# EDGAR Filing Document

**Accession Number:** 0001332551
**File Stem:** 0001193125-26-098916
**Filing Date:** 2026-3
**Character Count:** 1880996
**Document Hash:** efc959c0a226d5a17bd905b71705b6b3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-098916.hdr.sgml**: 20260310

**ACCESSION NUMBER**: 0001193125-26-098916

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 162

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260310

**DATE AS OF CHANGE**: 20260309

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ACRES Commercial Realty Corp.
- **CENTRAL INDEX KEY:** 0001332551
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE INVESTMENT TRUSTS [6798]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 202287134
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-32733
- **FILM NUMBER:** 26736553

**BUSINESS ADDRESS:**
- **STREET 1:** 390 RXR PLAZA
- **CITY:** UNIONDALE
- **STATE:** NY
- **ZIP:** 11556
- **BUSINESS PHONE:** 516-535-0015

**MAIL ADDRESS:**
- **STREET 1:** 390 RXR PLAZA
- **CITY:** UNIONDALE
- **STATE:** NY
- **ZIP:** 11556

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Exantas Capital Corp.
- **DATE OF NAME CHANGE:** 20180525

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Resource Capital Corp.
- **DATE OF NAME CHANGE:** 20050708

?xml version='1.0' encoding='ASCII'? 10-K

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM** 10-K

(Mark One)

---

| | |
|:---|:---|
| &nbsp;&nbsp;☑ | &nbsp;&nbsp;**ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

For the fiscal year ended December 31, 2025

or

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the transition period from <u>_________</u> to <u>__________</u>

**Commission file number** 1-32733

![img249776336_0.jpg](img249776336_0.jpg)

ACRES COMMERCIAL REALTY CORP.

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| Maryland |  | 20-2287134 |
| (State or other jurisdiction of |  | (I.R.S. Employer |
| incorporation or organization) |  | Identification No.) |
| 390 RXR Plaza**,** Uniondale**,** New York 11556 | 390 RXR Plaza**,** Uniondale**,** New York 11556 | 390 RXR Plaza**,** Uniondale**,** New York 11556 |
| (Address of principal executive offices) (Zip Code) | (Address of principal executive offices) (Zip Code) | (Address of principal executive offices) (Zip Code) |
| Registrant's telephone number, including area code: 516**-**535-0015 | Registrant's telephone number, including area code: 516**-**535-0015 | Registrant's telephone number, including area code: 516**-**535-0015 |
| Securities registered pursuant to Section 12(b) of the Act: | Securities registered pursuant to Section 12(b) of the Act: | 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, $0.001 par value | ACR | New York Stock Exchange |
| 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock | ACRPrC | New York Stock Exchange |
| 7.875% Series D Cumulative Redeemable Preferred Stock | ACRPrD | New York Stock Exchange |

---

Securities registered pursuant to Section 12 (g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☑ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☑ No

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 of this chapter) 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No

The aggregate market value of the voting common equity held by non-affiliates of the registrant, based on the closing price of such stock on the last business day of the registrant's most recently completed second fiscal quarter June 30, 2025 was $105,608,385.

The number of outstanding shares of the registrant's common stock on March 6, 2026 was 7,131,101 shares.

**DOCUMENTS INCORPORATED BY REFERENCE**

The information required by Part III of this Form 10-K, to the extent not set forth herein or by amendment, is incorporated by reference from the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2025.

------

**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**INDEX TO ANNUAL REPORT**

**ON FORM 10-K**

---

| | | |
|:---|:---|:---|
|  |  | **PAGE** |
|  | [**<u>Forward-Looking Statements</u>**](#forwardlooking_statements) | 3 |
| [**<u>PART I</u>**](#part_i) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1: | [<u>Business</u>](#item_1_business) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1A: | [<u>Risk Factors</u>](#parti_item1a) | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1B: | [<u>Unresolved Staff Comments</u>](#item_1b) | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1C: | [<u>Cybersecurity</u>](#item_1c) | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 2: | [<u>Properties</u>](#item2_properties) | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 3: | [<u>Legal Proceedings</u>](#item3) | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 4: | [<u>Mine Safety Disclosures</u>](#item4) | 39 |
| [**<u>PART II</u>**](#part_ii) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 5: | [<u>Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</u>](#item_5_market_for_registrants_common_equ) | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 6: | [<u>\[Reserved\]</u>](#item_6_reserved) | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 7: | [<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item_7_mda) | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 7A: | [<u>Quantitative and Qualitative Disclosures About Market Risk</u>](#item_7a_quantitative_qualitative_disclos) | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 8: | [<u>Financial Statements and Supplementary Data</u>](#item8_financialstatements) | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 9: | [<u>Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</u>](#item_9_changes_disagreements_with_accoun) | 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 9A: | [<u>Controls and Procedures</u>](#item_9a_controls_procedures) | 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 9B: | [<u>Other Information</u>](#item_9b_or_information) | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 9C | [<u>Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</u>](#item_9c_disclosure_regarding_foreign_jur) | 140 |
| [**<u>PART III</u>**](#part_iii) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 10: | [<u>Directors, Executive Officers and Corporate Governance</u>](#item_10_directors_executive_ficers_corpo) | 141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 11: | [<u>Executive Compensation</u>](#item_11_executive_compensation) | 141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 12: | [<u>Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</u>](#item_12_security_ownership_certain_benef) | 141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 13: | [<u>Certain Relationships and Related Transaction and Director Independence</u>](#item_13_certain_relationships_related_tr) | 141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 14: | [<u>Principal Accountant Fees and Services</u>](#item_14_principal_accountant_fees_servic) | 141 |
| [**<u>PART IV</u>**](#part_iv) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 15: | [<u>Exhibits and Financial Statement Schedules</u>](#item_15_exhibits_financial_statement_sch) | 142 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 16: | [<u>Form 10-K Summary</u>](#item_16_form_10k_summary) | 146 |
| [**<u>SIGNATURES</u>**](#signatures) | [**<u>SIGNATURES</u>**](#signatures) | 147 |

---

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**FORWARD-LOOKING STATEMENTS**

***In this annual report on Form 10-K, references to "Company," "we," "us," or "our" refer to ACRES Commercial Realty Corp. and its subsidiaries; references to the Company's "Manager" refer to ACRES Capital, LLC, a subsidiary of ACRES Capital Corp., unless specifically stated otherwise or the context otherwise indicates. This report contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "could," "estimate," "expects," "intend," "may," "plan," "potential," "project," "should," "will" and "would" or the negative of these terms or other comparable terminology.*** 

Forward-looking statements contained in this report are based on our beliefs, assumptions and expectations regarding 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 are within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Forward-looking statements we make in this report are subject to various risks and uncertainties that could cause actual results to vary from our forward-looking statements, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in our industry, interest rates, the debt securities markets, real estate markets or the general economy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased rates of default and/or decreased recovery rates on our investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the performance and financial condition of our borrowers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the cost and availability of our financings, which depend in part on our asset quality, the nature of our relationships with our lenders and other capital providers, our business prospects and outlook and general market conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability and attractiveness of terms of additional debt repurchases;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability, terms and deployment of short-term and long-term capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• events giving rise to increases in our current expected credit loss reserve, including the impact of the current economic environment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability of, and ability to retain, qualified personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in our business strategy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the degree and nature of our competition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the resolution of our non-performing and sub-performing assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to comply with financial covenants in our debt instruments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the adequacy of our cash reserves and working capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the timing of cash flows, if any, from our investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unanticipated increases in financial and other costs, including a rise in interest rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain compliance with over-collateralization and interest coverage tests in our collateralized loan obligations ("CLOs");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our dependence on ACRES Capital, LLC (our "Manager") and ability to find a suitable replacement in a timely manner, or at all, if our Manager or we were to terminate the management agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• environmental and/or safety requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to satisfy complex rules in order for us to qualify as a real estate investment trust ("REIT"), for federal income tax purposes and qualify for our exemption under the Investment Company Act of 1940, as amended, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• legislative and regulatory changes (including changes to laws governing the taxation of REITs or the exemptions from registration as an investment company); and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the factors described in this report, including those set forth under the sections captioned "Risk Factors," "Business" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations."

We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

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[<u>(Back to Index)</u>](#back_to_index)

**PART I**

**ITEM 1. BUSINESS**

**General**

We are a Maryland corporation, incorporated in 2005, and a real estate finance company that is organized and conducts our operations to qualify as a real estate investment trust ("REIT") for federal income tax purposes under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. On February 16, 2021, we amended our certificate of incorporation to change our name to ACRES Commercial Realty Corp. from Exantas Capital Corp. Our investment strategy is primarily focused on originating, holding and managing commercial real estate ("CRE") mortgage loans and equity investments in commercial real estate property through direct ownership and joint ventures. We are externally managed by ACRES Capital, LLC (our "Manager") a subsidiary of ACRES Capital Corp. (collectively "ACRES"), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, industrial and office property in top United States, or U.S., markets. Our Manager draws upon the management team of ACRES and its collective investment experience to provide its services.

Our objective is to provide our stockholders with total returns over time, including the payment of quarterly distributions when approved by our board of directors, (our "Board") and capital appreciation, while seeking to manage the risks associated with our investment strategies. We finance a substantial portion of our portfolio investments through borrowing strategies seeking to match the maturities and repricing dates of our financings with the maturities and repricing dates of our investments.

Our investment strategy targets the following CRE credit investments, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Floating-rate first mortgage loans, which we refer to as whole loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• First priority interests in first mortgage loans, which we refer to as A-notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Subordinated interests in first mortgage loans, which we refer to as B-notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Preferred equity investments related to CRE that are subordinate to first mortgage loans and are not collateralized by the property underlying the investment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• CRE equity investments.

We generate our income primarily from the spread between the revenues we receive from our interest-bearing assets and the cost to finance our ownership of those assets, including corporate debt. We also derive rental income from our direct equity investments in commercial real estate property.

We typically target transitional floating-rate CRE loans between $10.0 million and $100.0 million. During the year ended December 31, 2025, we originated 15 CRE loans with total commitments of $757.3 million. At December 31, 2025, our CRE loan portfolio at par comprised $1.8 billion of CRE whole loans with a weighted average spread of 3.35% over the one-month benchmark interest rates utilized, which have a weighted average floor of 1.78%.

# Our Business Strategy
The core components of our business strategy are:

***Investment in CRE assets***. We are currently invested in CRE whole loans and CRE equity investments. Our goal is to allocate 90% to 100% of our equity to our CRE assets.

***Managing our investment portfolio****.* At December 31, 2025, we managed $2.2 billion of assets. The core of our management process is credit analysis, which our Manager, with the assistance of ACRES, uses to actively monitor our existing investments and as a basis for evaluating new investments. Senior management of ACRES has extensive experience in underwriting the credit risk associated with our targeted asset classes and conducts detailed due diligence on all investments. After we make investments, our Manager actively monitors them for early detection of trouble or deterioration. If a default occurs, we use our senior management team's asset management experience in seeking to mitigate the severity of any loss and to optimize the recovery from assets collateralizing the investment.

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***Managing our interest rate, pricing and liquidity risk***. We engage in a number of business activities that are vulnerable to interest rate, pricing and liquidity risk and we seek to manage those risks. The risks on our long-term financing agreements, principally our term financing facilities, are managed by seeking to match the maturities and repricing dates of our financed investments with the maturities and repricing dates of our long-term financing facilities. Additionally, we seek to match investment and financing maturities and repricing dates using securitization vehicles structured by our Manager and, subject to the availability of markets for securitization financings, we expect to continue to use securitizations in the future to accomplish our long-term match funding financing strategy.

At December 31, 2025, our financing arrangements were as follows (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Outstanding Borrowings** <sup>(1)</sup> | **Value of Collateral** | **Equity at Risk** <sup>(2)</sup> |
| **At December 31, 2025:** |  |  |  |
| &nbsp;&nbsp;**CRE - Term Reinvestment Financing Facility** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;JPMorgan Chase Bank, N.A. | $728167 | $1009622 | $295734 |
| &nbsp;&nbsp;**Senior Secured Financing Facility** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Massachusetts Mutual Life Insurance Company | $61645 | $166526 | $104091 |
| &nbsp;&nbsp;**CRE - Term Warehouse Financing Facilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;JPMorgan Chase Bank, N.A. | $116488 | $149000 | $32570 |
| &nbsp;&nbsp;&nbsp;&nbsp;Morgan Stanley Mortgage Capital Holdings LLC | $417374 | $544937 | $130295 |
| &nbsp;&nbsp;**Mortgage Payable** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;ReadyCap Commercial, LLC | $20185 | $26964 | $6695 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1343859 | $1897049 |  |

---

(1)Includes deferred debt issuance costs.

(2)The term reinvestment financing facility, senior secured financing facility and term warehouse financing facilities include accrued interest receivable and accrued interest payable, which are excluded from the value of collateral.

Our financing arrangements charge a floating rate of interest. For more information concerning our financing arrangements, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources," and Note 11 contained in "Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements" of this report. We continuously monitor our compliance with all of the financial covenants. We were in compliance with all financial covenants, as defined in the respective agreements, at December 31, 2025.

***Diversification of investments***. We manage our investment risk by maintaining a diversified portfolio of CRE mortgage loans and other CRE-related investments. As funds become available for investment or reinvestment, we seek to maintain diversification by property type or geographic location while allocating our capital to investment opportunities that we believe are the most economically attractive. The percentage of assets that we have invested in certain non-qualifying, non-core and other real estate-related investments is subject to the federal income tax requirements for REIT qualification and the requirements for exclusion from regulation under the Investment Company Act of 1940, or the Investment Company Act.

**Our Operating Policies**

***Investment guidelines.*** We have established investment policies, procedures and guidelines that are reviewed and approved by our Manager's investment committee and our Board. Our investment committee and/or our Board, as applicable, meets regularly to consider and approve proposed specific investments. Our Board monitors the execution of our overall investment strategies and targeted asset classes. We acquire our investments primarily for income. We do not have a policy that requires us to focus our investments in one or more particular geographic areas or industries.

***Financing policies.*** We use leverage in order to increase potential returns to our stockholders and for financing our portfolio. We do not speculate on changes in interest rates. Although we have identified leverage targets for each of our targeted asset classes, our investment policies do not have any minimum or maximum leverage limits. Our Manager's investment committee has the discretion, without the need for further approval by our Board, to increase the amount of leverage we incur above our targeted range for individual asset classes subject, however, to any leverage constraints that may be imposed by existing financing arrangements.

We use borrowing and securitization strategies to accomplish our long-term match funding financing strategy. Based upon current conditions in the credit markets for collateralized loan obligations (sometimes, collectively, referred to as CLOs), we expect to modestly increase leverage through new CRE debt securitizations and the continued use of our senior secured financing facility and term financing facilities. We may also seek other credit arrangements to finance new investments that we believe can generate attractive risk-adjusted returns, subject to availability.

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***Credit and risk management policies.*** Our Manager focuses its attention on credit and risk assessment from the earliest stage of the investment selection process. In addition, our Manager screens and monitors all potential investments to determine their impact on maintaining our REIT qualification under federal income tax laws and our exclusion from investment company status under the Investment Company Act. Portfolio risks, including risks related to credit losses, interest rate volatility, liquidity and counterparty credit, are generally managed on an asset and portfolio type basis by our Manager.

**Floating-Rate Loan Portfolio and Borrowings**

As discussed in the "Managing our interest rate, pricing and liquidity risk" section above, our investments in floating-rate assets and utilization of floating-rate borrowings expose us to interest rate risk. In a business environment where benchmark interest rates are increasing, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. The sponsors may need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At December 31, 2025, 76.5% of the par value of our CRE loan portfolio had interest rate caps with a weighted-average maturity of 15 months or funded debt service reserves in place.

**Investment Portfolio**

The table below summarizes the amortized costs and net carrying amounts of our investments at December 31, 2025, classified by asset type (dollars in thousands, except amounts in footnotes):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **At December 31, 2025** | **Amortized Cost** | **Net Carrying Amount** <sup>(1)</sup> | **Percent of Portfolio** | **Weighted Average Coupon** |
| **Loans held for investment:** |  |  |  |  |
| &nbsp;&nbsp;CRE whole loans | $1820942 | $1800784 | 91.74% | 7.32% |
| &nbsp;&nbsp;CRE preferred equity investment | 9425 | 9185 | 0.47% | 10.00% |
|  | 1830367 | 1809969 | 92.21% |  |
| **Other investments:** |  |  |  |  |
| &nbsp;&nbsp;Investments in unconsolidated entities | 29237 | 29237 | 1.49% | N/A<sup>(4)</sup> |
| &nbsp;&nbsp;Investments in real estate<sup>(2)</sup> | 56277 | 56277 | 2.86% | N/A<sup>(4)</sup> |
| &nbsp;&nbsp;Properties held for sale<sup>(3)</sup> | 67509 | 67509 | 3.44% | N/A<sup>(4)</sup> |
|  | 153023 | 153023 | 7.79% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total investment portfolio** | $1983390 | $1962992 | 100.00% |  |

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(1)Net carrying amount includes an allowance for credit losses of $20.4 million.

(2)Includes real estate-related right of use assets of $19.0 million, intangible assets of $6.2 million and lease liabilities of $45.3 million.

(3)Includes property held for sale-related liabilities of $3.1 million, related right of use assets of $5.4 million, intangible assets of $2.7 million and mortgages payable of $20.2 million.

(4)There are no stated rates associated with these investments.

The negative impact of COVID-19 on our commercial mortgage-backed securities, or CMBS, investments and 2020 results created net operating loss ("NOL") carryforwards and net capital loss carryforwards ("CLCFs"). We have $32.1 million of NOL carryforwards, which was reported on our tax return filed in October 2025 for the 2024 tax year. Additionally, in our taxable REIT subsidiaries ("TRS"), we have NOL carryforwards of $62.0 million, of which $22.2 million have an indefinite carryforward period and $39.8 million begin to expire in 2044. We also have $20.8 million of CLCFs from prior years, which are set to expire on December 31, 2029.

In previous years we have acquired equity investments in CRE properties to utilize CLCFs in our REIT. These equity investments offer the opportunity for capital appreciation returns that may be reinvested into the loan origination pipeline when and if realized.

We hold investments in 100% of the common shares of two trusts, Resource Capital Trust I and RCC Trust II, that were formed for the purpose of providing us with unsecured junior subordinated debt financing and are accounted for as investments in unconsolidated entities.

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***CRE Debt Investments***

***Floating-rate whole loans.*** We predominantly originate floating-rate first mortgage loans, or whole loans, directly to borrowers. The direct origination of whole loans enables us to better control the structure of the loans and to maintain direct lending relationships with borrowers. Additionally, we may acquire whole loans from third parties that conform to our investment strategy. We may create tranches of a loan we originate, consisting of an A-note (described below) and a B-note (described below), as well as mezzanine loans or other participations, which we may hold or sell to third parties. We do not obtain ratings on these investments. With respect to our portfolio at December 31, 2025, our whole loan investments had loan-to-collateral value, or LTV, ratios that typically do not exceed 85%. Typically, our whole loans are structured with an original term of up to three years, with two one-year extensions that bring the loan to a maximum term of five years. Substantially all of our CRE loans held at December 31, 2025 were whole loans. We expect to hold most of our whole loans to maturity.

***Whole Loan Participations.*** We may opportunistically invest in participations of whole loans with third-parties or with related parties, whereby we purchase or otherwise share in the ownership interests of a whole loan made by another financial institution (the lead financial institution) to a borrower with whom we do not have a direct lending relationship on a pari passu basis. In this arrangement the lead financial institution fully maintains the lending relationship and all communications with the borrower; however, we re-underwrite the investment subject to our underwriting standards for whole loans prior to investing. This type of investment allows us to strategically diversify risk, share in the profits of the lead financial institution and further diversify our asset holdings. We expect our investments in participation loans to have LTV ratios not to exceed 85%. At December 31, 2025, our loan portfolio included two related-party whole loan participations with a par value of $45.2 million.

***Whole Loan Syndications.*** We may also opportunistically invest in the syndications of whole loans with third-parties or with related parties, whereby we co-originate a whole loan to a borrower with another financial institution on a pari passu basis, as well as maintain a direct lending relationship with the borrower. In this arrangement each lender in the syndicate has a separate promissory note with the borrower, subject to a co-lender agreement. This type of investment allows us to strategically diversify risk, as well as further diversify our asset holdings and borrower base. We expect our investments in whole loan syndications to have LTV ratios not to exceed 85%. At December 31, 2025, our loan portfolio included two related-party whole loan syndications with a par value of $88.7 million.

***Senior interests in whole loans (A-notes*).** We may invest in senior interests in whole loans, referred to as A-notes, either directly originated or purchased from third parties. We do not intend to obtain ratings on these investments. We expect our typical A-note investments to have LTV ratios not exceeding 70% and will generally be structured with an original term of up to three years, with one-year extensions that bring the loan to a maximum term of five years. We expect to hold any A-note investments to maturity. We did not hold any A-note investments at December 31, 2025.

***Subordinate interests in whole loans (B-notes***). To a lesser extent, we may invest in subordinate interests in whole loans, referred to as B-notes, which we will either directly originate or purchase from third parties. B-notes are loans secured by a first mortgage but are subordinated to an A-note. The subordination of a B-note is generally evidenced by an intercreditor or participation agreement between the holders of the A-note and the B-note. In some instances, the B-note lender may require a security interest in the stock or other equity interests of the borrower as part of the transaction. B-note lenders have the same obligations, collateral and borrower as the A-note lender, but typically are subordinated in recovery upon a default to the A-note lender. B-notes share certain credit characteristics with second mortgages in that both are subject to greater credit risk with respect to the underlying mortgage collateral than the corresponding first mortgage or A-note. We do not intend to obtain ratings on these investments. We expect our typical B-note investments to have LTV ratios between 55% and 80% and will generally be structured with an original term of up to three years, with one-year extensions that bring the loan to a maximum term of five years. We expect to hold any B-note investments to maturity. We did not hold any B-note investments at December 31, 2025.

In addition to the accrued interest receivable on a B-note, we may earn fees charged to the borrower under the note or additional income by receiving principal payments in excess of the discounted price (below par value) we paid to acquire the note. Our ownership of a B-note with controlling class rights may, in the event the financing fails to perform according to its terms, cause us to pursue our remedies as owner of the B-note, which may include foreclosure on, or modification of, the note. In some cases, the owner of the A-note may be able to foreclose or modify the note against our wishes as owner of the B-note. As a result, our economic and business interests may diverge from the interests of the owner of the A-note.

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***Mezzanine financing***. Historically, we have invested in mezzanine loans that are senior to the borrower's equity in, and subordinate to the mortgage loan on, a property. A mezzanine loan is typically secured by a pledge of the ownership interests in the entity that directly owns the real property or by a second lien mortgage loan on the property. In addition, mezzanine loans typically include credit enhancements such as letters of credit, personal guarantees of the principals of the borrower, or collateral unrelated to the property. A mezzanine loan may be structured so that we receive a stated fixed or variable interest rate on the loan as well as a percentage of gross revenues and a percentage of the increase in the fair market value of the property securing the loan, payable upon maturity, refinancing or sale of the property. Mezzanine loans may also have prepayment lockouts, penalties, minimum profit hurdles and other mechanisms to protect and enhance returns in the event of premature repayment. At December 31, 2025, our loan portfolio did not hold any mezzanine loans.

***Preferred equity investments.*** Historically, we have invested in preferred equity investments in entities that own or acquire CRE properties. These investments are subordinate to first mortgage loans and mezzanine debt and are typically structured to provide some credit enhancement differentiating it from the common equity. We expect our preferred equity investments to have LTV ratios between 65% and 90% with stated maturities from three to eight years. We expect to hold preferred equity investments to maturity. At December 31, 2025, our loan portfolio included one preferred equity investment with a par value of $9.5 million.

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The following charts describe the property type and the geographic breakdown, by National Council of Real Estate Investment Fiduciaries ("NCREIF") region of our CRE loan portfolio at December 31, 2025 (based on carrying value):

![img249776336_1.jpg](img249776336_1.jpg)

![img249776336_2.jpg](img249776336_2.jpg)

The total CRE loan portfolio, at carrying value, was $1.8 billion at December 31, 2025. The Southwest region constituted 24.2% of our portfolio, of which 90.2% was in Texas, and its collateral comprised 100.0% multifamily properties. The Southeast region constituted 20.6% of our portfolio, of which 60.1% was in Florida, and its collateral comprised 89.1% multifamily properties. The Pacific region constituted 14.0% of our portfolio, of which 79.8% was in California, and its collateral comprised 73.0% multifamily properties. We view our investment and credit strategies as being adequately diversified across property types in the Southwest, Southeast and Pacific regions.

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***Investments in Real Estate***

We may invest directly in the ownership of CRE equity investments and we may acquire CRE equity investments through a joint venture or wholly-owned subsidiary and may classify these investments in real estate as held for investment or held for sale. At December 31, 2025, we held three investments in real estate acquired through direct equity investments and three investments in real estate acquired from lending activities (i.e. through the receipt of the deeds-in-lieu of foreclosure on the properties that collateralized former non-performing loans). At December 31, 2025, three of these investments were classified as held for sale.

The following table summarizes the investments in real estate at December 31, 2025 (in thousands, except amounts in footnotes):

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | **Cost Basis** | **Accumulated Depreciation & Amortization** | **Carrying Value** |
| **Assets acquired:** |  |  |  |
| &nbsp;&nbsp;***Investments in real estate, equity:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate <sup>(1)</sup> | $74468 | $(7797) | $66671 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets <sup>(2)(3)</sup> | 19665 | (1024) | 18641 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets <sup>(4)</sup> | 9469 | (3342) | 6127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 103602 | (12163) | 91439 |
| &nbsp;&nbsp;***Investments in real estate from lending activities:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate <sup>(1)</sup> | $10025 | $(281) | $9744 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets <sup>(2)(3)</sup> | 399 | (63) | 336 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets <sup>(4)</sup> | 364 | (270) | 94 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 10788 | (614) | 10174 |
| &nbsp;&nbsp;&nbsp;&nbsp;Properties held for sale <sup>(5)</sup> | 90825 |  | 90825 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 205215 | (12777) | 192438 |
| **Liabilities assumed:** |  |  |  |
| &nbsp;&nbsp;***Investments in real estate, equity:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage payables | 19565 | 620 | 20185 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities <sup>(3)(6)</sup> | 44958 |  | 44958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 64523 | 620 | 65143 |
| &nbsp;&nbsp;***Investments in real estate from lending activities:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 41 | (41) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities <sup>(3)(6)</sup> | 378 |  | 378 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 419 | (41) | 378 |
| &nbsp;&nbsp;&nbsp;&nbsp;Liabilities held for sale <sup>(7)</sup> | 3131 |  | 3131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 68073 | 579 | 68652 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total net investments in real estate and properties held for sale <sup>(8)</sup> | $137142 |  | $123786 |

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(1)Investments in real estate includes $15.2 million of land, which is not depreciable. Also includes $3.7 million of construction in progress, which is also not depreciable until placed in service.

(2)Primarily comprises a $18.4 million right of use asset, associated with a ground lease referenced in footnote (6). Amortization is booked to real estate expenses on the consolidated statements of operations. Additionally in December 2024, we entered into an operating lease associated with a parking lease at a newly acquired property. The associated right of use asset has a value of $322,000 at December 31, 2025.

(3)Refer to Note 9 in the Notes to the Consolidated Financial Statements for additional information on our remaining operating leases.

(4)Primarily comprises a franchise intangible of $3.5 million, a management contract intangible of $2.6 million, in-place lease intangible of $7,000 and a customer list intangible of $87,000.

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(5)Properties held for sale included a hotel acquired via deed-in-lieu of foreclosure in November 2020, an office property acquired via deed-in-lieu of foreclosure in June 2023 and one student housing property acquired in April 2022.

(6)Primarily comprises a $44.7 million ground lease with a remaining term of 91 years. Lease expenses for the year ended December 31, 2025 were $2.8 million.

(7)Comprises an operating lease liability.

(8)Excludes items of working capital, either acquired or assumed.

# Competition
See "Item 1A. Risk Factors - Risks Related to Our Investments - We may face competition for suitable investments."

**Management Agreement**

We have a management agreement, amended and restated on July 31, 2020 and further amended on February 16, 2021, May 6, 2022 and February 15, 2024, or the "Management Agreement," with our Manager pursuant to which our Manager provides the day-to-day management of our operations. The amended Management Agreement was entered into with our Manager and ACRES Capital Corp. The terms were substantially the same as the previous management agreement, except for the term, board designation rights, termination fee, Manager compensation and definition of incentive compensation, all discussed in detail below.

The Management Agreement requires our Manager to manage our business affairs in conformity with the policies and investment guidelines established by our Board. Our Manager provides its services under the supervision and direction of our Board. Our Manager is responsible for the selection, purchase and sale of our portfolio investments, our financing activities and providing us with investment advisory services. Our Manager and its affiliates also provide us with a Chief Financial Officer and a sufficient number of additional accounting, finance, tax and investor relations professionals. Our Manager receives fees and is reimbursed for its expenses as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A monthly base management fee equal to 1/12th of the amount of our equity multiplied by 1.50%. Under the Management Agreement, "equity" is equal to the net proceeds from issuances of shares of capital stock (or the value of common shares upon the conversion of convertible securities), after deducting any underwriting discounts and commissions and other expenses and costs relating to such issuance, plus or minus our retained earnings (excluding non-cash equity compensation incurred in current or prior periods) less all amounts we have paid for common stock and preferred stock repurchases. The calculation is adjusted for one-time events due to changes in accounting principles generally accepted in the U.S., or GAAP, as well as other non-cash charges, upon approval of our independent directors.

With respect to each fiscal quarter commencing with the quarter ending December 31, 2022, an incentive management fee calculated and payable in arrears in an amount, not less than zero, equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *for the first full calendar quarter ending December 31, 2022*, the product of (a) 20% and (b) the excess of (i) EAD of the Company for such calendar quarter, over (ii) the product of (A) the Company's book value equity as of the end of such calendar quarter, and (B) 7% per annum;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *for each of the second, third and fourth full calendar quarters following the calendar quarter ending December 31, 2022*, the excess of (1) the product of (a) 20% and (b) the excess of (i) EAD of the Company for the calendar quarter(s) following September 30, 2022, over (ii) the product of (A) the Company's book value equity in the calendar quarter(s) following September 30, 2022, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to the Manager with respect to the prior calendar quarter(s) following September 30, 2022 (other than the most recent calendar quarter); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *for each calendar quarter thereafter*, the excess of (1) the product of (a) 20% and (b) the excess of (i) EAD of the Company for the previous 12-month period, over (ii) the product of (A) the Company's book value equity in the previous 12-month period, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to the Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive compensation shall be payable with respect to any calendar quarter unless EAD for the twelve most recently completed calendar quarters (or such lesser number of completed calendar quarters from September 30, 2022) in the aggregate is greater than zero.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Per-loan underwriting and review fees in connection with valuations of and potential investments in certain subordinate commercial mortgage pass-through certificates, in amounts approved by a majority of the independent directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reimbursement of out-of-pocket expenses and certain other costs incurred by our Manager and its affiliates that relate directly to us and our operations.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reimbursement of our Manager's and its affiliates' expenses for (A) the wages, salaries and benefits of our Chief Financial Officer, and (B) a portion of the wages, salaries and benefits of accounting, finance, tax and investor relations professionals, in proportion to such personnel's percentage of time allocated to our operations.

Incentive compensation is calculated and payable quarterly to our Manager to the extent it is earned. Up to 75% of the incentive compensation is payable in cash and at least 25% is payable in the form of an award of common stock. Our Manager may elect to receive more than 25% of its incentive compensation in common stock. All shares are fully vested upon issuance; however, our Manager may not sell such shares for one year after the incentive compensation becomes due and payable unless the Management Agreement is terminated. Shares payable as incentive compensation are valued as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if such shares are traded on a securities exchange, at the average of the closing prices of the shares on such exchange over the 30-day period ending three days prior to the issuance of such shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if such shares are actively traded over-the-counter, at the average of the closing bid or sales price as applicable over the 30-day period ending three days prior to the issuance of such shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if there is no active market for such shares, at the fair market value as reasonably determined in good faith by our Board.

The Management Agreement's current contract term ends on July 31, 2026, and the agreement provides for automatic one-year renewals on such date and on each July 31 thereafter until terminated. Our Board reviews our Manager's performance annually. The Management Agreement may be terminated annually upon the affirmative vote of at least two-thirds of our independent directors, or by the affirmative vote of the holders of at least a majority of the outstanding shares of our common stock, based upon unsatisfactory performance that is materially detrimental to us or a determination by our independent directors that the management fees payable to our Manager are not fair, subject to our Manager's right to prevent such a compensation termination by accepting a mutually acceptable reduction of management fees. Our Board must provide 180 days' prior notice of any such termination. If we terminate the Management Agreement, our Manager is entitled to a termination fee equal to four times the sum of the average annual base management fee and the average annual incentive compensation earned by our Manager during the two 12-month periods immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter before the date of termination.

We may also terminate the Management Agreement for cause with 30 days' prior written notice from our Board. No termination fee is payable in the event of a termination for cause. The Management Agreement defines cause as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our Manager's continued material breach of any provision of the Management Agreement following a period of 30 days after written notice thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our Manager's fraud, misappropriation of funds, or embezzlement against us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our Manager's gross negligence in the performance of its duties under the Management Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the dissolution, bankruptcy or insolvency, or the filing of a voluntary bankruptcy petition by our Manager; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a change of control (as defined in the Management Agreement) of our Manager if a majority of our independent directors determines, at any point during the 18 months following the change of control, that the change of control was detrimental to the ability of our Manager to perform its duties in substantially the same manner conducted before the change of control.

Cause does not include unsatisfactory performance that is materially detrimental to our business.

Our Manager may terminate the Management Agreement at its option, (A) in the event that we default in the performance or observance of any material term, condition or covenant contained in the Management Agreement and such default continues for a period of 30 days after written notice thereof, or (B) without payment of a termination fee by us, if we become regulated as an investment company under the Investment Company Act, with such termination deemed to occur immediately before such event.

**Regulatory Aspects of Our Investment Strategy:**

**Exclusion from Regulation Under the Investment Company Act**

We operate our business so as to be excluded from regulation under the Investment Company Act. Because we conduct our business through wholly-owned subsidiaries, we must ensure not only that we qualify for an exclusion from regulation under the Investment Company Act, but also that each of our subsidiaries also qualifies.

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We believe that ACRES Realty Funding, Inc., ("ACRES RF"), the subsidiary that at December 31, 2025 held substantially all of our CRE loan assets, is excluded from Investment Company Act regulation under Section 3(c)(5)(C), a provision designed for companies that do not issue redeemable securities and are primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate. To qualify for this exclusion, at least 55% of ACRES RF's assets must consist of mortgage loans and other assets that are considered the functional equivalent of mortgage loans for purposes of the Investment Company Act and interests in real properties, which we refer to as Qualifying Interests. Moreover, 80% of ACRES RF's assets must consist of Qualifying Interests and other real estate-related assets. ACRES RF has not issued, and does not intend to issue, redeemable securities.

We treat our investments in CRE whole loans, A-notes, specific types of B-notes and specific types of mezzanine loans as Qualifying Interests for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C) to the extent such treatment is consistent with guidance provided by the Securities and Exchange Commission, or SEC, or its staff. We believe that SEC staff guidance allows us to treat B-notes as Qualifying Interests where we have unilateral rights to instruct the servicer to foreclose upon a defaulted mortgage loan, replace the servicer in the event the servicer, in its discretion, elects not to foreclose on such a loan, and purchase the A-note in the event of a default on the mortgage loan. We believe, based upon an analysis of existing SEC staff guidance, that we may treat mezzanine loans as Qualifying Interests where (i) the borrower is a special purpose bankruptcy-remote entity whose sole purpose is to hold all of the ownership interests in another special purpose entity that owns commercial real property, (ii) both entities are organized as limited liability companies or limited partnerships, (iii) under their organizational documents and the loan documents, neither entity may engage in any other business, (iv) the ownership interests of either entity have no value apart from the underlying real property which is essentially the only asset held by the property-owning entity, (v) the value of the underlying property in excess of the amount of senior obligations is in excess of the amount of the mezzanine loan, (vi) the borrower pledges its entire interest in the property-owning entity to the lender which obtains a perfected security interest in the collateral and (vii) the relative rights and priorities between the mezzanine lender and the senior lenders with respect to claims on the underlying property are set forth in an intercreditor agreement between the parties which gives the mezzanine lender certain cure and purchase rights in case there is a default on the senior loan. If the SEC staff provides future guidance that these investments are not Qualifying Interests, then we will treat them, for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C), as real estate-related assets or miscellaneous assets, as appropriate. Historically, we have held "whole pool certificates" in mortgage loans, although, at December 31, 2025 and 2024, we had no whole pool certificates in our portfolios. Pursuant to existing SEC staff guidance, we consider whole pool certificates to be Qualifying Interests. A whole pool certificate is a certificate that represents the entire beneficial interest in an underlying pool of mortgage loans. By contrast, a certificate that represents less than the entire beneficial interest in the underlying mortgage loans is not considered to be a Qualifying Interest for purposes of the 55% test, but constitutes a real estate-related asset for purposes of the 80% test.

To the extent ACRES RF holds its CRE loan assets through wholly or majority-owned CRE debt securitization vehicles or special purpose entities, or SPEs, ACRES RF also intends to conduct its operations so that it will not come within the definition of an investment company set forth in Section 3(a)(1)(C) of the Investment Company Act because less than 40% of the value of its total assets (exclusive of government securities and cash items) on an unconsolidated basis will consist of "investment securities," which we refer to as the 40% test. "Investment securities" exclude U.S. government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. Certain of the wholly-owned CRE debt securitization subsidiaries of ACRES RF rely on Section 3(c)(5)(C) for their Investment Company Act exemption, with the result that ACRES RF's interests in the CRE debt securitization subsidiaries do not constitute "investment securities" for the purpose of the 40% test.

RCC TRS, LLC, 2901 Renaissance Holdings 1, LLC or 2901 Renaissance Holdings 2, LLC do not qualify for the Section 3(c)(5)(C) exclusion. However, we believe they qualify for exclusion under either Section 3(c)(1) or 3(c)(7). As required by these exclusions, we will not allow any of these entities to make, or propose to make, a public offering of its securities. In addition, with respect to those subsidiaries for which we rely upon the Section 3(c)(1) exclusion, and as required thereby, we limit the number of holders of their securities to not more than 100 persons calculated in accordance with the attribution rules of Section 3(c)(1), and with respect to those subsidiaries for which we rely on the Section 3(c)(7) exclusion, and as required thereby, we limit ownership of their securities to "qualified purchasers." If we form other subsidiaries, we must ensure that they qualify for an exemption or exclusion from regulation under the Investment Company Act.

Moreover, we must ensure that ACRES Commercial Realty Corp. itself qualifies for an exclusion from regulation under the Investment Company Act. We do so by monitoring the value of our interests in our subsidiaries so that we can ensure that ACRES Commercial Realty Corp. satisfies the 40% test. Our interest in ACRES RF does not constitute an "investment security" for purposes of the 40% test, but our investments in the common shares of Resource Capital Trust I and RCC Trust II, both of which are held directly by ACRES Commercial Realty Corp., do. Accordingly, we must monitor the value of our interests in that subsidiary and those investments to ensure that the value of our interests in them does not exceed 40% of the value of our total assets.

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We have not received, nor have we sought, a no-action letter from the SEC regarding how our investment strategy fits within the exclusions from regulation under the Investment Company Act. To the extent that the SEC provides more specific or different guidance regarding the treatment of assets as Qualifying Interests or real estate-related assets, we may have to adjust our investment strategy. Any additional or different guidance from the SEC could inhibit our ability to pursue our investment strategy.

**Employees and Human Capital**

We have no direct employees. Under our Management Agreement, our Manager provides us with all management and support personnel and services necessary for our day-to-day operations. To provide its services, our Manager draws upon the expertise and experience of ACRES. Under our Management Agreement, our Manager and its affiliates also must provide us with our Chief Financial Officer, and a sufficient number of additional accounting, finance, tax and investor relations professionals. We bear the expense of the wages, salaries and benefits of our Chief Financial Officer, and the accounting, finance, tax and investor relations professionals to the extent allocated to us.

**Environmental, Social and Governance ("ESG") Policies**

Together with our Manager, we recognize the critical importance that ESG factors play when making decisions throughout our organization, including in our investment strategy and execution in our workplace. We are committed to being a good corporate citizen and have implemented policies and practices, which cover our day-to-day operations, our investment strategy, hiring practices and training and development.

**Internet Address and Availability of Information**

Our internet address is **<u>www.acresreit.com</u>**. We make available, free of charge through a link on our site, all reports filed with or furnished to the SEC as soon as reasonably practicable after such filing or furnishing. Our site also contains our code of business conduct and ethics, corporate governance guidelines and the charters of the audit committee, nominating and environmental, social and governance committee and compensation committee of our Board. A complete list of our filings is available on the SEC's website at **<u>http://www.sec.gov</u>**.

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**ITEM 1A. RISK FACTORS**

This section describes material risks affecting our business. In connection with the forward-looking statements that appear in this annual report, you should carefully review the factors discussed below and the cautionary statements referred to in "Forward-Looking Statements."

**Risk Factors Summary**

Our risk factors include discussion of risks to our business attributable to the impact of current economic conditions, risks related to our financing, risks related to our operations, risks related to our investments, risks related to our Manager, risks related to our organization and structure, tax risks and general risks, including as follows:

• If current economic and market conditions were to deteriorate, our ability to obtain the capital and financing necessary for growth may be limited, which could limit our profitability, ability to make distributions and the market price of our common stock.

• Our portfolio has been financed in material part through the use of leverage that may reduce the return on our investments and cash available for distribution.

• Our repurchase agreements, warehouse facilities and other short-term financings have credit risks that could result in losses.

• We are exposed to loss if lenders under our repurchase agreements, warehouse facilities, senior secured financing facility or other short-term financings liquidate the assets securing those facilities. Moreover, assets acquired by us pursuant to our repurchase agreements, warehouse facilities, senior secured financing facility or other short-term financings may not be suitable for refinancing through long-term arrangements that may require us to liquidate some or all of the related assets.

• We will incur losses on our repurchase transactions if the counterparty to the transactions defaults on its obligation to resell the underlying assets back to us at the end of the transaction term, or if the value of the underlying assets has declined as of the end of the term or if we default in our obligations to purchase the assets.

• We may have to repurchase assets that we have sold in connection with CRE debt securitizations and other securitizations.

• Financing our REIT qualifying assets with repurchase agreements and warehouse facilities could adversely affect our ability to qualify as a REIT.

• Historically, we have financed most of our investments through CRE debt securitizations and have retained the equity. CRE debt securitization equity receives distributions from the CRE debt securitization only if the CRE debt securitization generates enough income to first pay the holders of its debt securities and its expenses.

• If our CRE debt securitization financings fail to meet their performance tests, including over-collateralization and interest coverage requirements, our net income and cash flow from these CRE debt securitizations will be eliminated.

• If we issue debt securities, the terms may restrict our ability to make cash distributions, require us to obtain approval to sell our assets or otherwise restrict our operations in ways that could make it difficult to execute our investment strategy and achieve our investment objectives.

• Depending upon market conditions, we intend to seek financing through CRE debt securitizations, which would expose us to risks relating to the accumulation of assets for use in the CRE debt securitizations.

• We may change our investment strategy without stockholder consent, which may result in riskier investments than those currently targeted.

• Our business is highly dependent on communications and information systems, and systems failures or cybersecurity incidents could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to operate our business.

• Declines in the market values of our investments may reduce periodic reported results, credit availability and our ability to make distributions.

• Increases in interest rates and other factors could reduce the value of our investments, result in reduced earnings or losses and reduce our ability to pay distributions.

• We record some of our portfolio investments, including those classified as assets held for sale, at fair value as estimated by our management and, as a result, there will be uncertainty as to the value of these investments.

• We may face competition for suitable investments.

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• Many of our investments may be illiquid, which may result in our realizing less than their recorded value should we need to sell such investments quickly.

• Our investments in real estate and commercial mortgage loans, mezzanine loans and CRE equity investments are subject to the risks inherent in owning the real estate securing or underlying those investments that could result in losses to us.

• Our investments in real estate are subject to particular conditions that may have a negative impact on our results of operations.

• Our investments in real estate are illiquid. We may not be able to dispose of properties when desired or on favorable terms.

• If our allowance for credit losses is not adequate to cover actual future loan and lease losses, our earnings may decline.

• The current expected credit losses, or CECL, model may require us to increase our allowance for credit losses and therefore may have a material adverse effect on our business, financial condition and results of operations.

• Our investment portfolio may have material geographic, sector, property-type and sponsor concentrations.

• We may be exposed to environmental liabilities with respect to properties that we own or take title to in the future.

• We depend on our Manager and ACRES to develop and operate our business and may not find suitable replacements if the Management Agreement terminates.

• Our Manager's fee structure may not create proper incentives, and the incentive compensation we pay our Manager may increase the investment risk of our portfolio.

• Our Manager manages our portfolio pursuant to very broad investment guidelines and our Board does not approve each investment decision, which may result in our making riskier investments.

• Our Manager and ACRES will face conflicts of interest relating to the allocation of investment opportunities and such conflicts may not be resolved in our favor, which could limit our ability to acquire assets and, in turn, limit our ability to make distributions and reduce your overall investment return.

• Our officers and many of the investment professionals that provide services to us through our Manager are also officers or employees of ACRES and may face conflicts regarding the allocation of their time.

• Our charter and bylaws contain provisions that may inhibit potential acquisition bids that you and other stockholders may consider favorable, and the market price of our common stock may be lower as a result.

• Maryland takeover statutes may prevent a change in control of us, and the market price of our common stock may be lower as a result.

• Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interests.

• We have not established a minimum distribution payment level and we cannot assure you of our ability to make distributions in the future. In the future, we may use uninvested offering proceeds or borrowed funds to make distributions.

• Loss of our exclusion from regulation under the Investment Company Act would require significant changes in our operations and could reduce the market price of our common stock and our ability to make distributions.

• Legislative, regulatory or administrative changes could adversely affect our stockholders or us.

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**Risks Related to Impact of Current Economic Conditions**

***If current economic and market conditions were to deteriorate, our ability to obtain the capital and financing necessary for growth may be limited, which could limit our profitability, ability to make distributions and the market price of our common stock.***

We depend upon the availability of adequate debt and equity capital for growth in our operations. Although historically we have been able to raise both debt and equity capital, recent market and economic conditions have made obtaining additional equity capital highly dilutive to existing shareholders and may possibly affect our ability to raise debt capital. If current economic conditions were to deteriorate, our ability to access debt or equity capital on acceptable terms, could be further limited, which could limit our ability to generate growth, our profitability, our ability to make distributions and the market price of our common stock. In addition, as a REIT, we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain, to our stockholders and are therefore not able to retain significant amounts of our earnings for new investments, except where the existence of NOL and net capital loss carryforwards enable us to do so. While we may, through our taxable REIT subsidiary ("TRS") retain earnings as new capital, we are subject to REIT qualification requirements that limit the value of TRS stock and securities relative to the other assets owned by a REIT.

***A prolonged economic slowdown or lengthy or severe recession causing declining real estate values could impair our investments and harm our operations.***

We believe the risks associated with our business will be more severe during periods of economic slowdown or recession if these periods are accompanied by declining real estate values. Declining real estate values will likely reduce the level of new mortgage loan originations and other real estate-related investment activities since borrowers often use the appreciation in their existing real estate holdings or the expected appreciation in value-add projects to support the purchase of or incremental investment in additional properties. Further, declining real estate values significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our investment in the loan. Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect our ability to invest in, sell or securitize loans, which could materially and adversely affect our results of operations, financial condition, liquidity and our ability to pay distributions.

***The effects of the spread of illnesses or other public health emergencies on the global economy, the markets and our business may have an adverse impact on our financial condition, our results of operations and our liquidity and capital resources.***

A public health emergency could adversely affect the economy as well as individual issuers, assets and capital markets and could have serious negative effects on social, economic and financial systems, including significant uncertainty and volatility in the financial markets. Future infectious illness outbreaks or other public health emergencies could have similar or other unforeseen impacts and may exacerbate pre-existing political, social and economic risks in certain countries or globally, which could adversely affect the market price of our common stock.

A public health emergency could result in an increase of the costs and affect liquidity in the market, either of which could adversely affect our results of operations and market price of our common stock. In addition, a public health emergency could impair the information technology and other operational systems upon which we rely and could otherwise disrupt the ability of ACRES employees to perform essential tasks on behalf of the company. Governmental and quasi-governmental authorities and regulators throughout the world have at times responded to major economic disruptions with a variety of fiscal and monetary policy changes, including, but not limited to, direct capital infusions into companies and other issuers, new monetary tools and lower interest rates. An unexpected or sudden reversal of these policies, or the ineffectiveness of these policies, is likely to increase volatility in the market, which could adversely affect the market price of our common stock.

**Risks Related to Our Financing**

***Our portfolio has been financed in material part through the use of leverage that may reduce the return on our investments and cash available for distribution.***

Our portfolio has been financed in material part through the use of leverage and, as credit market conditions permit, we will seek such financing in the future. Using leverage subjects us to risks associated with debt financing, including the risks that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the cash provided by our operating activities will not be sufficient to meet required payments of principal and interest,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the cost of financing may increase relative to the income from the assets financed, reducing the income we have available to pay distributions, and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our investments may have maturities that differ from the maturities of the related financing and, consequently, the risk that the terms of any refinancing we obtain will not be as favorable as the terms of existing financing.

If we are unable to secure refinancing of our currently outstanding financing, when due, on acceptable terms, we may be forced to dispose of some of our assets at disadvantageous terms or to obtain financing at unfavorable terms, either of which may result in losses to us or reduce the cash flow available to meet our debt service obligations or to pay distributions.

Financing that we may obtain and financing we have obtained through CRE debt securitizations typically require, or will require, us to maintain a specified ratio of the amount of the financing to the value of the assets financed. A decrease in the value of these assets may lead to margin calls or calls for the pledge of additional assets, which we will have to satisfy. We may not have sufficient funds or unpledged assets to satisfy any such calls, which could result in our loss of distributions from and interests in affected CRE debt securitizations, which would reduce our assets, income and ability to make distributions.

***Our repurchase agreements, warehouse facilities and other short-term financings have credit risks that could result in losses.***

If we accumulate assets for a CRE debt securitization on a short-term credit facility and do not complete the CRE debt securitization financing, or if a default occurs under the facility, the short-term lender may sell the assets and we would be responsible for the amount by which the original purchase price of the assets exceeds their sale price, up to the amount of our investment or guaranty.

We may lose money on our repurchase transactions if the counterparty to the transaction defaults on its obligation to resell the underlying security back to us at the end of the transaction term, or if the value of the underlying security has declined as of the end of the term or if we default on our obligations under the repurchase agreements.

***We are exposed to loss if lenders under our repurchase agreements, warehouse facilities, senior secured financing facility or other short-term financings liquidate the assets securing those facilities. Moreover, assets acquired by us pursuant to our repurchase agreements, warehouse facilities, senior secured financing facility or other short-term financings may not be suitable for refinancing through long-term arrangements and may require us to liquidate some or all of the related assets.***

We have entered into repurchase agreements, warehouse facilities and senior secured financing facility and expect in the future to seek additional debt to finance our growth. Lenders typically have the right to liquidate assets securing or acquired under these facilities upon the occurrence of specified events, such as an event of default. We are exposed to loss if the proceeds received by the lender upon liquidation are insufficient to satisfy our obligation to the lender. We are also subject to the risk that the assets subject to such repurchase agreements, warehouse facilities or other debt might not be suitable for long-term refinancing or securitization transactions. If we are unable to refinance these assets on a long-term basis, or if long-term financing is more expensive than we anticipated at the time of our acquisition of the assets to be financed, we might be required to liquidate assets.

***We will incur losses on our repurchase transactions if the counterparty to the transactions defaults on its obligation to resell the underlying assets back to us at the end of the transaction term, or if the value of the underlying assets has declined as of the end of the term or if we default in our obligations to purchase the assets.***

When engaged in repurchase transactions, we generally sell assets to the transaction counterparty and receive cash from the counterparty. The counterparty must resell the assets back to us at the end of the term of the transaction. Because the cash we receive from the counterparty when we initially sell the assets is less than the market value of those assets, if the counterparty defaults on its obligation to resell the assets back to us we will incur a loss on the transaction. We will also incur a loss if the value of the underlying assets has declined as of the end of the transaction term, as we will have to repurchase the assets for their initial value but would receive assets worth less than that amount. If we default upon our obligation to repurchase the assets, the counterparty may liquidate them at a loss, which we are obligated to repay. Any losses we incur on our repurchase transactions would reduce our equity and our earnings, and thus our cash available for distribution to our stockholders.

***We may have to repurchase assets that we have sold in connection with CRE debt securitizations and other securitizations.***

If any of the assets that we originate or acquire and sell or securitize do not comply with representations and warranties that we make about them, we may have to repurchase these assets from the CRE debt securitization or securitization vehicle, or replace them. In addition, we may have to indemnify purchasers for losses or expenses incurred as a result of a breach of a representation or warranty. Any significant repurchases or indemnification payments could materially reduce our liquidity, earnings and ability to make distributions.

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***Financing our REIT qualifying assets with repurchase agreements and warehouse facilities could adversely affect our ability to qualify as a REIT.***

We have entered into and intend to enter into, sale and repurchase agreements under which we nominally sell certain REIT qualifying assets to a counterparty and simultaneously enter into an agreement to repurchase the sold assets. We believe that we will be treated for U.S. federal income tax purposes as the owner of the assets that are the subject of any such agreement, notwithstanding that we may transfer record ownership of the assets to the counterparty during the term of the agreement. It is possible, however, that the Internal Revenue Service, or IRS, could assert that we did not own the assets during the term of the sale and repurchase agreement, in which case our ability to qualify as a REIT would be adversely affected. If any of our REIT qualifying assets are subject to a repurchase agreement and are sold by the counterparty in connection with a margin call, the loss of those assets could impair our ability to qualify as a REIT. Accordingly, unlike other REITs, we may be subject to additional risk regarding our ability to qualify and maintain our qualification as a REIT.

***Historically, we have financed most of our investments through CRE debt securitizations and have retained the equity. CRE debt securitization equity receives distributions from the CRE debt securitization only if the CRE debt securitization generates enough income to first pay the holders of its debt securities and its expenses.***

Historically, we have financed most of our investments through CRE debt securitizations in which we retained the equity interest. Depending on market conditions and credit availability, we intend to use CRE debt securitizations to finance our investments in the future. The equity interests of a CRE debt securitization are subordinate in right of payment to all other securities issued by the CRE debt securitization. The equity is usually entitled to all of the income generated by the CRE debt securitization after the CRE debt securitization pays all of the interest due on the debt securities and its other expenses. However, there will be little or no income available to the CRE debt securitization equity if there are excessive defaults by the issuers of the underlying collateral, which would significantly reduce the value of that interest. Reductions in the value of the equity interests we have in a CRE debt securitization, if we determine that they are other-than-temporary, will reduce our earnings. In addition, the liquidity of the equity securities of CRE debt securitizations is constrained and, because they represent a leveraged investment in the CRE debt securitization's assets, the value of the equity securities will generally have greater fluctuations than the value of the underlying collateral.

***If our CRE debt securitization financings fail to meet their performance tests, including over-collateralization and interest coverage requirements, our net income and cash flow from these CRE debt securitizations will be eliminated.***

Our CRE debt securitizations generally provide that the principal amount of their assets must exceed the principal balance of the related securities issued by them by a certain amount, commonly referred to as "over-collateralization." If delinquencies and/or losses exceed specified levels, based on the analysis by the rating agencies (or any financial guaranty insurer) of the characteristics of the assets collateralizing the securities issued by the CRE debt securitization issuer, the required level of over-collateralization may be increased or may be prevented from decreasing as would otherwise be permitted if losses or delinquencies did not exceed those levels. A failure by a CRE debt securitization to satisfy an over-collateralization test typically results in accelerated distributions to the holders of the senior debt securities issued by the CRE debt securitization entity, resulting in a reduction or elimination of distributions to more junior securities until the over-collateralization requirements have been met or the senior debt securities have been paid in full.

Our equity holdings and, when we acquire debt interests in CRE debt securitizations, our debt interests, if any, generally are subordinate in right of payment to the other classes of debt securities issued by the CRE debt securitization entity. Accordingly, if over-collateralization tests are not met, distributions on the subordinated debt and equity we hold in these CRE debt securitizations will cease, resulting in a substantial reduction in our cash flow. Other tests (based on delinquency levels, interest coverage or other criteria) may restrict our ability to receive cash distributions from assets collateralizing the securities issued by the CRE debt securitization entity. Although at December 31, 2025, all of our CRE debt securitizations met their performance tests, we cannot assure you that our CRE debt securitizations will satisfy the performance tests in the future. For information concerning compliance by our CRE debt securitizations with their over-collateralization tests and interest coverage tests, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation - Liquidity and Capital Resources."

If any of our CRE debt securitizations fail to meet collateralization, interest coverage or other tests relevant to the most senior debt issued and outstanding by the CRE debt securitization issuer, an event of default may occur under that CRE debt securitization. If that occurs, our Manager's ability to manage the CRE debt securitization likely would be terminated and our ability to attempt to cure any defaults in the CRE debt securitization would be limited, which would increase the likelihood of a reduction or elimination of cash flow and returns to us in those CRE debt securitizations for an indefinite time.

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***If we issue debt securities, the terms may restrict our ability to make cash distributions, require us to obtain approval to sell our assets or otherwise restrict our operations in ways that could make it difficult to execute our investment strategy and achieve our investment objectives.***

Any debt securities we may issue in the future will likely be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Holders of senior securities may be granted the right to hold a perfected security interest in certain of our assets, to accelerate payments due under the indenture if we breach financial or other covenants, to restrict distributions, and to require us to obtain their approval to sell assets. These covenants could limit our ability to operate our business or manage our assets effectively. Additionally, any convertible or exchangeable securities that we issue may have rights, preferences and privileges more favorable than those of our common stock. We, and indirectly our stockholders, will bear the cost of issuing and servicing such securities.

***Depending upon market conditions, we intend to seek financing through CRE debt securitizations, which would expose us to risks relating to the accumulation of assets for use in the CRE debt securitizations.***

Historically, we have financed a significant portion of our assets through the use of CRE debt securitizations, and have accumulated assets for these financings through short-term credit facilities, typically repurchase agreements or warehouse facilities. Depending upon market conditions, and, consequently, the extent to which such financing is available to us, we expect to seek similar financing arrangements in the future. In addition to risks discussed above, these arrangements could expose us to other credit risks, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• An event of default under one short-term facility may constitute a default under other credit facilities we may have, potentially resulting in asset sales and losses to us, as well as increasing our financing costs or reducing the amount of investable funds available to us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may be unable to acquire a sufficient amount of eligible assets to maximize the efficiency of a CRE debt securitization issuance, which would require us to seek other forms of term financing or liquidate the assets. We may not be able to obtain term financing on acceptable terms, or at all, and liquidation of the assets may be at prices less than those we paid, resulting in losses to us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Using short-term financing to accumulate assets for a CRE debt securitization issuance may require us to obtain new financing as the short-term financing matures. Residual financing may not be available on acceptable terms, or at all. Moreover, an increase in short-term interest rates at the time that we seek to enter into new borrowings may reduce the spread between the income on our assets and the cost of our borrowings. This would reduce returns on our assets, which would reduce earnings and, in turn, cash available for distribution to our stockholders.

***We may be subject to losses arising from current and future guarantees of debt and contingent obligations of our subsidiaries or joint venture partners.***

We may guarantee the performance of the obligations of our subsidiaries, including credit and repurchase facilities, derivative agreements, unsecured indebtedness and indebtedness incurred by our joint venture partners. Non-performance on such obligations may cause losses to us in excess of the capital invested in our subsidiary or the relevant joint venture and there is no assurance that we will have sufficient capital to cover any such losses.

***The debt facilities that we use to finance our investments may require us to provide additional collateral.***

If the market value of the loans or investments pledged or sold by us to a funding source decline in value, we may be required by the lender to provide additional collateral or pay down a portion of the funds advanced. We may not have the funds available to pay down such future debt, which could result in defaults. Posting additional collateral to support these facilities would reduce our liquidity and limit our ability to leverage our assets. In the event we do not have sufficient liquidity to meet such requirements, lenders can accelerate the indebtedness, increase interest rates and terminate our ability to borrow. Further, lenders may require us to maintain a certain amount of uninvested cash or set aside unlevered assets sufficient to maintain a specified liquidity position. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on assets. In the event that we are unable to meet these collateral obligations, our financial condition could deteriorate rapidly.

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**Risks Related to Our Operations**

***We may change our investment strategy without stockholder consent, which may result in riskier investments than those currently targeted.***

Subject to maintaining our qualification as a REIT and our exclusion from regulation under the Investment Company Act, we may change our investment strategy, including the percentage of assets that may be invested in each asset class, or in the case of securities, in a single issuer, at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, the investments described in this report. A change in our investment strategy may increase our exposure to interest rate, credit market and real estate market fluctuations, all of which may reduce the market price of our common stock and reduce our ability to make distributions to stockholders. Furthermore, a change in our asset allocation could result in our making investments in asset categories different from those described in this report.

***We believe earnings available for distribution ("EAD"), a non-GAAP financial measure, is an appropriate measure to evaluate our performance and ability to pay dividends; however, in certain instances EAD may not be reflective of actual economic results.***

We utilize EAD as a measure to evaluate our performance and ability to pay dividends and believe that it is useful to analysts, investors and other parties in the evaluations of REITs. We believe EAD is a useful measure of our performance and ability to pay dividends because it excludes the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current CRE loan origination portfolio and other CRE-related investments and operations. EAD excludes (i) non-cash equity compensation expense, (ii) unrealized gains or losses, (iii) non-cash provision for loan losses, (iv) non-cash impairments on securities, (v) non-cash amortization of discounts or premiums associated with borrowings, (vi) net income or loss from limited partnership interests owned at the initial measurement date, (vii) net income or loss from non-core assets, (viii) real estate depreciation and amortization, (ix) foreign currency gains or losses and (x) income or losses from discontinued operations. EAD may also be adjusted periodically to exclude certain one-time events pursuant to changes in GAAP and certain non-cash items. Although pursuant to the Management Agreement we calculate incentive compensation using EAD excluding incentive compensation payable to our Manager, we include incentive compensation payable to our Manager in EAD for reporting purposes. EAD does not represent net income or cash generated from operating activities and should not be considered as an alternative to GAAP net income or as a measure of liquidity under GAAP. Our methodology for calculating EAD may differ from methodologies used by other companies to calculate similar supplemental performance measures, and accordingly, our reported EAD may not be comparable to similar performance measures used by other companies.

***If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.***

If we fail to maintain an effective system of internal control, fail to correct any flaws in the design or operating effectiveness of internal controls over financial reporting and disclosure, or fail to prevent fraud, our stockholders could lose confidence in our financial and other reporting, which could harm our business and the trading price of our common stock.

***Our due diligence may not reveal all of an investment's weaknesses.***

Before investing in any asset, we will assess the strength and skills of the asset's management and operations, the value of the asset and, for debt investments, the value of any collateral securing the debt, the ability of the asset or underlying collateral to service the debt and other factors that we believe are material to the performance of the investment. In making the assessment and otherwise conducting customary due diligence, we will rely on the resources available to us and, in some cases, an investigation by third parties. Our due diligence processes, however, may not uncover all facts that may be relevant to an investment decision.

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***Our business is highly dependent on communications and information systems, and systems failures or cybersecurity incidents could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to operate our business.***

We depend on the information systems of our Manager, ACRES and third parties. Any failure or interruption of our systems or cyber-attacks or security breaches of our networks or systems could cause delays or other problems in our lending activities. A disruption or breach could also lead to unauthorized access to and release, misuse, loss or destruction of our confidential information or personal or confidential information of our Manager, ACRES or third parties, which could lead to regulatory fines, litigation, costs of remediating the breach and reputational harm. In addition, we also face the risk of operational failure, termination or capacity constraints of any of the third parties with which we do business or that facilitate our business activities, including clearing agents or other financial intermediaries we use to facilitate our securities transactions, if their respective systems experience failure, interruption, cyber-attacks, or security breaches. If unauthorized parties gain access to our technology systems, they may be able to steal, publish, delete or modify private and sensitive information. Although we have implemented various measures to manage risks relating to these types of events, such systems could prove to be inadequate and, if compromised, could become inoperable for extended periods of time, cease to function properly or fail to adequately secure private information, including material nonpublic information. We may face increased costs as we continue to evolve our cyber defenses in order to contend with changing risks. These costs and losses associated with these risks are difficult to predict and quantify, but could have a significant adverse effect on our operating results.

The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. As our and our borrowers' reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by third-party service providers, and the information systems of our borrowers. We have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or that our operations or confidential information will not be negatively impacted by such an incident.

Computer malware, viruses, computer hacking and phishing attacks have become more prevalent in our industry and may occur on our systems. We rely heavily on our financial, accounting and other data processing systems. Although we have not detected a material cybersecurity breach to date, other financial services institutions have reported material breaches of their systems, some of which have been significant. Even with all reasonable security efforts, not every breach can be prevented or even detected. It is possible that we have experienced an undetected breach. There is no assurance that we, or the third parties that facilitate our business activities, have not or will not experience a breach. Cyber-attacks on our network or other systems could have a material adverse effect on our business and results of operations, due to, among other things, the loss of investor or proprietary data, interruptions or delays in the operation of our business and damage to our reputation. There can be no assurance that measures we take to ensure the integrity of our systems will provide protection, especially because cyberattack techniques used change frequently or are not recognized until successful. It is difficult to determine what, if any, negative impact may directly result from any specific interruption or cyber-attacks or security breaches of our networks or systems (or the networks or systems of third parties that facilitate our business activities) or any failure to maintain performance, reliability and security of our technical infrastructure, but such computer malware, viruses and computer hacking and phishing attacks may negatively affect our operations.

**Risks Related to Our Investments**

***Declines in the market values of our investments may reduce periodic reported results, credit availability and our ability to make distributions.***

Historically, we have classified a substantial portion of our assets for accounting purposes as "available-for-sale." As a result, reductions in the market values of those assets were directly charged to accumulated other comprehensive loss and reduce our stockholders' equity. A decline in these values would reduce the book value of our assets. Moreover, if there is an indication of credit quality issues for a specific investment, under the current expected credit losses, or CECL, accounting guidance, we must record a provision to our earnings in order to estimate expected losses.

A decline in the market value of our assets may also adversely affect us in instances where we have borrowed money based on the market value of those assets. If the market value of those assets declines, the lender may require us to post additional collateral to support the loan. If we are unable to post the additional collateral, we would have to repay some portion or all of the loan, which may require us to sell assets, which could potentially be under adverse market conditions. As a result, our earnings would be reduced or we could sustain losses, and cash available to make distributions could be reduced or eliminated.

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***Increases in interest rates and other factors could reduce the value of our investments, result in reduced earnings or losses and reduce our ability to pay distributions.***

A significant risk associated with our investment in CRE-related loans, and, historically, our CMBS and other debt investments is the risk that either or both of long-term and short-term interest rates increase significantly. If long-term rates increase, the market value of our assets would decline. Even if assets underlying investments we may own in the future are guaranteed by one or more persons, including government or government-sponsored agencies, those guarantees do not protect against declines in market value of the related assets caused by interest rate changes. At the same time, with respect to assets that are not match-funded or that have been acquired with variable rate or short-term financing, an increase in short-term interest rates would increase our interest expense, reducing our net interest spread or possibly result in negative cash flow from those assets. This could result in reduced profitability and distributions or losses.

***Heightened consumer demand, combined with constrained labor markets and supply chain imbalances, have created inflationary pressure within the U.S. economy. While our ownership of commercial real estate and floating rate loans can act as effective hedges against inflation, increased costs could compromise property performance and thus mortgage loan performance.***

Increased consumer demand, along with tight labor markets and supply chain imbalances, have created inflationary pressure on the U.S. economy. Our ownership of commercial real estate can act as an effective hedge against inflation, since in an inflationary environment, increases in the cost of construction and higher mortgage rates are likely to make new supply more expensive, leading to a limited supply of buildings, which in turn increases both rental rates and property values. Further, the Federal Reserve may raise interest rates in an effort to combat inflation, and so the interest payable on our existing fixed rate debt on our real estate portfolio becomes relatively cheaper, and the rates on our floating rate loans and financing adjust accordingly.

Increased costs, such as increased energy costs and wages, could stress property performance and thus mortgage loan performance. We use interest rate hedges to mitigate the effect of inflation on our fixed rate loans. While our diversified portfolio may serve to mitigate the negative effects of inflation on any singular location or property type, certain assets or markets may be more negatively affected by inflation.

***The transition away from reference rates and the use of alternative replacement reference rates may adversely affect the value of our loans, investments and borrowings and could affect our results of operations.***

There can be no guarantee that existing or future provisions for alternative reference rates will include adequate methodologies for adjustments or that the alternative reference rates will be similar to or produce the economic equivalent of, or be more or less favorable than the current reference rate, particularly during times of economic stress. As such, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined and any changes to benchmark interest rates could increase our financing costs or reduce our interest income, which could impact our results of operations, cash flows and the market value and liquidity of our investments. There could be a mismatch between the timing of the transition to a replacement rate between our investments and our financing, or a mismatch between the replacement rate used by our investments and our financing. Changes or uncertainty resulting from the transition to a replacement rate, including any market dislocations and disruptions as a result thereof, could adversely affect our business, reputation, increase the risk of litigation or other disputes, and increase transition-related expenses, among other adverse consequences.

***Investing in mezzanine debt, preferred equity, mezzanine or other subordinated tranches of CMBS involves greater risks of loss than senior secured debt investments.***

Subject to maintaining our qualification as a REIT and exclusion from regulation under the Investment Company Act, we may invest in mezzanine debt, preferred equity and mezzanine or other subordinated tranches of CMBS. These types of investments carry a higher degree of risk of loss than senior secured debt investments such as our whole loan investments because, in the event of default and foreclosure, holders of senior liens will be paid in full before mezzanine investors. Depending on the value of the underlying collateral at the time of foreclosure, there may not be sufficient assets to pay all or any part of amounts owed to mezzanine investors. Moreover, mezzanine and other subordinate debt investments may have higher LTV than conventional senior lien financing, resulting in less equity in the collateral and increasing the risk of loss of principal. If a borrower defaults or declares bankruptcy, we may be subject to agreements restricting or eliminating our rights as a creditor, including rights to call a default, cure a default, foreclose on collateral, and accelerate maturity or control decisions made in bankruptcy proceedings. In addition, the prices of lower credit quality securities are generally less sensitive to interest rate changes than more highly rated investments, but more sensitive to economic downturns or individual issuer developments because the ability of obligors of investments underlying the securities to make principal and interest payments may be impaired. In such event, existing credit support relating to the securities' structure may not be sufficient to protect us against loss of our principal. For additional risks regarding real estate-related loans, see "Risks Related to Investments- Our

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commercial mortgage loans and mezzanine loans are subject to the risks inherent in owning the real estate securing or underlying those investments that could result in losses to us."

***Our investments in preferred equity involve a greater risk of loss than traditional first mortgage debt investments we make.***

We may make preferred equity investments in entities that own or acquire CRE properties. Preferred equity investments involve a higher degree of risk than first mortgage loans due to a variety of factors, including the risk that, similar to mezzanine loans, such investments are subordinate to first mortgage loans and are not collateralized by property underlying the investment. Unlike mezzanine loans, preferred equity investments generally do not have a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. Although as a holder of preferred equity we may enhance our position with covenants that limit the activities of the entity in which we hold an interest and protect our equity by obtaining an exclusive right to control the underlying property after an event of default, should such a default occur on our investment, we would only be able to proceed against the entity in which we hold an interest, and not the property owned by such entity and underlying our investment. As a result, we may not recover some or all of our investment.

***We record some of our portfolio investments, including those classified as assets held for sale, at fair value as estimated by our management and, as a result, there will be uncertainty as to the value of these investments.***

We currently hold, and expect that we will hold in the future, portfolio investments that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We value these investments quarterly at fair value as determined under policies approved by our Board. Because such valuations are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that we would have obtained if a ready market for them existed. The value of our common stock will likely decrease if our determinations regarding the fair value of these investments are materially higher than the values that we ultimately realize upon their disposal.

***We may face competition for suitable investments.***

There are numerous REITs and other financial investors seeking to invest in the types of assets we target. This competition may cause us to forgo particular investments or to accept economic terms or structural features that we would not otherwise have accepted, and it may cause us to seek investments outside of our currently targeted areas. Competition for investment assets may slow our growth or limit our profitability and ability to make distributions to our stockholders.

***We may not have control over certain of our CRE loans and CRE investments.***

Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made. In certain situations, we may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acquire investments subject to rights of senior classes and servicers under inter-creditor or servicing agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acquire only a minority and/or non-controlling participation in an underlying investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• co-originate or participate in loans with third parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• co-invest with third parties through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• rely on independent third-party management or strategic partners with respect to the management of an asset.

Therefore, we may not be able to exercise control over the loan or investment. Such financial assets may involve risks not present in investments where senior creditors, servicers or third-party controlling investors are not involved. Our rights to control the process following a borrower default may be subject to the rights of senior creditors or servicers whose interests may not be aligned with ours. A third-party partner or co-venturer may have financial difficulties resulting in a negative impact on such asset, may have economic or business interest or goals which are inconsistent with ours, or may be in a position to take action contrary to our investment objectives. In addition, in certain circumstances we may be liable for the actions of our third-party partners or co-venturers.

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***Many of our investments may be illiquid, which may result in our realizing less than their recorded value should we need to sell such investments quickly.***

If we determine to sell one or more of our investments, we may encounter difficulties in finding buyers in a timely manner as real estate debt and other of our investments generally cannot be disposed of quickly, especially when market conditions are poor. Moreover, some of these assets may be subject to legal and other restrictions on resale. If we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. In addition, we may face other restrictions on our ability to liquidate an investment in a business entity to the extent that we, our Manager or ACRES has or could be attributed with material non-public information regarding such business entity. These factors may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions and may also limit our ability to use portfolio sales as a source of liquidity, which could limit our ability to make distributions to our stockholders or repay debt.

***Our investments in CRE loans, mezzanine loans and CRE equity investments are subject to the risks inherent in owning the real estate securing or underlying those investments that could result in losses to us.***

CRE loans are secured by, and mezzanine loans depend on, the performance of the underlying property and are subject to risks of delinquency and foreclosure, and risks of loss, that are greater than similar risks associated with loans made on the security of single-family residential properties. The ability of a borrower to repay a loan or make distributions secured by or dependent upon an income-producing property typically depends primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower's ability to repay the loan or ability to make distributions may be impaired. Net operating income of an income producing property can be affected by, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• tenant mix, success of tenant businesses, tenant bankruptcies and property management decisions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• property location and condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• competition from comparable types of properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• shifts in consumer habits or adoption of telework policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in laws that increase operating expenses or limit rents that may be charged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any need to address environmental contamination at the property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the occurrence of any uninsured casualty at the property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in national, regional or local economic conditions and/or the conditions of specific industry segments in which the lessees may operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• declines in regional or local real estate values;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• declines in regional or local rental or occupancy rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increases in interest rates, real estate tax rates and other operating expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability of debt or equity financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increases in costs of construction material;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in governmental rules, regulations and fiscal policies, including environmental legislation and zoning laws; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acts of God, terrorism, pandemic, social unrest and civil disturbances.

We risk loss of principal on defaulted CRE loans we hold to the extent of any deficiency between the value we can realize from the sale of the collateral securing the loan upon foreclosure and the loan's principal and accrued interest. Moreover, foreclosure of a mortgage loan can be an expensive and lengthy process that could reduce the net amount we can realize on the foreclosed mortgage loan. In a bankruptcy of a mortgage loan borrower, the mortgage loan will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy as determined by the bankruptcy court, and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law.

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We may be obligated to fund a portion of the loan at one or more future dates. We may not have the funds available at such future date(s) to meet our funding obligation under the loan. In that event, we would likely be in breach of the loan documents unless we are able to raise the capital, which we may not be able to achieve on favorable terms or at all. Additionally, if we are in breach of the loan documents, the borrower may file a claim against us for failure to perform under the loan documents.

For a discussion of additional risks associated with mezzanine loans, see "Risks Related to Our Investments - Investing in mezzanine debt, preferred equity and mezzanine or other subordinated debt investments involves greater risks of loss than senior secured debt investments."

***If our allowance for credit losses is not adequate to cover actual future loan losses, our earnings may decline.***

We maintain an allowance for credit losses to provide for loan defaults and non-performance by borrowers of their obligations. Our allowance for credit losses may not be adequate to cover actual future loan losses and future provisions for credit losses could materially reduce our income. We base our allowance for credit losses on historical loss experience, current portfolio and market conditions and reasonable and supportable forecasts for the duration of each respective loan. However, losses have in the past, and may in the future, exceed our current estimates, and the difference could be substantial. The amount of future losses is susceptible to changes in economic, operating and other conditions that may be beyond our control and difficult to estimate, including changes in interest rates, changes in borrowers' creditworthiness and the value of collateral securing loans. Additionally, if we seek to expand our loan portfolios, we may need to make additional provisions for credit losses to ensure that the allowance remains at levels deemed appropriate by our management for the size and quality of our portfolios. While we believe that our allowance for credit losses at December 31, 2025 is adequate to cover our anticipated losses, we cannot assure you that it will not increase in the future. Any increase in our allowance for credit losses will reduce our income and, if sufficiently large, could cause us to incur significant losses.

***The CECL model may require us to increase our allowance for credit losses and therefore may have a material adverse effect on our business, financial condition and results of operations.***

The CECL allowance required is a valuation account that is deducted from the related loans' and debt securities' amortized cost basis on our consolidated balance sheets, which reduces our total stockholders' equity. Additional changes to the CECL allowance are recognized through net income on our consolidated statements of operations. While the guidance does not require any particular method for determining the CECL allowance, it does specify the allowance should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan. Because our methodology for determining CECL allowances may differ from the methodologies employed by other companies, our CECL allowances may not be comparable with the CECL allowances reported by other companies. In addition, other than pursuant to a few narrow exceptions, the guidance requires that all financial instruments subject to the CECL model have some amount of reserve to reflect the GAAP principal underlying the CECL model that all loans, debt securities, and similar assets have some inherent risk of loss, regardless of credit quality, subordinate capital, or other mitigating factors. Accordingly, the adoption of the CECL model materially affected our determination of the allowance for credit losses and required us to increase our allowance upon adoption and recognize provisions for credit losses earlier in the lending cycle. Moreover, the CECL model has created more volatility in the level of our allowance for credit losses. If we are required to materially increase our level of allowance for credit losses for any reason, such increase could adversely affect our business, financial condition and results of operations.

***Our investment portfolio may have material geographic, sector, property-type and sponsor concentrations.***

We may have material geographic concentrations related to our direct or indirect investments in real estate loans and properties. We also may have material concentrations in the property types and industry sectors that are in our loan portfolio. Where we have any kind of concentration risk in our investments, we may be affected by sector-specific economic or other problems that are not reflected in the national economy generally or in more diverse portfolios. Where we have a significant concentration of investments with a small number of sponsors, we may be materially affected by an individual sponsors' performance. An adverse development in that area of concentration could reduce the value of our investment and our return on that investment and, if the concentration affects a material amount of our investments, impair our ability to execute our investment strategies successfully, reduce our earnings and reduce our ability to make distributions.

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***The B-notes in which we may invest may be subject to additional risks relating to the privately negotiated structure and terms of the transaction, which may result in losses to us.***

We may invest in B-notes. A B-note is a loan typically secured by a first mortgage on a single large commercial property or group of related properties and subordinated to a senior note secured by the same first mortgage on the same collateral. As a result, if a borrower defaults, there may not be sufficient funds remaining for B-note owners after payment to the senior note owners. Since each transaction is privately negotiated, B-notes can vary in their structural characteristics and risks. For example, the rights of holders of B-notes to control the process following a borrower default may be limited in certain investments. Depending upon market and economic conditions, we may make B-note investments at any time. B-notes are less liquid than other forms of CRE debt investments, such as CMBS, and, as a result, we may be able to dispose of underperforming or non-performing B-note investments only at a significant discount to book value.

***We may be exposed to environmental liabilities with respect to properties that we own or take title to in the future.***

In the course of our business, we have made direct investments in, and expect we will continue to make direct investments in, properties or taken title to, and expect we will in the future take title to, real estate through foreclosure on collateral underlying real estate debt investments. When we do take title to any property, we could be subject to environmental liabilities with respect to it. In such a circumstance, we may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs they incur as a result of environmental contamination, or may have to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial and could reduce our income and ability to make distributions. Additionally, the presence of hazardous substances on a property we own may adversely affect our ability to sell the property.

***Real estate ownership is subject to particular conditions that may have a negative impact on our results of operations.***

We are subject to all of the inherent risks associated with the ownership of real estate. We may not be successful in the development or redevelopment/expansion of the acquired properties. In addition, the real estate investments may not perform as well as expected, impacting our anticipated return on investment. We are subject to other risks in connection with any acquisition, development and redevelopment/expansion activities, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acquisition or construction costs of a project may be higher than projected, potentially making the project unfeasible or unprofitable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• development, redevelopment or expansions may take considerably longer than expected, delaying the commencement due to supply chain disruptions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may be unable to obtain zoning, occupancy or other governmental approvals; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• occupancy rates and rents may not meet our projections and the project may not be accretive.

We risk the loss of our investment if a development or redevelopment/expansion project is unsuccessful, either because it is not meeting our expectations when operational or was not completed according to the project planning.

***Real estate property investments are illiquid. We may not be able to dispose of properties when desired or on favorable terms.***

Real estate investments are relatively illiquid. Many factors that are beyond our control affect the real estate market. Our ability to quickly sell or exchange any of our properties in response to changes in economic and other conditions will be limited. No assurances can be given that we will recognize full value, at a price and at terms that are acceptable to us, for any property that we are required to sell for liquidity reasons. Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations.

***We may not have control, or control may be limited, over certain of our loans and real estate equity investments.*** 

Some of our loans or real estate equity investments may be co-lender, joint venture or other arrangements in which we share the rights, obligations and benefits of the loan or real estate equity investment with other lenders, servicers or joint venture partners. We may need the consent of these parties to exercise our rights under the respective agreements, including rights with respect to amendment of loan documentation, enforcement proceedings in the event of default and the institution of, and control over, foreclosure proceedings. The participants of these agreements may have interests that may not be aligned with ours and may be able to take actions to which we object but will be bound if our investment interest represents a non-controlling interest. We may be adversely affected by such actions. Additionally, our co-lenders, servicers or joint venture partners may have financial difficulties and may not be able to perform their

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financial obligations in accordance with their respective agreements, in which case we may be obligated to perform on their behalf. If we do not have the capital available or are unable to access funding, we may not have the capital available to meet those obligations, which will most likely result in a default under the respective agreement and could adversely affect our results of operations and financial condition.

**Risks Related to Our Manager**

***We depend on our Manager and ACRES to develop and operate our business and may not find suitable replacements if the Management Agreement terminates.***

We have no direct employees. Our officers, portfolio managers, administrative personnel and support personnel are employees of ACRES. We have no separate facilities and completely rely on our Manager; and ACRES has significant discretion as to the implementation of our operating policies and investment strategies. If our Management Agreement terminates, we may be unable to find a suitable replacement for our Manager. Moreover, we believe that our success depends to a significant extent upon the experience of the portfolio managers and officers of our Manager and ACRES who provide services to us, whose continued service is not guaranteed. The departure of any such persons could harm our investment performance.

***Our Manager's fee structure may not create proper incentives, and the incentive compensation we pay our Manager may increase the investment risk of our portfolio.***

Our Manager is entitled to receive a base management fee equal to 1/12th of our equity, as defined in the Management Agreement, multiplied by 1.50%. Since the base management fee is based on our outstanding equity, our Manager could be incentivized to recommend strategies that increase our equity, and there may be circumstances where increasing our equity will not optimize the returns for our stockholders.

In addition to its base management fee, our Manager is entitled to receive incentive compensation. This compensation is equal to the excess of (1) the product of (a) 20% and (b) the excess of (i) our EAD, as defined in the Management Agreement, for the previous 12-month period, over (ii) the product of (A) our book value equity (as defined in the Management Agreement) in the previous 12-month period, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to our Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive compensation shall be payable with respect to any calendar quarter unless EAD (as defined in the Management Agreement) for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters from September 30, 2022) in the aggregate is greater than zero.

In evaluating investments and other management strategies, the opportunity to earn incentive compensation based on EAD may lead our Manager to place undue emphasis on the maximization of EAD at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yields generally have higher risk of loss than investments with lower yields. If our interests and those of our Manager are not aligned, the execution of our business plan and our results of operations could be adversely affected, which could adversely affect our results of operations and financial condition.

***Our Manager manages our portfolio pursuant to very broad investment guidelines and our Board does not approve each investment decision, which may result in our making riskier investments.***

Our Manager is authorized to follow very broad investment guidelines. While our directors periodically review our investment guidelines and our investment portfolio, they do not review all of our proposed investments. In addition, in conducting periodic reviews, the directors may rely primarily on information provided to them by our Manager. Furthermore, our Manager may use complex strategies, and transactions entered into by our Manager, which may be difficult or impossible to unwind by the time they are reviewed by the directors. Our Manager has great latitude within the broad investment guidelines in determining the types of investments it makes for us. Poor investment decisions could impair our ability to make distributions to our stockholders.

***Termination of the Management Agreement by us without cause is difficult and could be costly.***

Termination of our Management Agreement without cause is difficult and could be costly. We may terminate the Management Agreement without cause only annually upon the affirmative vote of at least two-thirds of our independent directors or by a vote of the holders of at least a majority of our outstanding common stock, based upon unsatisfactory performance by our Manager that is materially detrimental to us or a determination that the management fee payable to our Manager is not fair. Moreover, with respect to a determination that the management fee is not fair, our Manager may prevent termination by accepting a mutually acceptable reduction of management fees. We must give not less than 180 days' prior notice of any termination. Upon any termination without cause, our Manager will be paid a termination fee equal to four times the sum of the average annual base management fee and the average annual incentive compensation earned by it during the two 12-month periods immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter before the date of termination.

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***Our Manager and ACRES will face conflicts of interest relating to the allocation of investment opportunities and such conflicts may not be resolved in our favor, which could limit our ability to acquire assets and, in turn, limit our ability to make distributions and reduce your overall investment return.***

Our Management Agreement does not prohibit our Manager, or ACRES from investing in or managing entities that invest in asset classes that are the same as, or similar to, our targeted asset classes, except that they may not raise funds for, sponsor or advise any new publicly-traded REIT that invests primarily in MBS in the U.S. We rely on our Manager to identify suitable investment opportunities for us. Our executive officers and several of the other key real estate professionals, acting on behalf of our Manager, are also the key real estate professionals acting on behalf of the advisors of other investment programs sponsored by, and other clients managed by, ACRES. As such, these investment programs and clients rely on many of the same real estate professionals as will future programs and vehicles sponsored by ACRES. Many investment opportunities that are suitable for us may also be suitable for one or more of these investment programs or clients. When an investment opportunity becomes available, the allocation committee established by ACRES, in accordance with its investment allocation policies and procedures, will offer the opportunity to the investment program or clients for which the investment opportunity is most suitable based on the available capital, investment objectives, portfolio and criteria of each. Thus, the allocation committees could direct attractive investment opportunities to an investment program or client other than us, which could result in us not investing in investment opportunities that could provide an attractive return or investing in investment opportunities that provide less attractive returns. Any of the foregoing may reduce our ability to make distributions to you.

***Our officers and many of the investment professionals that provide services to us through our Manager are also officers or employees of ACRES and may face conflicts regarding the allocation of their time.***

Our officers, other than our Chief Financial Officer, Chief Accounting Officer and several accounting and tax professionals on their staff, as well as the officers, directors and employees of ACRES who provide services to us, are not required to work full time on our affairs, and may devote significant time to the affairs of ACRES. As a result, there may be significant conflicts between us, on the one hand, and our Manager and ACRES on the other, regarding allocation of our Manager's and ACRES' resources to the management of our investment portfolio.

***We have engaged in and may again engage in transactions with entities affiliated with our Manager. Our policies and procedures may be insufficient to address any conflicts of interest that may arise.***

We have established policies and procedures regarding review, approval and ratification of transactions that may give rise to a conflict of interest between persons affiliated or associated with our Manager and us. In the ordinary course of our business, we have ongoing relationships and have engaged in and may again engage in transactions with entities affiliated or associated with our Manager. See "Item 13. Certain Relationships and Related Transactions and Director Independence - Relationships and Related Transactions" in this report. Our policies and procedures may not be sufficient to address any conflicts of interest that arise.

***Our Manager's liability is limited under the Management Agreement, and we have agreed to indemnify our Manager against certain liabilities.***

Our Manager does not assume any responsibility other than to render the services called for under the Management Agreement, and will not be responsible for any action of our Board in following or declining to follow its advice or recommendations. ACRES, our Manager, their directors, managers, officers, employees and affiliates will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary's stockholders for acts performed in accordance with and pursuant to the Management Agreement, except for acts constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the Management Agreement. We have agreed to indemnify the parties for all damages and claims arising from acts not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of duties, performed in good faith in accordance with and pursuant to the Management Agreement.

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**Risks Related to Our Organization and Structure**

***Our charter and bylaws contain provisions that may inhibit potential acquisition bids that you and other stockholders may consider favorable, and the market price of our common stock may be lower as a result.***

Our charter and bylaws contain provisions that may have an anti-takeover effect and inhibit a change in our Board. These provisions include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *There are ownership limits and restrictions on transferability and ownership in our charter.* For purposes of assisting us in maintaining our REIT qualification under the Code, our charter generally prohibits any person from beneficially or constructively owning more than 9.8% in value or number of shares, whichever is more restrictive, of any class or series of our outstanding capital stock. This restriction may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• discourage a tender offer or other transactions or a change in the composition of our Board or control that might involve a premium price for our shares or otherwise be in the best interests of our stockholders; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• result in shares issued or transferred in violation of such restrictions being automatically transferred to a trust for a charitable beneficiary, resulting in the forfeiture of those shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Our charter permits our Board to issue stock with terms that may discourage a third-party from acquiring us.* Our Board may amend our charter without stockholder approval to increase the total number of authorized shares of stock or the number of shares of any class or series and issue common or preferred stock having preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption as determined by our Board. Thus, our Board could authorize the issuance of stock with terms and conditions that could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our shares might receive a premium for their shares over the then-prevailing market price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Our charter and bylaws contain other possible anti-takeover provisions.* Our charter and bylaws contain other provisions, including advance notice procedures for the introduction of business and the nomination of directors, that may have the effect of delaying or preventing a change in control of us or the removal of existing directors and, as a result, could prevent our stockholders from being paid a premium for their common stock over the then-prevailing market price.

***Maryland takeover statutes may prevent a change in control of us, and the market price of our common stock may be lower as a result.***

*Maryland Control Share Acquisition Act*. Maryland law provides that "control shares" of a corporation acquired in a "control share acquisition" will have no voting rights except to the extent approved by a vote of two-thirds of the votes eligible to be cast on the matter under the Maryland Control Share Acquisition Act, or the Maryland Act. The Maryland Act defines "control shares" as voting shares of stock that, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power: one-tenth or more but less than one-third, one-third or more but less than a majority, or a majority or more of all voting power. A "control share acquisition" means the acquisition of control shares, subject to specific exceptions.

If voting rights or control shares acquired in a control share acquisition are not approved at a stockholders' meeting or if the acquiring person does not deliver an acquiring person statement as required by the Maryland Act then, subject to specific conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a stockholders' meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights.

Our bylaws contain a provision exempting acquisitions of our shares from the Maryland Act. However, our Board may amend our bylaws in the future to repeal this exemption.

*Business combinations.* Under Maryland law, "business combinations" between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any person who beneficially owns ten percent or more of the voting power of the corporation's shares; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an affiliate or associate of the corporation who, at any time within the two-year period before the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding voting stock of the corporation.

A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which such person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.

These super-majority vote requirements do not apply if the corporation's common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

The statute permits exemptions from its provisions, including business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder or the issuance of stock that resulted in the interested stockholder becoming subject to the statute if such issuance was approved by the board of directors or a committee of such board.

***Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interests.***

Our charter limits the liability of our directors and officers to our stockholders and us for money damages, except for liability resulting from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual receipt of an improper benefit or profit in money, property or services; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated.

In addition, our charter authorizes us to, and we do, indemnify our present and former directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify each present or former director or officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to fund the defense costs incurred by our directors and officers.

***Our right to take action against our Manager is limited.***

The obligation of our Manager under the Management Agreement is to render its services in good faith. It will not be responsible for any action taken by our Board or investment committee in following or declining to follow its advice and recommendations. Furthermore, as discussed above under - "Risks Related to Our Manager," it will be difficult and costly for us to terminate the Management Agreement without cause. In addition, we will indemnify our Manager, ACRES and their officers and affiliates for any actions taken by them in good faith.

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***We have not established a minimum distribution payment level and we cannot assure you of our ability to make distributions in the future. In the future, we may use uninvested offering proceeds or borrowed funds to make distributions.***

We expect to make quarterly distributions to our stockholders in amounts such that we distribute all or substantially all of our taxable income in each year, subject to certain adjustments. We have not established a minimum distribution payment level, and our ability to make distributions may be impaired by the risk factors described in this report. All distributions will be made at the discretion of our Board and will depend on our earnings, our financial condition, maintenance of our REIT qualification and other factors as our Board may deem relevant from time to time. We may not be able to make distributions in the future. In addition, some of our distributions may include a return of capital. To the extent that we decide to make distributions in excess of our current and accumulated taxable earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes. A return of capital is not taxable, but it has the effect of reducing the holder's tax basis in its investment. Although we currently do not expect that we will do so, we have in the past and may in the future also use proceeds from any offering of our securities that we have not invested or borrowed funds to make distributions. If we use uninvested offering proceeds to pay distributions in the future, we will have less funds available for investment and, as a result, our earnings and cash available for distribution would be less than we might otherwise have realized had such funds been invested. Similarly, if we borrow to fund distributions, our future interest costs would increase, thereby reducing our future earnings and cash available for distribution from what they otherwise would have been.

***Loss of our exclusion from regulation under the Investment Company Act would require significant changes in our operations and could reduce the market price of our common stock and our ability to make distributions.***

We rely on an exclusion from registration as an investment company afforded by Section 3(a)(1)(C) of the Investment Company Act. To qualify for this exclusion, we do not engage in the business of investing, reinvesting, owning, holding, or trading securities and we do not own "investment securities" with a value that exceeds 40% of the value of our total assets (exclusive of government securities and cash items) on an unconsolidated basis. We may not be able to maintain such a mix of assets in the future, and attempts to maintain such an asset mix may impair our ability to pursue otherwise attractive investments. In addition, these rules are subject to change and such changes may have an adverse impact on us. We may need to avail ourselves of alternative exclusions and exemptions that may require a change in the organizational structure of our business.

Furthermore, as it relates to our investment in our real estate subsidiary, ACRES RF, we rely on an exclusion from registration as an investment company afforded by Section 3(c)(5)(C) of the Investment Company Act. Given the material size of ACRES RF relative to our 3(a)(1)(C) exclusion, were ACRES RF to be deemed to be an investment company (other than by application of the Section 3(c)(1) exemption for closely held companies and the Section 3(c)(7) exemption for companies owned by "qualified purchasers"), we would not qualify for our 3(a)(1)(C) exclusion. Under the Section 3(c)(5)(C) exclusion, ACRES RF is required to maintain, on the basis of positions taken by the SEC staff in interpretive and no-action letters, a minimum of 55% of the value of the total assets of its portfolio in Qualifying Interests and a minimum of 80% in Qualifying Interests and real estate-related assets, with the remainder permitted to be miscellaneous assets. Because registration as an investment company would significantly affect ACRES RF's ability to engage in certain transactions or to organize itself in the manner it is currently organized, we intend to maintain its qualification for this exclusion from registration.

Historically, we treat our investments in mezzanine loans and our investments in CMBS as Qualifying Interests for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C) to the extent such treatment is consistent with guidance provided by the SEC or its staff. In the absence of specific guidance or guidance that otherwise supports the treatment of these investments as Qualifying Interests, we will treat them, for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C), as real estate-related assets or miscellaneous assets, as appropriate.

If ACRES RF's portfolio does not comply with the requirements of the exclusion we rely upon, it could be forced to alter its portfolio by selling or otherwise disposing of a substantial portion of the assets that are not Qualifying Interests or by acquiring a significant position in assets that are Qualifying Interests. Altering its portfolio in this manner may have an adverse effect on its investments if it is forced to dispose of or acquire assets in an unfavorable market, and may adversely affect our stock price.

If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC that we would be unable to enforce contracts with third parties, that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company, and that we would be subject to limitations on corporate leverage that would have an adverse impact on our investment returns.

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***Rapid changes in the values of our real estate-related investments may make it more difficult for us to maintain our qualification as a REIT or exclusion from regulation under the Investment Company Act.***

If the market value or income potential of our real estate-related investments declines as a result of economic conditions, increased interest rates, prepayment rates or other factors, we may need to increase our real estate-related investments and income and/or liquidate our non-qualifying assets in order to maintain our REIT qualification or exclusion from registration under the Investment Company Act. If the decline in real estate asset values and/or income occurs quickly, this may be especially difficult to accomplish. We may have to make investment decisions that we otherwise would not make absent REIT qualification and Investment Company Act considerations.

**Risks Related to Our REIT Status and Certain Other Tax Items**

***Complying with REIT requirements may cause us to forgo otherwise attractive opportunities.***

To qualify as a REIT for federal income tax purposes, we must continually satisfy various tests regarding the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our common stock. In order to meet these tests, we may be required to forgo investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our investment performance.

In particular, at least 75% of our assets at the end of each calendar quarter must consist of real estate assets, government securities, cash and cash items. For this purpose, "real estate assets" generally include interests in real property, such as land, buildings, leasehold interests in real property, stock of other entities that qualify as REITs, interests in mortgage loans secured by real property, investments in stock or debt investments during the one-year period following the receipt of new capital and regular or residual interests in a real estate mortgage investment conduit ("REMIC"). In addition, the amount of securities of a single issuer, other than a TRS, that we hold must generally not exceed either 5% of the value of our gross assets or 10% of the vote or value of such issuer's outstanding securities.

Certain of the assets that we hold are not qualified and will not be qualified real estate assets for purposes of the REIT asset tests. CMBS securities should generally qualify as real estate assets. However, to the extent that we own non-REMIC collateralized mortgage obligations or other debt investments secured by mortgage loans (rather than by real property) or secured by non-real estate assets, or debt securities that are not secured by mortgages on real property, those securities are likely not qualifying real estate assets for purposes of the REIT asset test, and will not produce qualifying real estate income. Further, whether securities held by warehouse lenders or financed using repurchase agreements are treated as qualifying assets or as generating qualifying real estate income for purposes of the REIT asset and income tests depends on the terms of the warehouse or repurchase financing arrangement.

We generally will be treated as the owner of any assets that collateralize CRE debt securitization transactions to the extent that we retain all of the equity of the securitization vehicle and do not make an election to treat such securitization vehicle as a TRS, as described in further detail below. It may be possible to reduce the impact of the REIT asset and gross income requirements by holding certain assets through our TRSs, subject to certain limitations as described below.

***Our qualification as a REIT and exemption from U.S. federal income tax with respect to certain assets may depend on the accuracy of legal opinions or advice rendered or given or statements by the issuers of securities in which we invest, and the inaccuracy of any such opinions, advice or statements may adversely affect our REIT qualification and result in significant corporate level tax.***

When purchasing securities, we have relied and may rely on opinions or advice of counsel for the issuer of such securities, or statements made in related offering documents, for purposes of determining whether such securities represent debt or equity securities for U.S. federal income tax purposes, and also to what extent those securities constitute REIT real estate assets for purposes of the REIT asset tests and produce income that qualifies under the 75% REIT gross income test. In addition, when purchasing CRE debt securitization equity, we have relied and may rely on opinions or advice of counsel regarding the qualification of interests in the debt of such CRE debt securitizations for U.S. federal income tax purposes. The inaccuracy of any such opinions, advice or statements may adversely affect our REIT qualification and result in significant corporate-level tax.

***We may realize excess inclusion income that would increase our tax liability and that of our stockholders.***

Excess inclusion income could result if we hold a residual interest in a REMIC or if we were to own an interest in a taxable mortgage pool. Excess inclusion income also is generated if we issue debt obligations, such as certain CRE debt securitizations, with two or more maturities and the terms of the payments on these obligations bear a relationship to the payments that we receive on our mortgage related securities securing those debt obligations. While we do not expect to acquire significant amounts of residual interests in REMICs, nor do we currently own residual interests in taxable mortgage pools, we do issue debt in certain CRE debt securitizations that generates excess inclusion income.

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If we realize excess inclusion income and allocate it to stockholders, this income cannot be offset by net operating losses of the stockholders. If the stockholder is a tax-exempt entity, then this income would be fully taxable as unrelated business taxable income under Section 512 of the Code. If the stockholder is a foreign person, it would be subject to federal income tax withholding on this income without reduction or exemption pursuant to any otherwise applicable income tax treaty.

If we realize excess inclusion income, we will be taxed at the highest corporate income tax rate on a portion of such income that is allocable to the percentage of our stock held in record name by "disqualified organizations," which are generally cooperatives, governmental entities and tax-exempt organizations that are exempt from unrelated business taxable income. To the extent that our stock owned by "disqualified organizations" is held in record name by a broker-dealer or other nominee, the broker/dealer or other nominee would be liable for the corporate level tax on the portion of our excess inclusion income allocable to the stock held by the broker-dealer or other nominee on behalf of "disqualified organizations." We expect that disqualified organizations will own our stock. Because this tax would be imposed on us, all of our investors, including investors that are not disqualified organizations, would bear a portion of the tax cost associated with the classification of us or a portion of our assets as a taxable mortgage pool. A regulated investment company or other pass through entity owning stock in record name will be subject to tax at the highest corporate rate on any excess inclusion income allocated to its owners that are disqualified organizations. Finally, if we fail to qualify as a REIT, our taxable mortgage pool securitizations will be treated as separate corporations for federal income tax purposes that cannot be included in any consolidated corporate tax return.

***Failure to qualify as a REIT would subject us to federal income tax, which would reduce the cash available for distribution to our stockholders.***

We believe that we have been organized and operated in a manner that has enabled us to qualify as a REIT for federal income tax purposes commencing with our taxable year ended on December 31, 2005. However, the federal income tax laws governing REITs are extremely complex, and interpretations of the federal income tax laws governing qualification as a REIT are limited. Qualifying as a REIT requires us to meet various tests regarding the nature of our assets and our income, the ownership of our outstanding stock, and the amount of our distributions on an ongoing basis.

If we fail to qualify as a REIT in any calendar year and we do not qualify for certain statutory relief provisions, we will be subject to federal income tax, including any applicable alternative minimum tax on our taxable income, at regular corporate rates. Distributions to stockholders would not be deductible in computing our taxable income. Corporate tax liability would reduce the amount of cash available for distribution to our stockholders. Under some circumstances, we might need to borrow money or sell assets in order to pay that tax. Furthermore, if we fail to maintain our qualification as a REIT and we do not qualify for the statutory relief provisions, we no longer would be required to distribute substantially all of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, to our stockholders. Unless our failure to qualify as a REIT was excused under federal tax laws, we could not re-elect to qualify as a REIT until the fifth calendar year following the year in which we failed to qualify. In addition, if we fail to qualify as a REIT, our taxable mortgage pool securitizations will be treated as separate corporations for U.S. federal income tax purposes.

***A determination that we have not made required distributions would subject us to tax or require us to pay a deficiency dividend; payment of tax would reduce the cash available for distribution to our stockholders.***

In order to qualify as a REIT, in each calendar year we must distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain. To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any calendar year are less than the sum of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 85% of our ordinary income for that year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 95% of our capital gain net income for that year; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 100% our undistributed taxable income from prior years.

We intend to make distributions to our stockholders in a manner intended to satisfy the 90% distribution requirement and to distribute all or substantially all of our net taxable income to avoid both corporate income tax and the 4% nondeductible excise tax. There is no requirement that a domestic TRS distribute its after-tax net income to its parent REIT or their stockholders and our U.S. TRS may determine not to make any distributions to us. However, non-U.S. TRSs will generally be deemed to distribute their earnings to us on an annual basis for federal income tax purposes, regardless of whether such TRSs actually distribute their earnings.

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Our taxable income may substantially exceed our net income as determined by GAAP because, for example, realized capital losses will be deducted in determining our GAAP net income but may not be deductible in computing our taxable income. In addition, we may invest in assets that generate taxable income in excess of economic income or in advance of the corresponding cash flow from the assets, referred to as phantom income. Although some types of phantom income are excluded to the extent they exceed 5% of our REIT taxable income in determining the 90% distribution requirement, we will incur corporate income tax and the 4% nondeductible excise tax with respect to any phantom income items if we do not distribute those items on an annual basis. As a result, we may generate less cash flow than taxable income in a particular year. It is also possible that a loss that we treat as an ordinary loss would be re-characterized as a capital loss. In such event we might have to pay tax for the year in question or pay a deficiency dividend so that we meet the dividends paid requirement for that year. In all such events, we may be required to use cash reserves, incur debt, or liquidate non-cash assets at rates or times that we regard as unfavorable in order to satisfy the distribution requirement and to avoid corporate income tax and the 4% nondeductible excise tax in that year.

***If we make distributions in excess of our current and accumulated earnings and profits, they will be treated as a return of capital, which will reduce the adjusted basis of your stock. To the extent such distributions exceed your adjusted basis, you may recognize a capital gain upon distribution.***

Unless you are a tax-exempt entity, distributions that we make to you generally will be subject to tax as ordinary income to the extent of our current and accumulated earnings and profits as determined for federal income tax purposes. If the amount we distribute to you exceeds your allocable share of our current and accumulated earnings and profits, the excess will be treated as a return of capital to the extent of your adjusted basis in your stock, which will reduce your basis in your stock but will not be subject to tax. To the extent the amount we distribute to you exceeds both your allocable share of our current and accumulated earnings and profits and your adjusted basis, this excess amount will be treated as a gain from the sale or exchange of a capital asset. For risks related to the use of uninvested offering proceeds or borrowings to fund distributions to stockholders, see - "Risks Related to Our Organization and Structure. - We have not established a minimum distribution payment level and we cannot assure you of our ability to make distributions in the future."

***Our ownership of and relationship with our TRS will be limited and a failure to comply with the limits would jeopardize our REIT qualification and may result in the application of a 100% excise tax.***

A REIT may own up to 100% of the securities of one or more TRSs. A TRS may earn types of income or hold assets that would not be qualifying income or assets if earned or held directly by the parent REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 25% of the value of a REIT's assets may consist of stock or securities of one or more TRSs. A TRS will pay federal, state and local income tax at regular corporate rates on any income that it earns, whether or not it distributes that income to us. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's-length basis.

Exantas Real Estate TRS, Inc. ("XAN RE TRS") will pay federal, state and local income tax on its taxable income, and its after-tax net income is available for distribution to us but is not required to be distributed to us. Income that is not distributed to us by XAN RE TRS will not be subject to the REIT 90% distribution requirement and therefore will not be available for distributions to our stockholders. We anticipate that the aggregate value of the securities we hold in our TRS will be less than 25% of the value of our total assets, including our TRS securities. We will monitor the compliance of our investments in TRSs with the rules relating to value of assets and transactions not on an arm's-length basis. We cannot assure you, however, that we will be able to comply with such rules.

***Complying with REIT requirements may limit our ability to hedge effectively.***

The REIT provisions of the Code substantially limit our ability to hedge MBS and related borrowings. Under these provisions, our annual gross income from non-qualifying hedges of our borrowings, together with any other income not generated from qualifying real estate assets, cannot exceed 25% of our gross income. In addition, our aggregate gross income from non-qualifying hedges, fees and certain other non-qualifying sources cannot exceed 5% of our annual gross income determined without regard to income from qualifying hedges. As a result, we might have to limit our use of advantageous hedging techniques or implement those hedges through XAN RE TRS. This could increase the cost of our hedging activities or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear.

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***The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of securitizing mortgage loans that would be treated as sales for federal income tax purposes.***

A REIT's net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, but including mortgage loans, held primarily for sale to customers in the ordinary course of business. We might be subject to this tax if we were able to sell or securitize loans in a manner that was treated as a sale of the loans for federal income tax purposes. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans and may limit the structures we utilize for our securitization transactions even though such sales or structures might otherwise be beneficial to us.

***Legislative, regulatory or administrative changes could adversely affect our stockholders or us.***

Legislative, regulatory or administrative changes could be enacted or promulgated at any time, either prospectively or with retroactive effect, and may adversely affect our stockholders and/or us. The U.S. federal tax rules that affect REITs are under review constantly by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to Treasury regulations and interpretations. Revisions in U.S. federal tax laws and interpretations thereof could cause us to change our investments, commitments and strategies, which could also affect the tax considerations of an investment in our stock.

***Dividends paid by REITs do not qualify for the reduced tax rates provided for under current law.***

Dividends paid by REITs are generally not eligible for the reduced 15% maximum tax rate for dividends paid to individuals (20% for those with taxable income above certain thresholds that are adjusted annually under current law). The more favorable rates applicable to regular corporate dividends could cause stockholders who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends to which more favorable rates apply, which could reduce the value of the stocks of REITs. However, non-corporate taxpayers may deduct up to 20% of certain pass-through business income, including "qualified REIT dividends" (generally, dividends received by a REIT stockholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations. Dividends from REITs as well as regular corporate dividends will also be subject to a 3.8% Medicare surtax for taxpayers with modified adjusted gross income above $200,000 (if single) or $250,000 (if married and filing jointly).

***We may lose our REIT qualification or be subject to a penalty tax if we modify mortgage loans or acquire distressed debt in a way that causes us to fail our REIT gross income or asset tests.***

Many of the terms of our mortgage loans, mezzanine loans and B-notes and the loans supporting our MBS have been modified and may in the future be modified to avoid foreclosure actions and for other reasons. If the terms of the loan are modified in a manner constituting a "significant modification," such modification triggers a deemed exchange for tax purposes of the original loan for the modified loan. Under existing Treasury Regulations, if a loan is secured by real property and other property and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan as of (1) the date we agreed to acquire or originate the loan or (2) in the event of certain significant modifications, the date we modified the loan, then a portion of the interest income from such a loan will not be qualifying income for purposes of the 75% gross income test, but will be qualifying income for purposes of the 95% gross income test. Although the law is not entirely clear, a portion of the loan may not be treated as a qualifying "real estate asset" for purposes of the 75% asset test. The non-qualifying portion of such a loan would be subject to, among other requirements, the 10% value test.

Revenue Procedure 2011-16, as modified and superseded by Revenue Procedure 2014-51, provides a safe harbor pursuant to which we will not be required to redetermine the fair market value of the real property securing a loan for purposes of the REIT gross income and asset tests in connection with a loan modification that is: (1) occasioned by a borrower default; or (2) made at a time when we reasonably believe that the modification to the loan will substantially reduce a significant risk of default on the original loan. We cannot assure you that all of our loan modifications have qualified or will qualify for the safe harbor in Revenue Procedure 2011-16, as modified and superseded by Revenue Procedure 2014-51. To the extent we significantly modify loans in a manner that does not qualify for that safe harbor, we will be required to redetermine the value of the real property securing the loan at the time it was significantly modified. In determining the value of the real property securing such a loan, we may not obtain third-party appraisals, but rather may rely on internal valuations. No assurance can be provided that the IRS will not successfully challenge our internal valuations. If the terms of our mortgage loans, mezzanine loans and B-notes and loans supporting our MBS are significantly modified in a manner that does not qualify for the safe harbor in Revenue Procedure 2011-16, as modified and superseded by Revenue Procedure 2014-51, and the fair market value of the real property securing such loans has decreased significantly, we could fail the 75% gross income test, the 75% asset test and/or the 10% value test. Unless we qualified for relief under certain cure provisions in the Code, such failures could cause us to fail to qualify as a REIT.

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Our subsidiaries and we have invested and may invest in the future in distressed debt, including distressed mortgage loans, mezzanine loans, B-notes and MBS. Revenue Procedure 2011-16, as modified and superseded by Revenue Procedure 2014-51, provides that the IRS will treat a distressed mortgage loan acquired by a REIT that is secured by real property and other property as producing in part non-qualifying income for the 75% gross income test. Specifically, Revenue Procedure 2011-16, as modified and superseded by Revenue Procedure 2014-51, indicates that interest income on a loan will be treated as qualifying income based on the ratio of (1) the fair market value of the real property securing the loan determined as of the date the REIT committed to acquire the loan and (2) the face amount of the loan (and not the purchase price or current value of the loan). The face amount of a distressed mortgage loan and other distressed debt will typically exceed the fair market value of the real property securing the debt on the date the REIT commits to acquire the debt. We believe that we will continue to invest in distressed debt in a manner consistent with complying with the 75% gross income test and maintaining our qualification as a REIT.

***The failure of a loan subject to a repurchase agreement, a mezzanine loan or a preferred equity investment to qualify as a real estate asset would adversely affect our ability to qualify as a REIT.***

We have entered into and we intend to continue to enter into sale and repurchase agreements under which we nominally sell certain of our loan assets to a counterparty and simultaneously enter into an agreement to repurchase the sold assets. We believe that we have been and will be treated for U.S. federal income tax purposes as the owner of the loan assets that are the subject of any such agreement notwithstanding that the agreement may transfer record ownership of the assets to the counterparty during the term of the agreement. It is possible, however, that the IRS could assert that we did not own the loan assets during the term of the sale and repurchase agreement, in which case we could fail to qualify as a REIT.

In addition, we have acquired in the past and may continue to acquire mezzanine loans, which are loans secured by equity interest in a partnership or limited liability company that directly or indirectly owns real property, and preferred equity investments, which are senior equity interests in entities that own or acquire real properties. In Revenue Procedure 2003-65, or the Revenue Procedure, the IRS provided a safe harbor pursuant to which a mezzanine loan, if it meets each of the requirements contained in the Revenue Procedure, will be treated by the IRS as a real estate asset for purposes of the REIT asset tests, and interest derived from the mezzanine loan will be treated as qualifying mortgage interest for purposes of the REIT 75% income test. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law. We have acquired and may continue to acquire mezzanine loans that may not meet all of the requirements for reliance on this safe harbor. In the event we own a mezzanine loan that does not meet the safe harbor, the IRS could challenge the loan's treatment as a real estate asset for purposes of the REIT asset and income tests, and if the challenge were sustained, we could fail to qualify as a REIT.

***Our qualification as a REIT could be jeopardized as a result of an interest in joint ventures.***

We hold and may continue to hold certain limited partner or non-managing member interests in partnerships or limited liability companies that are joint ventures. If a partnership or limited liability company in which we own an interest takes or expects to take actions that could jeopardize our qualification as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail a REIT gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to continue to qualify as a REIT unless we are able to qualify for a statutory REIT "savings" provision, which may require us to pay a significant penalty tax to maintain our REIT qualification.

**ITEM 1B. UNRESOLVED STAFF COMMENTS**

None.

**ITEM 1C. CYBERSECURITY**

**Cybersecurity Risk Management and Strategy**

As an externally managed REIT, our risk management function, including cybersecurity, is governed by the cybersecurity policies and procedures of our Manager, a subsidiary of ACRES Capital Corp. ("ACRES"). As such, our Manager participates in ACRES' processes for assessing, identifying, and managing risks from cybersecurity threats, as detailed below.

ACRES upholds a robust cybersecurity initiative, encompassing policies and protocols aimed at safeguarding its systems, operations, and entrusted data, including ours, from potential threats or risks. ACRES employs a range of protective measures within its cybersecurity framework including physical and digital access controls, identity verification, mobile device management software,

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employee training programs emphasizing cybersecurity awareness and best practices, tools for identifying abnormal activities, and vigilant monitoring of data usage, hardware, and software.

At least annually, ACRES' third-party cybersecurity compliance consultant conducts a cybersecurity risk assessment. We periodically review reporting on these risks and our cybersecurity threats, the status of our security infrastructure, our risk management activities and the status of, and our responses to, any cybersecurity incidents. We also periodically perform simulations and tabletop exercises. All employees are required to complete training that includes various topics on cybersecurity risk management best practices. Additionally, employees are regularly tested with phishing campaigns reinforcing their awareness of email threats.

Cybersecurity threat risks have not materially affected our company, including our business strategy, results of operations or financial condition. For further discussion of the risks we face from cybersecurity threats, including those that could materially affect us, see "Item 1A. Risk Factors—Risks Related to Our Operations—Our business is highly dependent on communications and information systems, and systems failures or cybersecurity incidents could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to operate our business" in this report.

**Cybersecurity Governance**

As described above, ACRES has engaged a third-party IT firm and cybersecurity compliance consultant to whom we have outsourced primary responsibility to oversee, implement and manage our processes and controls to assess, identify, and manage material risks from cybersecurity threats. ACRES management team oversees the work of the third-party IT and cybersecurity compliance consultant and regularly communicates with members of the team. Through the policies and controls described above, including an incident response policy, representatives of the third-party IT firm as well as members of ACRES management team are informed about cybersecurity threats and incidents affecting our information systems and direct our efforts to prevent, detect, mitigate and remediate cybersecurity threats and incidents.

The representatives of our third-party IT firm and cybersecurity compliance consultant who lead our cybersecurity risk management and risk assessment process have experience in managing information systems, developing cybersecurity strategy, implementing information security and cybersecurity programs, identifying and assessing cybersecurity risks and establishing incident response plans.

Our Company's Board and the audit committee are jointly responsible for overseeing our overall risk assessment and risk management program as well as our Manager's policies and practices related to our information technology systems, information security and cybersecurity risks. The Company's Board and the audit committee review at least annually our enterprise risks and related risk management program. In addition, the Company's Board receives periodic reports from our cybersecurity compliance firm on the primary cybersecurity risks that we and our Manager face and the measures we are taking to mitigate such risks. The chair of the audit committee would be notified following any cybersecurity incident meeting specified severity levels, and the Company's Board would also be expected to review the Manager's materiality assessment regarding any cybersecurity incident requiring disclosure to the SEC.

**ITEM 2. PROPERTIES**

We maintain offices in Uniondale, New York; New York City, New York and Philadelphia, Pennsylvania. Our principal office is located in leased space at 390 RXR Plaza, Uniondale, New York 11556. We do not own any material principal real property, other than certain investments in real estate properties.

**ITEM 3. LEGAL PROCEEDINGS**

Refer to "Part II - Item 8. Financial Statements and Supplementary Data – Note 21 - Commitments and Contingencies" for the applicable disclosures.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

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**PART II**

**ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

**Market Information**

Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol "ACR".

We are organized and conduct our operations to qualify as a real estate investment trust ("REIT") which requires that we distribute at least 90% of our REIT taxable income. During the year ended December 31, 2025, all taxable income was distributed to our preferred shareholders, and therefore, no common share distribution was required. Our board of directors, (our "Board"), is responsible for the establishment and evaluation of a plan for the prudent resumption of the payment of common share distributions. No assurance, however, can be given as to the amounts or timing of future distributions as such distributions are subject to our earnings, financial condition, capital requirements and such other factors as our Board deems relevant.

The following table summarizes our current and estimated tax loss carryforwards (dollars in millions):

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Tax Year Recognized** | **REIT (QRS) Tax Loss Carryforwards** | **REIT (QRS) Tax Loss Carryforwards** | **TRS Tax Loss Carryforwards** | **TRS Tax Loss Carryforwards** |
| **Tax Asset Item** |  | **Operating** | **Capital** | **Operating** | **Capital** |
| **Net Operating Loss Carryforwards:** |  |  |  |  |  |
| &nbsp;&nbsp;Cumulative as of 2024 | 2024 Return | $32.1 | $— | $62.0 | $— |
| **Net Capital Loss Carryforwards:** |  |  |  |  |  |
| &nbsp;&nbsp;Cumulative as of 2024 | 2024 Return |  | 115.9 |  | 20.8 |
| **Total tax asset estimates** |  | $32.1 | $115.9 | $62.0 | $20.8 |
| &nbsp;&nbsp;Useful life |  | Unlimited | 5 years | Various | 5 years |

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At December 31, 2025, we had $32.1 million of cumulative NOL to carry forward to future years. NOLs can generally be carried forward to offset both ordinary taxable income and capital gains in future years. The Tax Cuts and Jobs Act ("TCJA") along with revisions made by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act reduced the deduction for NOLs to 80% of taxable income and granted an indefinite carryforward period. Additionally, we have cumulative total net capital losses of $115.9 million, which expired on December 31, 2025, if not utilized on our tax return to be filed in October 2026.

We also have tax assets in our taxable REIT subsidiaries ("TRS"). These tax assets are analyzed and disclosed quarterly in our financial statements. At December 31, 2025, our TRS had $62.0 million of NOLs comprising: $39.8 million of pre-TCJA NOLs, some of which are set to expire beginning in 2044 and $22.2 million of NOLs with an indefinite carryforward period. We also have $20.8 million of CLCFs from prior years, which are set to expire on December 31, 2029.

At March 6, 2026, there were 7,131,101 shares of common stock outstanding held by 180 holders of record. The 180 holders of record include Cede & Co., which holds shares as nominee for The Depository Trust Company, which itself holds shares on behalf of the beneficial owners of our common stock. Such information was obtained through our registrar and transfer agent.

The following table summarizes certain information about our 2005 Stock Incentive Plan, Third Amended and Restated Omnibus Equity Compensation Plan and ACRES Commercial Realty Corp. Manager Incentive Plan at December 31, 2025:

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| | | | |
|:---|:---|:---|:---|
|  | **(a)** | **(b)** | **(c)** |
| **Plan Category** | **Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights** | **Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights** | **Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans Excluding Securities Reflected in Column (a)** |
| Equity compensation approved by security holders: |  |  |  |
| &nbsp;&nbsp;Restricted stock <sup>(1)</sup> | 328586 | N/A |  |
| Equity compensation plans not approved by security holders | N/A | N/A |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 328586 |  | 700822 |

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(1)All restricted stock awards consist of unvested shares.

Our 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock, or Series C Preferred Stock, is listed on the NYSE and trades under the symbol "ACRPrC." We have declared and paid dividends through January 2026. No dividends are currently in arrears on the Series C Preferred Stock.

Our 7.875% Series D Cumulative Redeemable Preferred Stock, or Series D Preferred Stock, is listed on the NYSE and trades under the symbol "ACRPrD." In October 2021, we and our Manager entered into an Equity Distribution Agreement with JonesTrading Institutional Services LLC, as placement agent, pursuant to which we may issue and sell from time to time up to 2.2 million shares of the Series D Preferred Stock. We have declared and paid dividends through January 2026. No dividends are currently in arrears on the Series D Preferred Stock.

**Issuer Purchases of Equity Securities**

In March 2016, our Board approved a securities repurchase program. In November 2020, our Board authorized and approved the continued use of our existing share repurchase program in order to repurchase up to $20.0 million of our outstanding shares of common stock. In July 2021, the authorized amount was fully utilized.

In November 2021, our Board authorized and approved the continued use of our existing share repurchase program to repurchase an additional $20.0 million of our outstanding common stock. From November 2023 through October 2025, our Board authorized and approved the repurchase of an additional $32.5 million of outstanding shares of both common and preferred stock. In December 2025, the authorized amount was fully utilized.

The following table presents information about our common stock repurchases made during the year ended December 31, 2025 in accordance with our repurchase program (dollars in thousands, except per share amounts):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Total Number of Shares Purchased** | **Average Price Paid per Share** <sup>(1)</sup> | **Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs** | **Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs** |
| January 2, 2025 - January 31, 2025 | 44306 | $17.38 | 44306 | $4030 |
| February 3, 2025 - February 28, 2025 | 72858 | 19.31 | 72858 | 2624 |
| March 3, 2025 - March 31, 2025 | 103024 | 21.35 | 103024 | 426 |
| April 1, 2025 - April 30, 2025 | 19622 | 21.70 | 19622 | - |
| May 1, 2025 - May 30, 2025 | 111192 | 18.88 | 111192 | 7903 |
| June 2, 2025 - June 30, 2025 | 140747 | 18.10 | 140747 | 5359 |
| July 1, 2025 - July 31, 2025 | 106874 | 18.10 | 106874 | 3427 |
| August 1, 2025 - August 29, 2025 | 6290 | 20.79 | 6290 | 3296 |
| September 2, 2025 - September 30, 2025 | 39930 | 21.10 | 39930 | 2454 |
| October 1, 2025 - October 31, 2025 | 88359 | 20.23 | 88359 | 8169 |
| November 3, 2025 - November 28, 2025 | 404281 | 20.20 | 404281 | 12 |
| December 1, 2025 - December 31, 2025 | 450 | 23.97 | 450 | - |

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(1)The average price paid per share as reflected above includes broker fees and commissions.

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**Performance Graph**

The following line graph presentation compares cumulative total shareholder returns on our common stock with the Russell 2000 Index and the FTSE NAREIT All REIT Index for the period from December 31, 2020 to December 31, 2025. The graph and table assume that $100 was invested in each of our common stock, the Russell 2000 Index and the FTSE NAREIT All REIT Index on December 31, 2020, and that all dividends were reinvested. This data is furnished by the Research Data Group.

![img249776336_3.jpg](img249776336_3.jpg)

**ITEM 6. [RESERVED]**

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**ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes included in "Item 8. Financial Statements and Supplementary Data" of this annual report on Form 10-K.

We have omitted discussion of the earliest of the three years covered by our consolidated financial statements presented in this report as that disclosure is included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission ("SEC") on March 17, 2025. You are encouraged to reference the discussion and analysis of our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2024 in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" within that report.

**Overview**

We are a Maryland corporation and an externally-managed real estate investment trust ("REIT") that is primarily focused on originating, holding and managing commercial real estate ("CRE") mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. Our manager is ACRES Capital, LLC (our "Manager"), a subsidiary of ACRES Capital Corp. (collectively, "ACRES"), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial properties in top United States ("U.S.") markets. Our Manager draws upon the management team of ACRES and its collective investment experience to provide its services. Our longer-term objective is to provide our stockholders with total returns over time, including quarterly distributions and capital appreciation, while seeking to manage the risks associated with our investment strategies, as well as to maximize long-term stockholder value by maintaining stability through our available liquidity and diversified CRE loan portfolio.

Currently, markets are grappling with trade tensions, geopolitical tensions, the risk of increased tariffs, inflation and labor volatility. These market pressures have caused continued disruption in many market segments, including the financial services, real estate and credit markets and these disruptions have affected the availability and the cost of capital. The increase in the cost of capital is expected to cause dislocations in various investment and financing markets in which we participate as we and other market participants adjust to the new financing environment.

Since September 2024, the U.S. Federal Reserve lowered the Federal Funds rate by 1.75% in six rate cuts reaching its lowest levels since 2022. Lowering rates and decreasing costs may encourage consumer spending and accelerate corporate profit growth, which may positively impact the credit profile of the collateral underlying our loans and positively impact our borrowers' ability to sell or refinance in the current market; however, lower rates would also correlate to decreases in our net income. There is also no certainty with respect to the timing and pace of potential future decreases or if such decreases will continue to occur.

The multifamily real estate market continues to be a competitive market, and as a result of investors' continued confidence in that asset class, the market for those assets continues to experience spread compression on newly originated deals. Furthermore, the office property market continues to experience high vacancies, slower leasing activity and current tenants reevaluating their needs for physical office space due to remote-work trends across the country. These factors, coupled with inflation, higher interest rates and dislocations in market liquidity, have converged to create higher levels of uncertainty surrounding property values, which in turn, also negatively impact borrowers' ability and willingness to financially support and standby their investments in their office properties, their abilities to sell or refinance their positions in the current market and ultimately our financial results.

In response, we continue to manage corporate liquidity actively and responsibly, manage our CRE assets through a solutions-based approach with our borrowers and manage our daily operations in light of changing macroeconomic circumstances. Our Manager also continuously monitors for new capital opportunities and selectively executes on agreements that are expected to enhance our returns.

We originate transitional floating-rate CRE loans with a target size between $10.0 million and $100.0 million. During the year ended December 31, 2025, we originated 14 new CRE floating-rate whole loans, with total commitments of $733.0 million, one new $15.0 million CRE mezzanine loan, one new $9.3 million CRE preferred equity investment and net funded commitments of $3.1 million. Loan payoffs and sales during the year ended December 31, 2025 were $418.9 million, producing a net increase to the portfolio of $341.5 million. During the year ended December 31, 2024, we selectively originated one floating-rate CRE loan, with a total commitment of $47.9 million. Loan payoffs during the year ended December 31, 2024 were $377.6 million, along with loan foreclosures of $37.7 million, partially offset by net funded commitments of $5.9 million, producing a net decrease to the portfolio of $361.5 million.

Our CRE loan portfolio, which had carrying values of $1.8 billion and $1.5 billion at December 31, 2025 and 2024, respectively, comprised:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• First mortgage loans, which we refer to as whole loans. These loans are typically secured by first liens on CRE property, including the following property types: multifamily, student housing, hospitality, office, self-storage, mixed-use and retail. All but three of our CRE whole loans were current on contractual payments at December 31, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Mezzanine debt that is senior to borrower's equity but is subordinated to other third-party debt. These loans are subordinated CRE loans, usually secured by a pledge of the borrower's equity ownership in the entity that owns the property or by a second lien mortgage on the property. At December 31, 2025, no individual mezzanine loans were included in CRE loans held for investment on our consolidated balance sheet. At December 31, 2024, we had one individual mezzanine loan included in CRE loans held for investment on our consolidated balance sheet that had no carrying value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Preferred equity investments that are subordinate to first mortgage loans and mezzanine debt. These investments may be subject to more credit risk than subordinated debt but provide the potential for higher returns upon a liquidation of the underlying property and are typically structured to provide some credit enhancement differentiating it from the common equity in such investments. At December 31, 2025, we had one preferred equity investment included in CRE loans held for investment with a carrying value of $9.2 million. We also hold the first mortgage CRE whole loan on the underlying collateral for this investment. At December 31, 2024, we had no preferred equity investments included in CRE loans held for investment.

We generate our income primarily from the spread between the revenues we receive from our assets and the cost to finance our ownership of those assets, including corporate debt.

While the CRE whole loans included in the CRE loan portfolio are substantially composed of floating-rate loans benchmarked to the one-month Term Secured Overnight Financing Rate ("Term SOFR"), asset yields are protected through the use of benchmark floors and minimum interest periods that typically range from 12 to 18 months at the time of a loan's origination. Our benchmark floors provide asset yield protection when the benchmark rate falls below an in-place benchmark floor. Our net investment returns are enhanced by a decline in the cost of our floating-rate liabilities that do not have benchmark floors. Our net investment returns will be negatively impacted by the rising cost of our floating-rate liabilities that do not have floors until the benchmark rate is above the benchmark floor, at which point our floating-rate loans and floating-rate liabilities will be match-funded, effectively locking in our net interest margin until the benchmark floor rate is activated again or the floating-rate loan is paid off or refinanced.

In a business environment where benchmark rates are increasing significantly, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. In certain cases, the sponsors will need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At December 31, 2025, 76.5% of the par value of our CRE loan portfolio had interest rate caps or funded debt service reserves in place. Our interest rate caps have a weighted-average maturity of 15 months.

At December 31, 2025, our par-value $1.8 billion floating rate CRE loan portfolio had a weighted average benchmark floor of 1.78%. At December 31, 2024, our par-value $1.5 billion floating rate CRE loan portfolio, which included one whole loan without a benchmark floor, had a weighted average benchmark floor of 0.97%. With the current trend of decreasing benchmark rates, we have seen the coupons on all of our floating-rate assets and debt decrease accordingly. Because we have equity invested in each floating-rate loan, and because in all instances the benchmark interest rates are above our loan floors, the decrease in interest rates resulted in a decrease in our net interest income. See "Interest Rate Risk" in "Item 7A: Quantitative and Qualitative Disclosures About Market Risk."

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Our portfolio comprises loans with a diverse array of collateral types and locations. Multifamily continues to comprise the majority of our portfolio, with 81.9% of our portfolio allocated to multifamily at December 31, 2025 and 77.4% at December 31, 2024. The following charts show our portfolio allocation at carrying value by property type at December 31, 2025 and 2024:

![img249776336_4.gif](img249776336_4.gif)

![img249776336_5.gif](img249776336_5.gif)

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Our properties are located throughout the U.S., with two and one National Council of Real Estate Investment Fiduciaries ("NCREIF") regions, the Southwest and Southeast at December 31, 2025 and Southwest at December 31, 2024, in excess of 20% of the total portfolio carrying value. The following charts shows our portfolio allocation by property type at December 31, 2025 and 2024:

![img249776336_6.jpg](img249776336_6.jpg)

![img249776336_7.gif](img249776336_7.gif)

From time to time, we may acquire real estate property through direct equity investments or as a result of our lending activities. During the year ended December 31, 2025, we acquired one property via foreclosure valued at $75.8 million that was contributed to a joint venture with an unrelated third-party. During the year ended December 31, 2024, we acquired one property via deed-in-lieu of foreclosure and one property via foreclosure, valued at $20.3 million and $30.9 million, respectively, each of which was immediately contributed to joint ventures with unrelated third-parties. Each of these investments is reported as investments in an unconsolidated entity on our consolidated balance sheet at December 31, 2025.

Additionally, we acquired two properties via foreclosure during the year ended December 31, 2024 that are held as investments in real estate. These properties had values of $17.5 million and $9.4 million, at the time of foreclosure. In December 2024, we sold an office property located in the Northeast region for $20.0 million and generated a net gain on the sale of $7.5 million. During the year

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ended December 31, 2025, we sold two properties consisting of one student housing project in the Southeast region for $106.8 million that generated a net gain of $13.1 million and an office complex located in the Southwest region for $16.5 million that generated a net loss of $1.5 million.

At December 31, 2025, the net carrying value of our net real estate-related assets and liabilities was $123.8 million on six properties owned, three of which are included in investments in real estate and three of which are included in properties held for sale on our consolidated balance sheets.

We use leverage to enhance our returns. The cost of borrowings to finance our investments is a significant part of our expenses. Our net interest income depends on our ability to control these expenses relative to our revenue. Our CRE loans may initially be financed with term facilities, such as CRE loan warehouse financing facilities, in anticipation of their ultimate securitization. We ultimately seek to finance our CRE loans through the use of non-recourse long-term, match-funded CRE debt securitizations.

At December 31, 2025 and 2024, our financing arrangements were as follows (dollars in thousands):

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| | | |
|:---|:---|:---|
|  | **Outstanding Borrowings** | **Percentage of Borrowings** |
| **At December 31, 2025:** |  |  |
| &nbsp;&nbsp;CRE - term reinvestment financing facility <sup>(1)(2)</sup> | $728167 | 47.1% |
| &nbsp;&nbsp;CRE - term warehouse financing facilities<sup>(1)</sup> | 533862 | 34.6% |
| &nbsp;&nbsp;Senior secured financing facility<sup>(1)</sup> | 61645 | 4.0% |
| &nbsp;&nbsp;Mortgage payable<sup>(1)</sup> | 20185 | 1.3% |
| &nbsp;&nbsp;5.75% Senior Unsecured Notes | 149531 | 9.7% |
| &nbsp;&nbsp;Unsecured junior subordinated debentures | 51548 | 3.3% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1544938 | 100.0% |
|  | **Outstanding Borrowings** | **Percentage of Borrowings** |
| **At December 31, 2024:** |  |  |
| &nbsp;&nbsp;CRE debt securitizations<sup>(1)(3)</sup> | $862804 | 63.4% |
| &nbsp;&nbsp;CRE - term warehouse financing facilities<sup>(1)</sup> | 156739 | 11.6% |
| &nbsp;&nbsp;Senior secured financing facility<sup>(1)</sup> | 60910 | 4.5% |
| &nbsp;&nbsp;Mortgages payable<sup>(1)</sup> | 79556 | 5.8% |
| &nbsp;&nbsp;5.75% Senior Unsecured Notes | 148814 | 10.9% |
| &nbsp;&nbsp;Unsecured junior subordinated debentures | 51548 | 3.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1360371 | 100.0% |

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(1)Represents an asset-specific borrowing.

(2)Our CRE - term reinvestment financing facility provides for a two-year reinvestment period that allows us to reinvest CRE loan payoffs and principal paydown proceeds into the reinvestment facility and pending certain eligibility criteria are met.

(3)In March 2025, we exercised the optional redemption on ACR 2021-FL1 and ACR 2021-FL2 in conjunction with the closing of the CRE term reinvestment facility.

We reevaluate our current expected credit losses ("CECL") allowance quarterly, incorporating our current expectations of macroeconomic factors considered in the determination of our CECL reserves. At December 31, 2025, the CECL allowance on our CRE loan portfolio was $20.4 million, or 1.1% of our $1.8 billion loan portfolio. During the year ended December 31, 2025, we recorded a reversal of credit losses primarily driven by net improvements in the modeled credit risk of our loan portfolio as well as loan payoffs. These reversals were offset by a general decline in projected macroeconomic factors. We also recorded a charge-off of $4.7 million for one mezzanine loan that was fully reserved for in 2022.

At December 31, 2024, the CECL allowance on our CRE loan portfolio was $32.8 million, or 2.2% of our $1.5 billion loan portfolio. During the year ended December 31, 2024, we recorded a net provision for credit losses primarily driven by a general worsening of macroeconomic factors over the year as well as an increase in modeled credit risk in our portfolio offset by loan payoffs. We also recorded a charge-off of $700,000 for one CRE whole loan held for sale.

Additionally, the decline in our CECL reserves from our highest reserve balance at June 30, 2020 of $61.1 million, or 3.4% of the par balance of our CRE loan portfolio, to our current reserve balance at December 31, 2025 of $20.4 million, or 1.1% of the par balance of our CRE loan portfolio, has been due to the following: the successful resolution of our individually evaluated loans with specific reserves, the overall newer vintage of our CRE loan portfolio (with only 4.1% of the portfolio, at December 31, 2025, being originated prior to the fourth quarter of 2020) as well as the increased percentage allocation of our CRE loan portfolio to multifamily

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loans over time. Multifamily loans have historically had the lowest credit losses of any asset class, and our percentage allocation of our CRE loan portfolio to multifamily at carrying value has grown from 58.4% at June 30, 2020 to 81.9% at December 31, 2025.

Common stock book value was $30.01 per share at December 31, 2025, an increase of $1.14 per share or 4% from December 31, 2024.

**Results of Operations**

Our net income allocable to common shares for the year ended December 31, 2025 was $239,000, or $0.03 per share-basic ($0.03 per share-diluted), as compared to net income allocable to common shares of $9.1 million, or $1.19 per share-basic ($1.15 per share-diluted), for the year ended December 31, 2024.

***Net Interest Income***

The following table analyzes the change in interest income and interest expense for the comparative years ended December 31, 2025 and 2024 by changes in volume and changes in rates. The changes attributable to the combined changes in volume and rate have been allocated proportionately, based on absolute values, to the changes due to volume and changes due to rates (dollars in thousands, except amounts in footnotes):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025 Compared to Year Ended December 31, 2024** | **Year Ended December 31, 2025 Compared to Year Ended December 31, 2024** | **Year Ended December 31, 2025 Compared to Year Ended December 31, 2024** | **Year Ended December 31, 2025 Compared to Year Ended December 31, 2024** |
|  |  |  | **Due to Changes in** | **Due to Changes in** |
|  | **Net Change** | **Percent Change** <sup>(1)</sup> | **Volume** | **Rate** |
| **(Decrease) increase in interest income:** |  |  |  |  |
| &nbsp;&nbsp;CRE whole loans <sup>(2)</sup> | $(38665) | (25)% | $(22297) | $(16368) |
| &nbsp;&nbsp;CRE mezzanine loans | 1679 | 100% | 1679 |  |
| &nbsp;&nbsp;CRE preferred equity loan | 249 | 100% | 249 |  |
| &nbsp;&nbsp;Other | (1376) | (57)% | (935) | (441) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total decrease in interest income | (38113) | (24)% | (21304) | (16809) |
| **(Decrease) increase in interest expense:** |  |  |  |  |
| &nbsp;&nbsp;Securitized borrowings: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;ACR 2021-FL1 Senior Notes | (36206) | (85)% | (35058) | (1148) |
| &nbsp;&nbsp;&nbsp;&nbsp;ACR 2021-FL2 Senior Notes | (29845) | (82)% | (28919) | (926) |
| Senior secured financing facility | (651) | (10)% | (56) | (595) |
| CRE - term warehouse financing facilities | (3908) | (27)% | (357) | (3551) |
| CRE - term reinvestment financing facility | 40907 | 100% | 40907 |  |
| 5.75% Senior Unsecured Notes <sup>(3)</sup> | 43 | —% | 43 |  |
| Unsecured junior subordinated debentures | (499) | (10)% |  | (499) |
| Hedging | 3 | —% |  | 3 |
| Other | 6 | 100% | 6 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total decrease in interest expense | (30150) | (26)% | (23434) | (6716) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net (decrease) increase in net interest income | $(7963) |  | $2130 | $(10093) |

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(1)Percent change is calculated as the net change divided by the respective interest income or interest expense for the year ended December 31, 2024.

(2)Includes a decrease in fee income of $2.4 million recognized on our CRE whole loans that was due to changes in volume.

(3)Net change pertains to amortization expense and is reflected in the change in volume.

*Net Change in Interest Income for the Comparative Years Ended December 31, 2025 and 2024:*

Aggregate interest income decreased by $38.1 million for the comparative years ended December 31, 2025 and 2024. We attribute the change to the following:

*CRE whole loans.* The decrease of $38.7 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to a decrease in (i) the daily average par value of our CRE portfolio resulting from loan payoffs and foreclosures and (ii) the benchmark rate over the comparative periods.

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*CRE mezzanine loans.* The increase of $1.7 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to the origination of a mezzanine loan in March 2025.

*CRE preferred equity loan.* The increase of $249,000 for the comparative years ended December 31, 2025 and 2024 was primarily attributable to the origination of a preferred equity loan in September 2025.

*Other.* The decrease of $1.4 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to a decrease in (i) restricted cash in our CRE securitizations and (ii) yields on our interest earning money market accounts.

*Net Change in Interest Expense for the Comparative Years Ended December 31, 2025 and 2024:*

Aggregate interest expense decreased by $30.2 million for the comparative years ended December 31, 2025 and 2024. We attribute the change to the following:

*Securitized borrowings.* The net decrease of $66.1 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to the redemptions of our ACR 2021-FL1 and ACR 2021-FL2 securitizations and a decrease in the benchmark rate over the comparative periods.

*Senior secured financing facility*. The decrease of $651,000 for the comparative years ended December 31, 2025 and 2024 was primarily attributable to a decrease in the benchmark rate over the comparative periods.

*CRE - term warehouse financing facilities.* The decrease of $3.9 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to a decrease in the benchmark rate over the comparative periods and paydowns on our borrowings.

*CRE - term reinvestment financing facility.* The increase of $40.9 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to the formation of our new CRE term reinvestment financing facility.

*Unsecured junior subordinated debentures.* The decrease of $499,000 for the comparative years ended December 31, 2025 and 2024 was attributable to a decrease in benchmark rates over the comparative periods.

*Average Net Yield and Average Cost of Funds:*

The following table presents the average net yield and average cost of funds for the years ended December 31, 2025 and 2024 (dollars in thousands, except amounts in footnotes):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
|  | **Average Amortized Cost** | **Interest Income (Expense)** | **Average Net Yield (Cost of Funds)** <sup>(1)</sup> | **Average Amortized Cost** | **Interest Income (Expense)** | **Average Net Yield (Cost of Funds)** <sup>(1)</sup> |
| **Interest-earning assets** |  |  |  |  |  |  |
| &nbsp;&nbsp;CRE whole loans, floating-rate <sup>(2)</sup> | $1514177 | $116198 | 7.67% | $1674824 | $154862 | 9.22% |
| &nbsp;&nbsp;CRE mezzanine loans | 12573 | 1678 | 13.17% | 4700 |  | —% |
| &nbsp;&nbsp;CRE preferred equity loan | 2356 | 249 | 10.58% |  |  | —% |
| &nbsp;&nbsp;Other | 33942 | 1024 | 3.02% | 60760 | 2400 | 3.94% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest income/average net yield | 1563048 | 119149 | 7.62% | 1740284 | 157262 | 9.01% |
| **Interest-bearing liabilities** |  |  |  |  |  |  |
| &nbsp;&nbsp;Collateralized by: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;CRE whole loans <sup>(3)</sup> | 1042208 | (70580) | (6.77)% | 1291633 | (100283) | (7.74)% |
| &nbsp;&nbsp;General corporate debt: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;5.75% Senior Unsecured Notes <sup>(4)</sup> | 149171 | (9342) | (6.26)% | 148475 | (9299) | (6.25)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured junior subordinated debentures | 51548 | (4414) | (8.45)% | 51548 | (4913) | (9.37)% |
| &nbsp;&nbsp;Hedging <sup>(5)</sup> |  | (1600) | —% |  | (1597) | —% |
| &nbsp;&nbsp;Other |  | (6) | —% |  |  | —% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense/average cost of funds | 1242927 | (85942) | (6.78)% | 1491656 | (116092) | (7.65)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total net interest income |  | $33207 |  |  | $41170 |  |

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(1)Average net yield includes net amortization/accretion and fee income and is computed based on average amortized cost.

(2)Includes fee income of $4.2 million and $6.6 million recognized on our floating-rate CRE whole loans for the years ended December 31, 2025 and 2024, respectively.

(3)Includes amortization expense of $4.8 million and $5.3 million for the years ended December 31, 2025 and 2024, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.

(4)Includes amortization expense of $717,000 and $674,000 for the years ended December 31, 2025 and 2024, respectively.

(5)Includes net amortization expense of $1.6 million for each of the years ended December 31, 2025 and 2024 on 20 terminated interest rate swap agreements that were in net loss positions at the time of termination. The remaining net losses, reported in accumulated other comprehensive loss on the consolidated balance sheets, will be accreted over the remaining life of the debt.

***Real Estate Income and Other Revenue***

The following table sets forth information relating to our real estate income and other revenue for the comparative years ended December 31, 2025 and 2024 (dollars in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** |  |  |
|  | **2025** | **2024** | **Dollar Change** | **Percent Change** |
| **Real estate income and other revenue:** |  |  |  |  |
| &nbsp;&nbsp;Real estate income | $46606 | $42170 | $4436 | 11% |
| &nbsp;&nbsp;Other revenue | 133 | 148 | (15) | (10)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $46739 | $42318 | $4421 | 10% |

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Aggregate real estate income and other revenue increased by $4.4 million for the comparative years ended December 31, 2025 and 2024. The increase year over year is attributed to: (i) incremental increase in revenues from the asset acquisitions in the third quarter of 2024 of a multifamily property and an office property through foreclosures, (ii) increased revenues from a hotel property that had increased average daily rates for the comparative periods and (iii) an increase in revenue related to a student housing property that completed construction and became operational in August 2024. This was partially offset by a decrease in revenues from a hotel property that had decreased average daily rates for the comparative periods.

***Operating Expenses***

*Year Ended December 31, 2025 as compared to the Year Ended December 31, 2024*

The following table sets forth information relating to our operating expenses for the years presented (dollars in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** |  |  |
|  | **2025** | **2024** | **Dollar Change** | **Percent Change** |
| **Operating expenses:** |  |  |  |  |
| &nbsp;&nbsp;General and administrative | $11304 | $10691 | $613 | 6% |
| &nbsp;&nbsp;Real estate expenses | 51325 | 46896 | 4429 | 9% |
| &nbsp;&nbsp;Management fees - related party | 6411 | 6498 | (87) | (1)% |
| &nbsp;&nbsp;Equity compensation - related party | 2147 | 2957 | (810) | (27)% |
| &nbsp;&nbsp;Corporate depreciation and amortization | 78 | 57 | 21 | 37% |
| &nbsp;&nbsp;(Reversal of) provision for credit losses, net | (7749) | 4790 | (12539) | (262)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $63516 | $71889 | $(8373) | (12)% |

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Aggregate operating expenses decreased by $8.4 million for the comparative years ended December 31, 2025 and 2024. We attribute the changes to the following:

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*General and administrative.* General and administrative expenses increased by $613,000 for the comparative years ended December 31, 2025 and 2024. The following table summarizes the information relating to our general and administrative expenses for the years presented (dollars in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** |  |  |
|  | **2025** | **2024** | **Dollar Change** | **Percent Change** |
| **General and administrative** |  |  |  |  |
| &nbsp;&nbsp;Professional services | $5882 | $5572 | $310 | 6% |
| &nbsp;&nbsp;Wages and benefits | 1383 | 1341 | 42 | 3% |
| &nbsp;&nbsp;D&O insurance | 983 | 992 | (9) | (1)% |
| &nbsp;&nbsp;Operating expenses | 1305 | 919 | 386 | 42% |
| &nbsp;&nbsp;Dues and subscriptions | 740 | 832 | (92) | (11)% |
| &nbsp;&nbsp;Director fees | 815 | 863 | (48) | (6)% |
| &nbsp;&nbsp;Tax penalties, interest & franchise tax | 84 | 94 | (10) | (11)% |
| &nbsp;&nbsp;Travel | 112 | 78 | 34 | 44% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $11304 | $10691 | $613 | 6% |

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The increase in general and administrative expense for the comparative years ended December 31, 2025 and 2024 was primarily attributable to (i) increased professional services related to construction consulting fees paid to third parties and legal expenses related to an amendment to our term reinvestment financing facility, partially offset by a decline in trustee fees related to our securitizations and (ii) an increase in operating expenses related to new office space, partially offset by a decrease in dues and subscriptions related to a decrease in total costs relating to ratings fees.

*Real estate expenses.* The increase of $4.4 million for the comparative years ended December 31, 2025 and 2024 was primarily related to (i) an increase in expenses related to a student housing property that completed construction and became operational in August 2024, (ii) asset acquisitions in the third quarter of 2024 of a multifamily property and an office property each through deed-in-lieu of foreclosure and (iii) an increase in expenses at a hotel property that had an incremental increase in operating expenses. This was partially offset by (i) a sale of an office property in December 2024 that had no operations in 2025 and (ii) an incremental decrease in operating expenses related to a hotel property with lower occupancy.

*Equity compensation - related party.* The decrease of $810,000 for the comparative years ended December 31, 2025 and 2024 was primarily related to the vesting of restricted shares, which decreased the monthly equity compensation expense.

*(Reversal of) provision for credit losses, net.* The decrease of $12.5 million for the comparative years ended December 31, 2025 and 2024 was primarily driven by net improvements in the modeled credit risk of our CRE loan portfolio as well as payoffs, offset by a general decline in projected macroeconomic factors during the periods. We also recorded a $4.7 million charge-off as of December 31, 2025. Please refer to the "Financing Receivables" section for more information on our provision for credit losses.

***Other Income (Expense)***

*Year Ended December 31, 2025 as compared to Year Ended December 31, 2024*

The following table sets forth information relating to our other income (expense) incurred for the years presented (dollars in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** |  |  |
|  | **2025** | **2024** | **Dollar Change** | **Percent Change** |
| **Other income (expense):** |  |  |  |  |
| &nbsp;&nbsp;Equity in losses of unconsolidated subsidiaries | $(1727) | $(912) | $(815) | 89% |
| &nbsp;&nbsp;Gain on conversion of real estate |  | 8637 | (8637) | (100)% |
| &nbsp;&nbsp;Gain on sale of investment in real estate | 11674 | 7506 | 4168 | 56% |
| &nbsp;&nbsp;Other income | 1516 | 1991 | (475) | (24)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $11463 | $17222 | $(5759) | (33)% |

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Aggregate other income (expense) decreased $5.8 million for the comparative years ended December 31, 2025 and 2024. We attribute the change to the following:

*Equity in losses of unconsolidated subsidiaries.* The decrease of $815,000 for the comparative years ended December 31, 2025 and 2024 was primarily related to two unconsolidated entity formations after June 30, 2024, and an additional unconsolidated entity formation in March 2025. These unconsolidated entities had losses for the year ended December 31, 2025.

*Gain on conversion of real estate.* The decrease of $8.6 million for the comparative years ended December 31, 2025 and 2024 was primarily attributed to the completion of two foreclosures that generated non-recurring unrealized gains of $5.8 million, in the first quarter of 2024, and $2.8 million, in the third quarter of 2024, as the fair value of both properties exceeded the amortized cost basis of the loans at the time of foreclosure. There were no gains on conversion of real estate during the year ended December 31, 2025.

*Gain on sale of real estate*. The increase of $4.2 million for the comparative years ended December 31, 2025 and 2024 was primarily attributed to the sale of a property generating a one time gain of $13.1 million which was offset by a one time loss of $1.5 million on a sale of a property in December 2025, compared to the sale of an office property in the Northeast region during the year ended December 31, 2024 that generated a non-recurring gain of $7.5 million.

*Other Income.* The decrease of $475,000 during the comparative years ended December 31, 2025 and 2024 is primarily attributed to the reversal of a representations and warranty reserve related to a discontinued residential lending business that occurred in 2024.

**Financial Condition**

***Summary***

Our total assets were $2.2 billion at December 31, 2025 as compared to $1.9 billion at December 31, 2024.

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***Investment Portfolio***

The tables below summarize the amortized cost and net carrying amount of our investment portfolio, classified by asset type, at December 31, 2025 and 2024 as follows (dollars in thousands, except amounts in footnotes):

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| | | | | |
|:---|:---|:---|:---|:---|
| **At December 31, 2025** | **Amortized Cost** | **Net Carrying Amount** <sup>(1)</sup> | **Percent of Portfolio** | **Weighted Average Coupon** |
| **Loans held for investment:** |  |  |  |  |
| &nbsp;&nbsp;CRE whole loans | $1820942 | $1800784 | 91.74% | 7.32% |
| &nbsp;&nbsp;CRE preferred equity investment | 9425 | 9185 | 0.47% | 10.00% |
|  | 1830367 | 1809969 | 92.21% |  |
| **Other investments:** |  |  |  |  |
| &nbsp;&nbsp;Investments in unconsolidated entities | 29237 | 29237 | 1.49% | N/A<sup>(5)</sup> |
| &nbsp;&nbsp;Investments in real estate<sup>(2)</sup> | 56277 | 56277 | 2.86% | N/A<sup>(5)</sup> |
| &nbsp;&nbsp;Properties held for sale<sup>(3)</sup> | 67509 | 67509 | 3.44% | N/A<sup>(5)</sup> |
|  | 153023 | 153023 | 7.79% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total investment portfolio** | $1983390 | $1962992 | 100.00% |  |
| **At December 31, 2024** | **Amortized Cost** | **Net Carrying Amount** <sup>(1)</sup> | **Percent of Portfolio** | **Weighted Average Coupon** |
| **Loans held for investment:** |  |  |  |  |
| &nbsp;&nbsp;CRE whole loans | $1482692 | $1454545 | 87.41% | 8.31% |
| &nbsp;&nbsp;CRE mezzanine loans<sup>(4)</sup> | 4700 |  | 0.00% | 10.00% |
|  | 1487392 | 1454545 | 87.41% |  |
| **Loans held for sale:** |  |  |  |  |
| &nbsp;&nbsp;CRE whole loan | 11100 | 11100 | 0.67% | 13.14% |
|  | 11100 | 11100 | 0.67% |  |
| **Other investments:** |  |  |  |  |
| &nbsp;&nbsp;Investments in unconsolidated entities | 21857 | 21857 | 1.31% | N/A<sup>(5)</sup> |
| &nbsp;&nbsp;Investments in real estate<sup>(2)</sup> | 58283 | 58283 | 3.50% | N/A<sup>(5)</sup> |
| &nbsp;&nbsp;Properties held for sale<sup>(3)</sup> | 118344 | 118344 | 7.11% | N/A<sup>(5)</sup> |
|  | 198484 | 198484 | 11.92% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total investment portfolio** | $1696976 | $1664129 | 100.00% |  |

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(1)Net carrying amount includes an allowance for credit losses of $20.4 million and $32.8 million at December 31, 2025 and 2024, respectively.

(2)Includes real estate related right of use assets of $19.0 million and $19.3 million, intangible assets of $6.2 million and $7.0 million and lease liabilities of $45.3 million and $44.6 million at December 31, 2025 and 2024, respectively. Also includes other liabilities of $12,000 at December 31, 2024.

(3)Includes properties held for sale-related liabilities of $3.1 million and $3.2 million at December 31, 2025 and 2024, respectively. Additionally, includes real estate related right of use assets of $5.4 million, intangible assets of $2.7 million, and mortgages payable of $20.2 million and $79.6 million at December 31, 2025 and 2024, respectively.

(4)Includes one mezzanine loan with a coupon rate of 10% that is non-accrual at December 31, 2024.

(5)There are no stated rates associated with these investments.

*CRE loans.* During the year ended December 31, 2025, we originated 14 CRE floating-rate whole loans, with total commitments of $733.0 million, one $15.0 CRE mezzanine loan, one new $9.3 million CRE preferred equity investment and net funded commitments of $3.1 million. We received $418.9 million in proceeds from loan payoffs and sales, producing a net increase of $336.8 million in the par balance of the portfolio.

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The following is a summary of our loans (dollars in thousands, except amounts in footnotes):

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Description** | **Quantity** | **Principal** | **Unamortized (Discount) Premium, net** <sup>(1)</sup> | **Amortized Cost** | **Allowance for Credit Losses** | **Carrying Value** | **Contractual Interest Rates** <sup>(2)</sup> | **Maturity Dates** <sup>(3)(4)</sup> |
| **At December 31, 2025:** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Whole loans <sup>(5)(6)(7)</sup> | 53 | $1828299 | $(7357) | $1820942 | $(20158) | $1800784 | 1M Term SOFR + 2.50% to 1M Term SOFR + 7.00% | January 2026 to May 2030 |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred equity investment (see Note 3) <sup>(8)</sup> |  | 9511 | (86) | 9425 | (240) | 9185 | 10.00% | October 2028 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total |  | $1837810 | $(7443) | $1830367 | $(20398) | $1809969 |  |  |
| **At December 31, 2024:** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Whole loans <sup>(5)(6)(7)</sup> | 52 | $1484997 | $(2305) | $1482692 | $(28147) | $1454545 | 1M Term SOFR + 2.50% to 1M Term SOFR + 7.00% | January 2025 to January 2030 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mezzanine loan <sup>(5)</sup> | 1 | 4700 |  | 4700 | (4700) |  | 10.00% | June 2028 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total |  | $1489697 | $(2305) | $1487392 | $(32847) | $1454545 |  |  |

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(1)Amounts include unamortized loan origination fees of $6.6 million and $1.3 million and deferred amendment fees of $852,000 and $985,000 at December 31, 2025 and 2024, respectively.

(2)References to ("1M Term SOFR") are one-month Term SOFR. Weighted-average one-month benchmark rates were 3.83% and 4.58% at December 31, 2025 and 2024, respectively. Additionally, weighted-average benchmark rate floors were 1.78% and 0.97% at December 31, 2025 and 2024, respectively.

(3)Maturity dates exclude contractual extension options, subject to the satisfaction of certain terms that may be available to the borrowers.

(4)Maturity dates exclude two and one whole loans, with amortized costs of $37.9 million and $5.6 million, in maturity default at December 31, 2025 and 2024, respectively.

(5)Substantially all loans are pledged as collateral under various borrowings at December 31, 2025 and 2024.

(6)CRE whole loans had $88.6 million and $94.0 million in unfunded loan commitments at December 31, 2025 and 2024, respectively. These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreement, and any necessary approvals have been obtained.

(7)Includes four mezzanine loans of $17.8 million, at amortized cost, with three having fixed interest rates of 15.0% and one having a fixed interest rate of 20.0% at December 31, 2025. Includes two mezzanine loans of $3.5 million, at amortized cost, that have fixed interest rates of 15.0% at December 31, 2024. Because we are also the first mortgage lender on these loans, we consider the first mortgage and mezzanine loans together as one whole loan.

(8)We had one preferred equity investment associated with a CRE whole loan at December 31, 2025. We had no preferred equity investments associated with CRE whole loans at December 31, 2024. Our preferred equity investment has a fixed interest rate of 10%, of which 4.0% interest is deferred until maturity.

At December 31, 2025, 24.2%, 20.6% and 14.0% of our CRE loan portfolio based on carrying value was concentrated in the Southwest, Southeast and Pacific regions, respectively, as defined by NCREIF. At December 31, 2024, 25.0%, 19.2% and 16.5% of our CRE loan portfolio based on carrying value was concentrated in the Southwest, Mountain and Southeast regions, respectively. At December 31, 2025 and 2024, no single loan or investment represented more than 10% of our total assets. For the year ended December 31, 2025, one investment group generated 14.0% of our revenue, while for the year ended December 31, 2024, no single investment group generated over 10% of our total revenue.

*Investments in unconsolidated entities.* Our investments in unconsolidated entities at December 31, 2025 comprised a 100% interest in the common shares of Resource Capital Trust I ("RCT I") and RCC Trust II ("RCT II"), with a carrying value of $1.5 million in the aggregate, or 3.0% of each trust, our investment in 65 E. Wacker Joint Venture, LLC (the "Wacker JV"), representing a 90% interest in a joint venture formed for the purpose of converting an office property in the East North Central region to multifamily units with a carrying value of $27.7 million, our investment in 7720 McCallum JV, LLC (the "McCallum JV"), representing a 50% interest in a joint venture for a multifamily unit property in the Southwest region with no carrying value, and our investment in Pacmulti Affiliates, LLC (the "Pacmulti JV"), representing a 50% interest in a joint venture for a multifamily unit property in the Mid-Atlantic region with no carrying value. Our investments in unconsolidated entities at December 31, 2024 comprised our investments in RCT I and RCT II, Wacker JV and the McCallum JV.

We record our investments in RCT I's and RCT II's common shares as investments in unconsolidated entities using the cost method. We record our investment in the Wacker JV, the McCallum JV and the Pacmulti JV as equity method investments.

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*Investments in real estate and properties held for sale.* At December 31, 2025, we held investments in six real estate properties, three of which are included in investments in real estate and three of which are included in properties held for sale on the consolidated balance sheets.

During the year ended December 31, 2025, we sold our interest in a student housing project for $106.8 million and generated a one-time gain on the sale of real estate for $13.1 million. Additionally, we sold an office complex for $16.5 million and generated a one time loss on the sale of real estate for $1.5 million.

The following table summarizes the book value of our investments in real estate and related intangible assets at December 31, 2025 (in thousands, except amounts in the footnotes):

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | **Cost Basis** | **Accumulated Depreciation & Amortization** | **Carrying Value** |
| **Assets acquired:** |  |  |  |
| &nbsp;&nbsp;***Investments in real estate, equity:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate <sup>(1)</sup> | $74468 | $(7797) | $66671 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets <sup>(2)(3)</sup> | 19665 | (1024) | 18641 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets <sup>(4)</sup> | 9469 | (3342) | 6127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 103602 | (12163) | 91439 |
| &nbsp;&nbsp;***Investments in real estate from lending activities:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate <sup>(1)</sup> | $10025 | $(281) | $9744 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets <sup>(2)(3)</sup> | 399 | (63) | 336 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets <sup>(4)</sup> | 364 | (270) | 94 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 10788 | (614) | 10174 |
| &nbsp;&nbsp;&nbsp;&nbsp;Properties held for sale <sup>(5)</sup> | 90825 |  | 90825 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 205215 | (12777) | 192438 |
| **Liabilities assumed:** |  |  |  |
| &nbsp;&nbsp;***Investments in real estate, equity:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage payables | 19565 | 620 | 20185 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities <sup>(3)(6)</sup> | 44958 |  | 44958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 64523 | 620 | 65143 |
| &nbsp;&nbsp;***Investments in real estate from lending activities:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 41 | (41) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities <sup>(3)(6)</sup> | 378 |  | 378 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 419 | (41) | 378 |
| &nbsp;&nbsp;&nbsp;&nbsp;Liabilities held for sale <sup>(7)</sup> | 3131 |  | 3131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 68073 | 579 | 68652 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total net investments in real estate and properties held for sale <sup>(8)</sup> | $137142 |  | $123786 |

---

(1)Investments in real estate includes $15.2 million of land, which is not depreciable. Also includes $3.7 million of construction in progress, which is also not depreciable until placed in service.

(2)Primarily comprised of an $18.4 million right of use asset, associated with the ground lease disclosed in footnote (6) below accounted for as an operating lease. Amortization is booked to real estate expenses on the consolidated statements of operations. Additionally we have an operating lease with a value of $322,000 at December 31, 2025 associated with a parking lease.

(3)Refer to Note 9 in the Notes to the Consolidated Financial Statements for additional information on our remaining operating leases.

(4)Primarily comprised of a franchise intangible of $3.5 million, a management contract intangible of $2.6 million, in-place lease intangible of $7,000 and a customer list intangible of $87,000.

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(5)At December 31, 2025, properties held for sale included a hotel acquired via deed-in-lieu of foreclosure in November 2020, an office property acquired via deed-in-lieu of foreclosure in June 2023 and a student housing property acquired in April 2022.

(6)Primarily comprised of a $44.7 million ground lease with a remaining term of 91 years. Lease expense for the year ended December 31, 2025 was $2.8 million.

(7)Comprised an operating lease liability.

(8)Excludes items of working capital, either acquired or assumed.

**Financing Receivables**

The following table shows the activity in the allowance for credit losses for the years ended December 31, 2025 and 2024 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2024** |
| Allowance for credit losses at beginning of period | $32847 | $28757 |
| &nbsp;&nbsp;(Reversal of) provision for credit losses | (7749) | 4790 |
| &nbsp;&nbsp;Charge-offs | (4700) | (700) |
| Allowance for credit losses at end of period | $20398 | $32847 |

---

During the year ended December 31, 2025, we recorded reversals of expected credit losses of $7.7 million, primarily attributable to net improvements in the modeled credit risk of our loan portfolio as well as loan payoffs. These reversals were offset by a general decline in projected macroeconomic factors. We also recorded a charge-off of $4.7 million for one mezzanine loan that was previously fully reserved.

During the year ended December 31, 2024, we recorded a net provision for expected credit losses of $4.8 million, primarily driven by a general decline of macroeconomic factors over the year as well as an increase in modeled credit risk in our portfolio offset by loan payoffs. We also recorded a charge-off of $700,000 for one CRE whole loan held for sale.

At December 31, 2025, we did not individually evaluate any loans.

During fiscal year 2025 and at December 31, 2024, we individually evaluated the following loan for which a resolution was reached:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•One office mezzanine loan in the Northeast region with a principal balance of $4.7 million at December 31, 2024. We fully reserved this loan in the fourth quarter of 2022. The loan entered payment default in February 2023 and was placed on nonaccrual status. In December 2025, the third party lender of the related senior loan foreclosed on the asset. We charged off the $4.7 million specific reserve.

During fiscal year 2024, we individually evaluated one additional loan for which a resolution was reached:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A multifamily loan in the Southeast region, with a principal balance of $9.3 million for which foreclosure was determined to be probable. In August 2024, we foreclosed on the loan.

***Credit quality indicators***

*Commercial Real Estate Loans*

CRE loans are collateralized by a diversified mix of real estate properties and are assessed for credit quality based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwritten plan, time since origination, current implied and/or re-underwritten loan-to-collateral value ("LTV") ratios, loan structure and exit plan. Depending on the loan's performance against these various factors, loans are rated on a scale from 1 to 5, with loans rated 1 representing loans with the highest credit quality and loans rated 5 representing the loans with the lowest credit quality. Loans are typically rated a 2 at origination. The factors evaluated provide general criteria to monitor credit migration in our loan portfolio; as such, a loan's rating may improve or worsen, depending on new information received.

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The criteria set forth below should be used as general guidelines and, therefore, not every loan will have all of the characteristics described in each category below.

---

| | |
|:---|:---|
| **Risk Rating** | **Risk Characteristics** |
| **1** | &nbsp;&nbsp;• Property performance has surpassed underwritten expectations. |
|  | &nbsp;&nbsp;• Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high quality tenant mix. |
| **2** | &nbsp;&nbsp;• Property performance is consistent with underwritten expectations and covenants and performance criteria are being met or exceeded. |
|  | • Occupancy is stabilized, near stabilized or is on track with underwriting. |
| **3** | &nbsp;&nbsp;• Property performance lags behind underwritten expectations. |
|  | &nbsp;&nbsp;• Occupancy is not stabilized and the property has some tenancy rollover. |
| **4** | &nbsp;&nbsp;• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers. |
|  | &nbsp;&nbsp;• Occupancy is not stabilized and the property has a large amount of tenancy rollover. |
| **5** | &nbsp;&nbsp;• Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Expected sale proceeds would not be sufficient to pay off the loan at maturity. |
|  | &nbsp;&nbsp;• The property has a material vacancy rate and significant rollover of remaining tenants. |
|  | &nbsp;&nbsp;• An updated appraisal is required upon designation and updated on an as-needed basis. |

---

All CRE loans are evaluated for any credit deterioration by debt asset management and certain finance personnel on at least a quarterly basis. Mezzanine loans and preferred equity investments may have experienced greater credit risks due to their nature as subordinated investments.

For the purpose of calculating the quarterly provision for credit losses under CECL, we pool CRE loans based on the underlying collateral property type and utilize a probability of default and loss given default methodology for approximately one year after which we immediately revert to a historical mean loss ratio.

Credit risk profiles of CRE loans at amortized cost were as follows (in thousands, except amounts in the footnotes):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Rating 1** | **Rating 2** | **Rating 3** | **Rating 4** | **Rating 5** | **Total** <sup>(1)</sup> |
| **At December 31, 2025:** |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans | $28137 | $938416 | $470871 | $377904 | $5614 | $1820942 |
| &nbsp;&nbsp;Preferred equity investment |  | 9425 |  |  |  | 9425 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $28137 | $947841 | $470871 | $377904 | $5614 | $1830367 |
| **At December 31, 2024:** |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans | $27869 | $565968 | $503125 | $380116 | $5614 | $1482692 |
| &nbsp;&nbsp;Mezzanine loan |  |  |  |  | 4700 | 4700 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $27869 | $565968 | $503125 | $380116 | $10314 | $1487392 |

---

(1)The total amortized cost of CRE loans excluded accrued interest receivable of $27.2 million and $14.6 million at December 31, 2025 and 2024, respectively.

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Credit risk profiles of CRE loans by origination year at amortized cost were as follows (in thousands, except amounts in footnotes):

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** <sup>(1)</sup> | **2024** <sup>(2)</sup> | **2023** | **2022** | **2021** | **Prior** | **Total** <sup>(3)</sup> |
| **At December 31, 2025:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans: <sup>(4)</sup> |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 1 | $— | $— | $— | $— | $28137 | $— | $28137 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 2 | 649712 | 22249 | 49376 |  | 203263 | 13816 | 938416 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 3 | 10283 |  |  | 235271 | 214356 | 10961 | 470871 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 4 | 137906 | 87370 | 15991 | 91675 |  | 44962 | 377904 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 5 |  |  |  |  |  | 5614 | 5614 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total whole loans | 797901 | 109619 | 65367 | 326946 | 445756 | 75353 | 1820942 |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred equity investment (rating 2) | 9425 |  |  |  |  |  | 9425 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans | $807326 | $109619 | $65367 | $326946 | $445756 | $75353 | $1830367 |
| &nbsp;&nbsp;Current Period Gross Write-Offs | $— | $— | $— | $— | $— | $(4700) | $(4700) |
|  | **2024** <sup>(2)</sup> | **2023** | **2022** | **2021** | **2020** | **Prior** | **Total** <sup>(3)</sup> |
| **At December 31, 2024:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans: <sup>(4)</sup> |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 1 | $— | $— | $— | $27869 | $— | $— | $27869 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 2 | 19023 | 48106 | 46416 | 382195 | 56284 | 13944 | 565968 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 3 |  |  | 249907 | 242155 |  | 11063 | 503125 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 4 | 80672 | 15811 | 85004 | 153740 |  | 44889 | 380116 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 5 |  |  |  |  |  | 5614 | 5614 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total whole loans | 99695 | 63917 | 381327 | 805959 | 56284 | 75510 | 1482692 |
| &nbsp;&nbsp;Mezzanine loan (rating 5) |  |  |  |  |  | 4700 | 4700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $99695 | $63917 | $381327 | $805959 | $56284 | $80210 | $1487392 |
| &nbsp;&nbsp;Current Period Gross Write-Offs | $— | $— | $— | $(700) | $— | $— | $(700) |

---

(1)Includes two novated CRE whole loans that resulted from loan workouts.

(2)Includes two novated CRE whole loans that resulted from loan workouts.

(3)The total amortized cost of CRE loans excluded accrued interest receivable of $27.2 million and $14.6 million at December 31, 2025 and 2024, respectively.

(4)Acquired CRE whole loans are grouped within each loan's year of origination.

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***Loan Portfolio Aging Analysis***

The following table presents the CRE loan portfolio aging analysis as of the dates indicated for CRE loans at amortized cost (in thousands, except amounts in footnotes):

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **30-59 Days** | **60-89 Days** | **Greater than 90<br>Days** | **Total Past Due** | **Current** <sup>(1)</sup> | **Total Loans Receivable** <sup>(2)</sup> | **Total Loans > 90 Days and Accruing** |
| **At December 31, 2025:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans | $— | $— | $26834 | $26834 | $1794108 | $1820942 | $— |
| &nbsp;&nbsp;Preferred equity investment |  |  |  |  | 9425 | 9425 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $— | $— | $26834 | $26834 | $1803533 | $1830367 | $— |
| **At December 31, 2024:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans | $— | $70760 | $5614 | $76374 | $1406318 | $1482692 | $— |
| &nbsp;&nbsp;Mezzanine loan <sup>(3)</sup> |  |  | 4700 | 4700 |  | 4700 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $— | $70760 | $10314 | $81074 | $1406318 | $1487392 | $— |

---

(1)Includes one CRE loan with an amortized cost of $32.3 million in maturity default at December 31, 2025.

(2)The total amortized cost of CRE loans excluded accrued interest receivable of $27.2 million and $14.6 million at December 31, 2025 and 2024, respectively.

(3)Fully reserved at December 31, 2024.

At December 31, 2025 and 2024, we had three and two CRE whole loans, with total amortized costs of $59.1 million and $76.4 million, respectively, in payment default. At December 31, 2024, we had one mezzanine loan, with a total amortized cost of $4.7 million, in payment default.

During the year ended December 31, 2025, we did not recognize interest income on CRE whole loans that were placed on nonaccrual status. During the year ended December 31, 2024, we recognized interest income of $472,000 on two CRE whole loans that were placed on nonaccrual status. During the year ended December 31, 2024, we recognized interest income of $389,000 on one CRE whole loan that was placed on nonaccrual status as part of a modification that took place during the year ended December 31, 2023. We recognize interest income on a cash basis from the net operating cash flows from the underlying property.

***Loan Modifications***

We are required to disclose modifications where we determined the borrower is experiencing financial difficulty and modified the agreement to: (i) forgive principal, (ii) reduce the interest rate, (iii) cause an other-than-insignificant payment delay, (iv) extend the loan term, or (v) any combination thereof.

During the year ended December 31, 2025, we did not enter into any loan modifications for borrowers that were experiencing financial difficulty.

During the year ended December 31, 2024, we entered into the following three loan modifications that required disclosure:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A multifamily whole loan with an amortized cost of $54.9 million, representing 3.0% of the total amortized cost of the portfolio, was modified to: (i) extend its maturity from June 2025 to June 2026, (ii) reduce its current pay interest rate from one-month Term SOFR plus a spread of 3.70% to one-month Term SOFR plus a spread of 1.70%, and (iii) defer interest of 2.00% that will be due at payoff. In connection with the modification, the borrower funded additional capital into the project for interest reserves to cover debt service. In October 2025, the loan was novated and replaced with a new obligor. In connection with the novation, the new loan: (i) matures November 2028, (ii) pays a current pay rate of one-month Term SOFR plus a spread of 0.70%, (iii) defers interest of 3.00% that will be due at payoff, and (iv) has a mezzanine commitment up to $1.9 million, of which $86,000 was funded at December 31, 2025. The loan has a fixed rate of 15.00% that accrues and will be due at payoff in November 2028.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A multifamily whole loan with an amortized cost of $45.5 million, representing 2.5% of the total amortized cost of the portfolio, was modified to: (i) reduce its current pay interest rate from one-month Term SOFR plus a spread of 3.31% to a 5.00% fixed rate and (ii) defer the unpaid interest that will be due at loan payoff. In connection with the modification, the borrower funded additional capital into the project for interest reserves to cover debt service. At December 31, 2025, the loan was in maturity default.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A multifamily whole loan with an amortized cost of $70.8 million, representing 3.9% of the total amortized cost of the portfolio, was modified to: (i) extend its maturity from January 2025 to January 2026 and (ii) provide for 2.00% per annum of the interest rate to be deferred until payoff. We also entered into a mezzanine loan with a total commitment of $6.0 million. The mezzanine loan has a fixed rate of 15.00% that accrues and will be due at payoff. In connection with the modification, the borrower renewed the interest rate cap. In March 2025, the loan was novated when we foreclosed on the mezzanine loan. In connection with the novation, the new loan: (i) matures May 2030, (ii) pays a current pay fixed rate of 5.00%, and (iii) has a mezzanine loan commitment of up to $13.5 million, of which $12.1 million was funded at December 31, 2025.

These loans were performing in accordance with the modified contractual terms as of December 31, 2025. At December 31, 2025, two of these loans, with a total amortized cost of $125.7 million, had a risk rating of "4" and the other loan, with an amortized cost of $45.5 million, had a risk rating of "3".

**Restricted Cash**

At December 31, 2025 and 2024, we had restricted cash of $2.2 million and $890,000, respectively, held in escrow for deposits or tax payments at our real estate properties or pledged with minimum reserve balance requirements. The increase of $1.3 million was primarily attributable to an increase in restricted cash held in escrow for tax payments and security deposits.

**Accrued Interest Receivable**

The following table summarizes our accrued interest receivable at December 31, 2025 and 2024 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** |  |
|  | **2025** | **2024** | **Net Change** |
| Accrued interest receivable from loans | $27232 | $14642 | $12590 |
| Accrued interest receivable from promissory note, escrow, sweep and reserve accounts | 27 | 13 | 14 |
| &nbsp;&nbsp;Total | $27259 | $14655 | $12604 |

---

The increase of $12.6 million in accrued interest receivable was primarily attributable to net production in our CRE loan portfolio and accrued deferred interest on modified loans, offset by loan payoffs.

**Other Assets**

The following table summarizes our other assets at December 31, 2025 and 2024 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** |  |
|  | **2025** | **2024** | **Net Change** |
| Tax receivables and prepaid taxes | $376 | $201 | $175 |
| Other receivables | 2987 | 2087 | 900 |
| Prepaid expenses | 1890 | 3027 | (1137) |
| Fixed assets - non real estate | 325 | 232 | 93 |
| Other assets, miscellaneous | 982 | 853 | 129 |
| &nbsp;&nbsp;Total | $6560 | $6400 | $160 |

---

The increase of $160,000 in other assets was primarily attributable to increases in other receivables, other assets and various prepaid assets held at our real estate properties.

**Deferred Tax Assets**

At both December 31, 2025 and 2024, our net deferred tax asset was zero, resulting from a full valuation allowance of $20.3 million and $20.6 million, respectively, on our gross deferred tax assets as we believed it was more likely than not that some or all of the deferred tax assets would not be realized. We will continue to evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing forecasted taxable income using both historical and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry back years (if permitted) and the availability of tax planning strategies.

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**Derivative Instruments**

Historically, we sought to mitigate the potential impact on net income (loss) of adverse fluctuations in interest rates incurred on our borrowings by entering into hedging agreements. We classified our interest rate hedges as cash flow hedges, which are hedges that eliminate the risk of changes in the cash flows of a financial asset or liability.

We terminated all of our interest rate swap positions associated with our prior financed CMBS portfolio in April 2020. At termination, we realized a loss of $11.8 million. At December 31, 2025 and 2024, we had losses of $1.6 million and $3.3 million, respectively, recorded in accumulated other comprehensive loss, which will be amortized into earnings over the remaining life of the debt. During the years ended December 31, 2025 and 2024, we recorded amortization expense, reported in interest expense on the consolidated statements of operations, of $1.7 million in each year.

At December 31, 2025, we had realized all of the gain attributable to two terminated interest rate swaps in accumulated other comprehensive loss on the consolidated balance sheets. At December 31, 2024, $73,000 was attributable to two terminated interest rate swaps in accumulated other comprehensive loss on the consolidated balance sheets, to be accreted into earnings over the remaining life of the debt. During the years ended December 31, 2025 and 2024, we recorded accretion income, reported in interest expense on the consolidated statements of operations, of $73,000 and $92,000, respectively, to accrete the accumulated other comprehensive income on the terminated swap agreements.

The following table presents the effect of derivative instruments on our consolidated statements of operations for the years presented (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Realized and Unrealized Gain (Loss)** <sup>(1)</sup> | **Realized and Unrealized Gain (Loss)** <sup>(1)</sup> | **Realized and Unrealized Gain (Loss)** <sup>(1)</sup> |
|  | **Consolidated Statements of Operations Location** | **Year Ended December 31, 2025** | **Year Ended December 31, 2024** | **Year Ended December 31, 2023** |
| Interest rate swap contracts, hedging | Interest expense | $(1600) | $(1598) | $(1593) |

---

(1)Negative values indicate a decrease to the associated consolidated statement of operations line items.

**Financing Arrangements**

Borrowings under our financing arrangements are guaranteed by us or one or more of our subsidiaries. The following table sets forth certain information with respect to our borrowings (dollars in thousands, except amounts in footnotes):

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Outstanding Borrowings** | **Value of Collateral** | **Number of Positions as Collateral** | **Weighted Average Interest Rate** | **Outstanding Borrowings** | **Value of Collateral** | **Number of Positions as Collateral** | **Weighted Average Interest Rate** |
| **CRE - Term Reinvestment Financing Facility** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;JPMorgan Chase Bank, N.A. <sup>(1)</sup> | $728167 | $1009622 | 34 | 5.50% | $— | $— |  | —% |
| **Senior Secured Financing Facility** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Massachusetts Mutual Life Insurance Company <sup>(2)</sup> | 61645 | 166526 | 5 | 7.53% | 60910 | 162578 | 6 | 8.22% |
| **CRE - Term Warehouse Financing Facilities** <sup>(3)</sup> |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;JPMorgan Chase Bank, N.A. <sup>(4)</sup> | 116488 | 149000 | 3 | 5.50% | 90995 | 158639 | 5 | 6.87% |
| &nbsp;&nbsp;Morgan Stanley Mortgage Capital Holdings LLC <sup>(5)</sup> | 417374 | 544937 | 12 | 5.55% | 65744 | 98373 | 5 | 7.22% |
| **Mortgages Payable** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;ReadyCap Commercial, LLC <sup>(6)</sup> | 20185 | 26964 | 1 | 7.57% | 20240 | 26960 | 1 | 8.28% |
| &nbsp;&nbsp;Oceanview Life and Annuity Company <sup>(7)(8)</sup> |  |  |  | —% | 44211 | 92549 | 1 | 10.40% |
| &nbsp;&nbsp;Florida Pace Funding Agency <sup>(7)(9)</sup> |  |  |  | —% | 15105 |  |  | 7.26% |
| &nbsp;&nbsp;Total | $1343859 | $1897049 |  |  | $297205 | $539099 |  |  |

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(1)Includes $2.8 million of deferred debt issuance costs at December 31, 2025.

(2)Includes $1.5 million and $2.2 million of deferred debt issuance costs at December 31, 2025 and 2024, respectively.

(3)Outstanding borrowings include accrued interest payable at December 31, 2024.

(4)Includes $352,000 and $988,000 of deferred debt issuance costs at December 31, 2025 and 2024, respectively.

(5)Includes $546,000 and $539,000 of deferred debt issuance costs at December 31, 2025 and 2024, respectively.

(6)There were no deferred debt issuance costs at December 31, 2025. Includes $52,000 of deferred debt issuance costs at December 31, 2024.

(7)Outstanding borrowings are collateralized by a student housing construction project. Value of collateral and number of positions as collateral related to Oceanview Life and Annuity Company also applies to Florida Pace Funding Agency.

(8)Includes $101,000 of deferred debt issuance costs at December 31, 2024.

(9)Includes $405,000 of deferred debt issuance costs at December 31, 2024.

We were in compliance with all covenants in the respective agreements at December 31, 2025 and 2024.

***CRE - Term Reinvestment Financing Facility***

In March 2025, an indirect wholly-owned subsidiary of ours entered into a master repurchase agreement (the "JPMorgan Chase 2025 Facility") with JPMorgan Chase Bank, N.A. ("JPMorgan Chase") to finance existing CRE loans and the origination of CRE loans. The JPMorgan Chase 2025 Facility has a maximum facility amount of $939.9 million, provides match term funding, charges interest of one-month benchmark plus a 1.75% spread and matures as of the latest maturity date of any purchased asset. The JPMorgan Chase 2025 Facility includes a two-year reinvestment period enabling the reinvestment of principal proceeds from asset repayments into qualifying replacement assets. The reinvestment period for the JPMorgan Chase 2025 Facility ends in March 2027.

In connection with the JPMorgan Chase 2025 Facility, we provided "bad act" guaranties pursuant to a guarantee agreement (the "2025 JPMorgan Chase Guarantee") where we are liable for 100% of the repurchase price of the purchase assets and JPMorgan Chase's losses, costs and expenses only upon the occurrence of certain customary bad acts. The JPMorgan Chase 2025 Guarantee includes certain financial covenants required of us, including required liquidity, required capital, ratios of total indebtedness to equity and EBITDA requirements. The JPMorgan Chase 2025 Facility also includes minimum interest coverage requirements and maximum look through LTV requirements. Also, ACRES Realty Funding, Inc. ("ACRES RF"), the direct owner of the wholly-owned subsidiary borrower, executed a pledge agreement with JPMorgan Chase pursuant to which it pledged and granted to JPMorgan Chase a continuing security interest in any and all of its right, title and interest in and to the wholly-owned subsidiary, including all distributions, proceeds, payments, income and profits from its interests in the wholly-owned subsidiary.

The JPMorgan Chase 2025 Facility specifies events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement, including but not limited to: payment defaults; bankruptcy or insolvency proceedings; a change of control of the ACRES SPE 2025-1, LLC, ("Seller SPE") or of us; breaches of covenants and/or certain representations and warranties; and a judgment in an amount greater than $250,000 against the Seller SPE or ACRES RF or $10.0 million against us. The remedies for such events of default are also customary for this type of financing arrangement and include the acceleration of the principal amount outstanding under the JPMorgan Chase 2025 Facility and the liquidation by JPMorgan Chase of purchased assets then subject to the JPMorgan Chase 2025 Facility. In October 2025, the JPMorgan Chase 2025 Facility was amended to allow ACRES Mortgage Fund Levered II, LLC ("AMF Levered II, LLC"), a wholly owned subsidiary of ACRES Mortgage Fund, Ltd., to purchase a non-controlling interest in the Seller SPE. At December 31, 2025, AMF Levered II, LLC owned a $125.0 million non-controlling interest, or 43.2%, of the Seller SPE and assumed a proportionate share of risk in the portfolio.

***Senior Secured Financing Facility***

On July 31, 2020, our indirect, wholly owned subsidiary ("Holdings"), along with its direct wholly owned subsidiary (the "Borrower"), entered into a $250.0 million Loan and Servicing Agreement (the "MassMutual Loan Agreement") with Massachusetts Mutual Life Insurance Company ("MassMutual") and the other lenders party thereto (the "Lenders"). The asset-based revolving loan facility (the "MassMutual Facility") provided under the MassMutual Loan Agreement has been used to finance our core CRE lending business.

In December 2022, Holdings, the Borrower and the Lenders entered into an Amended and Restated Loan and Servicing Agreement (the "Amended and Restated Loan and Servicing Agreement"), which amends and restates the MassMutual Loan Agreement, and reflects a senior secured term loan facility, not to exceed $500.0 million, composed of individual loan series issued upon mutual agreement of the Borrower and Lenders. Each loan series will be available for three months after the closing date agreed upon by the Borrower and Lenders ("Commitment Period"), subject to the maximum dollar amount agreed upon for that series. The Commitment Period is subject to immediate termination upon the occurrence of an event of default. Each loan series will have a final maturity of five years from the issuance date for the loan series unless an additional time is mutually agreed upon by the Lenders and Borrower. The advance rate on portfolio assets will be mutually agreed upon by the Lenders and Borrower. Each loan series will have its own mutually agreed upon interest rate equal to one-month Term SOFR plus the applicable spread.

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In connection with the Amended and Restated Loan and Servicing Agreement, several indirect, wholly owned subsidiaries of ours entered into a Guaranty (the "MassMutual Guaranty") in favor of the secured parties under the Amended and Restated Loan and Servicing Agreement. Pursuant to the MassMutual Guaranty, we fully guaranteed all payments and performance of Holdings and the Borrower under the Amended and Restated Loan and Servicing Agreement.

The Amended and Restated Loan and Servicing Agreement contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction and include declaring the final maturity date to have occurred and advances due and liquidation of the assets securing the series.

Pursuant to the Amended and Restated Loan Agreement, the Borrower's obligations under the MassMutual Loan Agreement are secured by the Borrower's assets and Holdings' equity interests in the Borrower, including all distributions, proceeds and profits from Holdings' interests in the Borrower.

***CRE - Term Warehouse Financing Facilities***

In October 2018, an indirect, wholly-owned subsidiary of ours entered into a master repurchase agreement (the "JPMorgan Chase Facility") with JP Morgan Chase to finance the origination of CRE loans. As amended, the JPMorgan Chase Facility has a maximum facility amount of $250.0 million, charges interest of one-month Term SOFR plus market spreads and matures in July 2026.

In May 2020, we entered into an amendment to the JPMorgan Chase Guarantee that revised its minimum equity financial covenant as of February 29, 2020. In October 2020, we entered into an amendment to the JPMorgan Chase Guarantee that revised a covenant definition so that credit losses are determined in accordance with a risk rating-based methodology. In September and October 2021, the JPMorgan Chase Facility was amended twice, resulting in (i) the extension of the JPMorgan Chase Facility's maturity date to October 2024, (ii) an update to our tangible net worth requirement and minimum liquidity covenant as set forth in the guarantee agreement and (iii) a modification of market terms regarding the replacement of LIBOR upon determination of a benchmark transition event. In November 2022, the JPMorgan Chase Facility was amended for the following (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity, and (iii) minimum unencumbered liquidity requirement, each through September 2023. In July 2023, the JPMorgan Chase Facility was amended to extend the maturity date to July 2026, as well as to extend the amendments to (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity and (iii) minimum unencumbered liquidity requirement, each through December 2024. In March 2025, we entered into Amendment No. 6 to Guarantee, by and between the Company and JPMorgan Chase, which makes certain amendments and modifications to the Guarantee, dated October 26, 2018 between the Company and JPMorgan Chase, as amended (the "JPM Guarantee") including but not limited to amending (capitalized terms each as defined in the JPM Guarantee) (i) minimum unencumbered Liquidity requirement, (ii) the ratio of Total Indebtedness to Total Equity, (iii) ratio of Adjusted Total Indebtedness to Total Equity, and (iv) EBITDA to Interest Expense ratio. In August 2025, we entered into Amendment No. 7 to Guarantee, by and between us and JPMorgan Chase, which makes certain amendments and modifications to the Guarantee, dated October 26, 2018 between us and JPMorgan Chase, as amended (the "JPM Guarantee") to amend the terms of the debt service coverage period.

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In November 2021, an indirect, wholly-owned subsidiary of ours entered into a Master Repurchase and Securities Contract Agreement (the "Morgan Stanley Facility") with Morgan Stanley Mortgage Capital Holdings LLC ("Morgan Stanley") to finance the origination of CRE loans. Each repurchase transaction will specify its own terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate. In January 2022, such subsidiary entered into the First Amendment to Master Repurchase and Securities Contract Agreement (the "Morgan Stanley Amendment") with Morgan Stanley, which amended the Morgan Stanley Facility to add market terms regarding the replacement of LIBOR upon determination of a benchmark transition event. In November 2022, the Morgan Stanley Facility was amended for the following (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity, and (iii) minimum unencumbered liquidity requirement, each through March 2024. In November 2023, the Morgan Stanley Facility was amended to extend the amendments to (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity and (iii) minimum unencumbered liquidity requirement, each through the quarter ending December 2024. In November 2024, this facility was amended to, among other things, amend the EBITDA to Interest Expense ratio through the quarter ending December 2025 and extend the Morgan Stanley Facility to November 2025. The Morgan Stanley Facility has a maximum facility amount of $250.0 million, charges interest of one-month benchmark plus market spreads and matures in November 2025. We also have the right to request an extension for an additional one-year period. In March 2025, we entered into Amendment No. 4 to Guaranty, by and between the Company and Morgan Stanley, which makes certain amendments and modifications to the Guaranty, dated November 3, 2021 between the Company and Morgan Stanley, as amended (the "MS Guaranty") including but not limited to (capitalized terms each as defined in the MS Guarantee) (i) minimum unencumbered Liquidity requirement, (ii) ratio of Total Indebtedness to Total Equity, (iii) ratio of Adjusted Total Indebtedness to Total Equity, and (iv) EBITDA to Interest Expense ratio. In November 2025, we entered into Amendment No. 3 to the Morgan Stanley Facility extending its maturity to November 2026 and entered into Amendment No.4 to the Morgan Stanley Facility to increase the facility amount to $400.0 million, as increased from time to time, provided the amount shall be automatically reduced to $250.0 million on the earlier of May 2026 or when we send a request for a reduction in the facility amount. Provided certain conditions are met, prior to May 2026, we can request that the facility amount be increased to $500.0 million. As of December 31, 2025, we have exercised our right to increase the Morgan Stanley Facility amount to its full capacity.

***Mortgage Payable***

In April 2022, Chapel Drive West, LLC, a wholly owned subsidiary of CS – ACRES FSU Student Venture, LLC (the "FSU Student Venture") entered into a Loan Agreement (the "Mortgage") with Readycap Commercial, LLC ("Readycap") to finance the acquisition of a student housing complex. The Mortgage is interest only and had a maximum principal balance of $20.4 million, of which, $18.7 million was advanced in the initial funding. The Mortgage charges interest of one-month Term SOFR plus a spread of 3.80%. The Mortgage was amended to mature in April 2026, subject to a one-year extension option.

The Mortgage contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction.

In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan"). The Construction Loan was interest only and has a maximum principal balance of $48.0 million. The Construction Loan charged one-month Term SOFR plus a spread of 6.00%. In February 2025, the Construction Loan was amended to bifurcate the first one-year extension option into two separate extension options and periods: a seven month extension period ended September 2025 and a five month extension ending February 2026. The Construction Loan had a maturity of September 2025.

In addition to the Construction Loan, Chapel Drive East, LLC entered into a financing agreement with Florida Pace Funding Agency to fund energy efficient building improvements and had a maximum principal balance of $15.5 million. This agreement charged fixed interest of 7.26% and matured in July 2053.

In September 2025, the Construction Loan and the financing agreement with Florida Pace Funding Agency were paid off in connection with the sale of the student housing complex.

**Securitizations**

***ACR 2021-FL1***

In May 2021, we closed ACR 2021-FL1, an $802.6 million CRE debt securitization transaction that provided financing for CRE loans. In March 2025, we exercised the optional redemption on ACR 2021-FL1 in conjunction with the closing of the JPMorgan Chase 2025 Facility.

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***ACR 2021-FL2***

In December 2021, we closed ACR 2021-FL2, a $700.0 million CRE debt securitization transaction that provided financing for CRE loans. In March 2025, we exercised the optional redemption on ACR 2021-FL2 in conjunction with the closing of the JPMorgan Chase 2025 Facility.

***ACR 2026-FL4***

In February 2026, we closed ACRES Commercial Realty 2026-FL4 Issuer, LLC ("ACR 2026-FL4"), a CRE debt securitization transaction that can finance up to $1.0 billion of CRE loans. ACR 2026-FL4 issued a total of $879.5 million of non-recourse, floating-rate notes to third parties at par. Additionally, we retained 100% of the Class F notes, Class G notes and Income notes. ACR 2026-FL4 includes a 180-day ramp up acquisition period that allows it to acquire CRE loans using unused proceeds from the issuance of the non-recourse floating-rate notes. Additionally, ACR 2026-FL4 includes a reinvestment period, which ends in August 2028, that allows it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds.

At closing, the offered notes issued to investors consisted of the following classes: (i) $589.7.0 million of Class A notes bearing interest at one-month SOFR plus 1.45%, increasing to 1.70% in August 2031; (ii) $104.2 million of Class A-S notes bearing interest at one-month SOFR plus 1.70%, increasing to 1.95% in August 2031; (iii) $72.4 million of Class B notes bearing interest at one-month SOFR plus 1.95%, increasing to 2.45% in August 2031; (iv) $58.5 million of Class C notes bearing interest at one-month SOFR plus 2.25%, increasing to 2.75% in August 2031; (v) $36.9 million of Class D notes bearing interest at one-month SOFR plus 2.85%, increasing to 3.35% in August 2031 and (vi) $17.8 million of Class E notes bearing interest at one-month SOFR plus 3.60%, increasing to 4.10% in August 2031.

All of the notes issued mature in August 2044, although we have the right to call the notes beginning on the payment date in August 2028 and thereafter.

**Corporate Debt**

***5.75% Senior Unsecured Notes Due 2026***

On August 16, 2021, we issued $150.0 million of our 5.75% senior unsecured notes due 2026 (the "5.75% Senior Unsecured Notes") pursuant to our Indenture, dated August 16, 2021 (the "Base Indenture"), between Wells Fargo, now Computershare Trust Company, N.A. ("CTC"), as trustee (the "Trustee"), and us as supplemented by the First Supplemental Indenture, dated August 16, 2021, between Wells Fargo, now CTC, and us (the "Supplemental Indenture" and, together with the Base Indenture, the "Indenture"). Prior to May 15, 2026, we may at our option redeem the 5.75% Senior Unsecured Notes, in whole or in part, at a redemption price equal to the sum of (i) 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date, and (ii) a make-whole premium. On or after May 15, 2026, we may at our option redeem the 5.75% Senior Unsecured Notes, at any time, in whole or in part, on not less than 15 days nor more than 60 days' prior notice, at a redemption price equal to 100% of the principal amount of the 5.75% Senior Unsecured Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

The Indenture contains restrictive covenants that, among other things, require us to maintain certain financial ratios. The foregoing limitations are subject to exceptions as set forth in the Supplemental Indenture. At December 31, 2025, we were in compliance with these covenants. The Indenture provides for customary events of default that include, among other things (subject in certain cases to customary grace and cure periods): (i) non-payment of principal or interest, (ii) breach of certain covenants contained in the Indenture or the 5.75% Senior Unsecured Notes, (iii) an event of default or acceleration of certain other indebtedness of ours or a subsidiary in which we have invested at least $75.0 million in capital within the applicable grace period and (iv) certain events of bankruptcy or insolvency. Generally, if an event of default occurs (subject to certain exceptions), CTC or the holders of at least 25% in aggregate principal amount of the then outstanding 5.75% Senior Unsecured Notes may declare all of the notes to be due and payable.

***Unsecured Junior Subordinated Debentures***

During 2006, we formed RCT I and RCT II for the sole purpose of issuing and selling capital securities representing preferred beneficial interests. RCT I and RCT II are not consolidated into our consolidated financial statements because we are not deemed to be the primary beneficiary of these entities. In connection with the issuance and sale of the capital securities, we issued junior subordinated debentures to RCT I and RCT II of $25.8 million each, representing our maximum exposure to loss. The debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II were included in borrowings and were amortized into interest expense on the consolidated statements of operations using the effective yield method over a ten year period.

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There were no unamortized debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II outstanding at December 31, 2025 and 2024. The interest rates for RCT I and RCT II, at December 31, 2025, were 7.90% and 8.05%, respectively. The interest rates for RCT I and RCT II, at December 31, 2024, were 8.54% and 8.80%, respectively.

The rights of holders of common securities of RCT I and RCT II are subordinate to the rights of the holders of capital securities only in the event of a default; otherwise, the common securities' economic and voting rights are pari passu with the capital securities. The capital and common securities of RCT I and RCT II are subject to mandatory redemption upon the maturity or call of the junior subordinated debentures held by each. Unless earlier dissolved, RCT I will dissolve in May 2041 and RCT II will dissolve in September 2041. The junior subordinated debentures are the sole assets of RCT I and RCT II, which mature in June 2036 and October 2036, respectively, and may currently be called at par.

**Equity**

Total equity as of December 31, 2025 was $550.6 million compared to total equity of $449.7 million as of December 31, 2024. The increase in equity was primarily attributable to an increase in non-controlling interests in the year ended December 31, 2025.

Our preferred equity is composed of the following at December 31, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•4.8 million shares of 8.625% fixed to floating rate Series C cumulative redeemable preferred stock with a $25.00 per share liquidation preference ("Series C Preferred Stock"). The Series C Preferred Stock has no maturity date and we are not required to redeem them at any time. However, we may redeem them at our election, in whole or in apart, on or after July 30, 2024. Effective July 30, 2024, the Series C Preferred Stock converted from its fixed rate of 8.625% to a floating rate equal to three-month Term SOFR plus a spread of 5.927%, but at no time shall the floating rate be less than 8.625%. Dividends are payable quarterly in arrears.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•4.5 million shares of fixed 7.875% Series D cumulative redeemable preferred stock with a $25.00 per share liquidation preference ("Series D Preferred Stock"). The Series D Preferred Stock has no maturity and we are not required to redeem them at any time. However, we may redeem them at our election, in whole or in apart, on or after May 21, 2026. Dividends are payable quarterly in arrears.

**Balance Sheet - Book Value Reconciliation**

The following table rolls forward our common stock book value for the three months and year ended December 31, 2025 (in thousands, except per share data and amounts in footnotes):

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|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31, 2025** | **Three Months Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** |
|  | **Total Amount** | **Per Share Amount** | **Total Amount** | **Per Share Amount** |
| Common stock book value at beginning of period <sup>(1)</sup> | $208937 | $29.63 | $215137 | $28.87 |
| Net (loss) income allocable to common shares <sup>(2)</sup> | (2952) | (0.45) | 239 | 0.04 |
| Change in other comprehensive income on derivatives | 409 | 0.06 | 1600 | 0.24 |
| Repurchase of common stock <sup>(3)</sup> | (9963) | 0.71 | (22319) | 1.66 |
| Impact to equity of share-based compensation | 373 | 0.06 | 2147 | (0.80) |
| Total net increase (decrease) | (12133) | 0.38 | (18333) | 1.14 |
| Common stock book value at end of period <sup>(1)(4)</sup> | $196804 | $30.01 | $196804 | $30.01 |

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(1)Per share calculations exclude unvested restricted stock, as disclosed on our consolidated balance sheets, of 328,586 shares at both December 31, 2025 and September 30, 2025, and 574,538 shares at December 31, 2024, and include warrants to purchase up to 391,995 shares of common stock at December 31, 2024. In July 2025, the warrants were exercised in exchange for shares, which resulted in 391,380 being added to the outstanding share count. The denominators for the calculation were 6,558,865, 7,051,955 and 7,451,461 at December 31, 2025, September 30, 2025, and December 31, 2024, respectively.

(2)The per share amounts are calculated with the denominator referenced in footnote (1) at December 31, 2025. We calculated net (loss) income per common share-diluted of $(0.43) and $0.03 using the weighted average diluted shares outstanding during the three and twelve months ended December 31, 2025, respectively.

(3)In November 2021, our Board authorized and approved the continued use of our existing share repurchase program to repurchase up to $20.0 million of our outstanding common stock. From November 2023 through October 2025, our Board authorized and approved the repurchase of an additional $32.5 million of outstanding shares of both common and preferred stock. Because we repurchased our common stock at significant discounts to book value, these repurchases were accretive to per share book value since the inception of the program. In December 2025, the authorized amount was fully utilized.

(4)We calculated common stock book value as total stockholders' equity of $420.8 million less preferred stock equity of $224.0 million at December 31, 2025.

**Management Agreement Equity**

Our monthly base management fee, as defined in our Management Agreement, is equal to 1/12th of the amount of our equity multiplied by 1.50% and is calculated and paid monthly in arrears.

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The following table summarizes the calculation of equity, as defined in the Management Agreement (in thousands):

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| | |
|:---|:---|
|  | **Amount** |
| **At December 31, 2025:** |  |
| &nbsp;&nbsp;Proceeds from capital stock issuances, net <sup>(1)</sup> | $1330472 |
| &nbsp;&nbsp;Retained earnings, net <sup>(2)</sup> | (631544) |
| &nbsp;&nbsp;Payments for repurchases of capital stock | (279667) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $419261 |

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(1)Deducts underwriting discounts and commissions and other expenses and costs relating to such issuances.

(2)Excludes non-cash equity compensation expense incurred to date.

**Earnings Available for Distribution**

Earnings Available for Distribution ("EAD") is a non-GAAP financial measure intended to supplement our financial results computed in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and we believe EAD serves as a useful indicator for investors in evaluating our performance and ability to pay dividends.

EAD excludes the effects of certain transactions and adjustments in accordance with GAAP that we believe are not necessarily indicative of our current CRE loan portfolio and other CRE-related investments and operations. EAD excludes income (loss) from all non-core assets such as commercial finance, residential mortgage lending, certain legacy CRE loans and other non-CRE assets designated as assets held for sale at the initial measurement date of December 31, 2016.

EAD, for reporting purposes, is defined as GAAP net income (loss) allocable to common shares, excluding (i) non-cash equity compensation expense, (ii) unrealized gains and losses, (iii) non-cash provisions for credit losses, (iv) non-cash impairments on securities, (v) non-cash amortization of discounts or premiums associated with borrowings, (vi) net income or loss from a limited partnership interest owned at the initial measurement date, (vii) net income or loss from non-core assets, (viii) real estate depreciation and amortization, (ix) foreign currency gains or losses and (x) income or loss from discontinued operations. EAD may also be adjusted periodically to exclude certain one-time events pursuant to changes in GAAP and certain non-cash items.

Although pursuant to the Management Agreement we calculate incentive compensation using EAD that excludes incentive compensation payable to our Manager, we include incentive compensation payable to our Manager in calculating EAD for reporting purposes.

The following table provides a reconciliation from GAAP net (loss) income allocable to common shares to EAD allocable to common shares for the periods presented (in thousands, except per share data):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **2025** | **Per Share<br>Data** | **2024** | **Per Share<br>Data** |
| **Net income allocable to common shares - GAAP** | $239 | $0.03 | $9123 | $1.15 |
| &nbsp;&nbsp;Adjustment for gain on sale of investment in real estate<sup>(1)</sup> | (8010) | (1.12) | (7506) | (0.95) |
| **Net income (loss) allocable to common shares - GAAP, adjusted** | $(7771) | $(1.09) | $1617 | $0.20 |
| **Reconciling Items from Continuing Operations:** |  |  |  |  |
| &nbsp;&nbsp;Non-cash equity compensation expense | 2147 | 0.30 | 2957 | 0.37 |
| &nbsp;&nbsp;Non-cash (reversal of) provision for CRE loan losses | (6443) | (0.90) | 4790 | 0.60 |
| &nbsp;&nbsp;Realized net gain on core activities<sup>(1)</sup> | 5412 | 0.76 | 5261 | 0.66 |
| &nbsp;&nbsp;Unrealized gain on core activities |  |  | (8637) | (1.09) |
| &nbsp;&nbsp;Real estate depreciation and amortization | 4786 | 0.67 | 6056 | 0.77 |
| &nbsp;&nbsp;Net income from non-core assets <sup>(2)</sup> |  |  | (1103) | (0.13) |
| **Earnings (Loss) Available for Distribution allocable to common shares** | $(1869) | $(0.26) | $10941 | $1.38 |
| Weighted average common shares - diluted on Earnings Available for Distribution allocable to common shares | 7129 |  | 7925 |  |
| **Earnings (Loss) Available for Distribution per common share - diluted** | $(0.26) |  | $1.38 |  |

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(1)Amount presented is net of the amount allocable to the non-controlling interest.

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(2)Non-core assets are investments and securities owned by us at the initial measurement date in (i) commercial finance, (ii) residential mortgage lending, (iii) legacy CRE loans designated as held for sale and (iv) other non-CRE assets included in assets held for sale.

For the year ended December 31, 2025, EAD in accordance with the Management Agreement, which excludes incentive compensation payable, was a loss of $1.9 million, or a loss of $0.26 per common share outstanding. There was no incentive compensation payable incurred by us for the year ended December 31, 2025.

**Incentive Compensation Hurdle**

With respect to each fiscal quarter commencing with the quarter ended December 31, 2022, an incentive management fee calculated and payable in arrears in an amount, not less than zero, equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)*for the first full calendar quarter ended December 31, 2022*, the product of (a) 20% and (b) the excess of (i) our EAD (as defined in the Management Agreement) for such calendar quarter, over (ii) the product of (A) our book value equity (as defined in the Management Agreement) as of the end of such calendar quarter, and (B) 7% per annum;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)*for each of the second, third and fourth full calendar quarters following the calendar quarter ended December 31, 2022*, the excess of (1) the product of (a) 20% and (b) the excess of (i) our EAD (as defined in the Management Agreement) for the calendar quarter(s) following September 30, 2022, over (ii) the product of (A) our book value equity (as defined in the Management Agreement) in the calendar quarter(s) following September 30, 2022, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to our Manager with respect to the prior calendar quarter(s) following September 30, 2022 (other than the most recent calendar quarter); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)*for each calendar quarter thereafter*, the excess of (1) the product of (a) 20% and (b) the excess of (i) our EAD (as defined in the Management Agreement) for the previous 12-month period, over (ii) the product of (A) our book value equity (as defined in the Management Agreement) in the previous 12-month period, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to our Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive compensation shall be payable with respect to any calendar quarter unless EAD (as defined in the Management Agreement) for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters from September 30, 2022) in the aggregate is greater than zero.

The following table summarizes the calculation of the Incentive Compensation Hurdle for the three months ended December 31, 2025 (dollars in thousands, except per share data):

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| | |
|:---|:---|
| **Book Value Equity** | **Amount** |
| &nbsp;&nbsp;Stockholders' equity less equity attributable to any outstanding preferred stock at September 30, 2022 | $216026 |
| &nbsp;&nbsp;Total amount of net proceeds from any issuance of common stock after October 1, 2022 | 4645 |
| &nbsp;&nbsp;Cumulative EAD from and after October 1, 2022 to the end of the most recently completed calendar quarter | 35855 |
| &nbsp;&nbsp;Amount paid to repurchase common stock after October 1, 2022 <sup>(1)</sup> | (25415) |
| &nbsp;&nbsp;Incentive Compensation paid after October 1, 2022 <sup>(1)</sup> | (1235) |
| &nbsp;&nbsp;&nbsp;&nbsp;Book value equity at December 31, 2025 | $229876 |
| Incentive Compensation Hurdle <sup>(2)(3)</sup> | $16091 |

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(1)Calculated on a daily weighted average basis for the 12-month period ended December 31, 2025.

(2)Calculated as book value equity at December 31, 2025 multiplied by 1.75% (7% per annum).

(3)The amount by which EAD (as defined in the Management Agreement) exceeds the Incentive Compensation Hurdle is multiplied by 20% to arrive at incentive compensation for the quarter.

For the year ended December 31, 2025, there was no incentive compensation payable to the Manager.

**Liquidity and Capital Resources**

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to pay dividends, fund investments, repay borrowings and provide for other general business needs, including payment of our base management fee and incentive compensation. Our ability to meet our on-going liquidity needs is subject to our ability to generate cash from operating activities, which was a net source of $4.1 million for the year ended December 31, 2025, and our ability to maintain and/or obtain additional debt financing and equity capital together with the funds referred to below.

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At December 31, 2025, our liquidity consisted of $83.8 million of unrestricted cash and cash equivalents, and $24.1 million of potential proceeds from unlevered, financeable CRE loans.

During the year ended December 31, 2025, our principal sources of liquidity were: (i) gross financing proceeds of $907.6 million from the initiation of our term reinvestment financing facility; (ii) warehouse financing proceeds of $551.8 million on loan originations; (iii) $125.0 million in proceeds from an investment made by a non-controlling interest in our SPE 2025-1 entity; (iv) gross proceeds of $106.8 million from the sale of an investment in real estate; (v) proceeds of $77.5 million on CRE loan sales; (vi) net proceeds of $53.1 million from repayments on our CRE portfolio; and (vii) gross proceeds of $16.5 million on the sale of a property held for sale.

These sources of liquidity were offset by the liquidation of our two CRE securitizations, paydowns on our term warehouse facilities, deployments in CRE loan portfolio and real estate investments, repurchases of common stock, distributions on our preferred stock and ongoing operating expenses and substantially resulted in the $83.8 million of unrestricted cash we held at December 31, 2025.

The outstanding balance of our loan to ACRES Capital Corp., the parent of our Manager, was $10.4 million and $10.7 million at December 31, 2025 and 2024, respectively. The note bears interest at 3.00% per annum, payable monthly, and matures in July 2026, subject to two one-year extensions, at ACRES Capital Corp.'s option, and amortizes at a rate of $25,000 per month.

In March 2025, we amended and restated our loan to ACRES Capital Corp. to: (i) be issued by ACRES Holdings, LLC, (ii) provide for a six month option for ACRES Holdings, LLC to draw an additional balance of $7.0 million, and (iii) if such option is exercised, (a) to extend the maturity to July 31, 2031, (b) increase the interest rate to 5% and (c) increase the monthly amortization to $50,000. The option was not exercised and expired as of September 30, 2025.

At December 31, 2025, $9.7 million of interest receivable is current and the remaining $17.5 million of interest receivable is deferred, which we deem fully collectible.

***Cash Flows***

For the year ended December 31, 2025, our restricted and unrestricted cash and cash equivalents balance increased $28.4 million, to $86.0 million. The cash movements can be summarized by the following:

*Cash flows from operating activities*. For the year ended December 31, 2025, operating activities increased our cash balances by $4.1 million. Though positive, cash inflows from operating activities are down as we work with our borrowers to structure loan repayment terms that allow our borrowers to successfully complete their underwritten plans and that allow us to ultimately maximize our investment. Some of these structures have deferred loan components that impact our current cash position. We expect to be repaid these deferred amounts as our borrowers create value in the underlying collateral through the execution and completion of their project plans and exit our loans through sales or refinance transactions.

*Cash flows from investing activities*. For the year ended December 31, 2025, investing activities decreased our cash balances by $224.2 million, primarily driven by deployments in CRE whole loans, CRE mezzanine loan, CRE preferred equity, funding of existing commitments on CRE whole loans, deployments in our investment in real estate and investments in unconsolidated entities with underlying real estate collateral, partially offset by repayments of CRE loans and proceeds from sales of CRE loans and proceeds from the sales of investments in real estate.

*Cash flows from financing activities*. For the year ended December 31, 2025, financing activities increased our cash balances by $248.5 million, primarily driven by proceeds from our CRE term reinvestment financing facility, CRE term warehouse financing facilities and proceeds from the sale of equity interests in our consolidated subsidiary, partially offset by repayments on our CRE securitization notes, CRE term warehouse financing facilities and CRE term reinvestment financing facility, mortgages payable, distributions on our preferred stock, and repurchases of our common stock.

***Financing Availability***

We utilize a variety of financing arrangements to finance certain assets. We generally utilize the following types of financing arrangements:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.*CRE - Term Reinvestment Financing Facility:* Our term reinvestment financing facility allows us to borrow effectively against loans that we own. Under this agreement, we transfer loans to a counterparty and agree to repurchase the same loans from the counterparty at a price equal to the transfer price plus interest. The counterparty retains the sole discretion over whether to purchase the loan from us. The facility includes a two-year reinvestment period enabling the reinvestment of principal proceeds from asset repayments into qualifying assets, provided that the proceeds are reinvested within 90 days of the payoff. We can also acquire and finance the future funding participations of the portfolio collateral, subject to the discretion of the counterparty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.*Senior Secured Financing Facility:* Our senior secured financing facility allows us to borrow against loans and real estate investments that we own. This facility has an individual floating rate loan series structure that has a three month commitment period after the financing is approved by the lender, subject to the maximum dollar amount agreed upon for the series. Each floating rate loan series will have mutually agreed upon terms including (i) total commitment, including the capacity to fund future funding commitments, where applicable; (ii) advance rate on portfolio assets; (iii) interest rate composed of one-month Term SOFR plus a market rate spread; and (iv) maturity date of five years from the issuance date for the loan series unless an additional time is mutually agreed upon by the parties. The facility has a maximum portfolio LTV of 85% and contains customary events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.*CRE - Term Warehouse Financing Facilities:* Term warehouse financing facilities effectively allow us to borrow against loans that we own. Under these agreements, we transfer loans to a counterparty and agree to purchase the same loans from the counterparty at a price equal to the transfer price plus interest. The counterparty retains the sole discretion over both whether to purchase the loan from us and, subject to certain conditions, the collateral value of such loan for purposes of determining whether we are required to pay margin to the counterparty. Generally, if the lender determines (subject to certain conditions) that the value of the collateral in a repurchase transaction has decreased by more than a defined minimum amount, we would be required to repay any amounts borrowed in excess of the product of (i) the revised collateral or market value multiplied by (ii) the applicable advance rate. During the term of these agreements, we receive the principal and interest on the related loans and pay interest to the counterparty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.*Securitizations:* We seek non-recourse long-term financing from securitizations of our investments in CRE loans. The securitizations generally involve a senior portion of our loan but may involve the entire loan. Securitization generally involves transferring notes to a special purpose vehicle (or the issuing entity), which then issues one or more classes of non-recourse notes pursuant to the terms of an indenture. The notes are secured by the pool of assets. In exchange for the transfer of assets to the issuing entity, we receive cash proceeds from the sale of non-recourse notes. Securitizations of our portfolio investments might magnify our exposure to losses on those portfolio investments because the retained subordinate interest in any particular overall loan would be subordinate to the loan components sold and we would, therefore, absorb all losses sustained with respect to the overall loan before the owners of the senior notes experience any losses with respect to the loan in question.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.*Mortgage payable:* We have entered into a loan agreement to finance the acquisition of a student housing complex. This loan is interest only and has a maximum principal balance, most of which was advanced in the initial funding. The loan agreement contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction.

In March 2025, we exercised the optional redemption of both ACR 2021-FL1 and ACR 2021-FL2. We also entered into a master repurchase agreement with JPMorgan Chase to finance existing CRE loans as well as the origination of new CRE loans. In connection with the financing, from the proceeds of the new financing facility we repaid (i) all of the outstanding senior notes at the ACR 2021-FL1 and ACR 2021-FL2 securitizations, (ii) all of the outstanding borrowings on the existing JPMorgan Chase facility and (iii) one borrowing from the Morgan Stanley facility. We recognized a charge of $1.5 million upon the redemption of the ACR 2021-FL1 and ACR 2021-FL2 securitizations from the recognition of unamortized deferred debt issuance costs associated with those securitizations.

We were in compliance with all of our covenants at December 31, 2025 in accordance with the terms provided in agreements with our lenders.

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At December 31, 2025, we had financing arrangements as summarized below (in thousands, except amounts in footnotes):

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Execution Date** | **Maturity Date** | **Maximum Capacity** | **Facility Principal<br>Outstanding** | **Availability** |
| **CRE - term reinvestment financing facility** <sup>(1)</sup> |  |  |  |  |  |
| &nbsp;&nbsp;JPMorgan Chase Bank, N.A. | March 2025 | November 2030 | $763303 | $731002 | $32301 |
| **Senior secured financing facility** <sup>(2)</sup> |  |  |  |  |  |
| &nbsp;&nbsp;Massachusetts Mutual Life Insurance Company | July 2020 | June 2028 | 500000 | 63099 | 436901 |
| **CRE - term warehouse financing facilities** <sup>(3)</sup> |  |  |  |  |  |
| &nbsp;&nbsp;JPMorgan Chase Bank, N.A. | October 2018 | July 2026 | 250000 | 116840 | 133160 |
| &nbsp;&nbsp;Morgan Stanley Mortgage Capital Holdings LLC | November 2021 | November 2026 | 500000 | 417920 | 82080 |
| **Mortgage payable** |  |  |  |  |  |
| &nbsp;&nbsp;ReadyCap Commercial, LLC | April 2022 | April 2026 | 20185 | 20185 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Total |  |  |  | $1349046 |  |

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(1)Excludes deferred debt issuance costs of $2.8 million.

(2)Excludes deferred debt issuance costs of $1.5 million.

(3)Excludes deferred debt issuance costs of $898,000.

The following table summarizes the average principal outstanding during the three months ended December 31, 2025 and 2024 and the principal outstanding on our financing arrangements at December 31, 2025 and 2024 (in thousands, except amounts in footnotes):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months<br>Ended<br>December 31, 2025** | **December 31, 2025** | **Three Months<br>Ended<br>December 31, 2024** | **December 31, 2024** |
|  | **Average Principal Outstanding** | **Principal Outstanding** | **Average Principal Outstanding** | **Principal Outstanding** |
| **Financing Arrangement** |  |  |  |  |
| &nbsp;&nbsp;CRE - term reinvestment financing facility <sup>(1)</sup> | $784225 | $731002 | $— | $— |
| &nbsp;&nbsp;Senior secured financing facility <sup>(2)</sup> | 63099 | 63099 | 63099 | 63099 |
| &nbsp;&nbsp;CRE - term warehouse financing facilities <sup>(3)</sup> | 361988 | 534760 | 158126 | 157832 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1209312 | $1328861 | $221225 | $220931 |

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(1)Principal outstanding excludes deferred debt issuance costs of $2.8 million at December 31, 2025.

(2)Principal outstanding excludes deferred debt issuance costs of $1.5 million and $2.2 million at December 31, 2025 and 2024, respectively.

(3)Principal outstanding excludes accrued interest payable of $435,000 at December 31, 2024 and deferred debt issuance costs of $898,000 and $1.5 million at December 31, 2025 and 2024, respectively.

The following table summarizes the maximum month-end principal outstanding on our financing arrangements during the periods presented (in thousands):

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| | | |
|:---|:---|:---|
|  | **Maximum Month-End Principal Outstanding During the** | **Maximum Month-End Principal Outstanding During the** |
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** |
| **Financing Arrangement** |  |  |
| &nbsp;&nbsp;CRE - term reinvestment financing facility | $891098 | $— |
| &nbsp;&nbsp;Senior secured financing facility | 63099 | 64495 |
| &nbsp;&nbsp;CRE - term warehouse financing facilities | 534760 | 189563 |

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Historically, we have financed the acquisition of our investments through collateralized loan obligations ("CLO") and securitizations that essentially match the maturity and repricing dates of these financing vehicles with the maturities and repricing dates of our investments. In the past, we have derived substantial operating cash from our equity investments in our CLOs and securitizations, which will cease if the CLOs and securitizations fail to meet certain tests. Through the time of the optional redemption of our securitizations in March 2025, we did not experience difficulty in maintaining our existing CLO and securitization financing and passed all of the critical tests required by these financings. Our securitizations collectively had a balance of $865.1 million at December 31, 2024.

The following table sets forth the coverage test summary for our financing facility for the periods presented (in thousands):

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| | | |
|:---|:---|:---|
|  | **Look Through LTV Cushion** <sup>(1)</sup> | **Annualized Interest Coverage Cushion** <sup>(2)(3)</sup> |
| **Name** | **At December 31, 2025** | **At December 31, 2025** |
| CRE - term reinvestment financing facility | $40986 | $25454 |

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(1)Look through LTV cushion represents the amount by which the collateral held by the counterparty exceeds the minimum amount required.

(2)Interest coverage includes annualized amounts based on the most recent distribution period.

(3)Interest coverage cushion represents the amount by which annualized interest income expected exceeds the annualized amount payable on the CRE term reinvestment financing facility.

Our leverage ratio, defined as the ratio of borrowings to total equity, may vary as a result of the various funding strategies we use. At December 31, 2025 and 2024, our leverage ratio under GAAP was 2.8 and 3.0 times, respectively. The leverage ratio decreased during the period primarily due to the increase in total equity, offset by an increase in borrowings.

**Contractual Obligations and Commitments**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Contractual Commitments** | **Contractual Commitments** | **Contractual Commitments** | **Contractual Commitments** | **Contractual Commitments** |
|  | **(dollars in thousands, except amounts in footnotes)** | **(dollars in thousands, except amounts in footnotes)** | **(dollars in thousands, except amounts in footnotes)** | **(dollars in thousands, except amounts in footnotes)** | **(dollars in thousands, except amounts in footnotes)** |
|  | **Payments due by Period** | **Payments due by Period** | **Payments due by Period** | **Payments due by Period** | **Payments due by Period** |
|  | **Total** | **Less than 1 year** | **1 - 3 years** | **3 - 5 years** | **More than 5 years** |
| **At December 31, 2025:** |  |  |  |  |  |
| &nbsp;&nbsp;CRE - term reinvestment financing facility <sup>(1)</sup> | $731002 | $— | $— | $731002 | $— |
| &nbsp;&nbsp;Senior secured financing facility <sup>(2)</sup> | 63099 |  | 63099 |  |  |
| &nbsp;&nbsp;CRE - term warehouse financing facilities <sup>(3)</sup> | 534760 | 534760 |  |  |  |
| &nbsp;&nbsp;Mortgage payable <sup>(4)</sup> | 20185 | 20185 |  |  |  |
| &nbsp;&nbsp;5.75% Senior Unsecured Notes <sup>(5)</sup> | 150000 | 150000 |  |  |  |
| &nbsp;&nbsp;Unsecured junior subordinated debentures <sup>(6)</sup> | 51548 |  |  |  | 51548 |
| &nbsp;&nbsp;Lease liabilities <sup>(7)</sup> | 858286 | 1753 | 6094 | 6656 | 843783 |
| &nbsp;&nbsp;Unfunded commitments on CRE loans <sup>(8)</sup> | 88649 | 27035 | 61614 |  |  |
| &nbsp;&nbsp;Base management fees <sup>(9)</sup> | 6289 | 6289 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2503818 | $740022 | $130807 | $737658 | $895331 |

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(1)Excludes $1.8 million of accrued interest payable.

(2)Excludes $224,000 of accrued interest payable.

(3)Excludes $1.1 million of accrued interest payable.

(4)Excludes $84,000 of accrued interest payable.

(5)Excludes $8.6 million of interest expense payable through maturity in August 2026.

(6)Excludes $21.0 million and $22.1 million of estimated interest expense payable through maturity, in June 2036 and October 2036, respectively.

(7)Lease liabilities include a ground rent lease for a hotel property with a remaining term of 91 years and an annual growth rate of 3%.

(8)These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreements, and any necessary approvals have been obtained. At December 31, 2025, we had unfunded commitments on 29 CRE whole loans.

(9)Base management fees presented are based on an estimate of base management fees payable to our Manager over the next 12 months. Our Management Agreement also provides for an incentive compensation arrangement that is based on operating performance. The incentive compensation is not a fixed and determinable amount, and therefore it is not included in this table.

***Net Operating Losses and Loss Carryforwards***

The following table sets forth the net operating losses and loss carryforwards for the periods presented (in millions):

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|:---|:---|:---|:---|:---|:---|
|  | **Tax Year Recognized** | **REIT (QRS) Tax Loss Carryforwards** | **REIT (QRS) Tax Loss Carryforwards** | **TRS Tax Loss Carryforwards** | **TRS Tax Loss Carryforwards** |
| **Tax Asset Item** |  | **Operating** | **Capital** | **Operating** | **Capital** |
| **Net Operating Loss Carryforwards:** |  |  |  |  |  |
| &nbsp;&nbsp;Cumulative as of 2024 | 2024 Return | $32.1 | $— | $62.0 | $— |
| **Net Capital Loss Carryforwards:** |  |  |  |  |  |
| &nbsp;&nbsp;Cumulative as of 2024 | 2024 Return |  | 115.9 |  | 20.8 |
| **Total tax asset estimates** |  | $32.1 | $115.9 | $62.0 | $20.8 |
| &nbsp;&nbsp;Useful life |  | Unlimited | 5 years | Various | 5 years |

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At December 31, 2025, we had $32.1 million of cumulative net operating losses ("NOL") to carry forward to future years. NOL can generally be carried forward to offset both ordinary taxable income and capital gains in future years. The Tax Cuts and Jobs Act ("TCJA") along with revisions made by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act reduced the deduction for NOLs generated post 2017 to 80% of taxable income and granted an indefinite carryforward period. Additionally, we have cumulative total net capital losses of $115.9 million, which expired at December 31, 2025, if not utilized on our tax return to be filed in October 2026.

We also have tax assets in our taxable REIT subsidiaries ("TRS"). These tax assets are analyzed and disclosed quarterly in our financial statements. At December 31, 2025, our TRSs had $62.0 million of NOLs comprising: $39.8 million of pre-TCJA NOLs, some of which are set to expire beginning in 2044 and $22.2 million of NOLs with an indefinite carryforward period. Additionally, our TRS had cumulative total net capital losses of $20.8 million, which are set to expire at December 31, 2029.

***Distributions***

We did not pay distributions on our common shares during the year ended December 31, 2025, as we were able to utilize NOL carryforwards and net capital loss carryforwards to offset our REIT taxable income. This enabled us to grow book value and our investable equity base. Our Board is responsible for the establishment and evaluation of a plan for the prudent resumption of the payment of common share distributions. No assurance, however, can be given as to the amounts or timing of future distributions as such distributions are subject to our earnings, financial condition, capital requirements and such other factors as our Board deems relevant.

We intend to continue to make regular quarterly distributions to holders of our preferred stock.

U.S. federal income tax law generally requires that a REIT distribute at least 90% of its REIT taxable income annually, determined 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 taxable income. 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 on our repurchase agreements and other debt payable. If our cash available for distribution is less than our 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.

**Off-Balance Sheet Arrangements**

***General***

At December 31, 2025, we did not maintain any relationships with unconsolidated entities or financial partnerships that were established for the purpose of facilitating off-balance sheet arrangements or contractually narrow or limited purposes, although we do have interests in unconsolidated entities that were not established for those purposes. At December 31, 2025, we had not guaranteed obligations of any unconsolidated entities or entered into any commitment or letter of intent to provide additional funding to any such entities, other than those discussed in the "Guarantees and Indemnifications" section below.

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***Unfunded Commitments***

In the ordinary course of business, we make commitments to borrowers whose loans are in our CRE loan portfolio to provide additional loan funding in the future. Disbursement of funds pursuant to these commitments is subject to the borrower meeting pre-specified criteria. These commitments are subject to the same underwriting requirements and ongoing portfolio maintenance as are the on-balance sheet financial investments that we hold. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Whole loans had $88.6 million and $94.0 million in unfunded loan commitments at December 31, 2025 and 2024, respectively. Unfunded commitments are not considered in the CECL reserve if they are unconditionally cancellable.

***Guarantees and Indemnifications***

In the ordinary course of business, we may provide guarantees and indemnifications that contingently obligate us to make payments to the guaranteed or indemnified party based on changes in the value of an asset, liability or equity security of the guaranteed or indemnified party. As such, we may be obligated to make payments to a guaranteed party based on another entity's failure to perform or achieve specified performance criteria, or we may have an indirect guarantee of the indebtedness of others.

In September 2025, we entered into guaranties related to a $62 million construction loan and an $11 million bridge loan made to a borrower that is held by a joint venture in which we have a 90% membership interest. Pursuant to the Guaranty of Completion, executed September 2025, by the individual principals of the partnership and us (collectively, the "Guarantors") for the benefit of DL RCF I Loan Holdings, LLC and DL RCF I Loan Holdings (Evergreen), LLC (collectively, the "Lender"), the Guarantors guarantee to the Lender, the Borrower's obligation to commence, construct, develop and complete the construction project in a good and workmanlike manner in accordance with the terms and conditions of the Loan Agreement, dated September 12, 2025 by and among the Borrower, DL RCF I Loan Holdings, LLC (the "Agent") and the Lender (the "Loan Agreement") and to perform all other work contemplated or required to be completed pursuant to the loan documentation through final completion.

In September 2025, the Guarantors also entered into a Guaranty of Retail Space to guarantee the payment and performance of all of the obligations for the payment of debt and the performance of the obligations under the Loan Agreement and a Guaranty of Recourse Obligations to guarantee the payment and performance of certain liabilities ("bad boy") and payment obligations set forth in the Loan Agreement and agree to be liable for the guaranteed obligations as a primary obligor. Also in September 2025, the Guarantors entered into the Guaranty of Interest and Carry Costs to guarantee the payment and performance of the Borrower's obligation to timely pay all Carry Costs and Debt Service and its obligation to make deposits into the Carry Cost Account (each as defined in the agreement) in accordance with the Loan Agreement, and all interest due to the Bridge Lender (defined below) and/or preferred return due pursuant to the Master Tenant Operating Agreement. The Guarantors also unconditionally covenant and agree to be liable for these guaranteed obligations as a primary obligor. Additionally, the Guarantors with the Borrower also entered into an Environmental Indemnity Agreement jointly and severally in favor of the Lender and Agent whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnification.

In connection with the $10.9 million bridge loan from Hoyne Savings Bank ("Bridge Lender") to Borrower, we entered into the Repayment and Completion Guaranty in September 2025, in favor of Bridge Lender subject to the Bridge Loan Agreement between Borrower and Bridge Lender (the "Bridge Loan Agreement") to guarantee the prompt payment of all indebtedness under the Bridge Loan Agreement and the prompt performance of all other covenants, obligations and agreements of Borrower under the Bridge Loan Agreement, including but not limited to, construction of the improvements and completion before the completion date and material compliance with all environmental covenants and indemnities set forth in the Bridge Loan Agreement.

**Critical Accounting Policies and Estimates**

Our consolidated financial statements are prepared by management in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires that we make estimates and assumptions that may affect the value of our assets or liabilities and disclosure of contingent assets and liabilities at the date of our financial statements and our financial results. We believe that certain of our policies are critical because they require us to make difficult, subjective and complex judgments about matters that are inherently uncertain. The critical policies summarized below relate to allowance for credit losses, investments in real estate, revenue recognition and variable interest entities ("VIEs"). We have reviewed these accounting policies with our Board and believe that all of the decisions and assessments upon which our financial statements are based were reasonable at the time made based upon information available to us at the time.

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***Allowance for Credit Losses***

We maintain an allowance for credit losses on our loans held for investment. CRE loans that are held for investment are carried at cost, net of unamortized acquisition premiums or discounts, loan fees and origination costs as applicable. Effective January 1, 2020, we determine our allowance for credit losses, consistent with GAAP, by measuring CECL on the loan portfolio on a quarterly basis. We utilize a probability of default and loss given default methodology over a reasonable and supportable forecast period after which we revert to the historical mean loss ratio, utilizing a blended approach sourced from our own historical losses and the market losses from an engaged third-party's database, to be applied for the remaining estimable period. The CECL model requires us to make significant judgments, including: (i) the selection of a reasonable and supportable forecast period, (ii) the selection and weighting of appropriate macroeconomic forecast scenarios, (iii) the determination of the risk characteristics in which to pool financial assets, and (iv) the appropriate historical loss data to use in the model. Unfunded commitments are not considered in the CECL reserve if they are unconditionally cancellable by us.

We measure the loan portfolio's credit losses by grouping loans based on similar risk characteristics under CECL, which is typically based on the loan's collateral type. We regularly evaluate the risk characteristics of our loan portfolio to determine whether a different pooling methodology is more accurate. Further, if we determine that foreclosure of a loan's collateral is probable or repayment of the loan is expected through sale or operation of the collateral and the borrower is experiencing financial difficulty, expected credit losses are measured as the difference between the current fair value of the collateral and the amortized cost of the loan. Fair value may be determined based on (i) the present value of estimated cash flows; (ii) the market price, if available; or (iii) the fair value of the collateral less estimated disposition costs.

While a loan exhibiting credit quality deterioration may remain on accrual status, the loan is placed on nonaccrual status at such time as (i) management believes that scheduled debt service payments will not be met within the coming 12 months; (ii) the loan becomes 90 days past due; (iii) management determines the borrower is incapable of, or has ceased efforts toward, curing the cause of the credit deterioration; or (iv) the net realizable value of the loan's underlying collateral approximates our carrying value for such loan. While on nonaccrual status, we recognize interest income only when an actual payment is received if a credit analysis supports the borrower's principal repayment capacity. When a loan is placed on nonaccrual, previously accrued interest is reversed from interest income.

We utilize the contractual life of our loans to estimate the period over which we measure expected credit losses. Estimates for prepayments and extensions are incorporated into the inputs for our CECL model. Modifications to loan terms, such as a modification in connection with a troubled debt restructuring ("TDR"), where a concession is granted to a borrower experiencing financial difficulty, may result in the extension of the loan's life and an increase in the allowance for credit losses.

In order to calculate the historical mean loss ratio applied to the loan portfolio, we utilize historical losses from our full underwriting history, along with the market loss history of a selected population of loans from a third-party's database that are similar to our loan types, loan sizes, durations, interest rate structure and general LTV profiles. We may make adjustments to the historical loss history for qualitative or environmental factors if we believe there is evidence that the estimate for expected credit losses should be increased or decreased.

We record write-offs against the allowance for credit losses if we deem that all or a portion of a loan's balance is uncollectible. If we receive cash in excess of some or all of the amounts we previously wrote off, we record a recovery to increase the allowance for credit losses.

As part of the evaluation of the loan portfolio, we assess the performance of each loan and assign a risk rating based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwritten plan, time since origination, current implied and/or re-underwritten LTV ratios, risk inherent in the loan structure and exit plan. Loans are rated "1" through "5," from least risk to greatest risk, in connection with this review.

***Investments in Real Estate***

We acquire investments in real estate through direct equity investments and as a result of our lending activities (i.e. through foreclosure or the receipt of the deed-in-lieu of foreclosure on a property). Acquired investments in real estate assets are recorded initially at fair value in accordance with U.S. GAAP. We allocate the purchase price of our acquired assets and assumed liabilities based on the relative fair values of the assets acquired and liabilities assumed.

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We evaluate whether property obtained as a result of our lending activities should be identified as held for sale. If a property is determined to be held for sale, all of the acquired assets and assumed liabilities will be recorded in property held for sale on the consolidated balance sheets and recorded at the lower of cost or fair value. Once a property is classified as held for sale, depreciation expense is no longer recorded.

Investments in real estate are carried net of accumulated depreciation. We depreciate real property, building and tenant improvements and furniture, fixtures, and equipment using the straight-line method over the estimated useful lives of the assets. We amortize any acquired intangible assets using the straight-line method over the estimated useful lives of the intangible assets. We amortize the value allocated to lease right of use assets and related in-place lease liabilities, when determined to be operating leases, using the straight-line method over the remaining lease term. The value allocated to any associated above or below market lease intangible asset or liability is amortized to lease expense over the remaining lease term.

Ordinary repairs and maintenance are expensed as incurred. Costs related to the improvement of the real property are capitalized and depreciated over their useful lives. Costs related to the development and construction of real property are capitalized to construction in progress during the period beginning with the commencement of development and ending with the completion of construction.

We depreciate investments in real estate and amortize intangible assets over the estimated useful lives of the assets as follows:

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| | |
|:---|:---|
| **Category** | **Term** |
| &nbsp;&nbsp;Building | 35 to 40 years |
| &nbsp;&nbsp;Building improvements | 1 to 39 years |
| &nbsp;&nbsp;Site improvements | 10 years |
| &nbsp;&nbsp;Tenant improvements | Shorter of lease term or expected useful life |
| &nbsp;&nbsp;Furniture, fixtures and equipment | 1 to 12 years |
| &nbsp;&nbsp;Right of use assets | 3 to 99 years |
| &nbsp;&nbsp;Intangible assets | 3 months to 18 years |
| &nbsp;&nbsp;Lease liabilities | Shorter of lease term or expected useful life |

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***Revenue Recognition***

Interest income from our loan portfolio is recognized over the life of each loan using the effective interest method and is recorded on the accrual basis. Premiums and discounts are amortized or accreted into income using the effective yield method. If a loan with a premium or discount is prepaid, we immediately recognize the unamortized portion as a decrease or increase to interest income. In addition, we defer loan origination and extension fees and loan origination costs and recognize them over the life of the related loan with interest income using the straight-line method, which approximates the effective yield method. Income recognition is suspended for loans at the earlier of the date at which payments become 90 days past due or when, in our opinion, a full recovery of principal and income becomes doubtful. When the ultimate collectability of the principal is in doubt, all payments received are applied to principal under the cost recovery method. When the ultimate collectability of the principal is not in doubt, contractual interest is recorded as interest income when received, under the cash method, until an accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed.

Through our investments in real estate, we earn revenue associated with rental operations and hospitality operations, which are presented in real estate income on the consolidated statements of operations.

Rental operating revenue consists of fixed contractual base rent arising from tenant leases at our office properties under operating leases. Revenue is recognized on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded in our consolidated balance sheets. We move to cash basis operating lease income recognition in the period in which collectability of all lease payments is no longer considered probable. At such time, any uncollectible receivable balance will be written off.

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Hospitality operating revenue consists of amounts derived from hotel operations, including room sales and other hotel revenues. We recognize hospitality operating revenue when guest rooms are occupied, services have been provided or fees have been earned. Revenues are recorded net of any sales, occupancy or other taxes collected from customers on behalf of third parties. The following provides additional detail on room revenue and other operating revenue:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Room revenue is recognized when our hotel satisfies its performance obligation of providing a hotel room. The hotel reservation defines the terms of the agreement including an agreed-upon rate and length of stay. Payment is typically due and paid in full at the end of the stay with some customers prepaying for their rooms prior to the stay. Payments received from a customer prior to arrival are recorded as an advance deposit and are recognized as revenue at the time of occupancy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other operating revenue is recognized at the time when the goods or services are provided to the customer or when the performance obligation is satisfied. Payment is due at the time that goods or services are rendered or billed.

***Variable Interest Entities***

We consolidate entities that are VIEs where we have determined that we are the primary beneficiary of such entities. Once it is determined that we hold a variable interest in a VIE, management performs a qualitative analysis to determine (i) if we have the power to direct the matters that most significantly impact the VIE's financial performance; and (ii) if we have the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. If our variable interest possesses both of these characteristics, we are deemed to be the primary beneficiary and would be required to consolidate the VIE. This assessment must be done on an ongoing basis.

At December 31, 2025, we determined that there are no VIEs to be consolidated.

**Recent Accounting Standards**

***Accounting Standards Adopted in 2025***

In December 2023, the Financial Accounting Standards Board ("FASB") issued guidance to improve the transparency of income tax disclosures. This guidance is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. We have adopted this guidance, which did not have a material impact to our consolidated financial statements or financial statement disclosures. See Note 20 - Income Taxes for further information.

***Accounting Standards to be Adopted in Future Periods***

In November 2024, the FASB issued guidance to improve transparency on certain costs and expenses. This guidance is effective for fiscal years beginning after December 15, 2026 and is to be adopted on a prospective basis with the option to apply retrospectively. We are in the process of evaluating the impact of this guidance, however, we do not expect a material impact to our consolidated financial statements.

**Inflation**

Virtually all of our assets and liabilities are interest rate sensitive in nature. As a result, interest rates and other factors influence our performance far more than inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. Our consolidated financial statements are prepared in accordance with GAAP and our distributions are determined by our Board based primarily on our maintaining our REIT qualification; in each case, our activities and balance sheet are measured with reference to historical cost and/or fair market value without considering inflation.

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

At December 31, 2025, the primary components of our market risk were credit risk, counterparty risk, financing risk, and interest rate risk, as described below. While we do not seek to avoid risk completely, we do seek to assume risk that can be quantified from historical experience, to actively manage that risk, to earn sufficient compensation to justify assuming that risk and to maintain capital levels consistent with the risk we undertake or to which we are exposed.

**Credit Risks**

Our loans and investments are subject to credit risk. The performance and value of our loans and investments depend upon the sponsors' 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, ACRES Capital, LLC's asset management team reviews our investment portfolios and in certain instances is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

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In addition, we are exposed to the risks generally associated with the commercial real estate ("CRE") market, including variances in occupancy rates, capitalization rates, absorption rates, and other macroeconomic factors beyond our control. We seek to manage these risks through our underwriting and asset management processes.

In a business environment where benchmark interest rates are increasing significantly, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. In most cases the sponsors will need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At December 31, 2025, 76.5% of the par value of our CRE loan portfolio had interest rate caps with a weighted-average maturity of 15 months or debt service reserves in place.

Macroeconomic conditions may persist into the future and impair our borrowers' ability to comply with the terms under our loan agreements. We maintain a robust asset management relationship with our borrowers and have utilized these relationships to address rising interest rates, and other macroeconomic factors on our loans secured by properties experiencing cash flow pressure. These conditions may be exacerbated by recent changes in global tariff policies and escalating global trade tensions, which may introduce uncertainty in supply chains and contribute to market volatility. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments. In order to mitigate that risk, we have proactively engaged with our borrowers, particularly with those with near-term maturities, in order to maximize recovery.

**Counterparty Risk**

The nature of our business requires us to hold our cash and cash equivalents and obtain financing with various financial institutions. This exposes us to the risk that these financial institutions may not fulfill their obligations to us under these various contractual arrangements. We mitigate this exposure by depositing our cash and cash equivalents and entering into financing agreements with high credit-quality institutions.

**Financing Risk**

We finance our target assets using our CRE debt securitizations, a CRE-term reinvestment financing facility, a senior secured financing facility, warehouse financing facilities, and mortgage payable. Over time, as market conditions change, we may use other forms of leverage in addition to these methods of financing. Weakness or volatility in the financial markets, the CRE and mortgage markets or the economy generally could adversely affect one or more of our lenders or potential lenders and could cause one or more of our lenders or potential lenders to be unwilling or unable to provide us with financing, or to decrease the amount of our available financing, or to increase the costs of that financing.

**Interest Rate Risk**

Our business model is such that rising interest rates will increase our net income, while declining interest rates will decrease net income, subject to the impact of interest rate floors. At December 31, 2025, 98.6% of our CRE loan portfolio by par value earned a floating rate of interest and may be financed with liabilities that both pay interest at floating rates and that are fixed. Floating-rate loans financed with fixed rate liabilities have a negative correlation with declining interest rates to the extent of our financing. The remaining 1.4% of our CRE loan portfolio by par value has a contractual fixed rate of interest. To the extent that interest rate floors on our floating-rate CRE loans are in the money, our net interest will have a negative correlation with rising interest rates to the extent of those interest rate floors. Our floating-rate loan portfolio of $1.8 billion had a weighted-average benchmark floor of 1.78% at December 31, 2025.

The following table estimates the hypothetical impact on our net interest income assuming an immediate increase or decrease of 100 basis points in the applicable interest rate benchmark (in thousands, except per share data):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** |
|  | **100 Basis Point Decrease** <sup>(4)</sup> | **100 Basis Point Decrease** <sup>(4)</sup> | **100 Basis Point Increase** | **100 Basis Point Increase** |
| **Net Assets Subject to Interest Rate Sensitivity** <sup>(1)(2)(3)</sup> | **Increase (Decrease) to Net Interest Income** | **Increase (Decrease) to Net Interest Income Per Share** | **Increase (Decrease) to Net Interest Income** | **Increase (Decrease) to Net Interest Income Per Share** |
| $430069 | $(2891) | $(0.41) | $4222 | $0.60 |

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(1)Includes our floating-rate CRE loans at December 31, 2025.

(2)Includes amounts outstanding on our CRE term reinvestment financing facility, CRE term warehouse financing facilities, senior secured financing facility and unsecured junior subordinated debentures.

(3)Certain of our floating rate loans are subject to a benchmark rate floor.

(4)Decrease in rates assumes the applicable benchmark rate does not fall below 0%.

***Risk Management***

To the extent consistent with maintaining our status as a REIT, we seek to manage our interest rate risk exposure to protect our variable rate debt against the effects of major interest rate changes. We generally seek to manage our interest rate risk by monitoring and adjusting, if necessary, the reset index and interest rate related to our borrowings.

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**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

**INDEX TO FINANCIAL STATEMENTS**

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|:---|:---|
|  | **PAGE** |
| [<u>Report of Independent Registered Public Accounting Firm</u>](#report_independent_registered_public_acc) (PCAOB ID: 42) | 81 |
| [<u>Report of Independent Registered Public Accounting Firm</u>](#report_independent_public_accounting_gt) (PCAOB ID: 248) | 83 |
| [<u>Consolidated Balance Sheets</u>](#consolidated_balance_sheets) | 84 |
| [<u>Consolidated Statements of Operations</u>](#consolidated_statements_of_operations) | 86 |
| [<u>Consolidated Statements of Comprehensive Income (Loss)</u>](#consolidated_statements_of_comp_inc_loss) | 87 |
| [<u>Consolidated Statements of Changes in Equity</u>](#consolidated_statements_of_changes_in_eq) | 88 |
| [<u>Consolidated Statements of Cash Flows</u>](#consolidated_stmt_cash_flows) | 91 |
| [<u>Notes to Consolidated Financial Statements</u>](#notes_to_consolidated_financial_statemen) | 92 |

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Shareholders and the Board of Directors of ACRES Commercial Realty Corp.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheet of ACRES Commercial Realty Corp. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for the years then ended, and the related notes and financial statement schedules (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 9, 2026 expressed an unqualified opinion thereon.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

***Allowance for Current Expected Credit Losses (CECL)***

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|:---|:---|
| *Description of the Matter* | As described in Note 2 and Note 7 to the consolidated financial statements, the Company determines an allowance for credit losses on its commercial real estate (CRE) loans by estimating the current expected credit losses (CECL) over the expected life of the CRE loans. The Company reassesses its estimate at each balance sheet date and recognizes changes in earnings. The allowance for credit losses includes a general estimate of credit losses. The general estimate of credit losses reflects the expected credit losses for all CRE loans that are not individually evaluated and specifically reserved. The general estimate of credit losses was $20.4 million as of December 31, 2025.<br>To estimate the general credit losses, the Company utilizes a probability of default and loss given default methodology, which incorporates individual loan- and collateral-specific data and projects expected credit losses over a reasonable and supportable forecast period using historical loss data and macroeconomic forecast  |

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|:---|:---|
|  | scenarios. This methodology requires the Company to make significant judgments about certain significant assumptions, specifically the fair value of collateral securing each CRE loan.<br>Auditing the Company's general estimate of credit losses was especially challenging and required the involvement of specialists due to the complexity of the methodology and the significant estimation uncertainty of the assumptions used in the model, specifically the fair value of collateral securing each CRE loan. |
| *How We Addressed the Matter in Our Audit* | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management's review of the allowance for credit losses, including controls over the significant assumptions and the data inputs used in the model to develop the general estimate of credit losses. <br>To test the general estimate of credit losses, we performed audit procedures that included, among others, evaluating the appropriateness of the methodology, model, and significant assumptions and testing the completeness and accuracy of the data inputs. We involved our credit risk valuation specialists to evaluate the conceptual soundness and performance of the model used in estimating the probability of defaults, and losses given default by comparing to independently obtained data and market observations. With the assistance of our real estate valuation specialists, for a sample of collateral-dependent loans, we assessed the reasonableness of current and as-stabilized fair values, including testing certain key assumptions used in the fair value measurements, such as capitalization rates and net operating income of the underlying collateral by comparing to independently obtained observable market data. We also evaluated the Company's disclosures in its consolidated financial statements.  |

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/s/ Ernst & Young LLP

We have served as the Company's auditor since 2024.

Philadelphia, Pennsylvania

March 9, 2026

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

Board of Directors and Shareholders

ACRES Commercial Realty Corp.

**Opinion on the financial statements** 

We have audited the consolidated balance sheet of ACRES Commercial Realty Corp. (a Maryland corporation) and subsidiaries (the "Company") as of December 31, 2023 (not presented herein), and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for the year ended December 31, 2023, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

**Basis for opinion** 

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

/s/ Grant Thornton LLP

We served as the Company's auditor from 2005 to 2024.

San Francisco, California

March 6, 2024 (except for Note 22, as to which the date is March 14, 2025).

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

**(in thousands, except share and per share data)**

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| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| **ASSETS** <sup>(1)</sup> |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $83768 | $56713 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | 2190 | 890 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest receivable | 27259 | 14655 |
| &nbsp;&nbsp;&nbsp;&nbsp;CRE loans | 1830367 | 1487392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: allowance for credit losses | (20398) | (32847) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE loans, net | 1809969 | 1454545 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan receivable - due from Manager | 10375 | 10675 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan held for sale |  | 11100 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in unconsolidated entities | 29237 | 21857 |
| &nbsp;&nbsp;&nbsp;&nbsp;Properties held for sale | 90825 | 201125 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate | 76415 | 76608 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets | 19545 | 19911 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets | 6221 | 6988 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets | 6560 | 6400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $2162364 | $1881467 |
| **LIABILITIES** <sup>(2)</sup> |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and other liabilities | $7482 | $11817 |
| &nbsp;&nbsp;&nbsp;&nbsp;Management fee payable - related party |  | 540 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable | 6814 | 6958 |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowings | 1544938 | 1360371 |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | 45942 | 45259 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions payable | 3457 | 3607 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued tax liability | 8 | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;Liabilities held for sale | 3131 | 3226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 1611772 | 1431805 |
| **EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, par value $0.001: 10,000,000 shares authorized 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share; 4,800,000 and 4,800,000 shares issued and outstanding | 5 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, par value $0.001: 6,800,000 shares authorized 7.875% Series D Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share; 4,507,857 and 4,507,857 shares issued and outstanding | 5 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value $0.001: 41,666,666 shares authorized; 6,887,451 and 7,634,004 shares issued and outstanding (including 328,586 and 574,538 unvested restricted shares) | 7 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 1142410 | 1162581 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (1603) | (3203) |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions in excess of earnings | (720028) | (720268) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 420796 | 439128 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests | 129796 | 10534 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total equity | 550592 | 449662 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**TOTAL LIABILITIES AND EQUITY** | $2162364 | $1881467 |

---

The accompanying notes are an integral part of these statements

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS - (Continued)**

**(in thousands, except share and per share data)**

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025**<sup>(3)</sup> | **December 31, 2024** |
| **(1) Assets of consolidated variable interest entities ("VIEs") included in total assets above:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | $— | $190 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest receivable |  | 10733 |
| &nbsp;&nbsp;&nbsp;&nbsp;CRE loans, pledged as collateral <sup>(4)</sup> |  | 1115163 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan held for sale |  | 9469 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets |  | 117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets of consolidated VIEs | $— | $1135672 |
| **(2) Liabilities of consolidated VIEs included in total liabilities above:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and other liabilities | $— | $73 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable |  | 2111 |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowings |  | 862804 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities of consolidated VIEs | $— | $864988 |

---

(3)There were no consolidated VIEs at December 31, 2025.

(4)Excludes the allowance for credit losses.

The accompanying notes are an integral part of these statements

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(in thousands, except share and per share data)**

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **REVENUES** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE loans | $118125 | $154862 | $184334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 1024 | 2400 | 3132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 119149 | 157262 | 187466 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 85942 | 116092 | 130791 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 33207 | 41170 | 56675 |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate income | 46606 | 42170 | 34311 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other revenue | 133 | 148 | 145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 79946 | 83488 | 91131 |
| **OPERATING EXPENSES** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 11304 | 10691 | 10512 |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate expenses | 51325 | 46896 | 38913 |
| &nbsp;&nbsp;&nbsp;&nbsp;Management fees - related party | 6411 | 6498 | 7462 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity compensation - related party | 2147 | 2957 | 2578 |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate depreciation and amortization | 78 | 57 | 91 |
| &nbsp;&nbsp;&nbsp;&nbsp;(Reversal of) provision for credit losses, net | (7749) | 4790 | 10902 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 63516 | 71889 | 70458 |
|  | 16430 | 11599 | 20673 |
| **OTHER INCOME (EXPENSE)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity in losses of unconsolidated subsidiaries | (1727) | (912) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on conversion of real estate |  | 8637 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of investment in real estate | 11674 | 7506 | 745 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income | 1516 | 1991 | 527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income | 11463 | 17222 | 1272 |
| **INCOME BEFORE TAXES** | 27893 | 28821 | 21945 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax benefit (expense) | 83 | (126) | (97) |
| **NET INCOME** | 27976 | 28695 | 21848 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income allocated to preferred shares | (21077) | (20386) | (19422) |
| &nbsp;&nbsp;&nbsp;&nbsp;Carrying value in excess of consideration paid for preferred shares |  | 242 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net (income) loss allocable to non-controlling interests, net of taxes | (6660) | 572 | 542 |
| **NET INCOME ALLOCABLE TO COMMON SHARES** | $239 | $9123 | $2968 |
| **NET INCOME PER COMMON SHARE - BASIC** | $0.03 | $1.19 | $0.35 |
| **NET INCOME PER COMMON SHARE - DILUTED** | $0.03 | $1.15 | $0.35 |
| **WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC** | 7129163 | 7653630 | 8416290 |
| **WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED** | 7412911 | 7924903 | 8566058 |

---

The accompanying notes are an integral part of these statements

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)**

**(in thousands)**

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Net income | $27976 | $28695 | $21848 |
| Other comprehensive income: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Reclassification adjustments associated with net unrealized losses from interest rate swaps included in interest expense | 1600 | 1598 | 1593 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other comprehensive income | 1600 | 1598 | 1593 |
| Comprehensive income before allocation to preferred shares | 29576 | 30293 | 23441 |
| Net (income) loss allocated to non-controlling interests | (6660) | 572 | 542 |
| Carrying value in excess of consideration paid for preferred shares |  | 242 |  |
| Net income allocated to preferred shares | (21077) | (20386) | (19422) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive income allocable to common shares | $1839 | $10721 | $4561 |

---

The accompanying notes are an integral part of these statements

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------

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**

**FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023**

**(in thousands, except share and per share data)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** |  |  |  |  |  |  |  |  |
|  | **Shares** | **Amount** | **Series C Preferred Stock** | **Series D Preferred Stock** | **Additional Paid-In Capital** | **Accumulated Other Comprehensive Loss** | **Retained Earnings (Distributions in Excess of Earnings)** | **Total Stockholders' Equity** | **Non-Controlling Interest** | **Total Equity** |
| **Balance, January 1, 2025** | 7634004 | $8 | $5 | $5 | $1162581 | $(3203) | $(720268) | $439128 | $10534 | $449662 |
| Exercise of warrants at $0.03 per share | 391380 |  |  |  |  |  |  |  |  |  |
| Purchase and retirement of common stock | (1137933) | (1) |  |  | (22318) |  |  | (22319) |  | (22319) |
| Amortization of stock-based compensation |  |  |  |  | 2147 |  |  | 2147 |  | 2147 |
| Contributions from non-controlling interests |  |  |  |  |  |  |  |  | 125000 | 125000 |
| Distributions to non-controlling interests |  |  |  |  |  |  |  |  | (12398) | (12398) |
| Net income |  |  |  |  |  |  | 21317 | 21317 | 6660 | 27977 |
| Distributions and accrual of cumulative preferred stock dividends |  |  |  |  |  |  | (21077) | (21077) |  | (21077) |
| Amortization of terminated derivatives |  |  |  |  |  | 1600 |  | 1600 |  | 1600 |
| **Balance, December 31, 2025** | 6887451 | $7 | $5 | $5 | $1142410 | $(1603) | $(720028) | $420796 | $129796 | $550592 |

---

The accompanying notes are an integral part of these statements

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------

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**

**FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023 - (Continued)**

**(in thousands, except share and per share data)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** |  |  |  |  |  |  |  |  |
|  | **Shares** | **Amount** | **Series C Preferred Stock** | **Series D Preferred Stock** | **Additional Paid-In Capital** | **Accumulated Other Comprehensive Loss** | **Retained Earnings (Distributions in Excess of Earnings)** | **Total Stockholders' Equity** | **Non-Controlling Interest** | **Total Equity** |
| **Balance, January 1, 2024** | 7878216 | $8 | $5 | $5 | $1169970 | $(4801) | $(729391) | $435796 | $10419 | $446215 |
| Purchase and retirement of common stock | (579456) |  |  |  | (7884) |  |  | (7884) |  | (7884) |
| Stock-based compensation | 335244 |  |  |  | 19 |  |  | 19 |  | 19 |
| Offering costs |  |  |  |  | (82) |  |  | (82) |  | (82) |
| Amortization of stock-based compensation |  |  |  |  | 2957 |  |  | 2957 |  | 2957 |
| Preferred stock redemption |  |  |  |  | (2399) |  | 242 | (2157) |  | (2157) |
| Contributions from non-controlling interests |  |  |  |  |  |  |  |  | 687 | 687 |
| Net income |  |  |  |  |  |  | 29267 | 29267 | (572) | 28695 |
| Distributions and accrual of cumulative preferred stock dividends |  |  |  |  |  |  | (20386) | (20386) |  | (20386) |
| Amortization of terminated derivatives |  |  |  |  |  | 1598 |  | 1598 |  | 1598 |
| **Balance, December 31, 2024** | 7634004 | $8 | $5 | $5 | $1162581 | $(3203) | $(720268) | $439128 | $10534 | $449662 |

---

The accompanying notes are an integral part of these statements

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------

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**

**FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023 - (Continued)**

**(in thousands, except share and per share data)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** |  |  |  |  |  |  |  |  |
|  | **Shares** | **Amount** | **Series C Preferred Stock** | **Series D Preferred Stock** | **Additional Paid-In Capital** | **Accumulated Other Comprehensive Loss** | **Retained Earnings (Distributions in Excess of Earnings)** | **Total Stockholders' Equity** | **Non-Controlling Interest** | **Total Equity** |
| **Balance, January 1, 2023** | 8708100 | $9 | $5 | $5 | $1174202 | $(6394) | $(732359) | $435468 | $5846 | $441314 |
| Purchase and retirement of common stock | (899085) | (1) |  |  | (7409) |  |  | (7410) |  | (7410) |
| Stock-based compensation | 69201 |  |  |  | 599 |  |  | 599 |  | 599 |
| Amortization of stock-based compensation |  |  |  |  | 2578 |  |  | 2578 |  | 2578 |
| Contributions from non-controlling interests |  |  |  |  |  |  |  |  | 5115 | 5115 |
| Net income |  |  |  |  |  |  | 22390 | 22390 | (542) | 21848 |
| Distributions and accrual of cumulative preferred stock dividends |  |  |  |  |  |  | (19422) | (19422) |  | (19422) |
| Amortization of terminated derivatives |  |  |  |  |  | 1593 |  | 1593 |  | 1593 |
| **Balance, December 31, 2023** | 7878216 | $8 | $5 | $5 | $1169970 | $(4801) | $(729391) | $435796 | $10419 | $446215 |

---

The accompanying notes are an integral part of these statements

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------

**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(in thousands)**

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |  |
| Net income | $27976 | $28695 | $21848 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;(Reversal of) provision for credit losses, net | (7749) | 4790 | 10902 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation, amortization and accretion | 10253 | 9691 | 5191 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of stock-based compensation | 2147 | 2957 | 2578 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on conversion of real estate |  | (8637) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of investment in real estate | (11674) | (7506) | (745) |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity in losses of unconsolidated subsidiaries | 1727 | 698 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in accrued interest receivable, net of purchased interest | (12959) | (2949) | 187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase in management fee payable | (540) | (26) | 284 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in accounts payable and other liabilities | (197) | (3455) | 3652 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in lease liabilities | (2325) | (2081) | (151) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase in accrued interest payable | (173) | (1377) | 885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in other assets | (2384) | (1415) | 978 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 4102 | 19385 | 45609 |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal fundings of CRE loans | (753231) | (53164) | (108260) |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal payments received on CRE loans | 341405 | 377583 | 215955 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate | (2573) | (44744) | (38192) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of investments in real estate | 121613 | 19985 | 14309 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in unconsolidated entities | (9107) | (884) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of furniture and fixtures | (165) | (8) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of CRE loans | 77530 |  | 77203 |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal payments received on loan - due from Manager | 300 | 300 | 300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by investing activities | (224228) | 299068 | 161315 |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Offering costs |  | (82) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchase of common stock | (22319) | (7884) | (7410) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchase of preferred stock |  | (2157) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior secured financing facility |  |  | 13500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE - term warehouse financing facilities | 551774 | 19151 | 11755 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgages payable | 1001 | 36334 | 25069 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE - term reinvestment financing facility | 913781 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments on borrowings: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Securitizations | (865078) | (344962) | (32183) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior secured financing facility |  | (1397) | (40554) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE - term warehouse financing facilities | (174900) | (31745) | (171742) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgages payable | (60929) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE - term reinvestment financing facility | (182725) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of debt issuance costs | (4015) | (640) | (3977) |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions to non-controlling interests | (11882) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds received from non-controlling interests | 125000 | 687 | 5115 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions paid on preferred stock | (21227) | (20041) | (19422) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities | 248481 | (352736) | (219849) |
| **NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH** | 28355 | (34283) | (12925) |
| **CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD** | 57603 | 91886 | 104811 |
| **CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD** | $85958 | $57603 | $91886 |

---

The accompanying notes are an integral part of these statements

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**NOTE 1 - ORGANIZATION**

ACRES Commercial Realty Corp., a Maryland corporation, along with its subsidiaries (collectively, the "Company"), is a real estate investment trust ("REIT") that is primarily focused on originating, holding and managing commercial real estate ("CRE") mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. The Company's manager is ACRES Capital, LLC (the "Manager"), a subsidiary of ACRES Capital Corp. (collectively, "ACRES"), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial property in top United States ("U.S.") markets.

The Company has qualified, and expects to qualify in the current fiscal year, as a REIT.

The Company conducts its operations through the use of subsidiaries that it consolidates into its financial statements. The Company's core assets are consolidated through its investments in ACRES Realty Funding, Inc. ("ACRES RF"), a wholly-owned subsidiary, that holds CRE loans and CRE-related securities as well as special purpose subsidiaries established for securitization purposes, which were consolidated as variable interest entities ("VIEs") as discussed in Note 3.

**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis of Presentation**

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. ("GAAP"). In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments necessary to fairly present the Company's financial position, results of operations and cash flows.

**Principles of Consolidation**

The consolidated financial statements include the accounts of the Company, majority-owned or controlled subsidiaries and VIEs for which the Company is considered the primary beneficiary. All inter-company transactions and balances have been eliminated in consolidation.

***Variable Interest Entities***

A VIE is defined as an entity in which equity investors (i) do not have a controlling financial interest and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, which is defined as the party that (a) has the power to control the activities that most significantly impact the VIE's economic performance and (b) has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company considers the following criteria in determining whether an entity is a VIE:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including the equity holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The equity investors lack one or more of the following essential characteristics of a controlling financial interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.The direct ability to make decisions about the entity's activities through voting rights or similar rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.The obligation to absorb the expected losses of the entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.The right to receive the expected residual returns of the entity. The equity investors have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

In determining whether the Company is the primary beneficiary of a VIE, the Company reviews governing contracts, formation documents and any other contractual arrangements for any relevant terms and determines the activities that have the most significant impact on the VIE and who has the power to direct those activities. The Company also looks for kick-out rights, protective rights and participating rights as well as any financial or other support provided to the VIE and the reason for that support, and the terms of any explicit or implicit arrangements that may require the Company to provide future support. The Company then makes a determination based on its power to direct the most significant activities of the VIE and/or a financial interest that is potentially significant. In instances when a VIE is owned by both the Company and related parties, the Company considers whether there is a single party in the related party group that meets both the power and losses or benefits criteria on its own as though no related party relationship existed. If one party within the related party group meets both these criteria, such reporting entity is the primary beneficiary of the VIE and no further analysis is needed. If no party within the related party group on its own meets both the power and losses or benefits criteria, but the related party group as a whole meets these two criteria, the determination of primary beneficiary within the related party group is based upon an analysis of the facts and circumstances with the objective of determining which party is most closely associated with the VIE. Determining the primary beneficiary requires significant judgment. The Company continuously analyzes entities in which it holds variable interests, including when there is a reconsideration event, to determine whether such entities are VIEs and whether such potential VIEs should be consolidated or deconsolidated.

***Voting Interest Entities***

A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company does not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party or through a simple majority vote.

The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework.

**Use of Estimates**

The preparation of financial statements in conformity with GAAP requires management 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 and within the period of financial results. Actual results could differ from those estimates. Estimates affecting the accompanying consolidated financial statements include, but are not limited to, the net realizable and fair values of the Company's investments, the estimated useful lives used to calculate depreciation, the expected lives over which to amortize premiums and accrete discounts, reversals of or provisions for expected credit losses and the disclosure of contingent liabilities.

**Cash and Cash Equivalents**

Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of three months or less at the time of purchase. From time to time, we may have bank balances in excess of federally insured amounts; however, we deposit our cash and cash equivalents with high credit-quality institutions to minimize credit risk exposure.

Restricted cash includes required account balance minimums for the Company's CRE debt securitizations and cash held in various escrow and deposit accounts.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The following table provides a reconciliation of cash, cash equivalents and restricted cash on the consolidated balance sheets to the total amount shown on the consolidated statements of cash flows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Cash and cash equivalents | $83768 | $56713 |
| Restricted cash | 2190 | 890 |
| &nbsp;&nbsp;Total cash, cash equivalents and restricted cash shown on the Company's consolidated statements of cash flows | $85958 | $57603 |

---

**Investments in Unconsolidated Entities**

The Company's non-controlling investments in unconsolidated entities are included in investments in unconsolidated entities on the consolidated balance sheets and are accounted for under the cost or equity method.

Under the equity method, capital contributions, distributions, profits and losses of the entities are allocated in accordance with the terms of the entities' operating agreements. Such allocations may differ from the stated percentage interests, if any, as a result of preferred returns and allocation formulas as described in the entities' operating agreements. For non-controlling investments in unconsolidated entities qualifying for equity method treatment with substantive profit-sharing arrangements, the hypothetical liquidation at book value ("HLBV") method may be used for recognizing earnings. Under the HLBV method, earnings are calculated and recognized based on the change in how the unconsolidated entity would allocate and distribute its cash if it were to liquidate the carrying value of its assets and liabilities on the beginning and end dates of the earnings period, excluding contributions made or distributions received.

The Company accounts for investments that do not qualify for equity method accounting using the cost method. Under the cost method, the Company records dividend income when declared to the extent it is not considered a return of capital, which is recorded as a reduction of the cost of the investment.

**Loans**

The Company acquires loans through direct origination and occasionally through purchases from third-parties. Loans are typically held for investment; therefore, the Company initially records loans at the amount funded for originated loans or at the acquisition price for loans purchased, and subsequently, accounts for them based on their outstanding principal plus or minus unamortized premiums or discounts. The Company may sell a loan held for investment where the credit fundamentals underlying a particular loan have changed in such a manner that the Company's expected return on investment may decrease. Once the determination has been made by the Company that it no longer will hold the loan for investment, the Company identifies these loans as loans held for sale. Any credit-related write-off considerations prior to the transfer of the loan to loans held for sale are accounted for through the allowance for credit losses on the Company's consolidated balance sheets.

The Company reports its loans held for sale at the lower of amortized cost or fair value. To determine fair value, the Company primarily uses appraisals of underlying collateral obtained from third-parties as a practical expedient. Key assumptions used in those appraisals are reviewed by the Company. If there is a material difference between the value provided by the appraiser and information used by the Company to validate the appraisal, the Company will evaluate the difference with the appraiser, which could result in an updated appraisal. The Company may also use the present value of estimated cash flows, market price, if available, or other determinants of the fair value of the collateral less estimated disposition costs. Any determined changes in the fair value of loans held for sale are recorded in fair value adjustments on financial assets held for sale on the Company's consolidated statements of operations. Based on a prioritization of inputs used in the valuation of each position, the Company categorizes these investments as either Level 2 or Level 3 in the fair value hierarchy.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**Loan Interest Income Recognition**

Interest income on loans includes interest at stated rates adjusted for amortization or accretion of premiums and discounts based on the contractual payment terms of the loan. Premiums and discounts are amortized or accreted into income using the effective yield method. If a loan with a premium or discount is prepaid, the Company immediately recognizes the unamortized portion as a decrease or increase to interest income. In addition, the Company defers loan origination and extension fees and loan origination costs and recognizes them over the life of the related loan against interest income using the straight line method, which approximates the effective yield method. Income recognition is suspended for loans at the earlier of the date at which payments become 90 days past due or when a full recovery of principal and income becomes doubtful. When the ultimate collectability of the principal is in doubt, all payments received are applied to principal under the cost recovery method. On the other hand, when the ultimate collectability of the principal is not in doubt, contractual interest is recorded as interest income when received, under the cash method, until an accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. A loan is written off when it is no longer realizable and/or legally discharged.

The Company records interest receivable on its loans in accrued interest receivable on its consolidated balance sheets. The Company analyzes the interest receivable balances on a timely basis, or at least quarterly, to determine if they are uncollectible. If an interest receivable amount is deemed uncollectible, then the Company writes off that uncollectible amount of the interest receivable through a reversal of interest income. In addition, interest receivable on loans is not included in the Company's current expected credit loss calculations as the Company performs timely write offs of aged interest receivables.

**Preferred Equity Investments**

Preferred equity investments, which are subordinate to any loans but senior to common equity, depending on the investment's characteristics, could be accounted for as real estate, joint ventures or as mortgage loans. The Company's preferred equity investments are accounted for as CRE loans held for investment, are carried at cost, net of unamortized loan fees and origination costs, and are included within CRE loans on the Company's consolidated balance sheets. The Company accreted or amortized any discounts or premiums over the life of the related loan utilizing the effective interest method. Interest and fees were recognized as income subject to recoverability, which was substantiated by obtaining annual appraisals on the underlying property.

**Allowance for Credit Losses**

The Company maintains an allowance for credit loss on its loans held for investment. The Company determines its allowance for credit losses by measuring the current expected credit losses ("CECL") on the loan portfolio on a quarterly basis. The Company utilizes a probability of default and loss given default methodology together with collateral-specific data for each loan over a reasonable and supportable forecast period after which it reverts to its historical mean loss ratio, utilizing a blended approach sourced from its own historical losses and the market losses from an engaged third-party's database, to be applied for the remaining estimable period. The CECL model requires the Company to make significant judgments, including: (i) the selection of a reasonable and supportable forecast period, (ii) the selection and weighting of appropriate macroeconomic forecast scenarios, (iii) the determination of the risk characteristics in which to pool financial assets, and (iv) the appropriate historical loss data to use in the model. Unfunded commitments are not considered in the CECL reserve if they are unconditionally cancellable by the Company.

The Company measures the loan portfolio's credit losses by grouping loans based on similar risk characteristics under CECL, which is typically based on the loan's collateral type. The Company regularly evaluates the risk characteristics of its loan portfolio to determine whether a different pooling methodology is more accurate. Further, if the Company determines that foreclosure of a loan's collateral is probable or repayment of the loan is expected through sale or operation of the collateral and the borrower is experiencing financial difficulty, expected credit losses are measured as the difference between the current fair value of the collateral and the amortized cost of the loan. Fair value may be determined based on (i) the present value of estimated cash flows; (ii) the market price, if available; or (iii) the fair value of the collateral less estimated disposition costs.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

While a loan exhibiting credit quality deterioration may remain on accrual status, the loan is placed on nonaccrual status at such time as (i) management believes that scheduled debt service payments will not be met within the coming 12 months; (ii) the loan becomes 90 days past due; (iii) management determines the borrower is incapable of, or has ceased efforts toward, curing the cause of the credit deterioration; or (iv) the net realizable value of the loan's underlying collateral approximates the Company's carrying value for such loan. While on nonaccrual status, the Company recognizes interest income only when an actual payment is received if a credit analysis supports the borrower's principal repayment capacity. When a loan is placed on nonaccrual, previously accrued and uncollected interest is reversed from interest income.

The Company utilizes the contractual life of its loans to estimate the period over which it measures expected credit losses. Estimates for prepayments and extensions are incorporated into the inputs for the Company's CECL model. Modifications to loan terms may result in an increase to the allowance for credit losses.

In order to calculate the historical mean loss ratio applied to the loan portfolio, the Company utilizes historical losses from its full underwriting history, along with the market loss history of a selected population of loans from a third-party's database that are similar to the Company's loan types, loan sizes, durations, interest rate structure and general loan-to-collateral value ("LTV") profiles. The Company may make adjustments to the historical loss history for qualitative or environmental factors if it believes there is evidence that the estimate for expected credit losses should be increased or decreased.

The Company records write-offs against the allowance for credit losses if it deems that all or a portion of a loan's balance is uncollectible. If the Company receives cash in excess of some or all of the amounts it previously wrote off, it records the recovery by increasing the allowance for credit losses.

As part of the evaluation of the loan portfolio, the Company assesses the performance of each loan and assigns a risk rating based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwritten plan, time since origination, current implied and/or re-underwritten LTV ratios, risk inherent in the loan structure and exit plan. Loans are rated "1" through "5," from the least risk to the greatest risk, in connection with this review.

**Operating Revenue at Properties**

Through its investments in real estate, the Company earns revenue associated with rental operations and hospitality operations, which are presented in real estate income on the consolidated statements of operations.

The Company's rental operating revenue consists of fixed contractual base rent arising from tenant leases at the Company's multifamily, office and student housing properties under operating leases. Revenue is recognized on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded in the Company's consolidated balance sheets. The Company moves to cash basis operating lease income recognition in the period in which collectability of all lease payments is no longer considered probable. At such time, any uncollectible receivable balance will be written off.

Hospitality operating revenue consists of amounts derived from hotel operations, including room sales and other hotel revenues. The Company recognizes hospitality operating revenue when guest rooms are occupied, services have been provided or fees have been earned. Revenues are recorded net of any sales, occupancy or other taxes collected from customers on behalf of third parties. The following provides additional detail on room revenue and other operating revenue:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Room revenue is recognized when the Company's hotel satisfies its performance obligation of providing a hotel room. The hotel reservation defines the terms of the agreement including an agreed-upon rate and length of stay. Payment is typically due and paid in full at the end of the stay with some customers prepaying for their rooms prior to the stay. Payments received from a customer prior to arrival are recorded as an advance deposit and are recognized as revenue at the time of occupancy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other operating revenue is recognized at the time when the goods or services are provided to the customer or when the performance obligation is satisfied. Payment is due at the time that goods or services are rendered or billed.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**Investments in Real Estate**

The Company acquires investments in real estate through direct equity investments and as a result of its lending activities (i.e. through foreclosure or the receipt of the deed-in-lieu of foreclosure on a property). Acquired investments in real estate assets are accounted for as asset acquisitions and recorded initially at fair value in accordance with GAAP. The Company allocates the purchase price of its acquired assets and assumed liabilities based on the relative fair values of the assets acquired and liabilities assumed. The Company accounts for leases that it acquires as operating leases.

The Company evaluates whether property owned should be identified as held for sale. If a property is determined to be held for sale, all of the acquired capital assets are recorded in property held for sale and lease liabilities are recorded in liabilities held for sale on the consolidated balance sheets and recorded at the lower of cost or fair value, see the "Assets and Liabilities Held for Sale" section below. While a property is classified as held for sale, depreciation expense is no longer recorded.

Investments in real estate are carried net of accumulated depreciation. The Company depreciates real property, building and tenant improvements and furniture, fixtures, and equipment using the straight-line method over the estimated useful lives of the assets unless the asset is designated as held for sale. The Company amortizes any acquired intangible assets using the straight-line method over the estimated useful lives of the intangible assets. The Company amortizes the value allocated to lease right of use assets and related in-place lease liabilities, when determined to be operating leases, using the straight-line method over the remaining lease term. The value allocated to any associated above or below market lease intangible asset or liability is amortized to the respective lease expense or revenue account over the remaining lease term.

Ordinary repairs and maintenance are expensed as incurred. Costs related to the improvement of the real property are capitalized and depreciated over their useful lives. Costs related to the development and construction of real property are capitalized to construction in progress during the period beginning with the commencement of development and ending with the completion of construction.

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

---

| | |
|:---|:---|
| **Category** | **Term** |
| &nbsp;&nbsp;Building | 35 to 40 years |
| &nbsp;&nbsp;Building improvements | 1 to 39 years |
| &nbsp;&nbsp;Site improvements | 10 years |
| &nbsp;&nbsp;Tenant improvements | Shorter of lease term or expected useful life |
| &nbsp;&nbsp;Furniture, fixtures and equipment | 1 to 12 years |
| &nbsp;&nbsp;Right of use assets | 3 to 99 years |
| &nbsp;&nbsp;Intangible assets | 3 months to 18 years |
| &nbsp;&nbsp;Lease liabilities | Shorter of lease term or expected useful life |

---

**Leases**

The value of the operating leases are determined through the discounted cash flow method and are recognized on the consolidated balance sheets as offsetting right of use assets and lease liabilities. The operating lease for the Company's office space is amortized over the lease term using the effective-interest method. The Company's operating lease for office equipment is amortized over the lease term using the straight-line method.

**Assets and Liabilities Held for Sale**

The Company classifies long-lived assets or a disposal group to be sold as held for sale in the period in which all of the following criteria are met:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• management, having the authority to approve the action, commits to a plan to sell the asset or the disposal group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the Company's control extend the period of time required to sell the asset or disposal group beyond one year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

A long-lived asset or disposal group that is classified as held for sale is initially measured at the lower of its cost or fair value less any costs to sell. Any loss resulting from the transfer of long-lived assets or disposal groups to assets held for sale is recognized in the period in which the held for sale criteria are met.

The fair values of assets held for sale are assessed each reporting period and changes in such fair values are reported as an adjustment to the carrying value of the asset or disposal group with an offset to fair value adjustments on financial assets held for sale on the Company's consolidated statements of operations, to the extent that any subsequent changes in fair value do not exceed the cost basis of the asset or disposal group.

Additionally, upon determining that a long-lived asset or disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group in the line items assets or liabilities held for sale, respectively, on the consolidated balance sheets.

**Comprehensive Income (Loss)**

Comprehensive income (loss) for the Company includes net income (loss) and the change in net unrealized gains (losses) on derivative instruments that were used to hedge exposure to interest rate fluctuations.

**Income Taxes**

The Company operates in such a manner as to qualify as a REIT under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"); therefore, applicable REIT taxable income is included in the taxable income of its shareholders, to the extent distributed by the Company. To maintain REIT status for federal income tax purposes, the Company is generally required to distribute at least 90% of its REIT taxable income to its shareholders as well as comply with certain other qualification requirements as defined under the Code. As a REIT, the Company is not subject to federal corporate income tax to the extent that it distributes 100% of its REIT taxable income each year.

Taxable income, from non-REIT activities managed through the Company's taxable REIT subsidiaries ("TRSs"), is subject to federal, state and local income taxes. The Company's TRS' income taxes are accounted for under the asset and liability method. Under the asset and liability method, deferred income taxes are recognized for the temporary differences between the financial reporting basis and tax basis of assets and liabilities. The Company evaluates the realizability of its deferred tax assets and liabilities and recognizes a valuation allowance if, based on available evidence, it is more likely than not that some or all of its deferred tax assets will not be realized. In evaluating the realizability of the deferred tax asset or liability, the Company will consider the expected future taxable income, impact of any permitted carrybacks, existing and projected book to tax differences as well as tax planning strategies. This analysis is inherently subjective, as it is based on forecasted earning and business and economic activity. Changes in estimates of deferred tax asset realizability, if any, are included in income tax (expense) benefit on the consolidated statements of operations.

The Company accounts for taxes assessed by a governmental authority that is directly imposed on a revenue-producing transaction (e.g., sales, use, value added) on a net (excluded from revenue) basis.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The Company established a full valuation allowance against its net deferred tax asset that was tax effected at $20.3 million and $20.6 million, at December 31, 2025 and 2024, respectively, as the Company believed it was more likely than not that all of the deferred tax assets would not be realized. This assessment was based on the Company's cumulative historical losses and uncertainties as to the amount of taxable income that would be generated in future years by the Company's taxable REIT subsidiaries.

The Company evaluates and recognizes tax positions only if it is more likely than not that the position will be sustained upon examination by the appropriate taxing authority. A tax position that meets this threshold is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies any tax penalties as other operating expenses and any interest as interest expense. The Company does not have any unrecognized tax benefits that would affect the Company's financial position.

**Stock Based Compensation**

Issuances of restricted stock and options are initially measured at fair value on the grant date based on the Company's common stock price and expensed monthly on a straight-line basis over the service period to equity compensation expense on the consolidated statements of operations, with a corresponding entry to additional paid-in capital on the consolidated balance sheets. In accordance with GAAP, the fair value of all unvested issuances of restricted stock and options is not remeasured after the initial grant date. The Company accounts for forfeitures as they occur.

**Earnings per Share**

The Company presents both basic and diluted earnings per share ("EPS"). Basic EPS excludes dilution and is computed by dividing net income (loss) allocable to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount.

**Business Segments**

The Company's management directs operations as one business, Commercial Real Estate Lending Operations. The Company utilizes a consolidated approach to assess performance and allocate resources. As such, the Company operates in one business segment.

**Fair Value Measurements**

In analyzing the fair value of its investments accounted for on a fair value basis, the Company uses the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The hierarchy defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value inputs are observable.

Level 3 - Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable, for example, when there is little or no market activity for an investment at the end of the period, unobservable inputs may be used.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter; depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. Transfers between levels are determined by the Company at the end of the reporting period. However, the Company expects that changes in classifications between levels will be rare.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**Recent Accounting Pronouncements**

***Accounting Standards Adopted in 2025***

In December 2023, the Financial Accounting Standards Board ("FASB") issued guidance to improve the transparency of income tax disclosures. This guidance is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. The Company has adopted this guidance, which did not have a material impact to its consolidated financial statements or financial statement disclosures. See Note 20 - Income Taxes for further information.

***Accounting Standards to be Adopted in Future Periods***

In November 2024, the FASB issued guidance to improve transparency on certain costs and expenses. This guidance is effective for fiscal years beginning after December 15, 2026 and is to be adopted on a prospective basis with the option to apply retrospectively. The Company is in the process of evaluating the impact of this guidance, however, the Company does not expect a material impact to its consolidated financial statements.

**NOTE 3 - VARIABLE INTEREST ENTITIES**

The Company has evaluated its loans, investments in unconsolidated entities, liabilities to subsidiary trusts issuing preferred securities (consisting of unsecured junior subordinated notes), securitizations, guarantees and other financial contracts in order to determine if they are variable interests in variable interest entities ("VIEs"). The Company regularly monitors these legal interests and contracts and, to the extent it has determined that it has a variable interest, analyzes the related entity for potential consolidation.

**Consolidated VIEs (the Company is the primary beneficiary)**

Based on management's analysis, the Company was the primary beneficiary of two VIEs at December 31, 2024 (collectively, the "Consolidated VIEs"). In March 2025, the Company exercised the optional redemption on both VIEs.

The Consolidated VIEs were CRE securitizations that were formed on behalf of the Company to invest in CRE whole loans that were financed by the issuance of debt securities. By financing these assets with long-term borrowings through the issuance of debt securities, the Company seeks to generate attractive risk-adjusted equity returns and to match the term of its assets and liabilities. The primary beneficiary determination for each of these VIEs was made at each VIE's inception and is continually assessed. The Consolidated VIEs were accounted for as secured borrowings in accordance with GAAP.

The Company had exposure to losses on its securitizations to the extent of its investments in the subordinated debt and preferred equity of each securitization. The Company was entitled to receive payments of principal and interest on the debt securities it holds and, to the extent revenues exceed debt service requirements and other expenses of the securitizations, distributions with respect to its preferred equity interests. As a result of consolidation, the debt and equity interests the Company held in these securitizations had been eliminated; and the Company's consolidated balance sheets reflect the assets held, debt issued by the securitizations to third parties and any accrued payables to third parties. The Company's operating results and cash flows included the gross amounts related to the securitizations' assets and liabilities as opposed to the Company's net economic interests in the securitizations. Assets and liabilities related to the securitizations were disclosed, in the aggregate, on the Company's consolidated balance sheets. For a discussion of the debt issued through the securitizations, see Note 11.

Creditors of the Company's Consolidated VIEs had no recourse to the general credit of the Company, nor to each other. During the years ended December 31, 2025, 2024 and 2023, the Company did not provide any financial support to either of its Consolidated VIEs. There were no explicit arrangements that obligate the Company to provide financial support to either of its Consolidated VIEs.

**CS-ACRES FSU Student Venture, LLC**

In April 2022, the Company contributed an initial investment of $13.0 million for a 72.1% interest in CS-ACRES FSU Student Venture, LLC (the "FSU Student Venture"). The FSU Student Venture, a joint venture between the Company and two unrelated third parties, was formed for the purpose of developing a student housing project. The FSU Student Venture was determined not to be a VIE as there was sufficient equity at risk, it does not have disproportionate voting rights and its members all have the following characteristics: (1) the power to direct activities, (2) the obligation to absorb losses and (3) the right to receive residual returns. However,

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

the Company consolidated the FSU Student Venture due to its 72.1% interest that provides the Company with control over all major decisions of the joint venture. The portion of the joint venture that the Company does not own is presented as non-controlling interest at and for the periods presented in the Company's consolidated financial statements.

In September 2025, the Company distributed one of the underlying properties to a newly formed joint venture, CS-ACRES Osceola Student Joint Venture, LLC (the "FSU Osceola Student Venture"). See additional details below. Subsequent to this distribution, the Company sold its interest in the FSU Student Venture for $106.8 million, which resulted in a gain on the sale of investment in real estate.

As part of the transaction, the Company provided seller financing in the form of a $90.0 million CRE whole loan commitment and a $9.3 million preferred equity loan (the "FSU Preferred Equity Loan") to the new FSU Student Venture partners. The Company determined that although its investment in the FSU Preferred Equity Loan represented a variable interest, it did not provide the Company with a controlling financial interest. The Company accounts for its investment in the FSU Preferred Equity Loan as a CRE loan on its consolidated financial statements.

**CS-ACRES Osceola Student Joint Venture, LLC**

In September 2025, the FSU Student Venture distributed one of its underlying properties to the FSU Osceola Student Venture at a carrying value of $27.0 million. The FSU Osceola Student Venture, a joint venture between the Company and two unrelated third parties, was formed for the purpose of operating a student housing project. The FSU Osceola Student Venture was determined not to be a VIE as there was sufficient equity at risk, it does not have disproportionate voting rights and its members all have the following characteristics: (1) the power to direct activities, (2) the obligation to absorb losses and (3) the right to receive residual returns. The Company consolidated the FSU Osceola Student Venture due to its 72.1% interest that provides the Company with control over all major decisions of the joint venture. The portion of the joint venture that the Company does not own is presented as non-controlling interest at and for the periods presented in the Company's consolidated financial statements.

**ACRES SPE 2025-1, LLC**

ACRES SPE 2025-1, LLC ("SPE 2025-1") was formed in March 2025, to acquire, originate and finance purchased assets. Subsequently, SPE 2025-1 entered into a master repurchase agreement with JPMorgan Chase ("JPMorgan Chase 2025 Facility") to finance existing vintage CRE loans and to potentially finance the origination of new CRE loans held by the Company. In the quarter ended December 31, 2025, AMF Levered II, LLC, a wholly owned subsidiary of ACRES Mortgage Fund, Ltd., purchased a $125.0 million, or 43.2%, non-controlling interest in SPE 2025-1 (See Note 17). SPE 2025-1 was determined not to be a VIE as there was sufficient equity at risk, it does not have disproportionate voting rights and its members all have the following characteristics: (1) the power to direct activities, (2) the obligation to absorb losses and (3) the right to receive residual returns. The Company consolidated SPE 2025-1 due to its 56.8% interest that provides the Company with control over all major decisions. AMF Levered II, LLC assumed its proportionate share of risk in the underlying assets and the liabilities, including the JPMorgan Chase 2025 Facility. The portion of SPE 2025-1 that the Company does not own is presented as non-controlling interest at and for the periods presented in the Company's consolidated financial statements.

**Investments in Unconsolidated Entities (the Company is not the primary beneficiary, but has a variable interest)**

Based on management's analysis, the Company is not the primary beneficiary of the VIEs discussed below since it does not have both (i) the power to direct the activities that most significantly impact the VIEs' economic performance and (ii) the obligation to absorb the losses of the VIEs or the right to receive the benefits from the VIEs, which could be significant to the VIEs. Accordingly, the following VIEs are not consolidated in the Company's financial statements at December 31, 2025 and 2024. The Company continuously reassesses whether it is deemed to be the primary beneficiary of its unconsolidated VIEs. The Company's maximum exposure to risk for each of these unconsolidated VIEs is set forth in the "Maximum Exposure to Loss" column in the table below.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

***Unsecured Junior Subordinated Debentures***

The Company has a 100% interest in the common shares of both Resource Capital Trust I ("RCT I") and RCC Trust II ("RCT II"), with a value of $1.5 million in the aggregate, or 3.0% of each trust, at December 31, 2025 and 2024. RCT I and RCT II were formed for the purposes of providing debt financing to the Company. The Company completed a qualitative analysis to determine whether it is the primary beneficiary of each of the trusts and determined that it was not the primary beneficiary of either trust because it does not have the power to direct the activities most significant to the trusts, which include the collection of principal and interest through servicing rights. Accordingly, neither trust is consolidated into the Company's consolidated financial statements.

The Company records its investments in RCT I and RCT II's common shares of $774,000 each as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II. The trusts each hold subordinated debentures for which the Company is the obligor in the amount of $25.8 million for each of RCT I and RCT II. The debentures were funded by the issuance of trust preferred securities of RCT I and RCT II.

***65 E. Wacker Joint Venture, LLC***

In March 2024, the Company contributed its interest in an East North Central office property to form a joint venture (the "Wacker JV") with an unrelated third-party (the "Wacker Managing Member") for the purpose of converting the office property to multifamily units. At the date of contribution, the office property had a fair value of $20.3 million. The Wacker Managing Member is responsible for the day-to-day operations of the Wacker JV, but the Company and the Wacker Managing Member must each approve all major decisions related to the operations, financing or disposition of the Wacker JV before any major decision can be taken. The Company accounts for its investment in the Wacker JV as an equity method investment within investments in unconsolidated entities in its consolidated financial statements.

In September 2025, the Wacker JV completed a re-capitalization that included entering into a $62 million construction loan, $11 million bridge loan and converting part of the Company's common equity into preferred equity. Also, in connection with the re-capitalization, the Company entered into guarantees related to the construction loan and bridge loan. The guarantees include a Guaranty of Completion, a Guaranty of Retail Space, a Guaranty of Recourse Obligations, a Guarantee of Interest and Carry Costs and an Environmental Indemnity Agreement (collectively the "Guaranties").

***7720 McCallum JV, LLC***

In September 2024, the Company contributed $574,000 as well as its net interest in a multifamily unit property located in the Southwest region to form a joint venture (the "McCallum JV") with an unrelated third-party (the "McCallum Managing Member"). The McCallum Managing Member is responsible for the day-to-day operations of the McCallum JV. The Company determined the McCallum JV to be a VIE for which it was not the primary beneficiary because it did not have the power to direct the activities most significant to the McCallum JV, as the Company does not have unilateral kick-out rights or substantive participating rights. The Company accounts for its investment in the McCallum JV as an equity method investment within investments in unconsolidated entities in its consolidated financial statements.

Upon formation of the McCallum JV, the McCallum JV took ownership of the multifamily property subject to a related CRE loan payable to the Company which was novated to allow the McCallum JV to replace the original obligor who was experiencing financial difficulty. The $31.5 million CRE loan has an initial maturity date of September 5, 2027 and bears interest at a rate of one-month Term Secured Overnight Financing Rate ("Term SOFR") and a spread of 2.75%. There were no other changes to the terms of the loan. The McCallum JV also entered into a $1.5 million mezzanine loan commitment with the Company, of which $1.4 million was funded at December 31, 2025.

***Pacmulti Affiliates, LLC***

In March 2025, the Company contributed $200,000 as well as its net interest in a multifamily unit property located in the Mid-Atlantic region to form a joint venture (the "Pacmulti JV") with an unrelated third-party (the "Pacmulti Managing Member"). The Pacmulti Managing Member is responsible for the day-to-day operations of the Pacmulti JV. The Company determined the Pacmulti JV to be a VIE for which it was not the primary beneficiary because it did not have the power to direct the activities most significant to the Pacmulti JV, as the Company does not have unilateral kick-out rights or substantive participating rights. The Company accounts for its

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

investment in the Pacmulti JV as an equity method investment within investments in unconsolidated entities in its consolidated financial statements.

Upon formation of the Pacmulti JV, the Pacmulti JV took ownership of the multifamily property subject to a related CRE loan payable to the Company which was novated to allow the Pacmulti JV to replace the original obligor who was experiencing financial difficulty. The $70.8 million CRE loan has an initial maturity date of May 5, 2030 and bears interest at a rate of one-month Term SOFR and a spread of 3.41%. There were no other changes to the terms of the loan. The Pacmulti JV also entered into a $13.5 million mezzanine loan commitment with the Company, of which $12.1 million was funded at December 31, 2025.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company's unconsolidated VIEs at December 31, 2025 (in thousands):

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Unsecured Junior Subordinated Debentures** | **65 E Wacker Joint Venture, LLC** | **7720 McCallum JV, LLC** | **Pacmulti Affiliates, LLC** | **FSU Preferred Equity Loan** | **Total** | **Maximum Exposure to Loss** |
| **ASSETS** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Accrued interest receivable | $11 | $— | $— | $— | $— | $11 | $— |
| &nbsp;&nbsp;CRE loans<sup>(1)</sup> |  |  |  |  | 9425 | 9425 | 9425 |
| &nbsp;&nbsp;Investments in unconsolidated entities | 1548 | 27689 |  |  |  | 29237 | 29237 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets | 1559 | 27689 |  |  | 9425 | 38673 |  |
| **LIABILITIES** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Accrued interest payable | 364 |  |  |  |  | 364 | N/A |
| &nbsp;&nbsp;Borrowings | 51548 |  |  |  |  | 51548 | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 51912 |  |  |  |  | 51912 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net (liability) asset | $(50353) | $27689 | $— | $— | $9425 | $(13239) |  |

---

(1)The carrying values exclude the allowance for credit losses.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION**

The following table summarizes the Company's supplemental disclosure of cash flow information (in thousands, except amounts in footnotes):

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Supplemental cash flows:** |  |  |  |
| &nbsp;&nbsp;Interest expense paid in cash | $85114 | $115425 | $124047 |
| &nbsp;&nbsp;Income taxes paid in cash<sup>(1)</sup> | 190 | 83 | 101 |
| **Non-cash investing activities include the following:** |  |  |  |
| &nbsp;&nbsp;Transfer of whole loans to investments in real estate | $— | $43827 | $20900 |
| &nbsp;&nbsp;Properties held for sale assets related to the receipt of foreclosure or deed-in-lieu of foreclosure |  | (14398) | (20900) |
| &nbsp;&nbsp;Transfer of investment in real estate to investment in unconsolidated entities |  | (20123) |  |
| &nbsp;&nbsp;Investments in real estate related to the receipt of foreclosure |  | (9307) |  |
| **Non-cash financing activities include the following:** |  |  |  |
| &nbsp;&nbsp;Incentive compensation paid in common stock | $— | $19 | $598 |
| &nbsp;&nbsp;Distributions on preferred stock accrued but not paid | 3457 | 3607 | 3262 |
| &nbsp;&nbsp;Distributions to non-controlling interests accrued but not paid | 516 |  |  |
| &nbsp;&nbsp;Capitalized amortization of deferred debt issuance costs |  | 717 | 1127 |
| &nbsp;&nbsp;Capitalized interest |  | 1722 | 1160 |
| &nbsp;&nbsp;Cashless exercise of warrants | 12 |  |  |

---

(1)For the year ended December 31, 2025, the Company made net payments of $75,000 for federal income taxes and $115,000 for state and local income taxes. Of this amount $75,000 was paid to South Carolina, $21,000 was paid to Tennessee and $19,000 was paid to other state and local jurisdictions.

**NOTE 5 - RESTRICTED CASH**

The following table summarizes the Company's restricted cash (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| **Restricted cash:** |  |  |
| &nbsp;&nbsp;Cash held by consolidated CRE securitizations | $— | $190 |
| &nbsp;&nbsp;Restricted cash held in various escrow accounts | 1277 | 380 |
| &nbsp;&nbsp;Restricted cash held in deposit accounts | 913 | 320 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2190 | $890 |

---

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**NOTE 6 - LOANS**

The following is a summary of the Company's CRE loans held for investment by asset type (dollars in thousands, except amounts in footnotes):

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Description** | **Quantity** | **Principal** | **Unamortized (Discount) Premium, net** <sup>(1)</sup> | **Amortized Cost** | **Allowance for Credit Losses** | **Carrying Value** | **Contractual Interest Rates** <sup>(2)</sup> | **Maturity Dates** <sup>(3)(4)</sup> |
| **At December 31, 2025:** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Whole loans <sup>(5)(6)(7)</sup> | 53 | $1828299 | $(7357) | $1820942 | $(20158) | $1800784 | 1M Term SOFR + 2.50% to 1M Term SOFR + 7.00% | January 2026 to May 2030 |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred equity investment (see Note 3) <sup>(8)</sup> |  | 9511 | (86) | 9425 | (240) | 9185 | 10.00% | October 2028 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total |  | $1837810 | $(7443) | $1830367 | $(20398) | $1809969 |  |  |
| **At December 31, 2024:** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Whole loans <sup>(5)(6)(7)</sup> | 52 | $1484997 | $(2305) | $1482692 | $(28147) | $1454545 | 1M Term SOFR + 2.50% to 1M Term SOFR + 7.00% | January 2025 to January 2030 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mezzanine loan <sup>(5)</sup> | 1 | 4700 |  | 4700 | (4700) |  | 10.00% | June 2028 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total |  | $1489697 | $(2305) | $1487392 | $(32847) | $1454545 |  |  |

---

(1)Amounts include unamortized loan origination fees of $6.6 million and $1.3 million and deferred amendment fees of $852,000 and $985,000 at December 31, 2025 and 2024, respectively.

(2)References to ("1M Term SOFR") are one-month Term SOFR. Weighted-average one-month Term SOFR were 3.83% and 4.58% at December 31, 2025 and 2024, respectively. Additionally, weighted-average benchmark rate floors were 1.78% and 0.97% at December 31, 2025 and 2024, respectively.

(3)Maturity dates exclude contractual extension options, subject to the satisfaction of certain terms that may be available to the borrowers.

(4)Maturity dates exclude two and one whole loans, with amortized costs of $37.9 million and $5.6 million, in maturity default at December 31, 2025 and 2024, respectively.

(5)Substantially all loans are pledged as collateral under various borrowings at December 31, 2025 and 2024.

(6)CRE whole loans had $88.6 million and $94.0 million in unfunded loan commitments at December 31, 2025 and 2024, respectively. These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreements, and any necessary approvals have been obtained.

(7)Includes four mezzanine loans of $17.8 million, at amortized cost, with three having fixed interest rates of 15.0% and one having a fixed interest rate of 20.0% at December 31, 2025. Includes two mezzanine loans of $3.5 million, at amortized cost, that both have fixed interest rates of 15.0% at December 31, 2024. Because the Company is also the first mortgage lender on these loans, it considers the first mortgage and mezzanine loans together as one whole loan.

(8)The Company had one preferred equity investment associated with a CRE whole loan at December 31, 2025. The Company had no preferred equity investments associated with CRE whole loans at December 31, 2024. The preferred equity investment has a fixed interest rate of 10%, of which 4.0% interest is deferred until maturity.

The following is a summary of the Company's CRE loans held for investment by property type and geographic location (dollars in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
| **Property Type** | **Carrying Value** | **% of Loan Portfolio** | **Carrying Value** | **% of Loan Portfolio** |
| Multifamily | $1482268 | 81.9% | $1125564 | 77.4% |
| Office | 230385 | 12.7% | 236409 | 16.2% |
| Hotel | 57426 | 3.2% | 56384 | 3.9% |
| Mixed-Use | 24614 | 1.4% |  |  |
| Self-Storage | 15276 | 0.8% | 36188 | 2.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1809969 | 100% | $1454545 | 100% |

---

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
| **Geographic Location** | **Carrying Value** | **% of Loan Portfolio** | **Carrying Value** | **% of Loan Portfolio** |
| Southwest | $437113 | 24.2% | $364544 | 25.0% |
| Southeast | 373256 | 20.6% | 239986 | 16.5% |
| Pacific | 253558 | 14.0% | 146652 | 10.1% |
| Mountain | 223247 | 12.3% | 278654 | 19.2% |
| Mid Atlantic | 222958 | 12.3% | 183075 | 12.6% |
| Northeast | 163724 | 9.1% | 155352 | 10.7% |
| East North Central | 72720 | 4.0% | 46459 | 3.2% |
| West North Central | 63393 | 3.5% | 39823 | 2.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1809969 | 100% | $1454545 | 100% |

---

The following is a summary of the contractual maturities of the Company's CRE loans held for investment, at amortized cost (in thousands, except amounts in the footnotes):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Description** | **2026** | **2027** | **2028 and Thereafter** | **Total** |
| **At December 31, 2025:** |  |  |  |  |
| &nbsp;&nbsp;Whole loans <sup>(1)(2)</sup> | $592949 | $498541 | $691589 | $1783079 |
| &nbsp;&nbsp;Preferred equity investment |  |  | 9425 | 9425 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total CRE loans | $592949 | $498541 | $701014 | $1792504 |
| **Description** | **2025** | **2026** | **2027 and Thereafter** | **Total** |
| **At December 31, 2024:** |  |  |  |  |
| &nbsp;&nbsp;Whole loans <sup>(1)(2)</sup> | $1080501 | $198982 | $197595 | $1477078 |
| &nbsp;&nbsp;Mezzanine loan |  |  | 4700 | 4700 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total CRE loans | $1080501 | $198982 | $202295 | $1481778 |

---

(1)Maturity dates exclude two and one whole loans with amortized costs of $37.9 million and $5.6 million in maturity default at December 31, 2025 and 2024, respectively.

(2)At December 31, 2025, the amortized costs of the CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $397.1 million, $384.7 million and $1.0 billion in 2026, 2027 and 2028 and thereafter, respectively. At December 31, 2024, the amortized costs of the CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $101.2 million, $555.5 million and $820.4 million in 2025, 2026 and 2027 and thereafter, respectively.

At December 31, 2025 and 2024, no single loan or investment represented more than 10% of the Company's total assets. For the year ended December 31, 2025, one investment group generated 14.0% of the Company's revenue, while for the year ended December 31, 2024, no single investment group generated over 10% of the Company's revenue.

**NOTE 7 - FINANCING RECEIVABLES**

The following table shows the activity in the allowance for credit losses for the years ended December 31, 2025 and 2024 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2024** |
| Allowance for credit losses at beginning of period | $32847 | $28757 |
| &nbsp;&nbsp;(Reversal of) provision for credit losses | (7749) | 4790 |
| &nbsp;&nbsp;Charge-offs | (4700) | (700) |
| Allowance for credit losses at end of period | $20398 | $32847 |

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

During the year ended December 31, 2025, the Company recorded reversals of expected credit losses of $7.7 million, primarily attributable to net improvements in the modeled credit risk of the Company's loan portfolio as well as loan payoffs. These reversals were offset by a general decline in projected macroeconomic factors. The Company also recorded a charge-off of $4.7 million for one mezzanine loan that was previously fully reserved.

During the year ended December 31, 2024, the Company recorded a net provision for expected credit losses of $4.8 million, primarily driven by a general decline of macroeconomic factors over the year as well as an increase in modeled credit risk in the Company's portfolio offset by loan payoffs. The Company also recorded a charge-off of $700,000 for one CRE whole loan held for sale.

During the year ended December 31, 2023, the Company recorded provisions for expected credit losses of $10.9 million, primarily driven by increased modeled portfolio credit risk compounded by ongoing macroeconomic uncertainty in the commercial real estate market. In June 2023, the Company received the deed-in-lieu of foreclosure on an office loan in the East North Central region with a principal balance of $22.8 million, which resulted in a charge-off of $948,000 against the allowance for credit losses.

In addition to the Company's general estimate of credit losses, the Company may also be required to individually evaluate collateral-dependent loans for credit losses if it has determined that foreclosure or sale of the loan or the underlying collateral is probable. At December 31, 2025, the Company did not individually evaluate any CRE loans for impairment.

In fiscal year 2025 and at December 31, 2024, the Company individually evaluated the following loan for impairment:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•One mezzanine loan in the Northeast region, collateralized by an office building and a principal balance of $4.7 million at December 31, 2024. The Company fully reserved this loan in the fourth quarter of 2022. The loan entered payment default in February 2023 and was placed on nonaccrual status. During the year ended December 31, 2025, the Company charged-off this loan.

In fiscal year 2024, the Company individually evaluated one additional loan for which a resolution was reached:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A multifamily loan in the Southeast region, with a principal balance of $9.3 million for which foreclosure was determined to be probable. In August 2024, the Company foreclosed on the loan.

***Credit quality indicators***

*Commercial Real Estate Loans*

CRE loans are collateralized by a diversified mix of real estate properties and are assessed for credit quality based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwritten plan, time since origination, current implied and/or re-underwritten loan-to-collateral value ("LTV") ratios, loan structure and exit plan. Depending on the loan's performance against these various factors, loans are rated on a scale from 1 to 5, with loans rated 1 representing loans with the highest credit quality and loans rated 5 representing loans with the lowest credit quality. Loans are typically rated a 2 at origination. The factors evaluated provide general criteria to monitor credit migration in the Company's loan portfolio; as such, a loan's rating may improve or worsen, depending on new information received.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The criteria set forth below should be used as general guidelines and, therefore, not every loan will have all of the characteristics described in each category below.

---

| | |
|:---|:---|
| **Risk Rating** | **Risk Characteristics** |
| **1** | &nbsp;&nbsp;• Property performance has surpassed underwritten expectations. |
|  | &nbsp;&nbsp;• Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high-quality tenant mix. |
| **2** | &nbsp;&nbsp;• Property performance is consistent with underwritten expectations and covenants and performance criteria are being met or exceeded. |
|  | • Occupancy is stabilized, near stabilized or is on track with underwriting. |
| **3** | &nbsp;&nbsp;• Property performance lags behind underwritten expectations. |
|  | &nbsp;&nbsp;• Occupancy is not stabilized and the property has some tenancy rollover. |
| **4** | &nbsp;&nbsp;• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers. |
|  | &nbsp;&nbsp;• Occupancy is not stabilized and the property has a large amount of tenancy rollover. |
| **5** | &nbsp;&nbsp;• Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Expected sale proceeds would not be sufficient to pay off the loan at maturity. |
|  | &nbsp;&nbsp;• The property has a material vacancy rate and significant rollover of remaining tenants. |
|  | &nbsp;&nbsp;• An updated appraisal is required upon designation and updated on an as-needed basis. |

---

All CRE loans are evaluated for any credit deterioration by debt asset management and certain finance personnel on at least a quarterly basis. Mezzanine loans and preferred equity investments may experience greater credit risks due to their nature as subordinated investments.

For the purpose of calculating the quarterly provision for credit losses under CECL, the Company pools CRE loans based on the underlying collateral property type and utilizes a probability of default and loss given default methodology for approximately one year after which it immediately reverts to a historical mean loss ratio.

Credit risk profiles of CRE loans at amortized cost were as follows (in thousands, except amounts in the footnote):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Rating 1** | **Rating 2** | **Rating 3** | **Rating 4** | **Rating 5** | **Total** <sup>(1)</sup> |
| **At December 31, 2025:** |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans | $28137 | $938416 | $470871 | $377904 | $5614 | $1820942 |
| &nbsp;&nbsp;Preferred equity investment |  | 9425 |  |  |  | 9425 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $28137 | $947841 | $470871 | $377904 | $5614 | $1830367 |
| **At December 31, 2024:** |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans | $27869 | $565968 | $503125 | $380116 | $5614 | $1482692 |
| &nbsp;&nbsp;Mezzanine loan |  |  |  |  | 4700 | 4700 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $27869 | $565968 | $503125 | $380116 | $10314 | $1487392 |

---

(1)The total amortized cost of CRE loans excluded accrued interest receivable of $27.2 million and $14.6 million at December 31, 2025 and 2024, respectively.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

Credit risk profiles of CRE loans by origination year at amortized cost were as follows (in thousands, except amounts in the footnotes):

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** <sup>(1)</sup> | **2024** <sup>(2)</sup> | **2023** | **2022** | **2021** | **Prior** | **Total** <sup>(3)</sup> |
| **At December 31, 2025:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans: <sup>(4)</sup> |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 1 | $— | $— | $— | $— | $28137 | $— | $28137 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 2 | 649712 | 22249 | 49376 |  | 203263 | 13816 | 938416 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 3 | 10283 |  |  | 235271 | 214356 | 10961 | 470871 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 4 | 137906 | 87370 | 15991 | 91675 |  | 44962 | 377904 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 5 |  |  |  |  |  | 5614 | 5614 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total whole loans | 797901 | 109619 | 65367 | 326946 | 445756 | 75353 | 1820942 |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred equity investment (rating 2) | 9425 |  |  |  |  |  | 9425 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans | $807326 | $109619 | $65367 | $326946 | $445756 | $75353 | $1830367 |
| &nbsp;&nbsp;Current Period Gross Write-Offs | $— | $— | $— | $— | $— | $(4700) | $(4700) |
|  | **2024** <sup>(2)</sup> | **2023** | **2022** | **2021** | **2020** | **Prior** | **Total** <sup>(3)</sup> |
| **At December 31, 2024:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans: <sup>(4)</sup> |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 1 | $— | $— | $— | $27869 | $— | $— | $27869 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 2 | 19023 | 48106 | 46416 | 382195 | 56284 | 13944 | 565968 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 3 |  |  | 249907 | 242155 |  | 11063 | 503125 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 4 | 80672 | 15811 | 85004 | 153740 |  | 44889 | 380116 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rating 5 |  |  |  |  |  | 5614 | 5614 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total whole loans | 99695 | 63917 | 381327 | 805959 | 56284 | 75510 | 1482692 |
| &nbsp;&nbsp;Mezzanine loan (rating 5) |  |  |  |  |  | 4700 | 4700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $99695 | $63917 | $381327 | $805959 | $56284 | $80210 | $1487392 |
| &nbsp;&nbsp;Current Period Gross Write-Offs | $— | $— | $— | $(700) | $— | $— | $(700) |

---

(1)Includes two novated CRE whole loans that resulted from loan workouts.

(2)Includes two novated CRE whole loans that resulted from loan workouts.

(3)The total amortized cost of CRE loans excluded accrued interest receivable of $27.2 million and $14.6 million at December 31, 2025 and 2024, respectively.

(4)Acquired CRE whole loans are grouped within each loan's year of origination.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

***Loan Portfolio Aging Analysis***

The following table presents the CRE loan portfolio aging analysis at the dates indicated for CRE loans at amortized cost (in thousands, except amounts in footnotes):

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **30-59 Days** | **60-89 Days** | **Greater than 90<br>Days** | **Total Past Due** | **Current** <sup>(1)</sup> | **Total Loans Receivable** <sup>(2)</sup> | **Total Loans > 90 Days and Accruing** |
| **At December 31, 2025:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans | $— | $— | $26834 | $26834 | $1794108 | $1820942 | $— |
| &nbsp;&nbsp;Preferred equity investment |  |  |  |  | 9425 | 9425 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $— | $— | $26834 | $26834 | $1803533 | $1830367 | $— |
| **At December 31, 2024:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Whole loans | $— | $70760 | $5614 | $76374 | $1406318 | $1482692 | $— |
| &nbsp;&nbsp;Mezzanine loan <sup>(3)</sup> |  |  | 4700 | 4700 |  | 4700 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $— | $70760 | $10314 | $81074 | $1406318 | $1487392 | $— |

---

(1)Includes one CRE loan with an amortized cost of $32.3 million in maturity default at December 31, 2025.

(2)The total amortized cost of CRE loans excluded accrued interest receivable of $27.2 million and $14.6 million at December 31, 2025 and 2024, respectively.

(3)Fully reserved at December 31, 2024.

At December 31, 2025 and 2024, the Company had three and two CRE whole loans, with total amortized costs of $59.1 million and $76.4 million, respectively, in payment default. Additionally at December 31, 2024, the Company had one mezzanine loan, with a total amortized cost of $4.7 million, in payment default.

During the year ended December 31, 2025, the Company did not recognize interest income on CRE whole loans that were placed on nonaccrual status. During the years ended December 31, 2024 and 2023, the Company recognized interest income of $472,000 and $437,000, respectively, on two CRE whole loans that were placed on nonaccrual status. During the years ended December 31, 2024 and 2023, the Company recognized interest income of $389,000 and $295,000, respectively, on one CRE whole loan that was placed on nonaccrual status as part of a modification that took place during the year ended December 31, 2023. The Company recognizes interest income on a cash basis from the net operating cash flows from the underlying property.

***Loan Modifications***

The Company is required to disclose modifications where it determined the borrower is experiencing financial difficulty and modified the agreement to: (i) forgive principal, (ii) reduce the interest rate, (iii) cause an other-than-insignificant payment delay, (iv) extend the loan term or (v) any combination thereof.

During the year ended December 31, 2025, the Company did not enter into any loan modifications for borrowers that were experiencing financial difficulty.

During the year ended December 31, 2024, the Company entered into the following three loan modifications that required disclosure:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A multifamily whole loan with an amortized cost of $54.9 million, representing 3.0% of the total amortized cost of the portfolio, was modified to: (i) extend its maturity from June 2025 to June 2026, (ii) reduce its current pay interest rate from one-month Term SOFR plus a spread of 3.70% to one-month Term SOFR plus a spread of 1.70%, and (iii) defer interest of 2.00% that will be due at payoff. In connection with the modification, the borrower funded additional capital into the project for interest reserves to cover debt service. In October 2025, the loan was novated and replaced with a new obligor. In connection with the novation, the new loan: (i) matures November 2028, (ii) pays a current pay rate of one-month Term SOFR plus a spread of 0.70%, (iii) defers interest of 3.00% that will be due at payoff, and (iv) has a mezzanine commitment up to $1.9 million, of which $86,000 was funded at December 31, 2025. The mezzanine loan has a fixed rate of 15.00% that accrues and will be due at payoff in November 2028.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A multifamily whole loan with an amortized cost of $45.5 million, representing 2.5% of the total amortized cost of the portfolio, was modified to: (i) reduce its current pay interest rate from one-month Term SOFR plus a spread of 3.31% to a 5.00% fixed rate and (ii) defer the unpaid interest that will be due at loan payoff. In connection with the modification, the borrower funded additional capital into the project for interest reserves to cover debt service. At December 31, 2025, the loan was in maturity default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•A multifamily whole loan with an amortized cost of $70.8 million, representing 3.9% of the total amortized cost of the portfolio, was modified to: (i) extend its maturity from January 2025 to January 2026 and (ii) provide for 2.00% per annum of the interest rate to be deferred until payoff. The Company also entered into a mezzanine loan with a total commitment of $6.0 million. The mezzanine loan has a fixed rate of 15.00% that accrues and will be due at payoff. In connection with the modification, the borrower renewed the interest rate cap. In March 2025, the loan was novated when the Company foreclosed on the mezzanine loan. In connection with the novation, the new loan: (i) matures May 2030, (ii) pays a current pay fixed rate of 5.00%, and (iii) has a mezzanine loan commitment of up to $13.5 million, of which $12.1 million was funded at December 31, 2025.

These loans were performing in accordance with the modified contractual terms as of December 31, 2025. At December 31, 2025, two of these loans, with a total amortized cost of $125.7 million, had a risk rating of "4" and the other loan, with an amortized cost of $45.5 million, had a risk rating of "3".

**NOTE 8 - INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES**

At December 31, 2025, the Company held investments in six real estate properties, three of which are included in investments in real estate, and three of which are included in properties held for sale on the consolidated balance sheets.

In September 2025, the Company sold its interest in a student housing project for $106.8 million and generated a one-time gain on the sale of real estate for $13.1 million. See Note 3 for further details about the sale transaction that occurred in September 2025. In December 2025, the Company sold an office complex for $16.5 million and generated a one-time loss on the sale of real estate for $1.5 million.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The following table summarizes the book value of the Company's acquired assets and assumed liabilities (in thousands, except amounts in the footnotes):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Cost Basis** | **Accumulated Depreciation & Amortization** | **Carrying Value** | **Cost Basis** | **Accumulated Depreciation & Amortization** | **Carrying Value** |
| **Assets acquired:** |  |  |  |  |  |  |
| &nbsp;&nbsp;***Investments in real estate, equity:*** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate <sup>(1)</sup> | $74468 | $(7797) | $66671 | $82265 | $(5657) | $76608 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets <sup>(2)(3)</sup> | 19665 | (1024) | 18641 | 20064 | (759) | 19305 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets <sup>(4)</sup> | 9469 | (3342) | 6127 | 9833 | (2845) | 6988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 103602 | (12163) | 91439 | 112162 | (9261) | 102901 |
| &nbsp;&nbsp;***Investments in real estate from lending activities:*** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate <sup>(1)</sup> | $10025 | $(281) | $9744 | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets <sup>(2)(3)</sup> | 399 | (63) | 336 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets <sup>(4)</sup> | 364 | (270) | 94 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 10788 | (614) | 10174 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Properties held for sale <sup>(5)</sup> | 90825 |  | 90825 | 201125 |  | 201125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 205215 | (12777) | 192438 | 313287 | (9261) | 304026 |
| **Liabilities assumed:** |  |  |  |  |  |  |
| &nbsp;&nbsp;***Investments in real estate, equity:*** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage payables | 19565 | 620 | 20185 | 76631 | 2925 | 79556 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities |  |  |  | 41 | (29) | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities <sup>(3)(6)</sup> | 44958 |  | 44958 | 44606 |  | 44606 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 64523 | 620 | 65143 | 121278 | 2896 | 124174 |
| &nbsp;&nbsp;***Investments in real estate from lending activities:*** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 41 | (41) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities <sup>(3)(6)</sup> | 378 |  | 378 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 419 | (41) | 378 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Liabilities held for sale <sup>(7)</sup> | 3131 |  | 3131 | 3226 |  | 3226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 68073 | 579 | 68652 | 124504 | 2896 | 127400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total net investments in real estate and properties held for sale <sup>(8)</sup> | $137142 |  | $123786 | $188783 |  | $176626 |

---

(1)Investments in real estate includes $15.2 million of land, which is not depreciable, at each of December 31, 2025 and 2024. Also includes $3.7 million and $3.2 million of construction in progress, which is also not depreciable until placed in service, at December 31, 2025 and 2024, respectively. Depreciation expense for the years ended December 31, 2025, 2024 and 2023, were $2.4 million, $2.7 million and $2.8 million, respectively.

(2)Primarily comprises a $18.4 million and $18.6 million right of use asset, at December 31, 2025 and 2024, respectively, associated with an acquired ground lease disclosed in footnote (6) below accounted for as an operating lease. Amortization is booked to real estate expenses on the consolidated statements of operations. Additionally in December 2024, the Company entered into an operating lease associated with a parking lease at a newly acquired property. The associated right of use asset has a value of $322,000 and $367,000 at December 31, 2025 and 2024, respectively.

(3)Refer to Note 9 for additional information on the Company's remaining operating leases.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

(4)Primarily comprises a franchise intangible of $3.5 million and $4.1 million, a management contract intangible of $2.6 million and $2.8 million, a customer list intangible of $87,000 and $371,000 and an in-place lease intangible of $7,000 and $68,000 at December 31, 2025 and 2024, respectively.

(5)At December 31, 2025, properties held for sale included a hotel acquired via deed-in-lieu of foreclosure in November 2020, an office property acquired via deed-in-lieu of foreclosure in June 2023 and one student housing property acquired in April 2022. At December 31, 2024, properties held for sale included a newly constructed multifamily property placed in service in September 2024 and an office complex acquired in July 2024.

(6)Primarily comprised of a $44.7 million ground lease with a remaining term of 91 years at December 31, 2025. Lease expenses for the years ended December 31, 2025, 2024 and 2023 were $2.8 million, $2.8 million and $2.7 million, respectively.

(7)Comprised of an operating lease liability.

(8)Excludes items of working capital, either acquired or assumed.

The Company acquired a ground lease with its equity investment in a hotel property in April 2022. This ground lease has an associated above-market lease intangible liability. The ground lease confers to the Company the right to use the land on which its hotel operates, and the ground lease payments increase 3.00% per year until 2116. The Company acquired the original 99-year lease with 94 years remaining. At December 31, 2025, 91 years remain in its term.

In December 2024, the Company entered into a parking lease at an asset acquired in August 2024. The parking lease allows the Company to have access to a designated amount of parking spots adjacent to the building which the Company operates. The lease payments increase 2.00% per year until 2123, or a 99-year lease. At December 31, 2025, 98 years remain in its term.

The following table summarizes the expenses of intangible assets, right of use assets and leases related to investments in real estate and other acquired assets and assumed liabilities (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Assets:** |  |  |  |
| Amortization related to intangible assets | $767 | $1257 | $998 |
| Amortization related to right of use assets | 328 | 207 | 203 |
| **Liabilities:** |  |  |  |
| Accretion related to ground lease liability | $2634 | $2548 | $2469 |
| Lease payments | 1859 | 1783 | 1729 |

---

The following table summarizes the Company's expected fiscal year amortization expense on its intangible lease assets (in thousands):

---

| | |
|:---|:---|
|  | **Amortization Expense** |
| 2026 | $835 |
| 2027 | 756 |
| 2028 | 748 |
| 2029 | 748 |
| 2030 | 748 |
| 2031 | 748 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $4583 |

---

**NOTE 9 - LEASES**

In addition to the leases discussed in Note 8, the Company has operating leases for office space and office equipment. The leases have terms that expire between February 2029 and September 2029. The leases on the office space and office equipment contain options for early termination granted to the Company and the lessor. Lease payments are determined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Office space: payments are made on a fixed schedule, escalating annually, and include the Company's responsibility for a percentage of increases in the building's property taxes and operating expenses over the base year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Office equipment: payments are made on a fixed schedule.

The following table summarizes the Company's operating leases (in thousands):

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| **Operating Leases:** |  |  |
| &nbsp;&nbsp;Right of use assets | $499 | $606 |
| &nbsp;&nbsp;Lease liabilities | $(544) | $(653) |
| Weighted average remaining lease term: | 3.7 years | 4.7 years |
| Weighted average discount rate <sup>(1)</sup>: | 8.70% | 8.70% |

---

(1)The market discount rate is used, when readily determinable, in calculating the present value of lease payments for the operating lease liability. Otherwise, the incremental borrowing rate on the commencement date is used.

The following table summarizes the Company's operating lease costs and cash payments during the periods indicated (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2024** | **Year Ended December 31, 2023** |
| **Lease Cost:** |  |  |  |
| &nbsp;&nbsp;Operating lease cost | $160 | $160 | $194 |
| **Other Information:** |  |  |  |
| &nbsp;&nbsp;Cash paid for amounts included in the measurement of lease liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows from operating leases | $159 | $155 | $151 |

---

The following table summarizes the Company's operating leases cash flow obligations on an undiscounted, annual basis (in thousands):

---

| | |
|:---|:---|
|  | **Operating Leases** |
| 2026 | $166 |
| 2027 | 170 |
| 2028 | 174 |
| 2029 | 132 |
| &nbsp;&nbsp;Subtotal | 642 |
| &nbsp;&nbsp;Less: impact of discount | (98) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $544 |

---

# NOTE 10 - INVESTMENTS IN UNCONSOLIDATED ENTITIES
The following table summarizes the Company's investments in unconsolidated entities at December 31, 2025 and December 31, 2024 and equity in earnings (losses) of unconsolidated entities for the years ended December 31, 2025, 2024 and 2023 (dollars in thousands, except in the footnotes):

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **Earnings (Losses) of Unconsolidated Entities** | **Earnings (Losses) of Unconsolidated Entities** | **Earnings (Losses) of Unconsolidated Entities** |
|  | **Ownership %** | **December 31,** | **December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **at December 31, 2025** | **2025** | **2024** | **2025** | **2024** | **2023** |
| 'Unsecured Junior Subordinated Debentures<sup>(1)</sup> | &nbsp;&nbsp;3% | $1548 | $1548 | $— | $— | $— |
| 65 E. Wacker Joint Venture, LLC <sup>(2)</sup> | &nbsp;&nbsp;90% | 27689 | 20157 | (517) | (490) |  |
| 7720 McCallum JV, LLC <sup>(3)</sup> | &nbsp;&nbsp;50% |  | 152 | (339) | (422) |  |
| Pacmulti Affiliates JV, LLC <sup>(4)</sup> | &nbsp;&nbsp;50% |  |  | (871) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total |  | $29237 | $21857 | $(1727) | $(912) | $— |

---

(1)During the years ended December 31, 2025, 2024 and 2023, dividends from the investments in RCT I's and RCT II's common shares in the amounts of $133,000, $148,000 and $145,000, respectively, are recorded in other revenue on the Company's consolidated statements of operations.

(2)Refer to Note 3 for details regarding the Wacker JV.

(3)Refer to Note 3 for details regarding the McCallum JV.

(4)Refer to Note 3 for details regarding the Pacmulti JV.

**NOTE 11 - BORROWINGS**

The Company historically has financed the acquisition of its investments, including investment securities and loans, through the use of secured and unsecured borrowings. Certain information with respect to the Company's borrowings is summarized in the following table (dollars in thousands, except amounts in the footnotes):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Principal Outstanding** | **Unamortized Issuance Costs and Discounts** | **Outstanding Borrowings** | **Weighted Average Borrowing Rate** | **Weighted Average Remaining Maturity** | **Value of Collateral** |
| **At December 31, 2025:** |  |  |  |  |  |  |
| &nbsp;&nbsp;CRE - term reinvestment financing facility | $731002 | $2835 | $728167 | 5.50% | 4.8 years | $1009622 |
| &nbsp;&nbsp;Senior secured financing facility | 63099 | 1454 | 61645 | 7.53% | 2.1 years | 166526 |
| &nbsp;&nbsp;CRE - term warehouse financing facilities | 534760 | 898 | 533862 | 5.54% | 0.8 years | 693937 |
| &nbsp;&nbsp;Mortgage payable | 20185 |  | 20185 | 7.57% | 0.3 years | 26964 |
| &nbsp;&nbsp;5.75% Senior unsecured notes | 150000 | 469 | 149531 | 5.75% | 0.6 years |  |
| &nbsp;&nbsp;Unsecured junior subordinated debentures | 51548 |  | 51548 | 7.97% | 10.7 years |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1550594 | $5656 | $1544938 | 5.73% | 3.1 years | $1897049 |
|  | **Principal Outstanding** | **Unamortized Issuance Costs and Discounts** | **Outstanding Borrowings** | **Weighted Average Borrowing Rate** | **Weighted Average Remaining Maturity** | **Value of Collateral** |
| **At December 31, 2024** |  |  |  |  |  |  |
| &nbsp;&nbsp;ACR 2021-FL1 Senior Notes | $472507 | $660 | $471847 | 6.11% | 11.5 years | $599927 |
| &nbsp;&nbsp;ACR 2021-FL2 Senior Notes | 392571 | 1614 | 390957 | 6.47% | 12.1 years | 525571 |
| &nbsp;&nbsp;Senior secured financing facility | 63099 | 2189 | 60910 | 8.22% | 3.1 years | 162578 |
| &nbsp;&nbsp;CRE - term warehouse financing facilities <sup>(1)</sup> | 158266 | 1527 | 156739 | 7.02% | 1.3 years | 257012 |
| &nbsp;&nbsp;Mortgages payable | 80113 | 557 | 79556 | 9.25% | 5.7 years | 119509 |
| &nbsp;&nbsp;5.75% Senior unsecured notes | 150000 | 1186 | 148814 | 5.75% | 1.6 years |  |
| &nbsp;&nbsp;Unsecured junior subordinated debentures | 51548 |  | 51548 | 8.67% | 11.7 years |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1368104 | $7733 | $1360371 | 6.66% | 8.7 years | $1664597 |

---

(1)Principal outstanding includes accrued interest payable of $435,000 at December 31, 2024, respectively.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**Securitizations**

The investments held by the Company's securitizations collateralized the securitizations' borrowings and, as a result, were not available to the Company, its creditors, or stockholders. All senior notes of the securitizations held by the Company at December 31, 2024 were eliminated in consolidation. In March 2025, the Company exercised the optional redemption on ACR 2021-FL1 and ACR 2021-FL2 in conjunction with the closing of the CRE term reinvestment facility (see below).

***ACR 2021-FL1***

In May 2021, the Company closed ACRES Commercial Realty 2021-FL1 Issuer, Ltd. ("ACR 2021-FL1"), an $802.6 million CRE debt securitization transaction that provided financing for CRE loans. In March 2025, the Company exercised the optional redemption on ACR 2021-FL1 in conjunction with the closing of the CRE term reinvestment facility (see below).

***ACR 2021-FL2***

In December 2021, the Company closed ACRES Commercial Realty 2021-FL2 Issuer, Ltd. ("ACR 2021-FL2"), a $700.0 million CRE debt securitization transaction that provided financing for CRE loans. In March 2025, the Company exercised the optional redemption on ACR 2021-FL2 in conjunction with the closing of the CRE term reinvestment facility (see below).

***ACR 2026-FL4***

In February 2026, the Company closed ACRES Commercial Realty 2026-FL4 Issuer, LLC ("ACR 2026-FL4"), a CRE debt securitization transaction that can finance up to $1.0 billion of CRE loans. ACR 2026-FL4 issued a total of $879.5 million of non-recourse, floating-rate notes to third parties at par. Additionally, the Company retained 100% of the Class F notes, Class G notes and Income notes. ACR 2026-FL4 includes a 180-day ramp up acquisition period that allows it to acquire CRE loans using unused proceeds from the issuance of the non-recourse floating-rate notes. Additionally, ACR 2026-FL4 includes a reinvestment period, which ends in August 2028, that allows it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds.

At closing, the offered notes issued to investors consisted of the following classes: (i) $589.7 million of Class A notes bearing interest at one-month SOFR plus 1.45%, increasing to 1.70% in August 2031; (ii) $104.2 million of Class A-S notes bearing interest at one-month SOFR plus 1.70%, increasing to 1.95% in August 2031; (iii) $72.4 million of Class B notes bearing interest at one-month SOFR plus 1.95%, increasing to 2.45% in August 2031; (iv) $58.5 million of Class C notes bearing interest at one-month SOFR plus 2.25%, increasing to 2.75% in August 2031; (v) $36.9 million of Class D notes bearing interest at one-month SOFR plus 2.85%, increasing to 3.35% in August 2031; and (vi) $17.8 million of Class E notes bearing interest at one-month SOFR plus 3.60%, increasing to 4.10% in August 2031.

All of the notes issued mature in August 2044, although the Company has the right to call the notes beginning on the payment date in August 2028 and thereafter.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**Financing Arrangements**

Borrowings under the Company's financing arrangements are guaranteed by the Company or one or more of its subsidiaries. The following table sets forth certain information with respect to these arrangements (dollars in thousands, except amounts in the footnotes):

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Outstanding Borrowings** | **Value of Collateral** | **Number of Positions as Collateral** | **Weighted Average Interest Rate** | **Outstanding Borrowings** | **Value of Collateral** | **Number of Positions as Collateral** | **Weighted Average Interest Rate** |
| **CRE - Term Reinvestment Financing Facility** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;JPMorgan Chase Bank, N.A. <sup>(1)</sup> | $728167 | $1009622 | 34 | 5.50% | $— | $— |  | —% |
| **Senior Secured Financing Facility** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Massachusetts Mutual Life Insurance Company <sup>(2)</sup> | 61645 | 166526 | 5 | 7.53% | 60910 | 162578 | 6 | 8.22% |
| **CRE - Term Warehouse Financing Facilities** <sup>(3)</sup> |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;JPMorgan Chase Bank, N.A. <sup>(4)</sup> | 116488 | 149000 | 3 | 5.50% | 90995 | 158639 | 5 | 6.87% |
| &nbsp;&nbsp;Morgan Stanley Mortgage Capital Holdings LLC <sup>(5)</sup> | 417374 | 544937 | 12 | 5.55% | 65744 | 98373 | 5 | 7.22% |
| **Mortgages Payable** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;ReadyCap Commercial, LLC <sup>(6)</sup> | 20185 | 26964 | 1 | 7.57% | 20240 | 26960 | 1 | 8.28% |
| &nbsp;&nbsp;Oceanview Life and Annuity Company <sup>(7)(8)</sup> |  |  |  | —% | 44211 | 92549 | 1 | 10.40% |
| &nbsp;&nbsp;Florida Pace Funding Agency <sup>(7)(9)</sup> |  |  |  | —% | 15105 |  |  | 7.26% |
| &nbsp;&nbsp;Total | $1343859 | $1897049 |  |  | $297205 | $539099 |  |  |

---

(1)Includes $2.8 million of deferred debt issuance costs at December 31, 2025.

(2)Includes $1.5 million and $2.2 million of deferred debt issuance costs at December 31, 2025 and 2024, respectively.

(3)Outstanding borrowings include accrued interest payable at December 31, 2024.

(4)Includes $352,000 and $988,000 of deferred debt issuance costs at December 31, 2025 and 2024, respectively.

(5)Includes $546,000 and $539,000 of deferred debt issuance costs at December 31, 2025 and 2024, respectively.

(6)There were no deferred debt issuance costs at December 31, 2025. Includes $52,000 of deferred debt issuance costs at December 31, 2024.

(7)Outstanding borrowings are collateralized by a student housing construction project. Value of collateral and number of positions as collateral related to Oceanview Life and Annuity Company also applied to Florida Pace Funding Agency.

(8)Includes $101,000 of deferred debt issuance costs at December 31, 2024.

(9)Includes $405,000 of deferred debt issuance costs at December 31, 2024.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The following table shows information about the amount at risk under the Company's financing arrangements (dollars in thousands, except amounts in footnotes):

---

| | | | |
|:---|:---|:---|:---|
|  | **Amount at Risk** | **Weighted Average Remaining Maturity** | **Weighted Average Interest Rate** |
| **At December 31, 2025:** |  |  |  |
| &nbsp;&nbsp;**CRE - Term Reinvestment Financing Facility** <sup>(1)(2)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;JPMorgan Chase Bank, N. A. | $295734 | 4.8 years | 5.50% |
| &nbsp;&nbsp;**Senior Secured Financing Facility** <sup>(1)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Massachusetts Mutual Life Insurance Company | $104091 | 2.1 years | 7.53% |
| &nbsp;&nbsp;**CRE - Term Warehouse Financing Facilities** <sup>(1)(2)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;JPMorgan Chase Bank, N. A. | $32570 | 0.6 years | 5.50% |
| &nbsp;&nbsp;&nbsp;&nbsp;Morgan Stanley Mortgage Capital Holdings LLC | $130295 | 0.8 years | 5.55% |
| &nbsp;&nbsp;**Mortgage Payable** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;ReadyCap Commercial, LLC <sup>(3)</sup> | $6695 | 0.3 years | 7.57% |

---

(1)Equal to the total of the estimated fair value of securities or loans sold and accrued interest receivable, minus the total of the financing agreement liabilities and accrued interest payable.

(2)The Company is required to maintain a total minimum unencumbered liquidity balance of $20.9 million.

(3)Equal to the total of the estimated fair value of real estate property investment financed, minus the total of the construction loans agreement liabilities and accrued interest payable.

The Company was in compliance with all financial covenants in each of the respective agreements at December 31, 2025 and 2024.

***CRE - Term Reinvestment Financing Facility***

In March 2025, an indirect wholly-owned subsidiary of the Company entered into a master repurchase agreement (the "JPMorgan Chase 2025 Facility") with JPMorgan Chase Bank, N.A. ("JPMorgan Chase") to finance existing CRE loans and the origination of new CRE loans. The JPMorgan Chase 2025 Facility has a maximum facility amount of $939.9 million, provides match term funding, charges interest of one-month Term SOFR plus a 1.75% spread and matures as of the latest maturity date of any purchased asset. The JPMorgan Chase 2025 Facility includes a two-year reinvestment period enabling the reinvestment of principal proceeds from asset repayments into qualifying replacement assets. The reinvestment period for the JPMorgan Chase 2025 Facility ends in March 2027.

In connection with the JPMorgan Chase 2025 Facility, the Company provided "bad act" guaranties pursuant to a guarantee agreement (the "2025 JPMorgan Chase Guarantee") where the Company is liable for 100% of the repurchase price of the purchase assets and JPMorgan Chase's losses, costs and expenses only upon the occurrence of certain customary bad acts. The JPMorgan Chase 2025 Guarantee includes certain financial covenants required of the Company, including required liquidity, required capital, ratios of total indebtedness to equity and EBITDA requirements. The JPMorgan Chase 2025 Facility also includes minimum interest coverage requirements and maximum look through LTV requirements. Also, ACRES RF, the direct owner of the wholly-owned subsidiary borrower, executed a pledge agreement with JPMorgan Chase pursuant to which it pledged and granted to JPMorgan Chase a continuing security interest in any and all of its right, title and interest in and to the wholly-owned subsidiary, including all distributions, proceeds, payments, income and profits from its interests in the wholly-owned subsidiary.

The JPMorgan Chase 2025 Facility specifies events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement, including but not limited to: payment defaults; bankruptcy or insolvency proceedings; a change of control of the ACRES SPE 2025-1, LLC, ("Seller SPE") or the Company; breaches of covenants and/or certain representations and warranties; and a judgment in an amount greater than $250,000 against the Seller SPE or ACRES RF or $10.0 million against the Company. The remedies for such events of default are also customary for this type of financing arrangement and include the acceleration of the principal amount outstanding under the JPMorgan Chase 2025 Facility and the liquidation by JPMorgan Chase of purchased assets then subject to the JPMorgan Chase 2025 Facility. In October 2025, the JPMorgan Chase 2025 Facility was amended to allow ACRES Mortgage Fund Levered II, LLC ("AMF Levered II, LLC"), a wholly owned subsidiary of ACRES Mortgage Fund, Ltd., to purchase a non-controlling interest in the Seller SPE. At December 31, 2025, AMF Levered II, LLC owned a $125.0 million non-controlling interest, or 43.2%, of the Seller SPE and assumed a proportionate share of risk in the portfolio.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

***Senior Secured Financing Facility***

On July 31, 2020, an indirect, wholly owned subsidiary ("Holdings"), along with its direct wholly owned subsidiary (the "Borrower"), of the Company entered into a $250.0 million Loan and Servicing Agreement (the "MassMutual Loan Agreement") with MassMutual and the other lenders party thereto (the "Lenders"). The asset-based revolving loan facility (the "MassMutual Facility") provided under the MassMutual Loan Agreement has been used to finance the Company's core CRE lending business.

In December 2022, Holdings, the Borrower and the Lenders entered into an Amended and Restated Loan and Servicing Agreement (the "Amended and Restated Loan and Servicing Agreement"), which amends and restates the MassMutual Loan Agreement, and reflects a senior secured term loan facility, not to exceed $500.0 million, composed of individual loan series issued upon mutual agreement of the Borrower and Lenders. Each loan series will be available for three months after the closing date agreed upon by the Borrower and Lenders ("Commitment Period"), subject to the maximum dollar amount agreed upon for that series. The Commitment Period is subject to immediate termination upon the occurrence of an event of default. Each loan series will have a final maturity of five years from the issuance date for the loan series unless an additional time is mutually agreed upon by the Lenders and Borrower. The advance rate on portfolio assets will be mutually agreed upon by the Lenders and Borrower. Each loan series will have its own mutually agreed upon interest rate equal to one-month Term SOFR plus the applicable spread.

In connection with the Amended and Restated Loan and Servicing Agreement, several indirect, wholly owned subsidiaries of the Company entered into a Guaranty (the "MassMutual Guaranty") in favor of the secured parties under the Amended and Restated Loan and Servicing Agreement. Pursuant to the MassMutual Guaranty, the Company fully guaranteed all payments and performance of Holdings and the Borrower under the Amended and Restated Loan and Servicing Agreement.

The Amended and Restated Loan and Servicing Agreement contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction and include declaring the final maturity date to have occurred and advances due and liquidation of the assets securing the series.

Pursuant to the Amended and Restated Loan and Servicing Agreement, the Borrower's obligations under the MassMutual Loan Agreement are secured by the Borrower's assets and Holdings' equity interests in the Borrower, including all distributions, proceeds and profits from Holdings' interests in the Borrower.

***CRE - Term Warehouse Financing Facilities***

In October 2018, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase agreement (the "JPMorgan Chase Facility") with JP Morgan Chase to finance the origination of CRE loans. As amended, the JPMorgan Chase Facility has a maximum facility amount of $250.0 million, charges interest of one-month Term SOFR plus market spreads and matures in July 2026.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

In May 2020, the Company entered into an amendment to the JP Morgan Chase Guarantee that revised its minimum equity financial covenant as of February 29, 2020. In October 2020, the Company entered into an amendment to the JPMorgan Chase Guarantee that revised a covenant definition so that credit losses are determined in accordance with a risk rating-based methodology. In September and October 2021, the JPMorgan Chase Facility was amended twice, resulting in (i) the extension of the JPMorgan Chase Facility's maturity date to October 2024, (ii) an update to the Company's tangible net worth requirement and minimum liquidity covenant as set forth in the guarantee agreement and (iii) a modification of market terms regarding the replacement of LIBOR upon determination of a benchmark transition event. In November 2022, the JPMorgan Chase Facility was amended for the following: (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity, and (iii) minimum unencumbered liquidity requirement, each through September 2023. In July 2023, the JPMorgan Chase Facility was amended to extend the maturity date to July 2026, as well as to extend the amendments to (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity and (iii) minimum unencumbered liquidity requirement, each through December 2024. In March 2025, the Company entered into Amendment No. 6 to Guarantee, by and between the Company and JPMorgan Chase, which makes certain amendments and modifications to the Guarantee, dated October 26, 2018 between the Company and JPMorgan Chase, as amended (the "JPM Guarantee") including but not limited to amending (capitalized terms each as defined in the JPM Guarantee) (i) minimum unencumbered Liquidity requirement, (ii) the ratio of Total Indebtedness to Total Equity, (iii) ratio of Adjusted Total Indebtedness to Total Equity, and (iv) EBITDA to Interest Expense ratio. In August 2025, the Company entered into Amendment No. 7 to Guarantee, by and between the Company and JPMorgan Chase, which makes certain amendments and modifications to the Guarantee, dated October 26, 2018 between the Company and JPMorgan Chase, as amended the JPM Guarantee, to amend the terms of the debt service coverage period.

The JPMorgan Chase Facility contains margin call provisions that provide JPMorgan Chase with certain rights if the value of purchased assets declines. Under these circumstances, JPMorgan Chase may require the Company to transfer cash in an amount necessary to eliminate such margin deficit or repurchase the asset(s) that resulted in the margin call.

In connection with the JPMorgan Chase Facility, the Company guaranteed the payment and performance under the JPMorgan Chase Facility pursuant to the JPMorgan Chase Guarantee subject to a limit of 25% of the currently unpaid aggregate repurchase price of all purchased assets. The JPMorgan Chase Guarantee includes certain financial covenants required of the Company, including required liquidity, required capital, ratios of total indebtedness to equity and EBITDA requirements. Also, ACRES RF, the direct owner of the wholly-owned subsidiary borrower, executed a pledge agreement with JPMorgan Chase pursuant to which it pledged and granted to JPMorgan Chase a continuing security interest in any and all of its right, title and interest in and to the wholly-owned subsidiary, including all distributions, proceeds, payments, income and profits from its interests in the wholly-owned subsidiary.

The JPMorgan Chase Facility specifies events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of financing arrangement and include the acceleration of the principal amount outstanding under the JPMorgan Chase Facility and the liquidation by JPMorgan Chase of purchased assets then subject to the JPMorgan Chase Facility.

In November 2021, an indirect, wholly-owned subsidiary of the Company entered into a Master Repurchase and Securities Contract Agreement (the "Morgan Stanley Facility") with Morgan Stanley Mortgage Capital Holdings LLC ("Morgan Stanley") to finance the origination of CRE loans. As amended, the Morgan Stanley Facility had a maximum facility amount of $250.0 million, charges interest of one-month Term SOFR plus market spreads and was scheduled to mature in November 2025. The Company also has the right to request a one-year extension. In March 2025, the Company entered into Amendment No. 4 to Guaranty by and between the Company and Morgan Stanley, which makes certain amendments and modifications to the amended Guaranty between the Company and Morgan Stanley (the "MS Guaranty"), including but not limited to (capitalized terms each as defined in the MS Guaranty) (i) minimum unencumbered Liquidity requirement, (ii) the ratio of Total Indebtedness to Total Equity, (iii) ratio of Adjusted Total Indebtedness to Total Equity, and (iv) EBITDA to Interest Expense ratio. In November 2025, the Company entered into Amendment No. 3 to the Morgan Stanley Facility extending its maturity to November 2026 and entered into Amendment No.4 to the Morgan Stanley Facility to increase the facility amount to $400.0 million, as increased from time to time, provided the amount shall be automatically reduced to $250.0 million on the earlier of May 2026 or when the Company sends a request for a reduction in the facility amount. Provided certain conditions are met, prior to May 2026, the Company can request that the facility amount be increased to $500.0 million.

The Morgan Stanley Facility contains margin call provisions that provide Morgan Stanley with certain rights if the value of purchased assets declines. Under these circumstances, Morgan Stanley may require the subsidiary to transfer cash in an amount necessary to eliminate such margin deficit or repurchase the asset(s) that resulted in the margin call.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The Company guaranteed its subsidiary's payment and performance under the Morgan Stanley Facility pursuant to a guaranty agreement (the "Morgan Stanley Guaranty"), subject to a limit of 25% of the then currently unpaid aggregate repurchase price of all purchased assets. The Morgan Stanley Guaranty includes certain financial covenants required of the Company, including required liquidity, required capital, ratios of total indebtedness to equity and EBITDA requirements. Also, the subsidiary's direct parent, ACRES RF, executed a Pledge Agreement with Morgan Stanley pursuant to which ACRES RF pledged and granted to Morgan Stanley a continuing security interest in any and all of ACRES RF's right, title and interest in and to the subsidiary, including all distributions, proceeds, payments, income and profits from ACRES RF's interests in the subsidiary.

The Morgan Stanley Facility specifies events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of financing arrangement and include acceleration of the principal amount outstanding under the Morgan Stanley Facility and liquidation by Morgan Stanley of purchased assets then subject to the Morgan Stanley Facility.

The Term Warehouse Financing Facilities are accounted for as secured borrowings in accordance with GAAP.

***Mortgages Payable***

In April 2022, Chapel Drive West, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a Loan Agreement (the "Mortgage") with ReadyCap Commercial, LLC ("ReadyCap") to finance the acquisition of a student housing complex. The Mortgage is interest only and has a maximum principal balance of $20.4 million, of which, $18.7 million was advanced in the initial funding. Initially, the Mortgage charged interest of 30-day average SOFR plus a spread of 3.80%. In October 2022, the Mortgage was amended to charge interest of one-month Term SOFR plus a spread of 3.80%. The Mortgage was amended to mature in April 2026, subject to a one-year extension option.

The Mortgage contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction.

In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan"). The Construction Loan was interest only and had a maximum principal balance of $48.0 million. The Construction Loan charged one-month Term SOFR plus a spread of 6.00%. In February 2025, the Construction Loan was amended to bifurcate the first one-year extension option into two separate extension options and periods: a seven-month extension period ended September 2025 and a five-month extension ended February 2026. The Construction Loan had a maturity of September 2025.

In addition to the Construction Loan, Chapel Drive East, LLC, entered into a financing agreement with Florida Pace Funding Agency to fund energy efficient building improvements and had a maximum principal balance of $15.5 million. This agreement charged fixed interest of 7.26% and matured in July 2053.

Both the Construction Loan and the financing agreement with Florida Pace Funding Agency were paid off in connection with the sale of the student housing complex in September 2025.

**Corporate Debt**

***5.75% Senior Unsecured Notes Due 2026***

On August 16, 2021, the Company issued $150.0 million of its 5.75% senior unsecured notes due 2026 (the "5.75% Senior Unsecured Notes") pursuant to its Indenture dated August 16, 2021 (the "Base Indenture"), between it and Wells Fargo, now Computershare Trust Company, N.A. ("CTC"), as trustee (the "Trustee"), as supplemented by the First Supplemental Indenture, dated August 16, 2021, between it and Wells Fargo (now CTC) (the "Supplemental Indenture" and, together with the Base Indenture, the "Indenture"). Prior to May 15, 2026, the Company may at its option redeem the 5.75% Senior Unsecured Notes, in whole or in part, at a redemption price equal to the sum of (i) 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date, and (ii) a make-whole premium. On or after May 15, 2026, the Company may at its option redeem the 5.75% Senior Unsecured Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days' prior notice, at

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

a redemption price equal to 100% of the principal amount of the 5.75% Senior Unsecured Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

The Indenture contains restrictive covenants that, among other things, require the Company to maintain certain financial ratios. The foregoing limitations are subject to exceptions as set forth in the Supplemental Indenture. At December 31, 2025, the Company was in compliance with these covenants. The Indenture provides for customary events of default that include, among other things (subject in certain cases to customary grace and cure periods): (i) non-payment of principal or interest, (ii) breach of certain covenants contained in the Indenture or the 5.75% Senior Unsecured Notes, (iii) an event of default or acceleration of certain other indebtedness of the Company or a subsidiary in which the Company has invested at least $75.0 million in capital within the applicable grace period and (iv) certain events of bankruptcy or insolvency. Generally, if an event of default occurs (subject to certain exceptions), CTC or the holders of at least 25% in aggregate principal amount of the then outstanding 5.75% Senior Unsecured Notes may declare all of the notes to be due and payable.

***Unsecured Junior Subordinated Debentures***

During 2006, the Company formed RCT I and RCT II for the sole purpose of issuing and selling capital securities representing preferred beneficial interests. RCT I and RCT II are not consolidated into the Company's consolidated financial statements because the Company is not deemed to be the primary beneficiary of these entities. In connection with the issuance and sale of the capital securities, the Company issued junior subordinated debentures to RCT I and RCT II of $25.8 million each, representing the Company's maximum exposure to loss. The debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II were included in borrowings and were amortized into interest expense on the consolidated statements of operations using the effective yield method over a ten-year period.

There were no unamortized debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II outstanding at December 31, 2025 and 2024. The interest rates for RCT I and RCT II, at December 31, 2025, were 7.90% and 8.05%, respectively. The interest rates for RCT I and RCT II, at December 31, 2024, were 8.54% and 8.80%, respectively.

The rights of holders of common securities of RCT I and RCT II are subordinate to the rights of the holders of capital securities only in the event of a default; otherwise, the common securities' economic and voting rights are pari passu with the capital securities. The capital and common securities of RCT I and RCT II are subject to mandatory redemption upon the maturity or call of the junior subordinated debentures held by each. Unless earlier dissolved, RCT I will dissolve in May 2041 and RCT II will dissolve in September 2041. The junior subordinated debentures are the sole assets of RCT I and RCT II, which mature in June 2036 and October 2036, respectively, and may currently be called at par.

Contractual maturity dates of the Company's borrowings principal outstanding by category and year are presented in the table below (in thousands):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Total** | **2026** | **2027** | **2028** | **2029**<sup>(1)</sup> | **2030 and Thereafter** |
| **At December 31, 2025:** |  |  |  |  |  |  |
| &nbsp;&nbsp;CRE - term reinvestment financing facility | $731002 | $— | $— | $— | $— | $731002 |
| &nbsp;&nbsp;Senior secured financing facility | 63099 |  | 50996 | 12103 |  |  |
| &nbsp;&nbsp;CRE - term warehouse financing facilities | 534760 | 534760 |  |  |  |  |
| &nbsp;&nbsp;Mortgage payable | 20185 | 20185 |  |  |  |  |
| &nbsp;&nbsp;5.75% Senior unsecured notes | 150000 | 150000 |  |  |  |  |
| &nbsp;&nbsp;Unsecured junior subordinated debentures | 51548 |  |  |  |  | 51548 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1550594 | $704945 | $50996 | $12103 | $— | $782550 |

---

(1)There are no contractual maturities due in 2029.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**NOTE 12 - SHARE ISSUANCE AND REPURCHASE**

On October 4, 2021, the Company and the Manager entered into an Equity Distribution Agreement with JonesTrading Institutional Services LLC, as placement agent ("JonesTrading"), pursuant to which the Company may issue and sell from time to time up to 2.2 million shares of the 7.875% Series D Cumulative Redeemable Preferred Stock ("Series D Preferred Stock"). Sales of the Series D Preferred Stock may be made in transactions that are deemed to be "at the market" offerings, as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation, sales made directly on the New York Stock Exchange, on any other existing trading market for the shares or to or through a market maker. Subject to the terms of the Company's notice, JonesTrading may also sell the shares by any other method permitted by law, including but not limited to in privately negotiated transactions. The Company will pay JonesTrading a commission up to 3.0% of the gross proceeds from the sales of the Series D Preferred Stock pursuant to the agreement. The terms and conditions of the agreement include various representations and warranties, conditions to closing, indemnification rights and obligations of the parties and termination provisions. During the years ended December 31, 2025, 2024 and 2023, the Company did not issue any Series D Preferred Stock through this agreement.

On or after July 30, 2024, the Company may, at its option, redeem its 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock ("Series C Preferred Stock"), in whole or in part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date. Effective July 30, 2024 and thereafter, the Company pays cumulative distributions on the Series C Preferred Stock at a floating rate equal to three-month Term SOFR plus a spread of 5.927% per annum based on the $25.00 liquidation preference, provided that such floating rate shall not be less than the initial rate of 8.625% at any date of determination.

At December 31, 2025, the Company had 4.8 million shares of Series C Preferred Stock and 4.5 million shares of Series D Preferred Stock outstanding, with weighted average issuance prices, excluding offering costs, of $25.00.

In November 2021, the board of directors, (the "Board"), authorized and approved the continued use of its existing share repurchase program to repurchase an additional $20.0 million of the outstanding shares of the Company's common stock. Under the share repurchase program, the Company intends to repurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 and 10b5-1 of the Exchange Act. From November 2023 through October 2025, the Board authorized and approved the repurchase of an additional $32.5 million of outstanding shares of both common and preferred stock. In December 2025, the authorized amount was fully utilized.

During the years ended December 31, 2025, 2024 and 2023, the Company repurchased $22.3 million, $7.9 million and $7.4 million of its common stock, representing 1,137,933, 579,456 and 899,085 shares, respectively. Additionally, during the year ended December 31, 2024, the Company repurchased $2.2 million, or 100,000 shares, of its Series D Preferred Stock. In December 2025, the authorized amount was fully utilized.

In connection with the Note and Warrant Purchase Agreement with Oaktree Capital Management, L.P. ("Oaktree") and Massachusetts Mutual Life Insurance Company ("MassMutual") dated July 31, 2020, the Company issued to Oaktree warrants to purchase 391,995 shares of common stock for an aggregate purchase price of $42.0 million, and issued to MassMutual warrants to purchase 74,666 shares of common stock for an aggregate purchase price of $8.0 million. The warrants were classified as equity and recorded in additional paid-in capital on the consolidated balance sheets at their fair value of $3.1 million at issuance. The warrants were immediately exercisable on issuance at an exercise price of $0.03 per share, subject to certain potential adjustments, and were scheduled to expire seven years from the issuance date. The holder of the warrants could exercise with cash or as a net exercise. In July 2022, MassMutual exercised their warrants to purchase 74,666 shares. In July 2025, the Company issued 391,380 common shares as a result of the exercise of 391,955 cashless warrants exercised by Oaktree at $0.03 per common share.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**NOTE 13 - SHARE-BASED COMPENSATION**

In June 2021, the Company's shareholders approved the ACRES Commercial Realty Corp. Third Amended and Restated Omnibus Equity Compensation Plan (the "Omnibus Plan") and the ACRES Commercial Realty Corp. Manager Incentive Plan (the "Manager Plan" and together with the Omnibus Plan, the "Plans"). The Omnibus Plan was amended to (i) increase the number of shares authorized for issuance by an additional 1,100,000 shares of common stock, less any shares of common stock issued or subject to awards granted under the Manager Plan; and (ii) extend the expiration date of the Omnibus Plan from June 2029 to June 2031. The maximum number of shares that may be subject to awards granted under the Plans, determined on a combined basis, will be 1,700,817 shares of common stock.

The Omnibus Plan and the Manager Plan are administered by the compensation committee of the Company's Board (the "Compensation Committee"). In 2020, the Compensation Committee and the Board created parameters for equity awards, whereby they are no longer discretionary but are now based upon the Company's achievement of performance parameters using book value of the common stock as the appropriate benchmark. See Note 17 for a description of awards made under the Manager Plan.

The Company recognized stock-based compensation expense of $2.1 million, $3.0 million and $2.6 million during the years ended December 31, 2025, 2024 and 2023, respectively, related to restricted stock.

In May 2024, the Company issued 295,237 shares of common stock to the Manager and 38,096 shares of common stock to the Company's directors (with the exception of Messrs. Fentress and Fogel) under the Plans after the Company reached the established per share book value target of $27.00 per share. Each grant vests 25% per year over four years. No shares of common stock were issued to the Manager or the Company's directors during the year ended December 31, 2025.

On March 5, 2026, the Company issued a total of 243,650 shares of common stock under its Manager Incentive Plan to ACRES Share Holdings, LLC, a subsidiary of the Manager and under its Third Amended and Restated Omnibus Equity Compensation Plan to the Company's directors (with the exception of Messrs. Fentress and Fogel), after the Company reached the established per share book value target of $30.00 per share. Each grant vests 25% over four years. Of this amount, ACRES Share Holdings, LLC was granted 204,765 shares of common stock and now holds approximately 16% of the Company's outstanding common stock. Additionally, on March 5, 2026, the Company granted ACRES Share Holdings, LLC a stock ownership waiver allowing it to exceed the 9.8% ownership limitations set forth in the Company's charter. The stock ownership waiver allows ACRES Share Holdings, LLC to hold up to 18% of the Company's outstanding shares of common stock.

Under the Company's Fourth Amended and Restated Management Agreement, as amended ("Management Agreement"), incentive compensation is paid quarterly. Up to 75% of the incentive compensation may be paid in cash and at least 25% must be paid in the form of an award of common stock, recorded in management fees on the consolidated statements of operations. During the years ended December 31, 2025 and 2024, the Company incurred no incentive compensation payable to the Manager. At December 31, 2025 and 2024, there was no incentive compensation payable within Management fee payable - related party on the consolidated balance sheets. During the year ended December 31, 2023, the Company incurred incentive compensation expense payable to the Manager of $895,000, of which 50% was payable in cash and 50% was payable in common stock.

The Company did not issue shares of common stock to the Manager during the year ended December 31, 2025. The Company issued 1,911 shares of common stock to the Manager during the year ended December 31, 2024, pertaining to the portion of the fourth quarter 2023 incentive compensation that was payable in shares. Shares of common stock issued under the Management Agreement for incentive compensation vest immediately upon issuance.

The following table summarizes the Company's restricted common stock transactions:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Manager** | **Directors** | **Total Number of Shares** | **Weighted-Average Grant-Date Fair Value** |
| **Unvested shares at January 1, 2025** | 520240 | 54298 | 574538 | $13.83 |
| &nbsp;&nbsp;Issued |  |  |  |  |
| &nbsp;&nbsp;Vested | (223810) | (22142) | (245952) | 14.39 |
| **Unvested shares at December 31, 2025** | 296430 | 32156 | 328586 | $13.40 |

---

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The unvested shares of restricted common stock that are expected to vest during the following years:

---

| | |
|:---|:---|
|  | **Shares** |
| 2026 | 164293 |
| 2027 | 82139 |
| 2028 | 82154 |
| &nbsp;&nbsp;Total | 328586 |

---

At December 31, 2025, total unrecognized compensation costs relating to unvested restricted stock was $1.5 million based on the grant date fair value of shares granted. The cost is expected to be recognized over a weighted average period of 2.3 years.

**NOTE 14 - EARNINGS PER SHARE**

The following table presents a reconciliation of basic and diluted earnings (losses) per common share for the periods presented (dollars in thousands, except per share amounts):

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Net income** | $27976 | $28695 | $21848 |
| &nbsp;&nbsp;Net income allocated to preferred shares | (21077) | (20386) | (19422) |
| &nbsp;&nbsp;Carrying value in excess of consideration paid for preferred shares |  | 242 |  |
| &nbsp;&nbsp;Net (income) loss allocable to non-controlling interest, net of taxes | (6660) | 572 | 542 |
| **Net income allocable to common shares** | $239 | $9123 | $2968 |
| **Weighted average number of common shares outstanding:** |  |  |  |
| &nbsp;&nbsp;Weighted average number of common shares outstanding - basic | 7129163 | 7261635 | 8024295 |
| &nbsp;&nbsp;Weighted average number of warrants outstanding <sup>(1)</sup> |  | 391995 | 391995 |
| &nbsp;&nbsp;Total weighted average number of common shares outstanding - basic | 7129163 | 7653630 | 8416290 |
| &nbsp;&nbsp;Effect of dilutive securities - unvested restricted stock | 283748 | 271273 | 149768 |
| &nbsp;&nbsp;Weighted average number of common shares outstanding - diluted | 7412911 | 7924903 | 8566058 |
| Net income per common share - basic | $0.03 | $1.19 | $0.35 |
| Net income per common share - diluted | $0.03 | $1.15 | $0.35 |

---

(1)See Note 12 for further details regarding the warrants.

**NOTE 15 - DISTRIBUTIONS**

In order to qualify as a REIT, the Company must distribute at least 90% of its taxable income. In addition, the Company must distribute 100% of its taxable income in order to not be subject to corporate federal income taxes on retained income. The Company anticipates it will distribute substantially all of its taxable income to its stockholders, after accounting for the net usage of its deferred tax assets. Because taxable income differs from cash flow from operations due to non-cash revenues or expenses (such as provisions for loan and lease losses and depreciation) and tax loss carryforwards, in certain circumstances the Company may generate operating cash flow in excess of its distributions or, alternatively, the Company may be required to borrow funds to make sufficient distribution payments.

The Company's 2026 distributions are, and will be, determined by the Company's Board, which will also consider the composition of any distributions declared, including the option of paying a portion in cash and the balance in additional shares of common stock.

For the years ended December 31, 2025, 2024 and 2023, the Company did not pay any common share distributions.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The following table presents distributions declared (on a per share basis) for the years ended December 31, 2025, 2024 and 2023 with respect to the Company's Series C Preferred Stock and Series D Preferred Stock:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Series C Preferred Stock** | **Series C Preferred Stock** | **Series C Preferred Stock** | **Series D Preferred Stock** | **Series D Preferred Stock** | **Series D Preferred Stock** |
|  | **Date Paid** | **Total Distribution Paid** | **Distribution Per Share** | **Date Paid** | **Total Distribution Paid** | **Distribution Per Share** |
|  |  | (in thousands) |  |  | (in thousands) |  |
| **2025** |  |  |  |  |  |  |
| &nbsp;&nbsp;December 31 | January 30, 2026 | $2930 | $0.6103331 | January 30, 2026 | $2219 | $0.4921875 |
| &nbsp;&nbsp;September 30 | October 30 | 3071 | 0.6398100 | October 30 | 2219 | 0.4921875 |
| &nbsp;&nbsp;June 30 | July 30 | 3062 | 0.6379156 | July 30 | 2219 | 0.4921875 |
| &nbsp;&nbsp;March 31 | April 30 | 3064 | 0.6383681 | April 30 | 2219 | 0.4921875 |
| **2024** |  |  |  |  |  |  |
| &nbsp;&nbsp;December 31 | January 30, 2025 | $3155 | $0.6572606 | January 30, 2025 | $2219 | $0.4921875 |
| &nbsp;&nbsp;September 30 | October 30 | 3355 | 0.6988981 | October 30 | 2219 | 0.4921875 |
| &nbsp;&nbsp;June 30 | July 30 | 2587 | 0.5390625 | July 30 | 2219 | 0.4921875 |
| &nbsp;&nbsp;March 31 | April 30 | 2588 | 0.5390625 | April 30 | 2219 | 0.4921875 |
| **2023** |  |  |  |  |  |  |
| &nbsp;&nbsp;December 31 | January 30, 2024 | $2588 | $0.5390625 | January 30, 2024 | $2268 | $0.4921875 |
| &nbsp;&nbsp;September 30 | October 30 | 2587 | 0.5390625 | October 30 | 2268 | 0.4921875 |
| &nbsp;&nbsp;June 30 | July 31 | 2588 | 0.5390625 | July 31 | 2268 | 0.4921875 |
| &nbsp;&nbsp;March 31 | May 1 | 2587 | 0.5390625 | May 1 | 2268 | 0.4921875 |

---

**NOTE 16 - ACCUMULATED OTHER COMPREHENSIVE LOSS**

The following table presents the changes in net unrealized loss on derivatives, the sole component of accumulated other comprehensive loss, for the year ended December 31, 2025 (in thousands):

---

| | |
|:---|:---|
|  | **Accumulated Other Comprehensive Loss - Net Unrealized Loss on Derivatives** |
| **Balance at January 1, 2025** | $(3203) |
| &nbsp;&nbsp;Amounts reclassified from accumulated other comprehensive loss <sup>(1)</sup> | 1600 |
| **Balance at December 31, 2025** | $(1603) |

---

(1)Amounts reclassified from accumulated other comprehensive loss are reclassified to interest expense on the Company's consolidated statements of operations.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**NOTE 17 - RELATED PARTY TRANSACTIONS**

**Management Agreement** 

In March 2005, the Company entered into a Management Agreement, which was last amended on February 15, 2024, with the manager pursuant to which the manager provides the day-to-day management of the Company's operations. The Management Agreement requires the Manager to manage the Company's business affairs in conformity with the policies and investment guidelines established by the Company's Board. The Manager provides its services under the supervision and direction of the Company's Board. The Manager is responsible for the selection, purchase and sale of the Company's portfolio investments, its financing activities and providing investment advisory services. The Manager and its affiliates also provide the Company with a Chief Financial Officer and a sufficient number of additional accounting, finance, tax and investor relations professionals. The Manager receives fees and is reimbursed for its expenses as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A monthly base management fee equal to 1/12th of the amount of the Company's equity multiplied by 1.50%; provided, however, that for each calendar month through July 31, 2022, such fee was equal to a minimum of $442,000. Under the Management Agreement, "equity" is equal to the net proceeds from issuances of shares of capital stock (or the value of common shares upon the conversion of convertible securities), after deducting any underwriting discounts and commissions and other expenses and costs relating to such issuance, plus or minus the Company's retained earnings (excluding non-cash equity compensation incurred in current or prior periods) less all amounts the Company has paid for common stock and preferred stock repurchases. The calculation is adjusted for one-time events due to changes in GAAP, as well as other non-cash charges, upon approval of the Company's independent directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• With respect to each fiscal quarter commencing with the quarter ended December 31, 2022, an incentive management fee calculated and payable in arrears in an amount, not less than zero, equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *for the first full calendar quarter ended December 31, 2022*, the product of (a) 20% and (b) the excess of (i) EAD of the Company for such calendar quarter, over (ii) the product of (A) the Company's book value equity as of the end of such calendar quarter, and (B) 7% per annum;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *for each of the second, third and fourth full calendar quarters following the calendar quarter ended December 31, 2022,* the excess of (1) the product of (a) 20% and (b) the excess of (i) EAD of the Company for the calendar quarter(s) following September 30, 2022, over (ii) the product of (A) the Company's book value equity in the calendar quarter(s) following September 30, 2022, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to the Manager with respect to the prior calendar quarter(s) following September 30, 2022 (other than the most recent calendar quarter); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *for each calendar quarter thereafter,* the excess of (1) the product of (a) 20% and (b) the excess of (i) EAD of the Company for the previous 12-month period, over (ii) the product of (A) the Company's book value equity in the previous 12-month period, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to the Manager with respect to the first three calendar quarters of such previous 12-month period; *provided*, however, that no incentive compensation shall be payable with respect to any calendar quarter unless EAD for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters from September 30, 2022) in the aggregate is greater than zero.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Per loan underwriting and review fees in connection with valuations of and potential investments in certain subordinate commercial mortgage pass-through certificates, in amounts approved by a majority of the independent directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reimbursement of expenses for personnel of the Manager or its affiliates for their services in connection with the making of fixed-rate commercial real estate loans by the Company, in an amount equal to one percent of the principal amount of each such loan made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reimbursement of out-of-pocket expenses and certain other costs incurred by the Manager and its affiliates that relate directly to the Company and its operations.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reimbursement of the Manager's and its affiliates' expenses for (A) wages, salaries and benefits of the Company's Chief Financial Officer, and (B) a portion of the wages, salaries and benefits of accounting, finance, tax and investor relations professionals, in proportion to such personnel's percentage of time allocated to its operations.

Incentive compensation is calculated and payable quarterly to the Manager to the extent it is earned. Up to 75% of the incentive compensation is payable in cash and at least 25% is payable in the form of an award of common stock. The Manager may elect to receive more than 25% of its incentive compensation in common stock. All shares are fully vested upon issuance, however, the Manager may not sell such shares for one year after the incentive compensation becomes due and payable unless the Management Agreement is terminated. Shares payable as incentive compensation are valued as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if such shares are traded on a securities exchange, at the average of the closing prices of the shares on such exchange over the 30-day period ending three days prior to the issuance of such shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if such shares are actively traded over-the-counter, at the average of the closing bid or sales price as applicable over the 30-day period ending three days prior to the issuance of such shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if there is no active market for such shares, at the fair market value as reasonably determined in good faith by the Board of the Company.

The Management Agreement's current contract term ends on July 31, 2026 and the agreement provides for automatic one year renewals on such date and on each July 31 thereafter until terminated. The Company's Board reviews the Manager's performance annually. The Management Agreement may be terminated annually upon the affirmative vote of at least two-thirds of the Company's independent directors, or by the affirmative vote of the holders of at least a majority of the outstanding shares of its common stock, based upon unsatisfactory performance that is materially detrimental to the Company or a determination by its independent directors that the management fees payable to the Manager are not fair, subject to the Manager's right to prevent such a compensation termination by accepting a mutually acceptable reduction of management fees. The Company's Board must provide 180 days' prior notice of any such termination. If the Company terminates the Management Agreement, the Manager is entitled to a termination fee equal to four times the sum of the average annual base management fee and the average annual incentive compensation earned by the Manager during the two 12-month periods immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter before the date of termination.

The Company may also terminate the Management Agreement for cause with 30 days' prior written notice from its Board. No termination fee is payable in the event of a termination for cause. The Management Agreement defines cause as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Manager's continued material breach of any provision of the Management Agreement following a period of 30 days after written notice thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Manager's fraud, misappropriation of funds, or embezzlement against the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Manager's gross negligence in the performance of its duties under the Management Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the dissolution, bankruptcy or insolvency, or the filing of a voluntary bankruptcy petition, by the Manager; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a change of control (as defined in the Management Agreement) of the Manager if a majority of the Company's independent directors determines, at any point during the 18 months following the change of control, that the change of control was detrimental to the ability of the Manager to perform its duties in substantially the same manner conducted before the change of control.

Cause does not include unsatisfactory performance that is materially detrimental to the Company's business.

The Manager may terminate the Management Agreement at its option, (A) in the event that the Company defaults in the performance or observance of any material term, condition or covenant contained in the Management Agreement and such default continues for a period of 30 days after written notice thereof, or (B) without payment of a termination fee by the Company, if it becomes regulated as an investment company under the Investment Company Act of 1940, with such termination deemed to occur immediately before such event.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**Relationship with ACRES Capital Corp. and certain of its Subsidiaries**

*Relationship with ACRES Capital Corp. and certain of its Subsidiaries.* The Manager is a subsidiary of ACRES Capital Corp., of which Andrew Fentress, the Company's Chairman, serves as Managing Partner, and Mark Fogel, the Company's President, Chief Executive Officer and Director, serves as Chief Executive Officer and President. Mr. Fentress and Mr. Fogel are also shareholders and board members of ACRES Capital Corp.

Effective on July 31, 2020, the Company has a Management Agreement with the Manager pursuant to which the Manager provides the day-to-day management of the Company's operations and receives management fees. For the years ended December 31, 2025, 2024 and 2023, the Manager earned base management fees of $6.4 million, $6.5 million and $6.6 million, respectively. No incentive management fee was earned during the years ended December 31, 2025 and 2024. For the year ended December 31, 2023, the Manager earned incentive management fees of $895,000 of which 50% was payable in cash and 50% was payable in common stock. At December 31, 2025, there was no base management fee payable to the Manager and at December 31, 2024, the Company had a base management payable to the Manager of $540,000. At December 31, 2025 and 2024, no incentive management fees were payable by the Company to the Manager.

The Manager and its affiliates provide the Company with a Chief Financial Officer and a sufficient number of additional accounting, finance, tax and investor relations professionals. The Company reimburses the Manager's expenses for (a) the wages, salaries and benefits of the Chief Financial Officer, and (b) a portion of the wages, salaries and benefits of accounting, finance, tax, and investor relations professionals, in proportion to such personnel's percentage of time allocated to the Company's operations. The Company reimburses out-of-pocket expenses and certain other costs incurred by the Manager that related directly to the Company's operations. The costs are recorded in general and administrative expenses on the consolidated statements of operations.

For the years ended December 31, 2025, 2024 and 2023, the Company reimbursed the Manager $5.1 million, $4.7 million and $3.8 million, respectively, for all such compensation and costs. At December 31, 2025 and 2024, the Company had payables to the Manager pursuant to the Management Agreement totaling $466,000 and $353,000, respectively, related to such compensation and costs. The Company's base management fee payable was recorded in management fee payable while expense reimbursement payables were recorded in accounts payable and other liabilities on the consolidated balance sheets, respectively.

On July 31, 2020, ACRES RF, a direct, wholly owned subsidiary of the Company, provided a $12.0 million loan (the "ACRES Loan") to ACRES Capital Corp. evidenced by the promissory note from ACRES Capital Corp.

The ACRES Loan accrues interest at 3.00% per annum payable monthly. The monthly amortization payment is $25,000. The ACRES Loan matures in July 2026, subject to two one-year extensions (at ACRES Capital Corp.'s option) subject to the payment of a 0.5% extension fee to ACRES RF on the outstanding principal amount of the ACRES Loan.

In March 2025, the Company amended and restated the promissory note in connection with the ACRES Loan. The ACRES Loan was amended and restated to: (i) be issued by ACRES Holdings, LLC, (ii) provide for a six month option for ACRES Holdings, LLC to draw an additional balance of $7.0 million, and (iii) if such option is exercised, (a) to extend the maturity to July 31, 2031, (b) increase the interest rate to 5.00% and (c) increase the monthly amortization to $50,000. The six month option period ended and was not exercised.

During the years ended December 31, 2025, 2024 and 2023, the Company recorded interest income of $320,000, $331,000 and $339,000, respectively, on the ACRES Loan in other income (expense) on the consolidated statements of operations. At December 31, 2025 and 2024, the ACRES Loan had a principal balance of $10.4 million and $10.7 million, respectively, recorded in loan receivable - due from Manager on the consolidated balance sheets. At December 31, 2025 and 2024, the ACRES Loan had no interest receivable.

The Company retained equity in two securitization entities that were structured for the Company by the Manager. Under the Management Agreement, the Manager was not separately compensated by the Company for executing this transaction and was not separately compensated for managing the securitization entity and its assets. The two securitizations were liquidated during March 2025.

*Relationship with ACRES Mortgage Loan Funding, LLC.* In July 2025, the Company sold $45.8 million of a $72.0 million CRE whole loan commitment that originated in the second quarter of 2025 to ACRES Mortgage Loan Funding, LLC. The Company

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

transferred $344,000 of the origination fee related to the portion of this CRE whole loan to ACRES Capital, LLC. No loans were co-originated during the years ended December 31, 2025 and 2024.

*Relationship with ACRES Capital Servicing LLC.* Under the MassMutual Loan Agreement, ACRES Capital Servicing LLC ("ACRES Capital Servicing"), an affiliate of ACRES Capital Corp. and the Manager, served as the portfolio servicer. Additionally, ACRES Capital Servicing served as special servicer of ACR 2021-FL1 and ACR 2021-FL2 prior to their liquidation in March 2025. In February 2026, the Company closed the 2026-FL4 securitization transaction and ACRES Capital Servicing serves as special servicer.

During the years ended December 31, 2025, 2024 and 2023, ACRES Capital Servicing received no portfolio servicing fees. During the years ended December 31, 2025, 2024 and 2023, ACRES Capital Servicing earned $182,000, $328,000 and $67,000, respectively, in special servicing fees, of which $11,000 and $19,000 were recorded as a reduction to interest income in the consolidated statements of operations for the years ended December 31, 2024 and 2023. During the year ended December 31, 2025, no special servicing fee was recorded as a reduction to interest income in the consolidated statements of operations.

*Relationship with ACRES Collateral Manager, LLC.* ACRES Collateral Manager, LLC, an affiliate of ACRES Capital Corp. and the Manager, served as the collateral manager of ACR 2021-FL1 and ACR 2021-FL2, a role for which it waived its fee. In March 2025, ACR 2021-FL1 and ACR 2021-FL2 were liquidated. In February 2026, the Company closed the 2026-FL4 securitization transaction and ACRES Collateral Manager, LLC serves as collateral manager, a role for which it waived its fee.

*Relationship with ACRES Development Management, LLC.* ACRES Development Management, LLC ("DevCo") is a wholly owned subsidiary of ACRES Capital Corp., the parent of the Manager. DevCo acts in various capacities as a co-developer or owner's representative for direct equity investments within the Company's portfolio. The Company has entered into three development agreements with DevCo (the "Development Agreements") that were signed between November 2021 and April 2022, between the joint venture entity of the CRE equity investments acquired through direct investment. At December 31, 2025, only one development agreement remains active.

Pursuant to the Development Agreements, DevCo agreed to manage the development of the projects associated with each equity investment in accordance with a development standard in exchange for fees equal to between 1.25% and 1.50% of all project costs. During the year ended December 31, 2025, the Company did not incur nor pay fees for services rendered under these agreements. During the years ended December 31, 2024 and 2023, the Company incurred and paid $412,000 and $464,000, respectively, in fees for services rendered under the Development Agreements.

*Relationship with ACRES Share Holdings, LLC.* During the year ended December 31, 2025, the Company did not issue any shares to ACRES Share Holdings, LLC in connection with the incentive compensation payable to the Manager under the Management Agreement. During the year ended December 31, 2024, the Company issued 1,911 shares in connection with the incentive compensation payable to the Manager under the Management Agreement. The shares vested fully upon issuance pursuant to the Management Agreement.

During the year ended December 31, 2024, ACRES Share Holdings, LLC was granted 295,237 shares under the Manager Plan. These shares will vest 25% for four years, on each anniversary of the issuance date. There were no shares granted to ACRES Share Holdings, LLC under the Manager Plan for the year ended December 31, 2025. See Note 13 for additional details.

On March 5, 2026, the Company issued a total of 204,765 shares of common stock under its Manager Incentive Plan to ACRES Share Holdings, LLC, a subsidiary of the Manager after the Company reached the established per share book value target of $30.00 per share. Each grant vests 25% over four years. Additionally, on March 5, 2026, the Company granted ACRES Share Holdings, LLC a stock ownership waiver allowing it to exceed the 9.8% ownership limitations set forth in the Company's charter. The stock ownership waiver allows ACRES Share Holdings, LLC to hold up to 18% of the Company's outstanding shares of common stock.

*Relationship with McCallum JV.* In September 2024, ACRES RF, a direct, wholly owned subsidiary, entered into a $33.7 million senior loan commitment and a $1.5 million mezzanine loan commitment with McCallum JV in which the Company holds a 50% interest. The loans have an initial maturity date of September 5, 2027. The senior loan has a rate of one-month Term SOFR plus a spread of 2.75%, while the mezzanine loan has a fixed rate of 20.00%. At December 31, 2025, the senior loan was fully funded, while the mezzanine loan had an outstanding balance of $1.4 million. During the years ended December 31, 2025 and 2024, the Company recognized $2.5 million and $800,000, respectively, of revenue related to the McCallum JV loans. At December 31, 2025 and 2024, $916,000 and $284,000, respectively, of accrued interest was outstanding.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

*Relationship with Pacmulti JV.* In March 2025, ACRES RF, a direct, wholly owned subsidiary, entered into a $70.8 million senior loan commitment and a $13.5 million mezzanine loan commitment with Pacmulti JV in which the Company holds a 50% interest. The loans have an initial maturity date of May 5, 2030. The senior loan has a rate of one-month Term SOFR plus a spread of 3.41%, while the mezzanine loan has a fixed rate of 15.00%. At December 31, 2025, the senior loan has been fully funded, while the mezzanine loan had an outstanding balance of $12.1 million. During the year ended December 31, 2025, the Company recognized $5.2 million of revenue related to the loans, with $4.8 million of accrued interest outstanding at December 31, 2025.

*Relationship with AMF Levered II, LLC.* During the year ended December 31, 2025, AMF Levered II, LLC, a wholly owned subsidiary of ACRES Mortgage Fund, Ltd., purchased a $125.0 million non-controlling interest in SPE 2025-1. During the year ended December 31, 2025, the Company allocated $4.0 million in earnings related to operations and distributed $353,000 of income, net of expenses to AMF Levered II, LLC. Additionally, at December 31, 2025, the Company had a distribution payable balance of $516,000. AMF Levered II, LLC owns 43% of SPE 2025-1 and assumed its proportionate share of risk in the underlying assets and the liabilities, including the JPMorgan Chase 2025 Facility.

**NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS**

The Company had no financial instruments carried at fair value on a recurring basis at either December 31, 2025 or 2024.

The Company measures the fair value of certain assets on a non-recurring basis when events or changes in circumstances indicate that the carrying value of the assets may be impaired. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for sale or write-downs of an asset's value due to impairment.

During the year ended December 31, 2025, the Company foreclosed on one property that formerly collateralized a CRE whole loan. Upon receipt, the property was immediately contributed to a joint venture, and the Company's investment in that joint venture is included in investments in unconsolidated entities on the consolidated balance sheets. The property was appraised and determined to have a fair value of $74.4 million at the time of acquisition. Fair value was determined using an income capitalization valuation technique, with the significant unobservable input being an overall cap rate of 5.00% The valuation of this property fell under Level 3 of the fair value hierarchy.

During the year ended December 31, 2024, the Company received one deed-in-lieu of foreclosure on a property and foreclosed on a second property that each formerly collateralized a CRE whole loan. Upon receipt, the properties were immediately contributed to joint ventures, and the Company's investment in those joint ventures are included in investments in unconsolidated entities on the consolidated balance sheets. The first property was appraised and determined to have a fair value of $20.3 million at the time of acquisition. Fair value was determined using a discounted cash flow valuation technique, with the significant unobservable inputs being an internal rate of return of 8.50% and a terminal cap rate of 7.00%. The second property was appraised and determined to have a fair value of $32.0 million at the time of acquisition. Fair value was determined using an income capitalization valuation technique, with the significant unobservable input being a terminal cap rate of 6.00%. The valuation of this property fell under Level 3 of the fair value hierarchy.

Additionally, during the year ended December 31, 2024, two other properties were acquired through foreclosure that each formerly collateralized a CRE whole loan. The first property was determined to have a fair value of $17.5 million at the time of acquisition and was immediately classified as a property held for sale on the Company's consolidated balance sheets. The property's value was determined from a range of offers received to purchase the property. The second property was appraised and determined to have a value of $9.8 million at the time of acquisition. Fair value was determined using an income approach valuation technique, with the significant unobservable input being a terminal cap rate of 6.25%. The valuation of these properties fell under Level 3 of the fair value hierarchy.

Additionally, during the year ended December 31, 2024, the Company reclassified one loan from CRE whole loans to Loans held for sale. The loan was transferred upon entering into a loan sale and assignment agreement in December 2024 and marked to the lower of cost or market. The loan had an outstanding par balance of $11.8 million and was written down $700,000 through the allowance for credit losses immediately prior to the reclassification. The carrying value of the loan held for sale is $11.1 million. The valuation of the loan fell under Level 3 of the fair value hierarchy.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair values of the Company's short-term financial instruments such as cash and cash equivalents, restricted cash, accrued interest receivable, accounts payable, and other liabilities, accrued interest payable and distributions payable approximate their carrying values on the consolidated balance sheets. The fair values of the Company's other financial assets and liabilities are estimated as follows:

*CRE whole loans.* The fair values of the Company's loans held for investment are measured by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Par values of loans with variable interest rates are expected to approximate fair value unless evidence of credit deterioration exists, in which case the fair value approximates the par value less the loan's allowance estimated through individual evaluation. The Company's floating-rate CRE loans had interest rates from 4.63% to 10.88% and 7.13% to 11.63% at December 31, 2025 and 2024, respectively.

*CRE mezzanine loans.* The fair value of the Company's mezzanine loans are measured by discounting the expected remaining cash flows using the current interest rates at which similar instruments would be originated for the same remaining maturity. At December 31, 2024, the Company held one mezzanine loan, which was fully reserved and had no carrying or fair value. The Company did not hold any mezzanine loans at December 31, 2025, as the one mezzanine loan was charged off.

*Preferred equity investments.* The fair value of the Company's preferred equity investment is measured by discounting the expected cash flows using the future expected coupon rates. The Company's preferred equity investment is discounted at a rate of 10.00%.

*Loan receivable- due from Manager*. Fair value is estimated using a discounted cash flow model.

*Senior notes in CRE securitizations, 5.75% Senior Unsecured Notes and junior subordinated notes.* Fair values are estimated using a discounted cash flow model with implied yields based on trades for similar securities.

*CRE term reinvestment financing facility, Senior secured financing facility, warehouse financing facilities and mortgage payable.* These are variable rate debt instruments that are indexed to one-month Term SOFR that reset periodically and, as a result, their carrying value approximates their fair value, excluding deferred debt issuance costs.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The fair values of the Company's financial and non-financial assets that are not reported at fair value on the consolidated balance sheets are reported in the following table (in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Fair Value Measurements** | **Fair Value Measurements** | **Fair Value Measurements** | **Fair Value Measurements** |
|  | **Carrying Value** | **Fair Value**<sup>(1)</sup> | **Quoted Prices in Active Markets for Identical Assets or Liabilities<br>(Level 1)** | **Significant Other Observable Inputs<br>(Level 2)** | **Significant Unobservable Inputs<br>(Level 3)** |
| **At December 31, 2025:** |  |  |  |  |  |
| &nbsp;&nbsp;Assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;CRE whole loans | $1800784 | $1828299 | $— | $— | $1828299 |
| &nbsp;&nbsp;&nbsp;&nbsp;CRE preferred equity investment | 9185 | 9511 |  |  | 9511 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan receivable - due from Manager | 10375 | 9337 |  |  | 9337 |
| &nbsp;&nbsp;Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;CRE term reinvestment facility | 728167 | 731002 |  |  | 731002 |
| &nbsp;&nbsp;&nbsp;&nbsp;Senior secured financing facility | 61645 | 63099 |  |  | 63099 |
| &nbsp;&nbsp;&nbsp;&nbsp;Warehouse financing facilities | 533862 | 534760 |  |  | 534760 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage payable | 20185 | 20185 |  |  | 20185 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.75% Senior Unsecured Notes | 149531 | 148740 |  |  | 148740 |
| &nbsp;&nbsp;&nbsp;&nbsp;Junior subordinated notes | 51548 | 42777 |  |  | 42777 |
| **At December 31, 2024:** |  |  |  |  |  |
| &nbsp;&nbsp;Assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;CRE whole loans | $1454545 | $1484997 | $— | $— | $1484997 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan receivable - due from Manager | 10675 | 8969 |  |  | 8969 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan held for sale | 11100 | 11100 |  |  | 11100 |
| &nbsp;&nbsp;Liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Senior notes in CRE securitizations | 862804 | 857437 |  |  | 857437 |
| &nbsp;&nbsp;&nbsp;&nbsp;Senior secured financing facility | 60910 | 63099 |  |  | 63099 |
| &nbsp;&nbsp;&nbsp;&nbsp;Warehouse financing facilities | 156739 | 158266 |  |  | 158266 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgages payable | 79556 | 80113 |  |  | 80113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.75% Senior Unsecured Notes | 148814 | 145485 |  |  | 145485 |
| &nbsp;&nbsp;&nbsp;&nbsp;Junior subordinated notes | 51548 | 40852 |  |  | 40852 |

---

(1)The fair values reflected in the table above represent management's best estimate of the fair value of the financial instruments and have no impact on the Company's performance or cash flows.

**NOTE 19 - MARKET RISK AND DERIVATIVE INSTRUMENTS**

The Company is affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." When deemed appropriate, the Company may use derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments were interest rate risk and market price risk.

The Company historically managed its interest rate risk with interest rate swaps. Interest rate swaps are contracts between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices.

The Company seeks to manage the extent to which net income changes as a function of changes in interest rates by matching adjustable-rate assets with variable-rate borrowings.

The Company classified its interest rate swap contracts as cash flow hedges, which are hedges that eliminate the risk of changes in the cash flows of a financial asset or liability.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

The Company terminated all of its interest rate swap positions associated with its financed CMBS portfolio in April 2020. At termination, the Company realized a loss of $11.8 million. At December 31, 2025 and 2024, the Company had losses of $1.6 million and $3.3 million, respectively, recorded in accumulated other comprehensive loss, which will be amortized into earnings over the remaining life of the debt. During each of the three years ended December 31, 2025, 2024 and 2023, the Company recorded amortization expense, reported in interest expense on the consolidated statements of operations, of $1.7 million.

At December 31, 2024, the Company had an unrealized gain of $73,000 attributable to two terminated interest rate swaps in accumulated other comprehensive loss on the consolidated balance sheets, to be accreted into earnings over the remaining life of the debt. The Company did not have an unrealized balance at December 31, 2025 since the remaining gain attributable to two terminated interest rate swaps in accumulated other comprehensive loss on the consolidated balance sheets was realized during the year ended December 31, 2025. During the years ended December 31, 2025, 2024 and 2023, the Company recorded accretion income, reported in interest expense on the consolidated statements of operations, of $73,000, $92,000 and $91,000, respectively, to accrete the accumulated other comprehensive income on the terminated swap agreements.

The following table presents the effect of the derivative instruments on the consolidated statements of operations during the years ended December 31, 2025, 2024 and 2023:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Realized and Unrealized Gain (Loss)** <sup>(1)</sup> | **Realized and Unrealized Gain (Loss)** <sup>(1)</sup> | **Realized and Unrealized Gain (Loss)** <sup>(1)</sup> |
|  | **Consolidated Statements of Operations Location** | **Year Ended December 31, 2025** | **Year Ended December 31, 2024** | **Year Ended December 31, 2023** |
| Interest rate swap contracts, hedging | Interest expense | $(1600) | $(1598) | $(1593) |

---

(1)Negative values indicate a decrease to the associated consolidated statements of operations line items.

**NOTE 20 - INCOME TAXES**

The following table details the components of income taxes of the Company (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Income tax (benefit) expense:** |  |  |  |
| &nbsp;&nbsp;Current: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal | $(81) | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;State | (2) | (1) | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current | (83) | (1) | 1 |
| &nbsp;&nbsp;Deferred: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;State |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $(83) | $(1) | $1 |

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

A reconciliation of the income tax expense based upon the statutory tax rate to the effective income tax rate was as follows of the Company for the year presented (dollars in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2025** |
| **Income tax (benefit) expense:** |  |  |
| &nbsp;&nbsp;Statutory tax | $5858 | 21.00% |
| &nbsp;&nbsp;REIT non-taxable income | (6325) | (22.68%) |
| &nbsp;&nbsp;State and local taxes, net of federal benefit | 394 | 1.41% |
| &nbsp;&nbsp;True-up of prior period tax expense | 7 | 0.03% |
| &nbsp;&nbsp;Valuation allowance | (222) | (0.80%) |
| &nbsp;&nbsp;Other items | 205 | 0.74% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $(83) | (0.30%) |

---

A reconciliation of the income tax expense based upon the statutory tax rate to the effective income tax rate was as follows for the Company's TRSs for the years presented (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2024** | **2023** |
| **Income tax (benefit) expense:** |  |  |
| &nbsp;&nbsp;Statutory tax | $(39) | $(70) |
| &nbsp;&nbsp;State and local taxes, net of federal benefit | 1062 | (42) |
| &nbsp;&nbsp;True-up of prior period tax expense |  | (6) |
| &nbsp;&nbsp;Valuation allowance | (757) | 310 |
| &nbsp;&nbsp;Other items | (267) | (191) |
| &nbsp;&nbsp;Total | $(1) | $1 |

---

The components of deferred tax assets and liabilities were as follows for the Company (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| **Deferred tax assets related to:** |  |  |
| &nbsp;&nbsp;Federal, state and local loss carryforwards | $13739 | $13794 |
| &nbsp;&nbsp;Amortization of intangibles | 18 | 25 |
| &nbsp;&nbsp;Capital loss carryforward | 5480 | 255 |
| &nbsp;&nbsp;Accrued expenses | 4 |  |
| &nbsp;&nbsp;Equity investments |  | 5116 |
| &nbsp;&nbsp;Interest expense limitation 163(j) | 1823 | 1365 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax assets | 21064 | 20555 |
| &nbsp;&nbsp;Valuation allowance | (20328) | (20551) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax assets, net of valuation allowance | $736 | $4 |
| **Deferred tax liabilities related to:** |  |  |
| &nbsp;&nbsp;Equity investments | $(736) | $— |
| &nbsp;&nbsp;Accrued expenses |  | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax liabilities | $(736) | $(4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred tax assets, net | $— | $— |

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

At December 31, 2025 and 2024, the Company had $62.3 million and $60.9 million, respectively, of gross federal and $832,000 and $1.3 million, respectively, of gross state and local net operating loss ("NOL") carryforwards (a collective deferred tax asset of $13.7 million and $13.8 million, respectively). At December 31, 2025, $22.5 million of the NOL carryforwards have an indefinite carryforward period and $39.8 million of the NOL carryforwards begin to expire in 2044.

The Company also generated a gross capital loss carryforward of $20.8 million (tax effected expense of $4.4 million at December 31, 2025). Due to changes in management's focus regarding the non-core asset classes, the Company determined that it no longer expected to have sufficient forecasted taxable income to completely realize the tax benefits of the deferred tax assets at December 31, 2025 and 2024. Therefore, a full valuation allowance with a tax effected expense of $20.3 million and $20.6 million has been recorded against the net deferred tax asset at December 31, 2025 and 2024, respectively. Management will continue to assess its estimate of the amount of deferred tax assets that the Company will be able to utilize.

The Company is subject to examination by the Internal Revenue Service for calendar years including and subsequent to 2022, and is subject to examination by state and local jurisdictions for calendar years including and subsequent to 2022.

**NOTE 21 - COMMITMENTS AND CONTINGENCIES**

The Company may become involved in litigation on various matters due to the nature of the Company's business activities. The resolution of these matters may result in adverse judgments, fines, penalties, injunctions and other relief against the Company as well as monetary payments or other agreements and obligations. In addition, the Company may enter into settlements on certain matters in order to avoid the additional costs of engaging in litigation. The Company is unaware of any contingencies arising from such litigation that would require accrual or disclosure in the consolidated financial statements at December 31, 2025.

The Company did not have any general litigation reserve at December 31, 2025 or 2024.

***Other Guarantees***

See description of 65 E. Wacker Joint Venture, LLC in Note 3.

***Unfunded Commitments***

The Company's CRE loans had $88.6 million and $94.0 million in unfunded loan commitments at December 31, 2025 and 2024, respectively. These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreements, and any necessary approvals have been obtained.

**NOTE 22 - SEGMENT INFORMATION**

The Company's management directs operations on a consolidated basis as a single operating segment, CRE lending operations. The CRE lending operations segment derives its revenues in the United States by originating, holding and managing CRE mortgage loans and related assets. Additionally, the Company may find it is in its best interests to foreclose or to accept the deed-in-lieu of foreclosure on certain loans; and if the Company cannot sell the related property, the Company operates the property as real estate owned. The accounting policies of the CRE lending operations segment are the same as those described in the summary of significant accounting policies.

The chief operating decision maker ("CODM") is the ACRES management committee that includes the principals of the Manager, including the Company's President & Chief Executive Officer. The CODM uses net income, as reported on the Company's consolidated statements of operations, in evaluating performance for the CRE lending operations segment and determining how to allocate resources. Net income is used to monitor budget versus actual results. The CODM also uses net income in competitive analysis by benchmarking to the Company's competitors. The Company's net income is primarily derived through the difference between the interest income earned on our loans and the cost at which the Company is able to finance them. Accordingly, interest expense, as reported on the Company's consolidated statements of operations, is the Company's most significant segment expense. The other significant expenses are general and administrative expenses and provision for credit losses. The measure of segment assets is reported on the consolidated balance sheets as total assets.

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**ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**DECEMBER 31, 2025**

**NOTE 23 - SUBSEQUENT EVENTS**

The Company has evaluated subsequent events through the filing of this report and determined that there have not been any events, other than those described in Notes 11, 13 and 17, that have occurred that would require adjustments to or disclosures in the consolidated financial statements.

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**ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

None.

**ITEM 9A. 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 Securities Exchange Act of 1934, as amended, or the Exchange Act, reports 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 and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our Chief Executive Officer and Chief Financial Officer, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

**Management's Report on Internal Control over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting at December 31, 2025. In making this assessment, management used the criteria set forth in the 2013 version of the *Internal Control-Integrated Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, management concluded that our internal control over financial reporting is effective at December 31, 2025.

Our independent registered public accounting firm, Ernst & Young LLP, audited our internal control over financial reporting at December 31, 2025. Their report, dated March 9, 2026, expressed an unqualified opinion on our internal control over financial reporting. This report is included in this Item 9A.

**Changes in Internal Control over Financial Reporting**

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Shareholders and the Board of Directors of ACRES Commercial Realty Corp.

**Opinion on Internal Control Over Financial Reporting**

We have audited ACRES Commercial Realty Corp. and subsidiaries' internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, ACRES Commercial Realty Corp. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss),changes in equity and cash flows for the years then ended, and the related notes and schedules listed in the Index at Item 15(a) 2. and our report dated March 9, 2026 expressed an unqualified opinion thereon.

**Basis for Opinion**

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

**Definition and Limitations of Internal Control Over Financial Reporting**

A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

March 9, 2026

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**ITEM 9B. OTHER INFORMATION**

During the three months ended December 31, 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.

On March 5, 2026, the Company issued a total of 243,650 shares of common stock under its Manager Incentive Plan to ACRES Share Holdings, LLC, a subsidiary of the Manager and under its Third Amended and Restated Omnibus Equity Compensation Plan to the Company's directors (with the exception of Messrs. Fentress and Fogel), after the Company reached the established per share book value target of $30.00 per share. Each grant vests 25% over four years. Of this amount, ACRES Share Holdings, LLC was granted 204,765 shares of common stock and now holds approximately 16% of the Company's outstanding common stock. Shares issued to ACRES Share Holdings, LLC under the Management Incentive Plan were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

On March 5, 2026, the Company granted ACRES Share Holdings, LLC a stock ownership waiver allowing it to exceed the 9.8% ownership limitations set forth in the Company's charter. The stock ownership waiver allows ACRES Share Holdings, LLC to hold up to 18% of the Company's outstanding shares of common stock.

**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

Not applicable.

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**PART III**

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

The information required by this item will be set forth in our definitive proxy statement with respect to our 2026 annual meeting of stockholders, to be filed on or before April 30, 2026 ("2026 Proxy Statement"), which is incorporated herein by this reference.

**ITEM 11. EXECUTIVE COMPENSATION**

The information required by this item will be set forth in our 2026 Proxy Statement, which is incorporated herein by this reference.

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

The information required by this item will be set forth in our 2026 Proxy Statement, which is incorporated herein by this reference.

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE**

The information required by this item will be set forth in our 2026 Proxy Statement, which is incorporated herein by this reference.

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

The information required by this item will be set forth in our 2026 Proxy Statement, which is incorporated herein by this reference.

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**PART IV**

**ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

(a)The following documents are filed as part of this Annual Report on Form 10-K:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Financial Statements**

See Part II - Item 8 - "Financial Statements and Supplementary Data," filed herewith, for a list of financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Financial Statement Schedules**

[<u>Schedule II - Valuation and Qualifying Accounts</u>](#schedule_ii)

[<u>Schedule III - Real Estate and Accumulated Depreciation</u>](#schedule_iii)

[<u>Schedule IV - Mortgage Loans on Real Estate</u>](#schedule_iv)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Exhibits**

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| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 3.1(a) | [<u>Amended and Restated Articles of Incorporation of Resource Capital Corp. (Filed previously as an exhibit to the Company's Registration Statement on Form S-11, Registration No. 333-126517.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095011605002406/ex3-1.txt) |
| 3.1(b) | [<u>Articles of Amendment to Restated Certificate of Incorporation of Resource Capital Corp. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 1, 2015.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255115000032/exh31rsoarticlesofamendment.htm) |
| 3.1(c) | [<u>Articles Supplementary 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock. (Filed previously as an exhibit to the Company's Registration Statement on Form 8-A filed on June 9, 2014.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312514230445/d741022dex33.htm) |
| 3.1(d) | [<u>Articles Supplementary 7.875% Series D Cumulative Redeemable Preferred Stock, as corrected. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on May 21, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312521169383/d173347dex31.htm) |
| 3.1(e) | [<u>Articles of Amendment, effective May 25, 2018. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on May 25, 2018.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255118000022/a2018525xanex31.htm) |
| 3.1(f) | [<u>Articles of Amendment, effective February 16, 2021. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on February 18, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021006702/xan-ex31_36.htm) |
| 3.1(g) | [<u>Articles of Amendment, effective May 28, 2021. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on June 1, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459021031078/acr-ex31_8.htm) |
| 3.2 | [<u>Fourth Amended and Restated Bylaws of ACRES Commercial Realty Corp. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on February 18, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021006702/xan-ex32_37.htm) |
| 4.1(a) | [<u>Form of Certificate for Common Stock for Resource Capital Corp. (Filed previously as an exhibit to the Company's Registration Statement on Form S-11, Registration No. 333-126517.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095011605002929/ex4-1.txt) |
| 4.1(b) | [<u>Form of Certificate for 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock. (Filed previously as an exhibit to the Company's Registration Statement on Form 8-A filed on June 9, 2014.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312514230445/d741022dex42.htm) |
| 4.1(c) | [<u>Form of Certificate for 7.875% Series D Cumulative Redeemable Preferred Stock. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on May 21, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312521169383/d173347dex41.htm) |
| 4.2(a) | [<u>Junior Subordinated Indenture between Resource Capital Corp. and Wells Fargo Bank, N.A., dated May 25, 2006. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255106000012/ex4_2juniorsubindenture.htm) |
| 4.2(b) | [<u>Amendment to Junior Subordinated Indenture and Junior Subordinated Note due 2036 between Resource Capital Corp. and Wells Fargo Bank, N.A., dated October 26, 2009 and effective September 30, 2009. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000142685009000025/exh4_2b.htm) |
| 4.3(a) | [<u>Amended and Restated Trust Agreement among Resource Capital Corp., Wells Fargo Bank, N.A., Wells Fargo Delaware Trust Company and the Administrative Trustees named therein, dated May 25, 2006. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255106000012/amendedtrustagrmay252006.htm) |
| 4.3(b) | [<u>Amendment to Amended and Restated Trust Agreement and Preferred Securities Certificate among Resource Capital Corp., Wells Fargo Bank, N.A. and the Administrative Trustees named therein, dated October 26, 2009 and effective September 30, 2009. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000142685009000025/exh4_3b.htm) |
| 4.4 | [<u>Junior Subordinated Note due 2036 in the principal amount of $25,774,000, dated October 26, 2009. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000142685009000025/exh4_4.htm) |
| 4.5(a) | [<u>Junior Subordinated Indenture between Resource Capital Corp. and Wells Fargo Bank, N.A., dated September 29, 2006. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255106000023/juniorsubinddated092906.htm) |
| 4.5(b) | [<u>Amendment to Junior Subordinated Indenture and Junior Subordinated Note due 2036 between Resource Capital Corp. and Wells Fargo Bank, N.A., dated October 26, 2009 and effective September 30, 2009. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000142685009000025/exh4_5b.htm) |
| 4.6(a) | [<u>Amended and Restated Trust Agreement among Resource Capital Corp., Wells Fargo Bank, N.A., Wells Fargo Delaware Trust Company and the Administrative Trustees named therein, dated September 29, 2006. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255106000023/amendtrustagrdated092906.htm) |

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| | |
|:---|:---|
| 4.6(b) | [<u>Amendment to Amended and Restated Trust Agreement and Preferred Securities Certificate among Resource Capital Corp., Wells Fargo Bank, N.A. and the Administrative Trustees named therein, dated October 26, 2009 and effective September 30, 2009. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000142685009000025/exh4_6b.htm) |
| 4.7 | [<u>Amended Junior Subordinated Note due 2036 in the principal amount of $25,774,000, dated October 26, 2009. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000142685009000025/exh4_7.htm) |
| 4.8 | [<u>Description of Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021012662/acr-ex49_6.htm) |
| 4.9(a) | [<u>Base Indenture, dated August 16, 2021, between the Company and the Trustee. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 17, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459021044937/acr-ex41_10.htm) |
| 4.9(b) | [<u>First Supplemental Indenture, dated August 16, 2021, between the Company and the Trustee. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 17, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459021044937/acr-ex42_11.htm) |
| 4.9(c) | [<u>Form of 5.75% Senior Note due 2026 (included in Exhibit 4.9(b))</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459021044937/acr-ex42_11.htm) |
| 10.1(a)\* | [<u>Fourth Amended and Restated Management Agreement, dated as of July 31, 2020, by and among Exantas Capital Corp., ACRES Capital, LLC and ACRES Capital Corp. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 4, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312520208347/d946697dex101.htm) |
| 10.1(b)\* | [<u>First Amendment to Fourth Amended and Restated Management Agreement, dated as of February 16, 2021, by and among ACRES Commercial Realty Corp. f/k/a Exantas Capital Corp., ACRES Capital, LLC and ACRES Capital Corp. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021012662/acr-ex102_188.htm) |
| 10.1(c)\* | [<u>Second Amendment to Fourth Amended and Restated Management Agreement, dated as of May 6, 2022, by and among ACRES Commercial Realty Corp. f/k/a Exantas Capital Corp., ACRES Capital, LLC and ACRES Capital Corp. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022018807/acr-ex101c_157.htm) |
| 10.1 (d)\* | [<u>Third Amendment to Fourth Amended and Restated Management Agreement, dated February 15, 2024, by and among ACRES Commercial Realty Corp., ACRES Capital, LLC and ACRES Capital Corp. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017024027462/acr-ex10_1.htm) |
| 10.2(a)\* | [<u>Second Amended and Restated Omnibus Equity Compensation Plan. (Filed previously as an exhibit to the Company's Proxy Statement filed on April 18, 2019.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312519110876/d725565ddef14a.htm) |
| 10.2(b)\* | [<u>Amendment No. 1 to the Exantas Capital Corp. Second Amended and Restated Omnibus Equity Compensation Plan. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459020038891/xan-ex104_264.htm) |
| 10.2(c)\* | [<u>Third Amended and Restated Omnibus Equity Compensation Plan. (Filed previously as an exhibit to the Company's Proxy Statement filed on April 12, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312521113214/d127518ddef14a.htm) |
| 10.2(d)\* | [<u>Form of Stock Award Agreement. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255114000030/exhibit104bformofstockawar.htm) |
| 10.2(e)\* | [<u>Form of Stock Award Agreement (for employees with Resource America, Inc. employment agreements). (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255114000030/exhibit104cformofstockawar.htm) |
| 10.3 | [<u>Form of Indemnification Agreement. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255117000025/a201763010qrso-ex109.htm) |
| 10.4(a) | [<u>Loan and Servicing Agreement, dated as of July 31, 2020, among RCC Real Estate SPE Holdings LLC, as Holdings, RCC Real Estate SPE 9 LLC, as the Borrower, Massachusetts Mutual Life Insurance Company and the other Lenders from time to time party thereto, Wells Fargo Bank, National Association, as the Administrative Agent, Massachusetts Mutual Life Insurance Company, as the Facility Servicer, ACRES Capital Servicing LLC, as the Portfolio Asset Servicer, and Wells Fargo Bank, National Association, as the Collateral Custodian. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 4, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312520208347/d946697dex102.htm) |
| 10.4(b) | [<u>First Amendment to Loan and Servicing Agreement, dated as of September 16, 2020, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association, as the Administrative Agent. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 22, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459020044281/xan-ex101_7.htm) |
| 10.4(c) | [<u>Second Amendment to Loan and Servicing Agreement, dated as of May 25, 2021, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021042160/acr-ex106_114.htm) |
| 10.4(d) | [<u>Third Amendment to Loan and Servicing Agreement, dated as of August 16, 2021, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, the Lenders party thereto and Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021055325/acr-ex106d_251.htm) |
| 10.4(e) | [<u>Fourth Amendment to Loan and Servicing Agreement, dated as of April 12, 2022, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, the Lenders party thereto and Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022018807/acr-ex105e_265.htm) |
| 10.4(f) | [<u>Fifth Amendment to Loan and Servicing Agreement, dated as of July 26, 2022, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, the Lenders party thereto and Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on July 27, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022026696/acr-ex101_11.htm) |

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|:---|:---|
| 10.4(g) | [<u>Sixth Amendment to Loan and Servicing Agreement, dated as of August 29, 2022, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, the Lenders party thereto and Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 30, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022030483/acr-ex101_18.htm) |
| 10.4(h) | [<u>Guaranty, dated as of July 31, 2020, by Exantas Capital Corp., and each of Exantas Real Estate Funding 2018-RSO6 Investor, LLC, Exantas Real Estate Funding 2019-RSO7 Investor, LLC, and Exantas Real Estate Funding 2020-RSO8 Investor, LLC, in favor of the Secured Parties. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 4, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312520208347/d946697dex103.htm) |
| 10.4(i) | [<u>Amended and Restated Loan and Servicing Agreement, dated as of December 22, 2022, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, Plymouth Meeting Holdings, LLC, Exantas Phili Holdings, LLC, ACRES Real Estate TRS 9 LLC, Massachusetts Mutual Life Insurance Company and ACRES Capital Servicing (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on December 22, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017022026961/acr-ex10_1.htm) |
| 10.4(j) | [<u>Guaranty, dated May 25, 2021 between Exantas Phili Holdings, LLC in favor of the Secured Parties. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022018807/acr-ex105g_198.htm) |
| 10.4(k) | [<u>Guaranty, dated May 25, 2021 between 65 E. Wacker Holdings, LLC in favor of the Secured Parties. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022018807/acr-ex105h_199.htm) |
| 10.4(l) | [<u>Guaranty, dated May 25, 2021 between Plymouth Meeting Holdings, LLC in favor of the Secured Parties. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022018807/acr-ex105i_200.htm) |
| 10.4(m) | [<u>Pledge and Guaranty Agreement, dated August 16, 2021 between ACRES Real Estate TRS 9 LLC in favor of the Secured Parties. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022018807/acr-ex105j_201.htm) |
| 10.4(n) | [<u>Guaranty, dated April 12, 2022 between Appleton Hotel Holdings, LLC and Appleton Hotel Leasing, LLC in favor of the Secured Parties. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022018807/acr-ex105k_202.htm) |
| 10.5(a) | [<u>Note and Warrant Purchase Agreement, dated as of July 31, 2020, by and among Exantas Capital Corp. and the Purchasers signatory thereto. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 4, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312520208347/d946697dex104.htm) |
| 10.5(b) | [<u>Agreement between the Company, OCM XAN Holdings PT, LLC and the Massachusetts Mutual Life Insurance Company, dated August 18, 2021. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 20, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021045285/acr-ex101_8.htm) |
| 10.5(c) | [<u>Amendment No. 1 to Note and Warrant Purchase Agreement, dated January 31, 2022, between ACRES Commercial Realty Corp. and the Purchasers signatory thereto. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on February 3, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459022003836/acr-ex101_9.htm) |
| 10.6(a) | [<u>Promissory Note, dated as of July 31, 2020, issued by ACRES Capital Corp. to RCC Real Estate, Inc. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 4, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312520208347/d946697dex105.htm) |
| 10.6(b) | [<u>Amendment No.1 to Promissory Note, dated March 13, 2025, between ACRES Holdings, LLC to ACRES Realty Funding, Inc. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2024.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017025039661/acr-ex10_6b.htm) |
| 10.7(a)\* | [<u>Manager Incentive Plan. (Filed previously as an exhibit to the Company's Proxy Statement filed on April 12, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000119312521113214/d127518ddef14a.htm) |
| 10.7(b)\* | [<u>Form of Stock Award Agreement Under the Manager Incentive Plan. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on June 9, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459021032289/acr-ex101_8.htm) |
| 10.8\* | [<u>Equity Distribution Agreement, dated October 4, 2021, by and among ACRES Commercial Realty Corp., ACRES Capital, LLC and JonesTrading Institutional Services LLC. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on October 7, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021050338/acr-ex11_10.htm) |
| 10.9(a) | [<u>Building Loan Agreement, dated as of January 24, 2023 between Chapel Drive East, LLC and Oceanview Life and Annuity Company. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017023006479/acr-ex10_9.htm) |
| 10.9(b) | [<u>Amendment No. 1 to Building Loan Agreement, dated March 11, 2025, between Chapel Drive East, LLC and Oceanview Life and Annuity Company. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2024.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017025039661/acr-ex10_9b.htm) |
| 10.9(c) | [<u>Guaranty Agreement executed January 24, 2023 by Jason Pollack, Frank Dellaglio and ACRES Realty Funding, Inc. for the benefit of Oceanview Life and Annuity Company. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on January 25, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017023001179/acr-ex10_1.htm) |
| 10.9(d) | [<u>Completion Guaranty Agreement executed January 24, 2023 by Jason Pollack, Frank Dellaglio and ACRES Realty Funding, Inc. for the benefit of Oceanview Life and Annuity Company. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on January 25, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017023001179/acr-ex10_2.htm) |
| 10.9(e) | [<u>Carry Guaranty Agreement executed January 24, 2023 by Jason Pollack, Frank Dellaglio and ACRES Realty Funding, Inc. for the benefit of Oceanview Life and Annuity Company. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on January 25, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017023001179/acr-ex10_3.htm) |
| 10.9(f) | [<u>Environmental Indemnity Agreement executed January 24, 2023 by Jason Pollack, Frank Dellaglio and ACRES Realty Funding, Inc. in favor of Oceanview Life and Annuity Company. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on January 25, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017023001179/acr-ex10_4.htm) |
| 10.10(a) | [<u>Guaranty of Completion, executed September 12, 2025 by Adam Friedberg, Anthony Hrusovsky, Peter Koch and ACRES Commercial Realty Corp. for the benefit of DL RCF I Loan Holdings, LLC (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 18, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525207376/acr-ex10_1.htm) |
| 10.10(b) | [<u>Guaranty of Retail Space, executed September 12, 2025 by Adam Friedberg, Anthony Hrusovsky, Peter Koch and ACRES Commercial Realty Corp. for the benefit of DL RCF I Loan Holdings, LLC (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 18, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525207376/acr-ex10_2.htm) |

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| | |
|:---|:---|
| 10.10(c) | [<u>Guaranty of Recourse Obligations, executed September 12, 2025 by Adam Friedberg, Anthony Hrusovsky, Peter Koch and ACRES Commercial Realty Corp. for the benefit of DL RCF I Loan Holdings, LLC (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 18, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525207376/acr-ex10_3.htm) |
| 10.10(d) | [<u>Guaranty of Interest and Carry Costs, executed September 12, 2025 by Adam Friedberg, Anthony Hrusovsky, Peter Koch and ACRES Commercial Realty Corp. for the benefit of DL RCF I Loan Holdings, LLC (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 18, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525207376/acr-ex10_4.htm) |
| 10.10(e) | [<u>Environmental Indemnity Agreement, dated September 12, 2025 by 65 E. Wacker Holdings II, LLC, Adam Friedberg, Anthony Hrusovsky, Peter Koch and ACRES Commercial Realty Corp. in favor of DL RCF I Loan Holdings, LLC (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 18, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525207376/acr-ex10_5.htm) |
| 10.10(f) | [<u>Repayment and Completion Guaranty, dated September 12, 2025 by ACRES Commercial Realty Corp. in favor of Hoyne Savings Bank (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 18, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525207376/acr-ex10_6.htm) |
| 16.1(a) | [<u>Letter from Grant Thornton LLP dated April 26, 2024. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on April 26, 2024.)</u>](https://www.sec.gov/ix?doc=/Archives/edgar/data/1332551/000095017024049113/acr-20240423.htm) |
| 16.1(b) | [<u>Letter from Grant Thornton LLP dated May 8, 2024 (Filed previously as an exhibit to the Company's Current Report on Form 8-K/A filed on May 8, 2024.)</u>](https://www.sec.gov/ix?doc=/Archives/edgar/data/1332551/000095017024122460/acr-20240930.htm) |
| 19.1 | [<u>Fifth Amended and Restated Statement of Policy Regarding Securities Trades by Personnel of ACRES Commercial Realty Corp.</u>](acr-ex19_1.htm) |
| 21.1 | [<u>List of Subsidiaries of ACRES Commercial Realty Corp.</u>](acr-ex21_1.htm) |
| 23.1 | [<u>Consent of Ernst & Young LLP.</u>](acr-ex23_1.htm) |
| 23.2 | [<u>Consent of Grant Thornton LLP.</u>](acr-ex23_2.htm) |
| 31.1 | [<u>Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Executive Officer.</u>](acr-ex31_1.htm) |
| 31.2 | [<u>Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Financial Officer.</u>](acr-ex31_2.htm) |
| 32.1 | [<u>Certification Pursuant to 18 U.S.C. Section 1350.</u>](acr-ex32_1.htm) |
| 32.2 | [<u>Certification Pursuant to 18 U.S.C. Section 1350.</u>](acr-ex32_2.htm) |
| 97.1 | [<u>Policy for the Recovery of Erroneously Awarded Compensation. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017024027462/acr-ex97_1.htm) |
| 99.1(a) | [<u>Master Repurchase Agreement for $250,000,000 between RCC Real Estate SPE 8, LLC, as Seller, and JPMorgan Chase Bank, National Association, as Buyer, dated October 26, 2018. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on October 30, 2018.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255118000041/a20181030xanexhibit991.htm) |
| 99.1(b) | [<u>First Amendment to Uncommitted Master Repurchase Agreement dated as of August 14, 2020 between RCC Real Estate SPE 8, LLC and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459020052481/xan-ex994_141.htm) |
| 99.1(c) | [<u>Amendment No. 2 to Master Repurchase Agreement, dated September 1, 2021 between RCC Real Estate SPE 8, LLC and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 2, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459021046953/acr-ex991_9.htm) |
| 99.1(d) | [<u>Amendment No. 3 to Master Repurchase Agreement and Guarantee Agreement, dated October 26, 2021 between RCC Real Estate SPE 8, LLC, JPMorgan Chase Bank, National Association and ACRES Commercial Realty Corp., as guarantor (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on October 29, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021052991/acr-ex991_6.htm) |
| 99.1(e) | [<u>Amendment No. 4 to Master Repurchase Agreement, dated July 21, 2023, between RCC Real Estate SPE 8, LLC and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on July 25, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017023034416/acr-ex99_2.htm) |
| 99.1(f) | [<u>Guarantee made by Exantas Capital Corp., as guarantor, in favor of JPMorgan Chase Bank, National Association, dated October 26, 2018. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on October 30, 2018.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000133255118000041/a20181030xanexhibit992.htm) |
| 99.1(g) | [<u>First Amendment to Guarantee Agreement, dated May 6, 2020, between Exantas Capital Corp. and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459020024285/xan-ex994_82.htm) |
| 99.1(h) | [<u>Amendment No. 2 To Guarantee Agreement, dated October 2, 2020 between Exantas Capital Corp. and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on October 7, 2020.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459020046020/xan-ex992_8.htm) |
| 99.1(i) | [<u>Amendment No. 4 To Guarantee Agreement, dated November 17, 2022 between ACRES Commercial Realty Corp. and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on November 18, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022038041/acr-ex991_6.htm) |
| 99.1(j) | [<u>Amendment No. 5 to Guarantee Agreement, dated July 21, 2023, between ACRES Commercial Realty Corp. and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on July 25, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017023034416/acr-ex99_1.htm) |
| 99.1(k) | [<u>Amendment No. 6 to Guarantee Agreement, dated March 14, 2025, between ACRES Commercial Realty Corp. and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2024.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017025039661/acr-ex99_1k.htm) |
| 99.1(l) | [<u>Amendment No. 7 to Guarantee Agreement, dated August 1, 2025, between ACRES Commercial Realty Corp. and JPMorgan Chase Bank, National Association. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2025)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017025102890/acr-ex99_1l.htm) |
| 99.2(a) | [<u>Master Repurchase and Securities Contract Agreement between ACRES Real Estate SPE 10, LLC, as Seller, and Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent, dated November 3, 2021. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021055325/acr-ex994a_248.htm) |

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| | |
|:---|:---|
| 99.2(b) | [<u>First Amendment to Master Repurchase and Securities Contract Agreement, dated January 28, 2022, between ACRES Real Estate SPE 10, LLC and Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on February 3, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/0001332551/000156459022003836/acr-ex991_6.htm) |
| 99.2(c) | [<u>Guaranty made by ACRES Commercial Realty Corp., as Guarantor, in favor of Morgan Stanley Mortgage Capital Holdings LLC, dated November 3, 2021. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459021055325/acr-ex994b_247.htm) |
| 99.2(d) | [<u>Amendment No. 1 to Guaranty, dated November 18, 2022 between ACRES Commercial Realty Corp. and Morgan Stanley Mortgage Capital Holdings LLC. (Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on November 18, 2022.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000156459022038041/acr-ex992_18.htm) |
| 99.2(e) | [<u>Amendment No. 2 to Guaranty, dated November 3, 2023 between ACRES Commercial Realty Corp. and Morgan Stanley Mortgage Capital Holdings LLC. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017023060179/acr-ex99_2.htm) |
| 99.2(f) | [<u>Amendment No. 3 to Guaranty, dated November 1, 2024 between ACRES Commercial Realty Corp. and Morgan Stanley Mortgage Capital Holdings LLC. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017024122460/acr-ex99_2.htm) |
| 99.2(g) | [<u>Amendment No. 4 to Guaranty, dated March 14, 2025 between ACRES Commercial Realty Corp. and Morgan Stanley Mortgage Capital Holdings LLC. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2024.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017025039661/acr-ex99_2g.htm) |
| 99.2(h) | [<u>Third Amendment to Master Repurchase and Securities Contract Agreement, dated November 3, 2025, between ACRES Real Estate SPE 10, LLC and Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525269208/acr-ex99_2h.htm) |
| 99.2(i) | [<u>Fourth Amendment to Master Repurchase and Securities Contract Agreement, dated November 5, 2025, between ACRES Real Estate SPE 10, LLC and Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525269208/acr-ex99_2i.htm) |
| 99.2(j) | [<u>Fifth Amendment to Master Repurchase and Securities Contract Agreement, dated December 18, 2025, between ACRES Real Estate SPE 10, LLC and Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent.</u>](acr-ex99_2j.htm) |
| 99.2(k) | [<u>Sixth Amendment to Master Repurchase and Securities Contract Agreement, dated March 5, 2026, between ACRES Real Estate SPE 10, LLC and Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent.</u>](acr-ex99_2k.htm) |
| 99.3(a) | [<u>Master Repurchase Agreement between ACRES SPE 2025-1, LLC, as Seller, and JPMorgan Chase Bank, National Association, as Buyer, dated March 14, 2025. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2024.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017025039661/acr-ex99_3a.htm) |
| 99.3(b) | [<u>Guarantee made by ACRES Commercial Realty Corp., as Guarantor, in favor of JPMorgan Chase Bank, National Association, dated March 14, 2025. (Filed previously as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2024.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000095017025039661/acr-ex99_3b.htm) |
| 99.3(c) | [<u>Amendment No. 1 to Master Repurchase Agreement, dated October 31, 2025 between ACRES SPE 2025-1, LLC, as Seller, and JPMorgan Chase Bank, National Association, as Buyer. (Filed previously as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.)</u>](https://www.sec.gov/Archives/edgar/data/1332551/000119312525269208/acr-ex99_3c.htm) |
| 99.4 | [<u>Federal Income Tax Consequences of our Qualification as a REIT.</u>](acr-ex99_4.htm) |
| 101.INS | Inline 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 With Embedded Linkbases Document. |
| 104 | Cover Page Interactive Data File. |

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\* Indicates management contracts and compensatory plans arrangements.

**ITEM 16. FORM 10-K SUMMARY**

None.

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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| | | |
|:---|:---|:---|
|  |  | ACRES COMMERCIAL REALTY CORP. |
| March 9, 2026 | By: | /s/ Mark Fogel |
|  |  | Mark Fogel |
|  |  | President & Chief Executive Officer |

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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| /s/ Andrew Fentress | Chairman of the Board | March 9, 2026 |
| ANDREW FENTRESS |  |  |
| /s/ Mark Fogel | President, Chief Executive Officer & Director | March 9, 2026 |
| MARK FOGEL | (Principal Executive Officer) |  |
| /s/ Karen Edwards | Director | March 9, 2026 |
| KAREN EDWARDS |  |  |
| /s/ Gary Ickowicz | Director | March 9, 2026 |
| GARY ICKOWICZ |  |  |
| /s/ Steven J. Kessler | Director | March 9, 2026 |
| STEVEN J. KESSLER |  |  |
| /s/ Murray S. Levin | Director | March 9, 2026 |
| MURRAY S. LEVIN |  |  |
| /s/ P. Sherrill Neff | Director | March 9, 2026 |
| P. SHERRILL NEFF |  |  |
| /s/ Dawanna Williams | Director | March 9, 2026 |
| DAWANNA WILLIAMS |  |  |
| /s/ David J. Bryant | Director | March 9, 2026 |
| DAVID J. BRYANT |  |  |
| /s/ Eldron C. Blackwell | Senior Vice President and | March 9, 2026 |
| ELDRON C. BLACKWELL | Chief Financial Officer |  |
|  | (Principal Financial Officer) |  |
| /s/ Linda M. Kilpatrick | Vice President | March 9, 2026 |
| LINDA M. KILPATRICK | Chief Accounting Officer and Controller |  |
|  | (Principal Accounting Officer) |  |

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**SCHEDULE II**

**ACRES Commercial Realty Corp.**

**Valuation and Qualifying Accounts**

**(in thousands)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Balance at Beginning of Period** | **Charge to Expense** | **Loans Charged off/Reversal of Expense** | **Balance at End of Period** |
| **Allowance for credit losses:** |  |  |  |  |
| &nbsp;&nbsp;Year Ended December 31, 2025 | $32847 | $— | $(12449) | $20398 |
| &nbsp;&nbsp;Year Ended December 31, 2024 | $28757 | $4790 | $(700) | $32847 |
| &nbsp;&nbsp;Year Ended December 31, 2023 | $18803 | $10902 | $(948) | $28757 |

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**SCHEDULE III**

**ACRES Commercial Realty Corp.**

**Real Estate and Accumulated Depreciation**

**(in thousands)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Initial Cost to Company** | **Initial Cost to Company** |  | **Gross Amount of Which Carried at Close of Period** | **Gross Amount of Which Carried at Close of Period** | **Gross Amount of Which Carried at Close of Period** |  |  |  |  |
|  | **Encumbrances** | **Land** | **Buildings and Improvements** | **Costs Capitalized Subsequent to Acquisition - Improvements** | **Land** | **Buildings and Improvements** | **Total** | **Accumulated Depreciation** | **Year of Construction** | **Date Acquired** | **Life on Which Depreciation in Latest Statements of Operations is Computed** |
| Hotel property, Northeast region (held for sale) <sup>(1)(2)(3)</sup> | $16567 | $— | $30944 | $6692 | $— | $37636 | $37636 | $(2823) | 2000 | November 2020 | N/A |
| Unimproved land, Northeast region | N/A | 14203 |  | 2361 | 14203 | 2361 | 16564 |  | N/A | November 2021 | N/A |
| Student housing property, Southeast region (held for sale) <sup>(1)</sup> | 20186 | 5976 | 19114 | 3241 | 5976 | 22355 | 28331 | (1367) | 2003/2024 | April 2022 | N/A |
| Hotel property, East North Central region <sup>(3)(4)</sup> | 16921 |  | 51353 | 6551 |  | 57904 | 57904 | (7796) | 1982 | April 2022 | 36.4 years |
| Office property, East North Central region (held for sale) <sup>(1)(2)</sup> | N/A |  | 20900 |  |  | 20900 | 20900 |  | 1896 | June 2023 | N/A |
| Multifamily property, Southeast region <sup>(4)</sup> |  | 979 | 8090 | 956 | 979 | 9046 | 10025 | (281) | 1938 | August 2024 | 39.5 years |
| &nbsp;&nbsp;Total | $53674 | $21158 | $130401 | $19801 | $21158 | $150202 | $171360 | $(12267) |  |  |  |

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(1)The property is being held for sale and is evaluated at the lower of cost or fair value.

(2)The property was acquired through a deed in lieu of foreclosure transaction.

(3)The property is included as collateral on our senior secured financing facility.

(4)The life on which depreciation in latest statements of operations is computed was calculated as the weighted average of the useful lives of the building, site improvements and tenant improvements, which comprise the investments in the properties.

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**SCHEDULE III**

**ACRES Commercial Realty Corp.**

**Real Estate and Accumulated Depreciation - (Continued)**

**(in thousands)**

The following table rolls forward our gross investments in real estate and the related accumulated depreciation:

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Investments in Real Estate:** |  |  |  |
| &nbsp;&nbsp;Balance at beginning of period | $279432 | $219943 | $158760 |
| &nbsp;&nbsp;Additions during period: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisitions through deed-in-lieu of foreclosure |  |  | 20900 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisitions through foreclosure |  | 27368 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Improvements, etc. | 2473 | 45015 | 53761 |
| &nbsp;&nbsp;Deductions during period: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | (110545) | (12894) | (13478) |
| &nbsp;&nbsp;Balance at close of period | $171360 | $279432 | $219943 |
| **Accumulated Depreciation:** |  |  |  |
| &nbsp;&nbsp;Balance at beginning of period | $(9846) | $(7865) | $(3464) |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions during period: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation expense | (2421) | (2747) | (4401) |
| &nbsp;&nbsp;&nbsp;&nbsp;Deductions during period: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  | 766 | - |
| &nbsp;&nbsp;Balance at close of period | $(12267) | $(9846) | $(7865) |

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**SCHEDULE IV**

**ACRES Commercial Realty Corp.**

**Mortgage Loans on Real Estate**

**At December 31, 2025**

**(in thousands, except amounts in footnotes)**

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Type of Loan/<br>Borrower** | **Description /<br>Location** | **Interest<br>Rates** <sup>(1)</sup> | **Maturity<br>Date** <sup>(2)</sup> | **Periodic<br>Payment<br>Terms** <sup>(3)</sup> | **Prior<br>Liens** | **Face<br>Amount<br>of Loans** | **Net<br>Carrying<br>Amount<br>of Loans**<sup>(4)</sup> | **Principal<br>Amount of<br>Loans Subject<br>to Delinquent<br>Principal or<br>Interest** |
| **CRE whole loans:** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;*CRE whole loans in excess of 3% of the carrying amount of total loans* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower A | Multifamily/Los Angeles, CA | 1M SOFR + 3.00% \| FLOOR 3.00% | 2027 | I/O |  | $118738 | $118280 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower B | Multifamily/Tallahassee, FL | 1M SOFR + 2.95% \| FLOOR 2.50% | 2028 | I/O |  | $89850 | $89025 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower C <sup>(5)</sup> | Multifamily/Rock Hill, SC | 1M SOFR + 3.41% \| FLOOR 0.10% | 2030 | I/O |  | $82876 | $82876 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower D | Multifamily/Austin, TX | 1M SOFR + 2.75% \| FLOOR 3.00% | 2028 | I/O |  | $60250 | $59635 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower E <sup>(6)</sup> | Multifamily/Tempe, AZ | 1M SOFR + 3.70% \| FLOOR 2.50% | 2028 | I/O |  | $55086 | $55030 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;*CRE whole loans less than 3% of the carrying amount of total loans* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE whole loans <sup>(7)(8)</sup> | Multifamily/Diversified | 1M SOFR + 2.60% - 4.36%<br>FLOOR 0.05% - 4.00% | 2026-2029 | I/O & P/I |  | 1086838 | 1082543 | 53471 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE whole loans <sup>(7)(8)</sup> | Office/Diversified | 1M SOFR + 2.50% - 5.75%<br>FLOOR 0.10% - 3.50% | 2026-2030 | I/O & P/I |  | 235243 | 234502 | 5614 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE whole loans | Hotel/Diversified | 1M SOFR + 5.00% - 7.00%<br>FLOOR 3.00% - 3.02% | 2026 | I/O |  | 58422 | 58374 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE whole loans | Mixed Use/Columbus, OH | 1M SOFR + 2.75% \| FLOOR 3.00% | 2028 | I/O |  | 25000 | 24686 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRE whole loans | Self-Storage/Marietta, GA | 1M SOFR + 5.50% \| FLOOR 4.50% | 2027 | I/O |  | 15996 | 15991 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total CRE whole loans** |  |  |  |  |  | 1828299 | 1820942 | 59085 |
| **Preferred Equity loan:** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;*Preferred Equity loan less than 3% of the carrying amount of total loans* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred Equity loan | Multifamily/Tallahassee, FL | 10.00% | 2028 |  |  | 9511 | 9425 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total preferred equity loan** |  |  |  |  |  | 9511 | 9425 |  |
| **Total loans** |  |  |  |  |  | 1837810 | 1830367 | 59085 |
| Allowance for credit losses |  |  |  |  |  |  | (20398) |  |
| **Total loans, net** |  |  |  |  |  |  | $1809969 |  |

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(1)References to ("1M SOFR") are one-month Term Secured Overnight Financing Rate ("SOFR"), which is used as a benchmark on our CRE whole loans.

(2)Maturity dates exclude extension options that may be available to borrower.

(3)I/O = interest only, P/I = principal and interest.

(4)The net carrying amount of loans comprises of a general allowance for credit losses of $20.4 million at December 31, 2025.

(5)Includes a mezzanine loan of $12.1 million at par and amortized cost that has a fixed rate of 15.00%.

(6)Includes a mezzanine loan of $86,000 at par and amortized cost that has a fixed rate of 15.00%.

(7)Includes four multifamily loans and two office loans with total par of $110.5 million that are amortizing loans.

(8)Maturity dates exclude one multifamily loan and one office loan in maturity default at December 31, 2025.

[<u>(Back to Index)</u>](#back_to_index)

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[<u>(Back to Index)</u>](#back_to_index)

**SCHEDULE IV**

**ACRES Commercial Realty Corp.**

**Mortgage Loans on Real Estate - (Continued)**

**At December 31, 2025**

**(in thousands)**

The following table reconciles our CRE loans carrying amounts for the periods indicated:

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| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **Balance at beginning of year** | $1454545 | $1828336 | $2038787 |
| Additions during the period: |  |  |  |
| &nbsp;&nbsp;New loans originated or acquired | 725146 | 19501 | 62968 |
| &nbsp;&nbsp;Funding of existing loan commitments | 35260 | 34319 | 45749 |
| &nbsp;&nbsp;Amortization of loan origination and extension fees and loan origination costs, net | 3973 | 5927 | 7539 |
| &nbsp;&nbsp;(Provision for) reversal of credit losses, net | 7749 | (4790) | (10902) |
| &nbsp;&nbsp;Loans charged-off | 4700 | 700 | 948 |
| &nbsp;&nbsp;Capitalized interest and loan acquisition costs | 242 |  |  |
| &nbsp;&nbsp;Origination fee sold to related party | 344 |  |  |
| Deductions during the period: |  |  |  |
| &nbsp;&nbsp;Payoff, paydown and sale of loans | (362035) | (377583) | (293158) |
| &nbsp;&nbsp;Loan sold to related party | (45800) |  |  |
| &nbsp;&nbsp;Deed in lieu of foreclosure |  | (37705) | (22797) |
| &nbsp;&nbsp;Reclassification to loan held for sale |  | (11800) |  |
| &nbsp;&nbsp;Loans charged-off | (4700) |  |  |
| &nbsp;&nbsp;Capitalized origination and extension fees | (9455) | (2360) | (798) |
| &nbsp;&nbsp;Loss on discounted payoff |  |  |  |
| **Balance at end of year** | $1809969 | $1454545 | $1828336 |

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[<u>(Back to Index)</u>](#back_to_index)

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## Exhibit 19.1

**Exhibit 19.1**

**ACRES COMMERCIAL REALTY CORP.**

**Fifth Amended and Restated Statement of Policy Regarding Securities Trades by Personnel of ACRES Commercial Realty Corp.**

ACRES Commercial Realty Corp. ("ACR"), like many companies, has decided to adopt a policy dealing with purchases and sales of our securities by our employees, officers and directors. Our employees shall refer to our employees, if any, and the employees of our external manager and its affiliates who provide services to ACR. The purchase or sale of securities while aware of material nonpublic information or the disclosure of material nonpublic information to others who then trade in ACR securities is prohibited by the federal securities laws. Insider trading violations are pursued vigorously by the SEC and the U.S. Attorneys and are punished severely. In the course of developing this policy, we have concluded that the key to preventing inadvertent violations of the securities laws is to educate all employees, officers and directors about the insider trading laws and to establish procedures ("pre-clearance procedures") for reviewing all proposed purchases, sales or other transactions in our securities by all of our employees, officers and directors. We have also decided that we should establish formal policies regarding when our employees, officers and directors may not engage in market transactions in our commons shares – so called "blackout periods." This memorandum takes into account Regulation FD (which deals with the timing and content of public disclosures concerning our business) and Rule 10b5-1 (which deals with pre-approved trading plans), but also reflects our own examination of our procedures.

Please note that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our insider trading policy and pre-clearance procedures apply to all employees, officers and directors, from top to bottom.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Quarterly blackout periods will apply to all employees, officers and directors. The blackout periods will serve as general guidelines for planning and clearing transactions. There may be instances where a transaction during a quarterly blackout period will be pre-cleared (e.g., where there has been a recent Regulation FD announcement and there is no undisclosed material information). By the same token, there may be instances where a proposed transaction will not be permitted even outside a quarterly blackout period, because of undisclosed material information.

We hope that our insider trading policy and these procedures will help protect all of our employees, officers and directors as well as ACR from inadvertent violations of laws regulating securities trades by insiders. If you have any questions about the insider trading policy or these procedures, please call our counsel, Jaclyn Jesberger, Esquire at (516) 882-1662.

**<u>Statement of Policy</u>**

It is the policy of ACR that no employee, officer or director who is aware of material nonpublic information relating to ACR may, directly or through family members or other persons or entities:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•buy or sell ACR securities (other than pursuant to a pre-approved trading plan that complies with SEC Rule 10b5-1), or engage in any other action to take personal advantage of that information; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•pass that information on to others outside ACR, including family and friends.

In addition, it is the policy of ACR that no employee, officer or director who, in the course of working for ACR, learns of material nonpublic information about a company with which ACR does business, may trade in that company's securities until the information becomes public or is no longer material.

Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are not excepted from the policy. The securities laws do not recognize such mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve ACR's reputation for adhering to the highest standards of conduct.

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<u>Disclosure Of Information To Others.</u> ACR is required under Regulation FD of the federal securities laws to avoid the selective disclosure of material nonpublic information. ACR has established procedures for releasing material information in a manner that is designed to achieve broad public dissemination of the information immediately upon its release. You may not, therefore, disclose information to anyone outside ACR, including family members and friends, other than in accordance with those procedures. You also may not discuss ACR or its business in an internet "chat room" or similar internet-based forum.

<u>Material Information.</u> Material information is any information that a reasonable investor would consider important in making a decision to buy, hold, or sell securities. Any information that could be expected to affect ACR's stock price, whether it is positive or negative, should be considered material. Some examples of information that ordinarily would be regarded as material are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•projections of future earnings or losses, or other earnings guidance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•earnings or dividends that are inconsistent with the consensus expectations of the investment community;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a pending or proposed merger, acquisition or tender offer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a pending or proposed acquisition or disposition of a significant asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a change in dividend policy, the declaration of a stock split, or an offering of additional securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a change in management; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•impending bankruptcy or the existence of severe liquidity problems.

<u>Twenty-Twenty Hindsight.</u> Remember, anyone scrutinizing your transactions will be doing so after the fact, with the benefit of hindsight. As a practical matter, before engaging in any transaction, you should carefully consider how enforcement authorities and others might view the transaction in hindsight.

<u>When Information Is "Public".</u> If you are aware of material nonpublic information, you may not trade until the information has been disclosed broadly to the marketplace (such as by a press release or an SEC filing) and the investing public has had time to absorb the information fully. To avoid the appearance of impropriety, as a general rule, information should not be considered fully absorbed by the marketplace until after the second business day following release of the information. If, for example, ACR were to make an announcement on a Monday, you should not trade in ACR's securities until Thursday. If an announcement were made on a Friday, Wednesday generally would be the first eligible trading day.

<u>Transactions by Family Members.</u> The insider trading policy also applies to your family members who reside with you, anyone else who lives in your household, and any family members who do not live in your household but whose transactions in ACR securities are directed by you or are subject to your influence or control (such as parents or children who consult with you before they trade in ACR securities). You are responsible for the transactions of these other persons and therefore should make them aware of the need to confer with you before they trade in ACR's securities.

<u>Stock Option Plan Exercises.</u> ACR's insider trading policy does not apply to the exercise of a stock option. The policy does apply, however, to any sale of our securities as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.

<u>Prohibited Transactions.</u> ACR considers it improper and inappropriate for any employee, officer or director of ACR to engage in speculative transactions in ACR securities. It therefore is ACR's policy that employees, officers and directors of ACR may not engage in any of the following transactions:

<u>Short Sales.</u> Short sales of ACR's securities evidence an expectation on the part of the seller that the securities will decline in value, and therefore signal to the market that the seller has no confidence in ACR or its short-term prospects. In addition, short sales may reduce the seller's incentive to improve ACR's performance. For these reasons, short sales of ACR's securities are prohibited by this Policy Statement. In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short sales.

<u>Publicly Traded Options.</u> A transaction in options is, in effect, a bet on the short-term movement of ACR's securities and therefore creates the appearance that the employee, officer or director is trading based on inside information. Transactions in options also may focus the employee's, officer's or director's attention on short-term

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performance at the expense of ACR's long-term objectives. Accordingly, transactions in puts, calls or other derivative securities, on an exchange or in any other organized market, are prohibited by this Policy Statement. (Option positions arising from certain types of hedging transactions are governed by the section below captioned "Hedging Transactions.")

<u>Hedging Transactions.</u> Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow an employee, officer or director to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the employee, officer or director to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the employee, officer or director may no longer have the same objectives as ACR's other shareholders. Therefore, employees, officers and directors are prohibited from engaging in any such transactions.

<u>Margin Accounts and Pledges</u>. Securities held in a margin account may be sold by the broker without the customer's consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in ACR securities, employees, officers and directors are prohibited from holding ACR securities in a margin account or pledging ACR securities as collateral for a loan. An exception to this prohibition may be granted where a person wishes to pledge ACR securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. The audit committee of the board of directors may, in its discretion, determine to make such other exceptions as it deems suitable. Any person who wishes to pledge ACR securities as collateral for a loan must submit a request for approval to ACR's counsel, Jaclyn Jesberger, Esquire, or in her absence, such person designated by ACR's President, at least two weeks prior to the proposed execution of documents evidencing the proposed pledge.

<u>Post-Termination Transactions.</u> The Policy Statement continues to apply to your transactions in ACR securities even after you have terminated employment. If you are in possession of material nonpublic information when your employment terminates, you may not trade in ACR securities until that information has become public or is no longer material.

**<u>Pre-clearance Procedures</u>** 

To help prevent inadvertent violations of the federal securities laws, to avoid even the appearance of trading on inside information and to permit ACR to assist with any filings that may be necessary, employees, officers and directors of ACR (together with their family members who reside with them, anyone else who lives in their household, and any family members who do not live in their household but whose transactions in ACR securities are directed by them or are subject to their influence or control) may not engage in any transaction in ACR securities (including a gift, contribution to a trust, or similar transfer) without first obtaining pre-clearance of the transaction from ACR's counsel, Jaclyn Jesberger, Esquire at (516) 882-1662 or Julie Wilson at (215) 988-6792, or in their absence, such person designated by ACR's President. A request for pre-clearance should be submitted at least three business days in advance of the proposed transaction. ACR's counsel is under no obligation to approve a trade submitted for pre-clearance, and may determine not to permit the trade. ACR's counsel will consult with the ACR's CEO or the CEO's designee regarding whether the CEO or such designee, as the case may be, is aware of the existence of any material nonpublic information concerning ACR or whether there is any other reason why the trade should not be permitted prior to approving any trade.

Any person subject to the pre-clearance requirements who wishes to implement a trading plan under SEC Rule 10b5-1 must first pre-clear the plan with ACR's counsel. As required by Rule 10b5-1, you may enter into a trading plan only when you are not in possession of material nonpublic information. In addition, you may not enter into a trading plan during a blackout period, described in the next section of this memorandum. Transactions effected pursuant to a pre-cleared trading plan will not require further pre-clearance at the time of the transaction if the plan specifies the dates, prices and amounts of the contemplated trades, or establishes a formula for determining the dates, prices and amounts.

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In addition, no pre-clearance is necessary with respect to exercises of ACR stock options to which ACR's insider trading policy does not apply as described above.

**<u>Blackout Periods</u>**

*<u>Quarterly Blackout Periods.</u>* Projections of quarterly earnings developed by ACR may be considered material nonpublic information and ACR's announcement of its quarterly financial results almost always has the potential to have a material effect on the market for ACR's securities. ACR usually develops these projections in connection with the declaration of ACR's quarterly dividend during the last month of a particular fiscal quarter. Therefore, you can anticipate that, to avoid even the appearance of trading while aware of material nonpublic information, persons who are or may be expected to be aware of ACR's projected or actual quarterly financial results generally will not be pre-cleared to trade in ACR's securities during the period beginning on the 15<sup>th</sup> day of the last month prior to the end of ACR's fiscal quarter and ending after the second full business day following ACR's issuance of its quarterly earnings release for such quarter. All employees, officers and directors of ACR are subject to these quarterly blackout periods.

ACR may on occasion issue interim earnings guidance or other potentially material information by means of a press release, SEC filing on Form 8-K or other means designed to achieve widespread dissemination of the information. You should anticipate that trades are unlikely to be pre-cleared while ACR is in the process of assembling the information to be released and until the information has been released and fully absorbed by the market.

*<u>Pension Fund Blackout Periods</u>*. To the extent required by Section 306 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), directors and executive officers will be prohibited from engaging in any transaction in ACR's equity securities during any pension fund or retirement fund "blackout period" (as defined in the Sarbanes-Oxley Act) with respect to such equity security if such director or executive officer acquires the equity security in connection with his or her service or employment with ACR.

*<u>Event-specific Blackout Periods</u>*<u>.</u> From time to time, an event may occur that is material to ACR and is known by only a few directors or executives. So long as the event remains material and nonpublic, all employees, officers and directors of ACR may not trade in ACR's securities. The existence of an event-specific blackout will not be announced, other than to those who are aware of the event giving rise to the blackout. If, however, a person whose trades are subject to pre-clearance requests permission to trade in ACR's securities during an event-specific blackout, ACR counsel will inform the requester of the existence of a blackout period, without disclosing the reason for the blackout. Any person made aware of the existence of an event-specific blackout should not disclose the existence of the blackout to any other person. The failure of ACR's counsel to designate a person as being subject to an event-specific blackout will not relieve that person of the obligation not to trade while aware of material nonpublic information.

*<u>Hardship Exceptions</u>*<u>.</u> A person who is subject to a quarterly blackout period and who has an unexpected and urgent need to sell ACR securities in order to generate cash may, in appropriate circumstances, be permitted to sell ACR securities even during the blackout period. Hardship exceptions may be granted only by ACR's counsel with the approval of the audit committee of the board of directors and must be requested at least three business days in advance of the proposed trade. A hardship exception may be granted only if ACR's counsel and the audit committee of the board of directors concludes that ACR's earnings information for the applicable quarter does not constitute material nonpublic information. Under no circumstance will a hardship exception be granted during an event-specific blackout period.

*<u>Post-Termination Transactions</u>.* If you are aware of material nonpublic information when you terminate service as a director, officer or other employee of ACR, you may not trade in ACR securities until that information has become public or is no longer material. In all other respects, the procedures set forth in this memorandum will cease to apply to your transactions in ACR securities upon the expiration of any "blackout period" that is applicable to your transactions at the time of your termination of service.

*<u>Assistance</u>.* Any person who has a question about this memorandum or its application to any proposed transaction may obtain additional guidance from ACR's counsel, Jaclyn Jesberger, Esquire at (516) 882-1662.

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## Exhibit 21.1

**Exhibit 21.1**

**List of Subsidiaries of**

**ACRES Commercial Realty Corp.**

---

| | |
|:---|:---|
| **<u>Subsidiaries</u>** | **<u>State of Incorporation</u>** |
| 1926 RHT ACRES Member, LLC (F/K/A 1926 RHT Holdings, LLC) | Delaware |
| 2501-2901 Renaissance JV, LLC | Delaware |
| 2901 Renaissance Holdings 1 LLC | Delaware |
| 2901 Renaissance Holdings 2 LLC | Delaware |
| 2901 Renaissance, LLC | Delaware |
| 209 West Jackson Holdings, LLC | Delaware |
| 65 E. Wacker JV Member, LLC | Delaware |
| 7720 McCallum ACRES Member, LLC | Delaware |
| ACRES 2025 FL-3 LLC | Delaware |
| ACRES Commercial Realty 2026-FL4 Holder, LLC | Delaware |
| ACRES Commercial Realty 2026-FL4 Issuer, LLC | Delaware |
| ACRES FSU, LLC | Delaware |
| ACRES Real Estate TRS 9 LLC | Delaware |
| ACRES Real Estate SPE 10, LLC | Delaware |
| ACRES Realty Funding, Inc. (F/K/A RCC Real Estate, Inc.) | Delaware |
| ACRES Renaissance Holdings, LLC | Delaware |
| ACRES SPE 2025-1, LLC | Delaware |
| Appleton Hotel Holdings, LLC | Delaware |
| Appleton Hotel Leasing, LLC ("TRS") | Delaware |
| Exantas Phili Holdings, LLC (F/K/A Exantas HGI Holdings, LLC) | Delaware |
| Exantas Real Estate TRS, Inc. | Delaware |
| Kimbrough BADA, LLC | Delaware |
| RCC Prospect Holdings, LLC | Delaware |
| RCC Real Estate Acquisitions SPE, LLC | Delaware |
| RCC Real Estate SPE 8, LLC | Delaware |
| RCC Real Estate SPE Holdings LLC | Delaware |
| RCC Real Estate SPE 9 LLC | Delaware |
| RCC TRS, LLC | Delaware |
| RCC Trust II | Delaware |
| Resource Capital Trust I | Delaware |

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## Exhibit 23.1

**Exhibit 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in the following Registration Statements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Registration Statement (Form S-3 No. 333-255523) of ACRES Commercial Realty Corp.,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Registration Statement (Form S-3 No. 333-278433) of ACRES Commercial Realty Corp.,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Registration Statement (Form S-8 No. 333-151622) pertaining to the Resource Capital Corp. 2007 Omnibus Equity Compensation Plan,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Registration Statement (Form S-8 No. 333-176448) pertaining to the Resource Capital Corp. Amended and Restated 2007 Omnibus Equity Compensation Plan,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.Registration Statement (Form S-8 No. 333-200133) pertaining to the Resource Capital Corp. Amended and Restated Omnibus Equity Compensation Plan,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.Registration Statement (Form S-8 No. 333- 232371) pertaining to the Exantas Capital Corp. Second Amended and Restated Omnibus Equity Compensation Plan,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.Registration Statement (Form S-8 No. 333- 257901) pertaining to the ACRES Commercial Realty Corp. Third Amended and Restated Omnibus Equity Compensation Plan;

of our reports dated March 9, 2026, with respect to the consolidated financial statements of ACRES Commercial Realty Corp. and the effectiveness of internal control over financial reporting of ACRES Commercial Realty Corp. included in this Annual Report (Form 10-K) of ACRES Commercial Realty Corp. for the year ended December 31, 2025.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

March 9, 2026

------

## Exhibit 23.2

**Exhibit 23.2**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We have issued our report dated March 6, 2024 (except for Note 22, as to which the date is March 14, 2025), with respect to the consolidated financial statements included in the Annual Report of ACRES Commercial Realty Corp. on Form 10-K for the year ended December 31, 2025. We consent to the incorporation by reference of said report in the Registration Statements of ACRES Commercial Realty Corp. on Form S-3 (File No. 333-255523, effective May 12, 2021, and File No. 333-278433, effective May 1, 2024) and Form S-8 (File No. 333-151622, effective June 12, 2008, File No. 333-176448, effective August 24, 2011, File No. 333-200133, effective November 12, 2014, File No. 333-232371, effective June 26, 2019 and File No. 333-257901, effective July 14, 2021).

/s/ GRANT THORNTON LLP

San Francisco, California

March 9, 2026

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION**

I, Mark Fogel, certify that:

1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2025 of ACRES Commercial Realty Corp.;

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(s) 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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(s) 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):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.

---

| | |
|:---|:---|
| March 9, 2026 | /s/ Mark Fogel |
|  | Mark Fogel |
|  | Chief Executive Officer & President |

---

------

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION**

I, Eldron C. Blackwell, certify that:

1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2025 of ACRES Commercial Realty Corp.;

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(s) 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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(s) 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):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.

---

| | |
|:---|:---|
| March 9, 2026 | /s/ Eldron C. Blackwell |
|  | Eldron C. Blackwell |
|  | Chief Financial Officer |

---

------

## Exhibit 32.1

**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 the Annual Report on Form 10-K of ACRES Commercial Realty Corp. (the "Company") for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark Fogel, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) 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.

---

| | |
|:---|:---|
| March 9, 2026 | /s/ Mark Fogel |
|  | Mark Fogel |
|  | Chief Executive Officer and President |

---

This certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this certification required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

------

## Exhibit 32.2

**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 the Annual Report on Form 10-K of ACRES Commercial Realty Corp. (the "Company") for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Eldron C. Blackwell, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) 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.

---

| | |
|:---|:---|
| March 9, 2026 | /s/ Eldron C. Blackwell |
|  | Eldron C. Blackwell |
|  | Chief Financial Officer |

---

This certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this certification required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

------

## Exhibit 99.2

Exhibit 99.2(j)

**<u>Fifth Amendment to Master Repurchase and securities contract Agreement</u>** 

This Fifth Amendment to Master Repurchase and Securities Contract Agreement (this "**<u>Amendment</u>**"), dated as of December 18, 2025, is by and among MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company ("**<u>MSMCH</u>**"), as administrative agent (in such capacity, together with its permitted successors and assigns, the "**<u>Administrative Agent</u>**") for MORGAN STANLEY BANK, N.A., a national banking association ("**<u>MSBNA</u>**") and such other financial institutions from time to time party to the Master Repurchase Agreement (as defined below), ACRES REAL ESTATE SPE 10, LLC, a Delaware limited liability company, as seller ("**<u>Seller</u>**"), and ACRES COMMERCIAL REALTY CORP, a Maryland corporation ("**<u>Guarantor</u>**").

**<u>W I T N E S S E T H</u>:**

**WHEREAS**, Seller, Administrative Agent and MSBNA are parties to that certain Master Repurchase and Securities Contract Agreement, dated as of November 3, 2021, as amended by that certain First Amendment to Master Repurchase and Securities Contract Agreement, dated as of January 28, 2022, as amended by that certain Second Amendment to Master Repurchase and Securities Contract Agreement, dated as of November 1, 2024, as amended by that certain Third Amendment to Master Repurchase and Securities Contract Agreement, dated as of November 3, 2025, and as amended by that certain Fourth Amendment to Master Repurchase and Securities Contract Agreement, dated as of November 5, 2025 (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "**<u>Master Repurchase Agreement</u>**");

**WHEREAS**, Seller has requested and Buyer has agreed to increase the Facility Amount; and

**WHEREAS**, Seller, Guarantor and Administrative Agent, on behalf of Buyers, wish to modify certain terms and provisions of the Master Repurchase Agreement as set forth herein.

**NOW, THEREFORE**, for good and valuable consideration, the parties hereto agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Amendment to the Master Repurchase Agreement</u>. The Master Repurchase Agreement is hereby amended to delete the red stricken text (indicated textually in the same manner as the following example: **stricken text**), move the green stricken text from its current location to the location of the green underlined text (indicated textually in the same manner as the following example: **stricken text** to **<u>underlined text</u>**) and to add the blue underlined text (indicated textually in the same manner as the following example: **<u>underlined text</u>**) as attached hereto on <u>Annex A</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Increase of Facility Amount</u>. Administrative Agent, on behalf of Buyers, and Seller acknowledge and agree that pursuant to the terms of this Amendment, the Facility Amount has been increased in accordance with Section 9(b) of the Master Repurchase Agreement. Seller has no further option to request an increase of the Facility Amount pursuant to Section 9(b) of the Master Repurchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Representations and Warranties</u>. Seller and Guarantor each hereby represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) no uncured monetary Default, material non-monetary Default or Event of Default or any unsatisfied Margin Deficit has occurred and is continuing as of the date hereof or

------

will occur as a result of the execution, delivery and performance by Seller and Guarantor of this Amendment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the representations and warranties made by each of Seller and Guarantor in the Transaction Documents are true, correct, complete and accurate in all respects as of the date hereof, except to the extent that such representations and warranties (a) are made as of a particular date or (b) are no longer true as a result of a change in fact with respect to a Purchased Asset that was consented to in writing by Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) no amendments have been made to the organizational documents of Seller, Pledgor or Guarantor since November 3, 2021; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the person signing this Amendment on behalf of Seller and/or Guarantor is duly authorized to do so on its behalf.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Effectiveness</u>. The effectiveness of this Amendment is subject to receipt by Administrative Agent of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Amendment</u>. This Amendment, duly executed and delivered by Seller, Guarantor and Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Fees</u>. Payment by Seller of (i) the Facility Increase Fee (as defined in the Fourth Amendment) on the increased Facility Amount in accordance with the Fourth Amendment and (ii) the actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Administrative Agent and/or Buyers, incurred by Administrative Agent, on behalf of Buyers, in connection with this Amendment and the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>[Reserved]</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>[Reserved]</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>[Reserved]</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Continuing Effect; Reaffirmation of Guaranty.</u> As amended by this Amendment, all terms, covenants and provisions of the Master Repurchase Agreement and the other Transaction Documents are ratified and confirmed and shall remain in full force and effect. As amended by this Amendment, all terms, covenants and provisions of the Master Repurchase Agreement are ratified and confirmed and shall remain in full force and effect. In addition, any and all guaranties and indemnities for the benefit of Administrative Agent and/or Buyers (including, without limitation, the Guaranty) and agreements subordinating rights and liens to the rights and liens of Administrative Agent and/or Buyers, are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Administrative Agent and/or Buyers, and each party subordinating any right or lien to the rights and liens of Administrative Agent and/or Buyers, hereby consents, acknowledges and agrees to the modifications set forth in this Amendment and waives any common law, equitable, statutory or other rights which such party might otherwise have as a result of or in connection with this Amendment. This Amendment shall be deemed a "Transaction Document" for all purposes under the Master Repurchase Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Binding Effect; No Partnership; Counterparts</u>. The provisions of the Master Repurchase Agreement as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. The parties consent to the use of electronic signatures and any counterpart delivered by facsimile, pdf or other electronic means shall have the same import and effect as original counterparts and shall be valid, enforceable and binding for the purposes of this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Further Agreements</u>. Seller and Guarantor agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Administrative Agent and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Governing Law</u>. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Defined Terms</u>. Capitalized terms used but not defined herein shall have the meanings set forth in the Master Repurchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Headings</u>. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>References to Transaction Documents</u>. All references to the Master Repurchase Agreement in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement as amended hereby, unless the context expressly requires otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>No Waiver</u>. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Administrative Agent or any Buyer under the Master Repurchase Agreement or any other Transaction Document, nor constitute a waiver of any provision of the Master Repurchase Agreement or any other Transaction Document by any of the parties hereto.

[NO FURTHER TEXT ON THIS PAGE]

------

**IN WITNESS WHEREOF**, the parties have executed this Amendment as of the day first written above.

**<u>ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS:</u>**<br>**MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC**, a New York limited liability company**** <br>

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: | &nbsp;&nbsp;/s/ William P. Bowman |
|  | &nbsp;&nbsp;Name: William P. Bowman<br>Title: Authorized Signatory |

---

**[SIGNATURES CONTINUE ON FOLLOWING PAGE]**

------

**<u>SELLER</u>**:<br>**ACRES REAL ESTATE SPE 10, LLC**, a Delaware limited liability company

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: | &nbsp;&nbsp;/s/ Mark Fogel |
|  | &nbsp;&nbsp;Name: Mark Fogel<br>Title: President |

---

**<u>ACKNOWLEDGED AND AGREED TO BY</u>**

------

**<u>GUARANTOR</u>:**

**ACRES COMMERCIAL REALTY CORP.,** a Maryland corporation

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: | &nbsp;&nbsp;/s/ Mark Fogel |
|  | &nbsp;&nbsp;Name: Mark Fogel<br>Title: President |

---

------

**ANNEX A TO THE FOURTH<u>FIFTH</u> AMENDMENT TO MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT**

**MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT<br>among<br>MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,<br>As Administrative Agent,<br>THE FINANCIAL INSTITUTIONS PARTY HERETO<br>as Buyers,<br>and<br>ACRES REAL ESTATE SPE 10, LLC<br>as Seller**

------

**Table of Contents**

**Page**

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. APPLICABILITY | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. DEFINITIONS | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. INITIATION; CONFIRMATION; TERMINATION; FEES | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. CAUTIONARY SECURITY INTEREST | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. PAYMENT, TRANSFER AND CUSTODY | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. CERTAIN RIGHTS OF ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS, WITH RESPECT TO THE PURCHASED ASSETS | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. EXTENSION OF FACILITY TERMINATION DATE | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. REPRESENTATIONS | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. NEGATIVE COVENANTS OF SELLER | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. AFFIRMATIVE COVENANTS OF SELLER | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. SINGLE-PURPOSE ENTITY | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. EVENTS OF DEFAULT; REMEDIES | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. SINGLE AGREEMENT | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. NOTICES AND OTHER COMMUNICATIONS | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. NON-ASSIGNABILITY | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ETC. | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. NO RELIANCE; DISCLAIMERS | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. INDEMNITY AND EXPENSES | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. DUE DILIGENCE | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22. SERVICING | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23. TREATMENT FOR TAX PURPOSES | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24. INTENT | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26. SETOFF RIGHTS | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27. ADMINISTRATIVE AGENT | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28. MISCELLANEOUS | 74 |

---

i

------

**SCHEDULES**

---

| | |
|:---|:---|
| &nbsp;&nbsp;SCHEDULE 1 | &nbsp;&nbsp;Maximum Purchase Percentage |
| &nbsp;&nbsp;SCHEDULE 2 | &nbsp;&nbsp;Purchased Asset Documents |
| &nbsp;&nbsp;SCHEDULE 3 | &nbsp;&nbsp;Prohibited Transferees |

---

**EXHIBITS**

---

| | |
|:---|:---|
| &nbsp;&nbsp;EXHIBIT I | &nbsp;&nbsp;Form of Confirmation |
| &nbsp;&nbsp;EXHIBIT II-1 | &nbsp;&nbsp;Form of Power of Attorney to Administrative Agent, on Behalf of Buyers, |
| &nbsp;&nbsp;EXHIBIT II-2 | &nbsp;&nbsp;Form of Power of Attorney to Seller |
| &nbsp;&nbsp;EXHIBIT III | &nbsp;&nbsp;Representations and Warranties Regarding the Purchased Assets |
| &nbsp;&nbsp;EXHIBIT IV | &nbsp;&nbsp;Form of Bailee Agreement |
| &nbsp;&nbsp;EXHIBIT V | &nbsp;&nbsp;Authorized Representatives of Seller |

---

**ANNEXES**

---

| | |
|:---|:---|
| &nbsp;&nbsp;ANNEX I | &nbsp;&nbsp;Notice Instructions |
| &nbsp;&nbsp;ANNEX II | &nbsp;&nbsp;Wiring Instructions |

---

ii

------

**MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT**

This Master Repurchase and Securities Contract Agreement (this "<u>Agreement</u>") is dated as of November 3, 2021, and is made by and among MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company ("<u>MSMCH</u>"), as administrative agent (in such capacity, together with its permitted successors and assigns, the "<u>Administrative Agent</u>") for MORGAN STANLEY BANK, N.A. ("<u>MSBNA</u>"), a national banking association, and such other financial institutions from time to time party hereto as buyers (MSBNA, together with its successors and permitted assigns, and together with such other financial institutions from time to time party hereto and their respective successors and permitted assigns, collectively "<u>Buyers</u>" and individually, each a "<u>Buyer</u>") and ACRES REAL ESTATE SPE 10, LLC, a Delaware limited liability company, as seller ("<u>Seller</u>").

**1. APPLICABILITY**

From time to time the parties hereto may enter into transactions in which Seller agrees to transfer to Administrative Agent, on behalf of Buyers, one or more Eligible Assets, on a servicing-released basis, against the transfer of funds by Buyers with a simultaneous agreement by Administrative Agent, on behalf of Buyers, to transfer to Seller such Eligible Assets at a date certain (or such earlier date in accordance with the terms hereof) against the transfer of funds by Seller to Administrative Agent, on behalf of Buyers. Each such transaction involving the transfer of an Eligible Asset from Seller to Administrative Agent, on behalf of Buyers, shall be referred to herein as a "<u>Transaction</u>" and, unless otherwise agreed in writing, shall be governed by this Agreement.

**2. DEFINITIONS**

Capitalized terms in this Agreement shall have the respective meanings set forth below:

"<u>1934 Act</u>" shall mean the Securities Exchange Act of 1934, as amended.

"<u>AB Mortgage Loan</u>" shall mean a Mortgage Loan evidenced by two or more senior and subordinate Mortgage Notes.

"<u>Accelerated Repurchase Date</u>" shall have the meaning specified in <u>Section 14(b)(i)</u> of this Agreement.

"<u>Act of Insolvency</u>" shall mean, with respect to any Person: the filing of a decree or order for relief by a court having jurisdiction over such Person or any substantial part of its assets or property in an involuntary case under any applicable Insolvency Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, or ordering the winding–up or liquidation of such Person's affairs, and such decree or order shall remain unstayed and in effect for a period of thirty (30) days, the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, the consent by such Person to the entry of an order for relief in an involuntary case under any Insolvency Law, the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, the making by such Person of any general assignment for the benefit of creditors, the admission of the inability of such Person to pay its debts or discharge its obligations generally as they become due or mature, the failure by such Person generally to pay its debts as they become due, the taking of any action by any Governmental Authority or agency or any Person, agency or entity acting or purporting to act under Governmental Authority to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the property of such Person, or shall have taken any action to displace the management

------

of such Person or to curtail its authority in the conduct of the business of such Person, or the taking of action by such Person in furtherance of any of the foregoing.

"<u>Administrative Agent</u>" shall have the meaning assigned thereto in the introductory paragraph hereto.

"<u>Affiliate</u>" shall mean, (i) when used with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person and (ii) with respect to Seller, any "affiliate" of Seller as such term is defined in the Bankruptcy Code.

"<u>Affiliated Hedge Counterparty</u>" shall mean Morgan Stanley Bank, N.A., or any other Buyer, or any Affiliate of Morgan Stanley Bank, N.A., or any other Buyer, in each case, in its capacity as a party to any Hedging Transaction with Seller.

"<u>Aggregate Repurchase Price</u>" shall mean, as of any date of determination, the aggregate Repurchase Price (excluding any accrued and unpaid Price Differential) of all Purchased Assets outstanding as of such date.

"<u>Agreement</u>" shall have the meaning specified in the introductory paragraph of this Agreement.

"<u>Applicable Spread</u>" shall have the meaning specified in the Fee Letter.

"<u>Appraisal</u>" shall mean an appraisal of any Eligible Property prepared by a licensed Independent Appraiser approved by Administrative Agent, on behalf of Buyers, in its reasonable discretion, in accordance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation, in compliance with the requirements of Title 11 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and utilizing customary valuation methods, such as the income, sales/market or cost approaches, as any of the same may be updated by recertification from time to time by the appraiser performing such Appraisal.

"<u>Asset Base Component</u>" shall mean, as of any date of determination, with respect to each Purchased Asset, the product of (a) its Market Value, *multiplied by* (b) the Maximum Purchase Percentage applicable to such Purchased Asset as of such date.

"<u>Assignment of Leases</u>" shall mean, with respect to any Purchased Asset that is a Mortgage Loan, any assignment of leases, rents and profits or equivalent instrument, whether contained in the related Mortgage or executed separately, assigning to the holder or holders of such Mortgage all of the related Mortgagor's interest in the leases, rents and profits derived from the ownership, operation, leasing or disposition of all or a portion of the related Mortgaged Property as security for repayment of such Purchased Asset.

"<u>Assignment of Mortgage</u>" shall mean, with respect to any Purchased Asset that is a Mortgage Loan, an assignment of the mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related property is located to reflect the assignment and pledge of the Mortgage, subject to the terms of this Agreement.

*"*<u>Available Tenor</u>" means, as of any date of determination and with respect to the then-current Benchmark, any tenor for such Benchmark or payment period for price differential calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of a Pricing Period pursuant to this Agreement as of such date.

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"<u>Bailee</u>" shall mean such third party as Administrative Agent, on behalf of Buyers, and Seller shall mutually approve in their sole discretion, exercised in good faith.

"<u>Bailee Agreement</u>" shall mean a Bailee Agreement among Seller, Administrative Agent, on behalf of Buyers, and Bailee in the form of <u>Exhibit IV</u> hereto.

"<u>Bailee Delivery Failure</u>" shall have the meaning specified in the Bailee Agreement.

"<u>Bankruptcy Code</u>" shall mean Title 11 of the United States Code, as amended, modified or replaced from time to time.

"<u>Benchmark</u>" means, initially Term SOFR; provided that, if a Benchmark Transition Event and the Benchmark Replacement Date with respect thereto have occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then "Benchmark" means the applicable Benchmark Replacement to the extent such Benchmark Replacement has replaced such Benchmark pursuant to Article 3(l).

"<u>Benchmark Replacement</u>" means, with respect to any Benchmark Transition Event for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent, on behalf of Buyers, as a replacement of the applicable then-current Benchmark on the applicable Benchmark Replacement Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the sum of: (a) either of (i) Compounded SOFR or (ii) Daily Simple SOFR, as selected by the Administrative Agent, on behalf of Buyers, to be the then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for the applicable loan market and (b) the applicable Benchmark Replacement Adjustment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the sum of: (a) the alternate rate of interest that has been selected by Administrative Agent, on behalf of Buyers, as the replacement for the then-current Benchmark for the applicable Corresponding Tenor in accordance with any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated secured financings or securitizations relating to the relevant asset class, as applicable at such time and (b) the Benchmark Replacement Adjustment.

If at any time the Benchmark Replacement as determined pursuant to this definition would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement.

"<u>Benchmark Replacement Adjustment</u>" means the first alternative set forth in the order below that can be determined by Administrative Agent, on behalf of Buyers, as of the Benchmark Replacement Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected, endorsed or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the spread adjustment (which may be a positive or negative value or zero) that has been selected by Administrative Agent, on behalf of Buyers, giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated secured financing or securitization transactions relating to the relevant asset class, as applicable at such time.

"<u>Benchmark Replacement Conforming Changes</u>" means, with respect to the use or administration of Term SOFR or any Benchmark Replacement, any technical, administrative or operational changes (including but not limited to changes to the definition of "Business Day," the definition of "Pricing Period," timing and frequency of determining rates and making payments of price differential, timing of Transaction requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that Administrative Agent, on behalf of Buyers, decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by Administrative Agent, on behalf of Buyers, in a manner substantially consistent with market practice (or, if Administrative Agent, on behalf of Buyers, decides that adoption of any portion of such market practice is not administratively feasible or if Administrative Agent, on behalf of Buyers, determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as Administrative Agent, on behalf of Buyers, determines is reasonably necessary in connection with the administration of this Agreement.

"<u>Benchmark Replacement Date</u>" means the earliest to occur of the following events with respect to the then-current Benchmark or if the then current Benchmark is Term SOFR, with respect to the Term SOFR Reference Rate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) in the case of <u>clause (1)</u> or <u>(2)</u> of the definition of "Benchmark Transition Event," the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in the case of <u>clause (3)</u> of the definition of "Benchmark Transition Event," the date of the public statement or publication of information referenced therein.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the "Benchmark Replacement Date" will be deemed to have occurred in the case of <u>clause (1)</u> or <u>(2)</u> with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

"<u>Benchmark Transition Event</u>" means the occurrence of one or more of the following events with respect to the then-current Benchmark:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, <u>provided</u> that, at the

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time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, <u>provided</u> that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.

For the avoidance of doubt, a "Benchmark Transition Event" will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

"<u>Blocked Account</u>" shall have the meaning specified in <u>Section 5(a)</u> of this Agreement.

"<u>Blocked Account Agreement</u>" shall mean that certain Blocked Account Agreement, dated as of the date hereof, executed by Administrative Agent, on behalf of Buyers, Seller and the Depository Bank (and any successor thereto or replacement thereof executed by Administrative Agent, on behalf of Buyers, Seller and the Depository Bank), as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>Business Day</u>" shall mean any day other than (i) a Saturday or Sunday and (ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New York, Custodian or Administrative Agent, on behalf of Buyers, is authorized or obligated by law or executive order to be closed.

"<u>Buyer(s)</u>" shall have the meaning set forth in the introductory paragraph hereto.

"<u>Buyers' Principal Payment Share</u>" shall mean, with respect to any Principal Payment, an amount equal to the product of the amount of such Principal Payment, *multiplied by* the applicable Purchase Percentage.

"<u>Capital Lease Obligations</u>" shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

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"<u>Capital Stock</u>" shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent equity ownership interests in a Person which is not a corporation, including, without limitation, any and all membership or other equivalent interests in any limited liability company, and any and all partnership or other equivalent interests in any partnership or limited partnership, and any and all warrants or options to purchase any of the foregoing.

"<u>Cash Equivalents</u>" shall mean, as of any date of determination, (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (ii) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States and (b) time deposits, certificates of deposit, money market accounts or banker's acceptances of any investment grade rated commercial bank, in each case maturing within ninety (90) days after such date.

"<u>Cause</u>" shall mean, with respect to an Independent Director, (i) acts or omissions by such Independent Director that constitute willful disregard of, or bad faith or gross negligence with respect to, the Independent Director's duties with respect to Seller's obligations under this Agreement, (ii) such Independent Director has engaged in or has been charged with, or has been convicted of, fraud or other acts constituting a crime under any law applicable to such Independent Director, (iii) such Independent Director is unable to perform his or her duties as Independent Director due to death, disability or incapacity, or (iv) such Independent Director no longer meets the definition of Independent Director, as that term is defined in this <u>Section 2</u>.

"<u>Change of Control</u>" shall mean the occurrence of any of the following events: (a) any "person" or "group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>")) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a percentage of the total Capital Stock of Seller or Guarantor, as applicable, of (I) for all such transferees other than a Permitted Transferee, twenty percent (20%) or more, and (II) for all Permitted Transferees, more than twenty-five percent (25%) (b) Guarantor shall cease to own and Control, of record and beneficially, directly one hundred percent (100%) of each class of outstanding Capital Stock of Pledgor, (c) Pledgor shall cease to own and Control, of record and beneficially, directly one hundred percent (100%) of each class of outstanding Capital Stock of Seller, (d) the Manager is terminated as, or otherwise ceases to be, the manager of Guarantor or Pledgor.

"<u>Closing Date</u>" shall mean the date of this Agreement.

"<u>Co-Buyer</u> Agreement" shall mean, collectively, (i) any co-buyer agreements entered into among Administrative Agent and one or more Buyers in connection with the Transactions and the Transaction Documents and (ii) any participation agreements entered into among Administrative Agent, one or more Buyers and any Participants in connection with the Transactions and the Transaction Documents, as each may be amended, modified and/or restated from time to time.

"<u>Code</u>" shall mean the Internal Revenue Code of 1986, as amended.

"<u>Collection Period</u>" shall mean, with respect to the Remittance Date in any month, the period beginning on the Remittance Date in the preceding month to and including the calendar day immediately preceding such Remittance Date.

"<u>Compounded SOFR</u>" means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which, for example, may

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be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Pricing Period or compounded in advance) being established by Administrative Agent, on behalf of Buyers, in accordance with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) if, and to the extent that, Administrative Agent, on behalf of Buyers, determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that have been selected by Administrative Agent, on behalf of Buyers, giving due consideration to any industry-accepted market practice for similar U.S. dollar denominated secured financing or securitization transactions relating to the relevant asset class, as applicable at such time.

"<u>Concentration Limit</u>" shall mean, (a) with respect to any New Asset, the Purchase Price of such New Asset does not exceed forty percent (40%) of the Facility Amount, (b) the aggregate Purchase Prices of all Purchased Assets for which the Mortgaged Property consists of hospitality properties shall not exceed thirty-five percent (35%) of the Facility Amount, and (c) the aggregate Purchase Prices of all Purchased Assets that are non-controlling pari passu Participation Interests shall not exceed Twenty-Five Million Dollars ($25,000,000).

"<u>Confirmation</u>" means, a written confirmation from Administrative Agent, on behalf of Buyers, to Seller, executed by Administrative Agent, on behalf of Buyers, and acknowledged by Seller, of Buyers' Final Approval to purchase a Purchased Asset, substantially in the form attached hereto as <u>Exhibit I</u>.

"<u>Continuing Directors</u>" means, as of any date of determination with respect to a Public Vehicle, any member of the board of directors who (a) was a member of the board of directors on the date of the initial Public Sale or (b) was nominated for election, elected or appointed to the board of directors with the approval of a majority of the then members of the board of directors of such Public Vehicle (either by a specific vote or by approval of such Public Vehicle's proxy statement in which that member was named as a nominee for election as a director, without objection to the nomination).

"<u>Control</u>" shall mean, with respect to any Person, the possession of the direct or indirect power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise. "<u>Controlling</u>", "<u>Controlled</u>" and "<u>under common Control</u>" have correlative meanings.

"<u>Corresponding Tenor</u>" with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or a price differential payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

"<u>Custodial Agreement</u>" shall mean that certain Custodial Agreement, dated as of the date hereof, entered into by and among Custodian, Seller and Administrative Agent, on behalf of Buyers, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>Custodian</u>" shall mean Wells Fargo Bank, N.A., or any successor custodian appointed by Administrative Agent, on behalf of Buyers, and reasonably acceptable to Seller, or appointed by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith during the continuance of an Event of Default.

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"<u>Daily Simple SOFR</u>" means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being established by Administrative Agent, on behalf of Buyers, in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining "Daily Simple SOFR" for business loans at such times; <u>provided</u> that, if Administrative Agent, on behalf of Buyers, decides that any such convention is not administratively feasible, then the Administrative Agent, on behalf of Buyers, may establish another convention in its reasonable discretion.

"<u>Default</u>" shall mean any event that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.

"<u>Defaulted Asset</u>" shall mean any Purchased Asset as to which (i) there is a breach beyond any applicable notice and cure period of a representation or warranty by Seller under <u>Exhibit III</u> attached hereto (without regard to any knowledge qualifier therein), (ii) a default has occurred and is continuing for at least twenty-five (25) days beyond any applicable notice and cure period under the related Purchased Asset Documents in the payment when due of any scheduled payment of interest or principal or any other amounts due under the Purchased Asset Documents, (iii) the occurrence and continuance of any other "event of default" as defined under the related Purchased Asset Documents, (iv) to the extent that the related Transaction is deemed to be a loan under federal, state or local law, Administrative Agent, on behalf of Buyers, ceases to have a first priority perfected security interest in the related Purchased Asset, (v) a Significant Modification has been made without the consent of Administrative Agent, on behalf of Buyers, pursuant to this Agreement, (vi) the related Purchased Asset File or any material portion thereof is subject to a continuing Bailee Delivery Failure or has been released from the possession of Custodian under the Custodial Agreement to anyone other than Administrative Agent, on behalf of Buyers, or any Affiliate of Administrative Agent, on behalf of Buyers, except in accordance with the terms of the Custodial Agreement, (vii) upon the occurrence of any Act of Insolvency with respect to any co-participant or any other person having an interest in such Purchased Asset or any related Mortgaged Property that is senior to, or *pari passu* with, in right of payment or priority with the rights of Administrative Agent, on behalf of Buyers, in such Purchased Asset, (viii) such Purchased Asset has gone into special servicing, however so defined in any servicing, or pooling and servicing, agreement related to a securitization or similar transaction, or (ix) the related Mortgaged Property ceases to have appropriate zoning approval or required insurance in the relevant jurisdiction that is likely to have a material adverse effect on the value of the related Mortgaged Property, and in any such case such failure continues beyond any applicable notice and cure period under the related Purchased Asset Documents.

"<u>Depository Bank</u>" shall mean Wells Fargo Bank, National Association, or any successor depository bank appointed by Administrative Agent, on behalf of Buyers, and reasonably acceptable to Seller, or appointed by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith during the continuance of an Event of Default.

"<u>Diligence Fees</u>" shall mean fees, costs and expenses payable by Seller to Administrative Agent and Buyers in respect of Administrative Agent's and Buyers' actual, reasonable and necessary out-of-pocket fees, costs and expenses (other than legal expenses) incurred in connection with its review of the Diligence Materials hereunder and Administrative Agent's and Buyers' continuing due diligence reviews of Purchased Assets pursuant to <u>Section 21</u> or otherwise hereunder.

"<u>Diligence Materials</u>" shall mean, with respect to any New Asset, the related Preliminary Due Diligence Package together with the related Supplemental Due Diligence Package.

"<u>Division</u>" shall mean, as to any Person, such Person dividing and/or otherwise engaging in and/or becoming subject to, in each case, any division pursuant to, or as permitted by, §18-217 of the Delaware Limited Liability Company Act.

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"<u>Early Repurchase Date</u>" shall have the meaning specified in <u>Section 3(i)(i)</u> of this Agreement.

"<u>Electronic Signature</u>" shall have the meaning specified in <u>Section 28(f)</u> of this Agreement.

"<u>Eligible Assets</u>" shall mean (i) performing Mortgage Loans, Mezzanine Loans and Participation Interests (A) acceptable to Administrative Agent, on behalf of Buyers, in the exercise of its sole discretion exercised in good faith, (B) secured directly by an Eligible Property, (C) which have a term equal to or less than ten (10) years (assuming exercise of all extension options), (D) as to which the applicable representations and warranties set forth in <u>Exhibit III</u> are true and correct as of the applicable Purchase Date unless otherwise disclosed in the Exception Report delivered to Administrative Agent on or prior to such Purchase Date, (E) [<u>reserved</u>], (F) that have a maximum LTV not in excess of 85%, (G) that have an original principal balance of not less than Five Million Dollars ($5,000,000) and (H) that are not subject to restrictions on transfer of lender's interest therein and (ii) such other commercial real estate debt instruments (including, without limitation and for the avoidance of doubt, Mezzanine Loans) acceptable to Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith in each case, acceptable to Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith on a case-by-case basis. Notwithstanding the foregoing, or any provision to the contrary set forth either in this Agreement or in any other Transaction Document, in no event shall Seller be required to enter into any Hedging Transactions in connection with any existing or proposed Purchased Assets and Seller shall at all times have the ability, to be exercised in its sole discretion at any time, whether to enter into, modify or terminate any such Hedging Transaction.

"<u>Eligible Property</u>" shall mean a property that is a multifamily, office, retail, industrial, hospitality, self-storage, mixed-use property or manufactured housing or such other property type acceptable to Administrative Agent in the exercise of its sole discretion exercised in good faith.

"<u>Environmental Law</u>" means: (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Re-authorization Act of 1986, 42 U.S.C. §9601 et seq.; (b) the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §6901 et seq.; (c) the Clean Air Act, 42 U.S.C. §7401 et seq., as amended by the Clean Air Act Amendments of 1990; (d) the Clean Water Act of 1977, 33 U.S.C. §1251 et seq.; (e) the Toxic Substances Control Act, 15 U.S.C.A. §2601 et seq.; (f) all other federal, state and local laws, ordinances, regulations or policies relating to pollution or protection of human health or the environment including without limitation, air pollution, water pollution, or the use, handling, discharge, disposal or release or recovery of on-site or off-site Hazardous Materials, as each of the foregoing may be amended from time to time; and (g) any and all regulations promulgated under or pursuant to any of the foregoing statutes.

"<u>ERISA</u>" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

"<u>ERISA Affiliate</u>" shall mean any corporation or trade or business (whether or not incorporated) that is a member of any group of organizations described in (i) Section 414(b) or (c) of the Code or Section 4001(b) of ERISA of which Seller is a member at any relevant time or (ii) solely for purposes of the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which Seller is a member.

"<u>Erroneous Payment Recipient</u>" shall have the meaning specified in <u>Section 27(c)(i)</u> hereof.

"<u>Event of Default</u>" shall have the meaning specified in <u>Section 14(a)</u>.

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"<u>Exception Report</u>" shall have the meaning specified in <u>Section 3(c)(viii)</u>.

"<u>Excluded Taxes</u>" shall mean any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to any Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of any Recipient being organized under the laws of, or having its principal office or the office from which it books the Transaction located in, the jurisdiction imposing such Tax (or any political subdivision thereof), or (ii) that are Other Connection Taxes, (b) in the case of a Buyer, withholding Taxes imposed on amounts payable to or for the account of such Buyer pursuant to a law in effect as of the date on which such Person (i) becomes a party to this Agreement, (ii) changes the office from which it books the Transactions or (iii) where Buyer is treated as a partnership for tax purposes and the tax status of a partner in such partnership is determinative of the obligation to pay Taxes, the later of the date on which Buyer acquired its applicable interest hereunder or the date on which the affected partner becomes a partner of Buyer, except in each case to the extent that pursuant to <u>Section 3(p)</u> or <u>Section 3(r)</u> amounts with respect to such taxes were payable either to such Person's assignor immediately before such Person became a party to this Agreement or to such Person immediately before it changed the office from which it books the Transaction, (c) Taxes attributable to any Recipient's failure to comply with <u>Section 3(r)</u> of this Agreement and (d) any withholding Taxes imposed under FATCA.

"<u>Executive Order 13224</u>" shall mean Executive Order 13224 "On Terrorist Financing: Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism", effective September 24, 2001.

"<u>Exit Fee</u>" shall have the meaning specified in the Fee Letter.

"<u>Extension Fee</u>" shall have the meaning specified in the Fee Letter.

"<u>Facility Amount</u>" shall mean Four<u>Five</u> Hundred Million Dollars ($400,000,000), as increased from time to time in accordance with Section 9(b) hereof<u>500,000,000)</u>; provided that the Facility Amount shall be automatically reduced to Two Hundred Fifty Million Dollars ($250,000,000) on the Facility Amount Reduction Date.

<u>"Facility Amount Reduction Date"</u> shall mean the earliest of (x) the date Buyer receives notice from Seller requesting a reduction of the Facility Amount or (y) May 6, 2026.

<u>"Facility Increase Conditions"</u> shall have the meaning specific in Section 9(b) of this Agreement<u>.</u>

<u>"Facility Increase Fee"</u> shall have the meaning set forth in the Fourth Amendment.

"<u>Facility Termination Date</u>" shall mean November 3, 2026, as the same may be extended in accordance with <u>Section 9</u><u>(a)</u> of this Agreement.

"<u>FATCA</u>" shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), together in each case with any current or future regulations, or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any law fiscal rule or practice adopted pursuant to any intergovernmental agreement implementing such Sections of the Code.

"<u>FATF</u>" shall mean the Financial Action Task Force on Money Laundering.

"<u>FDIA</u>" shall mean the Federal Deposit Insurance Act, as amended.

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"<u>FDICIA</u>" shall mean Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991.

"<u>Fee Letter</u>" shall mean that certain letter agreement, dated the date hereof, between Administrative Agent, on behalf of Buyers, and Seller, as the same may be amended, supplemented or otherwise modified from time to time.

"<u>Filings</u>" shall have the meaning specified in <u>Section 6(b)</u> of this Agreement.

"<u>Final Approval</u>" shall have the meaning specified in <u>Section 3(d)</u> of this Agreement.

"<u>Financial Covenant Compliance Certificate</u>" shall mean an Officer's Certificate from Guarantor confirming that as of the fiscal quarter most recently ended, Guarantor shall satisfy the financial covenants set forth in Section 9 of the Guaranty, in the form attached hereto as <u>Exhibit VI</u>.

"<u>First Mortgage A-Note</u>" shall mean (i) a senior Mortgage Note in an AB Mortgage Loan or (ii) a senior controlling *pari passu* Mortgage Note in a Split Mortgage Loan.

"<u>Floor</u>" shall mean zero (0) or such other rate with respect to a Transaction as set forth in the related Confirmation.

"Fourth Amendment" shall mean that certain Fourth Amendment to this Agreement, dated as of November 5, 2025, by and among Administrative Agent, Seller and Guarantor.

"<u>Future Advance Asset</u>" shall mean any Purchased Asset with respect to which there exists a continuing obligation on the part of the holder of such Purchased Asset, pursuant to the terms and conditions of the Purchased Asset Documents, to provide additional funding to the Mortgagor.

"<u>Future Advance Purchase</u>" shall have the meaning specified in <u>Section 3(h)</u> of this Agreement.

"<u>GAAP</u>" shall mean United States generally accepted accounting principles consistently applied as in effect from time to time.

"<u>Governmental Authority</u>" shall mean any national or federal government, any state, regional, local or other political subdivision thereof with jurisdiction and any Person with jurisdiction exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

"<u>Guarantee</u>" shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); <u>provided</u> that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the maximum reasonably anticipated liability in respect thereof as determined by such Person in accordance with GAAP. The terms "<u>Guarantee</u>" and "<u>Guaranteed</u>" used as verbs shall have correlative meanings.

"<u>Guarantor</u>" shall mean ACRES Commercial Realty Corp., a Maryland corporation, together with its permitted successors and assigns.

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"<u>Guaranty</u>" shall mean that certain Guaranty, dated as of the date hereof, made by Guarantor in favor of Administrative Agent, on behalf of Buyers, as the same may be amended, supplemented or otherwise modified from time to time.

"<u>Hedging Transactions</u>" shall mean, with respect to any or all of the Purchased Assets, any short sale of U.S. Treasury Securities or mortgage-related securities, futures contract (including currency futures) or options contract or any interest rate swap, cap or collar agreement or similar arrangements providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by Seller, or by the underlying obligor with respect to any Purchased Asset and pledged to Seller as collateral for such Purchased Asset, with one or more counterparties that is an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty or, with respect to any Hedging Transaction pledged to Seller as additional collateral for a Purchased Asset, complies with such other rating requirement applicable to such Hedging Transaction set forth in the related Purchased Asset Documents or which is otherwise acceptable to Administrative Agent, on behalf of Buyers; <u>provided</u> that Seller shall not grant or permit any liens, security interests, charges, or encumbrances with respect to any such Hedging Transactions for the benefit of any Person other than Administrative Agent, on behalf of Buyers.

"<u>Income</u>" shall mean, with respect to any Purchased Asset at any time, any payment or other cash distribution thereon of principal, interest, dividends, fees, reimbursements or proceeds thereof (including sales proceeds) or other cash distributions thereon (including casualty or condemnation proceeds).

"<u>Indebtedness</u>" shall mean, for any Person: (i) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (ii) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within sixty (60) days of the date the respective goods are delivered or the respective services are rendered; (iii) Indebtedness of others secured by a lien on the property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (iv) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (v) Capital Lease Obligations of such Person; (vi) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (vii) Indebtedness of others Guaranteed by such Person; (viii) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (ix) Indebtedness of general partnerships of which such Person is a general partner or of which such Person is secondarily on contingently liable (other than by endorsement of instruments in the course of collection), whether by reason of any agreement to acquire such indebtedness, to supply or advance sums or otherwise; and (x) all net liabilities or obligations under any interest rate swap, interest rate cap, interest rate floor, interest rate collar or other hedging instrument or agreement.

"<u>Indemnified Amounts</u>" shall have the meaning specified in <u>Section 20(a)</u> of this Agreement.

"<u>Indemnified Parties</u>" shall have the meaning specified in <u>Section 20(a)</u> of this Agreement.

"<u>Indemnified Taxes</u>" shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Seller under any Transaction Document and (b) to the extent not otherwise described in <u>clause (a)</u>, Other Taxes.

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"<u>Independent Appraiser</u>" shall mean an independent professional real estate appraiser who is a member in good standing of the American Appraisal Institute, and, if the state in which the subject Eligible Property is located certifies or licenses appraisers, is certified or licensed in such state, and in each such case, who has a minimum of five (5) years' experience in the subject property type.

"<u>Independent Director</u>" shall mean, with respect to any corporation or limited liability company, an individual who: (a) is provided by CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, Lord Securities Corporation or, if none of those companies is then providing professional independent directors, another nationally-recognized company reasonably approved by Administrative Agent, on behalf of Buyers, in each case that is not an Affiliate of such corporation or limited liability company and that provides professional independent directors and other corporate services in the ordinary course of its business; (b) is duly appointed as a member of the board of directors of such corporation or as an independent manager, member of the board of managers, or special member of such limited liability company; and (c) is not, and has never been, and will not while serving as Independent Director be (i) a member (other than an independent, non-economic "springing" member), partner, equityholder, manager, director, officer or employee of such corporation or limited liability company or any of its equityholders or affiliates (other than an affiliate that is not in the direct chain of ownership of such corporation or limited liability company and that is a Single-Purpose Entity; <u>provided</u> that the fees such individual earns from serving as an Independent Director of such affiliates in any given year constitute in the aggregate less than 5% of such individual's annual income for that year); (ii) a creditor, supplier or service provider (including provider of professional services) to such corporation or limited liability company or any of its equityholders or affiliates (other than a nationally recognized company that routinely provides professional independent managers or directors and that also provides lien search and other similar services to such corporation or limited liability company or any of its equityholders or affiliates in the ordinary course of business); (iii) a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or (iv) a Person that controls (whether directly, indirectly or otherwise) any of clauses <u>(i)</u> or <u>(ii)</u> above.

"<u>Insolvency Law</u>" shall mean the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments and similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

"<u>Insured Closing Letter and Escrow Instructions</u>" shall mean a letter addressed to Seller and Administrative Agent, on behalf of Buyers, from the title insurance underwriter (or any agent thereof) acting as an agent for each Table Funded Purchased Asset and related escrow instructions, which letter and instructions shall be in form and substance reasonably acceptable to Administrative Agent and Seller.

"<u>Key Person Event</u>" shall mean if any two (2) Key Persons shall fail to remain actively and directly involved in the management and policies of ACRES Commercial Realty Corp., or in a substantially similar capacity.

"<u>Key Persons</u>" shall mean Mark Fogel, Chief Executive Officer and President, Marty Reasoner, Managing Partner, Originations or Andrew Fentress, Managing Partner, Capital Markets.

"<u>Last Endorsee</u>" shall have the meaning specified in <u>Schedule 2</u> of this Agreement.

"<u>LTV</u>" shall mean, with respect to any Eligible Asset, the ratio of the aggregate outstanding debt (which shall include such Eligible Asset and all debt senior to or *pari passu* with such Eligible Asset) secured, directly or indirectly, by the related Eligible Property or Properties, to the aggregate "as-is" market

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value of such Eligible Property or Properties as determined by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith.

"<u>Manager</u>" shall mean ACRES Capital, LLC, a New York limited liability company.

"<u>Mandatory Early Repurchase Date</u>" shall have the meaning specified in <u>Section 3(i)(ii)</u> of this Agreement.

"<u>Margin Credit Event</u>" shall mean, with respect to any Purchased Asset, the date upon which material changes (*i.e.*, changes that adversely impact the value of the Purchased Asset relative to Buyers' initial underwriting or the most recent determination of Market Value) relative to the performance or condition of (i) the relevant Mortgaged Property, (ii) the Mortgagor (or its sponsor(s)) in relation to such Purchased Asset or (iii) the commercial real estate market in the relevant jurisdiction relating to the relevant Mortgaged Property, taken in the aggregate (excluding for any reason relating to fluctuation in current interest rates, interest rate spreads and credit spreads), exist with respect to such Purchased Asset as determined by Administrative Agent in its sole discretion exercised in good faith.

"<u>Margin Deficit</u>" shall have the meaning specified in <u>Section 4(a)</u> of this Agreement.

"<u>Margin Excess</u>" shall have the meaning specified in <u>Section 4(b)</u> of this Agreement.

"<u>Margin Materiality Threshold</u>" shall have the meaning specified in the Fee Letter.

"<u>Market Value</u>" shall mean, with respect to any Purchased Asset as of any relevant date, the market value of such Purchased Asset on such date, as determined by Administrative Agent in its sole discretion exercised in good faith, which determination shall be conclusive absent manifest error.

"<u>Material Adverse Effect</u>" shall mean a material adverse effect on (i) the property, business, operations, financial condition or credit quality of Guarantor, Pledgor and/or Seller, taken as a whole, (ii) the ability of the Guarantor, Pledgor or Seller to perform its obligations under any of the Transaction Documents to which it is party, (iii) the validity or enforceability of any the Transaction Documents, (iv) the material rights and remedies of Buyers under any of the Transaction Documents or (v) the Market Value, rating (if applicable) or liquidity of all the Purchased Assets in the aggregate.

"<u>Maximum Asset Exposure Threshold</u>" shall have the meaning specified in the Fee Letter.

"<u>Maximum Purchase Percentage</u>" shall mean, with respect to any Purchased Asset, the "Maximum Purchase Percentage" specified in <u>Schedule 1</u> (or as otherwise specified in the applicable Confirmation).

"<u>Mezzanine Borrower</u>" shall mean, with respect to any Mezzanine Loan, the obligor on the related Mezzanine Note, the pledgor under the related Mezzanine Pledge Agreement, and the owner of the related Capital Stock.

"<u>Mezzanine Loan</u>" shall mean a performing mezzanine loan secured by pledges of 100% of the Capital Stock of the Mortgagor under a related Mortgage Loan which is a Purchased Asset.

"<u>Mezzanine Loan Repurchase Assets</u>" shall have the meaning specified in <u>Section 6(f)</u> hereof.

"<u>Mezzanine Note</u>" shall mean the original executed promissory note or other tangible evidence of the Mezzanine Loan indebtedness.

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"<u>Mezzanine Pledge Agreement</u>" shall mean, with respect to any Purchased Asset that is a Mezzanine Loan, the pledge and security agreement creating a valid and enforceable lien on the related Capital Stock.

"<u>Monthly Statement</u>" shall mean, for each calendar month during which this Agreement shall be in effect, Seller's or Servicer's, as applicable, reconciliation in arrears of beginning balances, interest and principal paid to date and ending balances for each Purchased Asset, together with a certified written report describing (i) any developments or events with respect to such Purchased Asset since the prior Monthly Statement that are reasonably likely to have a Material Adverse Effect, (ii) any Defaults or potential Defaults, (iii) any and all written modifications to any Purchased Asset Documents since the prior Monthly Statement, (iv) loan status, collection performance and any delinquency and loss experience with respect to each Purchased Asset, (v) an update as to the expected disposition or sale of the Purchased Assets and (vi) such other information as Administrative Agent, on behalf of Buyers, may reasonably request with respect to Seller, any Purchased Asset, Mortgagor or Mortgaged Property.

"<u>Moody's</u>" shall mean Moody's Investors Service, Inc.

"<u>Mortgage</u>" shall mean the mortgage, deed of trust, deed to secure debt or other instruments, creating a valid and enforceable first lien on or a first priority ownership interest in a Mortgaged Property.

"<u>Mortgage Loan</u>" shall mean (i) a whole commercial mortgage loan or (ii) a First Mortgage A-Note, in each case secured by a Mortgage and evidenced by a Mortgage Note and all other Purchased Asset Documents, all right, title and interest of Seller in and to any Mortgaged Property covered by the related Mortgage and all related Servicing Rights.

"<u>Mortgage Note</u>" shall mean (a) with respect to a Mortgage, a note or other evidence of indebtedness of a Mortgagor secured by such Mortgage and (b) with respect to a Participation Interest, a Participation Certificate evidencing such Participation Interest.

"<u>Mortgaged Property</u>" shall mean, in the case of (a) a Mortgage Loan, the real property or properties securing repayment of the debt evidenced by a Mortgage Note (or Mortgage Notes, in the case of an AB Mortgage Loan or Split Mortgage Loan) and (b) a Mezzanine Loan, the real property or properties owned by the Person the Capital Stock of which is pledged as collateral for such Mezzanine Loan.

"<u>Mortgagor</u>" shall mean, in the case of (a) a Mortgage Loan, the obligor on a Mortgage Note, the grantor of the related Mortgage and the owner of the related Mortgaged Property and (b) a Mezzanine Loan, the obligor on any applicable Mezzanine Note.

"<u>New Asset</u>" shall mean an Eligible Asset that Seller proposes to sell to Administrative Agent, on behalf of Buyers, pursuant to a Transaction.

"<u>OFAC</u>" shall mean the Office of Foreign Assets Control of the United States Department of the Treasury.

"<u>Officer's Certificate</u>" shall mean, as to any Person, a certificate of the chief executive officer, the chief financial officer, the president, any vice president or the secretary of such Person.

"<u>Other Connection Taxes</u>" means, Taxes imposed as a result of a present or former connection between any Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received

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payments under, received or perfected a security interest under or engaged in any other transaction pursuant to or enforced any Transaction Document).

"<u>Other Taxes</u>" shall mean any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that may arise from any payment made under any Transaction Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Transaction Document, except any such Taxes that are Other Connection Taxes.

"<u>Participant</u>" shall have the meaning specified in <u>Section 17(b)</u> hereof.

"<u>Participation Certificate</u>" shall mean a participation certificate which evidences the outstanding balance of a Participation Interest.

"<u>Participation Interest</u>" shall mean a senior controlling *pari passu* participation interest in a performing Mortgage Loan.

"<u>Payment</u>" shall have the meaning specified in <u>Section 27(c)(i)</u> hereof.

"<u>Payment Notice</u>" shall have the meaning specified in <u>Section 27(c)(ii)</u> hereof.

"<u>Permitted Encumbrances</u>" shall mean (a) liens for real property Taxes, ground rents, water charges, sewer rates and assessments not yet due and payable; (b) liens arising by operation of law (such as materialmen's, mechanics', carriers', workmen's, repairmen's and similar liens) arising in the ordinary course of business which are (i) discharged by payment, bonding or otherwise or (ii) being contested in good faith by the related Mortgagor in accordance with the related Purchased Asset Documents; (c) covenants, conditions and restrictions, rights of way, easements and other matters of public record, which do not individually or in the aggregate, in the reasonable judgment of Seller, materially interfere with (i) the current use of the related Mortgaged Property, (ii) the security intended to be provided by the related Mortgage, (iii) the underlying obligor's ability to pay its obligations when they become due or (iv) the value of the related Mortgaged Property; (d) liens and encumbrances set forth in the related Title Policy; and (e) rights of existing or future tenants as tenants only pursuant to leases.

"<u>Permitted Transferee</u>" shall have the meaning set forth in the Fee Letter.

"<u>Person</u>" shall mean an individual, corporation, limited liability company, business trust, partnership, joint tenant or tenant-in-common, trust, joint stock company, joint venture, unincorporated organization, or other entity, or a federal, state or local government or any agency or political subdivision thereof.

"<u>Plan</u>" shall mean an employee benefit or other plan established or maintained during the five-year period ended prior to the date of this Agreement or to which Seller or any ERISA Affiliate makes, is obligated to make or has, within the five-year period ended prior to the date of this Agreement, been required to make contributions and that is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.

"<u>Plan Assets</u>" shall mean "plan assets" within the meaning of the U.S. Department of Labor regulations located at 29 C.F.R. 2510.3-101, as modified by Section 3(42) of ERISA, and shall include assets of any (i) employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title I of ERISA or (ii) plan (as defined in Section 4975(e)(l) of the Code) subject to Section 4975 of the Code.

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"<u>Pledge Agreement</u>" shall mean that certain Pledge and Security Agreement, dated as of the date hereof, by Pledgor in favor of Administrative Agent, on behalf of Buyers, as the same may be amended, restated, supplemented, replaced, or otherwise modified from time to time, pledging all of Pledgor's interest in the Capital Stock of Seller to Administrative Agent, on behalf of Buyers.

"<u>Pledgor</u>" shall mean ACRES Realty Funding, Inc., a Delaware corporation, together with its permitted successors and assigns.

"<u>Portfolio Exposure Threshold</u>" shall have the meaning specified in the Fee Letter.

"<u>Power of Attorney to Administrative Agent, on behalf of Buyers</u>" shall mean (i) that certain Power of Attorney to Administrative Agent, on behalf of Buyers, dated as of the date hereof executed by Seller in favor of Administrative Agent, on behalf of Buyers, and (ii) such other power of attorney executed pursuant to this Agreement in substantially the form attached as <u>Exhibit II-1</u>.

"<u>Power of Attorney to Seller</u>" shall mean (i) that certain Power of Attorney to Seller dated as of the date hereof executed by Administrative Agent, on behalf of Buyers, in favor of Seller and (ii) such other power of attorney executed pursuant to this Agreement substantially in the form of <u>Exhibit II-2</u>.

"<u>Preliminary Approval</u>" shall have the meaning specified in <u>Section 3(b)</u> of this Agreement.

"<u>Preliminary Due Diligence Package</u>" shall mean, with respect to any New Asset, the following due diligence information, to the extent available and applicable, relating to such New Asset to be provided by Seller to Administrative Agent, on behalf of Buyers, pursuant to this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Seller's internal credit committee or investment committee memorandum, among other things, outlining the proposed transaction, including potential transaction benefits and all material underwriting risks and Underwriting Issues, anticipated exit strategies, cash flows and all other characteristics of the proposed transaction that a prudent buyer would consider material, redacted as necessary to omit all privileged and confidential information of any kind;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) current rent roll and rollover schedule, if applicable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) cash flow pro forma, plus historical information, if available;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) flood certification, in form and substance acceptable to Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) maps and photos, if available;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) interest coverage ratios and annualized underwritten debt yield (or such other underwriting methodology utilized by Seller and approved by Administrative Agent, on behalf of Buyers);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) description of the Mortgaged Property, along with a description of the Mortgagor and sponsor (including their experience with other projects, ownership structure and financial statements);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) loan-to-value ratio;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Seller's or any Affiliate's relationship with the Mortgagor or any affiliate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) material third party reports, to the extent available and applicable, including: (i) engineering and structural reports, each in form and prepared by consultants acceptable to Administrative Agent, on behalf of Buyers; (ii) current Appraisal; (iii) Phase I environmental report (including asbestos

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and lead paint report) and, if applicable, Phase II or other follow-up environmental report if recommended in Phase I, each in form and prepared by consultants acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith; (iv) seismic reports, if applicable (and only if the related Eligible Property is included in seismic zone 3), each in form and prepared by consultants acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith; (v) operations and maintenance plan with respect to asbestos containing materials, each in form and prepared by consultants acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith; (vi) the servicing data tape; (vii) credit reports by a credit reporting agency acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith, in form and substance acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith; and (viii) background searches and reports of the findings of such searches, in form and substance acceptable to Administrative Agent, as determined in its reasonable discretion, exercised in good faith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) copies of documents evidencing such New Asset, or current drafts thereof, including, without limitation, underlying debt and security documents, guaranties, Mortgagor's organizational documents, loan and collateral pledge agreements, and intercreditor agreements, as applicable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) insurance reports in form and substance acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith, and prepared by third-party consultants acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith, and (ii) insurance certificates or other evidence of insurance coverage evidencing the insurance required to be maintained with respect to any Eligible Property or Properties pursuant to <u>Section 3(c)(iv)</u> hereof (including evidence of terrorism insurance coverage and such other customary insurance coverage satisfactory to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) analyses and reports with respect to such other matters concerning the New Asset as Administrative Agent, on behalf of Buyers, may in its reasonable discretion require; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) with respect to any Transaction involving a New Asset that is a Future Advance Asset, Seller shall indicate in the related Preliminary Due Diligence Package that such New Asset is a Future Advance Asset and shall provide Administrative Agent, with the information required to complete the Confirmation regarding such Future Advance Asset, as well as the then remaining unfunded principal amount of all Purchased Assets that constitute Future Advance Assets.

"<u>Prescribed Laws</u>" shall mean, collectively, (a) the USA PATRIOT Act, (b) Executive Order 13224, (c) the International Emergency Economic Power Act, 50 U.S.C. §1701 et. seq., (d) the Bank Secrecy Act (31 U.S.C. Sections 5311 et seq.) as amended and (e) all other Requirements of Law adopted by and applicable in the United States of America and relating to money laundering or terrorism, including without limitation, the USA PATRIOT Act and all regulations and executive orders adopted by the United States of America promulgated with respect to money laundering or terrorism, including, without limitation, those promulgated by the Office of Foreign Assets Control of the United States Department of the Treasury.

"<u>Price Differential</u>" shall mean, with respect to any Transaction as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Repurchase Price thereof (excluding any amount attributable to Price Differential in the definition thereof), calculated on the basis of a three hundred sixty (360) day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (such aggregate amount to be reduced by any amount of such Price Differential paid by Seller to Administrative Agent, on behalf of Buyers, prior to such date, with respect to such Transaction).

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"<u>Pricing Period</u>" shall mean, with respect to each Purchased Asset (x) in the case of the first (1st) Remittance Date following the purchase of such Purchased Asset, the period from and including the original Purchase Date for such Purchased Asset to but excluding such Remittance Date, and (y) in the case of each subsequent Remittance Date, the one-month period from and including the preceding Remittance Date to but excluding such Remittance Date; <u>provided</u>, that no Pricing Period for a Purchased Asset shall end after the Repurchase Date for such Purchased Asset.

"<u>Pricing Rate</u>" shall mean, for any Pricing Period with respect to a Purchased Asset, an annual rate equal to the Benchmark for such Pricing Period, plus the Applicable Spread for the related Purchased Asset (subject to adjustment and/or conversion as provided in <u>Sections 3(l)</u> and <u>3(m)</u> of this Agreement).

"<u>Principal Payment</u>" shall mean, with respect to any Purchased Asset, any payment or prepayment of principal received in respect thereof (including casualty or condemnation proceeds to the extent that such proceeds are not required under the underlying loan documents to be reserved, escrowed, readvanced or applied for the benefit of the Mortgagor or the related Mortgaged Property). For purposes of clarification, prepayment premiums, fees or penalties shall not be deemed to be principal.

"<u>Principal Sweep Amount</u>" shall mean with respect to any Principal Payment received during a Sweep Trigger:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if four (4) Purchased Assets remain subject to Transactions, an amount equal to fifty percent (50%) of the Seller's Principal Payment Share of such Principal Payment; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if three (3) or fewer Purchased Assets remain subject to Transactions, an amount equal to one hundred percent (100%) of the Seller's Principal Payment Share of such Principal Payment.

"<u>Principal Sweep Escrow Account</u>" shall have the meaning specified in <u>Section 5(a)</u> of this Agreement.

"<u>Prohibited Person</u>" shall mean any Person: (i) listed in the Annex to, or otherwise subject to the provisions of, Executive Order 13224; (ii) that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order 13224; (iii) domiciled in the United States of America and with whom Administrative Agent and/or any Buyer is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law adopted in the United States of America, including Executive Order 13224; (iv) who commits, threatens or conspires to commit or supports "terrorism" as defined in Executive Order 13224; (v) that is the target of Sanctions;(vi) that is a foreign shell bank; (vii) that is a resident of, or whose subscription funds are transferred from or through an account in, a jurisdiction that has been designated as a non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the FATF, of which the U.S. is a member and with which designation the U.S. representative to the group or organization continues to concur (see http://www.fatf-gati.org for the FATF's "Non-Cooperative Countries and Territories Initiative"); or (viii) who is an Affiliate of a Person described above.

"<u>Prohibited Transferee</u>" shall mean any of the Persons listed on <u>Schedule 3</u> attached to this Agreement, together with each of their respective Affiliates.

"<u>Purchase Date</u>" shall mean, with respect to any Eligible Asset, the date on which such Eligible Asset is transferred by Seller to Administrative Agent, on behalf of Buyers.

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"<u>Purchase Percentage</u>" shall mean, with respect to any Purchased Asset, the applicable Maximum Purchase Percentage specified in <u>Schedule 1</u> (or as otherwise specified in the applicable Confirmation).

"<u>Purchase Price</u>" shall mean, with respect to any Purchased Asset, the price at which such Purchased Asset is transferred by Seller to Administrative Agent, on behalf of Buyers, on the applicable Purchase Date. The Purchase Price as of any Purchase Date for any Purchased Asset shall be an amount (expressed in dollars) equal to the product of (a) the outstanding principal balance of such Purchased Asset, *multiplied by* (b) the applicable Purchase Percentage. The Purchase Price shall increase by any Future Advance Purchase pursuant to <u>Section 3(h)</u> and any payment made to Seller in connection with a Margin Excess pursuant to <u>Section 4(b)</u>, and shall decrease by any payment applied in connection with a Margin Deficit pursuant to <u>Section 4(a)</u> and any Principal Payment applied pursuant to <u>Section 5</u> to reduce such Purchase Price and any other amounts paid to Administrative Agent, on behalf of Buyers, by Seller to reduce such Purchase Price.

"<u>Purchased Asset</u>" shall mean (i) with respect to any Transaction, the Eligible Assets sold by Seller to Administrative Agent, on behalf of Buyers, in such Transaction and (ii) with respect to the Transactions in general, all Eligible Assets sold by Seller to Administrative Agent, on behalf of Buyers.

"<u>Purchased Asset Documents</u>" shall mean, with respect to a Purchased Asset, the documents specified in <u>Schedule 2</u>.

"<u>Purchased Asset File</u>" shall mean the Purchased Asset Documents, together with any additional documents and information required to be delivered to Administrative Agent, on behalf of Buyers, or its designee (including Custodian) pursuant to this Agreement.

"<u>Purchased Asset File Checklist</u>" shall have the meaning specified in the Custodial Agreement.

"<u>Purchased Asset Schedule</u>" shall have the meaning specified in the Custodial Agreement.

"<u>Qualified Hedge Counterparty</u>" shall mean, with respect to any Hedging Transaction, any entity other than an Affiliated Hedge Counterparty, that (a) qualifies as an "eligible contract participant" as such term is defined in the Commodity Exchange Act (as amended by the Commodity Futures Modernization Act of 2000), (b) the long-term debt of which is rated no less than "A+" by Standard & Poor's and "A1" by Moody's and (c) is reasonably acceptable to Administrative Agent, on behalf of Buyers,; <u>provided</u> that, with respect to <u>clause (c)</u>, if Administrative Agent, on behalf of Buyers, has approved an entity as a counterparty, it may not thereafter deem such counterparty unacceptable with respect to any previously outstanding Transaction unless <u>clause (a)</u> or <u>(b)</u> no longer applies with respect to such counterparty.

"<u>Quarterly Report</u>" shall mean, for each fiscal quarter during which this Agreement shall be in effect, (i) Seller's or Servicer's, as applicable, certified written report summarizing (with a separate cover sheet for each Purchased Asset or, in the case of a Purchased Asset secured (directly or indirectly) by a portfolio of Mortgaged Properties, a cover sheet for such portfolio on a consolidated basis), with respect to the Mortgaged Properties securing each Purchased Asset (or, in the case of a Purchased Asset secured (directly or indirectly) by a portfolio of Mortgaged Properties, such information on a consolidated basis), the net operating income, debt service coverage, occupancy, the revenues per room (for hospitality properties) and sales per square footage (for retail properties), in each case, to the extent received by Seller, and such other information as mutually agreed by Seller and Administrative Agent, on behalf of Buyers, and (ii) the updated underwriting report.

"<u>Recipient</u>" means (a) Administrative Agent, or (b) any Buyer, as applicable.

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"<u>Reference Time</u>" shall mean with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, the time set forth in the definition of Term SOFR, and (2) if such Benchmark is not Term SOFR, then the time determined by Administrative Agent, on behalf of Buyers, in accordance with the Benchmark Replacement Conforming Changes.

"<u>Regulations T, U and X</u>" shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor thereto), as the same may be modified and supplemented and in effect from time to time.

"<u>Relevant Governmental Body</u>" means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

"<u>Remittance Date</u>" shall mean the eighteenth (18th) calendar day of each month, or the next succeeding Business Day, if such calendar day shall not be a Business Day.

"<u>Representatives</u>" shall have the meaning specified in <u>Section 28(a)</u> hereof.

"<u>Repurchase Assets</u>" shall have the meaning specified in <u>Section 6(a)</u> hereof.

"<u>Repurchase Date</u>" shall mean, with respect to any Purchased Asset, the date that is the earliest to occur of the following: (a) the Facility Termination Date, (b) the date that is specified in the related Confirmation, (c) if applicable, the related Early Repurchase Date, Mandatory Early Repurchase Date or Accelerated Repurchase Date, or (d) the maturity date of such Purchased Asset or, in the case of a Participation Interest, the maturity date of the underlying Mortgage Loan (subject to extension, if applicable, in accordance with the related Purchased Asset Documents).

"<u>Repurchase Obligations</u>" shall mean the Aggregate Repurchase Price and all other amounts due under the Transaction Documents (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) irrespective of whether such obligations are direct or indirect, absolute or contingent, matured or unmatured.

"<u>Repurchase Price</u>" shall mean, with respect to any Purchased Asset, as of any date, the price at which such Purchased Asset is to be transferred from Administrative Agent, on behalf of Buyers, to Seller upon termination of the related Transaction; in each case, such price shall equal the sum of the Purchase Price of such Purchased Asset and the accrued and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination, minus all Income and other cash actually received by Buyers in respect of such Purchased Asset and applied towards the Repurchase Price and/or Price Differential pursuant to this Agreement, including without limitation, any Principal Sweep Amounts, if any actually applied to reduce the Purchase Price of such Purchased Asset.

"<u>Requirement of Law</u>" shall mean any law (including, without limitation, Prescribed Law), treaty, rule, regulation, code, directive, policy, order or requirement or determination of an arbitrator or a court or any other Governmental Authority in each case, as adopted by the United States of America, whether now or hereafter enacted or in effect.

"<u>Reserve Requirements</u>" shall mean, with respect to any date of determination, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such

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date (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board of Governors of the Federal Reserve System) maintained by Buyers.

"<u>Sanctions</u>" shall have the meaning specified in <u>Section 10(xxv)(A)</u> of this Agreement.

"<u>SEC</u>" shall mean the Securities and Exchange Commission.

"<u>Seller</u>" shall have the meaning specified in the introductory paragraph of this Agreement.

"<u>Seller's Principal Payment Share</u>" shall mean, with respect to any Principal Payment, all amounts in excess of Buyers' Principal Payment Share.

"<u>Servicer</u>" shall mean Greystone Servicing Company LLC, or any successor servicer appointed by Administrative Agent, on behalf of Buyers, and reasonably acceptable to Seller; <u>provided</u> that the provisions of <u>Section 22</u> are satisfied.

"<u>Servicer Acknowledgment</u>" shall mean (i) that certain servicer acknowledgment, dated as of the date hereof, executed by Seller and acknowledged by Servicer and Administrative Agent, on behalf of Buyers, and (ii) such other servicer acknowledgment entered into by Seller on Administrative Agent's behalf in accordance with <u>Section 22</u> of this Agreement.

"<u>Servicing Agreement</u>" shall mean (i) that certain Servicing Agreement, dated as of the date hereof, by and between Servicer and Seller, and (ii) such other servicing or subservicing agreement entered into by Seller on Administrative Agent's behalf in accordance with <u>Section 22</u> of this Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time.

"<u>Servicing Records</u>" shall have the meaning specified in <u>Section 22(b)</u> of this Agreement.

"<u>Servicing Rights</u>" shall mean contractual, possessory or other rights of any Person to administer, service or subservice any Purchased Assets (or to possess any Servicing Records relating thereto), including: (i) the rights to service the Purchased Assets; (ii) the right to receive compensation (whether direct or indirect) for such servicing, including the right to receive and retain the related servicing fee and all other fees with respect to such Purchased Assets; and (iii) all rights, powers and privileges incidental to the foregoing, together with all Servicing Records relating thereto.

"<u>Significant Modification</u>" shall mean (i) any extension, amendment, waiver, termination, rescission, cancellation, release, subordination or other modification to the terms of, or any collateral, guaranty or indemnity for, any Purchased Asset or Purchased Asset Document (including, without limitation, any provision related to the amount or timing of any scheduled payment of interest or principal, the validity, perfection or priority of any security interest, or the release of any collateral or obligor), (ii) any sale, transfer, disposition or any similar action with respect to any collateral for any Purchased Asset or (iii) the foreclosure or exercise of any material right or remedy by the holder of any Purchased Asset or Purchased Asset Document; provided that, (a) routine and customary modifications in the administration of the Purchased Asset Documents and other non-material, administrative or ministerial modifications with no economic effect on the value of the related Purchased Asset or related Mortgaged Property regarding consent rights over leases, budgets, utilization of reserves or the release thereof, approval of escrows and bonding amounts for mechanics' or materialmen's liens, tax abatements or tax challenges and (b) provided that Seller has given Administrative Agent, on behalf of Buyers, at least ten (10) days' prior notice thereof

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(which notice shall include a summary of the related proposed amendments or modification), any waivers, consents, amendments or modifications to any Purchased Asset Document, to the extent solely providing for the conversion of the interest rate thereunder to a benchmark rate based on SOFR (or another benchmark rate to the extent that such other benchmark rate is being implemented in order to match the benchmark interest rate hereunder) and any benchmark conforming changes made in connection therewith (including waivers, consents, modifications or amendments to or replacements of any related interest rate protection agreements and/or caps relating to the applicable Purchased Asset that are necessary to effect such conversion to SOFR or such other benchmark rate) shall (in each case, with respect to each of the preceding clauses (a) and (b)) not be considered Significant Modifications.

"<u>Single-Purpose Entity</u>" shall mean any corporation, limited partnership or limited liability company that, since the date of its formation and at all times on and after the date hereof, has complied with and shall at all times comply with the provisions of <u>Section 13</u> of this Agreement.

"<u>SIPA</u>" shall have the meaning specified in <u>Section 25(a)</u> of this Agreement.

"<u>SOFR</u>" with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York's Website.

"<u>Split Mortgage Loan</u>" shall mean a Mortgage Loan evidenced by two or more senior *pari passu* Mortgage Notes.

"<u>Standard & Poor's</u>" shall mean Standard & Poor's Financial Services, L.L.C., a division of McGraw Hill Financial Inc. and any successor in interest.

"<u>Subsidiary</u>" shall mean, as to any Person, a corporation, partnership or other entity Controlled by such Person. Unless otherwise qualified, all references to a Subsidiary or to Subsidiaries in this Agreement shall refer to a Subsidiary or Subsidiaries of Seller and/or Guarantor.

"<u>Supplemental Due Diligence Package</u>" shall mean, with respect to any New Asset, information or deliveries concerning such New Asset that Administrative Agent, on behalf of Buyers, shall reasonably request in addition to the Preliminary Due Diligence Package, including, without limitation, a confirmation that the credit memorandum represents the final terms of the underlying transaction, a loan-to-value ratio computation and a final annualized underwritten debt yield computation (or such other underwriting methodology utilized by Seller and approved by Administrative Agent, on behalf of Buyers) for such New Asset.

"<u>Survey</u>" shall mean a certified ALTA/ACSM (or applicable state standards for the state in which a Mortgaged Property is located) survey of a Mortgaged Property prepared by a registered independent surveyor and in form and content reasonably satisfactory to Administrative Agent, on behalf of Buyers, and the company issuing the Title Policy for such Mortgaged Property.

"<u>Sweep Trigger</u>" shall mean any date on which less than five (5) Purchased Assets remain subject to Transactions.

"<u>Table Funded Purchased Asset</u>" shall mean a Purchased Asset which is sold to Administrative Agent, on behalf of Buyers, simultaneously with the origination or acquisition thereof, which origination or acquisition is financed with the Purchase Price, pursuant to Seller's request, paid directly to a title company or other settlement agent, in each case, approved by Administrative Agent, on behalf of Buyers, for disbursement in connection with such origination or acquisition. A Purchased Asset shall cease to be a

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Table Funded Purchased Asset after Custodian has delivered a Trust Receipt to Administrative Agent certifying its receipt of the Purchased Asset File therefor.

"<u>Taxes</u>" shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

"<u>Term SOFR</u>" means, with respect to any advance of a Purchase Price or Future Advance Purchase for any day, the Term SOFR Reference Rate for a one-month tenor on the day (such day, the "<u>Term SOFR Determination Day</u>") that is two (2) U.S. Government Securities Business Days prior to the first day of such Pricing Period, as such rate is published by the Term SOFR Administrator for such day at 6:00 a.m. (New York City time); provided, however, that if as of 5:00 p.m. (New York City time) on any Term SOFR Determination Day the Term SOFR Reference Rate for the foregoing tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Term SOFR Determination Day; provided, further, that if Term SOFR determined as provided above shall be less than the Floor, then Term SOFR shall be deemed to be the Floor.

"<u>Term SOFR Administrator</u>" means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).

"<u>Term SOFR Reference Rate</u>" means the forward-looking term rate based on SOFR.

"<u>Term SOFR Determination Day</u>" shall have the meaning set forth in the definition of Term SOFR in this Agreement.

"<u>Title Policy</u>" shall mean (a) an American Land Title Association lender's title insurance policy or a comparable form of lender's title insurance policy approved for use in the applicable jurisdiction, in form and substance reasonably acceptable to Administrative Agent, on behalf of Buyers, or, (b) if such policy has not yet been issued, (i) a pro forma policy, (ii) a preliminary title policy together with an Insured Closing Letter and Escrow Instructions or (iii) a "marked up" commitment, in each case that is binding on the title insurer.

"<u>Transaction</u>" shall have the meaning specified in <u>Section 1</u> of this Agreement.

"<u>Transaction Conditions Precedent</u>" shall have the meaning specified in <u>Section 3(f)</u> of this Agreement.

"<u>Transaction Costs</u>" shall have the meaning specified in <u>Section 20(b)</u> of this Agreement.

"<u>Transaction Documents</u>" shall mean, collectively, this Agreement, the Blocked Account Agreement, the Custodial Agreement, the Fee Letter, the Guaranty, the Pledge Agreement, the Servicing Agreement and Servicer Acknowledgment, the Power of Attorney to Administrative Agent, on behalf of Buyers, the Power of Attorney to Seller, all Transfer Documents, all Confirmations executed pursuant to this Agreement in connection with specific Transactions and all other documents executed in connection herewith and therewith.

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"<u>Transfer</u>" shall mean, with respect to any Person, any sale or other whole or partial conveyance of all or any portion of such Person's assets, or any direct or indirect interest therein to a third party (other than in connection with the transfer of a Purchased Asset to Administrative Agent, on behalf of Buyers, in accordance herewith), including the granting of any purchase options, rights of first refusal, rights of first offer or similar rights in respect of any portion of such assets or the subjecting of any portion of such assets to restrictions on transfer.

"<u>Transfer Documents</u>" shall mean, with respect to any Purchased Asset, all applicable Purchased Asset Documents necessary to transfer all of Seller's right, title and interest in such Purchased Asset to Administrative Agent, on behalf of Buyers, in accordance with the terms of this Agreement.

"<u>Trust Receipt</u>" shall mean a trust receipt issued by Custodian, or, in the case of a Table Funded Purchased Asset, Bailee, as applicable, confirming the Custodian or Bailee's, as applicable, possession of certain Purchased Asset Files that are held by the Custodial or Bailee, as applicable, on behalf of Administrative Agent, on behalf of Buyers, substantially in the form required under the Custodial Agreement or the Bailee Agreement.

"<u>UCC</u>" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; <u>provided</u> that if, by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of any security interest is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, with respect to perfection or the effect of perfection or non-perfection, "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement relating to such perfection or effect of perfection or non-perfection.

"<u>Unadjusted Benchmark Replacement</u>" means the applicable Benchmark Replacement excluding the Benchmark Replacement Adjustment with respect thereto.

"<u>Underwriting Issues</u>" shall mean, with respect to any New Asset, all material information of which Seller has knowledge that, based on the making of reasonable inquiries and the exercise of reasonable care and diligence by a reasonable institutional mortgage loan buyer in determining whether to originate or acquire such New Asset under the circumstances, would, in the context of the totality of the Transaction in question, be considered a materially "negative" factor (either separately or in the aggregate with other information relating to such New Asset), including, but not limited to, whether such New Asset was repurchased from any warehouse loan facility or a repurchase transaction due to the breach of a representation and warranty or a material defect in loan documentation or closing deliveries (such as the absence of any material Purchased Asset Document(s)).

"<u>United States Person</u>" shall have the meaning specified in <u>Section ‎3(r)(i)</u> hereof.

"<u>Upfront Fee</u>" shall have the meaning specified in the Fee Letter.

"<u>USA PATRIOT Act</u>" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56).

"<u>U.S. Government Securities Business Day</u>" means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association, or any successor thereto, recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

"<u>U.S. Tax Compliance Certificate</u>" shall have the meaning specified in <u>Section 3(r)(ii)(C)</u> hereof.

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"<u>Voting Stock</u>" shall mean, with respect to any specified "person" (as that term is used in Section 13(d)(3) of the 1934 Act) as of any date, the Capital Stock of that person that is at the time entitled to vote generally in the election of the board of directors of that person.

**3. INITIATION; CONFIRMATION; TERMINATION; FEES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Seller may prior to the Facility Termination Date, from time to time request that Administrative Agent, on behalf of Buyers, enter into a Transaction with respect to one or more New Assets by submitting a Preliminary Due Diligence Package for Administrative Agent, on behalf of Buyers' review and approval, which approval shall be in the sole discretion of Administrative Agent, as exercised in good faith. Notwithstanding anything to the contrary herein, Administrative Agent, on behalf of Buyers, shall have no obligation to consider for purchase any New Asset if, immediately after the purchase of such New Asset, the Aggregate Repurchase Price would exceed the Facility Amount. Administrative Agent, Buyers and their respective representatives shall have the right to review all New Assets proposed to be sold to Administrative Agent, on behalf of Buyers, in any Transaction and to conduct its own due diligence investigation of such New Assets as Administrative Agent and Buyers determine is necessary in Administrative Agent's sole discretion exercised in good faith. Notwithstanding any provision to the contrary herein or in any other Transaction Document, Administrative Agent, on behalf of Buyers, shall be entitled to determine, in its sole discretion exercised in good faith, whether a New Asset qualifies as an Eligible Asset or whether to reject any New Asset proposed to be sold to Administrative Agent, on behalf of Buyers, by Seller, and Administrative Agent, on behalf of Buyers, shall have no obligation to enter into any Transactions, which Transactions shall be entered into in the sole discretion of Administrative Agent, on behalf of Buyers, exercised in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Upon Administrative Agent's receipt of a Preliminary Due Diligence Package, Administrative Agent, on behalf of Buyers, shall have the right to request a Supplemental Due Diligence Package to evaluate the proposed Transaction. Upon Administrative Agent's receipt or waiver of such Supplemental Due Diligence Package, Administrative Agent, on behalf of Buyers, shall, in its sole discretion exercised in good faith, within three (3) Business Days, either (i) notify Seller of its intent to proceed with the Transaction, together with its determination of the Purchase Price and the Market Value for the related New Asset (such notice, a "<u>Preliminary Approval</u>") or (ii) deny Seller's request. Administrative Agent's failure to respond to Seller within three (3) Business Days shall be deemed to be a denial of Seller's request to enter into the proposed Transaction, unless Administrative Agent, on behalf of Buyers, and Seller have agreed otherwise in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Upon Seller's receipt of Preliminary Approval with respect to a Transaction, Seller shall, if Seller desires to enter into such Transaction with respect to the related New Asset upon the terms set forth by Administrative Agent, on behalf of Buyers, in the Preliminary Approval, deliver the documents set forth below in this <u>Section 3(c)</u> with respect to each New Asset and related Eligible Property or Properties (to the extent not already delivered in the Preliminary Due Diligence Package or in the Supplemental Due Diligence Package) as a condition precedent to a Final Approval and issuance of a Confirmation, all in a manner and/or form satisfactory to Administrative Agent in its sole discretion exercised in good faith and pursuant to documentation satisfactory to Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Delivery of Purchased Asset Documents</u>. Copies of each of the final Purchased Asset Documents, or drafts of such Purchased Asset Documents in substantially final form if such New Asset is being originated concurrently with the transfer to Administrative Agent, on behalf of Buyers, subject to delivery of final, executed copies of such Purchased Asset Documents on the Purchase Date of such New Asset.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Environmental and Engineering</u>. A "<u>Phase I"</u> (and, if recommended by the Phase I, a "<u>Phase II</u>") environmental report, an asbestos survey, if applicable, and an engineering report, each in form reasonably satisfactory to Administrative Agent, on behalf of Buyers, by an engineer and an environmental consultant, approved by Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Appraisal</u>. If obtained by Seller, an Appraisal of the related Eligible Property or Properties dated less than twelve (12) months prior to the proposed Purchase Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Insurance</u>. Certificates or other evidence of insurance detailing insurance coverage in respect of the related Eligible Property or Properties of types (including but not limited to casualty, general liability and terrorism insurance coverage), in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in the Purchased Asset Documents and otherwise reasonably satisfactory to Administrative Agent, on behalf of Buyers. Such certificates or other evidence shall indicate that Seller (or as to a New Asset that is a Participation Interest, the lead lender on the related whole loan in which Seller is a participant) will be named as an additional insured as its interest may appear and shall contain a loss payee endorsement in favor of such additional insured with respect to the policies required to be maintained under the Purchased Asset Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Opinions of Counsel</u>. Copies of all legal opinions with respect to the New Asset (which shall include a non-consolidation opinion, if applicable, as determined by Administrative Agent, acting in its reasonable discretion) that shall be in form and substance reasonably satisfactory to Administrative Agent, on behalf of Buyers; <u>provided</u> that Seller may deliver drafts of such opinions if such New Asset is being originated concurrently with the transfer to Administrative Agent, on behalf of Buyers, and shall deliver final, executed copies of such legal opinions on the Purchase Date of such New Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>Title Insurance</u>. (A) An unconditional commitment from the title company to issue a Title Policy or Policies in favor of Seller and Seller's successors and/or assigns with respect to each Mortgage securing such New Asset with an amount of insurance that shall be not less than the principal balance of such New Asset, or (B) an endorsement or confirmatory letter from the title company that issued the existing Title Policy (in an amount not less than the principal balance of such New Asset) in favor of Seller and Seller's successors and assigns adding such parties as an additional insured.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) <u>Additional Real Estate Matters</u>. To the extent obtained by Seller, such other real estate related certificates and documentation as may have been reasonably requested by Administrative Agent, on behalf of Buyers, such as: (A) certificates of occupancy issued by the appropriate Governmental Authority and either letters certifying that the related Eligible Property or Properties are in compliance with all applicable zoning laws issued by the appropriate Governmental Authority, a zoning report in form and prepared by a zoning consultant satisfactory to Administrative Agent, on behalf of Buyers, or evidence that the related Title Policy includes a zoning endorsement; and (B) abstracts of all material leases in effect at the Mortgaged Property delivered in connection with the New Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) <u>Exception Report</u>. A written report of any exceptions to the representations and warranties in <u>Exhibit III</u> attached hereto (an "<u>Exception Report</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) <u>Other Documents</u>. Such other documents as Administrative Agent, on behalf of Buyers, shall reasonably deem to be necessary.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Within three (3) Business Days of Seller's delivery of the documents and materials contemplated in <u>Section 3(c)</u> above, Administrative Agent shall in its sole discretion exercised in good faith notify Seller that either (A) Administrative Agent, on behalf of Buyers, has not approved the New Asset or (B) Administrative Agent, on behalf of Buyers, agrees to purchase the New Asset, subject to satisfaction (or waiver by Administrative Agent) of the Transaction Conditions Precedent (such notice, a "<u>Final Approval</u>") set forth in <u>Section 3(f)</u> below. Administrative Agent's failure to respond to Seller within three (3) Business Days shall be deemed to be a denial of Seller's request that Administrative Agent, on behalf of Buyers, purchase the New Asset, unless Administrative Agent, on behalf of Buyers, and Seller have agreed otherwise in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> Subject to satisfaction of the Transaction Conditions Precedent, Administrative Agent, on behalf of Buyers, shall deliver to Seller an executed Confirmation with respect to a proposed Transaction; provided that, unless otherwise agreed by Seller, Administrative Agent shall deliver a separate Confirmation with respect to each New Asset that will be the subject of a Transaction. Each Confirmation shall be deemed to be incorporated herein by reference with the same effect as if set forth herein at length.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> Provided that each of the Transaction Conditions Precedent set forth in this <u>Section 3(f)</u> have been satisfied (or waived by Administrative Agent in its sole discretion exercised in good faith), each Buyer, in the amount of each such Buyer's pro rata share of the Purchase Price, shall transfer the Purchase Price to Seller with respect to each New Asset for which it has issued a Confirmation on the Purchase Date specified in such Confirmation (which Purchase Date shall be at least one (1) Business Day after the date the Final Approval is delivered), and the related New Asset shall be concurrently transferred by Seller to Administrative Agent, on behalf of Buyers, or its nominee. For purposes of this <u>Section 3(f)</u>, the conditions precedent to any proposed Transaction ("<u>Transaction Conditions Precedent</u>") shall be satisfied with respect to such proposed Transaction if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) no uncured monetary Default, material non-monetary Default or Event of Default, or any unsatisfied Margin Deficit shall have occurred and be continuing as of the Purchase Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Seller shall have executed a Confirmation for such proposed Transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Administrative Agent shall have (A) determined, in its sole discretion exercised in good faith in accordance with <u>Section 3(a)</u> of this Agreement, that the New Asset proposed to be sold to Administrative Agent, on behalf of Buyers, by Seller in such Transaction is an Eligible Asset, (B) obtained internal credit approval for the inclusion of such New Asset as a Purchased Asset in a Transaction, (C) confirmed that, after giving effect to such Purchased Asset, the Concentration Limit shall be satisfied and (D) determined, in its sole discretion exercised in good faith, that the Maximum Asset Exposure Threshold and Portfolio Exposure Threshold will be satisfied immediately after giving effect to such proposed Transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) (A) if the New Asset is not a Table Funded Purchased Asset, the applicable Purchased Asset File described in <u>Schedule 2</u> of this Agreement shall have been delivered to Custodian, and Administrative Agent, on behalf of Buyers, shall have received a Trust Receipt with respect to such Purchased Asset File, and (B) if the Purchased Asset is a Table Funded Purchased Asset, the documents required by <u>Schedule 2</u> shall have been delivered to Bailee and Bailee shall have executed and delivered a Bailee Agreement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Seller shall have delivered to any related Mortgagor, obligor, related servicer or lead lender a direction letter in accordance with <u>Section 5(a)</u> of this Agreement unless such Mortgagor, obligor, related servicer or lead lender is already remitting payments to Servicer, in which case Seller shall direct Servicer to remit all such amounts into the Blocked Account in accordance with <u>Section 5(a)</u> of this Agreement and to service such payments in accordance with the provisions of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Seller shall have paid to Administrative Agent, for its own account and/or on behalf of Buyers, as applicable, (A) any fees then due and payable under the Fee Letter and (B) any unpaid Transaction Costs in respect of such Purchased Asset due and owing by Seller (which amounts, at Seller's option, may be held back from funds remitted to Seller by Buyers on the Purchase Date);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Administrative Agent, on behalf of Buyers, shall have received true and complete copies of fully executed originals of all Transfer Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) Subject to the limitations set forth in the defined term Eligible Asset, Administrative Agent, on behalf of Buyers, shall have received a copy of any document relating to any Hedging Transaction entered into in connection with the related New Asset, and Seller shall have validly pledged and assigned to Administrative Agent, on behalf of Buyers, all of Seller's rights under each such Hedging Transaction, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) no circumstance shall exist or event have occurred resulting in a Material Adverse Effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) Administrative Agent, on behalf of Buyers, shall not have determined that the introduction of, or a change in, any Requirement of Law or in the interpretation or administration of any Requirement of Law has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Administrative Agent or any Buyer, to enter into any Transaction and no Governmental Authority shall have imposed material restrictions on the authority of Administrative Agent or any Buyer to enter into any Transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) Administrative Agent, on behalf of Buyers, shall not have determined, in its sole discretion exercised in good faith, that an event or circumstance exists that has caused the occurrence of (A) a material change in financial markets as a result of, an outbreak or escalation of hostilities or a material change in national or international political, financial or economic conditions, or (B) a general suspension of trading on major stock exchanges, or (C) a disruption in or moratorium on commercial banking activities or securities settlement services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) no circumstance shall exist or event have occurred resulting in (A) the effective absence of a "repo market" or comparable "lending market" for financing debt obligations secured by commercial mortgage loans or (B) Administrative Agent or Buyers not being able to finance Eligible Assets through the "repo market" or "lending market" with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) no Key Person Event shall have occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the related Transaction covered thereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h) Future Advances</u>. With respect to any Transaction involving an Eligible Asset that is a Future Advance Asset, Seller shall indicate in the related Preliminary Due Diligence Package that such Eligible Asset is a Future Advance Asset and shall provide Administrative Agent, on behalf of Buyers, with the information required to complete the Confirmation regarding such Future Advance Asset, as well as, the then remaining unfunded future funding obligations under all Future Advance Assets. At any time prior to the Repurchase Date (but no more than two (2) times per month for each Future Advance Asset), in the event a future advance is to be made by Seller pursuant to the Purchased Asset Documents with respect to a Future Advance Asset, Seller may submit to Administrative Agent, on behalf of Buyers, a request that Buyers transfer their respective pro rata share of cash to Seller in an amount not to exceed the Maximum Purchase Percentage, *multiplied by* the amount of such future advance (a "<u>Future Advance Purchase</u>"), which Future Advance Purchase shall increase the outstanding Purchase Price for such Future Advance Asset. Notwithstanding anything to the contrary contained in this Agreement, Administrative Agent, on behalf of Buyers, shall be under no obligation to make a Future Advance Purchase, and shall determine in its sole and absolute discretion, exercised in good faith, whether to proceed with any proposed Future Advance Purchase. Buyers shall transfer cash to Seller as provided in this <u>Section 3(h)</u> (and in accordance with the wire instructions provided by Seller in such request) on the date requested by Seller, which date shall be no earlier than two (2) Business Days following the Business Day on which Administrative Agent reasonably determines that the conditions precedent to such Future Advance Purchase as set forth in this <u>Section 3(h)</u> have been satisfied (or, in Administrative Agent's sole and absolute discretion, as determined in good faith, waived). Any Future Advance Purchase to be made by Administrative Agent, on behalf of Buyers, in accordance with this <u>Section 3(h)</u> shall be subject to satisfaction of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) no unsatisfied Margin Deficit, Default or Event of Default has occurred and is continuing or will result from the funding of such Future Advance Purchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the funding of the Future Advance Purchase will not cause the aggregate outstanding Purchase Price for all Purchased Assets to exceed the Facility Amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the Future Advance Purchase will not cause the Purchase Price of the applicable Future Advance Asset to exceed the Concentration Limit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Administrative Agent, on behalf of Buyers, shall have determined, in its sole discretion exercised in good faith, that the Maximum Asset Exposure Threshold and Portfolio Exposure Threshold will be satisfied immediately after giving effect to the funding of the Future Advance Purchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Seller shall have demonstrated to the reasonable satisfaction of Administrative Agent, on behalf of Buyers, that all conditions to the future advance under the Purchased Asset Documents have been satisfied;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Administrative Agent, on behalf of Buyers, and Seller shall have executed and delivered a restated Confirmation for the applicable Transaction to set forth the new outstanding Purchase Price for such Purchased Asset and any other modifications to the terms set forth on the existing Confirmation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the Future Advance Purchase shall be in an amount equal to or greater than One Million Dollars ($1,000,000); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) previously or simultaneously with Buyers funding of the Future Advance Purchase, Seller shall have funded or caused to be funded to the Mortgagor (or to an escrow agent

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or as otherwise directed by the Mortgagor) its pro rata portion of such Future Advance Purchase in respect of such Future Advance Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Seller and Administrative Agent, on behalf of Buyers, shall have approved any required modification to the Confirmation with respect to the applicable Future Advance Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Buyers credit committee shall have approved the Future Advance Purchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) no Key Person Event shall have occurred; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) Administrative Agent, on behalf of Buyers, shall not have determined, in its sole discretion exercised in good faith, that an event or circumstance exists that has caused the occurrence of (A) a material change in financial markets, as a result of an outbreak or escalation of hostilities, or a material change in national or international political, financial or economic conditions, (B) a general suspension of trading on major stock exchanges or (C) a disruption in or moratorium on commercial banking activities or securities settlement services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i) Early Repurchase and Mandatory Repurchase</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Seller shall be entitled to terminate any or all Transactions on demand, and repurchase the related Purchased Assets on any Business Day prior to the applicable Repurchase Date (an "<u>Early Repurchase Date</u>"); <u>provided</u>, *however*, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) no uncured monetary Default, material non-monetary Default or Event of Default, or any unsatisfied Margin Deficit shall be continuing or would occur or result from such early repurchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Seller notifies Administrative Agent in writing, no later than five (5) Business Days prior to the Early Repurchase Date, of its intent to terminate such Transaction and repurchase the related Purchased Asset; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Seller shall pay to Buyers on the Early Repurchase Date an amount equal to the sum of the Repurchase Price for such Transaction, all Transaction Costs and any other amounts payable by Seller and outstanding under this Agreement or the other Transaction Documents (including, without limitation, <u>Section 3(n)</u>, <u>Section 3(o)</u>, <u>Section 3(p)</u> and <u>Section 3(q)</u> of this Agreement, if any) with respect to such Transaction against transfer to Seller or its agent of the related Purchased Asset.<br>

If all Transactions are terminated by Seller in accordance with this Section 3(i)(i), at Seller's request this Agreement and all Transaction Documents shall terminate simultaneously with the repurchase of the last remaining Purchased Asset, except with respect to those provisions which by their terms survive the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) In addition to any other rights and remedies of Administrative Agent and Buyers under any Transaction Document, upon the occurrence of a Purchased Asset becoming a Defaulted Asset due to the occurrence of any one or more elements of the definition of "Defaulted Asset" set forth herein, Seller shall, in accordance with the procedures set forth in <u>Article 3(i)(i)(B)-(C)</u>, repurchase any such Purchased Asset on the date (the "<u>Mandatory Early Repurchase Date</u>") that is five (5) Business Days after the earlier of Seller's receipt of notice from Administrative Agent or Seller's actual knowledge of the occurrence thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j) Mandatory Repurchase</u>. On the Repurchase Date for any Transaction, termination of the applicable Transaction will be effected by transfer to Seller or, if requested by Seller, its designee of the related Purchased Assets, and any Income in respect thereof received by Administrative Agent, on behalf of Buyers (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to <u>Section 4</u> or <u>Section 5</u> hereof) against the simultaneous transfer to Administrative Agent, on behalf of Buyers, of the applicable Repurchase Price, all Transaction Costs and any other amounts payable by Seller and outstanding under this Agreement with respect to such Transaction (including without limitation, <u>Section 3(n)</u>, <u>Section 3(o)</u>, <u>Section 3(p)</u> and <u>Section 3(q)</u> of this Agreement, if any, and the Exit Fee, if applicable) to an account of Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k) Partial Prepayments</u>. So long as no Event of Default has occurred and is then continuing, the Repurchase Price with respect to one or more Purchased Assets may be paid in part at any time upon two (2) Business Days prior written notice from Seller to Administrative Agent; *provided*, *however*, that any such payment shall be accompanied by an amount representing accrued Price Differential with respect to such Purchased Asset(s) on the amount of such payment and all other amounts then due under the Transaction Documents. Each partial payment of the Repurchase Price that is voluntary (as opposed to mandatory under the terms of this Agreement) shall be in an amount of not less than One Million Dollars ($1,000,000).Administrative Agent, on behalf of Buyers, and Seller shall execute and deliver a restated Confirmation for the applicable Transaction to set forth the new outstanding Purchase Price and outstanding principal balance for such Purchased Asset in connection with such partial repurchase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and a Benchmark Replacement Date with respect thereto have occurred prior to the Reference Time in connection with any setting of the then-current Benchmark, then such Benchmark Replacement will replace the then-current Benchmark for all purposes under this Agreement and under any other Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without requiring any amendment to, or requiring any further action by or consent of any other party to, this Agreement or any other Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Notwithstanding the forgoing, in the event that Administrative Agent shall have determined (which determination shall be conclusive and binding upon Seller absent manifest error) that by reason of circumstances affecting the relevant market or otherwise, (i) adequate and reasonable means do not exist for ascertaining the applicable Benchmark, but a Benchmark Transition Event (as provided in the definition of Benchmark Transition Event as set forth herein) has not yet occurred or (ii) the Benchmark does not fairly and accurately reflect the costs to Buyers of effecting or maintaining the Transactions, then Administrative Agent shall give written notice to Seller as soon as practicable thereafter. If such notice is given, the Pricing Rate with respect to all outstanding Transactions, until such notice has been withdrawn by Administrative Agent, shall be a per annum rate equal to the sum of (i) an alternate benchmark rate that has been selected by Administrative Agent, (ii) the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected by Administrative Agent and (iii) the related Applicable Spread.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In connection with the implementation and administration of a Benchmark Replacement, Administrative Agent, on behalf of Buyers, will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary

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herein or in any other Transaction Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without requiring any further action by or consent of any other party to this Agreement or any other Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Administrative Agent, on behalf of Buyers, will promptly notify Seller of (A) any occurrence of (i) a Benchmark Transition Event and (ii) the Benchmark Replacement Date with respect thereto, (B) the implementation of any Benchmark Replacement, and (C) the effectiveness of any Benchmark Replacement Conforming Changes.

Any determination, decision or election that may be made by Administrative Agent, on behalf of Buyers, pursuant to Section 3(l) or this Section 3(m), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in the sole discretion of Administrative Agent, on behalf of Buyers, and without consent from Seller or any other party to any other Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> Upon demand by Administrative Agent, on behalf of Buyers, Seller shall indemnify Administrative Agent and Buyers, and hold Administrative Agent and Buyers harmless from any actual net loss or out-of-pocket cost or expense (not to include any lost profit or opportunity) (including, without limitation, reasonable out-of-pocket attorneys' fees and disbursements) that Administrative Agent or Buyers actually sustains or incurs as a direct consequence of (i) a default by Seller in terminating any Transaction after Seller has given a notice in accordance with <u>Section 3(i)</u> of a termination of a Transaction, (ii) any payment of all or any portion of the Repurchase Price, as the case may be, on any day other than a Remittance Date and (iii) Seller's failure to sell Eligible Assets to Administrative Agent, on behalf of Buyers, after Seller has notified Administrative Agent of a proposed Transaction and Administrative Agent, on behalf of Buyers, has given a Final Approval to purchase such Eligible Assets in accordance with the provisions of this Agreement (unless the Final Approval differs materially from the Preliminary Approval). This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(o) Capital Adequacy</u>. If Administrative Agent shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy, including the Reserve Requirements or any other similar reserve, special deposit or similar requirements relating to extensions of credit or other assets of Administrative Agent or any Buyer, or in the interpretation or application thereof or compliance by Administrative Agent or such Buyer, or any corporation controlling Administrative Agent or such Buyer, with any request or directive regarding such requirements (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof has the effect of reducing the rate of return on any Buyer's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Buyer, or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Buyer's or such corporation's policies with respect to such requirements) by an amount deemed by Administrative Agent, on behalf of Buyers, to be material, then from time to time, within five (5) Business Days after submission by Administrative Agent, on behalf of Buyers, to Seller of a written request therefor, Seller shall pay to Administrative Agent or such Buyer, such additional amount or amounts as will compensate Administrative Agent or such Buyer for such reduction; provided, that Administrative Agent, on behalf of Buyers, will not impose such additional amounts on Seller unless either MSBNA, acting in its individual capacity, or Administrative Agent, on behalf of Buyers, is imposing such additional amounts on other customers similarly situated to Seller under other repurchase facilities involving commercial real estate loans. A certificate as to the calculation of any additional amounts payable pursuant to this subsection shall be submitted by Administrative Agent to Seller and shall be conclusive and binding upon Seller in the absence of manifest error. With respect to each reduction in the rate of return as described above, this covenant shall survive for a period of one hundred eighty (180)

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days from the date of the incurrence of such reduction by Administrative Agent or any Buyer. This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(p)</u> Any and all payments by or on account of any obligation of Seller under the Transaction Documents shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law requires the deduction or withholding of any Tax from any such payment (as determined in the good faith discretion of Seller or Administrative Agent), then Seller shall be entitled to make (or cause to be made) such deduction or withholding and to timely pay (or cause to be timely paid) the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable shall be increased by Seller as necessary so that after such deduction or withholding has been made, each Buyer receives an amount equal to the sum it would have received had no such deduction or withholding been made. Seller shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Requirements of Law. As soon as practicable after any payment of Taxes by Seller to a Governmental Authority pursuant to this <u>Section 3(p)</u>, Seller shall deliver to Administrative Agent, on behalf of Buyers, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(q)</u> Seller shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this <u>Section 3(q)</u>) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Seller by a Buyer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Buyer, shall be conclusive absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(r)</u> If any Buyer is entitled to an exemption from or reduction of withholding Tax with respect to payments made under the Transaction Documents, such Buyer shall deliver to Seller and Administrative Agent, prior to becoming a party to this Agreement, and at the time or times reasonably requested by Seller or Administrative Agent, such properly completed and executed documentation reasonably requested by Seller or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, each Buyer shall deliver such other documentation prescribed by applicable law or reasonably requested by Seller or Administrative Agent as will enable Seller to determine whether or not such Buyer, is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in <u>Section 3(r)(i)</u>, <u>Section 3(r)(ii)</u> and <u>Section 3(r)(iv)</u> below) shall not be required if in such Buyer's reasonable judgment such completion, execution or submission would be illegal, would subject Buyer, to any material unreimbursed cost or expense or would otherwise materially prejudice the legal or commercial position of such Buyer. Without limiting the generality of the foregoing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if a Buyer is a United States person (as defined in Section 7701(a)(30) of the Code)(a "<u>United States Person</u>"), it shall deliver to Seller and Administrative Agent on or prior to the date on which Buyer becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Seller), executed originals of IRS Form W-9 certifying that such Buyer is exempt from U.S. federal backup withholding tax;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if a Buyer is not a United States Person, it shall, to the extent it is legally entitled to do so, deliver to Seller and Administrative Agent (in such number of copies as shall be requested

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by Seller) on or prior to the date on which such Buyer, becomes a party under this Agreement (and from time to time thereafter upon the reasonable request of Seller), whichever of the following is applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) in the case of a Buyer claiming the benefits of an income tax treaty to which the United States is a party, (1) with respect to payments characterized as interest for U.S. tax purposes under any Transaction Document, executed originals of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "interest" article of such tax treaty and (2) with respect to any other applicable payments under any Transaction Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "business profits" or "other income" article of such tax treaty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) executed originals of IRS Form W-8ECI;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) in the case of a Buyer claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (1) a certificate to the effect that Buyer is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10 percent shareholder" of Seller within the meaning of Section 881(c)(3)(B) of the Code, or a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Code (a "<u>U.S. Tax Compliance Certificate</u>") and (2) executed originals of IRS Form W-8BEN or W-8BEN-E; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) to the extent a Buyer is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; <u>provided</u> that if such Buyer is a partnership and one or more direct or indirect partners of such Buyer are claiming the portfolio interest exemption, such Buyer may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if a Buyer is not a United States Person, it shall, to the extent it is legally entitled to do so, deliver to Seller and Administrative Agent (in such number of copies as shall be requested by Seller) on or prior to the date on which such Buyer becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Seller and/or Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Seller or Administrative Agent to determine the withholding or deduction required to be made; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) each Buyer shall deliver to Seller and Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Seller or Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Seller or Administrative Agent as may be necessary for Seller and Administrative Agent to comply with their obligations under FATCA and to determine whether a Buyer has complied with such Buyer's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this <u>Section 3(r)(iv)</u>, "<u>FATCA</u>" shall include any amendments made to FATCA after the date of this Agreement;

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<u>provided</u> that each Buyer agrees that if any form or certification it previously delivered pursuant to this <u>Section 3(r)</u> expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Seller (and Administrative Agent) in writing of its legal inability to do so.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(s)</u> If any of the events described in <u>Section 3(o)</u> or <u>Section 3(p)</u> result in Administrative Agent's request, on behalf of Buyers, for additional amounts, then Seller shall have the option to notify Administrative Agent, on behalf of Buyers, in writing of its intent to terminate all of the Transactions and repurchase all of the Purchased Assets no later than five (5) Business Days after such notice is given to Administrative Agent, and such repurchase by Seller shall be conducted pursuant to and in accordance with <u>Section 3(h)</u> but without the payment of any Exit Fee. The election by Seller to terminate the Transactions in accordance with this <u>Section 3(s)</u> shall not relieve Seller for liability with respect to any additional amounts or increased costs actually incurred by Administrative Agent or Buyers prior to the actual repurchase of the Purchased Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(t) Tax Refunds on Indemnified Amounts</u>. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this <u>Section 3</u> (including by the payment of additional amounts pursuant to this <u>Section 3</u>), it shall pay to Seller an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such Recipient and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Seller, upon the request of such Recipient, shall repay to such Recipient the amount paid over pursuant to this <u>Section 3(t)</u> (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this <u>Section 3(t)</u>, in no event will the Recipient be required to pay any amount to Seller pursuant to this <u>Section 3(t)</u> the payment of which would place the Recipient in a less favorable net after-Tax position than the Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to Seller or any other Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(u) Mandatory Repurchase on Facility Maturity Date</u>. From and after the Facility Termination Date, Administrative Agent, on behalf of Buyers, shall have no further obligation to purchase any New Assets. On the Facility Termination Date, Seller shall be obligated to repurchase all of the Purchased Assets and transfer payment of the Repurchase Price for each such Purchased Asset, together with the accrued and unpaid Price Differential and all Transaction Costs and other amounts due and payable to Buyers hereunder, against the transfer by Administrative Agent, on behalf of Buyers, to Seller of each such Purchased Asset. Following the Facility Termination Date, Administrative Agent, on behalf of Buyers, shall not be obligated to transfer any Purchased Assets to Seller until payment in full to Buyers of all amounts due hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(v)</u> Notwithstanding any provision herein to the contrary, any rule, regulation, guideline or directive adopted after the date of this Agreement that implements (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act, or (ii) a capital or liquidity accords adopted by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or such rules, regulations, guidelines or directives adopted by United States or foreign regulatory authorities, in each case under clause (ii) pursuant to Basel III, shall in each case be deemed to be an adoption of or change in a Requirement of Law made subsequent to the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(w)</u> Status of Administrative Agent. On or before the date the Administrative Agent (or any successor thereto) becomes a party to this Agreement, such Administrative Agent shall provide to the Seller,

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two duly-signed, properly completed copies of the documentation prescribed in clause (i) or (ii) below, as applicable (together with all required attachments thereto): (i) if the Administrative Agent is a "United States person" (as defined in Section 7701(a)(30) of the Code), executed copies of IRS Form W-9 certifying that such Administrative Agent is exempt from U.S. federal backup withholding tax, or (ii) if the Administrative Agent is not a "United States person" (as defined in Section 7701(a)(30) of the Code), (A) with respect to any payments to be received on its own behalf, executed copies of IRS Form W-8ECI or W-8BEN-E, as applicable, and (B) with respect to payments received on account of any Buyer, executed copies of IRS Form W-8IMY certifying that Administrative Agent is either (1) a "qualified intermediary" which has assumed primary withholding responsibility under Chapters 3 and 4 of the Code and primary IRS Form 1099 reporting and back-up withholding responsibility, or (2) a U.S. branch providing such form as evidence of its agreement with the Seller to be treated as a "United States person" (as defined in Section 7701(a)(30) of the Code) for U.S. federal withholding tax purposes.

**4. MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Administrative Agent, on behalf of Buyers, may determine and re-determine the Asset Base Components on any Business Day and on as many Business Days as it may elect. Upon the occurrence of a Margin Credit Event with respect to one or more Purchased Assets, if at any such time the aggregate Purchase Price of such Purchased Assets is greater than the aggregate Asset Base Components of such Purchased Assets as determined by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith and such amount equals or exceeds the Margin Materiality Threshold (a "<u>Margin Deficit</u>"), then Seller shall, not later than two (2) Business Days after receipt of notice of such Margin Deficit from Administrative Agent, on behalf of Buyers, (i) deliver to Buyers cash, (ii) request a funding of Margin Excess under <u>Section 4(b)</u> to offset such Margin Deficit, or (iii) utilize any combination of the foregoing, in an amount sufficient to reduce the aggregate Purchase Price of such Purchased Assets to an amount equal to the aggregate Asset Base Components as re-determined by Administrative Agent, on behalf of Buyers, after giving effect to the delivery of cash or additional collateral by Seller to Buyers, pursuant to this <u>Section 4(a)</u>. Any cash delivered to Buyers pursuant to this <u>Section 4(a)</u> shall be applied by Administrative Agent, on behalf of Buyers, to reduce the Purchase Price of the applicable Purchased Assets that caused the related Margin Deficit to exist, allocated on a pro-rata basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> If at any such time the Purchase Price of one or more Purchased Assets is less than the aggregate Asset Base Components of such Purchased Assets as determined by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith (a "<u>Margin Excess</u>"), then Buyers shall, no later than five (5) Business Days after receipt of a request from Seller, transfer cash to Seller in an amount (not to exceed such Margin Excess) such that the Purchase Price of such Purchased Asset, after the addition of any such cash so transferred, will thereupon not exceed such Asset Base Component as re-determined by Administrative Agent, on behalf of Buyers, after giving effect to the delivery of cash by Buyers to Seller pursuant to this <u>Section 4(b)</u>; <u>provided</u> that (i) no Margin Deficit, monetary Default, material non-monetary Default or any Event of Default has occurred and is continuing or would result from such funding, (ii) such funding shall not result in the Aggregate Repurchase Price of all Purchased Assets exceeding the Facility Amount and (iii) each such funding shall be in an amount of not less than the Margin Materiality Threshold. Any cash delivered by Buyers to Seller pursuant to this <u>Section 4(b)</u> shall be applied by Administrative Agent, on behalf of Buyers, to increase the Purchase Price of the applicable Purchased Asset(s) that caused the related Margin Excess to exist, allocated on a pro-rata basis. Administrative Agent, on behalf of Buyers, and Seller shall execute and deliver a restated Confirmation(s) for the applicable Transaction(s) to set forth the new Purchase Price(s) for such Purchased Asset(s). Seller may not request funding under this <u>Section 4(b)</u> more than three (3) times in any calendar month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> The failure of Administrative Agent, on behalf of Buyers, or Buyers on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions to which this

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Agreement is subject or limit the rights of Administrative Agent, on behalf of Buyers, to do so at a later date. Seller and Administrative Agent, on behalf of Buyers, each agree that a failure or delay by Administrative Agent, on behalf of Buyers, to exercise its rights hereunder shall not limit or waive Administrative Agent or Buyers' rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.

**5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> On or before the date hereof, Seller and Administrative Agent, on behalf of Buyers, shall establish and maintain with the Depository Bank a deposit account in the name of Seller and under the sole control of Administrative Agent, on behalf of Buyers, with respect to which the Blocked Account Agreement shall have been executed (such account, together with any replacement or successor thereof, the "<u>Blocked Account</u>"). Administrative Agent, on behalf of Buyers, shall have sole dominion and control (including, without limitation, "control" within the meaning of Section 9.01(a) of the UCC) over the Blocked Account. Seller shall cause all Income with respect to the Purchased Assets to be deposited in the Blocked Account. In furtherance of the foregoing, Seller shall cause Servicer to remit to the Blocked Account all Income received in respect of the Purchased Assets on the date specified for remittances as set forth in the Servicer Acknowledgment. All Income in respect of the Purchased Assets, which may include payments in respect of associated Hedging Transactions, shall be deposited directly into, or, if applicable, remitted directly from the applicable underlying collection account to, the Blocked Account. On or before the before the occurrence of a Sweep Trigger, Seller and Administrative Agent, on behalf of Buyers, shall establish a subaccount in the Blocked Account entitled "Principal Sweep Escrow Account" (the "<u>Principal Sweep Escrow Account</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Unless an Event of Default shall have occurred and be continuing, on each Remittance Date, all Income on deposit in the Blocked Account in respect of the Purchased Assets and the associated Hedging Transactions shall be applied as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *first*, to Administrative Agent, on behalf of Buyers, an amount equal to the Price Differential which has accrued and is outstanding in respect of the Transactions as of such Remittance Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *second*, to Administrative Agent, on behalf of Buyers, any accrued and unpaid Transaction Costs and all other amounts payable by Seller and outstanding hereunder and under the other Transaction Documents (other than the Repurchase Price);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) *third*, if a Principal Payment in respect of any Purchased Asset has been made during the related Collection Period, and has not been applied in accordance with <u>Section 5(c)</u> below, to Administrative Agent, on behalf of Buyers, the Buyers' Principal Payment Share and any other amount due to Administrative Agent, on behalf of Buyers, under <u>Sections 5(c)</u> below to be applied in accordance therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) *fourth*, if a Margin Deficit shall exist with respect to one or more Purchased Assets, to Administrative Agent, on behalf of Buyers, an amount such that, after giving effect to such payment, the aggregate Purchase Price of such Purchased Assets is equal to the aggregate Asset Base Components of such Purchased Assets, as determined by Administrative Agent, on behalf of Buyers, after giving effect to such payment to the extent of remaining funds in the Blocked Account; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) *fifth*, to Seller, the remainder, if any.

If, on any Remittance Date, the amounts deposited in the Blocked Account shall be insufficient to make the payments required under <u>(i)</u> through <u>(iii)</u> above of this <u>Section 5(b)</u>, and Seller does not otherwise make such payments on such Remittance Date, the same shall constitute an Event of Default hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Unless an Event of Default shall have occurred and be continuing, any unscheduled Principal Payment (including net sale proceeds) in respect of any Purchased Asset for which the Income thereof has been received by the Depository Bank during any Collection Period shall be applied, no later than two (2) Business Days after receipt of notice from Seller of its request to apply such payment in accordance with this <u>subsection (c)</u>, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *first*, to Administrative Agent, on behalf of Buyers, the Buyers' Principal Payment Share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *second*, if a Margin Deficit <u>that is due and payable</u> shall exist with respect to one or more Purchased Assets, to Administrative Agent, on behalf of Buyers, to the extent of Income available after the payment made in accordance with <u>Sections 5(c)(i)</u> above, an amount equal to the aggregate Margin Deficit until paid in full;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) *third,* if a Sweep Trigger exists, to the Principal Sweep Escrow Account, the applicable Principal Sweep Amount; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) *fourth*, to Seller the remainder, if any.

If at any time no Sweep Trigger exists, all amounts in the Principal Sweep Escrow Account shall be remitted to Seller no later than two (2) Business Days after such Sweep Trigger ceases to exist. If a Sweep Trigger has occurred and is continuing, any amounts that have been on deposit in the Principal Sweep Escrow Account in excess of ninety (90) days shall be remitted to the Administrative Agent, on behalf of Buyers, to reduce the Purchase Price of the Purchased Assets in such order and priority as determined by Administrative Agent in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> If an Event of Default shall have occurred and be continuing, all Income on deposit in the Blocked Account in respect of the Purchased Assets and the associated Hedging Transactions shall be applied as determined in Administrative Agent, on behalf of Buyers, acting in its sole discretion exercised in good faith pursuant to <u>Section 14(b)(ii)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> If at any time during the term of any Transaction any Income is distributed to Seller with respect to the related Purchased Asset or Seller has otherwise received such Income and has made a payment in respect of such Income to Administrative Agent, on behalf of Buyers, pursuant to this <u>Section 5</u>, and for any reason such amount is required to be returned by any Buyer to an obligor under such Purchased Asset (either before or after the Repurchase Date), such Buyer, may provide Seller and Administrative Agent with notice of such required return, and Seller shall pay the amount of such required return to such Buyer by 11:00 a.m. (New York time) on the Business Day following Seller's receipt of such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> Subject to the other provisions hereof, Seller shall be responsible for all Transaction Costs in respect of any Purchased Assets to the extent it would be so obligated if the Purchased Assets had not

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been sold to Administrative Agent, on behalf of Buyers. Administrative Agent, on behalf of Buyers, shall provide Seller with notice of any Transaction Costs, and Seller shall pay the amount of any Transaction Costs to Administrative Agent, on behalf of Buyers, by 11:00 a.m. (New York time) on the later of (i) five (5) Business Days after the date on which Administrative Agent, on behalf of Buyers, has informed Seller that such amount is due under the Purchased Asset Documents and (ii) three (3) Business Days following Seller's receipt of such notice.

**6. CAUTIONARY SECURITY INTEREST**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Administrative Agent, Buyers, and Seller intend that all Transactions hereunder be sales to Administrative Agent, on behalf of Buyers, of the Purchased Assets for all purposes (other than for U.S. federal, state and local income or franchise tax purposes) and not loans from Buyers to Seller secured by the Purchased Assets. However, in the event that any Transaction is deemed to be a loan, and as security for Seller's performance of the Repurchase Obligations, Seller hereby pledges to Administrative Agent, on behalf of Buyers, and hereby grants to Administrative Agent, on behalf of Buyers, a first priority security interest in all of Seller's right, title and interest in and to the following (collectively, and together with the Mezzanine Loan Repurchase Assets (as defined below), the "<u>Repurchase Assets</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all of the Purchased Assets (including, for the avoidance of doubt, all security interests, mortgages and liens on personal or real property securing the Purchased Assets) and related Servicing Rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) all Income from the Purchased Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) all insurance policies and insurance proceeds relating to any Purchased Asset or the related Eligible Property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) all "general intangibles", "accounts" and "chattel paper" as defined in the UCC relating to or constituting any and all of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) all replacements, substitutions or distributions on or proceeds, payments and profits of, and records and files relating to, any and all of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) any other property, rights, titles or interests as are specified in the Confirmation and/or the Trust Receipt, the Purchased Asset Schedule or exception report with respect to the foregoing in all instances, whether now owned or hereafter acquired, now existing or hereafter created; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the Blocked Account and all amounts and property from time to time on deposit therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> With respect to the security interest in the Repurchase Assets granted in <u>Section 6(a)</u> and Section 6(f) hereof, and with respect to the security interests granted in <u>Sections 6(c)</u> and 6(d), Administrative Agent, on behalf of Buyers, shall, upon the occurrence and during the continuance of an Event of Default, have all of the rights and may exercise all of the remedies of a secured creditor under the UCC and any other applicable law and shall have the right to apply the Repurchase Assets or proceeds therefrom to the obligations of Seller under the Transaction Documents. In furtherance of the foregoing, (i) Administrative Agent, on behalf of Buyers, at Seller's sole cost and expense, shall cause to be filed as a protective filing with respect to the Repurchase Assets and as a UCC filing with respect to the security interests granted in <u>Sections 6(c)</u>, <u>6(d)</u> and <u>6(f)</u> one or more UCC financing statements in form satisfactory to Administrative Agent, on behalf of Buyers (to be filed in the filing office indicated therein) and, with

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respect to Seller, containing the following collateral description "all assets of the debtor, whether now owned or hereafter acquired" or words to that effect and, with respect to Pledgor, describing all of the items set forth in the definition of Collateral in the Pledge Agreement, in such locations as may be necessary to perfect and maintain perfection and priority of the outright transfer (including under <u>Section 22</u> of this Agreement) and the security interest granted hereby and, in each case, continuation statements and any amendments thereto (including, without limitation, by causing to be filed any amendments necessary to add or delete Repurchase Assets covered by the financing statement to reflect the purchase and repurchase of Purchased Assets) (collectively, the "<u>Filings</u>"), and shall forward copies of such Filings to Seller upon completion thereof, and (ii) Seller and Pledgor shall, from time to time, at their own expense, deliver and cause to be duly filed all such further filings, instruments and documents and take all such further actions as may be necessary or desirable or as may be requested by Administrative Agent, on behalf of Buyers, with respect to the perfection and priority of the outright transfer of the Purchased Assets and the security interest granted hereunder in the Repurchase Assets and the other collateral specified in <u>Sections 6(c)</u>, <u>6(d)</u> and <u>6(f)</u> and the rights and remedies of Administrative Agent, on behalf of Buyers, with respect to the Repurchase Assets (including under <u>Section 22</u> of this Agreement) (including the payments of any fees and Taxes required in connection with the execution and delivery of this Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Seller hereby pledges to Administrative Agent, for the benefit of Buyers, as security for the performance by Seller of the Repurchase Obligations and hereby grants to Administrative Agent, on behalf of Buyers, a first priority security interest in all of Seller's right, title and interest in and to Seller's rights under all Hedging Transactions relating to Purchased Assets entered into by Seller and all proceeds thereof. Seller shall take all action as is necessary or desirable to obtain consent to assignment of any such Hedging Transaction to Administrative Agent, on behalf of Buyers, and shall cause the counterparty under each such Hedging Transaction to enter into such document or instrument satisfactory to Administrative Agent, Seller and such counterparty, pursuant to which such counterparty will covenant and agree to accept notice from Administrative Agent, on behalf of Buyers, to redirect payments under such Hedging Transaction as Administrative Agent may direct. So long as no Event of Default shall be continuing, Administrative Agent, on behalf of Buyers, agrees that it will not redirect payments under any Hedging Transaction pledged to Administrative Agent, on behalf of Buyers, pursuant to the terms of this <u>Section 6(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Seller hereby pledges to Administrative Agent, on behalf of Buyers, as security for the performance by Seller of the Repurchase Obligations and hereby grants to Administrative Agent, on behalf of Buyers, a first priority security interest in all of Seller's right, title and interest in and to the Servicing Rights and the Blocked Account and all amounts and property from time to time on deposit therein and all replacements, substitutions or distributions on or proceeds, payments and profits of, and records and files relating to, the Servicing Rights and the Blocked Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> In connection with the repurchase by Seller of any Purchased Asset in accordance herewith, upon receipt of the Repurchase Price by Administrative Agent, on behalf of Buyers, Administrative Agent, on behalf of Buyers, will deliver to Seller, at Seller's expense, such documents and instruments as may be reasonably necessary and requested by Seller to reconvey such Purchased Asset and any Income related thereto to Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> In order to further secure the Repurchase Obligations hereunder, Seller hereby grants, assigns and pledges to Administrative Agent, on behalf of Buyers, a fully perfected first priority security interest in the Mezzanine Loans, all replacements, substitutions or distributions on, or proceeds, payments and profits of, and records and files relating thereto, and all related Servicing Rights, the Transaction Documents (to the extent such Transaction Documents and Seller's right thereunder relate to the Mezzanine Loans), all documentation governing the Mezzanine Loans, any right or interest in or to property of any kind whatsoever, whether real, personal, or mixed and whether tangible or intangible, relating to the Mezzanine Loans, all insurance policies and insurance proceeds relating to any Mezzanine Loans or the

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related Mortgaged Property, including, but not limited to, any payments or proceeds under any related primary insurance, hazard insurance, Income, interest rate protection agreements, accounts (including any interest of Seller in escrow accounts) and any other contract rights, instruments, accounts, payments, rights to payment (including payments of interest or finance charges), general intangibles and other assets relating to the Mezzanine Loans (including, without limitation, any other accounts) or any interest in Mezzanine Loans, and any proceeds (including the related securitization proceeds) and distributions with respect to any of the foregoing and any other property, rights, title or interests as are specified on a Confirmation and/or Trust Receipt with respect to the Mezzanine Loans, in all instances, whether now owned or hereafter acquired, now existing or hereafter created (collectively, the "<u>Mezzanine Loan Repurchase Assets</u>").

**7. PAYMENT, TRANSFER AND CUSTODY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Subject to the terms and conditions of this Agreement, on the Purchase Date for each Transaction, ownership of the Purchased Assets and all rights thereunder shall be transferred to Administrative Agent, on behalf of Buyers, or its designee (including Custodian) against the simultaneous transfer of the Purchase Price by Buyers to an account of Seller specified in the Confirmation relating to such Transaction. Administrative Agent, on behalf of Buyers, will provide Seller with a Power of Attorney to Seller, allowing Seller to administer, operate and service such Purchased Assets. So long as no Event of Default shall have occurred and be continuing, such Power of Attorney to Seller shall be binding upon Administrative Agent, on behalf of Buyers, and Administrative Agent's successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> With respect to each Table Funded Purchased Asset, Seller shall cause the Bailee to deliver to Administrative Agent by no later than 1:00 p.m. (New York time), on the Purchase Date, by electronic transmission a true and complete copy of the related Mortgage Note, Mezzanine Note or Participation Certificate (as applicable) with assignment in blank (as applicable), loan agreement, Mortgage or Mezzanine Pledge Agreement and LLC certificate (as applicable), Title Policy, the Insured Closing Letter and Escrow Instructions, if any, and the executed Bailee Agreement and Trust Receipt. In connection with the sale of each Purchased Asset, not later than 1:00 p.m. (New York time), two (2) Business Days prior to the related Purchase Date (or with respect to a Table Funded Purchased Asset not later than 1:00 p.m. (New York time) on the third (3<sup>rd</sup>) Business Day following the applicable Purchase Date), Seller shall deliver or cause Bailee to deliver (with a copy to Administrative Agent, on behalf of Buyers) and release to the Custodian (together with the Purchased Asset File Checklist), and shall cause the Custodian to deliver a Trust Receipt on the Purchase Date (or in the case of a Table Funded Purchased Asset, not later than two (2) Business Days following the receipt by the Custodian) confirming the receipt of, the original (or where indicated, copied) documents set forth on <u>Schedule 2</u>, pertaining to each of the Purchased Assets identified in the Purchased Asset File Checklist delivered therewith; <u>provided</u> that if Seller cannot deliver, or cause to be delivered, any of the original Purchased Asset Documents required to be delivered as originals (excluding the Mortgage Note, Mezzanine Note, the Assignment of Mortgage, the LLC certificate and, if applicable, the Participation Certificate, originals of which must be delivered at the time required under the provisions above), Seller shall deliver a photocopy thereof and an Officer's Certificate of Seller certifying that such copy represents a true and correct copy of the original and shall use its best efforts to obtain and deliver such original document within one hundred eighty (180) days after the related Purchase Date (or such longer period after the related Purchase Date to which Administrative Agent, on behalf of Buyers, may consent in its sole discretion exercised in good faith, so long as Seller is, as certified in writing to Administrative Agent, not less frequently than monthly, using its best efforts to obtain the original). After the expiration of such best efforts period, Seller shall deliver to Administrative Agent, on behalf of Buyers, a certification that states, despite Seller's best efforts, Seller was unable to obtain such original document, and thereafter Seller shall have no further obligation to deliver the related original document. Notwithstanding the foregoing, Administrative Agent, on behalf of Buyers, shall, at its option, have the right to cancel the purchase of an Eligible Asset if the required originals and/or copies, as applicable, of the related promissory note, Mortgage and guaranty have not been delivered as required in this Agreement , to

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be exercised by Administrative Agent, on behalf of Buyers, if at all, within thirty (30) days following the date of Administrative Agent's knowledge of the related delivery failure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> From time to time, Seller shall forward to Custodian additional original documents or additional documents evidencing any assumption, modification, consolidation or extension of a Purchased Asset approved in accordance with the terms of this Agreement, and upon receipt of any such other documents, Custodian shall, subject to and otherwise in accordance with the applicable provisions of the Custodial Agreement, hold such other documents on behalf of Administrative Agent, on behalf of Buyers, and as Administrative Agent, on behalf of Buyers, shall request from time to time. With respect to any documents which have been delivered or are being delivered to recording offices for recording and have not been returned to Seller in time to permit their delivery hereunder at the time required, in lieu of delivering such original documents, Seller shall deliver to Administrative Agent, on behalf of Buyers, a true copy thereof with an Officer's Certificate certifying that such copy is a true, correct and complete copy of the original, which has been transmitted for recordation. Seller shall deliver such original documents to Custodian promptly when they are received. With respect to all of the Purchased Assets delivered by Seller to Administrative Agent, on behalf of Buyers, or its designee (including Custodian), Seller shall execute an omnibus Power of Attorney to Administrative Agent, on behalf of Buyers, irrevocably appointing Administrative Agent, on behalf of Buyers, its attorney-in-fact with full power to (i) complete and record any Assignment of Mortgage, (ii) complete the endorsement of any Mortgage Note, Mezzanine Note, LLC certificate or Participation Certificate (as applicable) and (iii) take such other steps as may be necessary or desirable to enforce Administrative Agent, on behalf of Buyers, rights against any Purchased Assets and the related Purchased Asset Files and the Servicing Records. Administrative Agent, on behalf of Buyers, shall deposit the Purchased Asset Files representing the Purchased Assets, or cause the Purchased Asset Files to be deposited directly, with Custodian to be held by Custodian on behalf of Administrative Agent, on behalf of Buyers. The Purchased Asset Files shall be maintained in accordance with Custodial Agreement. Any Purchased Asset File not delivered to Administrative Agent, on behalf of Buyers, or its designee (including Custodian) is and shall be held in trust by Seller or its designee for the benefit of Administrative Agent, on behalf of Buyers, as the owner thereof. Seller or its designee shall maintain a copy of the Purchased Asset File and the originals of the Purchased Asset File not delivered to Administrative Agent, on behalf of Buyers, or its designee. The possession of the Purchased Asset File by Seller or its designee is at the will of Administrative Agent, on behalf of Buyers, for the sole purpose of servicing the related Purchased Asset, and such retention and possession by Seller or its designee is in a custodial capacity only. The books and records (including, without limitation, any computer records or tapes) of Seller or its designee shall be marked appropriately to reflect clearly the transfer, subject to the terms and conditions of this Agreement, of the related Purchased Asset to Administrative Agent, on behalf of Buyers. Seller or its designee (including Custodian) shall release its custody of the Purchased Asset File only in accordance with written instructions from Administrative Agent, on behalf of Buyers, unless such release is required as incidental to the servicing of the Purchased Assets or is in connection with a repurchase of any Purchased Asset by Seller or is pursuant to the order of a court of competent jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> On the date of this Agreement, Administrative Agent, on behalf of Buyers, shall have received all of the following items and documents, each of which shall be satisfactory to Administrative Agent, on behalf of Buyers, in form and substance:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Transaction Documents</u>. (A) This Agreement, duly executed and delivered by Seller and Administrative Agent, on behalf of Buyers; (B) the Custodial Agreement, duly executed and delivered by Seller, Administrative Agent, on behalf of Buyers, and Custodian;(C) the Blocked Account Agreement, duly executed and delivered by Seller, Administrative Agent, on behalf of Buyers, and Depository Bank; (D) the Fee Letter, duly executed and delivered by Seller and Administrative Agent, on behalf of Buyers; (E) the Guaranty, duly executed and delivered by Guarantor; (F) the Power of Attorney to Administrative Agent, on behalf of Buyers; (G) the Power

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of Attorney to Seller; (H) the Servicing Agreement and Servicer Acknowledgment duly executed by the parties thereto; (I) the Pledge Agreement, duly executed and delivered by Pledgor; and (J) the Filings, together with any other documents necessary or requested by Administrative Agent, on behalf of Buyers, to perfect the security interest granted by Seller in favor of Administrative Agent, on behalf of Buyers, for the benefit of Buyers, under this Agreement or any other Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Fees and Costs</u>. The Upfront Fee and all other Transaction Costs payable to Administrative Agent, on behalf of Buyers, in connection with the negotiation of the Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Organizational Documents</u>. Certified copies of the organizational documents of Seller, Pledgor and Guarantor and resolutions or other documents evidencing the authority of Seller, Pledgor and Guarantor with respect to the execution, delivery and performance of the Transaction Documents to which it is a party and each other document to be delivered by Seller and/or Guarantor from time to time in connection with the Transaction Documents (and Administrative Agent and Buyers may conclusively rely on such certifications until it receives notice in writing from Seller, Pledgor or Guarantor, as the case may be, to the contrary);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Legal Opinion</u>. Opinions of counsel to Seller, Pledgor and Guarantor in form and substance satisfactory to Administrative Agent and Buyers as to authority, enforceability of the Transaction Documents to which it is a party, perfection, bankruptcy safe harbors, the Investment Company Act and such other matters as may be requested by Administrative Agent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Other Documents</u>. Such other documents as Buyer may reasonably request.

**8. CERTAIN RIGHTS OF ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS, WITH RESPECT TO THE PURCHASED ASSETS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Subject to the terms and conditions of this Agreement, title to all Purchased Assets shall pass to Administrative Agent, on behalf of Buyers, on the applicable Purchase Date, and Administrative Agent, on behalf of Buyers, and Buyers shall have free and unrestricted use of its interest in the Purchased Assets in accordance with the terms and conditions of the Purchased Asset Documents, subject in all respects to the applicable terms, conditions and limitations set forth in the Transaction Documents. Nothing in this Agreement or any other Transaction Document shall preclude Administrative Agent, on behalf of Buyers, and Buyers from engaging (at their own expense) in repurchase transactions with the Purchased Assets with Persons in conformity with the terms and conditions of the Purchased Asset Documents or otherwise selling, transferring, pledging, repledging, hypothecating, or rehypothecating the Purchased Assets to Persons (other than any Prohibited Transferees so long as no Event of Default is then continuing) in conformity with the terms and conditions of the Purchased Asset Documents, but no such transaction shall relieve Administrative Agent, on behalf of Buyers, or Buyers of its obligations to transfer the Purchased Assets to Seller pursuant to <u>Section 3</u> of this Agreement or of Administrative Agent's obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to <u>Section 5</u> of this Agreement or otherwise affect the rights, obligations and remedies of any party to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Nothing contained in this Agreement or any other Transaction Document shall obligate Administrative Agent, on behalf of Buyers, to segregate any Purchased Assets delivered to Administrative Agent, on behalf of Buyers, by Seller. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, no Purchased Asset shall remain in the custody of Seller or an Affiliate of Seller other than as permitted herein. Subject to the terms and conditions of this Agreement, any documents

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delivered to Custodian pursuant to <u>Section 7</u> of this Agreement shall be released only in accordance with the terms and conditions of the Custodial Agreement.

**9. EXTENSION OF FACILITY TERMINATION DATE; increase of the Facility amount**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> (i) unless Seller notifies Buyer within thirty (30) days prior to then current Facility Termination Date, the Facility Termination Date shall automatically be extended for two (2) additional one (1) year periods (the "<u>First Automatic Extension Period</u>" and the "<u>Second Automatic Extension Period</u>," respectively); and (ii) at the request of Seller delivered to Administrative Agent no earlier than ninety (90) days and no later than thirty (30) days before the end of the Second Automatic Extension Period or the then current Facility Termination Date, as applicable, Seller may annually request an extension of the then current Facility Termination Date for a one (1) year period. Such requests may be approved or denied in Administrative Agent's sole discretion exercised in good faith, and in any case shall be approved only if (A) no uncured monetary Default, material non-monetary Default or Event of Default, or any unsatisfied Margin Deficit shall exist on the date of Seller's request to extend or on the then current Facility Termination Date, (B) all representations and warranties of Seller, Pledgor and Guarantor in the Transaction Documents shall be true, correct, complete and accurate in all respects as of the then current Facility Termination Date (except such representations which by their terms speak as of a specified date and subject to any exceptions disclosed to Administrative Agent, on behalf of Buyers, in an Exception Report prior to such date and approved by Administrative Agent), and (C) on or before the then current Facility Termination Date, Seller shall have paid the Extension Fee to Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Increase of Facility Amount. Prior to the Facility Amount Reduction Date, at Seller's request, the Facility Amount may be increased to up to Five Hundred Million Dollars ($500,000,000) provided that the Facility Increase Conditions (as defined below) are satisfied. For the purposes of this clause (b), "Facility Increase Conditions" shall mean:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> Seller shall have delivered to Administrative Agent a written request at least thirty (30) days prior to any increase being effectuated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(ii)</u> Any increase requested shall be in increments of Fifty Million Dollars ($50,000,000);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iii)</u> no Default, Event of Default or Margin Deficit has occurred and is continuing or would result from such increase in the Facility Amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iv)</u> the representations and warranties made by Seller, Pledgor and Guarantor in all of the Transaction Documents shall be true and correct in all respects as of the date such increase is effectuated, except to the extent that such representations and warranties (a) are made as of a particular date or (b) are no longer true as a result of a change in fact with respect to a Purchased Asset that was consented to in writing by Administrative Agent hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(v)</u> Administrative Agent, on behalf of Buyers, Seller and Guarantor shall execute an amendment to this Agreement to reflect the increased Facility Amount; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(vi)</u> Seller shall pay to Administrative Agent, on behalf of Buyers, the Facility Increase Fee (as defined in the Fourth Amendment) on such increased Facility Amount in accordance with the Fourth Amendment.

**10. REPRESENTATIONS**

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Seller represents and warrants to Administrative Agent and Buyers, that as of the date of this Agreement and as of each Purchase Date and at all times while this Agreement and any Transaction thereunder is in effect or any Repurchase Obligations remain outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Organization</u>. Seller (A) is a limited liability company duly organized, validly existing and in good standing under the laws and regulations of the State of Delaware; (B) is duly licensed, qualified, and in good standing in every state where such licensing or qualification is necessary for the transaction of Seller's business except with respect to licenses, franchises and qualification to do business in clauses (a) and (b) to the extent the failure to obtain any such license, franchise or qualification would not have a Material Adverse Effect; (C) has all requisite limited liability company or other power, and has all governmental licenses, authorizations, consents and approvals necessary, to (1) own and hold its assets and to carry on its business as now being conducted and proposed to be conducted and (2) to execute the Transaction Documents and enter into the Transactions thereunder, and (D) has all requisite limited liability company or other power to execute, deliver, and perform its obligations under this Agreement and the other Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Authorization; Due Execution; Enforceability</u>. The execution, delivery and performance by Seller of each of this Agreement and each of the other Transaction Documents have been duly authorized by all necessary limited liability company or other action on its part. The Transaction Documents have been duly executed and delivered by Seller for good and valuable consideration. The Transaction Documents constitute the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms subject to bankruptcy, insolvency, and other limitations on creditors' rights generally and to equitable principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Non-Contravention; Consents</u>. Neither the execution and delivery of the Transaction Documents, nor consummation by Seller of the transactions contemplated by the Transaction Documents (or any of them), nor compliance by Seller with the terms, conditions and provisions of the Transaction Documents (or any of them) will (A) conflict with or result in a breach of the organizational documents of Seller (B) conflict with any applicable law (including, without limitation, Prescribed Laws), rule or regulation or result in a breach or violation of any of the terms, conditions or provisions of any judgment or order, writ, injunction, decree or demand of any Governmental Authority applicable to Seller, (C) result in the creation or imposition of any lien or any other encumbrance upon any of the assets of Seller, other than pursuant to the Transaction Documents or (D) violate or conflict with contractual provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, contract or other material agreement to which Seller is a party or by which Seller may be bound.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Litigation; Requirements of Law</u>. Unless notice is given by or on behalf of Seller to Administrative Agent, on behalf of Buyers, from time to time, there is no action, suit, proceeding, investigation, or arbitration pending or, to the best knowledge of Seller, threatened against Seller or any of its assets which (A) may, individually or in the aggregate, result in any Material Adverse Effect; (B) may have an adverse effect on the validity of the Transaction Documents or any action taken or to be taken in connection with the obligations of Seller under any of the Transaction Documents; (C) makes a claim or claims in an amount greater than Two Hundred and Fifty Thousand Dollars ($250,000); or (D) requires filing with the SEC in accordance with the 1934 Act or any rules thereunder. Seller is in compliance in all material respects with all Requirements of Law. Seller is not in default in any material respect with respect to any judgment, order, writ, injunction, decree, rule or regulation of any arbitrator or Governmental Authority.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>No Broker</u>. Seller has not dealt with any broker, investment banker, agent or other Person (other than Morgan Stanley Bank, N.A. or an Affiliate thereof) who may be entitled to any commission or compensation in connection with the sale of the Purchased Assets pursuant to any Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>Good Title to Purchased Assets</u>. Immediately prior to the purchase of any Purchased Assets by Administrative Agent, on behalf of Buyers, from Seller, such Purchased Assets are free and clear of any lien, security interest, claim, option, charge, encumbrance or impediment to transfer to Administrative Agent, on behalf of Buyers (including any "adverse claim" as defined in Section 8-102(a)(1) of the UCC), and are not subject to any rights of setoff, any prior sale, transfer, assignment, or participation by Seller or any agreement (other than as provided for in the Transaction Documents) by Seller to assign, convey, transfer or participate in such Purchased Assets, in whole or in part, and Seller is the sole legal record and beneficial owner of, and owns and has the right to sell and transfer, such Purchased Assets to Administrative Agent, on behalf of Buyers, and, upon transfer of such Purchased Assets to Administrative Agent, on behalf of Buyers, Administrative Agent, on behalf of Buyers, shall be the owner of such Purchased Assets (other than for U.S. federal, state and local income and franchise tax purposes) free of any adverse claim, subject to Seller's rights pursuant to this Agreement. In the event that the related Transaction is recharacterized as a secured financing of the Purchased Assets and with respect to the security interests granted in <u>Section 6(a)</u>, <u>Section 6(c)</u> and <u>Section 6(d)</u>, and <u>Section 6(f)</u>, the provisions of this Agreement and the filing of the Filings are effective to create in favor of Administrative Agent, on behalf of Buyers, a valid security interest in all right, title and interest of Seller in, to and under the Repurchase Assets specified in <u>Section 6(a)</u> and the other collateral specified in <u>Section 6(c)</u>, <u>Section 6(d)</u> and <u>Section 6(f)</u>, and Administrative Agent, on behalf of Buyers, shall have a valid, perfected and enforceable first priority security interest in the Repurchase Assets and such other collateral, subject to no lien or rights of others other than as granted herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) <u>No Default; No Material Adverse Effect</u>. No uncured monetary Default, material non-monetary Default or any Event of Default exists under or with respect to the Transaction Documents. To Seller's actual knowledge, there are no post-Transaction facts or circumstances that have a Material Adverse Effect on any Purchased Asset that Seller has not notified Administrative Agent of in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) <u>Representations and Warranties Regarding Purchased Assets; Delivery of Purchased Asset File</u>. Each Purchased Asset sold hereunder, as of the applicable Purchase Date for the Transaction in question, conforms to the applicable representations and warranties set forth in <u>Exhibit III</u> attached hereto, except as has been disclosed to Administrative Agent in an Exception Report prior to Administrative Agent's, on behalf of Buyers, issuance of a Confirmation with respect to the related Purchased Asset, or as otherwise approved by Administrative Agent, on behalf of Buyers. It is understood and agreed that the representations and warranties set forth in <u>Exhibit III</u> hereto (as modified by any Exception Report disclosed to Administrative Agent in writing prior to Administrative Agent's, on behalf of Buyers, issuance of a Confirmation with respect to the related Purchased Asset), shall survive delivery of the respective Purchased Asset File to Administrative Agent, on behalf of Buyers, or its designee (including Custodian). With respect to each Purchased Asset, the Purchased Asset File and any other documents required to be delivered under this Agreement and the Custodial Agreement for such Purchased Asset have been delivered to Administrative Agent, on behalf of Buyers, or Bailee, as applicable, or to Custodian on behalf of Administrative Agent, on behalf of Buyers. Seller or its designee is in possession of a complete, true and accurate Purchased Asset File with respect to each Purchased Asset, except for such documents the originals of which have been delivered to Custodian.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) <u>Adequate Capitalization; No Fraudulent Transfer</u>. After giving effect to each Transaction (A) the amount of the "present fair saleable value" of the assets of Seller will, as of such date, exceed the amount of all "liabilities of Seller, contingent or otherwise", as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (B) the present fair saleable value of the assets of Seller will, as of such date, be greater than the amount that will be required to pay the liabilities of Seller on its debts as such debts become absolute and matured, (C) Seller will not have, as of such date, an unreasonably small amount of capital with which to conduct its businesses, and (D) Seller will be able to pay its debts as they mature. Seller does not intend to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. Seller is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Seller or any of its assets. Seller is not transferring any New Asset with any intent to hinder, delay or defraud any of its creditors. For purposes of this <u>Section 10(ix)</u>, "debt" means "liability on a claim", "claim" means any (1) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, and (2) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>Organizational Documents</u>. Seller has delivered to Administrative Agent, on behalf of Buyers, true and correct certified copies of its organizational documents, together with all amendments thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) <u>No Encumbrances</u>. There are (A) no outstanding rights, options, warrants or agreements on the part of Seller for a purchase, sale or issuance, in connection with the Purchased Assets (B) no agreements on the part of Seller to issue, sell or distribute the Purchased Assets and (C) no obligations on the part of Seller (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or interest therein, except, in each of the foregoing instances, as contemplated by the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) <u>No Investment Company or Holding Company</u>. Neither Seller, Pledgor nor Guarantor is required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) <u>Taxes</u>. Seller has filed or caused to be filed all tax returns that would be delinquent if they had not been filed on or before the date hereof and has paid all Taxes due and payable on or before the date hereof and all Taxes, fees or other charges imposed on it and any of its assets by any Governmental Authority; no tax liens have been filed against any of Seller's assets; and, to Seller's actual knowledge, no claims are being asserted with respect to any such Taxes, fees or other charges.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) <u>ERISA</u>. Neither Seller nor, except as would not reasonably be expected to have a Material Adverse Effect, any ERISA Affiliate (A) sponsors or maintains any Plans or (B) makes any contributions to or has any liabilities or obligations (direct or contingent) with respect to any Plans. Seller (i) is not an "employee benefit plan" within the meaning of, and subject to the provisions of Title I of ERISA, or a "plan" as described in and subject to Section 4975 of the Code, and (ii) does not hold Plan Assets of one or more such "employee benefit plan" or "plans". The consummation of the transactions contemplated by this Agreement will not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. Either (A) the Seller is not a "governmental plan" within the meaning of Section 3(32) of ERISA

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and is not otherwise an entity subject to any law or regulation substantially similar to Section 406 of ERISA or Section 4975 of the Code due to the investment in Seller by a governmental or other plan or (B) the consummation of the transactions contemplated by this Agreement will not constitute or result in a violation of any such substantially similar law or regulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) <u>Judgments/Bankruptcy</u>. Except as disclosed in writing to Administrative Agent, on behalf of Buyers, there are no judgments against Seller, Pledgor or Guarantor that are unsatisfied of record or docketed in any court located in the United States of America and no Act of Insolvency has ever occurred with respect to Seller, Pledgor or Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) <u>Full and Accurate Disclosure</u>. No information provided pursuant to or during the negotiation of the Transaction Documents, or any written statement furnished by or on behalf of Seller pursuant to the terms of the Transaction Documents (including any certification of Bailee), contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made when such statements and omissions are considered in the totality of the circumstances in question.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) <u>Financial Information</u>. All financial data concerning Seller, Pledgor and Guarantor and all data concerning the Purchased Assets that has been delivered to Administrative Agent, on behalf of Buyers, by Seller, any Affiliate of Seller or Seller's advisors is true, complete and correct in all material respects and has been prepared in accordance with GAAP (to the extent applicable). Since the delivery of such data, except as otherwise disclosed in writing to Administrative Agent, on behalf of Buyers, there has been no material adverse change in the business or financial condition of Seller, Pledgor or Guarantor or the Purchased Assets, or in the results of operations of Seller, Pledgor or Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii) <u>Jurisdiction of Organization</u>. Seller's jurisdiction of organization is the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix) <u>Location of Books and Records</u>. The location where Seller keeps its books and records is at its chief executive office at 390 RXR Plaza Uniondale, NY 11556.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) <u>Authorized Representatives</u>. The duly authorized representatives of Seller are listed on, and true signatures of such authorized representatives are set forth on, <u>Exhibit V</u> attached to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxi) <u>Use of Proceeds; Regulations T, U and X</u>. All proceeds of each Transaction shall be used by Seller for purposes permitted under Seller's governing documents; <u>provided</u> that no part of the proceeds of any Transaction will be secured directly or indirectly by margin stock. Neither the entering into nor consummation of any Transaction hereunder, nor the use of the proceeds thereof, will violate any provision of Regulations T, U and X.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxii) <u>Regulatory Status</u>. Seller is not a "bank holding company" or a direct or indirect subsidiary of a "bank holding company" as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiii) <u>Hedging Transactions</u>. Subject to the caveat set forth in the last sentence of the defined term "Eligible Asset," as of the Purchase Date for any Purchased Asset that is subject to a Hedging Transaction, each such Hedging Transaction is in full force and effect in accordance with its terms, each counterparty thereto is an Affiliated Hedge Counterparty or a Qualified Hedge

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Counterparty, and no "Termination Event", "Event of Default", "Potential Event of Default" or any similar event, however denominated, has occurred with respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiv) <u>Anti-Money Laundering</u>. The operations of Seller, Pledgor, Guarantor and their Subsidiaries are and have been conducted at all times during the two (2) year period immediately preceding each determination date, in material compliance with all applicable financial recordkeeping and reporting requirements, including those required by the Prescribed Laws, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Seller, Pledgor or Guarantor or any of their Subsidiaries with respect to the Prescribed Laws is pending or, to the best knowledge of Seller, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxv) <u>OFAC</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) None of Seller, any director, officer or employee of Seller, or to Seller's knowledge, any agent, Affiliate or representative of Seller, is a Person that is, or is owned or controlled by a Person that is: (1) the subject of any sanction administered or enforced by OFAC, the United Nations Security Council, the European Union, or Her Majesty's Treasury (collectively, "<u>Sanctions</u>"); or (2) located, organized or resides in a country or territory that is the subject of comprehensive Sanctions (including, without limitation, Cuba, Iran, North Korea, the Crimea region of Ukraine and Syria.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Seller is not now knowingly engaged in, and will not knowingly engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxvi) <u>Anti-Corruption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) None of Seller, its directors, officers, or employees, or, to Seller's knowledge, any agent or representative of Seller, has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any Person while knowing that all or some portion of the money or value will be offered, given or promised to anyone to improperly influence official action, to obtain or retain business or otherwise to secure any improper advantage, in each case in violation of applicable anti-corruption or anti-bribery laws.(B) Seller and, to Seller's knowledge, Seller's Affiliates have conducted their businesses in compliance with applicable anti-corruption laws and have instituted and maintained, and will continue to maintain, policies and procedures reasonably designed to promote and achieve compliance with such laws.

**11. NEGATIVE COVENANTS OF SELLER**

On and as of date of this Agreement and each Purchase Date and at all times while this Agreement and any Transaction hereunder is in effect or any Repurchase Obligations remain outstanding, Seller shall not without the prior written consent of Administrative Agent, on behalf of Buyers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> subject to Seller's right to repurchase the Purchased Assets, take any action which would, either directly or indirectly, materially impair or adversely affect Administrative Agent's title to the Purchased Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose of, including, without limitation, any effective transfer or other disposition as a result of a Division of Seller,

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or pledge or hypothecate, directly or indirectly, any interest in the Purchased Assets (or any of them) to any Person other than Administrative Agent, on behalf of Buyers, or engage in repurchase transactions or similar transactions with respect to the Purchased Assets (or any of them) with any Person other than Administrative Agent, on behalf of Buyers, except where the Purchased Assets in question are simultaneously repurchased from Administrative Agent, on behalf of Buyers, which may be transferred either back to Seller or at Seller's direction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> create, incur or permit to exist any lien, charge, encumbrance or security interest in or on any of the Repurchase Assets or other collateral subject to the security interests granted by Seller pursuant to <u>Section 6</u> of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> create, incur or permit any lien, security interest, charges, or encumbrances with respect to any Repurchase Assets or Hedging Transaction relating to the Purchased Assets for the benefit of any Person other than Administrative Agent, on behalf of Buyers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> consent or assent to a Significant Modification of any Purchased Asset without the prior written consent of Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> after the occurrence and during the continuation of any monetary Default, material non-monetary Default or any Event of Default, make any distribution (other than distributions as necessary to enable Guarantor to maintain its status as a real estate investment trust within the meaning of the Code and avoid any excise tax payable pursuant to Section 4981 of the Code (in each case, without regard to Guarantor's ability to make consent dividends within the meaning of Section 565 of the Code)), payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or ownership interest of Seller, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> sponsor or maintain any Plans or make any contributions to, or have any liability or obligation (direct or contingent) with respect to, any Plan or except as would not have a Material Adverse Effect, permit any ERISA Affiliate to sponsor or maintain any Plans or make any contributions to, or have any liability or obligation (direct or contingent) with respect to, any Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> engage in any transaction that would cause any obligation or action taken or to be taken hereunder (or the exercise by Administrative Agent or any Buyer, of any of its rights under this Agreement, the Purchased Assets or any Transaction Document) to be a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or a violation of any law or regulation substantially similar to Section 406 of ERISA or Section 4975 of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> make any future advances under any Purchased Asset to any underlying obligor that are not permitted by the related Purchased Asset Documents, except to the extent approved by Administrative Agent on behalf of Buyers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> seek its dissolution, liquidation, Division or winding up, in whole or in part;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> incur any Indebtedness except as provided in <u>Section 13(i)</u> hereof, or otherwise cease to be a Single-Purpose Entity;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> permit the organizational documents or organizational structure of Seller to be amended without the prior written consent of Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> except to the extent contributed by Seller or any of its Affiliates to a collateralized loan obligation transaction, acquire or maintain any right or interest in any Purchased Asset or Mortgaged Property that is senior to, junior to or *pari passu* with the rights and interests of Administrative Agent, on behalf of Buyers, therein under this Agreement and the other Transaction Documents unless such right or interest becomes a Purchased Asset hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(o)</u> directly or indirectly use the proceeds from any Transaction, or lend contribute or otherwise make available such proceeds to any other Person to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or in any other manner that would result in a violation of Sanctions by any Person (including Administrative Agent or any Buyer); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(p)</u> directly or, to its knowledge, indirectly use the proceeds from any Transaction or lend, contribute or otherwise make available such proceeds to any Person for the purpose of financing or facilitating any activity that would violate applicable anti-corruption laws, rules, or regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(q)</u> use any escrow or reserve held pursuant to the Purchased Asset Documents in its possession or control for any reason other than uses permitted under the Purchased Asset Documents.

**12. AFFIRMATIVE COVENANTS OF SELLER**

On and as of the date of this Agreement and each Purchase Date and at all times while this Agreement and any Transaction thereunder is in effect or any Repurchase Obligations remain outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Seller shall promptly notify Administrative Agent when it has actual knowledge of any event and/or condition that is likely to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Seller shall give notice to Administrative Agent of the following (accompanied by an Officer's Certificate setting forth details of the occurrence referred to therein and stating what actions Seller has taken or proposes to take with respect thereto):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) promptly upon receipt by Seller of notice or actual knowledge of the occurrence of any monetary Default, material non-monetary Default or any Event of Default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) with respect to any Purchased Asset sold to Administrative Agent, on behalf of Buyers, hereunder, promptly following receipt of any unscheduled Principal Payment (in full or in part);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) with respect to any Purchased Asset sold to Administrative Agent, on behalf of Buyers, hereunder, promptly following receipt by Seller of notice or actual knowledge that the related Mortgaged Property has been damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty, or otherwise damaged so as to affect adversely the value of such Mortgaged Property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) promptly upon receipt of notice by Seller or actual knowledge of (A) any Purchased Asset that becomes a Defaulted Asset, (B) any lien or any security interest (other than security interests created hereby) on, or claim asserted against, any Purchased Asset or, to Seller's

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actual knowledge, the underlying collateral therefor, (C) any event or change in circumstances that has or could reasonably be expected to have caused any credit impairment to any Purchased Asset or any obligor or guarantor in respect of any Purchased Asset, (D) any change with respect to Servicer or in the servicing of any Purchased Asset, or (E) any regulatory, including material licensing, issues with respect to any Purchased Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) promptly, and in any event within ten (10) days after service of process on any of the following, give to Administrative Agent notice of all litigation, actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting Seller, Pledgor or Guarantor or affecting any of the assets of Seller, Pledgor or Guarantor before any Governmental Authority that (A) questions or challenges the validity or enforceability of any of the Transaction Documents or any action to be taken in connection with the transactions contemplated hereby, (B) makes a claim or claims in an aggregate amount greater than Two Hundred and Fifty Thousand Dollars ($250,000) with respect to Seller or Ten Million Dollars ($10,000,000) with respect to Guarantor, (C) which, individually or in the aggregate, if adversely determined could reasonably be likely to have a Material Adverse Effect, (D) requires filing with the SEC in accordance with the 1934 Act and any rules thereunder or (E) raises any material lender licensee issues with respect to any Purchased Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) promptly upon any transfer of any underlying Mortgaged Property or any direct or indirect equity interest in any Mortgagor of which Seller has actual knowledge, whether or not consent to such transfer is required under the applicable Purchased Asset Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) promptly, and in any event within ten (10) days after Seller or any of its ERISA Affiliates knows or has reason to know that any "reportable event" (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur in respect of a Plan that, individually or in the aggregate, either has resulted, or would reasonably be expected to result, in a Material Adverse Effect or in a Lien arising under ERISA or Section 403(k) of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) a breach of any representation or warranty by Seller under <u>Exhibit III</u> attached hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) with respect to any Future Advance Asset, if Seller has failed to fund any additional advance to the related Mortgagor as and when required under, and otherwise in accordance with, the terms and conditions of the related Purchased Asset Documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) there is a Change of Control with respect to either Guarantor or Pledgor from the Person or Persons who are directly or indirectly Controlling either Guarantor or Pledgor, as applicable, as of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Seller shall provide Administrative Agent with copies of such documents as Administrative Agent, on behalf of Buyers, may reasonably request evidencing the truthfulness of the representations set forth in Section 10 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Seller shall defend the right, title and interest of Administrative Agent, on behalf of Buyers, in and to the Purchased Assets and any Hedging Transactions against, and take such other action as is necessary to remove, any liens, security interests, claims, encumbrances, charges and demands of all Persons thereon (other than security interests granted to Administrative Agent, on behalf of Buyers, hereunder), and take any such other action as is necessary to obtain or preserve a first priority perfected security interest in the Purchased Assets and any Hedging Transactions.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> Seller will permit Administrative Agent or any Buyer, or its designated representative to inspect any of Seller's records with respect to all or any portion of the Purchased Assets and the conduct and operation of its business related thereto at such reasonable times and with reasonable frequency requested by Administrative Agent or any Buyer, or its designated representative and to make copies of extracts of any and all thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> If any amount payable under or in connection with any of the Purchased Assets shall be or become evidenced by any new or otherwise subsequently-arising promissory note, other instrument or chattel paper (as each of the foregoing is defined under the UCC), such note, instrument or chattel paper shall be immediately delivered to Administrative Agent, on behalf of Buyers, or its designee, duly endorsed in a manner satisfactory to Administrative Agent or if any collateral or other security shall subsequently be delivered to Seller in connection with any Purchased Asset, Seller shall immediately deliver or forward such item of collateral or other security to Administrative Agent, on behalf of Buyers, or its designee, together with such instruments of assignment as Administrative Agent may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> Seller shall provide (or cause to be provided) to Administrative Agent, on behalf of Buyers, the following financial and reporting information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Monthly Statement, which report shall be delivered to Administrative Agent for each calendar month during the term of this Agreement in accordance with the timing set forth in section 3.12 of the Servicing Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Quarterly Report, together with all operating statements and occupancy information that Seller or Servicer has received relating to the Purchased Assets for the related fiscal quarter, which reports shall be delivered to Administrative Agent for each fiscal quarter during the term of this Agreement within forty-five (45) days following the end of each such fiscal quarter;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) a Financial Covenant Compliance Certificate, to be delivered by Guarantor within forty-five (45) days after the end of the first three (3) fiscal quarters and within one-hundred and twenty (120) days after the end of each fiscal year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) within forty-five (45) days following the end of each of the first three quarters, and within ninety (90) days following the end of each fiscal year, as the case may be, an Officer's Certificate of Seller in form and substance reasonably satisfactory to Administrative Agent, on behalf of Buyers, certifying that during such fiscal quarter or year Seller has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Transaction Documents to be observed, performed or satisfied by it, and that there has occurred no Event of Default and no event or circumstance has occurred that is reasonably likely to result in a Material Adverse Effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) as soon as available and in any event within forty-five (45) days after the end of each quarter (other than the last fiscal quarter of each fiscal year), the unaudited consolidated balance sheets of Guarantor and its consolidated subsidiaries as at the end of such period and the related unaudited consolidated statements of income and retained earnings and of cash flows for the Guarantor and its consolidated subsidiaries for such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a responsible officer of Guarantor, which certificate shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of Guarantor and its consolidated subsidiaries in accordance with GAAP, as at the end of, and for, such period (subject to normal year-end adjustments);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) as soon as available and in any event within ninety (90) days after the end of each fiscal year of Guarantor, the audited consolidated balance sheets of Guarantor and its consolidated subsidiaries as at the end of such fiscal year and the related audited consolidated statements of income and retained earnings and of cash flows for the Guarantor and its consolidated subsidiaries for such year, setting forth in each case in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, shall have no "going concern" qualification and shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of Guarantor and its respective consolidated subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP. Information required to be delivered pursuant to clauses (v) and (vi) of this Section shall be deemed to have been delivered on the date on which the Guarantor posts such information on the Guarantor's website on the internet or the SEC posts such information on their website at www.sec.gov/edgar/searchedgar/webusers.htm or at another website identified in a written notice to the Administrative Agent and accessible by the Administrative Agent without charge;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) within ten (10) Business Days after Administrative Agent's request, such further information with respect to the operation of any Mortgaged Property, Purchased Asset, the financial affairs of Seller, Pledgor or Guarantor and any Plan and Multiemployer Plan as may be reasonably requested by Administrative Agent, on behalf of Buyers, including all business plans prepared by or for Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) upon Administrative Agent's, on behalf of Buyers, reasonable request for any Appraisal that is dated more than twelve (12) months prior to such request, no more often than annually, updated Appraisals of the Mortgaged Properties relating to the Purchased Assets, at Seller's sole cost and expense; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) such other reports as Administrative Agent, on behalf of Buyers, shall reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> Seller shall at all times comply in all material respects with all laws (including, without limitation, Prescribed Laws), ordinances, rules and regulations of any federal, state, municipal or other public authority having jurisdiction over Seller or any of its assets, and Seller shall do or cause to be done all things reasonably necessary to preserve and maintain in full force and effect its legal existence and all licenses material to its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> Seller agrees that, from time to time upon the prior written request of Administrative Agent, on behalf of Buyers, it shall (A) execute and deliver such further documents, provide such additional information and reports and perform such other acts as Administrative Agent may reasonably request in order to insure compliance with all Prescribed Laws applicable to Seller and to fully effectuate the purposes of this Agreement and (B) provide such opinions of counsel concerning matters relating to the Prescribed Laws as Administrative Agent may reasonably request; provided, however, that nothing in this <u>Section 12(j)</u> shall be construed as requiring Administrative Agent to conduct any inquiry or decreasing Seller's responsibility for its statements, representations, warranties or covenants under this Agreement. In order to enable Administrative Agent, Buyers, and their respective Affiliates to comply with any anti-money laundering program and related responsibilities including, but not limited to, any obligations under the Prescribed Laws and regulations thereunder, Seller, on behalf of itself and its Affiliates, represents and covenants to Administrative Agent, Buyers, and their Affiliates that: (A) neither Seller, nor, any of its Affiliates, is a Prohibited Person and (B) Seller is not acting on behalf of or on behalf of any Prohibited Person. Seller agrees to promptly notify Administrative Agent, on behalf of Buyers, or a person appointed

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by Administrative Agent, on behalf of Buyers, to administer its anti-money laundering program, if applicable, of any change in information affecting this <u>Section 12(i)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> Seller shall at all times keep proper books of records and accounts in which full, true and correct entries shall be made of its transactions in accordance with GAAP and set aside on its books from its earnings for each fiscal year all such proper reserves in accordance with GAAP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> Seller shall advise Administrative Agent in writing of the opening of any new chief executive office of Seller, Pledgor or Guarantor or the closing of any such office and of any change in Seller's, Pledgor's or Guarantor's name or the places where the books and records pertaining to the Purchased Assets are held not less than fifteen (15) Business Days prior to taking any such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> Seller shall pay when due all Transaction Costs. Seller shall pay and discharge all Taxes, levies, liens and other charges, if any, on its assets and on the Purchased Assets that, in each case, in any manner would create any lien or charge upon the Purchased Assets, except for any such Taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> Seller shall maintain its existence as a limited liability company organized solely and in good standing under the law of the State of Delaware and shall not dissolve, liquidate, be subject to a Division, merge with or into any other Person or otherwise change its organizational structure or documents or identity or incorporate or organize in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> Seller shall maintain all records with respect to the Purchased Assets and the conduct and operation of its business with no less a degree of prudence than if the Purchased Assets were held by Seller for its own account and will furnish Administrative Agent upon request by Administrative Agent or its designated representative, with information reasonably obtainable by Seller with respect to the Purchased Assets and the conduct and operation of its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(o)</u> Seller shall provide Administrative Agent with notice of each modification of any Purchased Asset Documents consented to by Seller (including such modifications which do not constitute a Significant Modification).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(p)</u> Seller shall provide Administrative Agent with reasonable access to operating statements, the occupancy status and other property level information, with respect to the Mortgaged Properties, that are either in Seller's possession or available to Seller, plus any such additional reports as Administrative Agent, on behalf of Buyers, may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(q)</u> Seller may propose, and Administrative Agent, on behalf of Buyers, will consider, but shall be under no obligation to approve, strategies for the foreclosure or other realization upon the security for any Purchased Asset that has become a Defaulted Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(r)</u> Seller shall not cause any Purchased Asset to be serviced by any servicer other than a servicer expressly approved in writing by Administrative Agent, on behalf of Buyers. Seller shall provide written notification to Administrative Agent within one (1) Business Day of any rating agency reducing the credit or servicer rating applicable to any servicer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(s)</u> If Seller shall at any time become entitled to receive or shall receive any rights, whether in addition to, in substitution of, as a conversion of, or in exchange for a Purchased Asset, or otherwise in respect thereof, Seller shall accept the same as Administrative Agent, on behalf of Buyers, agent, hold the same in trust for Administrative Agent, on behalf of Buyers, and deliver the same forthwith to

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Administrative Agent, on behalf of Buyers (or Custodian, as appropriate) in the exact form received, duly endorsed by Seller to Administrative Agent, on behalf of Buyers, if required, together with all related and necessary duly executed Transfer Documents to be held by Administrative Agent, on behalf of Buyers, hereunder as additional collateral security for the Transactions. If any sums of money or property so paid or distributed in respect of the Purchased Assets shall be received by Seller, Seller shall, until such money or property is paid or delivered to Buyers, hold such money or property in trust for Buyers, segregated from other funds of Seller, as additional collateral security for the Transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(t)</u> To the extent any additional limited liability company is formed by Division of Seller (and without prejudice to <u>Section 11</u>), Seller shall cause any such additional limited liability company to transfer, convey and assign to Administrative Agent, on behalf of Buyers, on a servicing released basis all of such additional limited liability company's right, title and interest in and to the Purchased Assets, together with all related Servicing Rights in the same manner and to the same extent as the sale, transfer, conveyance and assignment by Seller on the initial Purchase Date of all of Seller's right, title and interest in and to the Purchased Assets, together with all related Servicing Rights.

**13. SINGLE-PURPOSE ENTITY**

Seller hereby represents and warrants to Administrative Agent and Buyers, and covenants with Administrative Agent and Buyers, that, on and as of the date of this Agreement and each Purchase Date and at all times while this Agreement and any Transaction hereunder is in effect or any Repurchase Obligations remain outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> it is and intends to remain solvent, and it has paid and will pay its debts and liabilities (including overhead expenses) from its own assets as the same shall become due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> it has complied and will comply with the provisions of its certificate of formation and its limited liability company agreement necessary to maintain its separate existence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> it has done or caused to be done and will do all things necessary to observe limited liability company formalities and to preserve its existence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> it has maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its affiliates, its members and any other Person, and it will file its own tax returns (except to the extent consolidation is required or permitted under GAAP or as a matter of law);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> it has been, is and will be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of Seller), it shall correct any known misunderstanding regarding its status as a separate entity, it shall conduct business in its own name, it shall not identify itself or any of its Affiliates as a division or part of the other and it shall maintain and utilize separate stationery, invoices and checks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> it has not owned and will not own any property or any other assets other than the Purchased Assets, cash and its interest under any associated Hedging Transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> it has not engaged and will not engage in any business other than the origination, acquisition, ownership, financing and disposition of the Purchased Assets and the associated Hedging Transactions in accordance with the applicable provisions of the Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> except for capital contributions and capital distributions permitted under the terms and conditions of its organizational documents and properly reflected on its books and records, it has not entered

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into, and will not enter into, any contract or agreement with any of its affiliates, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm's length basis with Persons other than such affiliate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> it has not incurred and will not incur any indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (A) obligations under the Transaction Documents, (B) obligations under the documents evidencing the Purchased Assets, and (C) unsecured trade payables, in an aggregate amount not to exceed Two Hundred and Fifty Thousand Dollars ($250,000) at any one time outstanding, incurred in the ordinary course of acquiring, owning, financing and disposing of the Purchased Assets; *provided*, *however*, that any such trade payables incurred by Seller shall be paid within sixty (60) days of the date incurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> it has not made and will not make any loans or advances to any other Person, and shall not acquire obligations or securities of any member or affiliate of any member or any other Person (other than in connection with the origination or acquisition of Purchased Assets);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> it will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> neither it nor Guarantor will seek (A) the dissolution, liquidation, Division or winding up, in whole or in part of Seller or (B) the division of Seller into two (2) or more limited liability companies or other legal entities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> it will not commingle its funds and other assets with those of any of its Affiliates or any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> it has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any of its Affiliates or any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(o)</u> it has not held and will not hold itself out to be responsible for the debts or obligations of any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(p)</u> it will (i) have at all times at least one (1) Independent Director and (ii) provide Administrative Agent with up-to-date contact information for all Independent Directors and a copy of the agreement pursuant to which each Independent Director consents to and serves as an Independent Director for Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(q)</u> its organizational documents shall provide that (i) no Independent Director of Seller may be removed or replaced without Cause, (ii) Administrative Agent be given at least two (2) Business Days prior notice of the removal and/or replacement of any Independent Director, together with the name and contact information of the replacement Independent Director and evidence of the replacement's satisfaction of the definition of Independent Director and (iii) any Independent Director of Seller shall not have any fiduciary duty to anyone including the holders of the equity interests in Seller and any Affiliates of Seller except Seller and the creditors of Seller with respect to taking of, or otherwise voting on, any Act of Insolvency; provided that the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(r)</u> it shall not, without the consent of its Independent Directors, institute any proceeding to be adjudicated as bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition or answer or consent seeking reorganization or relief under the Bankruptcy Code

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or consent to the filing of any such petition or to the appointment of a receiver, rehabilitator, conservator, liquidator, assignee, trustee or sequestrator (or other similar official) of it or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, or make an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take any action in furtherance of any of the foregoing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(s)</u> it shall not have any Subsidiaries or employees.

**14. EVENTS OF DEFAULT; REMEDIES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a) Events of Default</u>. The following shall constitute an event of default (each, an "<u>Event of Default</u>") by Seller hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) failure of Seller to repurchase one or more Purchased Assets on the applicable Repurchase Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) failure of Seller to apply any Income received by Seller (or Servicer on behalf of Seller) in accordance with the provisions hereof; <u>provided</u> that no Event of Default under this clause (ii) shall occur if, in the case of a failure to deposit Income or any other amounts by any third-party servicer unaffiliated with Seller, such failure is cured within two (2) Business Days of written notice to Seller or the date on which Seller had actual knowledge of such breach or failure to perform and the defaulting servicer is removed and replaced with a replacement servicer satisfactory to Administrative Agent in its sole discretion within sixty (60) days of written notice to Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if any of the Transaction Documents shall for any reason (A) not cause, or shall cease to cause, Administrative Agent, on behalf of Buyers, to be the owner of, or, if recharacterized as a secured financing, a secured party with respect to, the Repurchase Assets specified in <u>Section 6(a)</u> hereof and the other collateral specified in <u>Sections 6(c),</u> <u>6(d)</u> or <u>6(f)</u> hereof free of any adverse claim, liens and other rights of others (other than as granted herein); (B) cease, if a Transaction is recharacterized as a secured financing, to create a valid first priority perfected security interest in favor of Administrative Agent, on behalf of Buyers, in the Repurchase Assets specified in <u>Section 6(a)</u> hereof and the other collateral specified in <u>Sections 6(c)</u>, <u>6(d)</u> or <u>6(f)</u> hereof; or (B) cease to be in full force and effect or if the enforceability of any of them is challenged or repudiated by Seller, Pledgor, Guarantor or Servicer or any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) failure of Seller to make the payments required under <u>Section 4(a)</u> or <u>Section 5(b)</u> hereof on the date such payment is due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) failure of Seller, Pledgor or Guarantor to make any other payment owing to Buyers which has become due, whether by acceleration or otherwise, under the terms of this Agreement or any other Transaction Document which failure is not remedied within the period specified herein or, if no period is specified for such payments ten (10) Business Days after notice thereof to Seller from Administrative Agent, on behalf of Buyers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) breach by Seller in the due performance or observance of any term, covenant or agreement contained in <u>Section 11</u> of this Agreement; <u>provided</u>, that, if such breach is susceptible to cure as determined by Administrative Agent in its sole and absolute discretion, exercised in good faith, then Seller shall have five (5) days after the earlier to occur of notice from Administrative Agent or Seller's actual knowledge of such breach to remedy such breach (<u>provided</u> <u>further</u> that, if Seller shall have commenced to cure such breach within such five (5) day period and thereafter diligently and expeditiously proceeds to cure the same, such five (5) day period shall be extended

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for such time as is reasonably necessary for Seller in the exercise of due diligence, to cure such breach, and in no event shall such cure period exceed thirty (30) days from Seller's receipt of notice of such breach, <u>provided</u> that Seller is continuously and diligently curing such breach).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) a Change of Control shall have occurred with respect to Seller, Pledgor or Guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) any representation made by Seller or Pledgor herein or in any Transaction Document shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated and such representation breach continues unremedied for twenty (20) Business Days after the earlier to occur of the receipt of written notice thereof from Buyer, or the discovery thereof by the applicable Person; <u>provided</u> that the representations and warranties made by Seller in <u>Sections 10(vi)</u> or <u>10(viii)</u> hereof shall not be considered an Event of Default if incorrect or untrue in any material respect (which determination shall be made with respect to the representations and warranties in <u>Exhibit III</u> without regard to any knowledge qualifier therein), if Administrative Agent, on behalf of Buyers, terminates the related Transaction and Seller repurchases the related Purchased Asset(s) on an Early Repurchase Date no later than five (5) Business Days after receiving written notice of such incorrect or untrue representation; <u>provided</u>, *however*, that if Seller shall have made any such representation with knowledge that it was materially incorrect or untrue at the time made, such misrepresentation shall constitute an Event of Default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) (A) a final judgment by any competent court in the United States of America for the payment of money in an amount greater than Two Hundred Fifty Thousand Dollars ($250,000) shall have been rendered against Seller and remains undischarged or unpaid for a period of thirty (30) days, during which period execution of such judgment is not effectively stayed or (B) a final judgment by any competent court in the United States of America for the payment of money in an amount greater than Ten Million Dollars ($10,000,000) shall have been rendered against Guarantor and remains undischarged or unpaid for a period of sixty (60) days, during which period execution of such judgment is not effectively stayed by bonding over or other similar means;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) (A) Seller or Pledgor shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction to which it is a party, and which default involves the failure to pay an obligation in excess of Two Hundred Fifty Thousand Dollars ($250,000) or (B) Guarantor shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction to which it is a party, and which default involves the failure to pay an obligation in excess of Ten Million Dollars ($10,000,000); <u>provided</u>, *however*, that any such default, failure to perform or breach shall not constitute an Event of Default if Seller, Pledgor or Guarantor, as the case may be, cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) the breach by Guarantor of (A) any financial covenant set forth in Section 9 of the Guaranty or (B) any other term, covenant, obligation or condition set forth in the Guaranty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) if Seller shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement or any other Transaction Document, other than as specifically otherwise referred to in this <u>Section 14(a)</u>, and such breach or failure to perform is susceptible of cure and is not remedied within thirty (30) days after notice thereof to Seller by Administrative Agent, or its successors or assigns; <u>provided</u>, *however*, that if such default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period; and <u>provided</u> <u>further</u> that Seller shall

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have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Seller, in the exercise of due diligence, to cure such default, and in no event shall such cure period exceed sixty (60) days from Seller's receipt of Administrative Agent, on behalf of Buyers, notice of such default; and <u>provided</u> <u>further</u> that in the case of the occurrence of a non-monetary event of default under any Servicing Agreement, and such breach is curable by Seller, Seller cures such breach within ten (10) Business Days of written notice to Seller or the date on which Seller had actual knowledge of such breach or failure to perform and the defaulting servicer is removed and replaced with a replacement servicer satisfactory to Administrative Agent in its sole discretion within sixty (60) days of written notice to Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) an Act of Insolvency shall have occurred with respect to Seller, Pledgor or Guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) an "event of default" or "facility termination event" (as defined in the agreements relating to a facility described below), by Seller, Pledgor or Guarantor beyond any applicable notice and cure period, shall have occurred under (A) any repurchase facility, loan facility or hedging transaction entered into by Seller, Pledgor or Guarantor and any Buyer, or any Affiliate of any Buyer, or (B) any repurchase facility, loan facility or hedging transaction with any Buyer, or any Affiliate of any Buyer, in which Seller, Pledgor or Guarantor is a guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) any of the representations and warranties of Guarantor in the Guaranty or in any Financial Covenant Compliance Certificate shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) if Pledgor shall breach or fail to perform any of the terms, covenants, obligations or conditions of the Pledge Agreement, and such breach or failure to perform is susceptible of cure and is not remedied within the specified cure period or if no cure period is specified, ten (10) Business Days after notice thereof to Seller or Pledgor by Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b) Remedies</u>. If an Event of Default shall occur and be continuing, the following rights and remedies shall be available to Administrative Agent, on behalf of Buyers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the option of Administrative Agent, on behalf of Buyers, exercised by written notice to Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency with respect to Seller, Pledgor or Guarantor), the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (the date on which such option is exercised or deemed to have been exercised, the "<u>Accelerated Repurchase Date</u>") (and any Transaction for which the related Purchase Date has not yet occurred shall be canceled).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If Administrative Agent, on behalf of Buyers, exercises or is deemed to have exercised the option referred to in <u>Section 14(b)(i)</u> hereof (A) Seller's obligations hereunder to repurchase all Purchased Assets shall become immediately due and payable on and as of the Accelerated Repurchase Date, and all Income deposited in the Blocked Account shall be retained by Administrative Agent, on behalf of Buyers, and applied to the Repurchase Obligations; (B) the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall include the accrued and unpaid Price Differential with respect to each Purchased Asset accrued at the Pricing Rate applicable upon an Event of Default for such Transaction; and (C)

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Custodian shall, upon the request of Administrative Agent, on behalf of Buyers (with simultaneous copy of such request to Seller), deliver to Administrative Agent, on behalf of Buyers, all instruments, certificates and other documents then held by Custodian relating to the Purchased Assets; and (D) this Agreement shall automatically terminate, except with respect to those provisions which by their terms survive the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Administrative Agent, on behalf of Buyers, may, after ten (10) days' notice to Seller of Administrative Agent's, intent to take such action (<u>provided</u> that no such notice shall be required in the circumstances set forth in Section 9-611(d) of the UCC), (A) immediately sell, at a public or private sale in a commercially reasonable manner and at such price or prices as Administrative Agent, on behalf of Buyers, may deem to be satisfactory any or all of the Purchased Assets on a servicing released basis or (B) in its sole discretion exercised in good faith elect, in lieu of selling all or a portion of such Purchased Assets, to give Seller credit for such Purchased Assets in an amount equal to the Market Value of such Purchased Assets against the aggregate Repurchase Obligations. The proceeds of any disposition of Purchased Assets effected pursuant to this <u>Section 14(b)(iii)</u> shall be applied: *first*, to the costs and expenses incurred by Administrative Agent and Buyers, in connection with Seller's default; *second*, to the costs of cover and/or Hedging Transactions, if any; *third*, to the Repurchase Price; *fourth*, to all other outstanding Repurchase Obligations; and *fifth*, the balance, if any, to Seller. In the event that Buyers shall not have received repayment in full of the Repurchase Obligations following its liquidation of the Purchased Assets, Administrative Agent, on behalf of Buyers, may, in its sole discretion exercised in good faith, pursue Seller, Pledgor and Guarantor (to the extent provided in the Guaranty including, without limitation, the limitations on recourse set forth therein) for all or any part of any deficiency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid. In view of the nature of the Purchased Assets, the parties agree that, to the extent permitted by applicable law, liquidation of a Transaction or the Purchased Assets shall not require a public purchase or sale and that a private purchase or sale shall be deemed to have been made in a commercially reasonable manner. Accordingly, Administrative Agent, on behalf of Buyers, may elect, in its sole discretion exercised in good faith, the time and manner of liquidating any Purchased Assets, and nothing contained herein shall (A) obligate Administrative Agent, on behalf of Buyers, to liquidate any Purchased Assets following the occurrence of an Event of Default or to liquidate all of the Purchased Assets in the same manner or on the same Business Day or (B) constitute a waiver of any right or remedy of Administrative Agent or Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Seller shall be liable to Administrative Agent and Buyers, for (A) the amount of all expenses, including reasonable legal fees and expenses of counsel, incurred by Administrative Agent and Buyers in connection with or as a consequence of an Event of Default, (B) all costs incurred in connection with covering transactions or Hedging Transactions (including short sales) or entering into replacement transactions, and (C) all damages, losses, judgments, costs and other expenses of any kind that may be imposed on, incurred by or asserted against Administrative Agent and Buyers relating to or arising out of such hedging transactions or covering transactions, and (D) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Administrative Agent, on behalf of Buyers, may exercise any or all of the remedies available to Administrative Agent and Buyers, immediately upon the occurrence of an Event of Default and at any time during the continuance thereof. All rights and remedies arising under the

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Transaction Documents, as amended from time to time, are cumulative and not exclusive of any other rights or remedies that Administrative Agent or Buyers may have.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Administrative Agent, on behalf of Buyers, may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives any defenses Seller might otherwise have to require Administrative Agent or Buyers to enforce its rights by judicial process. Seller also waives any defense Seller might otherwise have arising from the use of nonjudicial process, disposition of any or all of the Purchased Assets, or from any other election of remedies. Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm's length.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Without limiting any other rights or remedies of Administrative Agent or Buyers, Administrative Agent and Buyers, shall have the right of set-off set forth in <u>Section 26</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Administrative Agent and Buyers shall have, in addition to its rights and remedies under the Transaction Documents, all of the rights and remedies provided by applicable federal, state, foreign, and local laws (including, without limitation, if the Transactions are recharacterized as secured financings, the rights and remedies of a secured party under the UCC of the State of New York, to the extent that the UCC is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between any Buyer and Seller or Administrative Agent, Buyer and Seller exercisable upon ten (10) days notice from Administrative Agent to Seller. Without limiting the generality of the foregoing, Administrative Agent and Buyers shall be entitled to set off the proceeds of the liquidation of the Purchased Assets against all of Seller's or any Subsidiary of Guarantor's obligations to Administrative Agent, Buyers, or their Affiliates, whether under this Agreement or under any other agreement between Seller or any Subsidiary of Guarantor and a Buyer or Administrative Agent, on behalf of Buyers, or between Seller and any Affiliate of any Buyer or Administrative Agent, on behalf of Buyers, or otherwise, whether or not such obligations are then due, without prejudice to Administrative Agent's or any Buyer's, right to recover any deficiency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Administrative Agent and each Buyer shall at any time have the right, in each case until such time as Administrative Agent, on behalf of Buyers, determines otherwise, to retain, to suspend payment or performance of, or to decline to remit, any amount or property that Administrative Agent, on behalf of Buyers, would otherwise be obligated to pay, remit or deliver to Seller hereunder if a Default or an Event of Default has occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) For the avoidance of doubt, Administrative Agent, on behalf of Buyers, shall have no obligation to review or purchase any Eligible Asset during the continuance of an Event of Default.

**15. SINGLE AGREEMENT**

Administrative Agent, on behalf of Administrative Agent, on behalf of Buyers, and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Administrative Agent, on behalf of Buyers, and Seller agrees to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder.

**16. NOTICES AND OTHER COMMUNICATIONS**

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All notices, consents, approvals and requests required or permitted hereunder shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) hand delivery, with proof of attempted delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery, or (d) by email (with confirmation of receipt by the receiving party); provided that, other than email notices with respect to communications under this Agreement related to (1) deliveries in connection with Administrative Agent, on behalf of Buyers, due diligence inspections of the Purchased Assets, (2) requests for Transactions (including Future Advance Purchases, (3) notices of partial prepayments or draws on Margin Excess (including Future Advance Purchases), (4) the delivery of Confirmations, (5) notices of early repurchases, (6) deliveries of financial statements or other reporting required under this Agreement and (7) notices requesting consent for Significant Modifications, which will not require any further notice upon confirmation of receipt by the receiving party, that such email notice must also be delivered by one of the means set forth in <u>clauses (a)</u>, <u>(b)</u> or <u>(c)</u> above, to the addresses specified in <u>Annex I</u> hereto or at such other address and person as shall be designated from time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for in this <u>Section 16</u>. A notice shall be deemed to have been given: (i) in the case of hand delivery, at the time of delivery; (ii) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; (iii) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day; or (iv) in the case of email, upon receipt of confirmation or receipt; <u>provided</u> that such emailed notice is also delivered as required in this <u>Section 16</u>. A party receiving a notice that does not comply with the technical requirements for notice under this <u>Section 16</u> may elect to waive any deficiencies and treat such notice as having been properly given. Notwithstanding the foregoing, notices pursuant to <u>Section 4</u> hereof may be sent by electronic mail to the email addresses set forth on <u>Annex I</u> attached hereto; <u>provided</u> that such notice delivered by email shall be deemed to be given only upon receipt of confirmation of receipt by the receiving party.

**17. NON-ASSIGNABILITY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> The rights and obligations of Seller under the Transaction Documents, the Hedging Transactions and under any Transaction shall not be assigned by Seller without the prior written consent of Administrative Agent, on behalf of Buyers. Any attempt by Seller to assign any of its rights or obligations under this Agreement without the prior written consent of Administrative Agent shall be null and void, *ab initio*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Any Buyer, may at any time, without the consent of Seller, Pledgor or Guarantor, sell participations in up to one hundred percent (100%) (in the aggregate, in one or more Transactions, including any assignments under <u>Section 17(c)</u>) of such Buyer's, rights and/or obligations under the Transaction Documents (any such holder of a participation, a "<u>Participant</u>"); *provided* that, so long as no Event of Default has occurred and remains uncured, (i) Administrative Agent's and such Buyer's obligations and Seller's rights and obligations under the Transaction Documents shall remain unchanged, (ii) Administrative Agent shall retain sole decision-making authority under the Transaction Documents (subject to the Co-Buyer Agreement), (iii) Seller shall continue to deal solely and directly with Administrative Agent, on behalf of Buyers, in connection with Administrative Agent's, rights and obligations under the Transaction Documents (subject to the Co-Buyer Agreement) and (iv) such Buyer shall not assign, participate or sell any portion of its rights and obligations under the Transaction Documents to any Prohibited Transferee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Any Buyer may at any time, without the consent of Seller, Pledgor or Guarantor, sell and assign up to one hundred percent (100%) (in the aggregate, in one or more Transactions, and including any participation under <u>Section 17(b)</u>) of the rights and obligations of such Buyer, under the Transaction Documents. From and after the effective date of such assignment, such assignee shall be a party and, to the

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extent provided in such assignment agreement, have the rights and obligations of such Buyer under the Transaction Documents with respect to the percentage and amount of the Repurchase Price allocated to it; provided that, so long as no Event of Default has occurred and remains uncured, such Buyer shall not assign, participate or sell any portion of its rights and obligations under the Transaction Documents to any Prohibited Transferee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> As long as an Event of Default shall have occurred and be continuing, Administrative Agent and any Buyer, may assign, participate or sell its rights and obligations under the Transaction Documents and/or any Transaction to any Person without prior notice to Seller and without regard to the limitations set forth in <u>Section 17(b)</u> and <u>Section 17(c)</u> above. From and after the date Administrative Agent or such Buyer, is no longer a party to this Agreement, Administrative Agent or such Buyer, as applicable, shall have no obligation to act as agent or to make decisions under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> Administrative Agent acting solely for this purpose as an agent of Seller, shall maintain a copy of each assignment and a register for the recordation of the names and addresses of the assignees, and ownership rights in the Transactions, Purchased Assets or other interests under this Agreement (as the same may be modified by any Co-Buyer Agreement). The entries in such register shall be conclusive absent manifest error, and each of Seller, Administrative Agent and Buyers, and their respective assignees shall treat each Person whose name is recorded in such register pursuant to the terms hereof as the beneficial owner of the interests in the Transactions, Purchased Assets or other interests under this Agreement for all purposes. If any assignee is a non-United States Person, such assignee shall timely provide Seller with such forms as may be required to establish the assignee's status for U.S. withholding tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> If any Buyer sells a participation, Administrative Agent acting solely for this purpose as an agent of Seller, maintain a register on which it enters the name and address of each participant and the ownership rights of each participant in the Transactions, Purchased Assets or other interests under this Agreement. The entries in such register shall be conclusive absent manifest error, and Administrative Agent, shall treat each Person whose name is recorded in such register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. If any participant is a non- United States Person, such participant shall timely provide Seller with such forms as may be required to establish such participant's status for U.S. withholding tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> Subject to the foregoing, the Transaction Documents and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns. Nothing in the Transaction Documents, express or implied, shall give to any Person, other than the parties to the Transaction Documents and their respective successors, any benefit or any legal or equitable right, power, remedy or claim under the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall prevent or prohibit any Buyer from pledging its interest in the Purchased Assets hereunder to a Federal Reserve Bank in support of borrowings made by such Buyer from such Federal Reserve Bank; *provided*, *however*, no such pledge shall release such Buyer, as the case may be, from any of its obligations hereunder or substitute any such pledgee for such Buyer, as the case may be, as a party hereto.

**18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ETC.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> This Agreement and any claim, controversy or dispute arising under or related to or in connection therewith, the relationship of the parties hereto, and/or interpretation and enforcement of the rights and duties of the parties hereto shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without giving effect to the conflict of law principles thereof, except for Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Each party irrevocably and unconditionally submits to the exclusive jurisdiction of any United States Federal or New York State court sitting in Manhattan, and any appellate court from any such court, solely for the purpose of any suit, action or proceeding brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> To the extent that either party has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such party hereby irrevocably waives and agrees not to plead or claim such immunity in respect of any action brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> **EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE AND IRREVOCABLY CONSENTS TO THE SERVICE OF ANY SUMMONS AND COMPLAINT AND ANY OTHER PROCESS BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS RESPECTIVE ADDRESS SPECIFIED HEREIN. EACH PARTY HEREBY AGREES 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 LAW. NOTHING IN THIS <u>SECTION 18</u> SHALL AFFECT THE RIGHT OF ADMINISTRATIVE AGENT OR BUYERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ADMINISTRATIVE AGENT OR BUYERS TO BRING ANY ACTION OR PROCEEDING AGAINST SELLER OR ITS PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> **EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.**

**19. NO RELIANCE; DISCLAIMERS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Each party hereby acknowledges, represents and warrants to the other that, in connection with the negotiation of, the entering into, and the performance under, the Transaction Documents and each Transaction thereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) It is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the other party to the Transaction Documents, other than the representations expressly set forth in the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) It has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed to be necessary, and it has made its own investment, hedging and trading decisions (including decisions regarding the suitability of any Transaction) based upon its own judgment and upon any advice from such advisors as it has deemed to be necessary and not upon any view expressed by the other party.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) It is a sophisticated and informed Person that has a full understanding of all the terms, conditions and risks (economic and otherwise) of the Transaction Documents and each Transaction thereunder and is capable of assuming and willing to assume (financially and otherwise) those risks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) It is entering into the Transaction Documents and each Transaction thereunder for the purposes of managing its borrowings or investments or hedging its underlying assets or liabilities and not for purposes of speculation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) It is not acting as a fiduciary or financial, investment or commodity trading advisor for the other party and has not given the other party (directly or indirectly through any other Person) any assurance, guaranty or representation whatsoever as to the merits (either legal, regulatory, tax, business, investment, financial accounting or otherwise) of the Transaction Documents or any Transaction thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Each determination by Administrative Agent, on behalf of Buyers, of the Market Value with respect to each New Asset or Purchased Asset or the communication to Seller of any information pertaining to Market Value under this Agreement shall be made in Administrative Agent's sole discretion exercised in good faith, subject to the following disclaimers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Administrative Agent, on behalf of Buyers, has assumed and relied upon, with Seller's consent and without independent verification, the accuracy and completeness of the information provided by Seller and reviewed by Administrative Agent, on behalf of Buyers. Administrative Agent, on behalf of Buyers, has not made any independent inquiry of any aspect of the New Assets or Purchased Assets or the underlying collateral. Administrative Agent, on behalf of Buyers, view is based on economic, market and other conditions as in effect on, and the information made available to Administrative Agent, on behalf of Buyers, as of, the date of any such determination or communication of information, and such view may change at any time without prior notice to Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Market Value determinations and other information provided to Seller constitute a statement of Administrative Agent, on behalf of Buyers, view of the value of one or more loans or other assets at a particular point in time and does not (A) constitute a bid for a particular trade, (B) indicate a willingness on the part of Administrative Agent, any Buyer, or any Affiliate thereof to make such a bid, or (C) reflect a valuation for substantially similar assets at the same or another point in time, or for the same assets at another point in time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Market Value determinations and other information provided to Seller may vary significantly from valuation determinations and other information that may be obtained from other sources.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Market Value determinations and other information provided to Seller are communicated to Seller solely for its use and may not be relied upon by any other person and may not be disclosed or referred to publicly or to any third party without the prior written consent of Administrative Agent, on behalf of Buyers, which consent of Administrative Agent, on behalf of Buyers, may withhold or delay in its sole and absolute discretion, as determined in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Administrative Agent makes no representations or warranties with respect to any Market Value determinations or other information provided to Seller. Administrative Agent shall not be liable for any incidental or consequential damages arising out of any inaccuracy in such

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valuation determinations and other information provided to Seller, including as a result of any act of gross negligence or breach of any warranty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Market Value determinations and other information provided to Seller in connection with <u>Section 3(b)</u> hereof are only indicative of the initial Market Value of the New Asset submitted to Administrative Agent, on behalf of Buyers, for consideration thereunder, and may change without notice to Seller prior to, or subsequent to, the transfer by Seller of the New Asset pursuant to <u>Section 3(f)</u> hereof. No indication is provided as to Administrative Agent's expectation of the future value of such Purchased Asset or the underlying collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Initial Market Value determinations and other information provided to Seller in connection with <u>Section 3(b)</u> hereof are to be used by Seller for the sole purpose of determining whether to proceed in accordance with <u>Section 3</u> hereof and for no other purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) All determinations of Market Value must be made by Administrative Agent in a manner that is consistent with the implied covenant of good faith and fair dealing under New York law.

**20. INDEMNITY AND EXPENSES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Seller hereby agrees to hold Administrative Agent, Buyers, and their respective Affiliates and each of their respective officers, directors and employees (the "<u>Indemnified Parties</u>") harmless from and indemnify the Indemnified Parties against any and all actual out-of-pocket liabilities, obligations, losses, damages, penalties, actions, judgments, suits, fees, costs and expenses (including the actual and reasonable attorneys' fees and disbursements of outside counsel and any and all servicing and enforcement costs incurred with respect to the Purchased Assets) or disbursements (all of the foregoing, collectively, "<u>Indemnified Amounts</u>") that may at any time (including, without limitation, such time as this Agreement shall no longer be in effect and the Transactions shall have been repaid in full) be imposed on or asserted against any Indemnified Party in any way whatsoever arising out of or in connection with, or relating to, this Agreement or any Transactions thereunder or any action taken or omitted to be taken by any Indemnified Party under or in connection with any of the foregoing; *provided* that Seller shall not be liable for Indemnified Amounts resulting from the fraudulent acts, gross negligence or willful misconduct of any Indemnified Party. Without limiting the generality of the foregoing, Seller agrees to hold each Indemnified Party harmless from and indemnify each Indemnified Party against all Indemnified Amounts with respect to all Purchased Assets relating to or arising out of any violation or alleged violation of any environmental law, rule or regulation or any consumer credit laws, including without limitation ERISA, the Truth in Lending Act and/or Real Estate Settlement Procedures Act, that, in each case, results from anything other than the gross negligence or willful misconduct of an Indemnified Party. In any suit, proceeding or action brought by Administrative Agent or any Buyer in connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of any Purchased Asset Documents, Seller will save, indemnify and hold Administrative Agent and Buyers harmless from and against all expenses, loss or damage suffered by Administrative Agent and Buyers by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Seller. Seller also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all such Indemnified Party's costs and expenses incurred in connection with the enforcement or the preservation of such Indemnified Party's rights under this Agreement and any other Transaction Document or any transaction contemplated hereby or thereby, including without limitation the actual and reasonable fees and disbursements of its outside counsel. Without limiting the generality of the foregoing, Seller agrees to hold each Indemnified Party harmless from any action taken in connection with this Agreement or any

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Transaction Documents, including, but not limited to, the payment of any Repurchase Price, Price Differential, Principal Payment, Income or any other payment or fees. Seller hereby acknowledges that its obligations hereunder are recourse obligations of Seller. This paragraph shall not apply to any Taxes, other than Taxes that represent Indemnified Amounts arising from any non Tax claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Seller agrees to pay as and when billed by Administrative Agent or any Buyer (i) all Indemnified Amounts provided in Section 20(a), (ii) all of the actual and reasonable out-of-pocket costs and expenses incurred by Administrative Agent, on behalf of Buyers, in connection with the development, preparation and execution of, and any amendment, supplement or modification to this Agreement and the other Transaction Documents or any other documents prepared in connection herewith or therewith including without limitation all the actual and reasonable fees, disbursements and expenses of outside counsel to Administrative Agent and any Buyer, (iii) all of the costs and expenses incurred in connection with the consummation and administration of the Transactions contemplated hereby and thereby including without limitation all the actual and reasonable fees, disbursements and expenses of counsel to Administrative Agent and any Buyer, (iv) all costs and expenses contemplated by <u>Section 14(b)(v)</u> and <u>(v)</u> all the Diligence Fees (collectively, "<u>Transaction Costs</u>").

**21. DUE DILIGENCE**

Seller acknowledges that Administrative Agent, on behalf of Buyers, has the right, subject to the limitations set forth in this <u>Section 21</u>, to perform continuing due diligence reviews with respect to the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or determining or re-determining the Asset Base Component for purposes of <u>Section 4</u> of this Agreement, or otherwise, and Seller agrees that Administrative Agent, on behalf of Buyers, at its option, has the right at any time to conduct a partial or complete due diligence review on any or all of the Purchased Assets, including, without limitation, ordering new credit reports and Appraisals on the applicable collateral and otherwise regenerating the information used to originate such Purchased Assets. Upon reasonable prior notice to Seller, Administrative Agent, on behalf of Buyers, or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Purchased Asset Files, Servicing Records and any and all documents, records, agreements, instruments or information relating to any Purchased Asset in the possession or under the control of Seller, any servicer or sub-servicer and/or Custodian. Seller also shall make available to Administrative Agent, on behalf of Buyers, a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Asset Files, the Servicing Records and the Purchased Assets. Seller agrees to cooperate with Administrative Agent, on behalf of Buyers, and any third party underwriter designated by Administrative Agent or any Buyer in connection with such underwriting, including, but not limited to, providing Administrative Agent, on behalf of Buyers, and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of such Seller. Seller agrees to reimburse Administrative Agent, on behalf of Buyers, for any and all actual and reasonable out-of-pocket attorneys' fees, costs and expenses incurred by Administrative Agent, on behalf of Buyers, in connection with continuing due diligence on Eligible Assets and Purchased Assets, including, without limitation, the cost of annual updated Appraisals on the Mortgaged Properties and Diligence Fees.

**22. SERVICING**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> The parties hereto agree and acknowledge that the Purchased Assets will be sold by Seller to Administrative Agent, on behalf of Buyers, on a servicing released basis. In furtherance of the foregoing, Seller and Administrative Agent, on behalf of Buyers, hereby agree and confirm that from and after the date hereof, only such Servicing Agreements that have been approved by Administrative Agent, on behalf of Buyers, shall govern the servicing of the Purchased Assets and any prior agreement between Seller and

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any other Person or otherwise with respect to such servicing is hereby superseded in all respects. Notwithstanding the foregoing, if Administrative Agent shall have received a duly executed Servicer Acknowledgment from Servicer, prior to an uncured Event of Default, Seller may retain Servicer, on behalf of Administrative Agent, to service the Purchased Assets for the benefit of or on behalf of Administrative Agent, on behalf of Buyers; provided, however, that the obligation of Servicer to service any Purchased Asset for the benefit of or on behalf of Administrative Agent, on behalf of Buyers, as aforesaid shall cease upon the repurchase of such Purchased Asset by Seller in accordance with the provisions of this Agreement or as otherwise provided in the Servicer Acknowledgment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Seller agrees that, as between Seller and Administrative Agent, on behalf of Buyers, Administrative Agent, on behalf of Buyers, is the owner of all servicing records, including but not limited to any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of Purchased Assets (the "<u>Servicing Records</u>") so long as the Purchased Assets are subject to this Agreement. Seller covenants to safeguard any such Servicing Records in Seller's possession and to deliver them promptly to Administrative Agent, on behalf of Buyers, or its designee (including Custodian) at Administrative Agent's request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Seller shall not, and shall not provide consent to Servicer to, employ any other sub-servicers to service the Purchased Assets without the prior written approval of Administrative Agent, on behalf of Buyers, which approval shall be in Administrative Agent's, sole discretion exercised in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Seller shall cause Servicer and any other sub-servicers engaged on behalf of Administrative Agent to execute a Servicing Agreement with Seller and Administrative Agent, on behalf of Buyers, or a Servicer Acknowledgment acknowledging Administrative Agent's, on behalf of Buyers, interest in the Purchased Assets and the Servicing Agreement and agreeing that Servicer and any sub-servicer (if applicable) shall deposit all Income with respect to the Purchased Assets in the Blocked Account, all in such manner as shall be reasonably acceptable to Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> To the extent applicable and otherwise permitted under the related Servicing Agreement, Seller shall cause Servicer to permit Administrative Agent, on behalf of Buyers, to inspect Servicer's servicing facilities for the purpose of satisfying such party that Servicer has the ability to service such Purchased Asset as provided in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> (i) Administrative Agent, on behalf of Buyers, may, in its sole discretion exercised in good faith if an Event of Default shall have occurred and be continuing, sell the Purchased Assets on a servicing released basis without payment of any termination fee or any other amount to Servicer, and (ii) to upon the occurrence of an Event of Default hereunder, Administrative Agent, on behalf of Buyers, shall have the right immediately to terminate Servicer's right to service the Purchased Assets without payment of any penalty or termination fee in accordance with the Servicer Acknowledgment and Servicing Agreement.

**23. TREATMENT FOR TAX PURPOSES**

It is the intention of the parties that, for U.S. federal, state and local income and franchise tax purposes, the Transactions constitute a debt financing, and that Seller is, and, so long as no Event of Default shall have occurred and be continuing, will continue to be, treated as the owner of the Purchased Assets for such purposes. Unless prohibited by applicable law, Seller and Administrative Agent, on behalf of Buyers, agree to treat the Transactions as described in the preceding sentence on any and all filings with any U.S. federal, state or local taxing authority.

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**24. INTENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> The parties intend and acknowledge that this Agreement and each Transaction hereunder is a "master netting agreement" as that term is defined in Section 101(38A)(A) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> The parties intend and acknowledge that this Agreement and each Transaction hereunder is a "securities contract" as that term is defined in Section 741(7) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> The parties intend and acknowledge that the Guaranty is a "securities contract" as that term is defined in Section 741(7)(A)(xi) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> The parties intend and acknowledge that any payments or transfers of property made with respect to this Agreement or any Transaction to satisfy a Margin Deficit shall be considered "margin payments" or settlement payments" as such terms are defined in Sections 741(5) and 741(8) of the Bankruptcy Code or a transfer as defined under Section 101(54) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> The parties intend and acknowledge that the grants of security interests set forth in the Pledge Agreement and <u>Section 6</u> that create the pledge of the Repurchase Assets, the other collateral specified in <u>Sections 6(c)</u>, <u>6(d)</u> or <u>6(f)</u> and the Mezzanine Loan Repurchase Assets each constitute "a security agreement or other arrangement or other credit enhancement" that is "related to" this Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> The parties intend and acknowledge that any provisions hereof or in any other document, agreement or instrument that is related in any way to the servicing of the Purchased Assets shall be deemed "related to" this Agreement within the meaning of Section 741 of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> Each party hereto recognizes and intends that this Agreement be and is an agreement to provide financial accommodations and is not subject to assumption pursuant to Bankruptcy Code Section 365(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> Each party hereto agrees that it shall not challenge, and hereby waives to the fullest extent available under applicable law its right to challenge, the characterization of this Agreement or any Transaction hereunder as a "securities contract" or a "master netting agreement" within the meaning of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> It is understood that, for so long as the non-defaulting party is a "financial institution," "financial participant" or other entity listed in Sections 555, 561, 362(b)(6), 362(b)(27), 546(e) or 546(j) of the Bankruptcy Code, that party shall be entitled to the "safe harbor" benefits and protections afforded under the Bankruptcy Code with respect to a "securities contract" and a "master netting agreement." Accordingly, such party's (i) right to liquidate the Purchased Assets, Repurchase Assets, the other collateral specified in <u>Sections 6(c)</u>, <u>6(d)</u> or <u>6(f)</u> and/or Mezzanine Loan Repurchase Assets delivered to it in connection with the Transactions hereunder or to accelerate or terminate this Agreement or otherwise exercise any other remedies pursuant to <u>Section 14</u> hereof is a contractual right to liquidate, accelerate or terminate such Transaction and/or this Agreement as described in Bankruptcy Code Sections 555 and 561 of the Bankruptcy Code, (ii) right to offset or net out as set forth <u>Section 26</u> is a contractual right, (iii) right to exercise these contractual rights shall not be subject to the automatic stay as set forth in Bankruptcy Code Sections 362(b)(6) or 362(b)(27) and (iv) right not have transfers made in connection with this Agreement avoided as set forth in Sections 546(e) and 546(j) of the Bankruptcy Code is a contractual right.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> The parties agree and acknowledge that the grant of setoff rights as set forth in <u>Section 26</u> is a contractual right of setoff within the meaning of Section 553 of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> The parties agree and acknowledge that if a party hereto is an "insured depository institution," as such term is defined in the FDIA, then each Transaction hereunder is a "qualified financial contract," as that term is defined in the FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> It is understood that this Agreement constitutes a "netting contract" as defined in and subject to FDICIA and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual payment obligation," respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined in FDICIA). It is further understood and agreed that either party's right to cause the termination, liquidation or acceleration of, or to offset net termination values, payment amounts or other transfer obligations arising under or in connection with this Agreement or the Transactions hereunder is a contractual right to cause the termination, liquidation or acceleration of, or to offset net termination values, payment amounts or other transfer obligations arising under or in connection with this Agreement as described in Section 561 of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> It is understood that this Agreement constitutes a "netting contract" as defined in and subject to FDICIA and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual payment obligation," respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined in FDICIA).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> The Servicing Rights and other servicing provisions under this Agreement are not severable from or to be separated from the Mortgage Loans under this Agreement, and such Servicing Rights and other servicing provisions of this Agreement constitute (a) "related terms" under this Agreement within the meaning of section 101(47)(A)(i) of the Bankruptcy Code and/or (b) a security agreement or other arrangement or other credit enhancement related to the Transaction Documents.

**25. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS**

The parties acknowledge that they have been advised that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> in the case of Transactions in which one of the parties is a broker or dealer registered with the SEC under Section 15 of the 1934 Act, the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 ("<u>SIPA</u>") do not protect the other party with respect to any Transaction hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> in the case of Transactions in which (i) one of the parties is a financial institution and/or (ii) one of the parties is an "insured depository institution", as that term is defined in Section 1813(c)(2) of Title 12 of the United States Code, funds held by the financial institution pursuant to a Transaction hereunder may not be a deposit and therefore may not be insured by the Federal Deposit Insurance Corporation.

**26. SETOFF RIGHTS**

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Without limiting any other rights or remedies of Administrative Agent or Buyers, Administrative Agent and Buyers shall have the right, without prior notice to Seller, and any such notice being expressly waived by Seller to the extent permitted by applicable law, to set off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final) in any currency, and any other obligation (including to return excess margin), credits, indebtedness, claims, securities, collateral or other property, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by or due from Administrative Agent, Buyers, or any Affiliate thereof to or for the credit of the account of Seller, to any obligations of Seller hereunder to Administrative Agent or Buyers. If a sum or obligation is unascertained, Administrative Agent, on behalf of Buyers, may estimate that obligation and set off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. This <u>Section 26</u> shall be without prejudice and in addition to any right of setoff, combination of accounts, lien or other rights to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).

**27. ADMINISTRATIVE AGENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a) Agent for Buyers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each of Seller and each Buyer hereby acknowledges and agrees that Administrative Agent has been appointed the Administrative Agent for the Transactions, and each Buyer hereby irrevocably authorizes and directs Administrative Agent to act as agent for and in the best interest of Buyers and to take such actions as Buyers are obligated or entitled to take under the provisions of this Agreement and the other Transaction Documents and to exercise such powers as are set forth herein or therein, together with such other powers as are reasonably incidental thereto. This Agreement is not intended to be, and shall not be construed to be, the formation of a partnership or joint venture between Administrative Agent and any Buyer. In performing its functions and duties under the Transaction Documents, Administrative Agent shall act solely as agent of Buyers and does not assume, and shall not be deemed to have assumed, any obligations toward or relationship of agency or trust with or for Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The agency created pursuant hereto shall in no way impair or affect any of the rights and powers of, or impose any additional duties or obligations upon, any Buyer that becomes Administrative Agent in accordance with the provisions of this Agreement in its individual capacity as a Buyer. With respect to its interest in the Transactions, except as specifically provided in this Agreement, Administrative Agent shall have the same rights and powers hereunder as a Buyer and may exercise the same as though it were not performing the duties and functions delegated to it, as Administrative Agent, hereunder. The term "Buyers" or "Buyer" or any similar term shall, unless the context clearly otherwise indicates, include any Buyer that becomes Administrative Agent in accordance with the provisions of this Agreement in its individual capacity as a Buyer and not as Administrative Agent. Administrative Agent, Buyers and each of their respective Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with Seller or any of its Affiliates (in each case not related to the Transactions) as if it were not performing its duties as Administrative Agent or Buyer (as applicable) specified herein, and may accept fees and other consideration from Seller or its Affiliates for services in connection therewith and otherwise without having to account for the same to Administrative Agent or the other Buyers, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) In furtherance of the authorizations set forth in this <u>Section 27</u>, each Buyer hereby irrevocably appoints Administrative Agent as its attorney-in-fact, with full power of substitution, for and on behalf of and in the name of each such Buyer (i) to enter into Transaction Documents and any amendments or modifications thereof, (ii) to take action with respect to the Transactions

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and Transaction Documents to create, perfect, maintain, and preserve Administrative Agent's, on behalf Buyers, Liens therein, (iii) to take action with respect to the Transactions and the Transaction Documents to transfer the Purchased Assets to Administrative Agent, on behalf of Buyers, and (iv) to execute instruments of release and terminations or to take other action necessary to release liens upon any Purchased Asset. This power of attorney shall be liberally, not restrictively, construed so as to give the greatest latitude to Administrative Agent's power, as attorney, under this Agreement and the Transaction Documents. The powers and authorities herein conferred on Administrative Agent may be exercised by Administrative Agent through any Person who, at the time of the execution of a particular instrument, is an officer of Administrative Agent (or any Person acting on behalf of Administrative Agent pursuant to a valid power of attorney). The power of attorney conferred by this <u>Section 27(a)(iii)</u> to Administrative Agent is granted for valuable consideration and is coupled with an interest and is irrevocable so long as the Transaction Documents remain in effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Each Buyer acknowledges and agrees that so long as no Event of Default has occurred and is continuing, notwithstanding anything to the contrary contained in any Co-Buyer Agreement, Seller shall be entitled to deal with Administrative Agent as the exclusive representative of Buyers on all matters relating to the Transactions, this Agreement and each of the other Transaction Documents, and, subject to the terms hereof and the terms of the Co-Buyer Agreement, each Buyer shall be bound by the acts of Administrative Agent with respect to the Transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b) Administrative Agent Standard of Care</u>. Administrative Agent shall administer and service its obligations under this Agreement and the other Transaction Documents, and shall make such decisions and take such actions as it shall in its reasonable judgment deem necessary, desirable or appropriate in connection therewith, in each case consistent with the Standard of Care.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c) Return of Certain Payments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Buyer (and each Participant of any of the foregoing, by its acceptance of a participation) hereby acknowledges and agrees that if the Administrative Agent notifies such Buyer that the Administrative Agent has determined in its sole discretion that any funds (or any portion thereof) received by such Buyer (any of the foregoing, a "<u>Erroneous Payment Recipient</u>") from the Administrative Agent (or any of its Affiliates) were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Erroneous Payment Recipient (whether or not known to such Erroneous Payment Recipient) (whether as a payment, prepayment or repayment of any Repurchase Price, Price Differential, Principal Payment, Income, fees or otherwise; individually and collectively, a "<u>Payment</u>") and demands the return of such Payment, such Erroneous Payment Recipient shall promptly, but in no event later than one (1) Business Day thereafter, return to the Administrative Agent the amount of any such Payment as to which such a demand was made. A notice of the Administrative Agent to any Erroneous Payment Recipient under this <u>Article 27(c)</u> shall be conclusive, absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Without limitation of clause (i) above, each Erroneous Payment Recipient further acknowledges and agrees that if such Erroneous Payment Recipient receives a Payment from the Administrative Agent (or any of its Affiliates) (x) that is in an amount, or on a date different from the amount and/or date specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a "<u>Payment Notice</u>"), (y) that was not preceded or accompanied by a Payment Notice, or (z) that such Erroneous Payment Recipient otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), in each case, it understands and agrees at the time of receipt of such Payment that an error has been made

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(and that it is deemed to have knowledge of such error) with respect to such Payment. Each Erroneous Payment Recipient agrees that, in each such case, it shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one (1) Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Any Payment required to be returned by an Erroneous Payment Recipient under this <u>Article 27(c)</u> shall be made in immediately available funds in the currency so received, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Erroneous Payment Recipient to the date such amount is repaid to the Administrative Agent at the greater of the federal funds rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. Each Erroneous Payment Recipient hereby agrees that it shall not assert and, to the fullest extent permitted by applicable law, hereby waives, any right to retain such Payment, and any claim, counterclaim, defense or right of set-off or recoupment or similar right to any demand by the Administrative Agent for the return of any Payment received, including without limitation any defense based on "discharge for value" or any similar doctrine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Seller, Guarantor and Pledgor hereby agrees that (x) in the event any Payment (or portion thereof) is not recovered from any Buyer that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Buyer with respect to such amount and (y) the receipt by any Erroneous Payment Recipient of a Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Repurchase Obligations owed to such Buyer by Seller, Guarantor or Pledgor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d) Ratable Share</u>. The liabilities of each Buyer under this Agreement and the other Transaction Documents shall be several and not joint, no Buyer shall be responsible for the obligations of any other Buyer, and each Buyer shall be liable to Seller only for its respective pro rata share of the Transactions. Notwithstanding anything to the contrary herein, all indemnities by Seller and obligations for costs, expenses, damages or advances set forth herein shall run to and benefit each Buyer in accordance with its share of the Transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e) Co-Buyer Agreement</u>. Seller hereby acknowledges and agrees that Buyer and Administrative Agent may at any time and from time to time enter into one or more Co-Buyer Agreements governing the relationship among the parties thereto. Seller acknowledges and agrees that Administrative Agent's discretion under this Agreement or the other Transaction Documents shall be subject to the limitations in any such Co-Buyer Agreements, including the requirement that Administrative Agent obtain approval of Buyer prior to granting certain consents or approvals or taking certain actions under this Agreement and under the other Transaction Documents. Any Co-Buyer Agreements are intended and will be solely for the benefit of Administrative Agent and the applicable parties thereto, and Seller acknowledges and agrees that neither Seller, Guarantor nor any Affiliate of Seller or Guarantor shall be a third-party beneficiary (intended or otherwise) of any of the provisions therein, or have any rights thereunder or be entitled to rely on any of the provisions contained therein. Neither Administrative Agent nor Buyer shall have any obligation to provide a copy of any Co-Buyer Agreement to Seller, Guarantor or any Affiliate of Seller or Guarantor or to disclose to Seller, Guarantor or any Affiliate of Seller or Guarantor the contents of any Co-Buyer Agreement. Administrative Agent and Buyers acknowledge and agree that neither Seller, Guarantor nor any Affiliate of Seller or Guarantor shall have any liabilities, obligations or duties of any kind with respect to any Co-Buyer Agreement, nor any of the provisions contained therein. The obligations of Seller, Guarantor and Pledgor under the Transaction Documents are and will be independent of any Co-Buyer Agreement and shall remain unmodified by the provisions thereof (although Seller acknowledges that with respect to certain approvals, calculations and other decisions hereunder and subject to the Fee

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Letter, any Co-Buyer Agreement may require Administrative Agent to consult with or receive the approval of Buyer prior to providing its own approval or determination regarding the same).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f) Successor Administrative Agents</u>. Administrative Agent may resign as Administrative Agent under the Transaction Documents upon notice to Buyers and Seller. If Administrative Agent shall resign or be removed by Buyers, then Buyers shall appoint a successor Administrative Agent; provided that such successor Administrative Agent meets the applicable "know your customer" requirements of the Servicer and Custodian. The term "Administrative Agent" shall mean each such successor Administrative Agent, effective upon its appointment, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any of the Transaction Documents or successors thereto. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of the Transaction Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Administrative Agent under the Transaction Documents. In no event shall there be more than one Administrative Agent hereunder.

**28. MISCELLANEOUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> The Transaction Documents and their respective terms, provisions, supplements and amendments, and transactions and notices thereunder, are proprietary to Administrative Agent and Buyers, and shall be held by Seller in strict confidence and shall not be disclosed to any third party without the consent of Administrative Agent and Buyers, except for disclosure to Seller's Affiliates, directors, attorneys, agents or accountants (the "<u>Representatives</u>"); provided that Seller shall inform each of its Representatives receiving any Transaction Documents of the confidential nature of the Transaction Documents, direct its Representatives to treat the Transaction Documents confidentially, and be responsible for any improper use of the Transaction Documents by Seller or its Representatives or upon prior written notice to Administrative Agent (if permitted by law), disclosure required by law, rule, regulation or order of a court or other regulatory body or upon prior written notice to Administrative Agent (if permitted by law), disclosure to any Approved Hedge Counterparty to the extent necessary to obtain any Hedging Transaction hereunder or any disclosures or filing required under SEC or state securities' laws. Seller shall cooperate in Administrative Agent's or any Buyer's, efforts to obtain a protective order or other reasonable assurance that confidential treatment will be accorded the Transaction Documents. If, in the absence of a protective order, Seller or any of its Representatives is compelled as a matter of law to disclose any such information, Seller may disclose to the party compelling disclosure only the part of the Transaction Documents as is required by law to be disclosed (in which case, prior to such disclosure, Seller shall advise and consult with Administrative Agent or any Buyer, and its counsel as to such disclosure and the nature and wording of such disclosure) and Seller shall use its best efforts to obtain confidential treatment therefor. Administrative Agent and Buyers acknowledge that this Agreement may be filed with the SEC; provided that Seller shall redact any pricing and other confidential provisions, including, without limitation, the amount of any Upfront Fee, Extension Fee, Applicable Spread and Purchase Percentage from such filed copy of this Agreement to the extent permitted to do so by the SEC or such state authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> [Reserved].

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> No express or implied waiver of any Event of Default by Administrative Agent shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by Administrative Agent shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure here from shall be effective unless and until such shall be in writing and duly executed by Seller and Administrative Agent, on behalf of Buyers (in accordance with the Co-Buyer Agreement).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Time is of the essence under the Transaction Documents and all Transactions thereunder, and all references to a time shall mean New York time in effect on the date of the action unless otherwise expressly stated in the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> All rights, remedies and powers of Administrative Agent or any Buyer hereunder and in connection herewith are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all other rights, remedies and powers of Administrative Agent or any Buyer, whether under law, equity or agreement. In addition to the rights and remedies granted to it in this Agreement to the extent applicable, Administrative Agent and each Buyer, shall have all rights and remedies of a secured party under the UCC and any other applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> This Agreement and the Transaction Documents may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. This Agreement and the Transaction Documents may be delivered by facsimile transmission, by electronic mail, or by other electronic transmission, in portable document format (.pdf) or otherwise, and each such executed facsimile, .pdf, or other electronic record shall be considered an original executed counterpart for purposes of this Agreement and any Transaction Document. Each party to this Agreement (a) agrees that it will be bound by its own Electronic Signature (as such term is defined immediately below), (b) accepts the Electronic Signature of each other party to this Agreement and any Transaction Document, and (c) agrees that such Electronic Signatures shall be the legal equivalent of manual signatures. The term "<u>Electronic Signature</u>" means (i) the signing party's manual signature on a signature page, converted by the signing party (or its agent) to facsimile or digital form (such as a .pdf file) and received from the customary email address or customary facsimile number of the signing party (or its counsel or representative), or other mutually agreed-upon authenticated source; or (ii) the signing party's digital signature executed using a mutually agreed-upon digital signature service provider and digital signature process. The words "execution," "executed", "signed," "signature," and words of like import in this paragraph shall, for the avoidance of doubt, be deemed to include Electronic Signatures and the use and keeping of records in electronic form, each of which shall have the same legal effect, validity and enforceability as manually executed signatures and the use of paper records and paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, state laws based on the Uniform Electronic Transactions Act, or any other state law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> The headings in the Transaction Documents are for convenience of reference only and shall not affect the interpretation or construction of the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or be invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> This Agreement, the Fee Letter and each Confirmation contains a final and complete integration of all prior expressions by the parties with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties with respect to such subject matter, superseding all prior oral or written understandings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> Each party understands that this Agreement is a legally binding agreement that may affect such party's rights. Each party represents to the other that such party has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> Should any provision of this Agreement require judicial interpretation, it is agreed that a court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against any Person by reason of the rule of construction that a document is to be construed more strictly against the Person who itself or through its agent prepared the same, it being agreed that all parties have participated in the preparation of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> Unless the context otherwise requires, whenever the words "including", "include", or "includes" are used herein, they shall be deemed to be followed by the phrase "without limitation".

[SIGNATURES COMMENCE ON THE NEXT PAGE]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

**<u>ADMINISTRATIVE AGENT</u>:**

**MORGAN STANLEY CAPITAL HOLDINGS LLC,** a New York limited liability company<br>

By: ________________________________<br>Name:<br>Title: Authorized Signatory<br>**<u>BUYER</u>:**

**MORGAN STANLEY BANK, N.A.,**<br>a national banking association<br>

By: ____________________________________<br>Name:<br>Title: Authorized Signatory

**<u>SELLER</u>:**

**ACRES REAL ESTATE SPE 10, LLC,** a Delaware limited liability company<br>

By: ____________________________________<br>Name:<br>Title:

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**Schedule 1**

**MAXIMUM PURCHASE PERCENTAGE**

Eighty Percent (80.0%)

SCHEDULE 1-1

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**Schedule 2**

**PURCHASED ASSET DOCUMENTS**

With respect to each Purchased Asset that is a Mortgage Loan or a Participation Interest, the following documents, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the original Mortgage Note bearing all intervening endorsements, endorsed "Pay to the order of _________ without recourse" and signed in the name of the last endorsee (the "<u>Last Endorsee</u>") by an authorized Person of the Last Endorsee (<u>provided</u> that, in the event that such Purchased Asset was acquired by the Last Endorsee in a merger, the signature must be in the following form: "[Last Endorsee], successor by merger to [name of predecessor]" and, in the event that such Purchased Asset was acquired or originated by the Last Endorsee while doing business under another name, the signature must be in the following form: "[Last Endorsee], [formerly known] or [doing business] as [previous name]") or a lost note affidavit in a form reasonably approved by Administrative Agent, on behalf of Buyers, with a copy of the applicable Mortgage Note attached thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the original loan agreement and guaranty, if any, executed in connection with such Purchased Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the original Mortgage with evidence of recording thereon, or a true and correct copy of the original that has been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the originals of all assumption, modification, consolidation or extension agreements with evidence of recording thereon, or true and correct copies of the originals that have each been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the original Assignment of Mortgage in blank for each Purchased Asset, in form and substance acceptable for recording and signed in the name of the Last Endorsee; <u>provided</u> that, in the event that such Purchased Asset was acquired by the Last Endorsee in a merger, the signature must be in the following form: "[Last Endorsee], successor by merger to [name of predecessor]" and, in the event that such Purchased Asset was acquired or originated while doing business under another name, the signature must be in the following form: "[Last Endorsee], [formerly known] or [doing business] as [previous name]";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the originals of all intervening Assignments of Mortgage (if any) with evidence of recording thereon, or copies thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the original Title Policy (or, if such policy is yet to be issued, by a pro forma policy, a preliminary title policy with escrow instructions or a "marked up" commitment, in each case binding on the title insurer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the original security agreement, chattel mortgage or equivalent document, if any, executed in connection with such Purchased Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the original Assignment of Leases, if any, with evidence of recording thereon, or a true and correct copy of the original that has been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located;

SCHEDULE 2-1

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) originals of all intervening assignments of assignment of leases and rents, if any, or copies thereof, with evidence of recording thereon, or copies thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) a copy of the UCC financing statements, certified as true and correct by Seller, and all necessary UCC continuation statements with evidence of filing thereon or copies thereof together with evidence that such UCC financing or continuation statements have been sent for filing, and UCC assignments in blank, which UCC assignments shall be in form and substance acceptable for filing in the applicable jurisdictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) the original environmental indemnity agreement or similar guaranty or indemnity (if any), whether stand-alone or incorporated into the applicable loan documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) the original omnibus assignment in blank, or such other document(s) necessary and sufficient to transfer to Administrative Agent, on behalf of Buyers, all of Seller's right, title and interest in and to such Purchased Asset (if any);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) a Survey of the Mortgaged Property (if any), as accepted by the title company in connection with the issuance of the Title Policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) a copy of all servicing agreements and Servicing Records related to such Purchased Asset, which Seller shall deliver to Servicer (with a copy to Administrative Agent, on behalf of Buyers);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) a copy of the Mortgagor's opinions of counsel, which shall be in form and substance reasonably satisfactory to Administrative Agent, on behalf of Buyers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) in the case of a Purchased Asset that is a Participation Interest, the original Participation Certificate evidencing such Participation Interest and including an assignment in blank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) in the case of a Purchased Asset that is a Participation Interest, the participation agreement and any other documents evidencing such Participation Interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) an assignment of any management agreements, permits, contracts and any other material agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) reports of UCC, tax lien, judgment and litigation searches, conducted by search firms reasonably acceptable to Administrative Agent with respect to such Purchased Asset, Seller and the related underlying obligor, such searches to be conducted in each location Administrative Agent shall reasonably designate and such reports reasonably satisfactory to Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) the original or a copy of the intercreditor or co-lender agreement executed in connection with such Purchased Asset, to the extent the subject borrower or an affiliate thereof, has encumbered its assets with senior, junior or other similar financing, whether mortgage financing or mezzanine loan financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) copies of all documents relating to the formation and organization of the related obligor under such Purchased Asset, together with all consents and resolutions delivered in connection with such obligor's obtaining such Purchased Asset; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) all other material documents and instruments evidencing, guaranteeing, insuring, securing or modifying such Purchased Asset, executed and delivered in connection with, or otherwise relating to, such Purchased Asset, including, but not limited to, all documents establishing or implementing any

SCHEDULE 2-2

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lockbox pursuant to which Seller is entitled to receive any payments from cash flow of the underlying real property.

With respect to each Purchased Asset that is a Mezzanine Loan, the following documents, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the original executed Mezzanine Note relating to such Mezzanine Loan, which Mezzanine Note shall (A) be endorsed (either on the face thereof or pursuant to a separate allonge) by the most recent endorsee prior to the applicable Seller, without recourse, to the order of such Seller and further reflect a complete, unbroken chain of endorsement from the related originator to such Seller and (B) be accompanied by a separate allonge pursuant to which such Seller has endorsed such Note, without recourse, in blank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) true and correct copies of the related intercreditor agreement (if any) and the related Mezzanine Pledge Agreement and all other material documents (including, without limitation, opinions of counsel) or agreements relating to such Mezzanine Loan or affecting the rights (including, without limitation, the security interests) of any holder thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) as applicable, true and correct copies of any assignment, assumption, modification, consolidation or extension made prior to the related Purchase Date in respect of such Mezzanine Note or any document or agreement referred to in clause (ii) above, in each case, if the document or agreement being assigned, assumed, modified, consolidated or extended is recordable, with evidence of recording thereon (unless the particular item has not been returned from the applicable recording office);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) as applicable, an original assignment of each agreement referred to in clause (ii) above, in recordable form if the agreement being assigned is a recordable document, executed in blank by the applicable Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) each LLC Certificate, together with an undated power covering each such certificate, duly executed in blank with, if Buyer so requests signature guaranteed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) copies of all UCC financing statements filed in respect of such Mezzanine Loan prior to the related Purchase Date, including all amendments and assignments related thereto, if any, in each case with evidence of filing in the applicable jurisdiction indicated thereon;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) an original assignment of each UCC financing statement filed in respect of such Mezzanine Loan, prepared in blank, in form suitable for filing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the related original omnibus assignment, if any, executed in blank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the original Title Policy for such Mezzanine Loan (provided that any exception to this item shall note whether the related Purchased Asset File includes a "marked up" commitment or *pro forma* policy marked as binding and countersigned or evidenced as binding by an escrow letter or closing instructions), if any, together with an original mezzanine endorsement, if any, and date down to owner's policy, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) any additional documents identified on the related Purchased Asset File Checklist delivered to Custodian in accordance with Article II of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) any additional documents required to be added to the related Purchased Asset File pursuant to this Agreement.

SCHEDULE 2-3

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**Schedule 3**

**PROHIBITED TRANSFEREES**

1. Apollo Commercial Real Estate Finance

2. Arbor Realty

3. Ares Commercial Real Estate Corp.

4. Blackstone Group

5. Five Oaks Investment Corp.

6. Granite Point Mortgage Trust

7. KKR & Co.

8. Starwood Property Trust

9. TPG Capital Management.

SCHEDULE 3-1

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**Exhibit I**

**CONFIRMATION<br>MORGAN STANLEY BANK, N.A.**

Ladies and Gentlemen:

Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent, on behalf of Buyers (together with its successors and assigns, "<u>Administrative Agent</u>") is pleased to deliver our written **CONFIRMATION** of our agreement (subject to satisfaction of the Transaction Conditions Precedent) to enter into the Transaction pursuant to which Administrative Agent, on behalf of Buyers, shall purchase from ACRES Real Estate SPE 10, LLC ("<u>Seller</u>"), the Purchased Asset identified in <u>Schedule 1</u> attached hereto, pursuant to the Master Repurchase and Securities Contract Agreement among Administrative Agent, Buyers, and Seller, dated as of November 3, 2021 (as the same may have been or may be amended from time to time, the "<u>Repurchase Agreement</u>"; capitalized terms used herein without definition have the meanings given in the Repurchase Agreement), as follows below and on <u>Schedule 1</u>:

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seller: | &nbsp;&nbsp;ACRES Real Estate SPE 10, LLC |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Date: | &nbsp;&nbsp;[__________], [______] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchased Asset: | &nbsp;&nbsp;As identified on attached <u>Schedule 1</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aggregate Principal<br>Amount of Purchased Asset: | &nbsp;&nbsp;$[__________] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Remaining Future<br>Advance Amount (if any): | &nbsp;&nbsp;$[__________] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Buyer Approved Future Funding: | &nbsp;&nbsp;$[___________] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repurchase Date: | &nbsp;&nbsp;[__________],[_______] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initial Purchase Price: | &nbsp;&nbsp;$[_______] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current Purchase Price: | &nbsp;&nbsp;$[_______] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pricing Rate: | &nbsp;&nbsp;Term SOFR + [__]% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Percentage: | &nbsp;&nbsp;[_]%<sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maximum Purchase Percentage | &nbsp;&nbsp;[_]% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maximum Asset Exposure<br>Threshold: | &nbsp;&nbsp;[_]% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Type of Funding: | &nbsp;&nbsp;[Table Funded]/[Non-Table Funded] |

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<sup>1</sup> To reflect actual advance rate for Purchased Loan.

Exhibit I-1

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Governing Agreement: | &nbsp;&nbsp;As identified on attached <u>Schedule 1</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seller's Wiring Instructions: | &nbsp;&nbsp;Bank: TD Bank NA<br>ABA: 031-101-266<br>Account Name: ACRES Realty Funding Inc.<br>Account #: xxxxxxxxxx |

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Name and address for communications: | &nbsp;&nbsp;<u>Buyer</u>: | &nbsp;&nbsp;Morgan Stanley Mortgage Capital Holdings LLC<br>1585 Broadway, 25th Floor<br>New York, New York 10036<br>Attention: Anthony Preisano<br>Telephone: (212) 761-5688<br>Email: Anthony.Preisano@morganstanley.com |
|  | &nbsp;&nbsp;with a copy to: | &nbsp;&nbsp;Morgan Stanley Bank, N.A.<br>One Utah Center, 201 South Main Street<br>Salt Lake City, Utah 84111 |
|  | &nbsp;&nbsp;and to: | &nbsp;&nbsp;Morgan Stanley Bank, N.A.<br>1 New York Plaza, 41st Floor<br>New York, New York 10004<br>Attention: Tom O'Donnell<br>Telephone: (212) 276-0616<br>Email: wltapes@morganstanley.com |
|  | &nbsp;&nbsp;and to: | &nbsp;&nbsp;Paul Hastings LLP<br>200 Park Avenue<br>New York, New York 10166<br>Attention: Lisa A. Chaney, Esq.<br>Telephone: (212) 318-6773<br>Email: lisachaney@paulhastings.com |
|  | &nbsp;&nbsp;Seller: | &nbsp;&nbsp;ACRES Real Estate SPE 10, LLC<br>c/o ACRES Capital, LLC<br>390 RXR Plaza<br>Uniondale, NY 11556<br>Attention: Mark Fogel<br>Telephone: (516) 336-8122<br>Email: MF@acrescap.com |
|  | &nbsp;&nbsp;with a copy to: | &nbsp;&nbsp;Melissa C. Hinkle, Esq.<br>Partner<br>Cadwalader, Wickersham & Taft LLP<br>200 Liberty Street<br>36-117<br>New York, NY 10281<br>Telephone: (212) 504-6972<br>Email: melissa.hinkle@cwt.com |

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Exhibit I-2

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and to: ACRES Real Estate SPE 10, LLC<br>c/o ACRES Capital, LLC<br>390 RXR Plaza<br>Uniondale, NY 11556<br>Attention: Jaclyn Jesberger<br>Telephone: (516) 882-1662<br>Email: jjesberger@acrescap.com

[SIGNATURES ON THE NEXT PAGE]

Exhibit I-3

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**MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC**<br>a New York limited liability company<br>

By: _______________________________<br>Name:<br>Title:

<u>AGREED AND ACKNOWLEDGED</u>:

**ACRES REAL ESTATE SPE 10, LLC**,<br>a Delaware limited liability company<br>

By: _____________________________________<br>Name:<br>Title:

Exhibit I-4

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**SCHEDULE 1 TO CONFIRMATION STATEMENT**

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| | |
|:---|:---|
| &nbsp;&nbsp;Purchased Asset: | &nbsp;&nbsp;[Asset Type] dated as of [______] in the original principal amount of $[_________], made by [____] to [____] under and pursuant to that certain [loan agreement]/[applicable document], and subsequently assigned to Seller (as amended from time to time, the "<u>Governing Agreement</u>"). |
| &nbsp;&nbsp;Aggregate Principal Amount: | &nbsp;&nbsp;$[_________] [(plus up to $[______] of future advances under Section [____] of the Governing Agreement). Buyers obligation to fund any future advances [subject to approval by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith is contingent on (a) Seller's satisfaction of the conditions contained in <u>Section 3(h)</u> of the Repurchase Agreement and (b) a bringdown by Seller of all representations and warranties made on the date hereof with regard to the Purchased Asset pursuant to <u>Section 10</u> of the Repurchase Agreement.] |
| &nbsp;&nbsp;Representations: | &nbsp;&nbsp;Seller acknowledges and agrees that upon funding by Buyers of the Purchase Price for the Purchased Asset [and, in connection with any subsequent funding of the Purchase Percentage of a future advance under the Purchased Asset, (i)] Seller shall be deemed to have confirmed that all of the representations and warranties set forth in <u>Section 10</u> of the Repurchase Agreement are true and correct as of the Purchase Date with respect to all Purchased Assets [or the applicable funding date, as the case may be,], except such representations and warranties which by their terms speak as of a specified date and except as set forth in the attached Exception Report or in the Exception Report delivered with respect to any other Purchased Asset [and (ii) with respect to the funding of a Future Advance Purchase, Seller shall be deemed to have represented and warranted that all of the conditions to funding of such advance set forth in Section [___] of the Governing Agreement have been satisfied (and no conditions have been waived, except as has been previously disclosed by Seller to Administrative Agent, on behalf of Buyers, in writing)]. |
| &nbsp;&nbsp;Fixed/Floating: | &nbsp;&nbsp;[Fixed]/[Floating] |
| &nbsp;&nbsp;Coupon: | &nbsp;&nbsp;[___]% |
| &nbsp;&nbsp;Term of Loan including Extension Options: | &nbsp;&nbsp;[__________],[_______] |

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Exhibit I-5

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Amortization (*e.g.*, IO, full amortization, etc.): [__]-year amortization[, with [__]-month IO.]

Exhibit I-6

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**EXCEPTION REPORT**

Representation numbers referred to below relate to the corresponding Representations and Warranties Regarding the Purchased Assets set forth in <u>Exhibit III</u> to the Repurchase Agreement.

Exhibit I-7

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**Exhibit II-1**

**FORM OF POWER OF ATTORNEY TO ADMINISTRATIVE AGENT,<br>ON BEHALF OF BUYERS**

Know All Men by These Presents, that ACRES REAL ESTATE SPE 10, LLC ("<u>Seller</u>"), does hereby appoint MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company, as administrative agent on behalf of Buyers (in such capacity, together with its permitted successors and assigns "<u>Administrative Agent</u>"), in connection with the Repurchase Agreement (defined below) its attorney-in-fact to act in Seller's name, place and stead in any way which Seller could do with respect to, at all times after the occurrence and during the continuance of an Event of Default (i) the completion of the endorsements of the Mortgage Notes and Participation Certificates (as applicable) and the Assignments of Mortgages, (ii) the recordation of the Assignments of Mortgages and (iii) the enforcement of Seller's rights under the Purchased Assets purchased by Administrative Agent, on behalf of Buyers (as defined below), pursuant to the Master Repurchase and Securities Contract Agreement dated as of November 3, 2021, as amended from time to time, by and among Administrative Agent, on behalf of MORGAN STANLEY BANK, N.A., a national banking association ("<u>MSBNA</u>"), and such other financial institutions from time to time party thereto, as buyers (MSBNA, together with such other financial institutions from time to time party thereto, as buyers, and together with their respective successors and assigns, collectively, "<u>Buyers</u>" and individually, each a "<u>Buyer</u>") and Seller (the "<u>Repurchase Agreement</u>") (including, for the avoidance of doubt, the enforcement and exercise of Seller's rights in respect of any interest reserve account or other deposit account or securities account established by any borrower or any other related obligor in connection with any Purchased Assets (including the enforcement and exercise of Seller's rights in respect of all funds or other assets deposited in, or credited to, such accounts)) and to take such other steps as may be necessary or desirable to enforce the rights of Administrative Agent, on behalf of Buyers, against such Purchased Assets, the related Purchased Asset Files, the Servicing Records and the Hedging Transactions to the extent that Seller is permitted by law to act through an agent. Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Repurchase Agreement.

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OR SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER'S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

Exhibit II-1-1

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IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be executed this ____ day of __________, 20__.

**ACRES REAL ESTATE SPE 10, LLC**,<br>a Delaware limited liability company<br>

By: _________________________________________<br>Name:<br>Title:

STATE OF))<br>COUNTY OF)

On this _____ of ____________, before me, the undersigned, a Notary Public in and for said state, personally appeared _______________________________, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

<br>___________________________________<br>Notary Public <br> (Seal)]

Exhibit II-1-2

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**Exhibit II-2**

**FORM OF POWER OF ATTORNEY TO SELLER**

Know All Men by These Presents, that MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company, as administrative agent no behalf of Buyers (in such capacity, together with its permitted successors and assigns "<u>Administrative Agent</u>"), on behalf of MORGAN STANLEY BANK, N.A., a national banking association ("<u>MSBNA</u>"), and such other financial institutions from time to time party thereto, as buyers (MSBNA, together with such other financial institutions from time to time party thereto, as buyers, and together with their respective successors and assigns, collectively, "<u>Buyers</u>" and individually, each a "<u>Buyer</u>") does hereby appoint ACRES REAL ESTATE SPE 10, LLC ("<u>Seller</u>"), its attorney-in-fact to act in the name, place and stead of Administrative Agent, on behalf of Buyers in any way which Administrative Agent, on behalf of Buyers, could with respect to modifications described below, to mortgage loan documents with respect to Purchased Assets sold by Seller to Administrative Agent, on behalf of Buyers, under that certain Master Repurchase and Securities Contract Agreement dated as of November 3, 2021, as amended from time to time, among Seller, Administrative Agent, on behalf of Buyers, and Buyers (the "<u>Repurchase Agreement</u>"). Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Repurchase Agreement. Seller is permitted to administer and service the Purchased Assets without the consent of Administrative Agent, on behalf of Buyers, any assignee or any other Person, pursuant to this power of attorney delivered by Administrative Agent, on behalf of Buyers, which power of attorney shall not be revoked by Administrative Agent, on behalf of Buyers, unless an Event of Default under the Repurchase Agreement has occurred and is then continuing. Notwithstanding the foregoing, Seller shall not consent or assent to a Significant Modification without the prior written consent of Administrative Agent, on behalf of Buyers. All waivers or material actions entered into or taken in respect of the Purchased Assets pursuant to this power of attorney shall be in writing. Seller shall notify Administrative Agent, on behalf of Buyers, and Custodian, in writing, of any waiver or other action entered into or taken thereby in respect of any such Purchased Asset pursuant to this power of attorney, and shall deliver to Custodian (with a copy to Administrative Agent, on behalf of Buyers) for deposit in the related Purchased Asset File, an original counterpart of the agreement, if any, relating to such waiver or other action, within three (3) Business Days following the execution thereof. Actions taken under the foregoing power of attorney shall be binding upon each holder of the Purchased Assets.

THIS POWER OF ATTORNEY MAY BE REVOKED BY ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS, BY DELIVERY OF WRITTEN NOTICE TO SELLER DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT UNDER THE REPURCHASE AGREEMENT. IF THIS POWER OF ATTORNEY HAS NOT BEEN REVOKED AND IF REQUESTED BY SELLER, ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS, WILL PROMPTLY CONFIRM IN WRITING TO SELLER, AND ANY OTHER PERSON OR ENTITY REASONABLY DESIGNATED BY SELLER, THAT THIS POWER OF ATTORNEY HAS NOT BEEN REVOKED AND IS IN FULL FORCE AND EFFECT.

Exhibit II-2-1

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IN WITNESS WHEREOF, Administrative Agent, on behalf of Buyers, has caused this Power of Attorney to be executed this ____ day of ________, 20__.

**MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC**, a New York limited liability company<br>

By: ________________________________________<br>Name:<br>Title:

STATE OF))<br>COUNTY OF)

On this _____ of ____________, before me, the undersigned, a Notary Public in and for said state, personally appeared _______________________________, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

<br>___________________________________<br>Notary Public <br> (Seal)]

Exhibit II-2-2

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**Exhibit III-1**

**REPRESENTATIONS AND WARRANTIES<br><u>REGARDING THE PURCHASED ASSETS</u>**

With respect to each Purchased Asset and the related Mortgaged Property or Mortgaged Properties, on the related Purchase Date and at all times while this Agreement and any Transaction contemplated hereunder is in effect, Seller shall be deemed to make the following representations and warranties to Administrative Agent, on behalf of Buyers, as of such date; <u>provided</u>, *however*, that, with respect to any Purchased Asset+, such representations and warranties shall be deemed to be modified by any Exception Report delivered by Seller to Administrative Agent, on behalf of Buyers, prior to the issuance of a Confirmation with respect thereto.

(1) <u>Whole Loan; Ownership of Purchased Assets</u>. Each Purchased Asset is an Eligible Asset. At the time of the sale, transfer and assignment to Administrative Agent, on behalf of Buyers, no Mortgage Note, Mortgage or Participation Certificate was subject to any assignment (other than assignments to Seller), participation (other than with respect to the Participation Interests) or pledge, and Seller had good title to, and was the sole owner of, each Purchased Asset free and clear of any and all liens, charges, pledges, encumbrances, participations (other than with respect to the Participation Interests), any other ownership interests on, in or to such Purchased Asset. Seller has full right and authority to sell, assign and transfer each Purchased Asset, and the assignment to Administrative Agent, on behalf of Buyers, constitutes a legal, valid and binding assignment of such Purchased Asset free and clear of any and all liens, pledges, charges or security interests of any nature encumbering such Purchased Asset.

(2) <u>Loan Document Status</u>. Each related Mortgage Note, Mortgage, Assignment of Leases (if a separate instrument), guaranty and other agreement executed by or on behalf of the related Mortgagor, guarantor or other obligor in connection with such Purchased Asset is the legal, valid and binding obligation of the related Mortgagor, guarantor or other obligor (subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency, one-action or market value limit deficiency legislation), as applicable, and is enforceable in accordance with its terms, except (a) as such enforcement may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law) and (b) that certain provisions in such Purchased Asset Documents (including, without limitation, provisions requiring the payment of default interest, late fees or prepayment/yield maintenance or prepayment fees, charges and/or premiums) are, or may be, further limited or rendered unenforceable by or under applicable law, but (subject to the limitations set forth in <u>clause (a)</u> above) such limitations or unenforceability will not render such Purchased Asset Documents invalid as a whole or materially interfere with the mortgagee's realization of the principal benefits and/or security provided thereby (<u>clauses (a)</u> and <u>(b)</u> collectively, the "<u>Standard Qualifications</u>"). Except as set forth in the immediately preceding sentences, there is no valid offset, defense, counterclaim or right of rescission available to the related borrower with respect to any of the related Mortgage Notes, Mortgages or other Purchased Asset Documents, including, without limitation, any such valid offset, defense, counterclaim or right based on intentional fraud by Seller in connection with the origination of the Purchased Asset, that would deny the mortgagee the principal benefits intended to be provided by the Mortgage Note, Mortgage or other Purchased Asset Documents.

Exhibit III-1-1

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(3) <u>Mortgage Provisions</u>. The Purchased Asset Documents for each Purchased Asset contain provisions that render the rights and remedies of the holder thereof adequate for the practical realization against the Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, non-judicial foreclosure subject to the limitations set forth in the Standard Qualifications.

(4) <u>Hospitality Provisions</u>. The Purchased Asset Documents for each Purchased Asset that is secured by a hospitality property operated pursuant to a franchise agreement includes an executed comfort letter or similar agreement signed by the Mortgagor and franchisor of such property enforceable against such franchisor, either directly or as an assignee of the originator. The Mortgage or related security agreement for each Purchased Asset secured by a hospitality property creates a security interest in the revenues of such property for which a UCC financing statement has been filed in the appropriate filing office.

(5) <u>Mortgage Status; Waivers and Modifications</u>. Since origination and except by written instruments set forth in the related Purchased Asset File or as otherwise provided in the related Purchased Asset Documents (a) the material terms of such Mortgage, Mortgage Note, guaranty, participation agreement, if applicable, and related Purchased Asset Documents have not been waived, impaired, modified, altered, satisfied, canceled, subordinated or rescinded in any respect that could have a material adverse effect on Purchased Asset; (b) no related Mortgaged Property or any portion thereof has been released from the lien of the related Mortgage in any manner which materially interferes with the security intended to be provided by such Mortgage or the use or operation of the remaining portion of such Mortgaged Property; and (c) neither the related borrower nor the related guarantor nor the related participating Person has been released from its material obligations under the Purchased Asset Documents. With respect to each Purchased Asset, except as contained in a written document included in the Purchased Asset File, there have been no modifications, amendments or waivers, that could be reasonably expected to have a material adverse effect on such Purchased Asset consented to by Seller.

(6) <u>Lien; Valid Assignment</u>. Subject to the Standard Qualifications, each assignment of Mortgage and assignment of Assignment of Leases to Administrative Agent, on behalf of Buyers, constitutes a legal, valid and binding assignment to Administrative Agent, on behalf of Buyers. Each related Mortgage and Assignment of Leases is freely assignable without the consent of the related Mortgagor. Each related Mortgage is a legal, valid and enforceable first lien on the related Mortgagor's fee or leasehold interest in the Mortgaged Property in the principal amount of such Purchased Asset or allocated loan amount (subject only to Permitted Encumbrances, except as the enforcement thereof may be limited by the Standard Qualifications. Such Mortgaged Property (subject to and excepting Permitted Encumbrances) is free and clear of any recorded mechanics' liens, recorded materialmen's liens and other recorded encumbrances, and no rights exist which under law could give rise to any such lien or encumbrance that would be prior to or equal with the lien of the related Mortgage, except those which are bonded over, escrowed for or insured against by a lender's title insurance policy (as described below). Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Purchased Asset establishes and creates a valid and enforceable lien on property described therein, except as such enforcement may be limited by Standard Qualifications subject to the limitations described in <u>Paragraph (9)</u> below. Notwithstanding anything herein to the contrary, no representation is made as to the perfection of any security interest in rents or other personal property to the extent that possession or control of such items or actions other than the filing of UCC financing statements is required in order to effect such perfection.

Exhibit III-1-2

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(7) <u>Permitted Liens; Title Insurance</u>. Each Mortgaged Property securing a Purchased Asset is covered by a Title Policy in the original principal amount of such Purchased Asset (or with respect to a Purchased Asset secured by multiple properties, an amount equal to at least the allocated loan amount with respect to the Title Policy for each such property) after all advances of principal (including any advances held in escrow or reserves), that insures for the benefit of the owner of the indebtedness secured by the Mortgage, the first priority lien of the Mortgage, which lien is subject only to Permitted Encumbrances. None of the Permitted Encumbrances are mortgage liens that are senior to or coordinate and co-equal with the lien of the related Mortgage. Such Title Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, all premiums thereon have been paid and no claims have been made by Seller thereunder and no claims have been paid thereunder. Neither Seller, nor to Seller's knowledge, any other holder of the Purchased Asset, has done, by act or omission, anything that would materially impair the coverage under such Title Policy. Each Title Policy contains no exclusion for, or affirmatively insures (except for any Mortgaged Property located in a jurisdiction where such affirmative insurance is not available in which case such exclusion may exist), (a) that the area shown on the survey is the same as the property legally described in the Mortgage and (b) to the extent that the Mortgaged Property consists of two or more adjoining parcels, such parcels are contiguous.

(8) <u>Junior Liens</u>. There are no subordinate mortgages or junior liens securing the payment of money encumbering the related Mortgaged Property (other than Permitted Encumbrances). Seller has no knowledge of any mezzanine debt secured directly by interests in the related Mortgagor, except as disclosed to Administrative Agent.

(9) <u>Assignment of Leases</u>. There exists as part of the related Purchased Asset File an Assignment of Leases (either as a separate instrument or incorporated into the related Mortgage). Subject to the Permitted Encumbrances, each related Assignment of Leases creates a valid first-priority collateral assignment of, or a valid first-priority lien or security interest in, rents and certain rights under the related lease or leases, subject only to a license granted to the related Mortgagor to exercise certain rights and to perform certain obligations of the lessor under such lease or leases, including the right to operate the related leased property, except as the enforcement thereof may be limited by the Standard Qualifications. No Person other than the related Mortgagor owns any interest in any payments due under such lease or leases that is superior to or of equal priority with the lender's interest therein. The related Mortgage or related Assignment of Leases, subject to applicable law, provides that, upon an event of default under the Purchased Asset, a receiver is permitted to be appointed for the collection of rents or for the related mortgagee to enter into possession to collect the rents or for rents to be paid directly to the mortgagee.

(10) <u>UCC Filings</u>. Seller has filed and/or recorded or caused to be filed and/or recorded (or, if not filed and/or recorded, have been submitted in proper form for filing and/or recording), UCC-1 financing statements in the appropriate public filing and/or recording offices necessary at the time of the origination of the Purchased Asset to perfect a valid security interest in all items of physical personal property reasonably necessary to operate such Mortgaged Property owned by such Mortgagor and located on the related Mortgaged Property (other than any non-material personal property, any personal property subject to a purchase money security interest, a sale and leaseback financing arrangement as permitted under the terms of the related Purchased Asset Documents or any other personal property leases applicable to such personal property), to the extent perfection may be effected pursuant to applicable law by recording or filing, as the case may be. Subject to the Standard Qualifications, each related Mortgage (or equivalent document) creates a valid and enforceable lien and security interest on the items of personalty described above. No representation is made as to the perfection of any security interest in rents or other personal property to the extent that possession or control of such items or actions other than the filing of UCC-1 financing

Exhibit III-1-3

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statements are required in order to effect such perfection. Each UCC-1 financing statement, if any, filed with respect to personal property constituting a part of the related Mortgaged Property and each UCC-2 or UCC-3 assignment, if any, of such financing statement to Seller was in suitable form for filing in the filing office in which such financing statement was filed.

(11) <u>Condition of Property</u>. Seller or the originator of the Purchased Asset inspected or caused to be inspected each related Mortgaged Property within six months of origination of the Purchased Asset and within twelve months of the Purchase Date. An engineering report or property condition assessment was prepared in connection with the origination of each Purchased Asset no more than twelve months prior to the Purchase Date. To Seller's knowledge, based solely upon due diligence customarily performed in connection with the origination of comparable mortgage loans, each related Mortgaged Property was (a) free and clear of any material damage, (b) in good repair and condition and (c) is free of structural defects, except in each case (i) for any damage or deficiencies that would not materially and adversely affect the use, operation or value of such Mortgaged Property as security for the Purchased Asset, (ii) if such repairs have been completed or (iii) if escrows in an aggregate amount consistent with the standards utilized by Seller with respect to similar loans its holds for its own account have been established, which escrows will in all events be in an aggregate amount not less than the estimated cost of such repairs. Seller has no knowledge of any material issues with the physical condition of the Mortgaged Property that Seller believes would have a material adverse effect on the use, operation or value of the Mortgaged Property other than those disclosed in the engineering report and those addressed in <u>clauses (i)</u>, <u>(ii)</u> and <u>(iii)</u> above.

(12) <u>Taxes and Assessments</u>. All real estate taxes, governmental assessments and other similar outstanding governmental charges (including, without limitation, water and sewage charges), or installments thereof, that could be a lien on the related Mortgaged Property that would be of equal or superior priority to the lien of the Mortgage and that prior to the Purchase Date have become delinquent in respect of each related Mortgaged Property have been paid, or, if the appropriate amount of such taxes or charges is being appealed or is otherwise in dispute, an escrow of funds has been established in an amount sufficient to cover such payments and reasonably estimated interest and penalties, if any, thereon. For purposes of this <u>Paragraph (12)</u>, real estate taxes and governmental assessments and other outstanding governmental charges and installments thereof shall not be considered delinquent until the earlier of (a) the date on which interest and/or penalties would first be payable thereon and (b) the date on which enforcement action is entitled to be taken by the related taxing authority.

(13) <u>Condemnation</u>. As of the date of origination and to Seller's knowledge as of the Purchase Date, there is no proceeding pending, and, to Seller's knowledge as of the date of origination and as of the Purchased Date, there is no proceeding threatened, for the total or partial condemnation of such Mortgaged Property that would have a material adverse effect on the value, use or operation of the Mortgaged Property.

(14) <u>Actions Concerning Purchased Asset</u>. As of the date of origination and to Seller's knowledge as of the Purchase Date, there was no pending, filed or threatened action, suit or proceeding, arbitration or governmental investigation involving any Mortgagor, guarantor, or the Mortgaged Property, an adverse outcome of which would reasonably be expected to materially and adversely affect (a) such Mortgagor's title to the Mortgaged Property, (b) the validity or enforceability of the Mortgage, (c) such Mortgagor's ability to perform under the related Purchased Asset Documents, (d) such guarantor's ability to perform under the related guaranty, (e) the use, operation or value of the Mortgaged Property, (f) the principal benefit of the security intended to be provided by the Purchased Asset Documents, (g) the current ability of the Mortgaged Property to generate net cash

Exhibit III-1-4

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flow sufficient to service such Purchased Asset or (h) the current principal use of the Mortgaged Property.

(15) <u>Escrow Deposits</u>. All escrow deposits and payments required to be escrowed with lender pursuant to the Purchased Asset Documents are in the possession, or under the control, of Seller or its servicer, and there are no deficiencies (subject to any applicable grace or cure periods) in connection therewith, and all such escrows and deposits (or the right thereto) that are required to be escrowed with lender under the related Purchased Asset Documents are being conveyed by Seller to Administrative Agent, on behalf of Buyers, or its servicer. Any and all requirements under the Purchased Asset Documents as to completion of any material improvements and as to disbursements of any funds escrowed for such purpose, which requirements were to have been complied with on or before the Purchase Date, have been complied with in all material respects or the funds so escrowed have not been released. No other escrow amounts have been released except in accordance with the terms and conditions of the Purchased Asset Documents.

(16) <u>No Holdbacks</u>. The principal balance of the Purchased Asset set forth on the Purchased Asset Schedule has been fully disbursed as of the Purchase Date and there is no requirement for future advances thereunder (except in those cases where the full amount of the Purchased Asset has been disbursed but a portion thereof is being held in escrow or reserve accounts pending the satisfaction of certain conditions relating to leasing, repairs or other matters with respect to the related Mortgaged Property, the Mortgagor or other considerations determined by Seller to merit such holdback), and any requirements or conditions to disbursements of any loan proceeds held in escrow have been satisfied with respect to any disbursements of any such escrow fund made on or prior to the date hereof.

(17) <u>Insurance</u>. Each related Mortgaged Property is, and is required pursuant to the related Mortgage to be, insured by a property insurance policy providing coverage for loss in accordance with coverage found under a "special cause of loss form" or "all risk form" that includes replacement cost valuation issued by an insurer meeting the requirements of the related Purchased Asset Documents and having a claims-paying or financial strength rating of any one of the following: (i) at least "A-:VII" from A.M. Best Company, Inc., (ii) at least "A3" (or the equivalent) from Moody's or (iii) at least "A-" from Standard & Poor's (collectively, the "<u>Insurance Rating Requirements</u>"), in an amount (subject to a customary deductible) not less than the lesser of (1) the original principal balance of the Purchased Asset and (2) the full insurable value on a replacement cost basis of the improvements, furniture, furnishings, fixtures and equipment owned by the Mortgagor and included in the Mortgaged Property (with no deduction for physical depreciation), but, in any event, not less than the amount necessary or containing such endorsements as are necessary to avoid the operation of any coinsurance provisions with respect to the related Mortgaged Property.

Each related Mortgaged Property is also covered, and required to be covered pursuant to the related Loan Documents, by business interruption or rental loss insurance which (subject to a customary deductible) (i) covers a period of not less than 12 months (or with respect to each Purchased Asset on a single asset with a principal balance of $50 million or more, 18 months); (ii) for a Purchased Asset with a principal balance of $50 million or more, contains a 180 day "extended period of indemnity"; and (iii) covers the actual loss sustained during restoration.

If any material part of the improvements, exclusive of a parking lot, located on a Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, the related Mortgagor is required to maintain an insurance policy issued by the National Flood Insurance Program, the Federal Emergency Management Agency, or such similar Federal agency acting in its capacity as an insurer against losses from

Exhibit III-1-5

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flooding, in the maximum amount available under the National Flood Insurance Program, plus such additional excess flood coverage in an amount as is generally required by prudent institutional commercial mortgage lenders originating mortgage loans for securitization.

If windstorm and/or windstorm related perils and/or "named storms" are excluded from the primary property damage insurance policy, the Mortgaged Property is insured by a separate windstorm insurance policy issued by an insurer meeting the Insurance Rating Requirements or endorsement covering damage from windstorm and/or windstorm related perils and/or named storms in an amount at least equal to 100% of the full insurable value on a replacement cost basis of the improvements and personalty and fixtures included in the related Mortgaged Property by an insurer meeting the Insurance Rating Requirement.

The Mortgaged Property is covered, and required to be covered pursuant to the related Purchased Asset Documents, by a commercial general liability insurance policy issued by an insurer meeting the Insurance Rating Requirements including coverage for property damage, contractual damage and personal injury (including bodily injury and death) in amounts as are generally required by a prudent institutional commercial mortgage lender for loans originated for securitization, and in any event not less than $1 million per occurrence and $2 million in the aggregate.

An architectural or engineering consultant has performed an analysis of each of the Mortgaged Properties located in seismic zones 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing either the scenario expected limit (the "<u>SEL</u>") or the probable maximum loss (the "<u>PML</u>") for the Mortgaged Property in the event of an earthquake. In such instance, the SEL or PML, as applicable, was based on a 475-year return period, an exposure period of 50 years and a 10% probability of exceedance. If the resulting report concluded that the SEL or PML, as applicable, would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Mortgaged Property was obtained by an insurer rated at least "A:VII" by A.M. Best Company, Inc. or "A3" (or the equivalent) from Moody's or "A-" by Standard & Poor's in an amount not less than 150% of the SEL or PML, as applicable.

The Purchased Asset Documents require insurance proceeds in respect of a property loss to be applied either (a) to the repair or restoration of all or part of the related Mortgaged Property, with respect to all property losses in excess of 5% of the then outstanding principal amount of the related Purchased Asset, the lender (or a trustee appointed by it) having the right to hold and disburse such proceeds as the repair or restoration progresses, or (b) to the reduction of the outstanding principal balance of such Purchased Asset together with any accrued interest thereon.

All premiums on all insurance policies referred to in this <u>Paragraph (17)</u> required to be paid as of the Purchase Date have been paid, and such insurance policies name the lender under the Purchased Asset and its successors and assigns as a loss payee under a mortgagee endorsement clause or, in the case of the general liability insurance policy, as named or additional insured. Such insurance policies will inure to the benefit of Administrative Agent, on behalf of Buyers. Each related Purchased Asset obligates the related Mortgagor to maintain all such insurance and, at such Mortgagor's failure to do so, authorizes the lender to maintain such insurance at the Mortgagor's cost and expense and to charge such Mortgagor for related premiums and other related expenses, including reasonable attorney's fees. All such insurance policies (other than commercial liability policies) require at least 10 days' prior notice to the lender of termination or cancellation arising because of nonpayment of a premium and at least 30 days prior notice to the lender of termination or cancellation (or such lesser period, not less than 10 days, as may be required by applicable law)

Exhibit III-1-6

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arising for any reason other than non-payment of a premium and no such notice has been received by Seller.

(18) <u>Access; Utilities; Separate Tax Lots</u>. Each Mortgaged Property (a) is located on or adjacent to a public road and has direct legal access to such road, or has access via an irrevocable easement or irrevocable right of way permitting ingress and egress to/from a public road, (b) is served by or has uninhibited access rights to public or private water and sewer (or well and septic) and all required utilities, all of which are appropriate for the current use of the Mortgaged Property, and (c) constitutes one or more separate tax parcels which do not include any property which is not part of the Mortgaged Property or is subject to an endorsement under the related Title Policy insuring the Mortgaged Property, or in certain cases, an application has been, or will be, made to the applicable governing authority for creation of separate tax lots, in which case the Purchased Asset Documents require the Mortgagor to escrow an amount sufficient to pay taxes for the existing tax parcel of which the Mortgaged Property is a part until the separate tax lots are created or the non-recourse carveout guarantor under the Purchased Asset Documents has indemnified the mortgagee for any loss suffered in connection therewith.

(19) <u>No Encroachments</u>. To Seller's knowledge based solely on surveys obtained in connection with origination (which may have been a previously existing "as built" survey) and the lender's Title Policy (or, if such policy is not yet issued, a pro forma title policy, a preliminary title policy with escrow instructions or a "marked up" commitment) obtained in connection with the origination of each Purchased Asset, all material improvements that were included for the purpose of determining the appraised value of the related Mortgaged Property at the time of the origination of such Purchased Asset are within the boundaries of the related Mortgaged Property, except encroachments that do not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements were obtained under the Title Policy. No improvements on adjoining parcels encroach onto the related Mortgaged Property except for encroachments that do not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements were obtained under the Title Policy. No material improvements encroach upon any easements except for encroachments the removal of which would not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements have been obtained under the Title Policy.

(20) <u>No Contingent Interest or Equity Participation</u>. No Purchased Asset has a shared appreciation feature, any other contingent interest feature or a negative amortization feature (except that an anticipated repayment date loan may provide for the accrual of the portion of interest in excess of the rate in effect prior to the anticipated Repayment Date) or an equity participation by Seller.

(21) <u>[Reserved]</u>.

(22) <u>Compliance with Usury Laws</u>. The interest rate (exclusive of any default interest, late charges, yield maintenance charges, exit fees, or prepayment premiums) of such Purchased Asset complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

(23) <u>Authorized to do Business</u>. To the extent required under applicable law, as of the Purchase Date and as of each date that such entity held the Mortgage Note, each holder of the Mortgage Note was authorized to transact and do business in the jurisdiction in which each related Mortgaged Property is located, or the failure to be so authorized does not materially and adversely affect the enforceability of such Purchased Asset by Administrative Agent, on behalf of Buyers.

Exhibit III-1-7

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(24) <u>Trustee under Deed of Trust</u>. With respect to each Mortgage which is a deed of trust, a trustee, duly qualified under applicable law to serve as such, currently so serves and is named in the deed of trust or has been substituted in accordance with the Mortgage and applicable law or may be substituted in accordance with the Mortgage and applicable law by the related mortgagee, and except in connection with a trustee's sale after a default by the related Mortgagor or in connection with any full or partial release of the related Mortgaged Property or related security for such Purchased Asset, and except in connection with a trustee's sale after a default by the related Mortgagor, no fees are payable to such trustee except for *de minimis* fees paid.

(25) <u>Local Law Compliance</u>. To Seller's knowledge, based upon any of a letter from any governmental authorities, a legal opinion, an architect's letter, a zoning consultant's report, an endorsement to the related Title Policy, or other affirmative investigation of local law compliance consistent with the investigation conducted by Seller for similar commercial, multifamily and manufactured housing community mortgage loans intended for securitization, with respect to the improvements located on or forming part of each Mortgaged Property securing a Purchased Asset, there are no material violations of applicable laws, zoning ordinances, rules, covenants, building codes, restrictions and land laws (collectively, "<u>Zoning Regulations</u>") other than those which (i) constitute a legal non-conforming use or structure, as to which the Mortgaged Property may be restored or repaired to the full extent necessary to maintain the use of the structure immediately prior to a casualty or the inability to restore or repair to the full extent necessary to maintain the use or structure immediately prior to the casualty would not materially and adversely affect the use or operation of the Mortgaged Property, (ii) are insured by the Title Policy or other insurance policy, (iii) are insured by law and ordinance insurance coverage in amounts customarily required by prudent commercial mortgage lenders for loans originated for securitization that provides coverage for additional costs to rebuild and/or repair the property to current Zoning Regulations or (iv) would not have a material adverse effect on the Purchased Asset. The terms of the Purchased Asset Documents require the Mortgagor to comply in all material respects with all applicable governmental regulations, zoning and building laws.

(26) <u>Licenses and Permits</u>. Each Mortgagor covenants in the Purchased Asset Documents that it shall keep all material licenses, permits, franchises, certificates of occupancy, consents and applicable governmental authorizations necessary for its operation of the Mortgaged Property in full force and effect, and to Seller's knowledge based upon a letter from any government authorities or other affirmative investigation of local law compliance consistent with the investigation conducted by Seller for similar commercial, multifamily and manufactured housing community mortgage loans intended for securitization, all such material licenses, permits and applicable governmental authorizations are in effect. The Purchased Asset Documents require the related Mortgagor to be qualified to do business in the jurisdiction in which the related Mortgaged Property is located and for the Mortgagor and the Mortgaged Property to be in compliance in all material respects with all regulations, zoning and building laws.

(27) <u>Recourse Obligations</u>. The Purchased Asset Documents for each Purchased Asset provide that such Purchased Asset is non-recourse to the related parties thereto except that: (a) the related Mortgagor and a guarantor (which is a natural person or persons, or an entity distinct from the Mortgagor (but may be affiliated with Mortgagor) that has assets other than equity in the related Mortgaged property that are not *de minimis*) shall be fully liable for losses, liabilities, costs and damages arising from certain acts of the related Mortgagor and/or its principals specified in the related Purchased Asset Documents, which acts generally include the following: (i) acts of fraud or intentional material misrepresentation, (ii) misappropriation of rents (following an event of default), insurance proceeds or condemnation awards, (iii) intentional material physical waste of the Mortgaged Property, (iv) intentional misconduct and (v) any breach of the environmental covenants contained

Exhibit III-1-8

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in the related Loan Documents, and (b) the Purchased Asset shall become full recourse to the related Mortgagor and a guarantor (which is a natural person or persons, or an entity distinct from the Mortgagor (but may be affiliated with Mortgagor) that has assets other than equity in the related Mortgaged property that are not *de minimis*), upon any of the following events: (i) if any petition for bankruptcy, insolvency, dissolution or liquidation pursuant to federal bankruptcy law, or nay similar federal or state law, shall be filed, consented to, or acquiesced in by the Mortgagor, (ii) Mortgagor and/or its principals shall have colluded with other creditors to cause an involuntary bankruptcy filing with respect to the Mortgagor or (iii) upon the transfer of either the Mortgaged Property or equity interests in Mortgagor made in violation of the Purchased Asset Documents.

(28) <u>Mortgage Releases</u>. The terms of the related Mortgage or related Purchased Asset Documents do not provide for release of any material portion of the Mortgaged Property from the lien of the Mortgage except (a) a partial release, accompanied by principal repayment of not less than a specified percentage at least equal to the lesser of (i) 110% of the related allocated loan amount of such portion of the Mortgaged Property and (ii) the outstanding principal balance of the Purchased Asset, (b) upon payment in full of such Purchased Asset, (c) releases of out-parcels that are unimproved or other portions of the Mortgaged Property which will not have a material adverse effect on the underwritten value of the Mortgaged Property and which were not afforded any material value in the appraisal obtained at the origination of the Purchased Asset and are not necessary for physical access to the Mortgaged Property or compliance with zoning requirements, or (d) as required pursuant to an order of condemnation or taking by a State or any political subdivision or authority thereof.

No such Purchased Asset that is secured by more than one Mortgaged Property or that is cross-collateralized with another Purchased Asset permits the release of cross-collateralization of the related Mortgaged Properties.

(29) <u>Financial Reporting and Rent Rolls</u>. The Purchased Asset Documents for each Purchased Asset require the Mortgagor to provide the owner or holder of the Mortgage with quarterly (other than for single-tenant properties) and annual operating statements, and quarterly (other than for single-tenant properties) rent rolls for properties that have leases contributing more than 5% of the in-place base rent and annual financial statements, which annual financial statements with respect to each Purchased Asset with more than one Mortgagor are in the form of an annual combined balance sheet of the Mortgagor entities (and no other entities), together with the related combined statements of operations, members' capital and cash flows, including a combining balance sheet and statement of income for the Mortgaged Properties on a combined basis.

(30) <u>Acts of Terrorism Exclusion</u>. With respect to each Purchased Asset over $20 million, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) do not specifically exclude Acts of Terrorism, as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 and 2015 (collectively, the "<u>TRIA</u>"), from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each other Purchased Asset, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) does not specifically exclude Acts of Terrorism, as defined in TRIA, from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each Purchased Asset, the related Purchased Asset Documents do not expressly waive or prohibit the mortgagee from requiring coverage for Acts of Terrorism, as defined in the TRIA, or damages related thereto except to the extent that any right to require such coverage may be limited by commercial availability on commercially reasonable terms; <u>provided</u>, *however*, that if the TRIA or a similar or

Exhibit III-1-9

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subsequent statute is not in effect, then, <u>provided</u> that terrorism insurance is commercially available, the Mortgagor under each Purchased Asset is required to carry terrorism insurance, but in such event the Mortgagor shall not be required to spend on terrorism insurance coverage more than two times the amount of the insurance premium that is payable in respect of the property and business interruption/rental loss insurance required under the related Purchased Asset Documents (without giving effect to the cost of terrorism and earthquake components of such casualty and business interruption/rental loss insurance) at the time of the origination of the Purchased Asset, and if the cost of terrorism insurance exceeds such amount, the borrower is required to purchase the maximum amount of terrorism insurance available with funds equal to such amount.

(31) <u>Due on Sale or Encumbrance</u>. Subject to specific exceptions set forth below, each Purchased Asset contains a "due on sale" or other such provision for the acceleration of the payment of the unpaid principal balance of such Purchased Asset if, without the consent of the holder of the Mortgage (which consent, in some cases, may not be unreasonably withheld) and/or complying with the requirements of the related Purchased Asset Documents (which provide for transfers without the consent of the lender which are customarily acceptable to prudent commercial and multifamily mortgage lending institutions on the security of property comparable to the related Mortgaged Property, including, without limitation, transfers of worn-out or obsolete furnishings, fixtures, or equipment promptly replaced with property of equivalent value and functionality and transfers by leases entered into in accordance with the Purchased Asset Documents), (a) the related Mortgaged Property, or any equity interest of greater than 50% in the related Mortgagor, is directly or indirectly pledged, transferred or sold, other than as related to (i) family and estate planning transfers or transfers upon death or legal incapacity, (ii) transfers to certain affiliates as defined in the related Purchased Asset Documents, (iii) transfers that do not result in a change of Control of the related Mortgagor or transfers of passive interests so long as the guarantor retains Control, (iv) transfers to another holder of direct or indirect equity in the Mortgagor, a specific Person designated in the related Purchased Asset Documents or a Person satisfying specific criteria identified in the related Purchased Asset Documents, such as a qualified equityholder, (v) transfers of stock or similar equity units in publicly traded companies or (vi) a substitution or release of collateral within the parameters of <u>Paragraph (28)</u> herein, or (vii) to the extent set forth in any Exception Report, by reason of any mezzanine debt that existed at the origination of the related Purchased Asset, or future permitted mezzanine debt in each case as set forth in any Exception Report or (b) the related Mortgaged Property is encumbered with a subordinate lien or security interest against the related Mortgaged Property, other than any Permitted Encumbrances. The Mortgage or other Purchased Asset Documents provide that to the extent any rating agency fees are incurred in connection with the review of and consent to any transfer or encumbrance, the Mortgagor is responsible for such payment along with all other reasonable fees and expenses incurred by the Mortgagee relative to such transfer or encumbrance. For purposes of the foregoing representation, "Control" means the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise.

(32) <u>Single-Purpose Entity</u>. Each Purchased Asset requires the borrower to be a Single-Purpose Entity for at least as long as the Purchased Asset is outstanding. Both the Purchased Asset Documents and the organizational documents of the Mortgagor with respect to each Purchased Asset with a principal amount on the Purchase Date of $5 million or more provide that the borrower is a Single-Purpose Entity, and each Purchased Asset with a principal amount on the Purchase Date of $20 million or more has a counsel's opinion regarding non-consolidation of the Mortgagor. For purposes of this <u>Paragraph (32)</u>, a "<u>Single-Purpose Entity</u>" shall mean an entity, other than an individual, whose organizational documents provide substantially to the effect that it was formed or organized solely for the purpose of owning and operating one or more of the Mortgaged Properties securing the Purchased Assets and prohibit it from engaging in any business unrelated

Exhibit III-1-10

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to such Mortgaged Property or Properties, and whose organizational documents further provide, or which entity represented in the related Purchased Asset Documents, substantially to the effect that it does not have any assets other than those related to its interest in and operation of such Mortgaged Property or Properties, or any indebtedness other than as permitted by the related Mortgage(s) or the other related Purchased Asset Documents, that it has its own books and records and accounts separate and apart from those of any other person, and that it holds itself out as a legal entity, separate and apart from any other person or entity.

(33) <u>[Reserved]</u>.

(34) <u>Ground Leases</u>. For purposes of this <u>Exhibit III</u>, a "<u>Ground Lease</u>" shall mean a lease creating a leasehold estate in real property where the fee owner as the ground lessor conveys for a term or terms of years its entire interest in the land and buildings and other improvements, if any, comprising the premises demised under such lease to the ground lessee (who may, in certain circumstances, own the building and improvements on the land), subject to the reversionary interest of the ground lessor as fee owner and does not include industrial development agency (IDA) or similar leases for purposes of conferring a tax abatement or other benefit.

With respect to any Purchased Asset where the Purchased Asset is secured by a leasehold estate under a Ground Lease in whole or in part, and the related Mortgage does not also encumber the related lessor's fee interest in such Mortgaged Property, based upon the terms of the Ground Lease and any estoppel or other agreement received from the ground lessor in favor of Seller, its successors and assigns, Seller represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i) the Ground Lease or a memorandum regarding such Ground Lease has been duly recorded or submitted for recordation in a form that is acceptable for recording in the applicable jurisdiction; (ii) the Ground Lease or an estoppel or other agreement received from the ground lessor permits the interest of the lessee to be encumbered by the related Mortgage and does not restrict the use of the related Mortgaged Property by such lessee, its successors or assigns in a manner that would materially adversely affect the security provided by the related Mortgage and (iii) no material change in the terms of the Ground Lease had occurred since its recordation, except by any written instrument which are included in the related Purchased Asset File;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the lessor under such Ground Lease has agreed in a writing included in the related Purchased Asset File (or in such Ground Lease) that the Ground Lease may not be amended or modified, or canceled or terminated, without the prior written consent of the lender (except termination or cancellation if (i) notice of a default under the Ground Lease is provided to lender and (ii) such default is curable by lender as provided in the Ground Lease but remains uncured beyond the applicable cure period), and no such consent has been granted by Seller since the origination of the Purchased Asset except as reflected in any written instruments which are included in the related Purchased Asset File;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Ground Lease has an original term (or an original term plus one or more optional renewal terms, which, under all circumstances, may be exercised, and will be enforceable, by either Mortgagor or the mortgagee) that extends not less than 20 years beyond the stated maturity of the related Purchased Asset, or 10 years past the stated maturity if such Purchased Asset fully amortizes by the stated maturity (or with respect to a Purchased Asset that accrues on an actual 360 basis, substantially amortizes);

Exhibit III-1-11

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Ground Lease either (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage, except for the related fee interest of the ground lessor and the Permitted Encumbrances, or (ii) is subject to a subordination, non-disturbance and attornment agreement to which the mortgagee on the lessor's fee interest in the Mortgaged Property is subject;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Ground Lease does not place commercially unreasonable restrictions on the identity of the mortgagee and the Ground Lease is assignable to the holder of the Purchased Asset and its successors and assigns without the consent of the lessor thereunder, and in the event it is so assigned, it is further assignable by the holder of the Purchased Asset and its successors and assigns without the consent of the lessor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Seller has not received any written notice of material default under or notice of termination of such Ground Lease and, to Seller's knowledge, there is no material default under such Ground Lease and no condition that, but for the passage of time or giving of notice, would result in a material default under the terms of such Ground Lease and to Seller's knowledge, such Ground Lease is in full force and effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give to the lender written notice of any default, and provides that no notice of default or termination is effective against the lender unless such notice is given to the lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) a lender is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease through legal proceedings) to cure any default under the Ground Lease which is curable after the lender's receipt of notice of any default before the lessor may terminate the Ground Lease;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial mortgage lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) under the terms of the Ground Lease, an estoppel or other agreement received from the ground lessor and the related Mortgage (taken together), any related insurance proceeds or the portion of the condemnation award allocable to the ground lessee's interest (other than (i) *de minimis* amounts for minor casualties or (ii) in respect of a total or substantially total loss or taking as addressed in <u>Paragraph (34)(k)</u> below) will be applied either to the repair or to restoration of all or part of the related Mortgaged Property with (so long as such proceeds are in excess of the threshold amount specified in the related Purchased Asset Documents) the lender or a trustee appointed by it having the right to hold and disburse such proceeds as repair or restoration progresses, or to the payment of the outstanding principal balance of the Purchased Asset, together with any accrued interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) in the case of a total or substantially total taking or loss, under the terms of the Ground Lease, an estoppel or other agreement and the related Mortgage (taken together), any related insurance proceeds, or portion of the condemnation award allocable to ground lessee's interest in respect of a total or substantially total loss or taking of the related Mortgaged Property to the extent not applied to restoration, will be applied first to the payment of the outstanding principal balance of the Purchased Asset, together with any accrued interest; and

Exhibit III-1-12

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>provided</u> that the lender cures any defaults which are susceptible to being cured, the ground lessor has agreed to enter into a new lease with the lender upon termination of the Ground Lease for any reason, including rejection of the Ground Lease in a bankruptcy proceeding.

(35) <u>Servicing</u>. The servicing and collection practices used by Seller with respect to the Purchased Asset have been, in all material respects, legal and have met customary industry standards for servicing of similar commercial loans.

(36) <u>Origination and Underwriting</u>. The origination practices of Seller (or the related originator if Seller was not the originator) with respect to each Purchased Asset have been, in all material respects, legal and as of the date of its origination, such Purchased Asset and the origination thereof complied in all material respects with, or was exempt from, all requirements of federal, state or local laws and regulations relating to the origination of such Purchased Asset. At the time of origination of such Purchased Asset, the origination, due diligence and underwriting performed by or on behalf of Seller in connection with each Purchased Asset complied in all material respects with the terms, conditions and requirements of Seller's origination, due diligence, underwriting procedures, guidelines and standards for similar commercial and multifamily loans.

(37) <u>Rent Rolls; Operating Histories</u>. Seller has obtained a rent roll (other than with respect to hospitality properties) certified by the related Mortgagor or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Purchased Asset. Seller has obtained operating histories (the "<u>Certified Operating Histories</u>") with respect to each Mortgaged Property certified by the related Mortgagor or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Purchased Asset. The Certified Operating Histories collectively report on operations for a period equal to (a) at least a continuous three-year period or (b) in the event the Mortgaged Property was owned, operated or constructed by the Mortgagor or an affiliate for less than three years then for such shorter period of time.

(38) <u>No Material Default; Payment Record</u>. No Purchased Asset has been more than 30 days delinquent, without giving effect to any grace or cure period, in making required payments since origination, and as of the Purchased Date, no Purchased Asset is delinquent (beyond any applicable grace or cure period) in making required payments. To Seller's knowledge, there is (a) no, and since origination there has been no, material default, breach, violation or event of acceleration existing under the related Purchased Asset Documents, or (b) no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default, breach, violation or event of acceleration, which default, breach, violation or event of acceleration, in the case of either <u>clause (a)</u> or <u>(b)</u>, materially and adversely affects the value of the Purchased Asset, or the value, use or operation of the related Mortgaged Property, <u>provided</u>, *however*, that this <u>Paragraph (38)</u> does not cover any default, breach, violation or event of acceleration that specifically pertains to or arises out of an exception scheduled to any other representation and warranty made by Seller in any Exception Report. No person other than the holder of such Purchased Asset may declare any event of default under the Purchased Asset or accelerate any indebtedness under the Purchased Asset Documents.

(39) <u>Bankruptcy</u>. As of the date of origination of the related Purchased Asset and to Seller's knowledge as of the Purchase Date, neither the Mortgaged Property nor any portion thereof is the subject of, and no Mortgagor, guarantor or tenant occupying a single-tenant property is a debtor in state or federal bankruptcy, insolvency or similar proceeding.

Exhibit III-1-13

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(40) <u>Organization of Mortgagor</u>. With respect to each Purchased Asset, in reliance on certified copies of the organizational documents of the Mortgagor delivered by the Mortgagor in connection with the origination of such Purchased Asset, the Mortgagor is an entity organized under the laws of a state of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico. No Purchased Asset has a Mortgagor that is an Affiliate of another borrower.

Seller has obtained an organizational chart or other description of each Mortgagor which identifies all beneficial controlling owners of the Mortgagor (*i.e.*, managing members, general partners or similar controlling person for such Mortgagor) (the "<u>Controlling Owner</u>") and all owners that hold a 20% or greater direct ownership share (the "<u>Major Sponsors</u>"). Seller (a) required questionnaires to be completed by each Controlling Owner and guarantor or performed other processes designed to elicit information from each Controlling Owner and guarantor regarding such Controlling Owner's or guarantor's prior history regarding any bankruptcies or other insolvencies, any felony convictions, and (b) performed or caused to be performed searches of the public records or services such as Lexis/Nexis, or a similar service designed to elicit information about each Controlling Owner, Major Sponsor and guarantor regarding such Controlling Owner's, Major Sponsor's or guarantor's prior history regarding any bankruptcies or other insolvencies, any felony convictions, and <u>provided</u>, *however*, that manual public records searches were limited to the last 10 years (<u>clauses (a)</u> and <u>(b)</u> collectively, the "<u>Sponsor Diligence</u>"). Based solely on the Sponsor Diligence, to the knowledge of Seller, no Major Sponsor or guarantor (i) was in a state or federal bankruptcy or insolvency proceeding, (ii) had a prior record of having been in a state of federal bankruptcy or insolvency, or (iii) had been convicted of a felony.

(41) <u>Environmental Conditions</u>. At origination, each Mortgagor represented and warranted that to its knowledge no hazardous materials or any other substances or materials which are included under or regulated by Environmental Laws are located on, or have been handled, manufactured, generated, stored, processed, or disposed of on or released or discharged from the Mortgaged Property, except for those substances commonly used in the operation and maintenance of properties of kind and nature similar to those of the Mortgaged Property in compliance with all Environmental Laws and in a manner that does not result in contamination of the Mortgaged Property or in a material adverse effect on the value, use or operations of the Mortgaged Property.

A Phase I environmental site assessment (or update of a previous Phase I and or Phase II site assessment) and, with respect to certain Purchased Assets, a Phase II environmental site assessment (collectively, an "<u>ESA</u>") meeting ASTM requirements was conducted by a reputable environmental consultant in connection with such Purchased Asset within 12 months prior to its origination date (or an update of a previous ESA was prepared), and such ESA either (i) did not identify the existence of recognized "environmental conditions" as such term is defined in ASTM E1527-05 or its successor (the "<u>Environmental Conditions</u>") at the related Mortgaged Property or the need for further investigation with respect to any Environmental Condition that was identified, or (ii) if the existence of an Environmental Condition or need for further investigation was indicated in any such ESA, then at least one of the following statements is true: (A) an amount reasonably estimated by a reputable environmental consultant to be sufficient to cover the estimated cost to cure any material noncompliance with applicable environmental laws or the Environmental Condition has been escrowed by the related Mortgagor and is held or controlled by the related lender; (B) if the only Environmental Condition relates to the presence of asbestos-containing materials, radon in indoor air, lead based paint or lead in drinking water, and the only recommended action in the ESA is the institution of such a plan, an operations or maintenance plan has been required to be instituted by the related Mortgagor that can reasonably be expected to mitigate the identified risk; (C) the Environmental Condition identified in the related environmental report was remediated or abated in all material respects prior to the date hereof, and, if and as appropriate, a no further action or

Exhibit III-1-14

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closure letter was obtained from the applicable governmental regulatory authority (or the Environmental Condition affecting the related Mortgaged Property was otherwise listed by such governmental authority as "closed" or a reputable environmental consultant has concluded that no further action is required); (D) a secured creditor environmental policy or a pollution legal liability insurance policy that covers liability for the Environmental Condition was obtained from an insurer rated no less than "A-" (or the equivalent) by Moody's, Standard & Poor's and/or Fitch, Inc.; (E) a party not related to the Mortgagor was identified as the responsible party for such Environmental Condition and such responsible party has financial resources reasonably estimated to be adequate to address the situation; or (F) a party related to the Mortgagor having financial resources reasonably estimated to be adequate to address the situation is required to take action. To Seller's actual knowledge, except as set forth in the ESA, there is no Environmental Condition (as such term is defined in ASTM E1527-05 or its successor) at the related Mortgaged Property.

In the case of each Purchased Asset with respect to which there is an environmental insurance policy (the "<u>Environmental Insurance Policy</u>"), (i) such Environmental Insurance Policy has been issued by the issuer set forth in the related Exception Report (the "<u>Policy Issuer</u>") and is effective as of the Purchase Date, (ii) as of origination and to Seller's knowledge as of the Purchase Date the Environmental Insurance Policy is in full force and effect, there is no deductible and Seller is a named insured under such policy, (iii) (A) a property condition or engineering report was prepared, if the related Mortgaged Property was constructed prior to 1985, with respect to asbestos-containing materials ("<u>ACM</u>") and, if the related Mortgaged Property is a multifamily property, with respect to radon gas ("<u>RG</u>") and lead-based paint ("<u>LBP</u>"), and (B) if such report disclosed the existence of a material and adverse LBP, ACM or RG environmental condition or circumstance affecting the related Mortgaged Property, the related Mortgagor (1) was required to remediate the identified condition prior to closing the Purchased Asset or provide additional security or establish with the mortgagee a reserve in an amount deemed to be sufficient by Seller, for the remediation of the problem, and/or (2) agreed in the Purchased Asset Documents to establish an operations and maintenance plan after the closing of the Purchased Asset that should reasonably be expected to mitigate the environmental risk related to the identified LBP, ACM or RG condition, (iv) on the effective date of the Environmental Insurance Policy, Seller as originator had no knowledge of any material and adverse environmental condition or circumstance affecting the Mortgaged Property (other than the existence of LBP, ACM or RG) that was not disclosed to the Policy Issuer in one or more of the following: (A) the application for insurance, (B) a Mortgagor questionnaire that was provided to the Policy Issuer, or (C) an engineering or other report provided to the Policy Issuer, and (v) the premium of any Environmental Insurance Policy has been paid through the maturity of the policy's term and the term of such policy extends at least five years beyond the maturity of the Purchased Asset.

(42) <u>Lease Estoppels</u>. With respect to each Purchased Asset secured by retail, office or industrial properties, Seller requested the related Mortgagor to obtain estoppels from each commercial tenant with respect to the rent roll delivered as of the origination date. With respect to each Purchased Asset predominantly secured by a retail, office or industrial property leased to a single tenant, Seller reviewed such estoppel obtained from such tenant no earlier than 90 days prior to the origination date of the related Purchased Asset, and to Seller's knowledge, (i) the related lease is in full force and effect and (ii) there exists no default under such lease, either by the lessee thereunder or by the lessor subject, in each case, to customary reservations of tenant's rights, such as with respect to common area maintenance ("<u>CAM</u>") and pass-through audits and verification of landlord's compliance with co-tenancy provisions. With respect to each Purchased Asset predominantly secured by a retail, office or industrial property, Seller has received lease estoppels executed within 90 days of the origination date of the related Purchased Asset that collectively account for at least 65% of the in-place base rent for the Mortgaged Property that secure a Purchased Asset that is

Exhibit III-1-15

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represented as of the origination date. To Seller's knowledge, (i) each lease represented on the rent roll delivered as of the origination date is in full force and effect and (ii) there exists no material default under any such related lease that represents 20% or more of the in-place base rent for the Mortgaged Property either by the lessee thereunder or by the related Mortgagor, subject, in each case, to customary reservations of tenant's rights, such as with respect to CAM and pass-through audits and verification of landlord's compliance with co-tenancy provisions.

(43) <u>Appraisal</u>. The Purchased Asset File contains an appraisal of the related Mortgaged Property with an appraisal date within six months of the Purchased Asset origination date, and within 12 months of the Purchase Date. The appraisal is signed by an appraiser who is a Member of the Appraisal Institute. Each appraiser has represented in such appraisal or in a supplemental letter that the appraisal satisfies the requirements of the "Uniform Standards of Professional Appraisal Practice" as adopted by the Appraisal Standards Board of the Appraisal Foundation and has certified that such appraiser had no interest, direct or indirect, in the Mortgaged Property or the borrower or in any loan made on the security thereof, and its compensation is not affected by the approval or disapproval of the Purchased Asset.

(44) <u>Purchased Asset Schedule</u>. The information pertaining to each Purchased Asset which is set forth in the Purchased Asset Schedule is true and correct in all material respects as of the Purchased Date and contains all information required by the Repurchase Agreement to be contained therein.

(45) <u>Cross-Collateralization</u>. No Purchased Asset is cross-collateralized or cross-defaulted with any other mortgage loan that is not held by Administrative Agent.

(46) <u>Advance of Funds by Seller</u>. After origination, no advance of funds has been made by Seller to the related Mortgagor other than in accordance with the Purchased Asset Documents, and, to Seller's knowledge, no funds have been received from any person other than the related Mortgagor or an affiliate for, or on account of, payments due on the Purchased Asset (other than as contemplated by the Purchased Asset Documents, such as, by way of example and not in limitation of the foregoing, amounts paid by the tenant(s) into a lender-controlled lockbox if required or contemplated under the related lease or Purchased Asset Documents). Neither Seller nor any affiliate thereof has any obligation to make any capital contribution to any Mortgagor under a Purchased Asset, other than contributions made on or prior to the date hereof.

(47) <u>Compliance with Anti-Money Laundering Laws</u>. Seller has complied in all material respects with the Prescribed Laws. Seller has established an anti-money laundering compliance program as required by the Prescribed Laws, has conducted the requisite due diligence in connection with the origination of the Purchased Asset for purposes of the Prescribed Laws, including with respect to the legitimacy of the applicable Mortgagor and the origin of the assets used by the said Mortgagor to purchase the property in question, and maintains, and will maintain, sufficient information to identify the applicable Mortgagor for purposes of the Prescribed Laws.

(48) <u>OFAC</u>. (a) No Purchased Asset is (i) subject to nullification pursuant to Executive Order 13224 or the regulations promulgated by OFAC (the "<u>OFAC Regulations</u>") or (ii) in violation of Executive Order 13224 or the OFAC Regulations, and (b) no Mortgagor is (i) subject to the provisions of Executive Order 13224 or (ii) listed as a "blocked person" for purposes of the OFAC Regulations.

(49) <u>Floating Interest Rates</u>. Each Purchased Asset bears interest at a floating rate of interest that is based on Term SOFR plus a margin (which interest rate may be subject to a minimum or "floor" rate).

Exhibit III-1-16

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(50) <u>Senior Participations</u>. With respect to each Purchased Asset that is a Participation Interest: (i) either (A) the Participation Interest is treated as a real estate asset for purposes of Section 856(c) of the Code, and the interest payable pursuant to such Participation Interest is treated as interest on an obligation secured by a mortgage on real property or on an interest in real property for purposes of Section 856(c) of the Code, or (B) the Participation Interest qualifies as a security that would not otherwise cause any parent REIT to fail to qualify as a REIT under the Code (including after the sale, transfer and assignment to Administrative Agent, on behalf of Buyers, of such Participation Interest); (ii) to the actual knowledge of Seller, as of the Purchase Date, the related participating Person was not a debtor in any outstanding proceeding pursuant to the federal bankruptcy code; and (iii) Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such Participation Interest is or may become obligated.

Exhibit III-1-17

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**Exhibit III-2**

**REPRESENTATIONS AND WARRANTIES<br>REGARDING EACH PURCHASED ASSET THAT IS A MEZZANINE LOAN**

With respect to each Purchased Asset that is a Mezzanine Loan and the related Mortgaged Property or Mortgaged Properties, on the related Purchase Date and at all times while this Agreement and any Transaction contemplated hereunder is in effect, Seller shall be deemed to make the following representations and warranties to Administrative Agent, on behalf of Buyers, as of such date; <u>provided</u>, *however*, that, with respect to any Purchased Asset, such representations and warranties shall be deemed to be modified by any Exception Report delivered by Seller to Administrative Agent, on behalf of Buyers, prior to the issuance of a Confirmation with respect thereto.

(1) The representations and warranties set forth in <u>Exhibit III-1</u> regarding Mortgage Loans shall be deemed incorporated herein in respect of each underlying Mortgage Loan and the related Mortgaged Property and Mortgagor related to the Purchased Asset; provided that if such representation is duplicative of any specific representation regarding the underlying Mortgage Loan, underlying Mortgaged Property or the Mortgagor, the representation hereunder shall control.

(2) The Mezzanine Loan is a performing mezzanine loan secured by a pledge of all of the Capital Stock of a Mortgagor on the performing underlying Mortgage Loan that owns income producing commercial real estate.

(3) <u>Whole Loan; Ownership of Purchased Assets</u>. Each Purchased Asset is an Eligible Asset. At the time of the sale, transfer and assignment to Administrative Agent, on behalf of Buyers, no Mezzanine Note was subject to any assignment (other than assignments to Seller), participation or pledge, and Seller had good title to, and was the sole owner of, each Purchased Asset free and clear of any and all liens, charges, pledges, encumbrances, participations, any other ownership interests on, in or to such Purchased Asset, but subject to any related intercreditor agreement provided to Administrative Agent, on behalf of Buyers, prior to the Purchase Date. Seller has full right and authority to sell, assign and transfer each Purchased Asset, and the assignment to Administrative Agent, on behalf of Buyers, constitutes a legal, valid and binding assignment of such Purchased Asset free and clear of any and all liens, pledges, charges or security interests of any nature encumbering such Purchased Asset, but subject to any related intercreditor agreement provided to Administrative Agent, on behalf of Buyers, prior to the Purchase Date.

(4) <u>Loan Document Status</u>. Each related Mezzanine Note, Mezzanine Pledge Agreement, guaranty and other agreement executed by or on behalf of the Mezzanine Borrower, guarantor or other obligor in connection with such Purchased Asset is the legal, valid and binding obligation of the Mezzanine Borrower, guarantor or other obligor (subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency, one-action or market value limit deficiency legislation), as applicable, and is enforceable in accordance with its terms, except (a) as such enforcement may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law) and (b) that certain provisions in such Purchased Asset Documents (including, without limitation, provisions requiring the payment of default interest, late fees or prepayment/yield maintenance or prepayment fees, charges and/or premiums) are, or may be, further limited or rendered unenforceable by or under applicable law, but (subject to the limitations set forth in <u>clause (a)</u> above) such limitations or unenforceability will not render such Purchased Asset Documents invalid as a whole or materially interfere with the lender's realization of the

Exhibit III-2-1

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principal benefits and/or security provided thereby (<u>clauses (a)</u> and <u>(b)</u> collectively, the "<u>Standard Qualifications</u>"). Except as set forth in the immediately preceding sentences, there is no valid offset, defense, counterclaim or right of rescission available to Mezzanine Borrower with respect to any of the related Mezzanine Notes or other Purchased Asset Documents, including, without limitation, any such valid offset, defense, counterclaim or right based on intentional fraud by Seller in connection with the origination of the Purchased Asset, that would deny the lender the principal benefits intended to be provided by the Mezzanine Note, or other Purchased Asset Documents.

(5) <u>Purchased Asset Document Provisions</u>. The Purchased Asset Documents for each Purchased Asset contain provisions that render the rights and remedies of the holder thereof adequate for the practical realization against the Capital Stock of the principal benefits of the security intended to be provided thereby, including realization by foreclosure subject to the limitations set forth in the Standard Qualifications.

(6) <u>Hospitality Provisions</u>. The Purchased Asset Documents for each Purchased Asset for which the underlying Mortgage Loan is secured by a hospitality property operated pursuant to a franchise agreement includes an executed comfort letter or similar agreement signed by the Mortgagor and franchisor of such property enforceable against such franchisor, either directly or as an assignee of the originator.

(7) <u>Waivers and Modifications</u>. Since origination and except by written instruments set forth in the related Purchased Asset File or as otherwise provided in the related Purchased Asset Documents (a) the material terms of such Mezzanine Note, guaranty, Mezzanine Pledge Agreement and related Purchased Asset Documents have not been waived, impaired, modified, altered, satisfied, canceled, subordinated or rescinded in any respect that could have a material adverse effect on the Purchased Asset, (b) no related Capital Stock or any portion thereof has been released from the lien of the related Mezzanine Pledge Agreement in any manner which materially interferes with the security intended to be provided by such Mezzanine Pledge Agreement, and (c) neither Mezzanine Borrower nor the related guarantor nor the related participating Person has been released from its material obligations under the Purchased Asset Documents. With respect to each Purchased Asset, except as contained in a written document included in the Purchased Asset File, there have been no modifications, amendments or waivers, that could be reasonably expected to have a material adverse effect on such Purchased Asset consented to by Seller.

(8) <u>Lien</u>. Any security agreement, Mezzanine Pledge Agreement or equivalent document related to and delivered in connection with the Purchased Asset establishes and creates a valid and enforceable lien on property described therein, except as such enforcement may be limited by Standard Qualifications.

Exhibit III-2-2

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(10) <u>UCC Filings</u>. Seller has filed or caused to be filed and (or, if not filed, have been submitted in proper form for filing), UCC-1 financing statements in the appropriate public filing offices necessary at the time of the origination of the Purchased Asset to perfect a valid security interest in all items of personal property owned by Mezzanine Borrower, to the extent perfection may be effected pursuant to applicable law by filing. Subject to the Standard Qualifications, each related Mezzanine Pledge Agreement (or equivalent document) creates a valid and enforceable lien and security interest on the items of personalty described above. No representation is made as to the perfection of any security interest in personal property to the extent that possession or control of such items or actions other than the filing of UCC-1 financing statements are required in order to effect such perfection. Each UCC-1 financing statement, if any, filed with respect to personal property owned by such Mezzanine Borrower and each UCC-2 or UCC-3 assignment, if any, of such financing statement to Seller was in suitable form for filing in the filing office in which such financing statement was filed.

(11) <u>Actions Concerning Purchased Asset</u>. As of the date of origination and to Seller's knowledge as of the Purchase Date, there was no pending, filed or threatened action, suit or proceeding, arbitration or governmental investigation involving any Mezzanine Borrower, guarantor or Mortgagor, an adverse outcome of which would reasonably be expected to materially and adversely affect (a) such Mezzanine Borrower's ownership of the Capital Stock in Mortgagor, (b) the validity or enforceability of the Purchased Asset Documents, (c) such Mezzanine Borrower's or Mortgagor's ability to perform under the related Purchased Asset Documents, (d) such guarantor's ability to perform under the related guaranty, (e) the principal benefit of the security intended to be provided by the Purchased Asset Documents or (f) the current ability of the Mortgaged Property to generate net cash flow sufficient to service such Purchased Asset.

(12) <u>Escrow Deposits</u>. All escrow deposits and payments required to be escrowed with lender pursuant to the Purchased Asset Documents are in the possession, or under the control, of Seller or its servicer, and there are no deficiencies (subject to any applicable grace or cure periods) in connection therewith, and all such escrows and deposits (or the right thereto) that are required to be escrowed with lender under the related Purchased Asset Documents are being conveyed by Seller to Administrative Agent, on behalf of Buyers, or its servicer. Any and all requirements under the Purchased Asset Documents as to disbursements of any funds escrowed, which requirements were to have been complied with on or before the Purchase Date, have been complied with in all material respects or the funds so escrowed have not been released. No other escrow amounts have been released except in accordance with the terms and conditions of the Purchased Asset Documents.

(13) <u>No Holdbacks</u>. The principal balance of the Purchased Asset set forth on the Purchased Asset Schedule has been fully disbursed as of the Purchase Date and there is no requirement for future advances thereunder (except in those cases where the full amount of the Purchased Asset has been disbursed but a portion thereof is being held in escrow or reserve accounts pending the satisfaction of certain conditions relating to leasing, repairs or other matters with respect to the related Mortgaged Property, the Mortgagor or other considerations determined by Seller to merit such holdbacks), and any requirements or conditions to disbursements of any loan proceeds held in escrow have been satisfied with respect to any disbursements of any such escrow fund made on or prior to the date hereof.

(14) <u>Insurance</u>. The Purchased Asset Documents require insurance proceeds in respect of a property loss to be applied either (a) to the repair or restoration of all or part of the underlying Mortgaged Property, with respect to all property losses in excess of 5% of the then outstanding principal amount of the related underlying Mortgage Loan, the mortgage lender (or a trustee appointed by it)

Exhibit III-2-3

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having the right to hold and disburse such proceeds as the repair or restoration progresses, or (b) to the reduction of the outstanding principal balance of the underlying Mortgage Loan together with any accrued interest thereon, with any excess applied to the existing outstanding principal balance of the Mezzanine Loan. All premiums on all insurance policies referred to in this <u>Paragraph (14)</u> required to be paid as of the Purchase Date have been paid, and such insurance policies name the lender under the Purchased Asset and its successors and assigns as a loss payee under a mortgagee endorsement clause or, in the case of the general liability insurance policy, as named or additional insured. Such insurance policies will inure to the benefit of Administrative Agent, on behalf of Buyers. Each related Purchased Asset obligates the underlying Mortgagor to maintain all such insurance and, at such Mortgagor's failure to do so, authorizes the lender to maintain such insurance at the Mortgagor's cost and expense and to charge such Mortgagor for related premiums and other related expenses, including reasonable attorney's fees. All such insurance policies (other than commercial liability policies) require at least 10 days' prior notice to the lender of termination or cancellation and no such notice has been received by Seller.

(15) <u>No Contingent Interest or Equity Participation</u>. No Purchased Asset has a shared appreciation feature, any other contingent interest feature or a negative amortization feature (except that an anticipated repayment date loan may provide for the accrual of the portion of interest in excess of the rate in effect prior to the anticipated Repayment Date) or an equity participation by Seller.

(16) <u>Compliance with Usury Laws</u>. The interest rate (exclusive of any default interest, late charges, yield maintenance charges, exit fees, or prepayment premiums) of such Purchased Asset complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

(17) <u>Authorized to do Business</u>. To the extent required under applicable law, as of the Purchase Date and as of each date that such entity held the Mezzanine Note, each holder of the Mezzanine Note was authorized to transact and do business in the jurisdiction in which the underlying Mortgaged Property is located, or the failure to be so authorized does not materially and adversely affect the enforceability of such Purchased Asset by Administrative Agent, on behalf of Buyers.

(18) <u>Compliance With Laws</u>. The Mezzanine Loan complies in all material respects with, or is exempt from, all requirements of federal, state or local law relating to such Mezzanine Loan. The terms of the Purchased Asset Documents require Mezzanine Borrower and the underlying Mortgagor to comply in all material respects with all applicable governmental regulations, zoning and building laws.

(19) <u>Licenses and Permits</u>. The Purchased Asset Documents require that Mezzanine Borrower shall cause each underlying Mortgagor to keep all material licenses, permits, franchises, certificates of occupancy, consents and applicable governmental authorizations necessary for its operation of the underlying Mortgaged Property in full force and effect, and to Seller's knowledge based upon a letter from any government authorities or other affirmative investigation of local law compliance consistent with the investigation conducted by Seller for similar commercial, multifamily and manufactured housing community mortgage loans intended for securitization, all such material licenses, permits and applicable governmental authorizations are in effect. The Purchased Asset Documents require the related underlying Mortgagor to be qualified to do business in the jurisdiction in which the related underlying Mortgaged Property is located and for Mezzanine Borrower, the underlying Mortgagor and the Mortgaged Property to be in compliance in all material respects with all regulations, zoning and building laws.

Exhibit III-2-4

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(20) <u>Recourse Obligations</u>. The Purchased Asset Documents for each Purchased Asset provide that such Purchased Asset is non-recourse to the related parties thereto except that: (a) Mezzanine Borrower and a guarantor (which is a natural person or persons, or an entity distinct from Mezzanine Borrower (but may be affiliated with Mezzanine Borrower) that has assets other than equity in the underlying Mortgagor that are not *de minimis*) shall be fully liable for losses, liabilities, costs and damages arising from certain acts of Mezzanine Borrower and/or its principals specified in the related Purchased Asset Documents, which acts generally include the following: (i) acts of fraud or intentional material misrepresentation, (ii) misappropriation of rents (following an event of default), insurance proceeds or condemnation awards, (iii) intentional material physical waste of the underlying Mortgaged Property, (iv) intentional misconduct and (v) any breach of the environmental covenants contained in the related Purchased Asset Documents, and (b) the Purchased Asset shall become full recourse to Mezzanine Borrower and a guarantor (which is a natural person or persons, or an entity distinct from Mezzanine Borrower (but may be affiliated with Mezzanine Borrower) that has assets other than equity in the underlying Mortgagor that are not *de minimis*), upon any of the following events: (i) if any petition for bankruptcy, insolvency, dissolution or liquidation pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed or consented to by Mezzanine Borrower, (ii) Mezzanine Borrower and/or its principals shall have colluded with other creditors to cause an involuntary bankruptcy filing with respect to Mezzanine Borrower or (iii) upon the transfer of the equity interests in the underlying Mortgagor made in violation of the Purchased Asset Documents.

(21) <u>Collateral Release</u>. The terms of the related Mezzanine Pledge Agreement or related Purchased Asset Documents do not provide for release of any material portion of the collateral securing the Mezzanine Loan from the lien of the Mezzanine Pledge Agreement except (a) a partial release, accompanied by principal repayment of not less than a specified percentage at least equal to the lesser of (i) 110% of the related allocated loan amount of such portion of the collateral securing the Mezzanine Loan and (ii) the outstanding principal balance of the Purchased Asset, or (b) upon payment in full of such Purchased Asset.

(22) <u>Financial Reporting and Rent Rolls</u>. The Purchased Asset Documents for each Purchased Asset require Mezzanine Borrower to provide the mezzanine lender with quarterly (other than for single-tenant properties) and annual operating statements, and quarterly (other than for single-tenant properties) rent rolls for properties that have leases contributing more than 5% of the in-place base rent and annual financial statements, which annual financial statements with respect to each Purchased Asset with more than one underlying Mortgagor or more than one Mezzanine Borrower are in the form of an annual combined balance sheet, as applicable, of the Mezzanine Borrower entities and the underlying Mortgagor entities (and no other entities), together with the related combined statements of operations, members' capital and cash flows, including a combining balance sheet and statement of income for the underlying Mortgaged Properties on a combined basis.

(23) <u>Acts of Terrorism Exclusion</u>. With respect to each Purchased Asset over $20 million, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) do not specifically exclude Acts of Terrorism, as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (collectively, the "<u>TRIA</u>"), from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each other Purchased Asset, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) does not specifically exclude Acts of Terrorism, as defined in TRIA, from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each Purchased Asset, the

Exhibit III-2-5

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related Purchased Asset Documents do not expressly waive or prohibit the mezzanine lender from requiring coverage for Acts of Terrorism, as defined in the TRIA, or damages related thereto except to the extent that any right to require such coverage may be limited by commercial availability on commercially reasonable terms; *provided*, *however*, that if the TRIA or a similar or subsequent statute is not in effect, then, *provided* that terrorism insurance is commercially available, the underlying Mortgagor under each Purchased Asset is required to carry terrorism insurance, but in such event the underlying Mortgagor shall not be required to spend on terrorism insurance coverage more than two times the amount of the insurance premium that is payable in respect of the property and business interruption/rental loss insurance required under the related Purchased Asset Documents (without giving effect to the cost of terrorism and earthquake components of such casualty and business interruption/rental loss insurance) at the time of the origination of the Purchased Asset, and if the cost of terrorism insurance exceeds such amount, the borrower is required to purchase the maximum amount of terrorism insurance available with funds equal to such amount.

(24) <u>Due on Sale or Encumbrance</u>. Subject to specific exceptions set forth below, each Purchased Asset contains a "due on sale" or other such provision for the acceleration of the payment of the unpaid principal balance of such Purchased Asset if, without the consent of the mezzanine lender (which consent, in some cases, may not be unreasonably withheld) and/or complying with the requirements of the related Purchased Asset Documents (which provide for transfers without the consent of the lender which are customarily acceptable to prudent commercial and multifamily mortgage lending institutions on the security of property comparable to the collateral for the Mezzanine Loan, including, without limitation, transfers of worn-out or obsolete furnishings, fixtures, or equipment promptly replaced with property of equivalent value and functionality and transfers by leases entered into in accordance with the Purchased Asset Documents), (a) the related underlying Mortgaged Property or equity interest of greater than 50% in the related underlying Mortgagor, is directly or indirectly pledged, transferred or sold, other than as related to (i) family and estate planning transfers or transfers upon death or legal incapacity, (ii) transfers to certain affiliates as defined in the related Purchased Asset Documents, (iii) transfers that do not result in a change of Control of Mezzanine Borrower or the related underlying Mortgagor or transfers of passive interests so long as the guarantor retains Control, (iv) transfers to another holder of direct or indirect equity in the underlying Mortgagor, a specific Person designated in the related Purchased Asset Documents or a Person satisfying specific criteria identified in the related Purchased Asset Documents, such as a qualified equityholder, (v) transfers of stock or similar equity units in publicly traded companies, or (vi) to the extent set forth in any Exception Report, by reason of any mezzanine debt that existed at the origination of the related Purchased Asset, or future permitted mezzanine debt in each case as set forth in any Exception Report or (b) the related underlying Mortgaged Property is encumbered with a subordinate lien or security interest against the related underlying Mortgaged Property, other than any Permitted Encumbrances, or the collateral for the Mezzanine Loan is encumbered with a subordinate lien or security interest against such collateral, other than any liens granted pursuant to the Purchased Asset Documents. The Purchased Asset Documents provide that to the extent any rating agency fees are incurred in connection with the review of and consent to any transfer or encumbrance, the Mezzanine Borrower is responsible for such payment along with all other reasonable fees and expenses incurred by the mezzanine lender relative to such transfer or encumbrance. For purposes of the foregoing representation, "Control" means the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise.

(25) <u>Single-Purpose Entity</u>. Each Purchased Asset requires Mezzanine Borrower to be a Single-Purpose Entity for at least as long as the Purchased Asset is outstanding. Both the Purchased Asset Documents and the organizational documents of Mezzanine Borrower with respect to each

Exhibit III-2-6

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Purchased Asset with a principal amount on the Purchase Date of $5 million or more provide that Mezzanine Borrower is a Single-Purpose Entity, and each Purchased Asset with a principal amount on the Purchase Date of $20 million or more has a counsel's opinion regarding non-consolidation of Mezzanine Borrower. For purposes of this <u>Paragraph (32)</u>, a "<u>Single-Purpose Entity</u>" shall mean an entity, other than an individual, whose organizational documents provide substantially to the effect that it was formed or organized solely for the purpose of owning the Capital Stock of the underlying Mortgagor securing the Purchased Assets and prohibit it from engaging in any business unrelated to owning such Capital Stock, and whose organizational documents further provide, or which entity represented in the related Purchased Asset Documents, substantially to the effect that it does not have any assets other than those related to its interest in the underlying Mortgagor, or any indebtedness other than as permitted by the related Mezzanine Pledge Agreement or the other related Purchased Asset Documents, that it has its own books and records and accounts separate and apart from those of any other person, and that it holds itself out as a legal entity, separate and apart from any other person or entity.

(26) <u>Ground Leases</u>. With respect to any Purchased Asset where the underlying Mortgage Loan is secured by a leasehold estate under a Ground Lease in whole or in part, and the related underlying Mortgage does not also encumber the related lessor's fee interest in such Mortgaged Property, based upon the terms of the Ground Lease and any estoppel or other agreement received from the ground lessor in favor of Seller, its successors and assigns, Seller represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i) the Ground Lease or a memorandum regarding such Ground Lease has been duly recorded or submitted for recordation in a form that is acceptable for recording in the applicable jurisdiction; (ii) the Ground Lease or an estoppel or other agreement received from the ground lessor permits the interest of the lessee to be encumbered by the related Mortgage and does not restrict the use of the related Mortgaged Property by such lessee, its successors or assigns in a manner that would materially adversely affect the security provided by the related Mortgage and (iii) no material change in the terms of the Ground Lease had occurred since its recordation, except by any written instrument which are included in the related Purchased Asset File;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the lessor under such Ground Lease has agreed in a writing included in the related Purchased Asset File (or in such Ground Lease) that the Ground Lease may not be amended or modified in any material respect, or canceled or terminated, without the prior written consent of the mezzanine lender (except termination or cancellation if (i) notice of a default under the Ground Lease is provided to mezzanine lender and (ii) such default is curable by mezzanine lender as provided in the Ground Lease but remains uncured beyond the applicable cure period), and no such consent has been granted by Seller since the origination of the Purchased Asset except as reflected in any written instruments which are included in the related Purchased Asset File;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Ground Lease has an original term (or an original term plus one or more optional renewal terms, which, under all circumstances, may be exercised, and will be enforceable, by either the underlying Mortgagor or the mortgagee) that extends not less than 20 years beyond the stated maturity of the related Purchased Asset, or 10 years past the stated maturity if such Purchased Asset fully amortizes by the stated maturity (or with respect to a Purchased Asset that accrues on an actual 360 basis, substantially amortizes);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Ground Lease either (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the underlying Mortgage, except for the related fee interest of the ground lessor and the Permitted Encumbrances, or (ii) is subject to a subordination,

Exhibit III-2-7

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non-disturbance and attornment agreement to which the mortgagee on the lessor's fee interest in the underlying Mortgaged Property is subject;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Ground Lease does not place commercially unreasonable restrictions on the identity of the mortgagee and the Ground Lease is assignable to the holder of the Purchased Asset and its successors and assigns without the consent of the lessor thereunder, and in the event it is so assigned, it is further assignable by the holder of the Purchased Asset and its successors and assigns without the consent of the lessor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Seller has not received any written notice of material default under or notice of termination of such Ground Lease and, to Seller's knowledge, there is no material default under such Ground Lease and no condition that, but for the passage of time or giving of notice, would result in a material default under the terms of such Ground Lease and to Seller's knowledge, such Ground Lease is in full force and effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give to the lender written notice of any default, and provides that no notice of default or termination is effective against the lender unless such notice is given to the lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) a lender is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease through legal proceedings) to cure any default under the Ground Lease which is curable after the lender's receipt of notice of any default before the lessor may terminate the Ground Lease;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial mortgage lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) under the terms of the Ground Lease, an estoppel or other agreement received from the ground lessor and the related underlying Mortgage (taken together), any related insurance proceeds or the portion of the condemnation award allocable to the ground lessee's interest (other than (i) *de minimis* amounts for minor casualties or (ii) in respect of a total or substantially total loss or taking as addressed in <u>Paragraph (26)(k)</u> below) will be applied either to the repair or to restoration of all or part of the related underlying Mortgaged Property with (so long as such proceeds are in excess of the threshold amount specified in the related Purchased Asset Documents) the lender or a trustee appointed by it having the right to hold and disburse such proceeds as repair and restoration progresses, or, to the payment of the outstanding principal balance of the underlying Mortgage Loan, together with any accrued interest, with excess, if any, applied to the Mezzanine Loan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) in the case of a total or substantially total taking or loss, under the terms of the Ground Lease, an estoppel or other agreement and the related underlying Mortgage (taken together), any related insurance proceeds, or portion of the condemnation award allocable to ground lessee's interest in respect of a total or substantially total loss or taking of the related underlying Mortgaged Property to the extent not applied to restoration, will be applied first, pro rata, to the payment of the outstanding principal balance of the underlying Mortgage Loan and the Purchased Asset, together with any accrued interest; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>provided</u> that the lender cures any defaults which are susceptible to being cured, the ground lessor has agreed to enter into a new lease with the lender upon termination of the Ground Lease for any reason, including rejection of the Ground Lease in a bankruptcy proceeding.

Exhibit III-2-8

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If applicable, the ground lessor consented to and acknowledged that (i) the Mezzanine Loan is permitted / approved, (ii) any foreclosure of the Mezzanine Loan and related change in ownership of the ground lessee will not require the consent of the ground lessor or constitute a default under the ground lease, (iii) copies of default notices would be sent to mezzanine lender (or, in the alternative, mortgage lender has agreed to send such notice to mezzanine lender pursuant to the related intercreditor agreement) and (iv) it would accept cure from mezzanine lender on behalf of the ground lessee (or, in the alternative, mortgage lender has agreed to tender such cure on behalf of mezzanine lender pursuant to the related intercreditor agreement).

(27) <u>Servicing</u>. The servicing and collection practices used by Seller with respect to the Purchased Asset have been, in all material respects, legal and have met customary industry standards for servicing of similar commercial loans.

(28) <u>Origination and Underwriting</u>. The origination practices of Seller (or the related originator if Seller was not the originator) with respect to each Purchased Asset have been, in all material respects, legal and as of the date of its origination, such Purchased Asset and the origination thereof complied in all material respects with, or was exempt from, all requirements of federal, state or local laws and regulations relating to the origination of such Purchased Asset. At the time of origination of such Purchased Asset, the origination, due diligence and underwriting performed by or on behalf of Seller in connection with each Purchased Asset complied in all material respects with the terms, conditions and requirements of Seller's origination, due diligence, underwriting procedures, guidelines and standards for similar commercial and multifamily loans.

(29) <u>Rent Rolls; Operating Histories</u>. Seller has obtained a rent roll (other than with respect to hospitality properties) certified by the related Mezzanine Borrower or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Purchased Asset. Seller has obtained operating histories (the "<u>Certified Operating Histories</u>") with respect to each underlying Mortgaged Property certified by the related Mezzanine Borrower or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Purchased Asset. The Certified Operating Histories collectively report on operations for a period equal to (a) at least a continuous three-year period or (b) in the event the underlying Mortgaged Property was owned, operated or constructed by the underlying Mortgagor or an affiliate for less than three years then for such shorter period of time.

(30) <u>No Material Default; Payment Record</u>. No Purchased Asset has been more than 30 days delinquent, without giving effect to any grace or cure period, in making required payments since origination, and as of the Purchased Date, no Purchased Asset is delinquent (beyond any applicable grace or cure period) in making required payments. To Seller's knowledge, there is (a) no, and since origination there has been no, material default, breach, violation or event of acceleration existing under the related Purchased Asset Documents, or (b) no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default, breach, violation or event of acceleration, which default, breach, violation or event of acceleration, in the case of either <u>clause (a)</u> or <u>(b)</u>, materially and adversely affects the value of the Purchased Asset or the collateral for the Mezzanine Loan, or the value, use or operation of the underlying Mortgaged Property, *provided*, *however*, that this <u>Paragraph (30)</u> does not cover any default, breach, violation or event of acceleration that specifically pertains to or arises out of an exception scheduled to any other representation and warranty made by Seller in any Exception Report. No person other than the holder of such Purchased Asset may declare any event of default under the Purchased Asset or accelerate any indebtedness under the Purchased Asset Documents.

Exhibit III-2-9

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(31) <u>Bankruptcy</u>. As of the date of origination of the related Purchased Asset and to Seller's knowledge as of the Purchase Date, no Mezzanine Borrower, guarantor or issuer is a debtor in state or federal bankruptcy, insolvency or similar proceeding.

(32) <u>Organization of Mezzanine Borrower</u>. With respect to each Purchased Asset, in reliance on certified copies of the organizational documents of Mezzanine Borrower delivered by Mezzanine Borrower in connection with the origination of such Purchased Asset, Mezzanine Borrower is an entity organized under the laws of a state of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico. No Purchased Asset has a Mezzanine Borrower that is an Affiliate of another Mezzanine Borrower. Seller has obtained an organizational chart or other description of each Mezzanine Borrower which identifies all beneficial controlling owners of the Mezzanine Borrower (*i.e.*, managing members, general partners or similar controlling person for such Mezzanine Borrower) (the "<u>Controlling Owner</u>") and all owners that hold a 20% or greater direct ownership share (the "<u>Major Sponsors</u>"). Seller (a) required questionnaires to be completed by each Controlling Owner and guarantor or performed other processes designed to elicit information from each Controlling Owner and guarantor regarding such Controlling Owner's or guarantor's prior history regarding any bankruptcies or other insolvencies, any felony convictions, and (b) performed or caused to be performed searches of the public records or services such as Lexis/Nexis, or a similar service designed to elicit information about each Controlling Owner, Major Sponsor and guarantor regarding such Controlling Owner's, Major Sponsor's or guarantor's prior history regarding any bankruptcies or other insolvencies, any felony convictions, and <u>provided</u>, *however*, that manual public records searches were limited to the last 10 years (<u>clauses (a)</u> and <u>(b)</u> collectively, the "<u>Sponsor Diligence</u>"). Based solely on the Sponsor Diligence, to the knowledge of Seller, no Major Sponsor or guarantor (i) was in a state or federal bankruptcy or insolvency proceeding, (ii) had a prior record of having been in a state of federal bankruptcy or insolvency, or (iii) had been convicted of a felony.

(33) <u>Environmental Conditions</u>. In the case of each Purchased Asset with respect to which there is an environmental insurance policy (the "<u>Environmental Insurance Policy</u>"), (i) such Environmental Insurance has been issued by the issuer set forth in the related Exception Report (the "<u>Policy Issuer</u>") and is effective as of the Purchase Date, (ii) as of origination and to Seller's knowledge as of the Purchase Date the Environmental Insurance Policy is in full force and effect, there is no deductible and Seller is a named insured under such policy, (iii) (A) a property condition or engineering report was prepared, if the related underlying Mortgaged Property was constructed prior to 1985, with respect to asbestos-containing materials ("<u>ACM</u>") and, if the related underlying Mortgaged Property is a multifamily property, with respect to radon gas ("<u>RG</u>") and lead-based paint ("<u>LBP</u>"), and (B) if such report disclosed the existence of a material and adverse LBP, ACM or RG environmental condition or circumstance affecting the related underlying Mortgaged Property, the related underlying Mortgagor (1) was required to remediate the identified condition prior to closing the Purchased Asset or provide additional security or establish with the mortgagee a reserve in an amount deemed to be sufficient by Seller, for the remediation of the problem, and/or (2) agreed in the Purchased Asset Documents to establish an operations and maintenance plan after the closing of the Purchased Asset that should reasonably be expected to mitigate the environmental risk related to the identified LBP, ACM or RG condition, (iv) on the effective date of the Environmental Insurance Policy, Seller as originator had no knowledge of any material and adverse environmental condition or circumstance affecting the underlying Mortgaged Property (other than the existence of LBP, ACM or RG) that was not disclosed to the Policy Issuer in one or more of the following: (A) the application for insurance, (B) an underlying Mortgagor questionnaire that was provided to the Policy Issuer, or (C) an engineering or other report provided to the Policy Issuer, and (v) the premium of any Environmental Insurance Policy has been paid through the

Exhibit III-2-10

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maturity of the policy's term and the term of such policy extends at least five years beyond the maturity of the Purchased Asset.

(34) <u>Lease Estoppels</u>. With respect to each Purchased Asset for which the underlying Mortgage Loan is secured by retail, office or industrial properties, Seller requested the related underlying Mortgagor to obtain estoppels from each commercial tenant with respect to the rent roll delivered as of the origination date. With respect to each Purchased Asset for which the underlying Mortgage Loan is predominantly secured by a retail, office or industrial property leased to a single tenant, Seller reviewed such estoppel obtained from such tenant no earlier than 90 days prior to the origination date of the related Purchased Asset, and to Seller's knowledge, (i) the related lease is in full force and effect and (ii) there exists no default under such lease, either by the lessee thereunder or by the lessor subject, in each case, to customary reservations of tenant's rights, such as with respect to common area maintenance ("<u>CAM</u>") and pass-through audits and verification of landlord's compliance with co-tenancy provisions. With respect to each Purchased Asset for which the underlying Mortgage Loan is predominantly secured by a retail, office or industrial property, Seller has received lease estoppels executed within 90 days of the origination date of the related Purchased Asset that collectively account for at least 65% of the in-place base rent for the underlying Mortgaged Property related to the Purchased Asset that is represented as of the origination date. To Seller's knowledge, (i) each lease represented on the rent roll delivered as of the origination date is in full force and effect and (ii) there exists no material default under any such related lease that represents 20% or more of the in-place base rent for the underlying Mortgaged Property either by the lessee thereunder or by the related underlying Mortgagor, subject, in each case, to customary reservations of tenant's rights, such as with respect to CAM and pass-through audits and verification of landlord's compliance with co-tenancy provisions.

(35) <u>Appraisal</u>. The Purchased Asset File contains an appraisal of the related underlying Mortgaged Property with an appraisal date within six months of the Purchased Asset origination date, and within 12 months of the Purchase Date. The appraisal is signed by an appraiser who is a Member of the Appraisal Institute. Each appraiser has represented in such appraisal or in a supplemental letter that the appraisal satisfies the requirements of the "Uniform Standards of Professional Appraisal Practice" as adopted by the Appraisal Standards Board of the Appraisal Foundation and has certified that such appraiser had no interest, direct or indirect, in the underlying Mortgaged Property or the borrower or in any loan made on the security thereof, and its compensation is not affected by the approval or disapproval of the Purchased Asset.

(36) <u>Purchased Asset Schedule</u>. The information pertaining to each Purchased Asset which is set forth in the Purchased Asset Schedule is true and correct in all material respects as of the Purchased Date and contains all information required by the Repurchase Agreement to be contained therein.

(37) <u>Cross-Collateralization</u>. No Purchased Asset is cross-collateralized or cross-defaulted with any other loan, other than the related Mortgage Loan.

(38) <u>Advance of Funds by Seller</u>. After origination, no advance of funds has been made by Seller to Mezzanine Borrower other than in accordance with the Purchased Asset Documents, and, to Seller's knowledge, no funds have been received from any person other than Mezzanine Borrower or an affiliate for, or on account of, payments due on the Purchased Asset (other than as contemplated by the Purchased Asset Documents). Neither Seller nor any affiliate thereof has any obligation to make any capital contribution to any Mezzanine Borrower under a Purchased Asset, other than contributions made on or prior to the date hereof.

Exhibit III-2-11

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(39) <u>Compliance with Anti-Money Laundering Laws</u>. Seller has complied in all material respects with the Prescribed Laws. Seller has established an anti-money laundering compliance program as required by the Prescribed Laws, has conducted the requisite due diligence in connection with the origination of the Purchased Asset for purposes of the Prescribed Laws, including with respect to the legitimacy of the applicable Mezzanine Borrower and the origin of the assets used by said Mezzanine Borrower to acquire the Capital Stock, and maintains, and will maintain, sufficient information to identify the applicable Mezzanine Borrower for purposes of the Prescribed Laws.

(40) <u>OFAC</u>. (a) No Purchased Asset is (i) subject to nullification pursuant to Executive Order 13224 or the regulations promulgated by OFAC (the "<u>OFAC Regulations</u>") or (ii) in violation of Executive Order 13224 or the OFAC Regulations, and (b) no Mezzanine Borrower is (i) subject to the provisions of Executive Order 13224 or (ii) listed as a "blocked person" for purposes of the OFAC Regulations.

(41) <u>Floating Interest Rates</u>. Each Purchased Asset bears interest at a floating rate of interest that is based on Term SOFR plus a margin (which interest rate may be subject to a minimum or "floor" rate).

(42) No consent or approval by any Person is required in connection with Seller's sale and/or Administrative Agent's acquisition of such Mezzanine Loan, for Administrative Agent's exercise of any rights or remedies in respect of such Mezzanine Loan or for Administrative Agent's, sale, pledge or other disposition of such Mezzanine Loan. No third party holds any "right of first refusal", "right of first negotiation", "right of first offer", purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

(43) The related Purchased Asset Documents provide for the acceleration of the payment of the unpaid principal balance of the Mezzanine Loan if (i) Mezzanine Borrower voluntarily transfers or encumbers all or any portion of any related Capital Stock, or (ii) any direct or indirect interest in Mezzanine Borrower is voluntarily transferred or assigned, other than, in each case, as permitted under the terms and conditions of the related loan documents.

(44) Pursuant to the terms of the related Purchased Asset Documents: (a) no material terms of any related underlying Mortgage Loan may be waived, canceled, subordinated or modified in any material respect and no material portion of such Mortgage or the underlying Mortgaged Property may be released without the consent of the holder of the Mezzanine Loan; (b) no material action may be taken by the Mortgagor with respect to the underlying Mortgaged Property without the consent of the holder of the Mezzanine Loan; and (c) the holder of the Mezzanine Loan's consent is required prior to the Mortgagor incurring any additional indebtedness.

(45) <u>Article 8 Opt-In</u>. The LLC Certificate of the issuer of the Capital Stock securing the Purchased Asset constitutes a "security" within the meaning of Article 8 of the UCC, and no amendment of the issuer's operating agreement that amends the opt-in may be effected without the consent of the holder of the Mezzanine Loan.

Exhibit III-2-12

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**Exhibit IV**

**FORM OF BAILEE AGREEMENT<br>[SELLER'S NAME AND ADDRESS]**

_______________ __, 20__

[ ]

Re: Bailee Agreement (this "<u>Bailee Agreement</u>") in connection with the sale of [description of Purchased Asset] by ACRES Real Estate SPE 10, LLC, as seller ("<u>Seller</u>") to Morgan Stanley Mortgage Capital Holdings LLC, as administrative agent, on behalf of Buyers (together with its permitted successors and assigns, "<u>Administrative Agent</u>")

Ladies and Gentlemen:

In consideration of the mutual premises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, Administrative Agent, on behalf of Buyers, and [_________] ("<u>Bailee</u>") hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Seller shall deliver to Bailee in connection with any Purchased Assets delivered to Bailee hereunder a Custodial Delivery Certificate in the form of <u>Attachment 1</u> attached hereto (the "<u>Custodial Delivery Certificate</u>") to which shall be attached a Purchased Asset Schedule identifying the Purchased Asset(s) being delivered to Bailee hereunder. Such Purchased Asset Schedule shall contain the following fields of information: (a) the loan identifying number; (b) the obligor's name; (c) the street address, city, state and zip code for the applicable real property; (d) the original balance; and (e) the current principal balance if different from the original balance and such other information as Administrative Agent, on behalf of Buyers, shall require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. On or prior to the date indicated on the Custodial Delivery Certificate (the "<u>Purchase Date</u>"), Seller shall have delivered to Bailee, as bailee for hire, the original Purchased Asset File (as set forth on Exhibit B to <u>Attachment 1</u>) for each of the Purchased Assets listed in Exhibit A to <u>Attachment 1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Bailee shall issue and deliver to Administrative Agent, on behalf of Buyers, and Custodian (as defined in <u>Section 5</u> below) on or prior to the Purchase Date by facsimile or other electronic transmission, in the name of Administrative Agent, on behalf of Buyers, an initial trust receipt and certification in the form of <u>Attachment 1</u> attached hereto (the "<u>Trust Receipt</u>"), which Trust Receipt shall state that Bailee has received the original documents comprising the Purchased Asset File as set forth in the Custodial Delivery Certificate, in addition to such other documents required to be delivered to Administrative Agent, on behalf of Buyers, and/or Custodian pursuant to the Master Repurchase and Securities Contract Agreement dated as of November 3, 2021, among by and among Administrative Agent, on behalf of Morgan Stanley Bank, N.A., a national banking association ("<u>MSBNA</u>"), and such other financial institutions from time to time party thereto, as buyers (MSBNA, together with such other financial institutions from time to time party thereto, as buyers, and together with their respective successors and assigns, collectively, "<u>Buyers</u>" and individually, each a "<u>Buyer</u>") and Seller (as the same may have been or may be amended from time to time, the "<u>Repurchase Agreement</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. On the applicable Purchase Date, in the event that Administrative Agent, on behalf of Buyers, fails to purchase any New Asset from Seller that is identified in the related Custodial Delivery Certificate, Administrative Agent shall deliver by facsimile or other electronic transmission to Bailee at

Exhibit IV-1

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[_______] to the attention of [________], an authorization (the "<u>Electronic Authorization</u>") to release the Purchased Asset Files with respect to the Purchased Assets identified therein to Seller. Upon receipt of such Electronic Authorization, Bailee shall release the Purchased Asset Files to Seller in accordance with Seller's instructions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Following the Purchase Date, Bailee shall forward the Purchased Asset Files to [________________] ("<u>Custodian</u>") by insured overnight courier for receipt by Custodian no later than 1:00 p.m. on the third (3rd) Business Day following the applicable Purchase Date (the "<u>Delivery Date</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. From and after the applicable Purchase Date until the time of receipt of the Electronic Authorization or the applicable Delivery Date, as applicable, Bailee (a) shall maintain continuous custody and control of the related Purchased Asset Files as bailee for Administrative Agent, on behalf of Buyers, and (b) is holding the related Purchased Asset Files as sole and exclusive bailee for Administrative Agent, on behalf of Buyers, unless and until otherwise instructed in writing by Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Seller agrees to indemnify and hold Bailee and its partners, directors, officers, agents and employees harmless against any and all actual and out-of-pocket third party liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable attorney's fees, that may be imposed on, incurred by, or asserted against it or them in any way relating to or arising out of this Bailee Agreement or any action taken or not taken by it or them hereunder unless such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (other than special, indirect, punitive or consequential damages, which shall in no event be paid by Seller) were imposed on, incurred by or asserted against Bailee because of the breach by Bailee of its obligations hereunder, which breach was caused by negligence, lack of good faith or willful misconduct on the part of Bailee or any of its partners, directors, officers, agents or employees. The foregoing indemnification shall survive any resignation or removal of Bailee or the termination or assignment of this Bailee Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. In the event that the Bailee fails to produce any document in a Purchased Asset File related to a Purchased Asset that is (or was required to be) then in its possession within three (3) Business Days after required or requested by Seller or Administrative Agent, on behalf of Buyers (a "<u>Bailee Delivery Failure</u>"), the Bailee shall indemnify and hold Administrative Agent and Buyers harmless against actual out of pocket liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable attorneys fees, that may be imposed on, incurred by, or asserted against it in any way relating to or arising out of such Bailee Delivery Failure (but excluding special, indirect, punitive or consequential damages).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Seller agrees to indemnify and hold Administrative Agent and Buyers and their respective affiliates and designees harmless against any and all actual and out-of-pocket third party liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable attorneys fees, that may be imposed on, incurred by, or asserted against it or them in any way relating to or arising out of a Custodial Delivery Failure (as defined in the Custodial Agreement) or the Bailee's negligence, lack of good faith or willful misconduct. The foregoing indemnification shall survive any termination or assignment of this Bailee Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. Seller hereby represents, warrants and covenants that Bailee is not an affiliate of or otherwise controlled by Seller. Notwithstanding the foregoing, the parties hereby acknowledge that Bailee hereunder may act as counsel to Seller in connection with a proposed transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. This Bailee Agreement may not be modified, amended or altered, except by written instrument, executed by all of the parties hereto.

Exhibit IV-2

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. This Bailee Agreement may not be assigned by Seller or Bailee without the prior written consent of Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. For the purpose of facilitating the execution of this Bailee Agreement as herein provided and for other purposes, this Bailee Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute and be one and the same instrument. Each party to this Bailee Agreement (a) agrees that it will be bound by its own Electronic Signature, (b) accepts the Electronic Signature of each other party to this Bailee Agreement, and (c) agrees that such Electronic Signatures shall be the legal equivalent of manual signatures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. This Bailee Agreement shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Repurchase Agreement.

[SIGNATURES COMMENCE ON NEXT PAGE]

Very truly yours,

**ACRES REAL ESTATE SPE 10, LLC,**<br>a Delaware limited liability company, Seller

By: ________________________________________<br>Name:<br>Title:

Exhibit IV-3

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ACCEPTED AND AGREED:<br>[_______], Bailee

By: ___________________________________<br>Name:<br>Title:

ACCEPTED AND AGREED:<br>**MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,**<br>a New York limited liability company, Administrative Agent

By: ___________________________________<br>Name:<br>Title:

**ATTACHMENT 1 TO BAILEE AGREEMENT<br>CUSTODIAL DELIVERY CERTIFICATE**<sup>2</sup>

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<sup>2</sup> Note: EXHIBIT A – Purchased Asset Schedule; EXHIBIT B – Purchased Asset Documents.

Exhibit IV-4

------

**ATTACHMENT 2 TO BAILEE AGREEMENT<br>FORM OF BAILEE'S TRUST RECEIPT**

____________, 20__<br>Morgan Stanley Mortgage Capital Holdings LLC<br>1585 Broadway, 2nd Floor<br>New York, New York 10036<br>Attention: Anthony Preisano

Re: Bailee Agreement, dated __________, 20___ (the "<u>Bailee Agreement</u>") among ACRES Real Estate SPE 10, LLC ("<u>Seller</u>"), Morgan Stanley Mortgage Capital Holdings LLC, as administrative agent, on behalf of Buyers (together with its permitted successors and assigns, "<u>Administrative Agent</u>") and _______________ ("<u>Bailee</u>")

Ladies and Gentlemen:

In accordance with the provisions of <u>Section 3</u> of the Bailee Agreement, the undersigned, as Bailee, hereby certifies that as to the Purchased Asset described in the Purchased Asset Schedule (Exhibit A to Attachment 1 to the Bailee Agreement), it has reviewed the Purchased Asset File (Exhibit B to Attachment 1 to the Bailee Agreement) and has determined that (i) all documents listed in the Purchased Asset File attached to the Bailee Agreement are in its possession and (ii) such documents have been reviewed by it and appear regular on their face and relate to the Purchased Asset.

Bailee hereby confirms that it is holding the Purchased Asset File as agent and bailee for the exclusive use and benefit of Administrative Agent, on behalf of Buyers, pursuant to the terms of the Bailee Agreement.

All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Bailee Agreement.

<br>__________________________________________<br>Bailee<br>

By:________________________________________<br>Name:<br>Title:

Exhibit IV-5

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**Exhibit V**

**AUTHORIZED REPRESENTATIVES OF SELLER**

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| | |
|:---|:---|
| &nbsp;&nbsp;**Name** | &nbsp;&nbsp;**Specimen Signature** |
| &nbsp;&nbsp;[●] |  |
| &nbsp;&nbsp;[●] |  |
| &nbsp;&nbsp;[●] |  |
| &nbsp;&nbsp;[●] |  |
| &nbsp;&nbsp;[●] |  |

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Signature Page to Master Repurchase and Securities Contract Agreement

Exhibit V-1

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**Exhibit VI**

**FORM OF FINANCIAL COVENANT COMPLIANCE CERTIFICATE**

[_____________], 20[__]

Morgan Stanley Mortgage<br>Capital Holdings LLC<br>1585 Broadway, 25th Floor<br>New York, New York 10036<br>Attention: Anthony Preisano

This Financial Covenant Compliance Certificate is furnished pursuant to that certain Master Repurchase and Securities Contract Agreement, dated as of November 3, 2021 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the "<u>Master Repurchase and Securities Contract Agreement</u>"), by and among Morgan Stanley Mortgage Capital Holdings LLC, a New York limited liability company, as administrative agent (in such capacity, together with its permitted successors and assigns, the "<u>Administrative Agent</u>") for Morgan Stanley Bank, N.A., a national banking association ("<u>MSBNA</u>"), as Buyer (MSBNA, together with its successors and assigns, and together with such other financial institutions from time to time party thereto, collectively "<u>Buyers</u>" and individually, each a "<u>Buyer</u>"), and ACRES Real Estate SPE 10, LLC, a Delaware limited liability company, as seller ("<u>Seller</u>"). Unless otherwise defined in the Master Repurchase and Securities Contract Agreement, capitalized terms used in this Financial Covenant Compliance Certificate have the respective meanings ascribed thereto in the Guaranty.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

(1) The Person executing this Financial Covenant Compliance Certificate on behalf of Seller is a duly elected responsible officer of Seller and such Person provides this Financial Covenant Compliance Certificate solely in such Person's capacity as an officer of Seller and not in such Person's individual capacity.

(2) All of the financial statements, calculations and other information set forth in this Financial Covenant Compliance Certificate, including, without limitation, in any exhibit or other attachment hereto, are true, complete and correct as of the date hereof.

(3) The Seller and Guarantor have reviewed the terms of the Master Repurchase and Securities Contract Agreement and have made, or have caused to be made under its supervision, a detailed review of the transactions and financial condition of Seller, and Guarantor during the accounting period covered by the financial statements attached (or most recently delivered to Buyer if none are attached).

(4) I am not aware of any facts, or pending developments that have caused, or may in the future cause the Market Value of any Purchased Asset to decline at any time within the reasonably foreseeable future.

(5) Each of Seller and Guarantor has, during the period since the delivery of the immediately preceding Financial Covenant Compliance Certificate, observed or performed all of its covenants, duties and agreements in all material respects, and satisfied in all material respects every condition contained in the Master Repurchase and Securities Contract Agreement and the related documents to be observed, performed or satisfied by it, and Seller and Guarantor have no knowledge of the occurrence during such period, or present existence, of any condition or event which constitutes an

Exhibit VI-1

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Event of Default or Default (including after giving effect to any pending Transactions requested to be entered into), except as set forth below.

(6) Attached as <u>Exhibit 1</u> hereto are the financial statements required to be delivered pursuant to the Master Repurchase and Securities Contract Agreement (or, if none are required to be delivered as of the date of this Financial Covenant Compliance Certificate, the financial statements most recently delivered pursuant to the Master Repurchase and Securities Contract Agreement), which financial statements, to the best knowledge of Seller and Guarantor after due inquiry, fairly and accurately present in all material respects, the consolidated financial condition and operations of Guarantor, Guarantor's Consolidated Subsidiaries and the consolidated results of their operations as of the date or with respect to the period therein specified, determined in accordance with GAAP.

(7) Guarantor is in compliance in all respects with the financial covenants set forth in <u>Section 9</u> of the Guaranty (the "<u>Financial Covenants</u>"). Attached as <u>Exhibit 2</u> hereto are the calculations demonstrating compliance with the Financial Covenants.

(8) Except as otherwise set forth herein, all representations and warranties made by Seller, and Guarantor in, pursuant to or in connection with the Master Repurchase and Securities Contract Agreement or any other document, agreement, statement, affirmation, certificate, notice, report or financial or other statement delivered in connection herewith or therewith, are true, correct and complete on and as of the date of this Financial Covenant Compliance Certificate as though made on and as of such day and shall be deemed to be made on such day, except as to the extent disclosed in an Exception Report.

To the extent that financial statements are being delivered in connection with this Financial Covenant Compliance Certificate, Seller hereby makes the following representations and warranties: (i) it is in compliance with all of the terms and conditions of the Master Repurchase and Securities Contract Agreement and (ii) it has no claim or offset against Administrative Agent and/or any Buyer under the Transaction Documents.

Described below are the exceptions, if any, to the above paragraphs, setting forth in detail the nature of the condition or event, the period during which it has existed and the action which Seller and/or Guarantor has taken, is taking, or proposes to take with respect to each such condition or event:

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

The foregoing certifications, together with the financial statements, updates, reports, materials, calculations and other information set forth in any exhibit or other attachment hereto, or otherwise covered by this Financial Covenant Compliance Certificate, are made and delivered this [__________], 20[__].

Exhibit VI-2

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**<u>SELLER</u>:**<br>ACRES REAL ESTATE SPE 10, LLC,<br>a Delaware limited liability company

By: ______________________<br>Name:<br>Title:<br>Date:

**<u>GUARANTOR</u>:**<br>ACRES COMMERCIAL REALTY CORP.,<br>a Maryland corporation

By: ______________________<br>Name:<br>Title:<br>Date:

Exhibit VI-3

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**Annex I<br>NOTICE INSTRUCTIONS**

<u>ADMINISTRATIVE AGENT</u>: Morgan Stanley Mortgage Capital Holdings LLC<br>1585 Broadway, 25th Floor<br>New York, New York 10036<br>Attention: Anthony Preisano<br>Telephone: (212) 761-5688<br>Email: Anthony.Preisano@morganstanley.com

with a copy to: Morgan Stanley Bank, N.A.<br>One Utah Center, 201 South Main Street<br>Salt Lake City, Utah 84111

and to: Morgan Stanley Bank, N.A.<br>1 New York Plaza, 41st Floor<br>New York, New York 10004<br>Attention: Tom O'Donnell<br>Telephone: (212) 276-0616<br>Email: wltapes@morganstanley.com

and to: Paul Hastings LLP<br>200 Park Avenue<br>New York, New York 10166<br>Attention: Lisa A. Chaney, Esq.<br>Telephone: (212) 318-6773<br>Email: lisachaney@paulhastings.com

<u>SELLER</u>: ACRES Real Estate SPE 10, LLC<br>c/o ACRES Capital, LLC<br>390 RXR Plaza<br>Uniondale, NY 11556<br>Attention: Mark Fogel<br>Telephone: (516) 336-8122<br>Email: MF@acrescap.com

with a copy to: Melissa C. Hinkle, Esq., Partner<br>Cadwalader, Wickersham & Taft LLP<br>200 Liberty Street, 36-117<br>New York, NY 10281<br>Telephone: (212) 504-6972<br>Email: melissa.hinkle@cwt.com

and to: ACRES Real Estate SPE 10, LLC<br>c/o ACRES Capital, LLC<br>390 RXR Plaza<br>Uniondale, NY 11556<br>Attention: Jaclyn Jesberger<br>Telephone: (516) 882-1662<br>Email: jjesberger@acrescap.com

Annex I

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**Annex II<br>WIRING INSTRUCTIONS**

<u>Payments to Administrative Agent, on behalf of Buyers</u>: Payments to Administrative Agent, on behalf of Buyers under this Agreement shall be made by transfer, via wire transfer, to the following account of Administrative Agent, on behalf of Buyers:

Bank Name: Citibank, N.A.<br>ABA #: 021000089<br>Account #: xxxxxxxxxx<br>Account Name: Morgan Stanley Mortgage Capital Holdings LLC<br>Ref: NY Warehouse, ACRES

Administrative Agent, on behalf of Buyers, may consider on a case-by-case-basis in its sole and absolute discretion alternative funding arrangements.

<u>Payments to Seller</u>: Payments to Seller under this Agreement shall be made by transfer, via wire transfer, to the following account of Seller:

Bank: TD Bank NA

ABA: 031-101-266

Account Name: ACRES Realty Funding Inc.

Account #: xxxxxxxxxx

Annex II

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## Exhibit 99.2

Exhibit 99.2(k)

**<u>Sixth Amendment to Master Repurchase and securities contract Agreement</u>** 

This Sixth Amendment to Master Repurchase and Securities Contract Agreement (this "**<u>Amendment</u>**"), dated as of March 5, 2026, is by and among MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company ("**<u>MSMCH</u>**"), as administrative agent (in such capacity, together with its permitted successors and assigns, the "**<u>Administrative Agent</u>**") for MORGAN STANLEY BANK, N.A., a national banking association ("**<u>MSBNA</u>**") and such other financial institutions from time to time party to the Master Repurchase Agreement (as defined below), ACRES REAL ESTATE SPE 10, LLC, a Delaware limited liability company, as seller ("**<u>Seller</u>**"), and ACRES COMMERCIAL REALTY CORP, a Maryland corporation ("**<u>Guarantor</u>**").

**<u>W I T N E S S E T H</u>:**

**WHEREAS**, Seller, Administrative Agent and MSBNA are parties to that certain Master Repurchase and Securities Contract Agreement, dated as of November 3, 2021, as amended by that certain First Amendment to Master Repurchase and Securities Contract Agreement, dated as of January 28, 2022, as amended by that certain Second Amendment to Master Repurchase and Securities Contract Agreement, dated as of November 1, 2024, as amended by that certain Third Amendment to Master Repurchase and Securities Contract Agreement, dated as of November 3, 2025, as amended by that certain Fourth Amendment to Master Repurchase and Securities Contract Agreement, dated as of November 5, 2025, and as amended by that certain Fifth Amendment to Master Repurchase and Securities Contract Agreement, dated as of December 18, 2025 (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "**<u>Master Repurchase Agreement</u>**");

**WHEREAS**, Seller has requested and Buyer has agreed to decrease the Facility Amount; and

**WHEREAS**, Seller, Guarantor and Administrative Agent, on behalf of Buyers, wish to modify certain terms and provisions of the Master Repurchase Agreement as set forth herein.

**NOW, THEREFORE**, for good and valuable consideration, the parties hereto agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Amendment to the Master Repurchase Agreement</u>. The Master Repurchase Agreement is hereby amended to delete the red stricken text (indicated textually in the same manner as the following example: **stricken text**), move the green stricken text from its current location to the location of the green underlined text (indicated textually in the same manner as the following example: **stricken text** to **<u>underlined text</u>**) and to add the blue underlined text (indicated textually in the same manner as the following example: **<u>underlined text</u>**) as attached hereto on <u>Annex A</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Representations and Warranties</u>. Seller and Guarantor each hereby represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) no uncured monetary Default, material non-monetary Default or Event of Default or any unsatisfied Margin Deficit has occurred and is continuing as of the date hereof or will occur as a result of the execution, delivery and performance by Seller and Guarantor of this Amendment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the representations and warranties made by each of Seller and Guarantor in the Transaction Documents are true, correct, complete and accurate in all respects as of the date

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hereof, except to the extent that such representations and warranties (a) are made as of a particular date or (b) are no longer true as a result of a change in fact with respect to a Purchased Asset that was consented to in writing by Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) no amendments have been made to the organizational documents of Seller, Pledgor or Guarantor since November 3, 2021; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the person signing this Amendment on behalf of Seller and/or Guarantor is duly authorized to do so on its behalf.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Effectiveness</u>. The effectiveness of this Amendment is subject to receipt by Administrative Agent of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Amendment</u>. This Amendment, duly executed and delivered by Seller, Guarantor and Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Fees</u>. Payment by Seller of (i) the Upsize Fee (as defined in the Fourth Amendment) in the amount of $103,125.00, (ii) the Facility Increase Fee (as defined in the Fourth Amendment) in the amount of $19,444.44, and (iii) the actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Administrative Agent and/or Buyers, incurred by Administrative Agent, on behalf of Buyers, in connection with this Amendment and the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>[Reserved]</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>[Reserved]</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>[Reserved]</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Continuing Effect; Reaffirmation of Guaranty.</u> As amended by this Amendment, all terms, covenants and provisions of the Master Repurchase Agreement and the other Transaction Documents are ratified and confirmed and shall remain in full force and effect. As amended by this Amendment, all terms, covenants and provisions of the Master Repurchase Agreement are ratified and confirmed and shall remain in full force and effect. In addition, any and all guaranties and indemnities for the benefit of Administrative Agent and/or Buyers (including, without limitation, the Guaranty) and agreements subordinating rights and liens to the rights and liens of Administrative Agent and/or Buyers, are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Administrative Agent and/or Buyers, and each party subordinating any right or lien to the rights and liens of Administrative Agent and/or Buyers, hereby consents, acknowledges and agrees to the modifications set forth in this Amendment and waives any common law, equitable, statutory or other rights which such party might otherwise have as a result of or in connection with this Amendment. This Amendment shall be deemed a "Transaction Document" for all purposes under the Master Repurchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Binding Effect; No Partnership; Counterparts</u>. The provisions of the Master Repurchase Agreement as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained

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shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. The parties consent to the use of electronic signatures and any counterpart delivered by facsimile, pdf or other electronic means shall have the same import and effect as original counterparts and shall be valid, enforceable and binding for the purposes of this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Further Agreements</u>. Seller and Guarantor agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Administrative Agent and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Governing Law</u>. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Defined Terms</u>. Capitalized terms used but not defined herein shall have the meanings set forth in the Master Repurchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Headings</u>. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>References to Transaction Documents</u>. All references to the Master Repurchase Agreement in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement as amended hereby, unless the context expressly requires otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>No Waiver</u>. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Administrative Agent or any Buyer under the Master Repurchase Agreement or any other Transaction Document, nor constitute a waiver of any provision of the Master Repurchase Agreement or any other Transaction Document by any of the parties hereto.

[NO FURTHER TEXT ON THIS PAGE]

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**IN WITNESS WHEREOF**, the parties have executed this Amendment as of the day first written above.

**<u>ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS:</u>**<br>**MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC**, a New York limited liability company**** <br>

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: | &nbsp;&nbsp;/s/ Evan Hershy |
|  | &nbsp;&nbsp;Name: Evan Hershy<br>Title: Authorized Signatory |

---

**[SIGNATURES CONTINUE ON FOLLOWING PAGE]**

------

**<u>SELLER</u>**:<br>**ACRES REAL ESTATE SPE 10, LLC**, a Delaware limited liability company

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: | &nbsp;&nbsp;/s/ Jaclyn Jesberger |
|  | &nbsp;&nbsp;Name: Jaclyn Jesberger<br>Title: Senior Vice President |

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**<u>ACKNOWLEDGED AND AGREED TO BY</u>**

------

**<u>GUARANTOR</u>:**

**ACRES COMMERCIAL REALTY CORP.,** a Maryland corporation

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: | &nbsp;&nbsp;/s/ Jaclyn Jesberger |
|  | &nbsp;&nbsp;Name: Jaclyn Jesberger<br>Title: Senior Vice President |

---

------

**ANNEX A TO THE FIFTH<u>SIXTH</u> AMENDMENT TO MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT**

**MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT<br>among<br>MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,<br>As Administrative Agent,<br>THE FINANCIAL INSTITUTIONS PARTY HERETO<br>as Buyers,<br>and<br>ACRES REAL ESTATE SPE 10, LLC<br>as Seller**

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**Table of Contents**

**Page**

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. APPLICABILITY | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. DEFINITIONS | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. INITIATION; CONFIRMATION; TERMINATION; FEES | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. CAUTIONARY SECURITY INTEREST | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. PAYMENT, TRANSFER AND CUSTODY | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. CERTAIN RIGHTS OF ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS, WITH RESPECT TO THE PURCHASED ASSETS | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. EXTENSION OF FACILITY TERMINATION DATE | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. REPRESENTATIONS | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. NEGATIVE COVENANTS OF SELLER | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. AFFIRMATIVE COVENANTS OF SELLER | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. SINGLE-PURPOSE ENTITY | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. EVENTS OF DEFAULT; REMEDIES | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. SINGLE AGREEMENT | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. NOTICES AND OTHER COMMUNICATIONS | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. NON-ASSIGNABILITY | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ETC. | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. NO RELIANCE; DISCLAIMERS | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. INDEMNITY AND EXPENSES | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. DUE DILIGENCE | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22. SERVICING | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23. TREATMENT FOR TAX PURPOSES | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24. INTENT | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26. SETOFF RIGHTS | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27. ADMINISTRATIVE AGENT | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28. MISCELLANEOUS | 74 |

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i

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**SCHEDULES**

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| | |
|:---|:---|
| &nbsp;&nbsp;SCHEDULE 1 | &nbsp;&nbsp;Maximum Purchase Percentage |
| &nbsp;&nbsp;SCHEDULE 2 | &nbsp;&nbsp;Purchased Asset Documents |
| &nbsp;&nbsp;SCHEDULE 3 | &nbsp;&nbsp;Prohibited Transferees |

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**EXHIBITS**

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| | |
|:---|:---|
| &nbsp;&nbsp;EXHIBIT I | &nbsp;&nbsp;Form of Confirmation |
| &nbsp;&nbsp;EXHIBIT II-1 | &nbsp;&nbsp;Form of Power of Attorney to Administrative Agent, on Behalf of Buyers, |
| &nbsp;&nbsp;EXHIBIT II-2 | &nbsp;&nbsp;Form of Power of Attorney to Seller |
| &nbsp;&nbsp;EXHIBIT III | &nbsp;&nbsp;Representations and Warranties Regarding the Purchased Assets |
| &nbsp;&nbsp;EXHIBIT IV | &nbsp;&nbsp;Form of Bailee Agreement |
| &nbsp;&nbsp;EXHIBIT V | &nbsp;&nbsp;Authorized Representatives of Seller |

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**ANNEXES**

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| | |
|:---|:---|
| &nbsp;&nbsp;ANNEX I | &nbsp;&nbsp;Notice Instructions |
| &nbsp;&nbsp;ANNEX II | &nbsp;&nbsp;Wiring Instructions |

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**MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT**

This Master Repurchase and Securities Contract Agreement (this "<u>Agreement</u>") is dated as of November 3, 2021, and is made by and among MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company ("<u>MSMCH</u>"), as administrative agent (in such capacity, together with its permitted successors and assigns, the "<u>Administrative Agent</u>") for MORGAN STANLEY BANK, N.A. ("<u>MSBNA</u>"), a national banking association, and such other financial institutions from time to time party hereto as buyers (MSBNA, together with its successors and permitted assigns, and together with such other financial institutions from time to time party hereto and their respective successors and permitted assigns, collectively "<u>Buyers</u>" and individually, each a "<u>Buyer</u>") and ACRES REAL ESTATE SPE 10, LLC, a Delaware limited liability company, as seller ("<u>Seller</u>").

**1. APPLICABILITY**

From time to time the parties hereto may enter into transactions in which Seller agrees to transfer to Administrative Agent, on behalf of Buyers, one or more Eligible Assets, on a servicing-released basis, against the transfer of funds by Buyers with a simultaneous agreement by Administrative Agent, on behalf of Buyers, to transfer to Seller such Eligible Assets at a date certain (or such earlier date in accordance with the terms hereof) against the transfer of funds by Seller to Administrative Agent, on behalf of Buyers. Each such transaction involving the transfer of an Eligible Asset from Seller to Administrative Agent, on behalf of Buyers, shall be referred to herein as a "<u>Transaction</u>" and, unless otherwise agreed in writing, shall be governed by this Agreement.

**2. DEFINITIONS**

Capitalized terms in this Agreement shall have the respective meanings set forth below:

"<u>1934 Act</u>" shall mean the Securities Exchange Act of 1934, as amended.

"<u>AB Mortgage Loan</u>" shall mean a Mortgage Loan evidenced by two or more senior and subordinate Mortgage Notes.

"<u>Accelerated Repurchase Date</u>" shall have the meaning specified in <u>Section 14(b)(i)</u> of this Agreement.

"<u>Act of Insolvency</u>" shall mean, with respect to any Person: the filing of a decree or order for relief by a court having jurisdiction over such Person or any substantial part of its assets or property in an involuntary case under any applicable Insolvency Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, or ordering the winding–up or liquidation of such Person's affairs, and such decree or order shall remain unstayed and in effect for a period of thirty (30) days, the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, the consent by such Person to the entry of an order for relief in an involuntary case under any Insolvency Law, the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, the making by such Person of any general assignment for the benefit of creditors, the admission of the inability of such Person to pay its debts or discharge its obligations generally as they become due or mature, the failure by such Person generally to pay its debts as they become due, the taking of any action by any Governmental Authority or agency or any Person, agency or entity acting or purporting to act under Governmental Authority to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the property of such Person, or shall have taken any action to displace the management

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of such Person or to curtail its authority in the conduct of the business of such Person, or the taking of action by such Person in furtherance of any of the foregoing.

"<u>Administrative Agent</u>" shall have the meaning assigned thereto in the introductory paragraph hereto.

"<u>Affiliate</u>" shall mean, (i) when used with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person and (ii) with respect to Seller, any "affiliate" of Seller as such term is defined in the Bankruptcy Code.

"<u>Affiliated Hedge Counterparty</u>" shall mean Morgan Stanley Bank, N.A., or any other Buyer, or any Affiliate of Morgan Stanley Bank, N.A., or any other Buyer, in each case, in its capacity as a party to any Hedging Transaction with Seller.

"<u>Aggregate Repurchase Price</u>" shall mean, as of any date of determination, the aggregate Repurchase Price (excluding any accrued and unpaid Price Differential) of all Purchased Assets outstanding as of such date.

"<u>Agreement</u>" shall have the meaning specified in the introductory paragraph of this Agreement.

"<u>Applicable Spread</u>" shall have the meaning specified in the Fee Letter.

"<u>Appraisal</u>" shall mean an appraisal of any Eligible Property prepared by a licensed Independent Appraiser approved by Administrative Agent, on behalf of Buyers, in its reasonable discretion, in accordance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation, in compliance with the requirements of Title 11 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and utilizing customary valuation methods, such as the income, sales/market or cost approaches, as any of the same may be updated by recertification from time to time by the appraiser performing such Appraisal.

"<u>Asset Base Component</u>" shall mean, as of any date of determination, with respect to each Purchased Asset, the product of (a) its Market Value, *multiplied by* (b) the Maximum Purchase Percentage applicable to such Purchased Asset as of such date.

"<u>Assignment of Leases</u>" shall mean, with respect to any Purchased Asset that is a Mortgage Loan, any assignment of leases, rents and profits or equivalent instrument, whether contained in the related Mortgage or executed separately, assigning to the holder or holders of such Mortgage all of the related Mortgagor's interest in the leases, rents and profits derived from the ownership, operation, leasing or disposition of all or a portion of the related Mortgaged Property as security for repayment of such Purchased Asset.

"<u>Assignment of Mortgage</u>" shall mean, with respect to any Purchased Asset that is a Mortgage Loan, an assignment of the mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related property is located to reflect the assignment and pledge of the Mortgage, subject to the terms of this Agreement.

*"*<u>Available Tenor</u>" means, as of any date of determination and with respect to the then-current Benchmark, any tenor for such Benchmark or payment period for price differential calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of a Pricing Period pursuant to this Agreement as of such date.

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"<u>Bailee</u>" shall mean such third party as Administrative Agent, on behalf of Buyers, and Seller shall mutually approve in their sole discretion, exercised in good faith.

"<u>Bailee Agreement</u>" shall mean a Bailee Agreement among Seller, Administrative Agent, on behalf of Buyers, and Bailee in the form of <u>Exhibit IV</u> hereto.

"<u>Bailee Delivery Failure</u>" shall have the meaning specified in the Bailee Agreement.

"<u>Bankruptcy Code</u>" shall mean Title 11 of the United States Code, as amended, modified or replaced from time to time.

"<u>Benchmark</u>" means, initially Term SOFR; provided that, if a Benchmark Transition Event and the Benchmark Replacement Date with respect thereto have occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then "Benchmark" means the applicable Benchmark Replacement to the extent such Benchmark Replacement has replaced such Benchmark pursuant to Article 3(l).

"<u>Benchmark Replacement</u>" means, with respect to any Benchmark Transition Event for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent, on behalf of Buyers, as a replacement of the applicable then-current Benchmark on the applicable Benchmark Replacement Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the sum of: (a) either of (i) Compounded SOFR or (ii) Daily Simple SOFR, as selected by the Administrative Agent, on behalf of Buyers, to be the then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for the applicable loan market and (b) the applicable Benchmark Replacement Adjustment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the sum of: (a) the alternate rate of interest that has been selected by Administrative Agent, on behalf of Buyers, as the replacement for the then-current Benchmark for the applicable Corresponding Tenor in accordance with any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated secured financings or securitizations relating to the relevant asset class, as applicable at such time and (b) the Benchmark Replacement Adjustment.

If at any time the Benchmark Replacement as determined pursuant to this definition would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement.

"<u>Benchmark Replacement Adjustment</u>" means the first alternative set forth in the order below that can be determined by Administrative Agent, on behalf of Buyers, as of the Benchmark Replacement Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected, endorsed or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the spread adjustment (which may be a positive or negative value or zero) that has been selected by Administrative Agent, on behalf of Buyers, giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated secured financing or securitization transactions relating to the relevant asset class, as applicable at such time.

"<u>Benchmark Replacement Conforming Changes</u>" means, with respect to the use or administration of Term SOFR or any Benchmark Replacement, any technical, administrative or operational changes (including but not limited to changes to the definition of "Business Day," the definition of "Pricing Period," timing and frequency of determining rates and making payments of price differential, timing of Transaction requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that Administrative Agent, on behalf of Buyers, decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by Administrative Agent, on behalf of Buyers, in a manner substantially consistent with market practice (or, if Administrative Agent, on behalf of Buyers, decides that adoption of any portion of such market practice is not administratively feasible or if Administrative Agent, on behalf of Buyers, determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as Administrative Agent, on behalf of Buyers, determines is reasonably necessary in connection with the administration of this Agreement.

"<u>Benchmark Replacement Date</u>" means the earliest to occur of the following events with respect to the then-current Benchmark or if the then current Benchmark is Term SOFR, with respect to the Term SOFR Reference Rate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) in the case of <u>clause (1)</u> or <u>(2)</u> of the definition of "Benchmark Transition Event," the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in the case of <u>clause (3)</u> of the definition of "Benchmark Transition Event," the date of the public statement or publication of information referenced therein.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the "Benchmark Replacement Date" will be deemed to have occurred in the case of <u>clause (1)</u> or <u>(2)</u> with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

"<u>Benchmark Transition Event</u>" means the occurrence of one or more of the following events with respect to the then-current Benchmark:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, <u>provided</u> that, at the

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time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, <u>provided</u> that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.

For the avoidance of doubt, a "Benchmark Transition Event" will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

"<u>Blocked Account</u>" shall have the meaning specified in <u>Section 5(a)</u> of this Agreement.

"<u>Blocked Account Agreement</u>" shall mean that certain Blocked Account Agreement, dated as of the date hereof, executed by Administrative Agent, on behalf of Buyers, Seller and the Depository Bank (and any successor thereto or replacement thereof executed by Administrative Agent, on behalf of Buyers, Seller and the Depository Bank), as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>Business Day</u>" shall mean any day other than (i) a Saturday or Sunday and (ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New York, Custodian or Administrative Agent, on behalf of Buyers, is authorized or obligated by law or executive order to be closed.

"<u>Buyer(s)</u>" shall have the meaning set forth in the introductory paragraph hereto.

"<u>Buyers' Principal Payment Share</u>" shall mean, with respect to any Principal Payment, an amount equal to the product of the amount of such Principal Payment, *multiplied by* the applicable Purchase Percentage.

"<u>Capital Lease Obligations</u>" shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

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"<u>Capital Stock</u>" shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent equity ownership interests in a Person which is not a corporation, including, without limitation, any and all membership or other equivalent interests in any limited liability company, and any and all partnership or other equivalent interests in any partnership or limited partnership, and any and all warrants or options to purchase any of the foregoing.

"<u>Cash Equivalents</u>" shall mean, as of any date of determination, (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (ii) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States and (b) time deposits, certificates of deposit, money market accounts or banker's acceptances of any investment grade rated commercial bank, in each case maturing within ninety (90) days after such date.

"<u>Cause</u>" shall mean, with respect to an Independent Director, (i) acts or omissions by such Independent Director that constitute willful disregard of, or bad faith or gross negligence with respect to, the Independent Director's duties with respect to Seller's obligations under this Agreement, (ii) such Independent Director has engaged in or has been charged with, or has been convicted of, fraud or other acts constituting a crime under any law applicable to such Independent Director, (iii) such Independent Director is unable to perform his or her duties as Independent Director due to death, disability or incapacity, or (iv) such Independent Director no longer meets the definition of Independent Director, as that term is defined in this <u>Section 2</u>.

"<u>Change of Control</u>" shall mean the occurrence of any of the following events: (a) any "person" or "group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>")) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a percentage of the total Capital Stock of Seller or Guarantor, as applicable, of (I) for all such transferees other than a Permitted Transferee, twenty percent (20%) or more, and (II) for all Permitted Transferees, more than twenty-five percent (25%) (b) Guarantor shall cease to own and Control, of record and beneficially, directly one hundred percent (100%) of each class of outstanding Capital Stock of Pledgor, (c) Pledgor shall cease to own and Control, of record and beneficially, directly one hundred percent (100%) of each class of outstanding Capital Stock of Seller, (d) the Manager is terminated as, or otherwise ceases to be, the manager of Guarantor or Pledgor.

"<u>Closing Date</u>" shall mean the date of this Agreement.

"<u>Co-Buyer</u> Agreement" shall mean, collectively, (i) any co-buyer agreements entered into among Administrative Agent and one or more Buyers in connection with the Transactions and the Transaction Documents and (ii) any participation agreements entered into among Administrative Agent, one or more Buyers and any Participants in connection with the Transactions and the Transaction Documents, as each may be amended, modified and/or restated from time to time.

"<u>Code</u>" shall mean the Internal Revenue Code of 1986, as amended.

"<u>Collection Period</u>" shall mean, with respect to the Remittance Date in any month, the period beginning on the Remittance Date in the preceding month to and including the calendar day immediately preceding such Remittance Date.

"<u>Compounded SOFR</u>" means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which, for example, may

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be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Pricing Period or compounded in advance) being established by Administrative Agent, on behalf of Buyers, in accordance with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) if, and to the extent that, Administrative Agent, on behalf of Buyers, determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that have been selected by Administrative Agent, on behalf of Buyers, giving due consideration to any industry-accepted market practice for similar U.S. dollar denominated secured financing or securitization transactions relating to the relevant asset class, as applicable at such time.

"<u>Concentration Limit</u>" shall mean, (a) with respect to any New Asset, the Purchase Price of such New Asset does not exceed forty percent (40%) of the Facility Amount, (b) the aggregate Purchase Prices of all Purchased Assets for which the Mortgaged Property consists of hospitality properties shall not exceed thirty-five percent (35%) of the Facility Amount, and (c) the aggregate Purchase Prices of all Purchased Assets that are non-controlling pari passu Participation Interests shall not exceed Twenty-Five Million Dollars ($25,000,000).

"<u>Confirmation</u>" means, a written confirmation from Administrative Agent, on behalf of Buyers, to Seller, executed by Administrative Agent, on behalf of Buyers, and acknowledged by Seller, of Buyers' Final Approval to purchase a Purchased Asset, substantially in the form attached hereto as <u>Exhibit I</u>.

"<u>Continuing Directors</u>" means, as of any date of determination with respect to a Public Vehicle, any member of the board of directors who (a) was a member of the board of directors on the date of the initial Public Sale or (b) was nominated for election, elected or appointed to the board of directors with the approval of a majority of the then members of the board of directors of such Public Vehicle (either by a specific vote or by approval of such Public Vehicle's proxy statement in which that member was named as a nominee for election as a director, without objection to the nomination).

"<u>Control</u>" shall mean, with respect to any Person, the possession of the direct or indirect power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise. "<u>Controlling</u>", "<u>Controlled</u>" and "<u>under common Control</u>" have correlative meanings.

"<u>Corresponding Tenor</u>" with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or a price differential payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

"<u>Custodial Agreement</u>" shall mean that certain Custodial Agreement, dated as of the date hereof, entered into by and among Custodian, Seller and Administrative Agent, on behalf of Buyers, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>Custodian</u>" shall mean Wells Fargo Bank, N.A., or any successor custodian appointed by Administrative Agent, on behalf of Buyers, and reasonably acceptable to Seller, or appointed by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith during the continuance of an Event of Default.

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"<u>Daily Simple SOFR</u>" means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being established by Administrative Agent, on behalf of Buyers, in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining "Daily Simple SOFR" for business loans at such times; <u>provided</u> that, if Administrative Agent, on behalf of Buyers, decides that any such convention is not administratively feasible, then the Administrative Agent, on behalf of Buyers, may establish another convention in its reasonable discretion.

"<u>Default</u>" shall mean any event that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.

"<u>Defaulted Asset</u>" shall mean any Purchased Asset as to which (i) there is a breach beyond any applicable notice and cure period of a representation or warranty by Seller under <u>Exhibit III</u> attached hereto (without regard to any knowledge qualifier therein), (ii) a default has occurred and is continuing for at least twenty-five (25) days beyond any applicable notice and cure period under the related Purchased Asset Documents in the payment when due of any scheduled payment of interest or principal or any other amounts due under the Purchased Asset Documents, (iii) the occurrence and continuance of any other "event of default" as defined under the related Purchased Asset Documents, (iv) to the extent that the related Transaction is deemed to be a loan under federal, state or local law, Administrative Agent, on behalf of Buyers, ceases to have a first priority perfected security interest in the related Purchased Asset, (v) a Significant Modification has been made without the consent of Administrative Agent, on behalf of Buyers, pursuant to this Agreement, (vi) the related Purchased Asset File or any material portion thereof is subject to a continuing Bailee Delivery Failure or has been released from the possession of Custodian under the Custodial Agreement to anyone other than Administrative Agent, on behalf of Buyers, or any Affiliate of Administrative Agent, on behalf of Buyers, except in accordance with the terms of the Custodial Agreement, (vii) upon the occurrence of any Act of Insolvency with respect to any co-participant or any other person having an interest in such Purchased Asset or any related Mortgaged Property that is senior to, or *pari passu* with, in right of payment or priority with the rights of Administrative Agent, on behalf of Buyers, in such Purchased Asset, (viii) such Purchased Asset has gone into special servicing, however so defined in any servicing, or pooling and servicing, agreement related to a securitization or similar transaction, or (ix) the related Mortgaged Property ceases to have appropriate zoning approval or required insurance in the relevant jurisdiction that is likely to have a material adverse effect on the value of the related Mortgaged Property, and in any such case such failure continues beyond any applicable notice and cure period under the related Purchased Asset Documents.

"<u>Depository Bank</u>" shall mean Wells Fargo Bank, National Association, or any successor depository bank appointed by Administrative Agent, on behalf of Buyers, and reasonably acceptable to Seller, or appointed by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith during the continuance of an Event of Default.

"<u>Diligence Fees</u>" shall mean fees, costs and expenses payable by Seller to Administrative Agent and Buyers in respect of Administrative Agent's and Buyers' actual, reasonable and necessary out-of-pocket fees, costs and expenses (other than legal expenses) incurred in connection with its review of the Diligence Materials hereunder and Administrative Agent's and Buyers' continuing due diligence reviews of Purchased Assets pursuant to <u>Section 21</u> or otherwise hereunder.

"<u>Diligence Materials</u>" shall mean, with respect to any New Asset, the related Preliminary Due Diligence Package together with the related Supplemental Due Diligence Package.

"<u>Division</u>" shall mean, as to any Person, such Person dividing and/or otherwise engaging in and/or becoming subject to, in each case, any division pursuant to, or as permitted by, §18-217 of the Delaware Limited Liability Company Act.

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"<u>Early Repurchase Date</u>" shall have the meaning specified in <u>Section 3(i)(i)</u> of this Agreement.

"<u>Electronic Signature</u>" shall have the meaning specified in <u>Section 28(f)</u> of this Agreement.

"<u>Eligible Assets</u>" shall mean (i) performing Mortgage Loans, Mezzanine Loans and Participation Interests (A) acceptable to Administrative Agent, on behalf of Buyers, in the exercise of its sole discretion exercised in good faith, (B) secured directly by an Eligible Property, (C) which have a term equal to or less than ten (10) years (assuming exercise of all extension options), (D) as to which the applicable representations and warranties set forth in <u>Exhibit III</u> are true and correct as of the applicable Purchase Date unless otherwise disclosed in the Exception Report delivered to Administrative Agent on or prior to such Purchase Date, (E) [<u>reserved</u>], (F) that have a maximum LTV not in excess of 85%, (G) that have an original principal balance of not less than Five Million Dollars ($5,000,000) and (H) that are not subject to restrictions on transfer of lender's interest therein and (ii) such other commercial real estate debt instruments (including, without limitation and for the avoidance of doubt, Mezzanine Loans) acceptable to Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith in each case, acceptable to Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith on a case-by-case basis. Notwithstanding the foregoing, or any provision to the contrary set forth either in this Agreement or in any other Transaction Document, in no event shall Seller be required to enter into any Hedging Transactions in connection with any existing or proposed Purchased Assets and Seller shall at all times have the ability, to be exercised in its sole discretion at any time, whether to enter into, modify or terminate any such Hedging Transaction.

"<u>Eligible Property</u>" shall mean a property that is a multifamily, office, retail, industrial, hospitality, self-storage, mixed-use property or manufactured housing or such other property type acceptable to Administrative Agent in the exercise of its sole discretion exercised in good faith.

"<u>Environmental Law</u>" means: (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Re-authorization Act of 1986, 42 U.S.C. §9601 et seq.; (b) the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §6901 et seq.; (c) the Clean Air Act, 42 U.S.C. §7401 et seq., as amended by the Clean Air Act Amendments of 1990; (d) the Clean Water Act of 1977, 33 U.S.C. §1251 et seq.; (e) the Toxic Substances Control Act, 15 U.S.C.A. §2601 et seq.; (f) all other federal, state and local laws, ordinances, regulations or policies relating to pollution or protection of human health or the environment including without limitation, air pollution, water pollution, or the use, handling, discharge, disposal or release or recovery of on-site or off-site Hazardous Materials, as each of the foregoing may be amended from time to time; and (g) any and all regulations promulgated under or pursuant to any of the foregoing statutes.

"<u>ERISA</u>" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

"<u>ERISA Affiliate</u>" shall mean any corporation or trade or business (whether or not incorporated) that is a member of any group of organizations described in (i) Section 414(b) or (c) of the Code or Section 4001(b) of ERISA of which Seller is a member at any relevant time or (ii) solely for purposes of the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which Seller is a member.

"<u>Erroneous Payment Recipient</u>" shall have the meaning specified in <u>Section 27(c)(i)</u> hereof.

"<u>Event of Default</u>" shall have the meaning specified in <u>Section 14(a)</u>.

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"<u>Exception Report</u>" shall have the meaning specified in <u>Section 3(c)(viii)</u>.

"<u>Excluded Taxes</u>" shall mean any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to any Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of any Recipient being organized under the laws of, or having its principal office or the office from which it books the Transaction located in, the jurisdiction imposing such Tax (or any political subdivision thereof), or (ii) that are Other Connection Taxes, (b) in the case of a Buyer, withholding Taxes imposed on amounts payable to or for the account of such Buyer pursuant to a law in effect as of the date on which such Person (i) becomes a party to this Agreement, (ii) changes the office from which it books the Transactions or (iii) where Buyer is treated as a partnership for tax purposes and the tax status of a partner in such partnership is determinative of the obligation to pay Taxes, the later of the date on which Buyer acquired its applicable interest hereunder or the date on which the affected partner becomes a partner of Buyer, except in each case to the extent that pursuant to <u>Section 3(p)</u> or <u>Section 3(r)</u> amounts with respect to such taxes were payable either to such Person's assignor immediately before such Person became a party to this Agreement or to such Person immediately before it changed the office from which it books the Transaction, (c) Taxes attributable to any Recipient's failure to comply with <u>Section 3(r)</u> of this Agreement and (d) any withholding Taxes imposed under FATCA.

"<u>Executive Order 13224</u>" shall mean Executive Order 13224 "On Terrorist Financing: Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism", effective September 24, 2001.

"<u>Exit Fee</u>" shall have the meaning specified in the Fee Letter.

"<u>Extension Fee</u>" shall have the meaning specified in the Fee Letter.

"<u>Facility Amount</u>" shall mean Five Hundred Million Dollars ($500,000,000); provided that the Facility Amount shall be automatically reduced to Two Hundred Fifty Million Dollars ($250,000,000) on the Facility Amount Reduction Date.

"Facility Amount Reduction Date" shall mean the earliest of (x) the date Buyer receives notice from Seller requesting a reduction of the Facility Amount or (y) May 6, 2026.

"Facility Increase Conditions" shall have the meaning specific in Section 9(b) of this Agreement.

"Facility Increase Fee" shall have the meaning set forth in the Fourth Amendment.

"<u>Facility Termination Date</u>" shall mean November 3, 2026, as the same may be extended in accordance with <u>Section 9(a)</u> of this Agreement.

"<u>FATCA</u>" shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), together in each case with any current or future regulations, or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any law fiscal rule or practice adopted pursuant to any intergovernmental agreement implementing such Sections of the Code.

"<u>FATF</u>" shall mean the Financial Action Task Force on Money Laundering.

"<u>FDIA</u>" shall mean the Federal Deposit Insurance Act, as amended.

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"<u>FDICIA</u>" shall mean Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991.

"<u>Fee Letter</u>" shall mean that certain letter agreement, dated the date hereof, between Administrative Agent, on behalf of Buyers, and Seller, as the same may be amended, supplemented or otherwise modified from time to time.

"<u>Filings</u>" shall have the meaning specified in <u>Section 6(b)</u> of this Agreement.

"<u>Final Approval</u>" shall have the meaning specified in <u>Section 3(d)</u> of this Agreement.

"<u>Financial Covenant Compliance Certificate</u>" shall mean an Officer's Certificate from Guarantor confirming that as of the fiscal quarter most recently ended, Guarantor shall satisfy the financial covenants set forth in Section 9 of the Guaranty, in the form attached hereto as <u>Exhibit VI</u>.

"<u>First Mortgage A-Note</u>" shall mean (i) a senior Mortgage Note in an AB Mortgage Loan or (ii) a senior controlling *pari passu* Mortgage Note in a Split Mortgage Loan.

"<u>Floor</u>" shall mean zero (0) or such other rate with respect to a Transaction as set forth in the related Confirmation.

"Fourth Amendment" shall mean that certain Fourth Amendment to this Agreement, dated as of November 5, 2025, by and among Administrative Agent, Seller and Guarantor.

"<u>Future Advance Asset</u>" shall mean any Purchased Asset with respect to which there exists a continuing obligation on the part of the holder of such Purchased Asset, pursuant to the terms and conditions of the Purchased Asset Documents, to provide additional funding to the Mortgagor.

"<u>Future Advance Purchase</u>" shall have the meaning specified in <u>Section 3(h)</u> of this Agreement.

"<u>GAAP</u>" shall mean United States generally accepted accounting principles consistently applied as in effect from time to time.

"<u>Governmental Authority</u>" shall mean any national or federal government, any state, regional, local or other political subdivision thereof with jurisdiction and any Person with jurisdiction exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

"<u>Guarantee</u>" shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); <u>provided</u> that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the maximum reasonably anticipated liability in respect thereof as determined by such Person in accordance with GAAP. The terms "<u>Guarantee</u>" and "<u>Guaranteed</u>" used as verbs shall have correlative meanings.

"<u>Guarantor</u>" shall mean ACRES Commercial Realty Corp., a Maryland corporation, together with its permitted successors and assigns.

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"<u>Guaranty</u>" shall mean that certain Guaranty, dated as of the date hereof, made by Guarantor in favor of Administrative Agent, on behalf of Buyers, as the same may be amended, supplemented or otherwise modified from time to time.

"<u>Hedging Transactions</u>" shall mean, with respect to any or all of the Purchased Assets, any short sale of U.S. Treasury Securities or mortgage-related securities, futures contract (including currency futures) or options contract or any interest rate swap, cap or collar agreement or similar arrangements providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by Seller, or by the underlying obligor with respect to any Purchased Asset and pledged to Seller as collateral for such Purchased Asset, with one or more counterparties that is an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty or, with respect to any Hedging Transaction pledged to Seller as additional collateral for a Purchased Asset, complies with such other rating requirement applicable to such Hedging Transaction set forth in the related Purchased Asset Documents or which is otherwise acceptable to Administrative Agent, on behalf of Buyers; <u>provided</u> that Seller shall not grant or permit any liens, security interests, charges, or encumbrances with respect to any such Hedging Transactions for the benefit of any Person other than Administrative Agent, on behalf of Buyers.

"<u>Income</u>" shall mean, with respect to any Purchased Asset at any time, any payment or other cash distribution thereon of principal, interest, dividends, fees, reimbursements or proceeds thereof (including sales proceeds) or other cash distributions thereon (including casualty or condemnation proceeds).

"<u>Indebtedness</u>" shall mean, for any Person: (i) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (ii) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within sixty (60) days of the date the respective goods are delivered or the respective services are rendered; (iii) Indebtedness of others secured by a lien on the property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (iv) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (v) Capital Lease Obligations of such Person; (vi) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (vii) Indebtedness of others Guaranteed by such Person; (viii) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (ix) Indebtedness of general partnerships of which such Person is a general partner or of which such Person is secondarily on contingently liable (other than by endorsement of instruments in the course of collection), whether by reason of any agreement to acquire such indebtedness, to supply or advance sums or otherwise; and (x) all net liabilities or obligations under any interest rate swap, interest rate cap, interest rate floor, interest rate collar or other hedging instrument or agreement.

"<u>Indemnified Amounts</u>" shall have the meaning specified in <u>Section 20(a)</u> of this Agreement.

"<u>Indemnified Parties</u>" shall have the meaning specified in <u>Section 20(a)</u> of this Agreement.

"<u>Indemnified Taxes</u>" shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Seller under any Transaction Document and (b) to the extent not otherwise described in <u>clause (a)</u>, Other Taxes.

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"<u>Independent Appraiser</u>" shall mean an independent professional real estate appraiser who is a member in good standing of the American Appraisal Institute, and, if the state in which the subject Eligible Property is located certifies or licenses appraisers, is certified or licensed in such state, and in each such case, who has a minimum of five (5) years' experience in the subject property type.

"<u>Independent Director</u>" shall mean, with respect to any corporation or limited liability company, an individual who: (a) is provided by CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, Lord Securities Corporation or, if none of those companies is then providing professional independent directors, another nationally-recognized company reasonably approved by Administrative Agent, on behalf of Buyers, in each case that is not an Affiliate of such corporation or limited liability company and that provides professional independent directors and other corporate services in the ordinary course of its business; (b) is duly appointed as a member of the board of directors of such corporation or as an independent manager, member of the board of managers, or special member of such limited liability company; and (c) is not, and has never been, and will not while serving as Independent Director be (i) a member (other than an independent, non-economic "springing" member), partner, equityholder, manager, director, officer or employee of such corporation or limited liability company or any of its equityholders or affiliates (other than an affiliate that is not in the direct chain of ownership of such corporation or limited liability company and that is a Single-Purpose Entity; <u>provided</u> that the fees such individual earns from serving as an Independent Director of such affiliates in any given year constitute in the aggregate less than 5% of such individual's annual income for that year); (ii) a creditor, supplier or service provider (including provider of professional services) to such corporation or limited liability company or any of its equityholders or affiliates (other than a nationally recognized company that routinely provides professional independent managers or directors and that also provides lien search and other similar services to such corporation or limited liability company or any of its equityholders or affiliates in the ordinary course of business); (iii) a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or (iv) a Person that controls (whether directly, indirectly or otherwise) any of clauses <u>(i)</u> or <u>(ii)</u> above.

"<u>Insolvency Law</u>" shall mean the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments and similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

"<u>Insured Closing Letter and Escrow Instructions</u>" shall mean a letter addressed to Seller and Administrative Agent, on behalf of Buyers, from the title insurance underwriter (or any agent thereof) acting as an agent for each Table Funded Purchased Asset and related escrow instructions, which letter and instructions shall be in form and substance reasonably acceptable to Administrative Agent and Seller.

"<u>Key Person Event</u>" shall mean if any two (2) Key Persons shall fail to remain actively and directly involved in the management and policies of ACRES Commercial Realty Corp., or in a substantially similar capacity.

"<u>Key Persons</u>" shall mean Mark Fogel, Chief Executive Officer and President, Marty Reasoner, Managing Partner, Originations or Andrew Fentress, Managing Partner, Capital Markets.

"<u>Last Endorsee</u>" shall have the meaning specified in <u>Schedule 2</u> of this Agreement.

"<u>LTV</u>" shall mean, with respect to any Eligible Asset, the ratio of the aggregate outstanding debt (which shall include such Eligible Asset and all debt senior to or *pari passu* with such Eligible Asset) secured, directly or indirectly, by the related Eligible Property or Properties, to the aggregate "as-is" market

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value of such Eligible Property or Properties as determined by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith.

"<u>Manager</u>" shall mean ACRES Capital, LLC, a New York limited liability company.

"<u>Mandatory Early Repurchase Date</u>" shall have the meaning specified in <u>Section 3(i)(ii)</u> of this Agreement.

"<u>Margin Credit Event</u>" shall mean, with respect to any Purchased Asset, the date upon which material changes (*i.e.*, changes that adversely impact the value of the Purchased Asset relative to Buyers' initial underwriting or the most recent determination of Market Value) relative to the performance or condition of (i) the relevant Mortgaged Property, (ii) the Mortgagor (or its sponsor(s)) in relation to such Purchased Asset or (iii) the commercial real estate market in the relevant jurisdiction relating to the relevant Mortgaged Property, taken in the aggregate (excluding for any reason relating to fluctuation in current interest rates, interest rate spreads and credit spreads), exist with respect to such Purchased Asset as determined by Administrative Agent in its sole discretion exercised in good faith.

"<u>Margin Deficit</u>" shall have the meaning specified in <u>Section 4(a)</u> of this Agreement.

"<u>Margin Excess</u>" shall have the meaning specified in <u>Section 4(b)</u> of this Agreement.

"<u>Margin Materiality Threshold</u>" shall have the meaning specified in the Fee Letter.

"<u>Market Value</u>" shall mean, with respect to any Purchased Asset as of any relevant date, the market value of such Purchased Asset on such date, as determined by Administrative Agent in its sole discretion exercised in good faith, which determination shall be conclusive absent manifest error.

"<u>Material Adverse Effect</u>" shall mean a material adverse effect on (i) the property, business, operations, financial condition or credit quality of Guarantor, Pledgor and/or Seller, taken as a whole, (ii) the ability of the Guarantor, Pledgor or Seller to perform its obligations under any of the Transaction Documents to which it is party, (iii) the validity or enforceability of any the Transaction Documents, (iv) the material rights and remedies of Buyers under any of the Transaction Documents or (v) the Market Value, rating (if applicable) or liquidity of all the Purchased Assets in the aggregate.

"<u>Maximum Asset Exposure Threshold</u>" shall have the meaning specified in the Fee Letter.

"<u>Maximum Purchase Percentage</u>" shall mean, with respect to any Purchased Asset, the "Maximum Purchase Percentage" specified in <u>Schedule 1</u> (or as otherwise specified in the applicable Confirmation).

"<u>Mezzanine Borrower</u>" shall mean, with respect to any Mezzanine Loan, the obligor on the related Mezzanine Note, the pledgor under the related Mezzanine Pledge Agreement, and the owner of the related Capital Stock.

"<u>Mezzanine Loan</u>" shall mean a performing mezzanine loan secured by pledges of 100% of the Capital Stock of the Mortgagor under a related Mortgage Loan which is a Purchased Asset.

"<u>Mezzanine Loan Repurchase Assets</u>" shall have the meaning specified in <u>Section 6(f)</u> hereof.

"<u>Mezzanine Note</u>" shall mean the original executed promissory note or other tangible evidence of the Mezzanine Loan indebtedness.

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"<u>Mezzanine Pledge Agreement</u>" shall mean, with respect to any Purchased Asset that is a Mezzanine Loan, the pledge and security agreement creating a valid and enforceable lien on the related Capital Stock.

"<u>Monthly Statement</u>" shall mean, for each calendar month during which this Agreement shall be in effect, Seller's or Servicer's, as applicable, reconciliation in arrears of beginning balances, interest and principal paid to date and ending balances for each Purchased Asset, together with a certified written report describing (i) any developments or events with respect to such Purchased Asset since the prior Monthly Statement that are reasonably likely to have a Material Adverse Effect, (ii) any Defaults or potential Defaults, (iii) any and all written modifications to any Purchased Asset Documents since the prior Monthly Statement, (iv) loan status, collection performance and any delinquency and loss experience with respect to each Purchased Asset, (v) an update as to the expected disposition or sale of the Purchased Assets and (vi) such other information as Administrative Agent, on behalf of Buyers, may reasonably request with respect to Seller, any Purchased Asset, Mortgagor or Mortgaged Property.

"<u>Moody's</u>" shall mean Moody's Investors Service, Inc.

"<u>Mortgage</u>" shall mean the mortgage, deed of trust, deed to secure debt or other instruments, creating a valid and enforceable first lien on or a first priority ownership interest in a Mortgaged Property.

"<u>Mortgage Loan</u>" shall mean (i) a whole commercial mortgage loan or (ii) a First Mortgage A-Note, in each case secured by a Mortgage and evidenced by a Mortgage Note and all other Purchased Asset Documents, all right, title and interest of Seller in and to any Mortgaged Property covered by the related Mortgage and all related Servicing Rights.

"<u>Mortgage Note</u>" shall mean (a) with respect to a Mortgage, a note or other evidence of indebtedness of a Mortgagor secured by such Mortgage and (b) with respect to a Participation Interest, a Participation Certificate evidencing such Participation Interest.

"<u>Mortgaged Property</u>" shall mean, in the case of (a) a Mortgage Loan, the real property or properties securing repayment of the debt evidenced by a Mortgage Note (or Mortgage Notes, in the case of an AB Mortgage Loan or Split Mortgage Loan) and (b) a Mezzanine Loan, the real property or properties owned by the Person the Capital Stock of which is pledged as collateral for such Mezzanine Loan.

"<u>Mortgagor</u>" shall mean, in the case of (a) a Mortgage Loan, the obligor on a Mortgage Note, the grantor of the related Mortgage and the owner of the related Mortgaged Property and (b) a Mezzanine Loan, the obligor on any applicable Mezzanine Note.

"<u>New Asset</u>" shall mean an Eligible Asset that Seller proposes to sell to Administrative Agent, on behalf of Buyers, pursuant to a Transaction.

"<u>OFAC</u>" shall mean the Office of Foreign Assets Control of the United States Department of the Treasury.

"<u>Officer's Certificate</u>" shall mean, as to any Person, a certificate of the chief executive officer, the chief financial officer, the president, any vice president or the secretary of such Person.

"<u>Other Connection Taxes</u>" means, Taxes imposed as a result of a present or former connection between any Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received

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payments under, received or perfected a security interest under or engaged in any other transaction pursuant to or enforced any Transaction Document).

"<u>Other Taxes</u>" shall mean any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that may arise from any payment made under any Transaction Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Transaction Document, except any such Taxes that are Other Connection Taxes.

"<u>Participant</u>" shall have the meaning specified in <u>Section 17(b)</u> hereof.

"<u>Participation Certificate</u>" shall mean a participation certificate which evidences the outstanding balance of a Participation Interest.

"<u>Participation Interest</u>" shall mean a senior controlling *pari passu* participation interest in a performing Mortgage Loan.

"<u>Payment</u>" shall have the meaning specified in <u>Section 27(c)(i)</u> hereof.

"<u>Payment Notice</u>" shall have the meaning specified in <u>Section 27(c)(ii)</u> hereof.

"<u>Permitted Encumbrances</u>" shall mean (a) liens for real property Taxes, ground rents, water charges, sewer rates and assessments not yet due and payable; (b) liens arising by operation of law (such as materialmen's, mechanics', carriers', workmen's, repairmen's and similar liens) arising in the ordinary course of business which are (i) discharged by payment, bonding or otherwise or (ii) being contested in good faith by the related Mortgagor in accordance with the related Purchased Asset Documents; (c) covenants, conditions and restrictions, rights of way, easements and other matters of public record, which do not individually or in the aggregate, in the reasonable judgment of Seller, materially interfere with (i) the current use of the related Mortgaged Property, (ii) the security intended to be provided by the related Mortgage, (iii) the underlying obligor's ability to pay its obligations when they become due or (iv) the value of the related Mortgaged Property; (d) liens and encumbrances set forth in the related Title Policy; and (e) rights of existing or future tenants as tenants only pursuant to leases.

"<u>Permitted Transferee</u>" shall have the meaning set forth in the Fee Letter.

"<u>Person</u>" shall mean an individual, corporation, limited liability company, business trust, partnership, joint tenant or tenant-in-common, trust, joint stock company, joint venture, unincorporated organization, or other entity, or a federal, state or local government or any agency or political subdivision thereof.

"<u>Plan</u>" shall mean an employee benefit or other plan established or maintained during the five-year period ended prior to the date of this Agreement or to which Seller or any ERISA Affiliate makes, is obligated to make or has, within the five-year period ended prior to the date of this Agreement, been required to make contributions and that is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.

"<u>Plan Assets</u>" shall mean "plan assets" within the meaning of the U.S. Department of Labor regulations located at 29 C.F.R. 2510.3-101, as modified by Section 3(42) of ERISA, and shall include assets of any (i) employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title I of ERISA or (ii) plan (as defined in Section 4975(e)(l) of the Code) subject to Section 4975 of the Code.

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"<u>Pledge Agreement</u>" shall mean that certain Pledge and Security Agreement, dated as of the date hereof, by Pledgor in favor of Administrative Agent, on behalf of Buyers, as the same may be amended, restated, supplemented, replaced, or otherwise modified from time to time, pledging all of Pledgor's interest in the Capital Stock of Seller to Administrative Agent, on behalf of Buyers.

"<u>Pledgor</u>" shall mean ACRES Realty Funding, Inc., a Delaware corporation, together with its permitted successors and assigns.

"<u>Portfolio Exposure Threshold</u>" shall have the meaning specified in the Fee Letter.

"<u>Power of Attorney to Administrative Agent, on behalf of Buyers</u>" shall mean (i) that certain Power of Attorney to Administrative Agent, on behalf of Buyers, dated as of the date hereof executed by Seller in favor of Administrative Agent, on behalf of Buyers, and (ii) such other power of attorney executed pursuant to this Agreement in substantially the form attached as <u>Exhibit II-1</u>.

"<u>Power of Attorney to Seller</u>" shall mean (i) that certain Power of Attorney to Seller dated as of the date hereof executed by Administrative Agent, on behalf of Buyers, in favor of Seller and (ii) such other power of attorney executed pursuant to this Agreement substantially in the form of <u>Exhibit II-2</u>.

"<u>Preliminary Approval</u>" shall have the meaning specified in <u>Section 3(b)</u> of this Agreement.

"<u>Preliminary Due Diligence Package</u>" shall mean, with respect to any New Asset, the following due diligence information, to the extent available and applicable, relating to such New Asset to be provided by Seller to Administrative Agent, on behalf of Buyers, pursuant to this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Seller's internal credit committee or investment committee memorandum, among other things, outlining the proposed transaction, including potential transaction benefits and all material underwriting risks and Underwriting Issues, anticipated exit strategies, cash flows and all other characteristics of the proposed transaction that a prudent buyer would consider material, redacted as necessary to omit all privileged and confidential information of any kind;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) current rent roll and rollover schedule, if applicable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) cash flow pro forma, plus historical information, if available;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) flood certification, in form and substance acceptable to Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) maps and photos, if available;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) interest coverage ratios and annualized underwritten debt yield (or such other underwriting methodology utilized by Seller and approved by Administrative Agent, on behalf of Buyers);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) description of the Mortgaged Property, along with a description of the Mortgagor and sponsor (including their experience with other projects, ownership structure and financial statements);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) loan-to-value ratio;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Seller's or any Affiliate's relationship with the Mortgagor or any affiliate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) material third party reports, to the extent available and applicable, including: (i) engineering and structural reports, each in form and prepared by consultants acceptable to Administrative Agent, on behalf of Buyers; (ii) current Appraisal; (iii) Phase I environmental report (including asbestos

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and lead paint report) and, if applicable, Phase II or other follow-up environmental report if recommended in Phase I, each in form and prepared by consultants acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith; (iv) seismic reports, if applicable (and only if the related Eligible Property is included in seismic zone 3), each in form and prepared by consultants acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith; (v) operations and maintenance plan with respect to asbestos containing materials, each in form and prepared by consultants acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith; (vi) the servicing data tape; (vii) credit reports by a credit reporting agency acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith, in form and substance acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith; and (viii) background searches and reports of the findings of such searches, in form and substance acceptable to Administrative Agent, as determined in its reasonable discretion, exercised in good faith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) copies of documents evidencing such New Asset, or current drafts thereof, including, without limitation, underlying debt and security documents, guaranties, Mortgagor's organizational documents, loan and collateral pledge agreements, and intercreditor agreements, as applicable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) insurance reports in form and substance acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith, and prepared by third-party consultants acceptable to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith, and (ii) insurance certificates or other evidence of insurance coverage evidencing the insurance required to be maintained with respect to any Eligible Property or Properties pursuant to <u>Section 3(c)(iv)</u> hereof (including evidence of terrorism insurance coverage and such other customary insurance coverage satisfactory to Administrative Agent, on behalf of Buyers, as determined in its reasonable discretion, exercised in good faith);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) analyses and reports with respect to such other matters concerning the New Asset as Administrative Agent, on behalf of Buyers, may in its reasonable discretion require; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) with respect to any Transaction involving a New Asset that is a Future Advance Asset, Seller shall indicate in the related Preliminary Due Diligence Package that such New Asset is a Future Advance Asset and shall provide Administrative Agent, with the information required to complete the Confirmation regarding such Future Advance Asset, as well as the then remaining unfunded principal amount of all Purchased Assets that constitute Future Advance Assets.

"<u>Prescribed Laws</u>" shall mean, collectively, (a) the USA PATRIOT Act, (b) Executive Order 13224, (c) the International Emergency Economic Power Act, 50 U.S.C. §1701 et. seq., (d) the Bank Secrecy Act (31 U.S.C. Sections 5311 et seq.) as amended and (e) all other Requirements of Law adopted by and applicable in the United States of America and relating to money laundering or terrorism, including without limitation, the USA PATRIOT Act and all regulations and executive orders adopted by the United States of America promulgated with respect to money laundering or terrorism, including, without limitation, those promulgated by the Office of Foreign Assets Control of the United States Department of the Treasury.

"<u>Price Differential</u>" shall mean, with respect to any Transaction as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Repurchase Price thereof (excluding any amount attributable to Price Differential in the definition thereof), calculated on the basis of a three hundred sixty (360) day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (such aggregate amount to be reduced by any amount of such Price Differential paid by Seller to Administrative Agent, on behalf of Buyers, prior to such date, with respect to such Transaction).

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"<u>Pricing Period</u>" shall mean, with respect to each Purchased Asset (x) in the case of the first (1st) Remittance Date following the purchase of such Purchased Asset, the period from and including the original Purchase Date for such Purchased Asset to but excluding such Remittance Date, and (y) in the case of each subsequent Remittance Date, the one-month period from and including the preceding Remittance Date to but excluding such Remittance Date; <u>provided</u>, that no Pricing Period for a Purchased Asset shall end after the Repurchase Date for such Purchased Asset.

"<u>Pricing Rate</u>" shall mean, for any Pricing Period with respect to a Purchased Asset, an annual rate equal to the Benchmark for such Pricing Period, plus the Applicable Spread for the related Purchased Asset (subject to adjustment and/or conversion as provided in <u>Sections 3(l)</u> and <u>3(m)</u> of this Agreement).

"<u>Principal Payment</u>" shall mean, with respect to any Purchased Asset, any payment or prepayment of principal received in respect thereof (including casualty or condemnation proceeds to the extent that such proceeds are not required under the underlying loan documents to be reserved, escrowed, readvanced or applied for the benefit of the Mortgagor or the related Mortgaged Property). For purposes of clarification, prepayment premiums, fees or penalties shall not be deemed to be principal.

"<u>Principal Sweep Amount</u>" shall mean with respect to any Principal Payment received during a Sweep Trigger:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if four (4) Purchased Assets remain subject to Transactions, an amount equal to fifty percent (50%) of the Seller's Principal Payment Share of such Principal Payment; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if three (3) or fewer Purchased Assets remain subject to Transactions, an amount equal to one hundred percent (100%) of the Seller's Principal Payment Share of such Principal Payment.

"<u>Principal Sweep Escrow Account</u>" shall have the meaning specified in <u>Section 5(a)</u> of this Agreement.

"<u>Prohibited Person</u>" shall mean any Person: (i) listed in the Annex to, or otherwise subject to the provisions of, Executive Order 13224; (ii) that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order 13224; (iii) domiciled in the United States of America and with whom Administrative Agent and/or any Buyer is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law adopted in the United States of America, including Executive Order 13224; (iv) who commits, threatens or conspires to commit or supports "terrorism" as defined in Executive Order 13224; (v) that is the target of Sanctions;(vi) that is a foreign shell bank; (vii) that is a resident of, or whose subscription funds are transferred from or through an account in, a jurisdiction that has been designated as a non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the FATF, of which the U.S. is a member and with which designation the U.S. representative to the group or organization continues to concur (see http://www.fatf-gati.org for the FATF's "Non-Cooperative Countries and Territories Initiative"); or (viii) who is an Affiliate of a Person described above.

"<u>Prohibited Transferee</u>" shall mean any of the Persons listed on <u>Schedule 3</u> attached to this Agreement, together with each of their respective Affiliates.

"<u>Purchase Date</u>" shall mean, with respect to any Eligible Asset, the date on which such Eligible Asset is transferred by Seller to Administrative Agent, on behalf of Buyers.

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"<u>Purchase Percentage</u>" shall mean, with respect to any Purchased Asset, the applicable Maximum Purchase Percentage specified in <u>Schedule 1</u> (or as otherwise specified in the applicable Confirmation).

"<u>Purchase Price</u>" shall mean, with respect to any Purchased Asset, the price at which such Purchased Asset is transferred by Seller to Administrative Agent, on behalf of Buyers, on the applicable Purchase Date. The Purchase Price as of any Purchase Date for any Purchased Asset shall be an amount (expressed in dollars) equal to the product of (a) the outstanding principal balance of such Purchased Asset, *multiplied by* (b) the applicable Purchase Percentage. The Purchase Price shall increase by any Future Advance Purchase pursuant to <u>Section 3(h)</u> and any payment made to Seller in connection with a Margin Excess pursuant to <u>Section 4(b)</u>, and shall decrease by any payment applied in connection with a Margin Deficit pursuant to <u>Section 4(a)</u> and any Principal Payment applied pursuant to <u>Section 5</u> to reduce such Purchase Price and any other amounts paid to Administrative Agent, on behalf of Buyers, by Seller to reduce such Purchase Price.

"<u>Purchased Asset</u>" shall mean (i) with respect to any Transaction, the Eligible Assets sold by Seller to Administrative Agent, on behalf of Buyers, in such Transaction and (ii) with respect to the Transactions in general, all Eligible Assets sold by Seller to Administrative Agent, on behalf of Buyers.

"<u>Purchased Asset Documents</u>" shall mean, with respect to a Purchased Asset, the documents specified in <u>Schedule 2</u>.

"<u>Purchased Asset File</u>" shall mean the Purchased Asset Documents, together with any additional documents and information required to be delivered to Administrative Agent, on behalf of Buyers, or its designee (including Custodian) pursuant to this Agreement.

"<u>Purchased Asset File Checklist</u>" shall have the meaning specified in the Custodial Agreement.

"<u>Purchased Asset Schedule</u>" shall have the meaning specified in the Custodial Agreement.

"<u>Qualified Hedge Counterparty</u>" shall mean, with respect to any Hedging Transaction, any entity other than an Affiliated Hedge Counterparty, that (a) qualifies as an "eligible contract participant" as such term is defined in the Commodity Exchange Act (as amended by the Commodity Futures Modernization Act of 2000), (b) the long-term debt of which is rated no less than "A+" by Standard & Poor's and "A1" by Moody's and (c) is reasonably acceptable to Administrative Agent, on behalf of Buyers,; <u>provided</u> that, with respect to <u>clause (c)</u>, if Administrative Agent, on behalf of Buyers, has approved an entity as a counterparty, it may not thereafter deem such counterparty unacceptable with respect to any previously outstanding Transaction unless <u>clause (a)</u> or <u>(b)</u> no longer applies with respect to such counterparty.

"<u>Quarterly Report</u>" shall mean, for each fiscal quarter during which this Agreement shall be in effect, (i) Seller's or Servicer's, as applicable, certified written report summarizing (with a separate cover sheet for each Purchased Asset or, in the case of a Purchased Asset secured (directly or indirectly) by a portfolio of Mortgaged Properties, a cover sheet for such portfolio on a consolidated basis), with respect to the Mortgaged Properties securing each Purchased Asset (or, in the case of a Purchased Asset secured (directly or indirectly) by a portfolio of Mortgaged Properties, such information on a consolidated basis), the net operating income, debt service coverage, occupancy, the revenues per room (for hospitality properties) and sales per square footage (for retail properties), in each case, to the extent received by Seller, and such other information as mutually agreed by Seller and Administrative Agent, on behalf of Buyers, and (ii) the updated underwriting report.

"<u>Recipient</u>" means (a) Administrative Agent, or (b) any Buyer, as applicable.

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"<u>Reference Time</u>" shall mean with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, the time set forth in the definition of Term SOFR, and (2) if such Benchmark is not Term SOFR, then the time determined by Administrative Agent, on behalf of Buyers, in accordance with the Benchmark Replacement Conforming Changes.

"<u>Regulations T, U and X</u>" shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor thereto), as the same may be modified and supplemented and in effect from time to time.

"<u>Relevant Governmental Body</u>" means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

"<u>Remittance Date</u>" shall mean the eighteenth (18th) calendar day of each month, or the next succeeding Business Day, if such calendar day shall not be a Business Day.

"<u>Representatives</u>" shall have the meaning specified in <u>Section 28(a)</u> hereof.

"<u>Repurchase Assets</u>" shall have the meaning specified in <u>Section 6(a)</u> hereof.

"<u>Repurchase Date</u>" shall mean, with respect to any Purchased Asset, the date that is the earliest to occur of the following: (a) the Facility Termination Date, (b) the date that is specified in the related Confirmation, (c) if applicable, the related Early Repurchase Date, Mandatory Early Repurchase Date or Accelerated Repurchase Date, or (d) the maturity date of such Purchased Asset or, in the case of a Participation Interest, the maturity date of the underlying Mortgage Loan (subject to extension, if applicable, in accordance with the related Purchased Asset Documents).

"<u>Repurchase Obligations</u>" shall mean the Aggregate Repurchase Price and all other amounts due under the Transaction Documents (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) irrespective of whether such obligations are direct or indirect, absolute or contingent, matured or unmatured.

"<u>Repurchase Price</u>" shall mean, with respect to any Purchased Asset, as of any date, the price at which such Purchased Asset is to be transferred from Administrative Agent, on behalf of Buyers, to Seller upon termination of the related Transaction; in each case, such price shall equal the sum of the Purchase Price of such Purchased Asset and the accrued and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination, minus all Income and other cash actually received by Buyers in respect of such Purchased Asset and applied towards the Repurchase Price and/or Price Differential pursuant to this Agreement, including without limitation, any Principal Sweep Amounts, if any actually applied to reduce the Purchase Price of such Purchased Asset.

"<u>Requirement of Law</u>" shall mean any law (including, without limitation, Prescribed Law), treaty, rule, regulation, code, directive, policy, order or requirement or determination of an arbitrator or a court or any other Governmental Authority in each case, as adopted by the United States of America, whether now or hereafter enacted or in effect.

"<u>Reserve Requirements</u>" shall mean, with respect to any date of determination, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such

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date (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board of Governors of the Federal Reserve System) maintained by Buyers.

"<u>Sanctions</u>" shall have the meaning specified in <u>Section 10(xxv)(A)</u> of this Agreement.

"<u>SEC</u>" shall mean the Securities and Exchange Commission.

"<u>Seller</u>" shall have the meaning specified in the introductory paragraph of this Agreement.

"<u>Seller's Principal Payment Share</u>" shall mean, with respect to any Principal Payment, all amounts in excess of Buyers' Principal Payment Share.

"<u>Servicer</u>" shall mean Greystone Servicing Company LLC, or any successor servicer appointed by Administrative Agent, on behalf of Buyers, and reasonably acceptable to Seller; <u>provided</u> that the provisions of <u>Section 22</u> are satisfied.

"<u>Servicer Acknowledgment</u>" shall mean (i) that certain servicer acknowledgment, dated as of the date hereof, executed by Seller and acknowledged by Servicer and Administrative Agent, on behalf of Buyers, and (ii) such other servicer acknowledgment entered into by Seller on Administrative Agent's behalf in accordance with <u>Section 22</u> of this Agreement.

"<u>Servicing Agreement</u>" shall mean (i) that certain Servicing Agreement, dated as of the date hereof, by and between Servicer and Seller, and (ii) such other servicing or subservicing agreement entered into by Seller on Administrative Agent's behalf in accordance with <u>Section 22</u> of this Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time.

"<u>Servicing Records</u>" shall have the meaning specified in <u>Section 22(b)</u> of this Agreement.

"<u>Servicing Rights</u>" shall mean contractual, possessory or other rights of any Person to administer, service or subservice any Purchased Assets (or to possess any Servicing Records relating thereto), including: (i) the rights to service the Purchased Assets; (ii) the right to receive compensation (whether direct or indirect) for such servicing, including the right to receive and retain the related servicing fee and all other fees with respect to such Purchased Assets; and (iii) all rights, powers and privileges incidental to the foregoing, together with all Servicing Records relating thereto.

"<u>Significant Modification</u>" shall mean (i) any extension, amendment, waiver, termination, rescission, cancellation, release, subordination or other modification to the terms of, or any collateral, guaranty or indemnity for, any Purchased Asset or Purchased Asset Document (including, without limitation, any provision related to the amount or timing of any scheduled payment of interest or principal, the validity, perfection or priority of any security interest, or the release of any collateral or obligor), (ii) any sale, transfer, disposition or any similar action with respect to any collateral for any Purchased Asset or (iii) the foreclosure or exercise of any material right or remedy by the holder of any Purchased Asset or Purchased Asset Document; provided that, (a) routine and customary modifications in the administration of the Purchased Asset Documents and other non-material, administrative or ministerial modifications with no economic effect on the value of the related Purchased Asset or related Mortgaged Property regarding consent rights over leases, budgets, utilization of reserves or the release thereof, approval of escrows and bonding amounts for mechanics' or materialmen's liens, tax abatements or tax challenges and (b) provided that Seller has given Administrative Agent, on behalf of Buyers, at least ten (10) days' prior notice thereof

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(which notice shall include a summary of the related proposed amendments or modification), any waivers, consents, amendments or modifications to any Purchased Asset Document, to the extent solely providing for the conversion of the interest rate thereunder to a benchmark rate based on SOFR (or another benchmark rate to the extent that such other benchmark rate is being implemented in order to match the benchmark interest rate hereunder) and any benchmark conforming changes made in connection therewith (including waivers, consents, modifications or amendments to or replacements of any related interest rate protection agreements and/or caps relating to the applicable Purchased Asset that are necessary to effect such conversion to SOFR or such other benchmark rate) shall (in each case, with respect to each of the preceding clauses (a) and (b)) not be considered Significant Modifications.

"<u>Single-Purpose Entity</u>" shall mean any corporation, limited partnership or limited liability company that, since the date of its formation and at all times on and after the date hereof, has complied with and shall at all times comply with the provisions of <u>Section 13</u> of this Agreement.

"<u>SIPA</u>" shall have the meaning specified in <u>Section 25(a)</u> of this Agreement.

"<u>SOFR</u>" with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York's Website.

"<u>Split Mortgage Loan</u>" shall mean a Mortgage Loan evidenced by two or more senior *pari passu* Mortgage Notes.

"<u>Standard & Poor's</u>" shall mean Standard & Poor's Financial Services, L.L.C., a division of McGraw Hill Financial Inc. and any successor in interest.

"<u>Subsidiary</u>" shall mean, as to any Person, a corporation, partnership or other entity Controlled by such Person. Unless otherwise qualified, all references to a Subsidiary or to Subsidiaries in this Agreement shall refer to a Subsidiary or Subsidiaries of Seller and/or Guarantor.

"<u>Supplemental Due Diligence Package</u>" shall mean, with respect to any New Asset, information or deliveries concerning such New Asset that Administrative Agent, on behalf of Buyers, shall reasonably request in addition to the Preliminary Due Diligence Package, including, without limitation, a confirmation that the credit memorandum represents the final terms of the underlying transaction, a loan-to-value ratio computation and a final annualized underwritten debt yield computation (or such other underwriting methodology utilized by Seller and approved by Administrative Agent, on behalf of Buyers) for such New Asset.

"<u>Survey</u>" shall mean a certified ALTA/ACSM (or applicable state standards for the state in which a Mortgaged Property is located) survey of a Mortgaged Property prepared by a registered independent surveyor and in form and content reasonably satisfactory to Administrative Agent, on behalf of Buyers, and the company issuing the Title Policy for such Mortgaged Property.

"<u>Sweep Trigger</u>" shall mean any date on which less than five (5) Purchased Assets remain subject to Transactions.

"<u>Table Funded Purchased Asset</u>" shall mean a Purchased Asset which is sold to Administrative Agent, on behalf of Buyers, simultaneously with the origination or acquisition thereof, which origination or acquisition is financed with the Purchase Price, pursuant to Seller's request, paid directly to a title company or other settlement agent, in each case, approved by Administrative Agent, on behalf of Buyers, for disbursement in connection with such origination or acquisition. A Purchased Asset shall cease to be a

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Table Funded Purchased Asset after Custodian has delivered a Trust Receipt to Administrative Agent certifying its receipt of the Purchased Asset File therefor.

"<u>Taxes</u>" shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

"<u>Term SOFR</u>" means, with respect to any advance of a Purchase Price or Future Advance Purchase for any day, the Term SOFR Reference Rate for a one-month tenor on the day (such day, the "<u>Term SOFR Determination Day</u>") that is two (2) U.S. Government Securities Business Days prior to the first day of such Pricing Period, as such rate is published by the Term SOFR Administrator for such day at 6:00 a.m. (New York City time); provided, however, that if as of 5:00 p.m. (New York City time) on any Term SOFR Determination Day the Term SOFR Reference Rate for the foregoing tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Term SOFR Determination Day; provided, further, that if Term SOFR determined as provided above shall be less than the Floor, then Term SOFR shall be deemed to be the Floor.

"<u>Term SOFR Administrator</u>" means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).

"<u>Term SOFR Reference Rate</u>" means the forward-looking term rate based on SOFR.

"<u>Term SOFR Determination Day</u>" shall have the meaning set forth in the definition of Term SOFR in this Agreement.

"<u>Title Policy</u>" shall mean (a) an American Land Title Association lender's title insurance policy or a comparable form of lender's title insurance policy approved for use in the applicable jurisdiction, in form and substance reasonably acceptable to Administrative Agent, on behalf of Buyers, or, (b) if such policy has not yet been issued, (i) a pro forma policy, (ii) a preliminary title policy together with an Insured Closing Letter and Escrow Instructions or (iii) a "marked up" commitment, in each case that is binding on the title insurer.

"<u>Transaction</u>" shall have the meaning specified in <u>Section 1</u> of this Agreement.

"<u>Transaction Conditions Precedent</u>" shall have the meaning specified in <u>Section 3(f)</u> of this Agreement.

"<u>Transaction Costs</u>" shall have the meaning specified in <u>Section 20(b)</u> of this Agreement.

"<u>Transaction Documents</u>" shall mean, collectively, this Agreement, the Blocked Account Agreement, the Custodial Agreement, the Fee Letter, the Guaranty, the Pledge Agreement, the Servicing Agreement and Servicer Acknowledgment, the Power of Attorney to Administrative Agent, on behalf of Buyers, the Power of Attorney to Seller, all Transfer Documents, all Confirmations executed pursuant to this Agreement in connection with specific Transactions and all other documents executed in connection herewith and therewith.

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"<u>Transfer</u>" shall mean, with respect to any Person, any sale or other whole or partial conveyance of all or any portion of such Person's assets, or any direct or indirect interest therein to a third party (other than in connection with the transfer of a Purchased Asset to Administrative Agent, on behalf of Buyers, in accordance herewith), including the granting of any purchase options, rights of first refusal, rights of first offer or similar rights in respect of any portion of such assets or the subjecting of any portion of such assets to restrictions on transfer.

"<u>Transfer Documents</u>" shall mean, with respect to any Purchased Asset, all applicable Purchased Asset Documents necessary to transfer all of Seller's right, title and interest in such Purchased Asset to Administrative Agent, on behalf of Buyers, in accordance with the terms of this Agreement.

"<u>Trust Receipt</u>" shall mean a trust receipt issued by Custodian, or, in the case of a Table Funded Purchased Asset, Bailee, as applicable, confirming the Custodian or Bailee's, as applicable, possession of certain Purchased Asset Files that are held by the Custodial or Bailee, as applicable, on behalf of Administrative Agent, on behalf of Buyers, substantially in the form required under the Custodial Agreement or the Bailee Agreement.

"<u>UCC</u>" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; <u>provided</u> that if, by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of any security interest is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, with respect to perfection or the effect of perfection or non-perfection, "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement relating to such perfection or effect of perfection or non-perfection.

"<u>Unadjusted Benchmark Replacement</u>" means the applicable Benchmark Replacement excluding the Benchmark Replacement Adjustment with respect thereto.

"<u>Underwriting Issues</u>" shall mean, with respect to any New Asset, all material information of which Seller has knowledge that, based on the making of reasonable inquiries and the exercise of reasonable care and diligence by a reasonable institutional mortgage loan buyer in determining whether to originate or acquire such New Asset under the circumstances, would, in the context of the totality of the Transaction in question, be considered a materially "negative" factor (either separately or in the aggregate with other information relating to such New Asset), including, but not limited to, whether such New Asset was repurchased from any warehouse loan facility or a repurchase transaction due to the breach of a representation and warranty or a material defect in loan documentation or closing deliveries (such as the absence of any material Purchased Asset Document(s)).

"<u>United States Person</u>" shall have the meaning specified in <u>Section ‎3(r)(i)</u> hereof.

"<u>Upfront Fee</u>" shall have the meaning specified in the Fee Letter.

"<u>USA PATRIOT Act</u>" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56).

"<u>U.S. Government Securities Business Day</u>" means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association, or any successor thereto, recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

"<u>U.S. Tax Compliance Certificate</u>" shall have the meaning specified in <u>Section 3(r)(ii)(C)</u> hereof.

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"<u>Voting Stock</u>" shall mean, with respect to any specified "person" (as that term is used in Section 13(d)(3) of the 1934 Act) as of any date, the Capital Stock of that person that is at the time entitled to vote generally in the election of the board of directors of that person.

**3. INITIATION; CONFIRMATION; TERMINATION; FEES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Seller may prior to the Facility Termination Date, from time to time request that Administrative Agent, on behalf of Buyers, enter into a Transaction with respect to one or more New Assets by submitting a Preliminary Due Diligence Package for Administrative Agent, on behalf of Buyers' review and approval, which approval shall be in the sole discretion of Administrative Agent, as exercised in good faith. Notwithstanding anything to the contrary herein, Administrative Agent, on behalf of Buyers, shall have no obligation to consider for purchase any New Asset if, immediately after the purchase of such New Asset, the Aggregate Repurchase Price would exceed the Facility Amount. Administrative Agent, Buyers and their respective representatives shall have the right to review all New Assets proposed to be sold to Administrative Agent, on behalf of Buyers, in any Transaction and to conduct its own due diligence investigation of such New Assets as Administrative Agent and Buyers determine is necessary in Administrative Agent's sole discretion exercised in good faith. Notwithstanding any provision to the contrary herein or in any other Transaction Document, Administrative Agent, on behalf of Buyers, shall be entitled to determine, in its sole discretion exercised in good faith, whether a New Asset qualifies as an Eligible Asset or whether to reject any New Asset proposed to be sold to Administrative Agent, on behalf of Buyers, by Seller, and Administrative Agent, on behalf of Buyers, shall have no obligation to enter into any Transactions, which Transactions shall be entered into in the sole discretion of Administrative Agent, on behalf of Buyers, exercised in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Upon Administrative Agent's receipt of a Preliminary Due Diligence Package, Administrative Agent, on behalf of Buyers, shall have the right to request a Supplemental Due Diligence Package to evaluate the proposed Transaction. Upon Administrative Agent's receipt or waiver of such Supplemental Due Diligence Package, Administrative Agent, on behalf of Buyers, shall, in its sole discretion exercised in good faith, within three (3) Business Days, either (i) notify Seller of its intent to proceed with the Transaction, together with its determination of the Purchase Price and the Market Value for the related New Asset (such notice, a "<u>Preliminary Approval</u>") or (ii) deny Seller's request. Administrative Agent's failure to respond to Seller within three (3) Business Days shall be deemed to be a denial of Seller's request to enter into the proposed Transaction, unless Administrative Agent, on behalf of Buyers, and Seller have agreed otherwise in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Upon Seller's receipt of Preliminary Approval with respect to a Transaction, Seller shall, if Seller desires to enter into such Transaction with respect to the related New Asset upon the terms set forth by Administrative Agent, on behalf of Buyers, in the Preliminary Approval, deliver the documents set forth below in this <u>Section 3(c)</u> with respect to each New Asset and related Eligible Property or Properties (to the extent not already delivered in the Preliminary Due Diligence Package or in the Supplemental Due Diligence Package) as a condition precedent to a Final Approval and issuance of a Confirmation, all in a manner and/or form satisfactory to Administrative Agent in its sole discretion exercised in good faith and pursuant to documentation satisfactory to Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Delivery of Purchased Asset Documents</u>. Copies of each of the final Purchased Asset Documents, or drafts of such Purchased Asset Documents in substantially final form if such New Asset is being originated concurrently with the transfer to Administrative Agent, on behalf of Buyers, subject to delivery of final, executed copies of such Purchased Asset Documents on the Purchase Date of such New Asset.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Environmental and Engineering</u>. A "<u>Phase I"</u> (and, if recommended by the Phase I, a "<u>Phase II</u>") environmental report, an asbestos survey, if applicable, and an engineering report, each in form reasonably satisfactory to Administrative Agent, on behalf of Buyers, by an engineer and an environmental consultant, approved by Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Appraisal</u>. If obtained by Seller, an Appraisal of the related Eligible Property or Properties dated less than twelve (12) months prior to the proposed Purchase Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Insurance</u>. Certificates or other evidence of insurance detailing insurance coverage in respect of the related Eligible Property or Properties of types (including but not limited to casualty, general liability and terrorism insurance coverage), in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in the Purchased Asset Documents and otherwise reasonably satisfactory to Administrative Agent, on behalf of Buyers. Such certificates or other evidence shall indicate that Seller (or as to a New Asset that is a Participation Interest, the lead lender on the related whole loan in which Seller is a participant) will be named as an additional insured as its interest may appear and shall contain a loss payee endorsement in favor of such additional insured with respect to the policies required to be maintained under the Purchased Asset Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Opinions of Counsel</u>. Copies of all legal opinions with respect to the New Asset (which shall include a non-consolidation opinion, if applicable, as determined by Administrative Agent, acting in its reasonable discretion) that shall be in form and substance reasonably satisfactory to Administrative Agent, on behalf of Buyers; <u>provided</u> that Seller may deliver drafts of such opinions if such New Asset is being originated concurrently with the transfer to Administrative Agent, on behalf of Buyers, and shall deliver final, executed copies of such legal opinions on the Purchase Date of such New Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>Title Insurance</u>. (A) An unconditional commitment from the title company to issue a Title Policy or Policies in favor of Seller and Seller's successors and/or assigns with respect to each Mortgage securing such New Asset with an amount of insurance that shall be not less than the principal balance of such New Asset, or (B) an endorsement or confirmatory letter from the title company that issued the existing Title Policy (in an amount not less than the principal balance of such New Asset) in favor of Seller and Seller's successors and assigns adding such parties as an additional insured.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) <u>Additional Real Estate Matters</u>. To the extent obtained by Seller, such other real estate related certificates and documentation as may have been reasonably requested by Administrative Agent, on behalf of Buyers, such as: (A) certificates of occupancy issued by the appropriate Governmental Authority and either letters certifying that the related Eligible Property or Properties are in compliance with all applicable zoning laws issued by the appropriate Governmental Authority, a zoning report in form and prepared by a zoning consultant satisfactory to Administrative Agent, on behalf of Buyers, or evidence that the related Title Policy includes a zoning endorsement; and (B) abstracts of all material leases in effect at the Mortgaged Property delivered in connection with the New Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) <u>Exception Report</u>. A written report of any exceptions to the representations and warranties in <u>Exhibit III</u> attached hereto (an "<u>Exception Report</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) <u>Other Documents</u>. Such other documents as Administrative Agent, on behalf of Buyers, shall reasonably deem to be necessary.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Within three (3) Business Days of Seller's delivery of the documents and materials contemplated in <u>Section 3(c)</u> above, Administrative Agent shall in its sole discretion exercised in good faith notify Seller that either (A) Administrative Agent, on behalf of Buyers, has not approved the New Asset or (B) Administrative Agent, on behalf of Buyers, agrees to purchase the New Asset, subject to satisfaction (or waiver by Administrative Agent) of the Transaction Conditions Precedent (such notice, a "<u>Final Approval</u>") set forth in <u>Section 3(f)</u> below. Administrative Agent's failure to respond to Seller within three (3) Business Days shall be deemed to be a denial of Seller's request that Administrative Agent, on behalf of Buyers, purchase the New Asset, unless Administrative Agent, on behalf of Buyers, and Seller have agreed otherwise in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> Subject to satisfaction of the Transaction Conditions Precedent, Administrative Agent, on behalf of Buyers, shall deliver to Seller an executed Confirmation with respect to a proposed Transaction; provided that, unless otherwise agreed by Seller, Administrative Agent shall deliver a separate Confirmation with respect to each New Asset that will be the subject of a Transaction. Each Confirmation shall be deemed to be incorporated herein by reference with the same effect as if set forth herein at length.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> Provided that each of the Transaction Conditions Precedent set forth in this <u>Section 3(f)</u> have been satisfied (or waived by Administrative Agent in its sole discretion exercised in good faith), each Buyer, in the amount of each such Buyer's pro rata share of the Purchase Price, shall transfer the Purchase Price to Seller with respect to each New Asset for which it has issued a Confirmation on the Purchase Date specified in such Confirmation (which Purchase Date shall be at least one (1) Business Day after the date the Final Approval is delivered), and the related New Asset shall be concurrently transferred by Seller to Administrative Agent, on behalf of Buyers, or its nominee. For purposes of this <u>Section 3(f)</u>, the conditions precedent to any proposed Transaction ("<u>Transaction Conditions Precedent</u>") shall be satisfied with respect to such proposed Transaction if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) no uncured monetary Default, material non-monetary Default or Event of Default, or any unsatisfied Margin Deficit shall have occurred and be continuing as of the Purchase Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Seller shall have executed a Confirmation for such proposed Transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Administrative Agent shall have (A) determined, in its sole discretion exercised in good faith in accordance with <u>Section 3(a)</u> of this Agreement, that the New Asset proposed to be sold to Administrative Agent, on behalf of Buyers, by Seller in such Transaction is an Eligible Asset, (B) obtained internal credit approval for the inclusion of such New Asset as a Purchased Asset in a Transaction, (C) confirmed that, after giving effect to such Purchased Asset, the Concentration Limit shall be satisfied and (D) determined, in its sole discretion exercised in good faith, that the Maximum Asset Exposure Threshold and Portfolio Exposure Threshold will be satisfied immediately after giving effect to such proposed Transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) (A) if the New Asset is not a Table Funded Purchased Asset, the applicable Purchased Asset File described in <u>Schedule 2</u> of this Agreement shall have been delivered to Custodian, and Administrative Agent, on behalf of Buyers, shall have received a Trust Receipt with respect to such Purchased Asset File, and (B) if the Purchased Asset is a Table Funded Purchased Asset, the documents required by <u>Schedule 2</u> shall have been delivered to Bailee and Bailee shall have executed and delivered a Bailee Agreement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Seller shall have delivered to any related Mortgagor, obligor, related servicer or lead lender a direction letter in accordance with <u>Section 5(a)</u> of this Agreement unless such Mortgagor, obligor, related servicer or lead lender is already remitting payments to Servicer, in which case Seller shall direct Servicer to remit all such amounts into the Blocked Account in accordance with <u>Section 5(a)</u> of this Agreement and to service such payments in accordance with the provisions of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Seller shall have paid to Administrative Agent, for its own account and/or on behalf of Buyers, as applicable, (A) any fees then due and payable under the Fee Letter and (B) any unpaid Transaction Costs in respect of such Purchased Asset due and owing by Seller (which amounts, at Seller's option, may be held back from funds remitted to Seller by Buyers on the Purchase Date);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Administrative Agent, on behalf of Buyers, shall have received true and complete copies of fully executed originals of all Transfer Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) Subject to the limitations set forth in the defined term Eligible Asset, Administrative Agent, on behalf of Buyers, shall have received a copy of any document relating to any Hedging Transaction entered into in connection with the related New Asset, and Seller shall have validly pledged and assigned to Administrative Agent, on behalf of Buyers, all of Seller's rights under each such Hedging Transaction, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) no circumstance shall exist or event have occurred resulting in a Material Adverse Effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) Administrative Agent, on behalf of Buyers, shall not have determined that the introduction of, or a change in, any Requirement of Law or in the interpretation or administration of any Requirement of Law has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Administrative Agent or any Buyer, to enter into any Transaction and no Governmental Authority shall have imposed material restrictions on the authority of Administrative Agent or any Buyer to enter into any Transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) Administrative Agent, on behalf of Buyers, shall not have determined, in its sole discretion exercised in good faith, that an event or circumstance exists that has caused the occurrence of (A) a material change in financial markets as a result of, an outbreak or escalation of hostilities or a material change in national or international political, financial or economic conditions, or (B) a general suspension of trading on major stock exchanges, or (C) a disruption in or moratorium on commercial banking activities or securities settlement services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) no circumstance shall exist or event have occurred resulting in (A) the effective absence of a "repo market" or comparable "lending market" for financing debt obligations secured by commercial mortgage loans or (B) Administrative Agent or Buyers not being able to finance Eligible Assets through the "repo market" or "lending market" with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) no Key Person Event shall have occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the related Transaction covered thereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h) Future Advances</u>. With respect to any Transaction involving an Eligible Asset that is a Future Advance Asset, Seller shall indicate in the related Preliminary Due Diligence Package that such Eligible Asset is a Future Advance Asset and shall provide Administrative Agent, on behalf of Buyers, with the information required to complete the Confirmation regarding such Future Advance Asset, as well as, the then remaining unfunded future funding obligations under all Future Advance Assets. At any time prior to the Repurchase Date (but no more than two (2) times per month for each Future Advance Asset), in the event a future advance is to be made by Seller pursuant to the Purchased Asset Documents with respect to a Future Advance Asset, Seller may submit to Administrative Agent, on behalf of Buyers, a request that Buyers transfer their respective pro rata share of cash to Seller in an amount not to exceed the Maximum Purchase Percentage, *multiplied by* the amount of such future advance (a "<u>Future Advance Purchase</u>"), which Future Advance Purchase shall increase the outstanding Purchase Price for such Future Advance Asset. Notwithstanding anything to the contrary contained in this Agreement, Administrative Agent, on behalf of Buyers, shall be under no obligation to make a Future Advance Purchase, and shall determine in its sole and absolute discretion, exercised in good faith, whether to proceed with any proposed Future Advance Purchase. Buyers shall transfer cash to Seller as provided in this <u>Section 3(h)</u> (and in accordance with the wire instructions provided by Seller in such request) on the date requested by Seller, which date shall be no earlier than two (2) Business Days following the Business Day on which Administrative Agent reasonably determines that the conditions precedent to such Future Advance Purchase as set forth in this <u>Section 3(h)</u> have been satisfied (or, in Administrative Agent's sole and absolute discretion, as determined in good faith, waived). Any Future Advance Purchase to be made by Administrative Agent, on behalf of Buyers, in accordance with this <u>Section 3(h)</u> shall be subject to satisfaction of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) no unsatisfied Margin Deficit, Default or Event of Default has occurred and is continuing or will result from the funding of such Future Advance Purchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the funding of the Future Advance Purchase will not cause the aggregate outstanding Purchase Price for all Purchased Assets to exceed the Facility Amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the Future Advance Purchase will not cause the Purchase Price of the applicable Future Advance Asset to exceed the Concentration Limit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Administrative Agent, on behalf of Buyers, shall have determined, in its sole discretion exercised in good faith, that the Maximum Asset Exposure Threshold and Portfolio Exposure Threshold will be satisfied immediately after giving effect to the funding of the Future Advance Purchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Seller shall have demonstrated to the reasonable satisfaction of Administrative Agent, on behalf of Buyers, that all conditions to the future advance under the Purchased Asset Documents have been satisfied;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Administrative Agent, on behalf of Buyers, and Seller shall have executed and delivered a restated Confirmation for the applicable Transaction to set forth the new outstanding Purchase Price for such Purchased Asset and any other modifications to the terms set forth on the existing Confirmation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the Future Advance Purchase shall be in an amount equal to or greater than One Million Dollars ($1,000,000); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) previously or simultaneously with Buyers funding of the Future Advance Purchase, Seller shall have funded or caused to be funded to the Mortgagor (or to an escrow agent

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or as otherwise directed by the Mortgagor) its pro rata portion of such Future Advance Purchase in respect of such Future Advance Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Seller and Administrative Agent, on behalf of Buyers, shall have approved any required modification to the Confirmation with respect to the applicable Future Advance Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Buyers credit committee shall have approved the Future Advance Purchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) no Key Person Event shall have occurred; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) Administrative Agent, on behalf of Buyers, shall not have determined, in its sole discretion exercised in good faith, that an event or circumstance exists that has caused the occurrence of (A) a material change in financial markets, as a result of an outbreak or escalation of hostilities, or a material change in national or international political, financial or economic conditions, (B) a general suspension of trading on major stock exchanges or (C) a disruption in or moratorium on commercial banking activities or securities settlement services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i) Early Repurchase and Mandatory Repurchase</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Seller shall be entitled to terminate any or all Transactions on demand, and repurchase the related Purchased Assets on any Business Day prior to the applicable Repurchase Date (an "<u>Early Repurchase Date</u>"); <u>provided</u>, *however*, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) no uncured monetary Default, material non-monetary Default or Event of Default, or any unsatisfied Margin Deficit shall be continuing or would occur or result from such early repurchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Seller notifies Administrative Agent in writing, no later than five (5) Business Days prior to the Early Repurchase Date, of its intent to terminate such Transaction and repurchase the related Purchased Asset; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Seller shall pay to Buyers on the Early Repurchase Date an amount equal to the sum of the Repurchase Price for such Transaction, all Transaction Costs and any other amounts payable by Seller and outstanding under this Agreement or the other Transaction Documents (including, without limitation, <u>Section 3(n)</u>, <u>Section 3(o)</u>, <u>Section 3(p)</u> and <u>Section 3(q)</u> of this Agreement, if any) with respect to such Transaction against transfer to Seller or its agent of the related Purchased Asset.<br>

If all Transactions are terminated by Seller in accordance with this Section 3(i)(i), at Seller's request this Agreement and all Transaction Documents shall terminate simultaneously with the repurchase of the last remaining Purchased Asset, except with respect to those provisions which by their terms survive the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) In addition to any other rights and remedies of Administrative Agent and Buyers under any Transaction Document, upon the occurrence of a Purchased Asset becoming a Defaulted Asset due to the occurrence of any one or more elements of the definition of "Defaulted Asset" set forth herein, Seller shall, in accordance with the procedures set forth in <u>Article 3(i)(i)(B)-(C)</u>, repurchase any such Purchased Asset on the date (the "<u>Mandatory Early Repurchase Date</u>") that is five (5) Business Days after the earlier of Seller's receipt of notice from Administrative Agent or Seller's actual knowledge of the occurrence thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j) Mandatory Repurchase</u>. On the Repurchase Date for any Transaction, termination of the applicable Transaction will be effected by transfer to Seller or, if requested by Seller, its designee of the related Purchased Assets, and any Income in respect thereof received by Administrative Agent, on behalf of Buyers (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to <u>Section 4</u> or <u>Section 5</u> hereof) against the simultaneous transfer to Administrative Agent, on behalf of Buyers, of the applicable Repurchase Price, all Transaction Costs and any other amounts payable by Seller and outstanding under this Agreement with respect to such Transaction (including without limitation, <u>Section 3(n)</u>, <u>Section 3(o)</u>, <u>Section 3(p)</u> and <u>Section 3(q)</u> of this Agreement, if any, and the Exit Fee, if applicable) to an account of Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k) Partial Prepayments</u>. So long as no Event of Default has occurred and is then continuing, the Repurchase Price with respect to one or more Purchased Assets may be paid in part at any time upon two (2) Business Days prior written notice from Seller to Administrative Agent; *provided*, *however*, that any such payment shall be accompanied by an amount representing accrued Price Differential with respect to such Purchased Asset(s) on the amount of such payment and all other amounts then due under the Transaction Documents. Each partial payment of the Repurchase Price that is voluntary (as opposed to mandatory under the terms of this Agreement) shall be in an amount of not less than One Million Dollars ($1,000,000).Administrative Agent, on behalf of Buyers, and Seller shall execute and deliver a restated Confirmation for the applicable Transaction to set forth the new outstanding Purchase Price and outstanding principal balance for such Purchased Asset in connection with such partial repurchase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and a Benchmark Replacement Date with respect thereto have occurred prior to the Reference Time in connection with any setting of the then-current Benchmark, then such Benchmark Replacement will replace the then-current Benchmark for all purposes under this Agreement and under any other Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without requiring any amendment to, or requiring any further action by or consent of any other party to, this Agreement or any other Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Notwithstanding the forgoing, in the event that Administrative Agent shall have determined (which determination shall be conclusive and binding upon Seller absent manifest error) that by reason of circumstances affecting the relevant market or otherwise, (i) adequate and reasonable means do not exist for ascertaining the applicable Benchmark, but a Benchmark Transition Event (as provided in the definition of Benchmark Transition Event as set forth herein) has not yet occurred or (ii) the Benchmark does not fairly and accurately reflect the costs to Buyers of effecting or maintaining the Transactions, then Administrative Agent shall give written notice to Seller as soon as practicable thereafter. If such notice is given, the Pricing Rate with respect to all outstanding Transactions, until such notice has been withdrawn by Administrative Agent, shall be a per annum rate equal to the sum of (i) an alternate benchmark rate that has been selected by Administrative Agent, (ii) the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected by Administrative Agent and (iii) the related Applicable Spread.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In connection with the implementation and administration of a Benchmark Replacement, Administrative Agent, on behalf of Buyers, will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary

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herein or in any other Transaction Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without requiring any further action by or consent of any other party to this Agreement or any other Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Administrative Agent, on behalf of Buyers, will promptly notify Seller of (A) any occurrence of (i) a Benchmark Transition Event and (ii) the Benchmark Replacement Date with respect thereto, (B) the implementation of any Benchmark Replacement, and (C) the effectiveness of any Benchmark Replacement Conforming Changes.

Any determination, decision or election that may be made by Administrative Agent, on behalf of Buyers, pursuant to Section 3(l) or this Section 3(m), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in the sole discretion of Administrative Agent, on behalf of Buyers, and without consent from Seller or any other party to any other Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> Upon demand by Administrative Agent, on behalf of Buyers, Seller shall indemnify Administrative Agent and Buyers, and hold Administrative Agent and Buyers harmless from any actual net loss or out-of-pocket cost or expense (not to include any lost profit or opportunity) (including, without limitation, reasonable out-of-pocket attorneys' fees and disbursements) that Administrative Agent or Buyers actually sustains or incurs as a direct consequence of (i) a default by Seller in terminating any Transaction after Seller has given a notice in accordance with <u>Section 3(i)</u> of a termination of a Transaction, (ii) any payment of all or any portion of the Repurchase Price, as the case may be, on any day other than a Remittance Date and (iii) Seller's failure to sell Eligible Assets to Administrative Agent, on behalf of Buyers, after Seller has notified Administrative Agent of a proposed Transaction and Administrative Agent, on behalf of Buyers, has given a Final Approval to purchase such Eligible Assets in accordance with the provisions of this Agreement (unless the Final Approval differs materially from the Preliminary Approval). This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(o) Capital Adequacy</u>. If Administrative Agent shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy, including the Reserve Requirements or any other similar reserve, special deposit or similar requirements relating to extensions of credit or other assets of Administrative Agent or any Buyer, or in the interpretation or application thereof or compliance by Administrative Agent or such Buyer, or any corporation controlling Administrative Agent or such Buyer, with any request or directive regarding such requirements (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof has the effect of reducing the rate of return on any Buyer's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Buyer, or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Buyer's or such corporation's policies with respect to such requirements) by an amount deemed by Administrative Agent, on behalf of Buyers, to be material, then from time to time, within five (5) Business Days after submission by Administrative Agent, on behalf of Buyers, to Seller of a written request therefor, Seller shall pay to Administrative Agent or such Buyer, such additional amount or amounts as will compensate Administrative Agent or such Buyer for such reduction; provided, that Administrative Agent, on behalf of Buyers, will not impose such additional amounts on Seller unless either MSBNA, acting in its individual capacity, or Administrative Agent, on behalf of Buyers, is imposing such additional amounts on other customers similarly situated to Seller under other repurchase facilities involving commercial real estate loans. A certificate as to the calculation of any additional amounts payable pursuant to this subsection shall be submitted by Administrative Agent to Seller and shall be conclusive and binding upon Seller in the absence of manifest error. With respect to each reduction in the rate of return as described above, this covenant shall survive for a period of one hundred eighty (180)

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days from the date of the incurrence of such reduction by Administrative Agent or any Buyer. This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(p)</u> Any and all payments by or on account of any obligation of Seller under the Transaction Documents shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law requires the deduction or withholding of any Tax from any such payment (as determined in the good faith discretion of Seller or Administrative Agent), then Seller shall be entitled to make (or cause to be made) such deduction or withholding and to timely pay (or cause to be timely paid) the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable shall be increased by Seller as necessary so that after such deduction or withholding has been made, each Buyer receives an amount equal to the sum it would have received had no such deduction or withholding been made. Seller shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Requirements of Law. As soon as practicable after any payment of Taxes by Seller to a Governmental Authority pursuant to this <u>Section 3(p)</u>, Seller shall deliver to Administrative Agent, on behalf of Buyers, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(q)</u> Seller shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this <u>Section 3(q)</u>) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Seller by a Buyer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Buyer, shall be conclusive absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(r)</u> If any Buyer is entitled to an exemption from or reduction of withholding Tax with respect to payments made under the Transaction Documents, such Buyer shall deliver to Seller and Administrative Agent, prior to becoming a party to this Agreement, and at the time or times reasonably requested by Seller or Administrative Agent, such properly completed and executed documentation reasonably requested by Seller or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, each Buyer shall deliver such other documentation prescribed by applicable law or reasonably requested by Seller or Administrative Agent as will enable Seller to determine whether or not such Buyer, is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in <u>Section 3(r)(i)</u>, <u>Section 3(r)(ii)</u> and <u>Section 3(r)(iv)</u> below) shall not be required if in such Buyer's reasonable judgment such completion, execution or submission would be illegal, would subject Buyer, to any material unreimbursed cost or expense or would otherwise materially prejudice the legal or commercial position of such Buyer. Without limiting the generality of the foregoing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if a Buyer is a United States person (as defined in Section 7701(a)(30) of the Code)(a "<u>United States Person</u>"), it shall deliver to Seller and Administrative Agent on or prior to the date on which Buyer becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Seller), executed originals of IRS Form W-9 certifying that such Buyer is exempt from U.S. federal backup withholding tax;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if a Buyer is not a United States Person, it shall, to the extent it is legally entitled to do so, deliver to Seller and Administrative Agent (in such number of copies as shall be requested

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by Seller) on or prior to the date on which such Buyer, becomes a party under this Agreement (and from time to time thereafter upon the reasonable request of Seller), whichever of the following is applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) in the case of a Buyer claiming the benefits of an income tax treaty to which the United States is a party, (1) with respect to payments characterized as interest for U.S. tax purposes under any Transaction Document, executed originals of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "interest" article of such tax treaty and (2) with respect to any other applicable payments under any Transaction Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "business profits" or "other income" article of such tax treaty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) executed originals of IRS Form W-8ECI;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) in the case of a Buyer claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (1) a certificate to the effect that Buyer is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10 percent shareholder" of Seller within the meaning of Section 881(c)(3)(B) of the Code, or a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Code (a "<u>U.S. Tax Compliance Certificate</u>") and (2) executed originals of IRS Form W-8BEN or W-8BEN-E; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) to the extent a Buyer is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; <u>provided</u> that if such Buyer is a partnership and one or more direct or indirect partners of such Buyer are claiming the portfolio interest exemption, such Buyer may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if a Buyer is not a United States Person, it shall, to the extent it is legally entitled to do so, deliver to Seller and Administrative Agent (in such number of copies as shall be requested by Seller) on or prior to the date on which such Buyer becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Seller and/or Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Seller or Administrative Agent to determine the withholding or deduction required to be made; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) each Buyer shall deliver to Seller and Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Seller or Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Seller or Administrative Agent as may be necessary for Seller and Administrative Agent to comply with their obligations under FATCA and to determine whether a Buyer has complied with such Buyer's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this <u>Section 3(r)(iv)</u>, "<u>FATCA</u>" shall include any amendments made to FATCA after the date of this Agreement;

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<u>provided</u> that each Buyer agrees that if any form or certification it previously delivered pursuant to this <u>Section 3(r)</u> expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Seller (and Administrative Agent) in writing of its legal inability to do so.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(s)</u> If any of the events described in <u>Section 3(o)</u> or <u>Section 3(p)</u> result in Administrative Agent's request, on behalf of Buyers, for additional amounts, then Seller shall have the option to notify Administrative Agent, on behalf of Buyers, in writing of its intent to terminate all of the Transactions and repurchase all of the Purchased Assets no later than five (5) Business Days after such notice is given to Administrative Agent, and such repurchase by Seller shall be conducted pursuant to and in accordance with <u>Section 3(h)</u> but without the payment of any Exit Fee. The election by Seller to terminate the Transactions in accordance with this <u>Section 3(s)</u> shall not relieve Seller for liability with respect to any additional amounts or increased costs actually incurred by Administrative Agent or Buyers prior to the actual repurchase of the Purchased Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(t) Tax Refunds on Indemnified Amounts</u>. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this <u>Section 3</u> (including by the payment of additional amounts pursuant to this <u>Section 3</u>), it shall pay to Seller an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such Recipient and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Seller, upon the request of such Recipient, shall repay to such Recipient the amount paid over pursuant to this <u>Section 3(t)</u> (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this <u>Section 3(t)</u>, in no event will the Recipient be required to pay any amount to Seller pursuant to this <u>Section 3(t)</u> the payment of which would place the Recipient in a less favorable net after-Tax position than the Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to Seller or any other Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(u) Mandatory Repurchase on Facility Maturity Date</u>. From and after the Facility Termination Date, Administrative Agent, on behalf of Buyers, shall have no further obligation to purchase any New Assets. On the Facility Termination Date, Seller shall be obligated to repurchase all of the Purchased Assets and transfer payment of the Repurchase Price for each such Purchased Asset, together with the accrued and unpaid Price Differential and all Transaction Costs and other amounts due and payable to Buyers hereunder, against the transfer by Administrative Agent, on behalf of Buyers, to Seller of each such Purchased Asset. Following the Facility Termination Date, Administrative Agent, on behalf of Buyers, shall not be obligated to transfer any Purchased Assets to Seller until payment in full to Buyers of all amounts due hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(v)</u> Notwithstanding any provision herein to the contrary, any rule, regulation, guideline or directive adopted after the date of this Agreement that implements (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act, or (ii) a capital or liquidity accords adopted by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or such rules, regulations, guidelines or directives adopted by United States or foreign regulatory authorities, in each case under clause (ii) pursuant to Basel III, shall in each case be deemed to be an adoption of or change in a Requirement of Law made subsequent to the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(w)</u> Status of Administrative Agent. On or before the date the Administrative Agent (or any successor thereto) becomes a party to this Agreement, such Administrative Agent shall provide to the Seller,

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two duly-signed, properly completed copies of the documentation prescribed in clause (i) or (ii) below, as applicable (together with all required attachments thereto): (i) if the Administrative Agent is a "United States person" (as defined in Section 7701(a)(30) of the Code), executed copies of IRS Form W-9 certifying that such Administrative Agent is exempt from U.S. federal backup withholding tax, or (ii) if the Administrative Agent is not a "United States person" (as defined in Section 7701(a)(30) of the Code), (A) with respect to any payments to be received on its own behalf, executed copies of IRS Form W-8ECI or W-8BEN-E, as applicable, and (B) with respect to payments received on account of any Buyer, executed copies of IRS Form W-8IMY certifying that Administrative Agent is either (1) a "qualified intermediary" which has assumed primary withholding responsibility under Chapters 3 and 4 of the Code and primary IRS Form 1099 reporting and back-up withholding responsibility, or (2) a U.S. branch providing such form as evidence of its agreement with the Seller to be treated as a "United States person" (as defined in Section 7701(a)(30) of the Code) for U.S. federal withholding tax purposes.

**4. MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Administrative Agent, on behalf of Buyers, may determine and re-determine the Asset Base Components on any Business Day and on as many Business Days as it may elect. Upon the occurrence of a Margin Credit Event with respect to one or more Purchased Assets, if at any such time the aggregate Purchase Price of such Purchased Assets is greater than the aggregate Asset Base Components of such Purchased Assets as determined by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith and such amount equals or exceeds the Margin Materiality Threshold (a "<u>Margin Deficit</u>"), then Seller shall, not later than two (2) Business Days after receipt of notice of such Margin Deficit from Administrative Agent, on behalf of Buyers, (i) deliver to Buyers cash, (ii) request a funding of Margin Excess under <u>Section 4(b)</u> to offset such Margin Deficit, or (iii) utilize any combination of the foregoing, in an amount sufficient to reduce the aggregate Purchase Price of such Purchased Assets to an amount equal to the aggregate Asset Base Components as re-determined by Administrative Agent, on behalf of Buyers, after giving effect to the delivery of cash or additional collateral by Seller to Buyers, pursuant to this <u>Section 4(a)</u>. Any cash delivered to Buyers pursuant to this <u>Section 4(a)</u> shall be applied by Administrative Agent, on behalf of Buyers, to reduce the Purchase Price of the applicable Purchased Assets that caused the related Margin Deficit to exist, allocated on a pro-rata basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> If at any such time the Purchase Price of one or more Purchased Assets is less than the aggregate Asset Base Components of such Purchased Assets as determined by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith (a "<u>Margin Excess</u>"), then Buyers shall, no later than five (5) Business Days after receipt of a request from Seller, transfer cash to Seller in an amount (not to exceed such Margin Excess) such that the Purchase Price of such Purchased Asset, after the addition of any such cash so transferred, will thereupon not exceed such Asset Base Component as re-determined by Administrative Agent, on behalf of Buyers, after giving effect to the delivery of cash by Buyers to Seller pursuant to this <u>Section 4(b)</u>; <u>provided</u> that (i) no Margin Deficit, monetary Default, material non-monetary Default or any Event of Default has occurred and is continuing or would result from such funding, (ii) such funding shall not result in the Aggregate Repurchase Price of all Purchased Assets exceeding the Facility Amount and (iii) each such funding shall be in an amount of not less than the Margin Materiality Threshold. Any cash delivered by Buyers to Seller pursuant to this <u>Section 4(b)</u> shall be applied by Administrative Agent, on behalf of Buyers, to increase the Purchase Price of the applicable Purchased Asset(s) that caused the related Margin Excess to exist, allocated on a pro-rata basis. Administrative Agent, on behalf of Buyers, and Seller shall execute and deliver a restated Confirmation(s) for the applicable Transaction(s) to set forth the new Purchase Price(s) for such Purchased Asset(s). Seller may not request funding under this <u>Section 4(b)</u> more than three (3) times in any calendar month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> The failure of Administrative Agent, on behalf of Buyers, or Buyers on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions to which this

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Agreement is subject or limit the rights of Administrative Agent, on behalf of Buyers, to do so at a later date. Seller and Administrative Agent, on behalf of Buyers, each agree that a failure or delay by Administrative Agent, on behalf of Buyers, to exercise its rights hereunder shall not limit or waive Administrative Agent or Buyers' rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.

**5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> On or before the date hereof, Seller and Administrative Agent, on behalf of Buyers, shall establish and maintain with the Depository Bank a deposit account in the name of Seller and under the sole control of Administrative Agent, on behalf of Buyers, with respect to which the Blocked Account Agreement shall have been executed (such account, together with any replacement or successor thereof, the "<u>Blocked Account</u>"). Administrative Agent, on behalf of Buyers, shall have sole dominion and control (including, without limitation, "control" within the meaning of Section 9.01(a) of the UCC) over the Blocked Account. Seller shall cause all Income with respect to the Purchased Assets to be deposited in the Blocked Account. In furtherance of the foregoing, Seller shall cause Servicer to remit to the Blocked Account all Income received in respect of the Purchased Assets on the date specified for remittances as set forth in the Servicer Acknowledgment. All Income in respect of the Purchased Assets, which may include payments in respect of associated Hedging Transactions, shall be deposited directly into, or, if applicable, remitted directly from the applicable underlying collection account to, the Blocked Account. On or before the before the occurrence of a Sweep Trigger, Seller and Administrative Agent, on behalf of Buyers, shall establish a subaccount in the Blocked Account entitled "Principal Sweep Escrow Account" (the "<u>Principal Sweep Escrow Account</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Unless an Event of Default shall have occurred and be continuing, on each Remittance Date, all Income on deposit in the Blocked Account in respect of the Purchased Assets and the associated Hedging Transactions shall be applied as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *first*, to Administrative Agent, on behalf of Buyers, an amount equal to the Price Differential which has accrued and is outstanding in respect of the Transactions as of such Remittance Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *second*, to Administrative Agent, on behalf of Buyers, any accrued and unpaid Transaction Costs and all other amounts payable by Seller and outstanding hereunder and under the other Transaction Documents (other than the Repurchase Price);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) *third*, if a Principal Payment in respect of any Purchased Asset has been made during the related Collection Period, and has not been applied in accordance with <u>Section 5(c)</u> below, to Administrative Agent, on behalf of Buyers, the Buyers' Principal Payment Share and any other amount due to Administrative Agent, on behalf of Buyers, under <u>Sections 5(c)</u> below to be applied in accordance therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) *fourth*, if a Margin Deficit shall exist with respect to one or more Purchased Assets, to Administrative Agent, on behalf of Buyers, an amount such that, after giving effect to such payment, the aggregate Purchase Price of such Purchased Assets is equal to the aggregate Asset Base Components of such Purchased Assets, as determined by Administrative Agent, on behalf of Buyers, after giving effect to such payment to the extent of remaining funds in the Blocked Account; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) *fifth*, to Seller, the remainder, if any.

If, on any Remittance Date, the amounts deposited in the Blocked Account shall be insufficient to make the payments required under <u>(i)</u> through <u>(iii)</u> above of this <u>Section 5(b)</u>, and Seller does not otherwise make such payments on such Remittance Date, the same shall constitute an Event of Default hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Unless an Event of Default shall have occurred and be continuing, any unscheduled Principal Payment (including net sale proceeds) in respect of any Purchased Asset for which the Income thereof has been received by the Depository Bank during any Collection Period shall be applied, no later than two (2) Business Days after receipt of notice from Seller of its request to apply such payment in accordance with this <u>subsection (c)</u>, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *first*, to Administrative Agent, on behalf of Buyers, the Buyers' Principal Payment Share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *second*, if a Margin Deficit <u>that is due and payable</u> shall exist with respect to one or more Purchased Assets, to Administrative Agent, on behalf of Buyers, to the extent of Income available after the payment made in accordance with <u>Sections 5(c)(i)</u> above, an amount equal to the aggregate Margin Deficit until paid in full;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) *third,* if a Sweep Trigger exists, to the Principal Sweep Escrow Account, the applicable Principal Sweep Amount; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) *fourth*, to Seller the remainder, if any.

If at any time no Sweep Trigger exists, all amounts in the Principal Sweep Escrow Account shall be remitted to Seller no later than two (2) Business Days after such Sweep Trigger ceases to exist. If a Sweep Trigger has occurred and is continuing, any amounts that have been on deposit in the Principal Sweep Escrow Account in excess of ninety (90) days shall be remitted to the Administrative Agent, on behalf of Buyers, to reduce the Purchase Price of the Purchased Assets in such order and priority as determined by Administrative Agent in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> If an Event of Default shall have occurred and be continuing, all Income on deposit in the Blocked Account in respect of the Purchased Assets and the associated Hedging Transactions shall be applied as determined in Administrative Agent, on behalf of Buyers, acting in its sole discretion exercised in good faith pursuant to <u>Section 14(b)(ii)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> If at any time during the term of any Transaction any Income is distributed to Seller with respect to the related Purchased Asset or Seller has otherwise received such Income and has made a payment in respect of such Income to Administrative Agent, on behalf of Buyers, pursuant to this <u>Section 5</u>, and for any reason such amount is required to be returned by any Buyer to an obligor under such Purchased Asset (either before or after the Repurchase Date), such Buyer, may provide Seller and Administrative Agent with notice of such required return, and Seller shall pay the amount of such required return to such Buyer by 11:00 a.m. (New York time) on the Business Day following Seller's receipt of such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> Subject to the other provisions hereof, Seller shall be responsible for all Transaction Costs in respect of any Purchased Assets to the extent it would be so obligated if the Purchased Assets had not

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been sold to Administrative Agent, on behalf of Buyers. Administrative Agent, on behalf of Buyers, shall provide Seller with notice of any Transaction Costs, and Seller shall pay the amount of any Transaction Costs to Administrative Agent, on behalf of Buyers, by 11:00 a.m. (New York time) on the later of (i) five (5) Business Days after the date on which Administrative Agent, on behalf of Buyers, has informed Seller that such amount is due under the Purchased Asset Documents and (ii) three (3) Business Days following Seller's receipt of such notice.

**6. CAUTIONARY SECURITY INTEREST**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Administrative Agent, Buyers, and Seller intend that all Transactions hereunder be sales to Administrative Agent, on behalf of Buyers, of the Purchased Assets for all purposes (other than for U.S. federal, state and local income or franchise tax purposes) and not loans from Buyers to Seller secured by the Purchased Assets. However, in the event that any Transaction is deemed to be a loan, and as security for Seller's performance of the Repurchase Obligations, Seller hereby pledges to Administrative Agent, on behalf of Buyers, and hereby grants to Administrative Agent, on behalf of Buyers, a first priority security interest in all of Seller's right, title and interest in and to the following (collectively, and together with the Mezzanine Loan Repurchase Assets (as defined below), the "<u>Repurchase Assets</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all of the Purchased Assets (including, for the avoidance of doubt, all security interests, mortgages and liens on personal or real property securing the Purchased Assets) and related Servicing Rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) all Income from the Purchased Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) all insurance policies and insurance proceeds relating to any Purchased Asset or the related Eligible Property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) all "general intangibles", "accounts" and "chattel paper" as defined in the UCC relating to or constituting any and all of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) all replacements, substitutions or distributions on or proceeds, payments and profits of, and records and files relating to, any and all of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) any other property, rights, titles or interests as are specified in the Confirmation and/or the Trust Receipt, the Purchased Asset Schedule or exception report with respect to the foregoing in all instances, whether now owned or hereafter acquired, now existing or hereafter created; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the Blocked Account and all amounts and property from time to time on deposit therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> With respect to the security interest in the Repurchase Assets granted in <u>Section 6(a)</u> and Section 6(f) hereof, and with respect to the security interests granted in <u>Sections 6(c)</u> and 6(d), Administrative Agent, on behalf of Buyers, shall, upon the occurrence and during the continuance of an Event of Default, have all of the rights and may exercise all of the remedies of a secured creditor under the UCC and any other applicable law and shall have the right to apply the Repurchase Assets or proceeds therefrom to the obligations of Seller under the Transaction Documents. In furtherance of the foregoing, (i) Administrative Agent, on behalf of Buyers, at Seller's sole cost and expense, shall cause to be filed as a protective filing with respect to the Repurchase Assets and as a UCC filing with respect to the security interests granted in <u>Sections 6(c)</u>, <u>6(d)</u> and <u>6(f)</u> one or more UCC financing statements in form satisfactory to Administrative Agent, on behalf of Buyers (to be filed in the filing office indicated therein) and, with

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respect to Seller, containing the following collateral description "all assets of the debtor, whether now owned or hereafter acquired" or words to that effect and, with respect to Pledgor, describing all of the items set forth in the definition of Collateral in the Pledge Agreement, in such locations as may be necessary to perfect and maintain perfection and priority of the outright transfer (including under <u>Section 22</u> of this Agreement) and the security interest granted hereby and, in each case, continuation statements and any amendments thereto (including, without limitation, by causing to be filed any amendments necessary to add or delete Repurchase Assets covered by the financing statement to reflect the purchase and repurchase of Purchased Assets) (collectively, the "<u>Filings</u>"), and shall forward copies of such Filings to Seller upon completion thereof, and (ii) Seller and Pledgor shall, from time to time, at their own expense, deliver and cause to be duly filed all such further filings, instruments and documents and take all such further actions as may be necessary or desirable or as may be requested by Administrative Agent, on behalf of Buyers, with respect to the perfection and priority of the outright transfer of the Purchased Assets and the security interest granted hereunder in the Repurchase Assets and the other collateral specified in <u>Sections 6(c)</u>, <u>6(d)</u> and <u>6(f)</u> and the rights and remedies of Administrative Agent, on behalf of Buyers, with respect to the Repurchase Assets (including under <u>Section 22</u> of this Agreement) (including the payments of any fees and Taxes required in connection with the execution and delivery of this Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Seller hereby pledges to Administrative Agent, for the benefit of Buyers, as security for the performance by Seller of the Repurchase Obligations and hereby grants to Administrative Agent, on behalf of Buyers, a first priority security interest in all of Seller's right, title and interest in and to Seller's rights under all Hedging Transactions relating to Purchased Assets entered into by Seller and all proceeds thereof. Seller shall take all action as is necessary or desirable to obtain consent to assignment of any such Hedging Transaction to Administrative Agent, on behalf of Buyers, and shall cause the counterparty under each such Hedging Transaction to enter into such document or instrument satisfactory to Administrative Agent, Seller and such counterparty, pursuant to which such counterparty will covenant and agree to accept notice from Administrative Agent, on behalf of Buyers, to redirect payments under such Hedging Transaction as Administrative Agent may direct. So long as no Event of Default shall be continuing, Administrative Agent, on behalf of Buyers, agrees that it will not redirect payments under any Hedging Transaction pledged to Administrative Agent, on behalf of Buyers, pursuant to the terms of this <u>Section 6(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Seller hereby pledges to Administrative Agent, on behalf of Buyers, as security for the performance by Seller of the Repurchase Obligations and hereby grants to Administrative Agent, on behalf of Buyers, a first priority security interest in all of Seller's right, title and interest in and to the Servicing Rights and the Blocked Account and all amounts and property from time to time on deposit therein and all replacements, substitutions or distributions on or proceeds, payments and profits of, and records and files relating to, the Servicing Rights and the Blocked Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> In connection with the repurchase by Seller of any Purchased Asset in accordance herewith, upon receipt of the Repurchase Price by Administrative Agent, on behalf of Buyers, Administrative Agent, on behalf of Buyers, will deliver to Seller, at Seller's expense, such documents and instruments as may be reasonably necessary and requested by Seller to reconvey such Purchased Asset and any Income related thereto to Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> In order to further secure the Repurchase Obligations hereunder, Seller hereby grants, assigns and pledges to Administrative Agent, on behalf of Buyers, a fully perfected first priority security interest in the Mezzanine Loans, all replacements, substitutions or distributions on, or proceeds, payments and profits of, and records and files relating thereto, and all related Servicing Rights, the Transaction Documents (to the extent such Transaction Documents and Seller's right thereunder relate to the Mezzanine Loans), all documentation governing the Mezzanine Loans, any right or interest in or to property of any kind whatsoever, whether real, personal, or mixed and whether tangible or intangible, relating to the Mezzanine Loans, all insurance policies and insurance proceeds relating to any Mezzanine Loans or the

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related Mortgaged Property, including, but not limited to, any payments or proceeds under any related primary insurance, hazard insurance, Income, interest rate protection agreements, accounts (including any interest of Seller in escrow accounts) and any other contract rights, instruments, accounts, payments, rights to payment (including payments of interest or finance charges), general intangibles and other assets relating to the Mezzanine Loans (including, without limitation, any other accounts) or any interest in Mezzanine Loans, and any proceeds (including the related securitization proceeds) and distributions with respect to any of the foregoing and any other property, rights, title or interests as are specified on a Confirmation and/or Trust Receipt with respect to the Mezzanine Loans, in all instances, whether now owned or hereafter acquired, now existing or hereafter created (collectively, the "<u>Mezzanine Loan Repurchase Assets</u>").

**7. PAYMENT, TRANSFER AND CUSTODY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Subject to the terms and conditions of this Agreement, on the Purchase Date for each Transaction, ownership of the Purchased Assets and all rights thereunder shall be transferred to Administrative Agent, on behalf of Buyers, or its designee (including Custodian) against the simultaneous transfer of the Purchase Price by Buyers to an account of Seller specified in the Confirmation relating to such Transaction. Administrative Agent, on behalf of Buyers, will provide Seller with a Power of Attorney to Seller, allowing Seller to administer, operate and service such Purchased Assets. So long as no Event of Default shall have occurred and be continuing, such Power of Attorney to Seller shall be binding upon Administrative Agent, on behalf of Buyers, and Administrative Agent's successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> With respect to each Table Funded Purchased Asset, Seller shall cause the Bailee to deliver to Administrative Agent by no later than 1:00 p.m. (New York time), on the Purchase Date, by electronic transmission a true and complete copy of the related Mortgage Note, Mezzanine Note or Participation Certificate (as applicable) with assignment in blank (as applicable), loan agreement, Mortgage or Mezzanine Pledge Agreement and LLC certificate (as applicable), Title Policy, the Insured Closing Letter and Escrow Instructions, if any, and the executed Bailee Agreement and Trust Receipt. In connection with the sale of each Purchased Asset, not later than 1:00 p.m. (New York time), two (2) Business Days prior to the related Purchase Date (or with respect to a Table Funded Purchased Asset not later than 1:00 p.m. (New York time) on the third (3<sup>rd</sup>) Business Day following the applicable Purchase Date), Seller shall deliver or cause Bailee to deliver (with a copy to Administrative Agent, on behalf of Buyers) and release to the Custodian (together with the Purchased Asset File Checklist), and shall cause the Custodian to deliver a Trust Receipt on the Purchase Date (or in the case of a Table Funded Purchased Asset, not later than two (2) Business Days following the receipt by the Custodian) confirming the receipt of, the original (or where indicated, copied) documents set forth on <u>Schedule 2</u>, pertaining to each of the Purchased Assets identified in the Purchased Asset File Checklist delivered therewith; <u>provided</u> that if Seller cannot deliver, or cause to be delivered, any of the original Purchased Asset Documents required to be delivered as originals (excluding the Mortgage Note, Mezzanine Note, the Assignment of Mortgage, the LLC certificate and, if applicable, the Participation Certificate, originals of which must be delivered at the time required under the provisions above), Seller shall deliver a photocopy thereof and an Officer's Certificate of Seller certifying that such copy represents a true and correct copy of the original and shall use its best efforts to obtain and deliver such original document within one hundred eighty (180) days after the related Purchase Date (or such longer period after the related Purchase Date to which Administrative Agent, on behalf of Buyers, may consent in its sole discretion exercised in good faith, so long as Seller is, as certified in writing to Administrative Agent, not less frequently than monthly, using its best efforts to obtain the original). After the expiration of such best efforts period, Seller shall deliver to Administrative Agent, on behalf of Buyers, a certification that states, despite Seller's best efforts, Seller was unable to obtain such original document, and thereafter Seller shall have no further obligation to deliver the related original document. Notwithstanding the foregoing, Administrative Agent, on behalf of Buyers, shall, at its option, have the right to cancel the purchase of an Eligible Asset if the required originals and/or copies, as applicable, of the related promissory note, Mortgage and guaranty have not been delivered as required in this Agreement , to

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be exercised by Administrative Agent, on behalf of Buyers, if at all, within thirty (30) days following the date of Administrative Agent's knowledge of the related delivery failure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> From time to time, Seller shall forward to Custodian additional original documents or additional documents evidencing any assumption, modification, consolidation or extension of a Purchased Asset approved in accordance with the terms of this Agreement, and upon receipt of any such other documents, Custodian shall, subject to and otherwise in accordance with the applicable provisions of the Custodial Agreement, hold such other documents on behalf of Administrative Agent, on behalf of Buyers, and as Administrative Agent, on behalf of Buyers, shall request from time to time. With respect to any documents which have been delivered or are being delivered to recording offices for recording and have not been returned to Seller in time to permit their delivery hereunder at the time required, in lieu of delivering such original documents, Seller shall deliver to Administrative Agent, on behalf of Buyers, a true copy thereof with an Officer's Certificate certifying that such copy is a true, correct and complete copy of the original, which has been transmitted for recordation. Seller shall deliver such original documents to Custodian promptly when they are received. With respect to all of the Purchased Assets delivered by Seller to Administrative Agent, on behalf of Buyers, or its designee (including Custodian), Seller shall execute an omnibus Power of Attorney to Administrative Agent, on behalf of Buyers, irrevocably appointing Administrative Agent, on behalf of Buyers, its attorney-in-fact with full power to (i) complete and record any Assignment of Mortgage, (ii) complete the endorsement of any Mortgage Note, Mezzanine Note, LLC certificate or Participation Certificate (as applicable) and (iii) take such other steps as may be necessary or desirable to enforce Administrative Agent, on behalf of Buyers, rights against any Purchased Assets and the related Purchased Asset Files and the Servicing Records. Administrative Agent, on behalf of Buyers, shall deposit the Purchased Asset Files representing the Purchased Assets, or cause the Purchased Asset Files to be deposited directly, with Custodian to be held by Custodian on behalf of Administrative Agent, on behalf of Buyers. The Purchased Asset Files shall be maintained in accordance with Custodial Agreement. Any Purchased Asset File not delivered to Administrative Agent, on behalf of Buyers, or its designee (including Custodian) is and shall be held in trust by Seller or its designee for the benefit of Administrative Agent, on behalf of Buyers, as the owner thereof. Seller or its designee shall maintain a copy of the Purchased Asset File and the originals of the Purchased Asset File not delivered to Administrative Agent, on behalf of Buyers, or its designee. The possession of the Purchased Asset File by Seller or its designee is at the will of Administrative Agent, on behalf of Buyers, for the sole purpose of servicing the related Purchased Asset, and such retention and possession by Seller or its designee is in a custodial capacity only. The books and records (including, without limitation, any computer records or tapes) of Seller or its designee shall be marked appropriately to reflect clearly the transfer, subject to the terms and conditions of this Agreement, of the related Purchased Asset to Administrative Agent, on behalf of Buyers. Seller or its designee (including Custodian) shall release its custody of the Purchased Asset File only in accordance with written instructions from Administrative Agent, on behalf of Buyers, unless such release is required as incidental to the servicing of the Purchased Assets or is in connection with a repurchase of any Purchased Asset by Seller or is pursuant to the order of a court of competent jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> On the date of this Agreement, Administrative Agent, on behalf of Buyers, shall have received all of the following items and documents, each of which shall be satisfactory to Administrative Agent, on behalf of Buyers, in form and substance:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Transaction Documents</u>. (A) This Agreement, duly executed and delivered by Seller and Administrative Agent, on behalf of Buyers; (B) the Custodial Agreement, duly executed and delivered by Seller, Administrative Agent, on behalf of Buyers, and Custodian;(C) the Blocked Account Agreement, duly executed and delivered by Seller, Administrative Agent, on behalf of Buyers, and Depository Bank; (D) the Fee Letter, duly executed and delivered by Seller and Administrative Agent, on behalf of Buyers; (E) the Guaranty, duly executed and delivered by Guarantor; (F) the Power of Attorney to Administrative Agent, on behalf of Buyers; (G) the Power

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of Attorney to Seller; (H) the Servicing Agreement and Servicer Acknowledgment duly executed by the parties thereto; (I) the Pledge Agreement, duly executed and delivered by Pledgor; and (J) the Filings, together with any other documents necessary or requested by Administrative Agent, on behalf of Buyers, to perfect the security interest granted by Seller in favor of Administrative Agent, on behalf of Buyers, for the benefit of Buyers, under this Agreement or any other Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Fees and Costs</u>. The Upfront Fee and all other Transaction Costs payable to Administrative Agent, on behalf of Buyers, in connection with the negotiation of the Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Organizational Documents</u>. Certified copies of the organizational documents of Seller, Pledgor and Guarantor and resolutions or other documents evidencing the authority of Seller, Pledgor and Guarantor with respect to the execution, delivery and performance of the Transaction Documents to which it is a party and each other document to be delivered by Seller and/or Guarantor from time to time in connection with the Transaction Documents (and Administrative Agent and Buyers may conclusively rely on such certifications until it receives notice in writing from Seller, Pledgor or Guarantor, as the case may be, to the contrary);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Legal Opinion</u>. Opinions of counsel to Seller, Pledgor and Guarantor in form and substance satisfactory to Administrative Agent and Buyers as to authority, enforceability of the Transaction Documents to which it is a party, perfection, bankruptcy safe harbors, the Investment Company Act and such other matters as may be requested by Administrative Agent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Other Documents</u>. Such other documents as Buyer may reasonably request.

**8. CERTAIN RIGHTS OF ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS, WITH RESPECT TO THE PURCHASED ASSETS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Subject to the terms and conditions of this Agreement, title to all Purchased Assets shall pass to Administrative Agent, on behalf of Buyers, on the applicable Purchase Date, and Administrative Agent, on behalf of Buyers, and Buyers shall have free and unrestricted use of its interest in the Purchased Assets in accordance with the terms and conditions of the Purchased Asset Documents, subject in all respects to the applicable terms, conditions and limitations set forth in the Transaction Documents. Nothing in this Agreement or any other Transaction Document shall preclude Administrative Agent, on behalf of Buyers, and Buyers from engaging (at their own expense) in repurchase transactions with the Purchased Assets with Persons in conformity with the terms and conditions of the Purchased Asset Documents or otherwise selling, transferring, pledging, repledging, hypothecating, or rehypothecating the Purchased Assets to Persons (other than any Prohibited Transferees so long as no Event of Default is then continuing) in conformity with the terms and conditions of the Purchased Asset Documents, but no such transaction shall relieve Administrative Agent, on behalf of Buyers, or Buyers of its obligations to transfer the Purchased Assets to Seller pursuant to <u>Section 3</u> of this Agreement or of Administrative Agent's obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to <u>Section 5</u> of this Agreement or otherwise affect the rights, obligations and remedies of any party to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Nothing contained in this Agreement or any other Transaction Document shall obligate Administrative Agent, on behalf of Buyers, to segregate any Purchased Assets delivered to Administrative Agent, on behalf of Buyers, by Seller. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, no Purchased Asset shall remain in the custody of Seller or an Affiliate of Seller other than as permitted herein. Subject to the terms and conditions of this Agreement, any documents

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delivered to Custodian pursuant to <u>Section 7</u> of this Agreement shall be released only in accordance with the terms and conditions of the Custodial Agreement.

**9. EXTENSION OF FACILITY TERMINATION DATE; increase of the Facility amount**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> (i) unless Seller notifies Buyer within thirty (30) days prior to then current Facility Termination Date, the Facility Termination Date shall automatically be extended for two (2) additional one (1) year periods (the "<u>First Automatic Extension Period</u>" and the "<u>Second Automatic Extension Period</u>," respectively); and (ii) at the request of Seller delivered to Administrative Agent no earlier than ninety (90) days and no later than thirty (30) days before the end of the Second Automatic Extension Period or the then current Facility Termination Date, as applicable, Seller may annually request an extension of the then current Facility Termination Date for a one (1) year period. Such requests may be approved or denied in Administrative Agent's sole discretion exercised in good faith, and in any case shall be approved only if (A) no uncured monetary Default, material non-monetary Default or Event of Default, or any unsatisfied Margin Deficit shall exist on the date of Seller's request to extend or on the then current Facility Termination Date, (B) all representations and warranties of Seller, Pledgor and Guarantor in the Transaction Documents shall be true, correct, complete and accurate in all respects as of the then current Facility Termination Date (except such representations which by their terms speak as of a specified date and subject to any exceptions disclosed to Administrative Agent, on behalf of Buyers, in an Exception Report prior to such date and approved by Administrative Agent), and (C) on or before the then current Facility Termination Date, Seller shall have paid the Extension Fee to Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Increase of Facility Amount. Prior to the Facility Amount Reduction Date, at Seller's request, the Facility Amount may be increased to up to Five Hundred Million Dollars ($500,000,000) provided that the Facility Increase Conditions (as defined below) are satisfied. For the purposes of this clause (b), "Facility Increase Conditions" shall mean:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> Seller shall have delivered to Administrative Agent a written request at least thirty (30) days prior to any increase being effectuated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(ii)</u> Any increase requested shall be in increments of Fifty Million Dollars ($50,000,000);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iii)</u> no Default, Event of Default or Margin Deficit has occurred and is continuing or would result from such increase in the Facility Amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iv)</u> the representations and warranties made by Seller, Pledgor and Guarantor in all of the Transaction Documents shall be true and correct in all respects as of the date such increase is effectuated, except to the extent that such representations and warranties (a) are made as of a particular date or (b) are no longer true as a result of a change in fact with respect to a Purchased Asset that was consented to in writing by Administrative Agent hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(v)</u> Administrative Agent, on behalf of Buyers, Seller and Guarantor shall execute an amendment to this Agreement to reflect the increased Facility Amount; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(vi)</u> Seller shall pay to Administrative Agent, on behalf of Buyers, the Facility Increase Fee (as defined in the Fourth Amendment) on such increased Facility Amount in accordance with the Fourth Amendment.

**10. REPRESENTATIONS**

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Seller represents and warrants to Administrative Agent and Buyers, that as of the date of this Agreement and as of each Purchase Date and at all times while this Agreement and any Transaction thereunder is in effect or any Repurchase Obligations remain outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Organization</u>. Seller (A) is a limited liability company duly organized, validly existing and in good standing under the laws and regulations of the State of Delaware; (B) is duly licensed, qualified, and in good standing in every state where such licensing or qualification is necessary for the transaction of Seller's business except with respect to licenses, franchises and qualification to do business in clauses (a) and (b) to the extent the failure to obtain any such license, franchise or qualification would not have a Material Adverse Effect; (C) has all requisite limited liability company or other power, and has all governmental licenses, authorizations, consents and approvals necessary, to (1) own and hold its assets and to carry on its business as now being conducted and proposed to be conducted and (2) to execute the Transaction Documents and enter into the Transactions thereunder, and (D) has all requisite limited liability company or other power to execute, deliver, and perform its obligations under this Agreement and the other Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Authorization; Due Execution; Enforceability</u>. The execution, delivery and performance by Seller of each of this Agreement and each of the other Transaction Documents have been duly authorized by all necessary limited liability company or other action on its part. The Transaction Documents have been duly executed and delivered by Seller for good and valuable consideration. The Transaction Documents constitute the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms subject to bankruptcy, insolvency, and other limitations on creditors' rights generally and to equitable principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Non-Contravention; Consents</u>. Neither the execution and delivery of the Transaction Documents, nor consummation by Seller of the transactions contemplated by the Transaction Documents (or any of them), nor compliance by Seller with the terms, conditions and provisions of the Transaction Documents (or any of them) will (A) conflict with or result in a breach of the organizational documents of Seller (B) conflict with any applicable law (including, without limitation, Prescribed Laws), rule or regulation or result in a breach or violation of any of the terms, conditions or provisions of any judgment or order, writ, injunction, decree or demand of any Governmental Authority applicable to Seller, (C) result in the creation or imposition of any lien or any other encumbrance upon any of the assets of Seller, other than pursuant to the Transaction Documents or (D) violate or conflict with contractual provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, contract or other material agreement to which Seller is a party or by which Seller may be bound.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Litigation; Requirements of Law</u>. Unless notice is given by or on behalf of Seller to Administrative Agent, on behalf of Buyers, from time to time, there is no action, suit, proceeding, investigation, or arbitration pending or, to the best knowledge of Seller, threatened against Seller or any of its assets which (A) may, individually or in the aggregate, result in any Material Adverse Effect; (B) may have an adverse effect on the validity of the Transaction Documents or any action taken or to be taken in connection with the obligations of Seller under any of the Transaction Documents; (C) makes a claim or claims in an amount greater than Two Hundred and Fifty Thousand Dollars ($250,000); or (D) requires filing with the SEC in accordance with the 1934 Act or any rules thereunder. Seller is in compliance in all material respects with all Requirements of Law. Seller is not in default in any material respect with respect to any judgment, order, writ, injunction, decree, rule or regulation of any arbitrator or Governmental Authority.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>No Broker</u>. Seller has not dealt with any broker, investment banker, agent or other Person (other than Morgan Stanley Bank, N.A. or an Affiliate thereof) who may be entitled to any commission or compensation in connection with the sale of the Purchased Assets pursuant to any Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>Good Title to Purchased Assets</u>. Immediately prior to the purchase of any Purchased Assets by Administrative Agent, on behalf of Buyers, from Seller, such Purchased Assets are free and clear of any lien, security interest, claim, option, charge, encumbrance or impediment to transfer to Administrative Agent, on behalf of Buyers (including any "adverse claim" as defined in Section 8-102(a)(1) of the UCC), and are not subject to any rights of setoff, any prior sale, transfer, assignment, or participation by Seller or any agreement (other than as provided for in the Transaction Documents) by Seller to assign, convey, transfer or participate in such Purchased Assets, in whole or in part, and Seller is the sole legal record and beneficial owner of, and owns and has the right to sell and transfer, such Purchased Assets to Administrative Agent, on behalf of Buyers, and, upon transfer of such Purchased Assets to Administrative Agent, on behalf of Buyers, Administrative Agent, on behalf of Buyers, shall be the owner of such Purchased Assets (other than for U.S. federal, state and local income and franchise tax purposes) free of any adverse claim, subject to Seller's rights pursuant to this Agreement. In the event that the related Transaction is recharacterized as a secured financing of the Purchased Assets and with respect to the security interests granted in <u>Section 6(a)</u>, <u>Section 6(c)</u> and <u>Section 6(d)</u>, and <u>Section 6(f)</u>, the provisions of this Agreement and the filing of the Filings are effective to create in favor of Administrative Agent, on behalf of Buyers, a valid security interest in all right, title and interest of Seller in, to and under the Repurchase Assets specified in <u>Section 6(a)</u> and the other collateral specified in <u>Section 6(c)</u>, <u>Section 6(d)</u> and <u>Section 6(f)</u>, and Administrative Agent, on behalf of Buyers, shall have a valid, perfected and enforceable first priority security interest in the Repurchase Assets and such other collateral, subject to no lien or rights of others other than as granted herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) <u>No Default; No Material Adverse Effect</u>. No uncured monetary Default, material non-monetary Default or any Event of Default exists under or with respect to the Transaction Documents. To Seller's actual knowledge, there are no post-Transaction facts or circumstances that have a Material Adverse Effect on any Purchased Asset that Seller has not notified Administrative Agent of in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) <u>Representations and Warranties Regarding Purchased Assets; Delivery of Purchased Asset File</u>. Each Purchased Asset sold hereunder, as of the applicable Purchase Date for the Transaction in question, conforms to the applicable representations and warranties set forth in <u>Exhibit III</u> attached hereto, except as has been disclosed to Administrative Agent in an Exception Report prior to Administrative Agent's, on behalf of Buyers, issuance of a Confirmation with respect to the related Purchased Asset, or as otherwise approved by Administrative Agent, on behalf of Buyers. It is understood and agreed that the representations and warranties set forth in <u>Exhibit III</u> hereto (as modified by any Exception Report disclosed to Administrative Agent in writing prior to Administrative Agent's, on behalf of Buyers, issuance of a Confirmation with respect to the related Purchased Asset), shall survive delivery of the respective Purchased Asset File to Administrative Agent, on behalf of Buyers, or its designee (including Custodian). With respect to each Purchased Asset, the Purchased Asset File and any other documents required to be delivered under this Agreement and the Custodial Agreement for such Purchased Asset have been delivered to Administrative Agent, on behalf of Buyers, or Bailee, as applicable, or to Custodian on behalf of Administrative Agent, on behalf of Buyers. Seller or its designee is in possession of a complete, true and accurate Purchased Asset File with respect to each Purchased Asset, except for such documents the originals of which have been delivered to Custodian.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) <u>Adequate Capitalization; No Fraudulent Transfer</u>. After giving effect to each Transaction (A) the amount of the "present fair saleable value" of the assets of Seller will, as of such date, exceed the amount of all "liabilities of Seller, contingent or otherwise", as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (B) the present fair saleable value of the assets of Seller will, as of such date, be greater than the amount that will be required to pay the liabilities of Seller on its debts as such debts become absolute and matured, (C) Seller will not have, as of such date, an unreasonably small amount of capital with which to conduct its businesses, and (D) Seller will be able to pay its debts as they mature. Seller does not intend to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. Seller is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Seller or any of its assets. Seller is not transferring any New Asset with any intent to hinder, delay or defraud any of its creditors. For purposes of this <u>Section 10(ix)</u>, "debt" means "liability on a claim", "claim" means any (1) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, and (2) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>Organizational Documents</u>. Seller has delivered to Administrative Agent, on behalf of Buyers, true and correct certified copies of its organizational documents, together with all amendments thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) <u>No Encumbrances</u>. There are (A) no outstanding rights, options, warrants or agreements on the part of Seller for a purchase, sale or issuance, in connection with the Purchased Assets (B) no agreements on the part of Seller to issue, sell or distribute the Purchased Assets and (C) no obligations on the part of Seller (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or interest therein, except, in each of the foregoing instances, as contemplated by the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) <u>No Investment Company or Holding Company</u>. Neither Seller, Pledgor nor Guarantor is required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) <u>Taxes</u>. Seller has filed or caused to be filed all tax returns that would be delinquent if they had not been filed on or before the date hereof and has paid all Taxes due and payable on or before the date hereof and all Taxes, fees or other charges imposed on it and any of its assets by any Governmental Authority; no tax liens have been filed against any of Seller's assets; and, to Seller's actual knowledge, no claims are being asserted with respect to any such Taxes, fees or other charges.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) <u>ERISA</u>. Neither Seller nor, except as would not reasonably be expected to have a Material Adverse Effect, any ERISA Affiliate (A) sponsors or maintains any Plans or (B) makes any contributions to or has any liabilities or obligations (direct or contingent) with respect to any Plans. Seller (i) is not an "employee benefit plan" within the meaning of, and subject to the provisions of Title I of ERISA, or a "plan" as described in and subject to Section 4975 of the Code, and (ii) does not hold Plan Assets of one or more such "employee benefit plan" or "plans". The consummation of the transactions contemplated by this Agreement will not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. Either (A) the Seller is not a "governmental plan" within the meaning of Section 3(32) of ERISA

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and is not otherwise an entity subject to any law or regulation substantially similar to Section 406 of ERISA or Section 4975 of the Code due to the investment in Seller by a governmental or other plan or (B) the consummation of the transactions contemplated by this Agreement will not constitute or result in a violation of any such substantially similar law or regulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) <u>Judgments/Bankruptcy</u>. Except as disclosed in writing to Administrative Agent, on behalf of Buyers, there are no judgments against Seller, Pledgor or Guarantor that are unsatisfied of record or docketed in any court located in the United States of America and no Act of Insolvency has ever occurred with respect to Seller, Pledgor or Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) <u>Full and Accurate Disclosure</u>. No information provided pursuant to or during the negotiation of the Transaction Documents, or any written statement furnished by or on behalf of Seller pursuant to the terms of the Transaction Documents (including any certification of Bailee), contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made when such statements and omissions are considered in the totality of the circumstances in question.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) <u>Financial Information</u>. All financial data concerning Seller, Pledgor and Guarantor and all data concerning the Purchased Assets that has been delivered to Administrative Agent, on behalf of Buyers, by Seller, any Affiliate of Seller or Seller's advisors is true, complete and correct in all material respects and has been prepared in accordance with GAAP (to the extent applicable). Since the delivery of such data, except as otherwise disclosed in writing to Administrative Agent, on behalf of Buyers, there has been no material adverse change in the business or financial condition of Seller, Pledgor or Guarantor or the Purchased Assets, or in the results of operations of Seller, Pledgor or Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii) <u>Jurisdiction of Organization</u>. Seller's jurisdiction of organization is the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix) <u>Location of Books and Records</u>. The location where Seller keeps its books and records is at its chief executive office at 390 RXR Plaza Uniondale, NY 11556.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) <u>Authorized Representatives</u>. The duly authorized representatives of Seller are listed on, and true signatures of such authorized representatives are set forth on, <u>Exhibit V</u> attached to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxi) <u>Use of Proceeds; Regulations T, U and X</u>. All proceeds of each Transaction shall be used by Seller for purposes permitted under Seller's governing documents; <u>provided</u> that no part of the proceeds of any Transaction will be secured directly or indirectly by margin stock. Neither the entering into nor consummation of any Transaction hereunder, nor the use of the proceeds thereof, will violate any provision of Regulations T, U and X.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxii) <u>Regulatory Status</u>. Seller is not a "bank holding company" or a direct or indirect subsidiary of a "bank holding company" as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiii) <u>Hedging Transactions</u>. Subject to the caveat set forth in the last sentence of the defined term "Eligible Asset," as of the Purchase Date for any Purchased Asset that is subject to a Hedging Transaction, each such Hedging Transaction is in full force and effect in accordance with its terms, each counterparty thereto is an Affiliated Hedge Counterparty or a Qualified Hedge

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Counterparty, and no "Termination Event", "Event of Default", "Potential Event of Default" or any similar event, however denominated, has occurred with respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiv) <u>Anti-Money Laundering</u>. The operations of Seller, Pledgor, Guarantor and their Subsidiaries are and have been conducted at all times during the two (2) year period immediately preceding each determination date, in material compliance with all applicable financial recordkeeping and reporting requirements, including those required by the Prescribed Laws, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Seller, Pledgor or Guarantor or any of their Subsidiaries with respect to the Prescribed Laws is pending or, to the best knowledge of Seller, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxv) <u>OFAC</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) None of Seller, any director, officer or employee of Seller, or to Seller's knowledge, any agent, Affiliate or representative of Seller, is a Person that is, or is owned or controlled by a Person that is: (1) the subject of any sanction administered or enforced by OFAC, the United Nations Security Council, the European Union, or Her Majesty's Treasury (collectively, "<u>Sanctions</u>"); or (2) located, organized or resides in a country or territory that is the subject of comprehensive Sanctions (including, without limitation, Cuba, Iran, North Korea, the Crimea region of Ukraine and Syria.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Seller is not now knowingly engaged in, and will not knowingly engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxvi) <u>Anti-Corruption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) None of Seller, its directors, officers, or employees, or, to Seller's knowledge, any agent or representative of Seller, has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any Person while knowing that all or some portion of the money or value will be offered, given or promised to anyone to improperly influence official action, to obtain or retain business or otherwise to secure any improper advantage, in each case in violation of applicable anti-corruption or anti-bribery laws.(B) Seller and, to Seller's knowledge, Seller's Affiliates have conducted their businesses in compliance with applicable anti-corruption laws and have instituted and maintained, and will continue to maintain, policies and procedures reasonably designed to promote and achieve compliance with such laws.

**11. NEGATIVE COVENANTS OF SELLER**

On and as of date of this Agreement and each Purchase Date and at all times while this Agreement and any Transaction hereunder is in effect or any Repurchase Obligations remain outstanding, Seller shall not without the prior written consent of Administrative Agent, on behalf of Buyers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> subject to Seller's right to repurchase the Purchased Assets, take any action which would, either directly or indirectly, materially impair or adversely affect Administrative Agent's title to the Purchased Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose of, including, without limitation, any effective transfer or other disposition as a result of a Division of Seller,

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or pledge or hypothecate, directly or indirectly, any interest in the Purchased Assets (or any of them) to any Person other than Administrative Agent, on behalf of Buyers, or engage in repurchase transactions or similar transactions with respect to the Purchased Assets (or any of them) with any Person other than Administrative Agent, on behalf of Buyers, except where the Purchased Assets in question are simultaneously repurchased from Administrative Agent, on behalf of Buyers, which may be transferred either back to Seller or at Seller's direction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> create, incur or permit to exist any lien, charge, encumbrance or security interest in or on any of the Repurchase Assets or other collateral subject to the security interests granted by Seller pursuant to <u>Section 6</u> of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> create, incur or permit any lien, security interest, charges, or encumbrances with respect to any Repurchase Assets or Hedging Transaction relating to the Purchased Assets for the benefit of any Person other than Administrative Agent, on behalf of Buyers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> consent or assent to a Significant Modification of any Purchased Asset without the prior written consent of Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> after the occurrence and during the continuation of any monetary Default, material non-monetary Default or any Event of Default, make any distribution (other than distributions as necessary to enable Guarantor to maintain its status as a real estate investment trust within the meaning of the Code and avoid any excise tax payable pursuant to Section 4981 of the Code (in each case, without regard to Guarantor's ability to make consent dividends within the meaning of Section 565 of the Code)), payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or ownership interest of Seller, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> sponsor or maintain any Plans or make any contributions to, or have any liability or obligation (direct or contingent) with respect to, any Plan or except as would not have a Material Adverse Effect, permit any ERISA Affiliate to sponsor or maintain any Plans or make any contributions to, or have any liability or obligation (direct or contingent) with respect to, any Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> engage in any transaction that would cause any obligation or action taken or to be taken hereunder (or the exercise by Administrative Agent or any Buyer, of any of its rights under this Agreement, the Purchased Assets or any Transaction Document) to be a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or a violation of any law or regulation substantially similar to Section 406 of ERISA or Section 4975 of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> make any future advances under any Purchased Asset to any underlying obligor that are not permitted by the related Purchased Asset Documents, except to the extent approved by Administrative Agent on behalf of Buyers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> seek its dissolution, liquidation, Division or winding up, in whole or in part;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> incur any Indebtedness except as provided in <u>Section 13(i)</u> hereof, or otherwise cease to be a Single-Purpose Entity;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> permit the organizational documents or organizational structure of Seller to be amended without the prior written consent of Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> except to the extent contributed by Seller or any of its Affiliates to a collateralized loan obligation transaction, acquire or maintain any right or interest in any Purchased Asset or Mortgaged Property that is senior to, junior to or *pari passu* with the rights and interests of Administrative Agent, on behalf of Buyers, therein under this Agreement and the other Transaction Documents unless such right or interest becomes a Purchased Asset hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(o)</u> directly or indirectly use the proceeds from any Transaction, or lend contribute or otherwise make available such proceeds to any other Person to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or in any other manner that would result in a violation of Sanctions by any Person (including Administrative Agent or any Buyer); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(p)</u> directly or, to its knowledge, indirectly use the proceeds from any Transaction or lend, contribute or otherwise make available such proceeds to any Person for the purpose of financing or facilitating any activity that would violate applicable anti-corruption laws, rules, or regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(q)</u> use any escrow or reserve held pursuant to the Purchased Asset Documents in its possession or control for any reason other than uses permitted under the Purchased Asset Documents.

**12. AFFIRMATIVE COVENANTS OF SELLER**

On and as of the date of this Agreement and each Purchase Date and at all times while this Agreement and any Transaction thereunder is in effect or any Repurchase Obligations remain outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Seller shall promptly notify Administrative Agent when it has actual knowledge of any event and/or condition that is likely to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Seller shall give notice to Administrative Agent of the following (accompanied by an Officer's Certificate setting forth details of the occurrence referred to therein and stating what actions Seller has taken or proposes to take with respect thereto):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) promptly upon receipt by Seller of notice or actual knowledge of the occurrence of any monetary Default, material non-monetary Default or any Event of Default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) with respect to any Purchased Asset sold to Administrative Agent, on behalf of Buyers, hereunder, promptly following receipt of any unscheduled Principal Payment (in full or in part);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) with respect to any Purchased Asset sold to Administrative Agent, on behalf of Buyers, hereunder, promptly following receipt by Seller of notice or actual knowledge that the related Mortgaged Property has been damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty, or otherwise damaged so as to affect adversely the value of such Mortgaged Property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) promptly upon receipt of notice by Seller or actual knowledge of (A) any Purchased Asset that becomes a Defaulted Asset, (B) any lien or any security interest (other than security interests created hereby) on, or claim asserted against, any Purchased Asset or, to Seller's

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actual knowledge, the underlying collateral therefor, (C) any event or change in circumstances that has or could reasonably be expected to have caused any credit impairment to any Purchased Asset or any obligor or guarantor in respect of any Purchased Asset, (D) any change with respect to Servicer or in the servicing of any Purchased Asset, or (E) any regulatory, including material licensing, issues with respect to any Purchased Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) promptly, and in any event within ten (10) days after service of process on any of the following, give to Administrative Agent notice of all litigation, actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting Seller, Pledgor or Guarantor or affecting any of the assets of Seller, Pledgor or Guarantor before any Governmental Authority that (A) questions or challenges the validity or enforceability of any of the Transaction Documents or any action to be taken in connection with the transactions contemplated hereby, (B) makes a claim or claims in an aggregate amount greater than Two Hundred and Fifty Thousand Dollars ($250,000) with respect to Seller or Ten Million Dollars ($10,000,000) with respect to Guarantor, (C) which, individually or in the aggregate, if adversely determined could reasonably be likely to have a Material Adverse Effect, (D) requires filing with the SEC in accordance with the 1934 Act and any rules thereunder or (E) raises any material lender licensee issues with respect to any Purchased Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) promptly upon any transfer of any underlying Mortgaged Property or any direct or indirect equity interest in any Mortgagor of which Seller has actual knowledge, whether or not consent to such transfer is required under the applicable Purchased Asset Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) promptly, and in any event within ten (10) days after Seller or any of its ERISA Affiliates knows or has reason to know that any "reportable event" (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur in respect of a Plan that, individually or in the aggregate, either has resulted, or would reasonably be expected to result, in a Material Adverse Effect or in a Lien arising under ERISA or Section 403(k) of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) a breach of any representation or warranty by Seller under <u>Exhibit III</u> attached hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) with respect to any Future Advance Asset, if Seller has failed to fund any additional advance to the related Mortgagor as and when required under, and otherwise in accordance with, the terms and conditions of the related Purchased Asset Documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) there is a Change of Control with respect to either Guarantor or Pledgor from the Person or Persons who are directly or indirectly Controlling either Guarantor or Pledgor, as applicable, as of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Seller shall provide Administrative Agent with copies of such documents as Administrative Agent, on behalf of Buyers, may reasonably request evidencing the truthfulness of the representations set forth in Section 10 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Seller shall defend the right, title and interest of Administrative Agent, on behalf of Buyers, in and to the Purchased Assets and any Hedging Transactions against, and take such other action as is necessary to remove, any liens, security interests, claims, encumbrances, charges and demands of all Persons thereon (other than security interests granted to Administrative Agent, on behalf of Buyers, hereunder), and take any such other action as is necessary to obtain or preserve a first priority perfected security interest in the Purchased Assets and any Hedging Transactions.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> Seller will permit Administrative Agent or any Buyer, or its designated representative to inspect any of Seller's records with respect to all or any portion of the Purchased Assets and the conduct and operation of its business related thereto at such reasonable times and with reasonable frequency requested by Administrative Agent or any Buyer, or its designated representative and to make copies of extracts of any and all thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> If any amount payable under or in connection with any of the Purchased Assets shall be or become evidenced by any new or otherwise subsequently-arising promissory note, other instrument or chattel paper (as each of the foregoing is defined under the UCC), such note, instrument or chattel paper shall be immediately delivered to Administrative Agent, on behalf of Buyers, or its designee, duly endorsed in a manner satisfactory to Administrative Agent or if any collateral or other security shall subsequently be delivered to Seller in connection with any Purchased Asset, Seller shall immediately deliver or forward such item of collateral or other security to Administrative Agent, on behalf of Buyers, or its designee, together with such instruments of assignment as Administrative Agent may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> Seller shall provide (or cause to be provided) to Administrative Agent, on behalf of Buyers, the following financial and reporting information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Monthly Statement, which report shall be delivered to Administrative Agent for each calendar month during the term of this Agreement in accordance with the timing set forth in section 3.12 of the Servicing Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Quarterly Report, together with all operating statements and occupancy information that Seller or Servicer has received relating to the Purchased Assets for the related fiscal quarter, which reports shall be delivered to Administrative Agent for each fiscal quarter during the term of this Agreement within forty-five (45) days following the end of each such fiscal quarter;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) a Financial Covenant Compliance Certificate, to be delivered by Guarantor within forty-five (45) days after the end of the first three (3) fiscal quarters and within one-hundred and twenty (120) days after the end of each fiscal year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) within forty-five (45) days following the end of each of the first three quarters, and within ninety (90) days following the end of each fiscal year, as the case may be, an Officer's Certificate of Seller in form and substance reasonably satisfactory to Administrative Agent, on behalf of Buyers, certifying that during such fiscal quarter or year Seller has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Transaction Documents to be observed, performed or satisfied by it, and that there has occurred no Event of Default and no event or circumstance has occurred that is reasonably likely to result in a Material Adverse Effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) as soon as available and in any event within forty-five (45) days after the end of each quarter (other than the last fiscal quarter of each fiscal year), the unaudited consolidated balance sheets of Guarantor and its consolidated subsidiaries as at the end of such period and the related unaudited consolidated statements of income and retained earnings and of cash flows for the Guarantor and its consolidated subsidiaries for such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a responsible officer of Guarantor, which certificate shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of Guarantor and its consolidated subsidiaries in accordance with GAAP, as at the end of, and for, such period (subject to normal year-end adjustments);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) as soon as available and in any event within ninety (90) days after the end of each fiscal year of Guarantor, the audited consolidated balance sheets of Guarantor and its consolidated subsidiaries as at the end of such fiscal year and the related audited consolidated statements of income and retained earnings and of cash flows for the Guarantor and its consolidated subsidiaries for such year, setting forth in each case in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, shall have no "going concern" qualification and shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of Guarantor and its respective consolidated subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP. Information required to be delivered pursuant to clauses (v) and (vi) of this Section shall be deemed to have been delivered on the date on which the Guarantor posts such information on the Guarantor's website on the internet or the SEC posts such information on their website at www.sec.gov/edgar/searchedgar/webusers.htm or at another website identified in a written notice to the Administrative Agent and accessible by the Administrative Agent without charge;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) within ten (10) Business Days after Administrative Agent's request, such further information with respect to the operation of any Mortgaged Property, Purchased Asset, the financial affairs of Seller, Pledgor or Guarantor and any Plan and Multiemployer Plan as may be reasonably requested by Administrative Agent, on behalf of Buyers, including all business plans prepared by or for Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) upon Administrative Agent's, on behalf of Buyers, reasonable request for any Appraisal that is dated more than twelve (12) months prior to such request, no more often than annually, updated Appraisals of the Mortgaged Properties relating to the Purchased Assets, at Seller's sole cost and expense; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) such other reports as Administrative Agent, on behalf of Buyers, shall reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> Seller shall at all times comply in all material respects with all laws (including, without limitation, Prescribed Laws), ordinances, rules and regulations of any federal, state, municipal or other public authority having jurisdiction over Seller or any of its assets, and Seller shall do or cause to be done all things reasonably necessary to preserve and maintain in full force and effect its legal existence and all licenses material to its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> Seller agrees that, from time to time upon the prior written request of Administrative Agent, on behalf of Buyers, it shall (A) execute and deliver such further documents, provide such additional information and reports and perform such other acts as Administrative Agent may reasonably request in order to insure compliance with all Prescribed Laws applicable to Seller and to fully effectuate the purposes of this Agreement and (B) provide such opinions of counsel concerning matters relating to the Prescribed Laws as Administrative Agent may reasonably request; provided, however, that nothing in this <u>Section 12(j)</u> shall be construed as requiring Administrative Agent to conduct any inquiry or decreasing Seller's responsibility for its statements, representations, warranties or covenants under this Agreement. In order to enable Administrative Agent, Buyers, and their respective Affiliates to comply with any anti-money laundering program and related responsibilities including, but not limited to, any obligations under the Prescribed Laws and regulations thereunder, Seller, on behalf of itself and its Affiliates, represents and covenants to Administrative Agent, Buyers, and their Affiliates that: (A) neither Seller, nor, any of its Affiliates, is a Prohibited Person and (B) Seller is not acting on behalf of or on behalf of any Prohibited Person. Seller agrees to promptly notify Administrative Agent, on behalf of Buyers, or a person appointed

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by Administrative Agent, on behalf of Buyers, to administer its anti-money laundering program, if applicable, of any change in information affecting this <u>Section 12(i)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> Seller shall at all times keep proper books of records and accounts in which full, true and correct entries shall be made of its transactions in accordance with GAAP and set aside on its books from its earnings for each fiscal year all such proper reserves in accordance with GAAP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> Seller shall advise Administrative Agent in writing of the opening of any new chief executive office of Seller, Pledgor or Guarantor or the closing of any such office and of any change in Seller's, Pledgor's or Guarantor's name or the places where the books and records pertaining to the Purchased Assets are held not less than fifteen (15) Business Days prior to taking any such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> Seller shall pay when due all Transaction Costs. Seller shall pay and discharge all Taxes, levies, liens and other charges, if any, on its assets and on the Purchased Assets that, in each case, in any manner would create any lien or charge upon the Purchased Assets, except for any such Taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> Seller shall maintain its existence as a limited liability company organized solely and in good standing under the law of the State of Delaware and shall not dissolve, liquidate, be subject to a Division, merge with or into any other Person or otherwise change its organizational structure or documents or identity or incorporate or organize in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> Seller shall maintain all records with respect to the Purchased Assets and the conduct and operation of its business with no less a degree of prudence than if the Purchased Assets were held by Seller for its own account and will furnish Administrative Agent upon request by Administrative Agent or its designated representative, with information reasonably obtainable by Seller with respect to the Purchased Assets and the conduct and operation of its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(o)</u> Seller shall provide Administrative Agent with notice of each modification of any Purchased Asset Documents consented to by Seller (including such modifications which do not constitute a Significant Modification).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(p)</u> Seller shall provide Administrative Agent with reasonable access to operating statements, the occupancy status and other property level information, with respect to the Mortgaged Properties, that are either in Seller's possession or available to Seller, plus any such additional reports as Administrative Agent, on behalf of Buyers, may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(q)</u> Seller may propose, and Administrative Agent, on behalf of Buyers, will consider, but shall be under no obligation to approve, strategies for the foreclosure or other realization upon the security for any Purchased Asset that has become a Defaulted Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(r)</u> Seller shall not cause any Purchased Asset to be serviced by any servicer other than a servicer expressly approved in writing by Administrative Agent, on behalf of Buyers. Seller shall provide written notification to Administrative Agent within one (1) Business Day of any rating agency reducing the credit or servicer rating applicable to any servicer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(s)</u> If Seller shall at any time become entitled to receive or shall receive any rights, whether in addition to, in substitution of, as a conversion of, or in exchange for a Purchased Asset, or otherwise in respect thereof, Seller shall accept the same as Administrative Agent, on behalf of Buyers, agent, hold the same in trust for Administrative Agent, on behalf of Buyers, and deliver the same forthwith to

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Administrative Agent, on behalf of Buyers (or Custodian, as appropriate) in the exact form received, duly endorsed by Seller to Administrative Agent, on behalf of Buyers, if required, together with all related and necessary duly executed Transfer Documents to be held by Administrative Agent, on behalf of Buyers, hereunder as additional collateral security for the Transactions. If any sums of money or property so paid or distributed in respect of the Purchased Assets shall be received by Seller, Seller shall, until such money or property is paid or delivered to Buyers, hold such money or property in trust for Buyers, segregated from other funds of Seller, as additional collateral security for the Transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(t)</u> To the extent any additional limited liability company is formed by Division of Seller (and without prejudice to <u>Section 11</u>), Seller shall cause any such additional limited liability company to transfer, convey and assign to Administrative Agent, on behalf of Buyers, on a servicing released basis all of such additional limited liability company's right, title and interest in and to the Purchased Assets, together with all related Servicing Rights in the same manner and to the same extent as the sale, transfer, conveyance and assignment by Seller on the initial Purchase Date of all of Seller's right, title and interest in and to the Purchased Assets, together with all related Servicing Rights.

**13. SINGLE-PURPOSE ENTITY**

Seller hereby represents and warrants to Administrative Agent and Buyers, and covenants with Administrative Agent and Buyers, that, on and as of the date of this Agreement and each Purchase Date and at all times while this Agreement and any Transaction hereunder is in effect or any Repurchase Obligations remain outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> it is and intends to remain solvent, and it has paid and will pay its debts and liabilities (including overhead expenses) from its own assets as the same shall become due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> it has complied and will comply with the provisions of its certificate of formation and its limited liability company agreement necessary to maintain its separate existence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> it has done or caused to be done and will do all things necessary to observe limited liability company formalities and to preserve its existence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> it has maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its affiliates, its members and any other Person, and it will file its own tax returns (except to the extent consolidation is required or permitted under GAAP or as a matter of law);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> it has been, is and will be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of Seller), it shall correct any known misunderstanding regarding its status as a separate entity, it shall conduct business in its own name, it shall not identify itself or any of its Affiliates as a division or part of the other and it shall maintain and utilize separate stationery, invoices and checks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> it has not owned and will not own any property or any other assets other than the Purchased Assets, cash and its interest under any associated Hedging Transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> it has not engaged and will not engage in any business other than the origination, acquisition, ownership, financing and disposition of the Purchased Assets and the associated Hedging Transactions in accordance with the applicable provisions of the Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> except for capital contributions and capital distributions permitted under the terms and conditions of its organizational documents and properly reflected on its books and records, it has not entered

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into, and will not enter into, any contract or agreement with any of its affiliates, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm's length basis with Persons other than such affiliate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> it has not incurred and will not incur any indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (A) obligations under the Transaction Documents, (B) obligations under the documents evidencing the Purchased Assets, and (C) unsecured trade payables, in an aggregate amount not to exceed Two Hundred and Fifty Thousand Dollars ($250,000) at any one time outstanding, incurred in the ordinary course of acquiring, owning, financing and disposing of the Purchased Assets; *provided*, *however*, that any such trade payables incurred by Seller shall be paid within sixty (60) days of the date incurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> it has not made and will not make any loans or advances to any other Person, and shall not acquire obligations or securities of any member or affiliate of any member or any other Person (other than in connection with the origination or acquisition of Purchased Assets);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> it will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> neither it nor Guarantor will seek (A) the dissolution, liquidation, Division or winding up, in whole or in part of Seller or (B) the division of Seller into two (2) or more limited liability companies or other legal entities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> it will not commingle its funds and other assets with those of any of its Affiliates or any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> it has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any of its Affiliates or any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(o)</u> it has not held and will not hold itself out to be responsible for the debts or obligations of any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(p)</u> it will (i) have at all times at least one (1) Independent Director and (ii) provide Administrative Agent with up-to-date contact information for all Independent Directors and a copy of the agreement pursuant to which each Independent Director consents to and serves as an Independent Director for Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(q)</u> its organizational documents shall provide that (i) no Independent Director of Seller may be removed or replaced without Cause, (ii) Administrative Agent be given at least two (2) Business Days prior notice of the removal and/or replacement of any Independent Director, together with the name and contact information of the replacement Independent Director and evidence of the replacement's satisfaction of the definition of Independent Director and (iii) any Independent Director of Seller shall not have any fiduciary duty to anyone including the holders of the equity interests in Seller and any Affiliates of Seller except Seller and the creditors of Seller with respect to taking of, or otherwise voting on, any Act of Insolvency; provided that the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(r)</u> it shall not, without the consent of its Independent Directors, institute any proceeding to be adjudicated as bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition or answer or consent seeking reorganization or relief under the Bankruptcy Code

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or consent to the filing of any such petition or to the appointment of a receiver, rehabilitator, conservator, liquidator, assignee, trustee or sequestrator (or other similar official) of it or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, or make an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take any action in furtherance of any of the foregoing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(s)</u> it shall not have any Subsidiaries or employees.

**14. EVENTS OF DEFAULT; REMEDIES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a) Events of Default</u>. The following shall constitute an event of default (each, an "<u>Event of Default</u>") by Seller hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) failure of Seller to repurchase one or more Purchased Assets on the applicable Repurchase Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) failure of Seller to apply any Income received by Seller (or Servicer on behalf of Seller) in accordance with the provisions hereof; <u>provided</u> that no Event of Default under this clause (ii) shall occur if, in the case of a failure to deposit Income or any other amounts by any third-party servicer unaffiliated with Seller, such failure is cured within two (2) Business Days of written notice to Seller or the date on which Seller had actual knowledge of such breach or failure to perform and the defaulting servicer is removed and replaced with a replacement servicer satisfactory to Administrative Agent in its sole discretion within sixty (60) days of written notice to Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if any of the Transaction Documents shall for any reason (A) not cause, or shall cease to cause, Administrative Agent, on behalf of Buyers, to be the owner of, or, if recharacterized as a secured financing, a secured party with respect to, the Repurchase Assets specified in <u>Section 6(a)</u> hereof and the other collateral specified in <u>Sections 6(c),</u> <u>6(d)</u> or <u>6(f)</u> hereof free of any adverse claim, liens and other rights of others (other than as granted herein); (B) cease, if a Transaction is recharacterized as a secured financing, to create a valid first priority perfected security interest in favor of Administrative Agent, on behalf of Buyers, in the Repurchase Assets specified in <u>Section 6(a)</u> hereof and the other collateral specified in <u>Sections 6(c)</u>, <u>6(d)</u> or <u>6(f)</u> hereof; or (B) cease to be in full force and effect or if the enforceability of any of them is challenged or repudiated by Seller, Pledgor, Guarantor or Servicer or any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) failure of Seller to make the payments required under <u>Section 4(a)</u> or <u>Section 5(b)</u> hereof on the date such payment is due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) failure of Seller, Pledgor or Guarantor to make any other payment owing to Buyers which has become due, whether by acceleration or otherwise, under the terms of this Agreement or any other Transaction Document which failure is not remedied within the period specified herein or, if no period is specified for such payments ten (10) Business Days after notice thereof to Seller from Administrative Agent, on behalf of Buyers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) breach by Seller in the due performance or observance of any term, covenant or agreement contained in <u>Section 11</u> of this Agreement; <u>provided</u>, that, if such breach is susceptible to cure as determined by Administrative Agent in its sole and absolute discretion, exercised in good faith, then Seller shall have five (5) days after the earlier to occur of notice from Administrative Agent or Seller's actual knowledge of such breach to remedy such breach (<u>provided</u> <u>further</u> that, if Seller shall have commenced to cure such breach within such five (5) day period and thereafter diligently and expeditiously proceeds to cure the same, such five (5) day period shall be extended

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for such time as is reasonably necessary for Seller in the exercise of due diligence, to cure such breach, and in no event shall such cure period exceed thirty (30) days from Seller's receipt of notice of such breach, <u>provided</u> that Seller is continuously and diligently curing such breach).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) a Change of Control shall have occurred with respect to Seller, Pledgor or Guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) any representation made by Seller or Pledgor herein or in any Transaction Document shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated and such representation breach continues unremedied for twenty (20) Business Days after the earlier to occur of the receipt of written notice thereof from Buyer, or the discovery thereof by the applicable Person; <u>provided</u> that the representations and warranties made by Seller in <u>Sections 10(vi)</u> or <u>10(viii)</u> hereof shall not be considered an Event of Default if incorrect or untrue in any material respect (which determination shall be made with respect to the representations and warranties in <u>Exhibit III</u> without regard to any knowledge qualifier therein), if Administrative Agent, on behalf of Buyers, terminates the related Transaction and Seller repurchases the related Purchased Asset(s) on an Early Repurchase Date no later than five (5) Business Days after receiving written notice of such incorrect or untrue representation; <u>provided</u>, *however*, that if Seller shall have made any such representation with knowledge that it was materially incorrect or untrue at the time made, such misrepresentation shall constitute an Event of Default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) (A) a final judgment by any competent court in the United States of America for the payment of money in an amount greater than Two Hundred Fifty Thousand Dollars ($250,000) shall have been rendered against Seller and remains undischarged or unpaid for a period of thirty (30) days, during which period execution of such judgment is not effectively stayed or (B) a final judgment by any competent court in the United States of America for the payment of money in an amount greater than Ten Million Dollars ($10,000,000) shall have been rendered against Guarantor and remains undischarged or unpaid for a period of sixty (60) days, during which period execution of such judgment is not effectively stayed by bonding over or other similar means;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) (A) Seller or Pledgor shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction to which it is a party, and which default involves the failure to pay an obligation in excess of Two Hundred Fifty Thousand Dollars ($250,000) or (B) Guarantor shall have defaulted or failed to perform under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction to which it is a party, and which default involves the failure to pay an obligation in excess of Ten Million Dollars ($10,000,000); <u>provided</u>, *however*, that any such default, failure to perform or breach shall not constitute an Event of Default if Seller, Pledgor or Guarantor, as the case may be, cures such default, failure to perform or breach, as the case may be, within the grace period, if any, provided under the applicable agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) the breach by Guarantor of (A) any financial covenant set forth in Section 9 of the Guaranty or (B) any other term, covenant, obligation or condition set forth in the Guaranty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) if Seller shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement or any other Transaction Document, other than as specifically otherwise referred to in this <u>Section 14(a)</u>, and such breach or failure to perform is susceptible of cure and is not remedied within thirty (30) days after notice thereof to Seller by Administrative Agent, or its successors or assigns; <u>provided</u>, *however*, that if such default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period; and <u>provided</u> <u>further</u> that Seller shall

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have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Seller, in the exercise of due diligence, to cure such default, and in no event shall such cure period exceed sixty (60) days from Seller's receipt of Administrative Agent, on behalf of Buyers, notice of such default; and <u>provided</u> <u>further</u> that in the case of the occurrence of a non-monetary event of default under any Servicing Agreement, and such breach is curable by Seller, Seller cures such breach within ten (10) Business Days of written notice to Seller or the date on which Seller had actual knowledge of such breach or failure to perform and the defaulting servicer is removed and replaced with a replacement servicer satisfactory to Administrative Agent in its sole discretion within sixty (60) days of written notice to Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) an Act of Insolvency shall have occurred with respect to Seller, Pledgor or Guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) an "event of default" or "facility termination event" (as defined in the agreements relating to a facility described below), by Seller, Pledgor or Guarantor beyond any applicable notice and cure period, shall have occurred under (A) any repurchase facility, loan facility or hedging transaction entered into by Seller, Pledgor or Guarantor and any Buyer, or any Affiliate of any Buyer, or (B) any repurchase facility, loan facility or hedging transaction with any Buyer, or any Affiliate of any Buyer, in which Seller, Pledgor or Guarantor is a guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) any of the representations and warranties of Guarantor in the Guaranty or in any Financial Covenant Compliance Certificate shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) if Pledgor shall breach or fail to perform any of the terms, covenants, obligations or conditions of the Pledge Agreement, and such breach or failure to perform is susceptible of cure and is not remedied within the specified cure period or if no cure period is specified, ten (10) Business Days after notice thereof to Seller or Pledgor by Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b) Remedies</u>. If an Event of Default shall occur and be continuing, the following rights and remedies shall be available to Administrative Agent, on behalf of Buyers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the option of Administrative Agent, on behalf of Buyers, exercised by written notice to Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency with respect to Seller, Pledgor or Guarantor), the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (the date on which such option is exercised or deemed to have been exercised, the "<u>Accelerated Repurchase Date</u>") (and any Transaction for which the related Purchase Date has not yet occurred shall be canceled).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If Administrative Agent, on behalf of Buyers, exercises or is deemed to have exercised the option referred to in <u>Section 14(b)(i)</u> hereof (A) Seller's obligations hereunder to repurchase all Purchased Assets shall become immediately due and payable on and as of the Accelerated Repurchase Date, and all Income deposited in the Blocked Account shall be retained by Administrative Agent, on behalf of Buyers, and applied to the Repurchase Obligations; (B) the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall include the accrued and unpaid Price Differential with respect to each Purchased Asset accrued at the Pricing Rate applicable upon an Event of Default for such Transaction; and (C)

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Custodian shall, upon the request of Administrative Agent, on behalf of Buyers (with simultaneous copy of such request to Seller), deliver to Administrative Agent, on behalf of Buyers, all instruments, certificates and other documents then held by Custodian relating to the Purchased Assets; and (D) this Agreement shall automatically terminate, except with respect to those provisions which by their terms survive the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Administrative Agent, on behalf of Buyers, may, after ten (10) days' notice to Seller of Administrative Agent's, intent to take such action (<u>provided</u> that no such notice shall be required in the circumstances set forth in Section 9-611(d) of the UCC), (A) immediately sell, at a public or private sale in a commercially reasonable manner and at such price or prices as Administrative Agent, on behalf of Buyers, may deem to be satisfactory any or all of the Purchased Assets on a servicing released basis or (B) in its sole discretion exercised in good faith elect, in lieu of selling all or a portion of such Purchased Assets, to give Seller credit for such Purchased Assets in an amount equal to the Market Value of such Purchased Assets against the aggregate Repurchase Obligations. The proceeds of any disposition of Purchased Assets effected pursuant to this <u>Section 14(b)(iii)</u> shall be applied: *first*, to the costs and expenses incurred by Administrative Agent and Buyers, in connection with Seller's default; *second*, to the costs of cover and/or Hedging Transactions, if any; *third*, to the Repurchase Price; *fourth*, to all other outstanding Repurchase Obligations; and *fifth*, the balance, if any, to Seller. In the event that Buyers shall not have received repayment in full of the Repurchase Obligations following its liquidation of the Purchased Assets, Administrative Agent, on behalf of Buyers, may, in its sole discretion exercised in good faith, pursue Seller, Pledgor and Guarantor (to the extent provided in the Guaranty including, without limitation, the limitations on recourse set forth therein) for all or any part of any deficiency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid. In view of the nature of the Purchased Assets, the parties agree that, to the extent permitted by applicable law, liquidation of a Transaction or the Purchased Assets shall not require a public purchase or sale and that a private purchase or sale shall be deemed to have been made in a commercially reasonable manner. Accordingly, Administrative Agent, on behalf of Buyers, may elect, in its sole discretion exercised in good faith, the time and manner of liquidating any Purchased Assets, and nothing contained herein shall (A) obligate Administrative Agent, on behalf of Buyers, to liquidate any Purchased Assets following the occurrence of an Event of Default or to liquidate all of the Purchased Assets in the same manner or on the same Business Day or (B) constitute a waiver of any right or remedy of Administrative Agent or Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Seller shall be liable to Administrative Agent and Buyers, for (A) the amount of all expenses, including reasonable legal fees and expenses of counsel, incurred by Administrative Agent and Buyers in connection with or as a consequence of an Event of Default, (B) all costs incurred in connection with covering transactions or Hedging Transactions (including short sales) or entering into replacement transactions, and (C) all damages, losses, judgments, costs and other expenses of any kind that may be imposed on, incurred by or asserted against Administrative Agent and Buyers relating to or arising out of such hedging transactions or covering transactions, and (D) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Administrative Agent, on behalf of Buyers, may exercise any or all of the remedies available to Administrative Agent and Buyers, immediately upon the occurrence of an Event of Default and at any time during the continuance thereof. All rights and remedies arising under the

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Transaction Documents, as amended from time to time, are cumulative and not exclusive of any other rights or remedies that Administrative Agent or Buyers may have.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Administrative Agent, on behalf of Buyers, may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives any defenses Seller might otherwise have to require Administrative Agent or Buyers to enforce its rights by judicial process. Seller also waives any defense Seller might otherwise have arising from the use of nonjudicial process, disposition of any or all of the Purchased Assets, or from any other election of remedies. Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm's length.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Without limiting any other rights or remedies of Administrative Agent or Buyers, Administrative Agent and Buyers, shall have the right of set-off set forth in <u>Section 26</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Administrative Agent and Buyers shall have, in addition to its rights and remedies under the Transaction Documents, all of the rights and remedies provided by applicable federal, state, foreign, and local laws (including, without limitation, if the Transactions are recharacterized as secured financings, the rights and remedies of a secured party under the UCC of the State of New York, to the extent that the UCC is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between any Buyer and Seller or Administrative Agent, Buyer and Seller exercisable upon ten (10) days notice from Administrative Agent to Seller. Without limiting the generality of the foregoing, Administrative Agent and Buyers shall be entitled to set off the proceeds of the liquidation of the Purchased Assets against all of Seller's or any Subsidiary of Guarantor's obligations to Administrative Agent, Buyers, or their Affiliates, whether under this Agreement or under any other agreement between Seller or any Subsidiary of Guarantor and a Buyer or Administrative Agent, on behalf of Buyers, or between Seller and any Affiliate of any Buyer or Administrative Agent, on behalf of Buyers, or otherwise, whether or not such obligations are then due, without prejudice to Administrative Agent's or any Buyer's, right to recover any deficiency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Administrative Agent and each Buyer shall at any time have the right, in each case until such time as Administrative Agent, on behalf of Buyers, determines otherwise, to retain, to suspend payment or performance of, or to decline to remit, any amount or property that Administrative Agent, on behalf of Buyers, would otherwise be obligated to pay, remit or deliver to Seller hereunder if a Default or an Event of Default has occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) For the avoidance of doubt, Administrative Agent, on behalf of Buyers, shall have no obligation to review or purchase any Eligible Asset during the continuance of an Event of Default.

**15. SINGLE AGREEMENT**

Administrative Agent, on behalf of Administrative Agent, on behalf of Buyers, and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Administrative Agent, on behalf of Buyers, and Seller agrees to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder.

**16. NOTICES AND OTHER COMMUNICATIONS**

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All notices, consents, approvals and requests required or permitted hereunder shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) hand delivery, with proof of attempted delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery, or (d) by email (with confirmation of receipt by the receiving party); provided that, other than email notices with respect to communications under this Agreement related to (1) deliveries in connection with Administrative Agent, on behalf of Buyers, due diligence inspections of the Purchased Assets, (2) requests for Transactions (including Future Advance Purchases, (3) notices of partial prepayments or draws on Margin Excess (including Future Advance Purchases), (4) the delivery of Confirmations, (5) notices of early repurchases, (6) deliveries of financial statements or other reporting required under this Agreement and (7) notices requesting consent for Significant Modifications, which will not require any further notice upon confirmation of receipt by the receiving party, that such email notice must also be delivered by one of the means set forth in <u>clauses (a)</u>, <u>(b)</u> or <u>(c)</u> above, to the addresses specified in <u>Annex I</u> hereto or at such other address and person as shall be designated from time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for in this <u>Section 16</u>. A notice shall be deemed to have been given: (i) in the case of hand delivery, at the time of delivery; (ii) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; (iii) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day; or (iv) in the case of email, upon receipt of confirmation or receipt; <u>provided</u> that such emailed notice is also delivered as required in this <u>Section 16</u>. A party receiving a notice that does not comply with the technical requirements for notice under this <u>Section 16</u> may elect to waive any deficiencies and treat such notice as having been properly given. Notwithstanding the foregoing, notices pursuant to <u>Section 4</u> hereof may be sent by electronic mail to the email addresses set forth on <u>Annex I</u> attached hereto; <u>provided</u> that such notice delivered by email shall be deemed to be given only upon receipt of confirmation of receipt by the receiving party.

**17. NON-ASSIGNABILITY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> The rights and obligations of Seller under the Transaction Documents, the Hedging Transactions and under any Transaction shall not be assigned by Seller without the prior written consent of Administrative Agent, on behalf of Buyers. Any attempt by Seller to assign any of its rights or obligations under this Agreement without the prior written consent of Administrative Agent shall be null and void, *ab initio*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Any Buyer, may at any time, without the consent of Seller, Pledgor or Guarantor, sell participations in up to one hundred percent (100%) (in the aggregate, in one or more Transactions, including any assignments under <u>Section 17(c)</u>) of such Buyer's, rights and/or obligations under the Transaction Documents (any such holder of a participation, a "<u>Participant</u>"); *provided* that, so long as no Event of Default has occurred and remains uncured, (i) Administrative Agent's and such Buyer's obligations and Seller's rights and obligations under the Transaction Documents shall remain unchanged, (ii) Administrative Agent shall retain sole decision-making authority under the Transaction Documents (subject to the Co-Buyer Agreement), (iii) Seller shall continue to deal solely and directly with Administrative Agent, on behalf of Buyers, in connection with Administrative Agent's, rights and obligations under the Transaction Documents (subject to the Co-Buyer Agreement) and (iv) such Buyer shall not assign, participate or sell any portion of its rights and obligations under the Transaction Documents to any Prohibited Transferee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Any Buyer may at any time, without the consent of Seller, Pledgor or Guarantor, sell and assign up to one hundred percent (100%) (in the aggregate, in one or more Transactions, and including any participation under <u>Section 17(b)</u>) of the rights and obligations of such Buyer, under the Transaction Documents. From and after the effective date of such assignment, such assignee shall be a party and, to the

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extent provided in such assignment agreement, have the rights and obligations of such Buyer under the Transaction Documents with respect to the percentage and amount of the Repurchase Price allocated to it; provided that, so long as no Event of Default has occurred and remains uncured, such Buyer shall not assign, participate or sell any portion of its rights and obligations under the Transaction Documents to any Prohibited Transferee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> As long as an Event of Default shall have occurred and be continuing, Administrative Agent and any Buyer, may assign, participate or sell its rights and obligations under the Transaction Documents and/or any Transaction to any Person without prior notice to Seller and without regard to the limitations set forth in <u>Section 17(b)</u> and <u>Section 17(c)</u> above. From and after the date Administrative Agent or such Buyer, is no longer a party to this Agreement, Administrative Agent or such Buyer, as applicable, shall have no obligation to act as agent or to make decisions under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> Administrative Agent acting solely for this purpose as an agent of Seller, shall maintain a copy of each assignment and a register for the recordation of the names and addresses of the assignees, and ownership rights in the Transactions, Purchased Assets or other interests under this Agreement (as the same may be modified by any Co-Buyer Agreement). The entries in such register shall be conclusive absent manifest error, and each of Seller, Administrative Agent and Buyers, and their respective assignees shall treat each Person whose name is recorded in such register pursuant to the terms hereof as the beneficial owner of the interests in the Transactions, Purchased Assets or other interests under this Agreement for all purposes. If any assignee is a non-United States Person, such assignee shall timely provide Seller with such forms as may be required to establish the assignee's status for U.S. withholding tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> If any Buyer sells a participation, Administrative Agent acting solely for this purpose as an agent of Seller, maintain a register on which it enters the name and address of each participant and the ownership rights of each participant in the Transactions, Purchased Assets or other interests under this Agreement. The entries in such register shall be conclusive absent manifest error, and Administrative Agent, shall treat each Person whose name is recorded in such register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. If any participant is a non- United States Person, such participant shall timely provide Seller with such forms as may be required to establish such participant's status for U.S. withholding tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> Subject to the foregoing, the Transaction Documents and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns. Nothing in the Transaction Documents, express or implied, shall give to any Person, other than the parties to the Transaction Documents and their respective successors, any benefit or any legal or equitable right, power, remedy or claim under the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall prevent or prohibit any Buyer from pledging its interest in the Purchased Assets hereunder to a Federal Reserve Bank in support of borrowings made by such Buyer from such Federal Reserve Bank; *provided*, *however*, no such pledge shall release such Buyer, as the case may be, from any of its obligations hereunder or substitute any such pledgee for such Buyer, as the case may be, as a party hereto.

**18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ETC.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> This Agreement and any claim, controversy or dispute arising under or related to or in connection therewith, the relationship of the parties hereto, and/or interpretation and enforcement of the rights and duties of the parties hereto shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without giving effect to the conflict of law principles thereof, except for Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Each party irrevocably and unconditionally submits to the exclusive jurisdiction of any United States Federal or New York State court sitting in Manhattan, and any appellate court from any such court, solely for the purpose of any suit, action or proceeding brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> To the extent that either party has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such party hereby irrevocably waives and agrees not to plead or claim such immunity in respect of any action brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> **EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE AND IRREVOCABLY CONSENTS TO THE SERVICE OF ANY SUMMONS AND COMPLAINT AND ANY OTHER PROCESS BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS RESPECTIVE ADDRESS SPECIFIED HEREIN. EACH PARTY HEREBY AGREES 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 LAW. NOTHING IN THIS <u>SECTION 18</u> SHALL AFFECT THE RIGHT OF ADMINISTRATIVE AGENT OR BUYERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ADMINISTRATIVE AGENT OR BUYERS TO BRING ANY ACTION OR PROCEEDING AGAINST SELLER OR ITS PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> **EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.**

**19. NO RELIANCE; DISCLAIMERS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Each party hereby acknowledges, represents and warrants to the other that, in connection with the negotiation of, the entering into, and the performance under, the Transaction Documents and each Transaction thereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) It is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the other party to the Transaction Documents, other than the representations expressly set forth in the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) It has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed to be necessary, and it has made its own investment, hedging and trading decisions (including decisions regarding the suitability of any Transaction) based upon its own judgment and upon any advice from such advisors as it has deemed to be necessary and not upon any view expressed by the other party.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) It is a sophisticated and informed Person that has a full understanding of all the terms, conditions and risks (economic and otherwise) of the Transaction Documents and each Transaction thereunder and is capable of assuming and willing to assume (financially and otherwise) those risks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) It is entering into the Transaction Documents and each Transaction thereunder for the purposes of managing its borrowings or investments or hedging its underlying assets or liabilities and not for purposes of speculation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) It is not acting as a fiduciary or financial, investment or commodity trading advisor for the other party and has not given the other party (directly or indirectly through any other Person) any assurance, guaranty or representation whatsoever as to the merits (either legal, regulatory, tax, business, investment, financial accounting or otherwise) of the Transaction Documents or any Transaction thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Each determination by Administrative Agent, on behalf of Buyers, of the Market Value with respect to each New Asset or Purchased Asset or the communication to Seller of any information pertaining to Market Value under this Agreement shall be made in Administrative Agent's sole discretion exercised in good faith, subject to the following disclaimers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Administrative Agent, on behalf of Buyers, has assumed and relied upon, with Seller's consent and without independent verification, the accuracy and completeness of the information provided by Seller and reviewed by Administrative Agent, on behalf of Buyers. Administrative Agent, on behalf of Buyers, has not made any independent inquiry of any aspect of the New Assets or Purchased Assets or the underlying collateral. Administrative Agent, on behalf of Buyers, view is based on economic, market and other conditions as in effect on, and the information made available to Administrative Agent, on behalf of Buyers, as of, the date of any such determination or communication of information, and such view may change at any time without prior notice to Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Market Value determinations and other information provided to Seller constitute a statement of Administrative Agent, on behalf of Buyers, view of the value of one or more loans or other assets at a particular point in time and does not (A) constitute a bid for a particular trade, (B) indicate a willingness on the part of Administrative Agent, any Buyer, or any Affiliate thereof to make such a bid, or (C) reflect a valuation for substantially similar assets at the same or another point in time, or for the same assets at another point in time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Market Value determinations and other information provided to Seller may vary significantly from valuation determinations and other information that may be obtained from other sources.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Market Value determinations and other information provided to Seller are communicated to Seller solely for its use and may not be relied upon by any other person and may not be disclosed or referred to publicly or to any third party without the prior written consent of Administrative Agent, on behalf of Buyers, which consent of Administrative Agent, on behalf of Buyers, may withhold or delay in its sole and absolute discretion, as determined in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Administrative Agent makes no representations or warranties with respect to any Market Value determinations or other information provided to Seller. Administrative Agent shall not be liable for any incidental or consequential damages arising out of any inaccuracy in such

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valuation determinations and other information provided to Seller, including as a result of any act of gross negligence or breach of any warranty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Market Value determinations and other information provided to Seller in connection with <u>Section 3(b)</u> hereof are only indicative of the initial Market Value of the New Asset submitted to Administrative Agent, on behalf of Buyers, for consideration thereunder, and may change without notice to Seller prior to, or subsequent to, the transfer by Seller of the New Asset pursuant to <u>Section 3(f)</u> hereof. No indication is provided as to Administrative Agent's expectation of the future value of such Purchased Asset or the underlying collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Initial Market Value determinations and other information provided to Seller in connection with <u>Section 3(b)</u> hereof are to be used by Seller for the sole purpose of determining whether to proceed in accordance with <u>Section 3</u> hereof and for no other purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) All determinations of Market Value must be made by Administrative Agent in a manner that is consistent with the implied covenant of good faith and fair dealing under New York law.

**20. INDEMNITY AND EXPENSES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> Seller hereby agrees to hold Administrative Agent, Buyers, and their respective Affiliates and each of their respective officers, directors and employees (the "<u>Indemnified Parties</u>") harmless from and indemnify the Indemnified Parties against any and all actual out-of-pocket liabilities, obligations, losses, damages, penalties, actions, judgments, suits, fees, costs and expenses (including the actual and reasonable attorneys' fees and disbursements of outside counsel and any and all servicing and enforcement costs incurred with respect to the Purchased Assets) or disbursements (all of the foregoing, collectively, "<u>Indemnified Amounts</u>") that may at any time (including, without limitation, such time as this Agreement shall no longer be in effect and the Transactions shall have been repaid in full) be imposed on or asserted against any Indemnified Party in any way whatsoever arising out of or in connection with, or relating to, this Agreement or any Transactions thereunder or any action taken or omitted to be taken by any Indemnified Party under or in connection with any of the foregoing; *provided* that Seller shall not be liable for Indemnified Amounts resulting from the fraudulent acts, gross negligence or willful misconduct of any Indemnified Party. Without limiting the generality of the foregoing, Seller agrees to hold each Indemnified Party harmless from and indemnify each Indemnified Party against all Indemnified Amounts with respect to all Purchased Assets relating to or arising out of any violation or alleged violation of any environmental law, rule or regulation or any consumer credit laws, including without limitation ERISA, the Truth in Lending Act and/or Real Estate Settlement Procedures Act, that, in each case, results from anything other than the gross negligence or willful misconduct of an Indemnified Party. In any suit, proceeding or action brought by Administrative Agent or any Buyer in connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of any Purchased Asset Documents, Seller will save, indemnify and hold Administrative Agent and Buyers harmless from and against all expenses, loss or damage suffered by Administrative Agent and Buyers by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Seller. Seller also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all such Indemnified Party's costs and expenses incurred in connection with the enforcement or the preservation of such Indemnified Party's rights under this Agreement and any other Transaction Document or any transaction contemplated hereby or thereby, including without limitation the actual and reasonable fees and disbursements of its outside counsel. Without limiting the generality of the foregoing, Seller agrees to hold each Indemnified Party harmless from any action taken in connection with this Agreement or any

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Transaction Documents, including, but not limited to, the payment of any Repurchase Price, Price Differential, Principal Payment, Income or any other payment or fees. Seller hereby acknowledges that its obligations hereunder are recourse obligations of Seller. This paragraph shall not apply to any Taxes, other than Taxes that represent Indemnified Amounts arising from any non Tax claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Seller agrees to pay as and when billed by Administrative Agent or any Buyer (i) all Indemnified Amounts provided in Section 20(a), (ii) all of the actual and reasonable out-of-pocket costs and expenses incurred by Administrative Agent, on behalf of Buyers, in connection with the development, preparation and execution of, and any amendment, supplement or modification to this Agreement and the other Transaction Documents or any other documents prepared in connection herewith or therewith including without limitation all the actual and reasonable fees, disbursements and expenses of outside counsel to Administrative Agent and any Buyer, (iii) all of the costs and expenses incurred in connection with the consummation and administration of the Transactions contemplated hereby and thereby including without limitation all the actual and reasonable fees, disbursements and expenses of counsel to Administrative Agent and any Buyer, (iv) all costs and expenses contemplated by <u>Section 14(b)(v)</u> and <u>(v)</u> all the Diligence Fees (collectively, "<u>Transaction Costs</u>").

**21. DUE DILIGENCE**

Seller acknowledges that Administrative Agent, on behalf of Buyers, has the right, subject to the limitations set forth in this <u>Section 21</u>, to perform continuing due diligence reviews with respect to the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or determining or re-determining the Asset Base Component for purposes of <u>Section 4</u> of this Agreement, or otherwise, and Seller agrees that Administrative Agent, on behalf of Buyers, at its option, has the right at any time to conduct a partial or complete due diligence review on any or all of the Purchased Assets, including, without limitation, ordering new credit reports and Appraisals on the applicable collateral and otherwise regenerating the information used to originate such Purchased Assets. Upon reasonable prior notice to Seller, Administrative Agent, on behalf of Buyers, or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Purchased Asset Files, Servicing Records and any and all documents, records, agreements, instruments or information relating to any Purchased Asset in the possession or under the control of Seller, any servicer or sub-servicer and/or Custodian. Seller also shall make available to Administrative Agent, on behalf of Buyers, a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Asset Files, the Servicing Records and the Purchased Assets. Seller agrees to cooperate with Administrative Agent, on behalf of Buyers, and any third party underwriter designated by Administrative Agent or any Buyer in connection with such underwriting, including, but not limited to, providing Administrative Agent, on behalf of Buyers, and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of such Seller. Seller agrees to reimburse Administrative Agent, on behalf of Buyers, for any and all actual and reasonable out-of-pocket attorneys' fees, costs and expenses incurred by Administrative Agent, on behalf of Buyers, in connection with continuing due diligence on Eligible Assets and Purchased Assets, including, without limitation, the cost of annual updated Appraisals on the Mortgaged Properties and Diligence Fees.

**22. SERVICING**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> The parties hereto agree and acknowledge that the Purchased Assets will be sold by Seller to Administrative Agent, on behalf of Buyers, on a servicing released basis. In furtherance of the foregoing, Seller and Administrative Agent, on behalf of Buyers, hereby agree and confirm that from and after the date hereof, only such Servicing Agreements that have been approved by Administrative Agent, on behalf of Buyers, shall govern the servicing of the Purchased Assets and any prior agreement between Seller and

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any other Person or otherwise with respect to such servicing is hereby superseded in all respects. Notwithstanding the foregoing, if Administrative Agent shall have received a duly executed Servicer Acknowledgment from Servicer, prior to an uncured Event of Default, Seller may retain Servicer, on behalf of Administrative Agent, to service the Purchased Assets for the benefit of or on behalf of Administrative Agent, on behalf of Buyers; provided, however, that the obligation of Servicer to service any Purchased Asset for the benefit of or on behalf of Administrative Agent, on behalf of Buyers, as aforesaid shall cease upon the repurchase of such Purchased Asset by Seller in accordance with the provisions of this Agreement or as otherwise provided in the Servicer Acknowledgment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> Seller agrees that, as between Seller and Administrative Agent, on behalf of Buyers, Administrative Agent, on behalf of Buyers, is the owner of all servicing records, including but not limited to any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of Purchased Assets (the "<u>Servicing Records</u>") so long as the Purchased Assets are subject to this Agreement. Seller covenants to safeguard any such Servicing Records in Seller's possession and to deliver them promptly to Administrative Agent, on behalf of Buyers, or its designee (including Custodian) at Administrative Agent's request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> Seller shall not, and shall not provide consent to Servicer to, employ any other sub-servicers to service the Purchased Assets without the prior written approval of Administrative Agent, on behalf of Buyers, which approval shall be in Administrative Agent's, sole discretion exercised in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Seller shall cause Servicer and any other sub-servicers engaged on behalf of Administrative Agent to execute a Servicing Agreement with Seller and Administrative Agent, on behalf of Buyers, or a Servicer Acknowledgment acknowledging Administrative Agent's, on behalf of Buyers, interest in the Purchased Assets and the Servicing Agreement and agreeing that Servicer and any sub-servicer (if applicable) shall deposit all Income with respect to the Purchased Assets in the Blocked Account, all in such manner as shall be reasonably acceptable to Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> To the extent applicable and otherwise permitted under the related Servicing Agreement, Seller shall cause Servicer to permit Administrative Agent, on behalf of Buyers, to inspect Servicer's servicing facilities for the purpose of satisfying such party that Servicer has the ability to service such Purchased Asset as provided in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> (i) Administrative Agent, on behalf of Buyers, may, in its sole discretion exercised in good faith if an Event of Default shall have occurred and be continuing, sell the Purchased Assets on a servicing released basis without payment of any termination fee or any other amount to Servicer, and (ii) to upon the occurrence of an Event of Default hereunder, Administrative Agent, on behalf of Buyers, shall have the right immediately to terminate Servicer's right to service the Purchased Assets without payment of any penalty or termination fee in accordance with the Servicer Acknowledgment and Servicing Agreement.

**23. TREATMENT FOR TAX PURPOSES**

It is the intention of the parties that, for U.S. federal, state and local income and franchise tax purposes, the Transactions constitute a debt financing, and that Seller is, and, so long as no Event of Default shall have occurred and be continuing, will continue to be, treated as the owner of the Purchased Assets for such purposes. Unless prohibited by applicable law, Seller and Administrative Agent, on behalf of Buyers, agree to treat the Transactions as described in the preceding sentence on any and all filings with any U.S. federal, state or local taxing authority.

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**24. INTENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> The parties intend and acknowledge that this Agreement and each Transaction hereunder is a "master netting agreement" as that term is defined in Section 101(38A)(A) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> The parties intend and acknowledge that this Agreement and each Transaction hereunder is a "securities contract" as that term is defined in Section 741(7) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> The parties intend and acknowledge that the Guaranty is a "securities contract" as that term is defined in Section 741(7)(A)(xi) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> The parties intend and acknowledge that any payments or transfers of property made with respect to this Agreement or any Transaction to satisfy a Margin Deficit shall be considered "margin payments" or settlement payments" as such terms are defined in Sections 741(5) and 741(8) of the Bankruptcy Code or a transfer as defined under Section 101(54) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> The parties intend and acknowledge that the grants of security interests set forth in the Pledge Agreement and <u>Section 6</u> that create the pledge of the Repurchase Assets, the other collateral specified in <u>Sections 6(c)</u>, <u>6(d)</u> or <u>6(f)</u> and the Mezzanine Loan Repurchase Assets each constitute "a security agreement or other arrangement or other credit enhancement" that is "related to" this Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> The parties intend and acknowledge that any provisions hereof or in any other document, agreement or instrument that is related in any way to the servicing of the Purchased Assets shall be deemed "related to" this Agreement within the meaning of Section 741 of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> Each party hereto recognizes and intends that this Agreement be and is an agreement to provide financial accommodations and is not subject to assumption pursuant to Bankruptcy Code Section 365(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> Each party hereto agrees that it shall not challenge, and hereby waives to the fullest extent available under applicable law its right to challenge, the characterization of this Agreement or any Transaction hereunder as a "securities contract" or a "master netting agreement" within the meaning of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> It is understood that, for so long as the non-defaulting party is a "financial institution," "financial participant" or other entity listed in Sections 555, 561, 362(b)(6), 362(b)(27), 546(e) or 546(j) of the Bankruptcy Code, that party shall be entitled to the "safe harbor" benefits and protections afforded under the Bankruptcy Code with respect to a "securities contract" and a "master netting agreement." Accordingly, such party's (i) right to liquidate the Purchased Assets, Repurchase Assets, the other collateral specified in <u>Sections 6(c)</u>, <u>6(d)</u> or <u>6(f)</u> and/or Mezzanine Loan Repurchase Assets delivered to it in connection with the Transactions hereunder or to accelerate or terminate this Agreement or otherwise exercise any other remedies pursuant to <u>Section 14</u> hereof is a contractual right to liquidate, accelerate or terminate such Transaction and/or this Agreement as described in Bankruptcy Code Sections 555 and 561 of the Bankruptcy Code, (ii) right to offset or net out as set forth <u>Section 26</u> is a contractual right, (iii) right to exercise these contractual rights shall not be subject to the automatic stay as set forth in Bankruptcy Code Sections 362(b)(6) or 362(b)(27) and (iv) right not have transfers made in connection with this Agreement avoided as set forth in Sections 546(e) and 546(j) of the Bankruptcy Code is a contractual right.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> The parties agree and acknowledge that the grant of setoff rights as set forth in <u>Section 26</u> is a contractual right of setoff within the meaning of Section 553 of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> The parties agree and acknowledge that if a party hereto is an "insured depository institution," as such term is defined in the FDIA, then each Transaction hereunder is a "qualified financial contract," as that term is defined in the FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> It is understood that this Agreement constitutes a "netting contract" as defined in and subject to FDICIA and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual payment obligation," respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined in FDICIA). It is further understood and agreed that either party's right to cause the termination, liquidation or acceleration of, or to offset net termination values, payment amounts or other transfer obligations arising under or in connection with this Agreement or the Transactions hereunder is a contractual right to cause the termination, liquidation or acceleration of, or to offset net termination values, payment amounts or other transfer obligations arising under or in connection with this Agreement as described in Section 561 of the Bankruptcy Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(m)</u> It is understood that this Agreement constitutes a "netting contract" as defined in and subject to FDICIA and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual payment obligation," respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined in FDICIA).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(n)</u> The Servicing Rights and other servicing provisions under this Agreement are not severable from or to be separated from the Mortgage Loans under this Agreement, and such Servicing Rights and other servicing provisions of this Agreement constitute (a) "related terms" under this Agreement within the meaning of section 101(47)(A)(i) of the Bankruptcy Code and/or (b) a security agreement or other arrangement or other credit enhancement related to the Transaction Documents.

**25. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS**

The parties acknowledge that they have been advised that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> in the case of Transactions in which one of the parties is a broker or dealer registered with the SEC under Section 15 of the 1934 Act, the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 ("<u>SIPA</u>") do not protect the other party with respect to any Transaction hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> in the case of Transactions in which (i) one of the parties is a financial institution and/or (ii) one of the parties is an "insured depository institution", as that term is defined in Section 1813(c)(2) of Title 12 of the United States Code, funds held by the financial institution pursuant to a Transaction hereunder may not be a deposit and therefore may not be insured by the Federal Deposit Insurance Corporation.

**26. SETOFF RIGHTS**

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Without limiting any other rights or remedies of Administrative Agent or Buyers, Administrative Agent and Buyers shall have the right, without prior notice to Seller, and any such notice being expressly waived by Seller to the extent permitted by applicable law, to set off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final) in any currency, and any other obligation (including to return excess margin), credits, indebtedness, claims, securities, collateral or other property, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by or due from Administrative Agent, Buyers, or any Affiliate thereof to or for the credit of the account of Seller, to any obligations of Seller hereunder to Administrative Agent or Buyers. If a sum or obligation is unascertained, Administrative Agent, on behalf of Buyers, may estimate that obligation and set off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. This <u>Section 26</u> shall be without prejudice and in addition to any right of setoff, combination of accounts, lien or other rights to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).

**27. ADMINISTRATIVE AGENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a) Agent for Buyers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each of Seller and each Buyer hereby acknowledges and agrees that Administrative Agent has been appointed the Administrative Agent for the Transactions, and each Buyer hereby irrevocably authorizes and directs Administrative Agent to act as agent for and in the best interest of Buyers and to take such actions as Buyers are obligated or entitled to take under the provisions of this Agreement and the other Transaction Documents and to exercise such powers as are set forth herein or therein, together with such other powers as are reasonably incidental thereto. This Agreement is not intended to be, and shall not be construed to be, the formation of a partnership or joint venture between Administrative Agent and any Buyer. In performing its functions and duties under the Transaction Documents, Administrative Agent shall act solely as agent of Buyers and does not assume, and shall not be deemed to have assumed, any obligations toward or relationship of agency or trust with or for Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The agency created pursuant hereto shall in no way impair or affect any of the rights and powers of, or impose any additional duties or obligations upon, any Buyer that becomes Administrative Agent in accordance with the provisions of this Agreement in its individual capacity as a Buyer. With respect to its interest in the Transactions, except as specifically provided in this Agreement, Administrative Agent shall have the same rights and powers hereunder as a Buyer and may exercise the same as though it were not performing the duties and functions delegated to it, as Administrative Agent, hereunder. The term "Buyers" or "Buyer" or any similar term shall, unless the context clearly otherwise indicates, include any Buyer that becomes Administrative Agent in accordance with the provisions of this Agreement in its individual capacity as a Buyer and not as Administrative Agent. Administrative Agent, Buyers and each of their respective Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with Seller or any of its Affiliates (in each case not related to the Transactions) as if it were not performing its duties as Administrative Agent or Buyer (as applicable) specified herein, and may accept fees and other consideration from Seller or its Affiliates for services in connection therewith and otherwise without having to account for the same to Administrative Agent or the other Buyers, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) In furtherance of the authorizations set forth in this <u>Section 27</u>, each Buyer hereby irrevocably appoints Administrative Agent as its attorney-in-fact, with full power of substitution, for and on behalf of and in the name of each such Buyer (i) to enter into Transaction Documents and any amendments or modifications thereof, (ii) to take action with respect to the Transactions

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and Transaction Documents to create, perfect, maintain, and preserve Administrative Agent's, on behalf Buyers, Liens therein, (iii) to take action with respect to the Transactions and the Transaction Documents to transfer the Purchased Assets to Administrative Agent, on behalf of Buyers, and (iv) to execute instruments of release and terminations or to take other action necessary to release liens upon any Purchased Asset. This power of attorney shall be liberally, not restrictively, construed so as to give the greatest latitude to Administrative Agent's power, as attorney, under this Agreement and the Transaction Documents. The powers and authorities herein conferred on Administrative Agent may be exercised by Administrative Agent through any Person who, at the time of the execution of a particular instrument, is an officer of Administrative Agent (or any Person acting on behalf of Administrative Agent pursuant to a valid power of attorney). The power of attorney conferred by this <u>Section 27(a)(iii)</u> to Administrative Agent is granted for valuable consideration and is coupled with an interest and is irrevocable so long as the Transaction Documents remain in effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Each Buyer acknowledges and agrees that so long as no Event of Default has occurred and is continuing, notwithstanding anything to the contrary contained in any Co-Buyer Agreement, Seller shall be entitled to deal with Administrative Agent as the exclusive representative of Buyers on all matters relating to the Transactions, this Agreement and each of the other Transaction Documents, and, subject to the terms hereof and the terms of the Co-Buyer Agreement, each Buyer shall be bound by the acts of Administrative Agent with respect to the Transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b) Administrative Agent Standard of Care</u>. Administrative Agent shall administer and service its obligations under this Agreement and the other Transaction Documents, and shall make such decisions and take such actions as it shall in its reasonable judgment deem necessary, desirable or appropriate in connection therewith, in each case consistent with the Standard of Care.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c) Return of Certain Payments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Buyer (and each Participant of any of the foregoing, by its acceptance of a participation) hereby acknowledges and agrees that if the Administrative Agent notifies such Buyer that the Administrative Agent has determined in its sole discretion that any funds (or any portion thereof) received by such Buyer (any of the foregoing, a "<u>Erroneous Payment Recipient</u>") from the Administrative Agent (or any of its Affiliates) were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Erroneous Payment Recipient (whether or not known to such Erroneous Payment Recipient) (whether as a payment, prepayment or repayment of any Repurchase Price, Price Differential, Principal Payment, Income, fees or otherwise; individually and collectively, a "<u>Payment</u>") and demands the return of such Payment, such Erroneous Payment Recipient shall promptly, but in no event later than one (1) Business Day thereafter, return to the Administrative Agent the amount of any such Payment as to which such a demand was made. A notice of the Administrative Agent to any Erroneous Payment Recipient under this <u>Article 27(c)</u> shall be conclusive, absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Without limitation of clause (i) above, each Erroneous Payment Recipient further acknowledges and agrees that if such Erroneous Payment Recipient receives a Payment from the Administrative Agent (or any of its Affiliates) (x) that is in an amount, or on a date different from the amount and/or date specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a "<u>Payment Notice</u>"), (y) that was not preceded or accompanied by a Payment Notice, or (z) that such Erroneous Payment Recipient otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), in each case, it understands and agrees at the time of receipt of such Payment that an error has been made

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(and that it is deemed to have knowledge of such error) with respect to such Payment. Each Erroneous Payment Recipient agrees that, in each such case, it shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one (1) Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Any Payment required to be returned by an Erroneous Payment Recipient under this <u>Article 27(c)</u> shall be made in immediately available funds in the currency so received, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Erroneous Payment Recipient to the date such amount is repaid to the Administrative Agent at the greater of the federal funds rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. Each Erroneous Payment Recipient hereby agrees that it shall not assert and, to the fullest extent permitted by applicable law, hereby waives, any right to retain such Payment, and any claim, counterclaim, defense or right of set-off or recoupment or similar right to any demand by the Administrative Agent for the return of any Payment received, including without limitation any defense based on "discharge for value" or any similar doctrine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Seller, Guarantor and Pledgor hereby agrees that (x) in the event any Payment (or portion thereof) is not recovered from any Buyer that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Buyer with respect to such amount and (y) the receipt by any Erroneous Payment Recipient of a Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Repurchase Obligations owed to such Buyer by Seller, Guarantor or Pledgor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d) Ratable Share</u>. The liabilities of each Buyer under this Agreement and the other Transaction Documents shall be several and not joint, no Buyer shall be responsible for the obligations of any other Buyer, and each Buyer shall be liable to Seller only for its respective pro rata share of the Transactions. Notwithstanding anything to the contrary herein, all indemnities by Seller and obligations for costs, expenses, damages or advances set forth herein shall run to and benefit each Buyer in accordance with its share of the Transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e) Co-Buyer Agreement</u>. Seller hereby acknowledges and agrees that Buyer and Administrative Agent may at any time and from time to time enter into one or more Co-Buyer Agreements governing the relationship among the parties thereto. Seller acknowledges and agrees that Administrative Agent's discretion under this Agreement or the other Transaction Documents shall be subject to the limitations in any such Co-Buyer Agreements, including the requirement that Administrative Agent obtain approval of Buyer prior to granting certain consents or approvals or taking certain actions under this Agreement and under the other Transaction Documents. Any Co-Buyer Agreements are intended and will be solely for the benefit of Administrative Agent and the applicable parties thereto, and Seller acknowledges and agrees that neither Seller, Guarantor nor any Affiliate of Seller or Guarantor shall be a third-party beneficiary (intended or otherwise) of any of the provisions therein, or have any rights thereunder or be entitled to rely on any of the provisions contained therein. Neither Administrative Agent nor Buyer shall have any obligation to provide a copy of any Co-Buyer Agreement to Seller, Guarantor or any Affiliate of Seller or Guarantor or to disclose to Seller, Guarantor or any Affiliate of Seller or Guarantor the contents of any Co-Buyer Agreement. Administrative Agent and Buyers acknowledge and agree that neither Seller, Guarantor nor any Affiliate of Seller or Guarantor shall have any liabilities, obligations or duties of any kind with respect to any Co-Buyer Agreement, nor any of the provisions contained therein. The obligations of Seller, Guarantor and Pledgor under the Transaction Documents are and will be independent of any Co-Buyer Agreement and shall remain unmodified by the provisions thereof (although Seller acknowledges that with respect to certain approvals, calculations and other decisions hereunder and subject to the Fee

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Letter, any Co-Buyer Agreement may require Administrative Agent to consult with or receive the approval of Buyer prior to providing its own approval or determination regarding the same).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f) Successor Administrative Agents</u>. Administrative Agent may resign as Administrative Agent under the Transaction Documents upon notice to Buyers and Seller. If Administrative Agent shall resign or be removed by Buyers, then Buyers shall appoint a successor Administrative Agent; provided that such successor Administrative Agent meets the applicable "know your customer" requirements of the Servicer and Custodian. The term "Administrative Agent" shall mean each such successor Administrative Agent, effective upon its appointment, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any of the Transaction Documents or successors thereto. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of the Transaction Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Administrative Agent under the Transaction Documents. In no event shall there be more than one Administrative Agent hereunder.

**28. MISCELLANEOUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(a)</u> The Transaction Documents and their respective terms, provisions, supplements and amendments, and transactions and notices thereunder, are proprietary to Administrative Agent and Buyers, and shall be held by Seller in strict confidence and shall not be disclosed to any third party without the consent of Administrative Agent and Buyers, except for disclosure to Seller's Affiliates, directors, attorneys, agents or accountants (the "<u>Representatives</u>"); provided that Seller shall inform each of its Representatives receiving any Transaction Documents of the confidential nature of the Transaction Documents, direct its Representatives to treat the Transaction Documents confidentially, and be responsible for any improper use of the Transaction Documents by Seller or its Representatives or upon prior written notice to Administrative Agent (if permitted by law), disclosure required by law, rule, regulation or order of a court or other regulatory body or upon prior written notice to Administrative Agent (if permitted by law), disclosure to any Approved Hedge Counterparty to the extent necessary to obtain any Hedging Transaction hereunder or any disclosures or filing required under SEC or state securities' laws. Seller shall cooperate in Administrative Agent's or any Buyer's, efforts to obtain a protective order or other reasonable assurance that confidential treatment will be accorded the Transaction Documents. If, in the absence of a protective order, Seller or any of its Representatives is compelled as a matter of law to disclose any such information, Seller may disclose to the party compelling disclosure only the part of the Transaction Documents as is required by law to be disclosed (in which case, prior to such disclosure, Seller shall advise and consult with Administrative Agent or any Buyer, and its counsel as to such disclosure and the nature and wording of such disclosure) and Seller shall use its best efforts to obtain confidential treatment therefor. Administrative Agent and Buyers acknowledge that this Agreement may be filed with the SEC; provided that Seller shall redact any pricing and other confidential provisions, including, without limitation, the amount of any Upfront Fee, Extension Fee, Applicable Spread and Purchase Percentage from such filed copy of this Agreement to the extent permitted to do so by the SEC or such state authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(b)</u> [Reserved].

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c)</u> No express or implied waiver of any Event of Default by Administrative Agent shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by Administrative Agent shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure here from shall be effective unless and until such shall be in writing and duly executed by Seller and Administrative Agent, on behalf of Buyers (in accordance with the Co-Buyer Agreement).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d)</u> Time is of the essence under the Transaction Documents and all Transactions thereunder, and all references to a time shall mean New York time in effect on the date of the action unless otherwise expressly stated in the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e)</u> All rights, remedies and powers of Administrative Agent or any Buyer hereunder and in connection herewith are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all other rights, remedies and powers of Administrative Agent or any Buyer, whether under law, equity or agreement. In addition to the rights and remedies granted to it in this Agreement to the extent applicable, Administrative Agent and each Buyer, shall have all rights and remedies of a secured party under the UCC and any other applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f)</u> This Agreement and the Transaction Documents may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. This Agreement and the Transaction Documents may be delivered by facsimile transmission, by electronic mail, or by other electronic transmission, in portable document format (.pdf) or otherwise, and each such executed facsimile, .pdf, or other electronic record shall be considered an original executed counterpart for purposes of this Agreement and any Transaction Document. Each party to this Agreement (a) agrees that it will be bound by its own Electronic Signature (as such term is defined immediately below), (b) accepts the Electronic Signature of each other party to this Agreement and any Transaction Document, and (c) agrees that such Electronic Signatures shall be the legal equivalent of manual signatures. The term "<u>Electronic Signature</u>" means (i) the signing party's manual signature on a signature page, converted by the signing party (or its agent) to facsimile or digital form (such as a .pdf file) and received from the customary email address or customary facsimile number of the signing party (or its counsel or representative), or other mutually agreed-upon authenticated source; or (ii) the signing party's digital signature executed using a mutually agreed-upon digital signature service provider and digital signature process. The words "execution," "executed", "signed," "signature," and words of like import in this paragraph shall, for the avoidance of doubt, be deemed to include Electronic Signatures and the use and keeping of records in electronic form, each of which shall have the same legal effect, validity and enforceability as manually executed signatures and the use of paper records and paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, state laws based on the Uniform Electronic Transactions Act, or any other state law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g)</u> The headings in the Transaction Documents are for convenience of reference only and shall not affect the interpretation or construction of the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(h)</u> Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or be invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> This Agreement, the Fee Letter and each Confirmation contains a final and complete integration of all prior expressions by the parties with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties with respect to such subject matter, superseding all prior oral or written understandings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(j)</u> Each party understands that this Agreement is a legally binding agreement that may affect such party's rights. Each party represents to the other that such party has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(k)</u> Should any provision of this Agreement require judicial interpretation, it is agreed that a court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against any Person by reason of the rule of construction that a document is to be construed more strictly against the Person who itself or through its agent prepared the same, it being agreed that all parties have participated in the preparation of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(l)</u> Unless the context otherwise requires, whenever the words "including", "include", or "includes" are used herein, they shall be deemed to be followed by the phrase "without limitation".

[SIGNATURES COMMENCE ON THE NEXT PAGE]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

**<u>ADMINISTRATIVE AGENT</u>:**

**MORGAN STANLEY CAPITAL HOLDINGS LLC,** a New York limited liability company<br>

By: ________________________________<br>Name:<br>Title: Authorized Signatory<br>**<u>BUYER</u>:**

**MORGAN STANLEY BANK, N.A.,**<br>a national banking association<br>

By: ____________________________________<br>Name:<br>Title: Authorized Signatory

**<u>SELLER</u>:**

**ACRES REAL ESTATE SPE 10, LLC,** a Delaware limited liability company<br>

By: ____________________________________<br>Name:<br>Title:

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**Schedule 1**

**MAXIMUM PURCHASE PERCENTAGE**

Eighty Percent (80.0%)

SCHEDULE 1-1

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**Schedule 2**

**PURCHASED ASSET DOCUMENTS**

With respect to each Purchased Asset that is a Mortgage Loan or a Participation Interest, the following documents, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the original Mortgage Note bearing all intervening endorsements, endorsed "Pay to the order of _________ without recourse" and signed in the name of the last endorsee (the "<u>Last Endorsee</u>") by an authorized Person of the Last Endorsee (<u>provided</u> that, in the event that such Purchased Asset was acquired by the Last Endorsee in a merger, the signature must be in the following form: "[Last Endorsee], successor by merger to [name of predecessor]" and, in the event that such Purchased Asset was acquired or originated by the Last Endorsee while doing business under another name, the signature must be in the following form: "[Last Endorsee], [formerly known] or [doing business] as [previous name]") or a lost note affidavit in a form reasonably approved by Administrative Agent, on behalf of Buyers, with a copy of the applicable Mortgage Note attached thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the original loan agreement and guaranty, if any, executed in connection with such Purchased Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the original Mortgage with evidence of recording thereon, or a true and correct copy of the original that has been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the originals of all assumption, modification, consolidation or extension agreements with evidence of recording thereon, or true and correct copies of the originals that have each been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the original Assignment of Mortgage in blank for each Purchased Asset, in form and substance acceptable for recording and signed in the name of the Last Endorsee; <u>provided</u> that, in the event that such Purchased Asset was acquired by the Last Endorsee in a merger, the signature must be in the following form: "[Last Endorsee], successor by merger to [name of predecessor]" and, in the event that such Purchased Asset was acquired or originated while doing business under another name, the signature must be in the following form: "[Last Endorsee], [formerly known] or [doing business] as [previous name]";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the originals of all intervening Assignments of Mortgage (if any) with evidence of recording thereon, or copies thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the original Title Policy (or, if such policy is yet to be issued, by a pro forma policy, a preliminary title policy with escrow instructions or a "marked up" commitment, in each case binding on the title insurer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the original security agreement, chattel mortgage or equivalent document, if any, executed in connection with such Purchased Asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the original Assignment of Leases, if any, with evidence of recording thereon, or a true and correct copy of the original that has been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located;

SCHEDULE 2-1

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) originals of all intervening assignments of assignment of leases and rents, if any, or copies thereof, with evidence of recording thereon, or copies thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) a copy of the UCC financing statements, certified as true and correct by Seller, and all necessary UCC continuation statements with evidence of filing thereon or copies thereof together with evidence that such UCC financing or continuation statements have been sent for filing, and UCC assignments in blank, which UCC assignments shall be in form and substance acceptable for filing in the applicable jurisdictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) the original environmental indemnity agreement or similar guaranty or indemnity (if any), whether stand-alone or incorporated into the applicable loan documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) the original omnibus assignment in blank, or such other document(s) necessary and sufficient to transfer to Administrative Agent, on behalf of Buyers, all of Seller's right, title and interest in and to such Purchased Asset (if any);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) a Survey of the Mortgaged Property (if any), as accepted by the title company in connection with the issuance of the Title Policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) a copy of all servicing agreements and Servicing Records related to such Purchased Asset, which Seller shall deliver to Servicer (with a copy to Administrative Agent, on behalf of Buyers);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) a copy of the Mortgagor's opinions of counsel, which shall be in form and substance reasonably satisfactory to Administrative Agent, on behalf of Buyers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) in the case of a Purchased Asset that is a Participation Interest, the original Participation Certificate evidencing such Participation Interest and including an assignment in blank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) in the case of a Purchased Asset that is a Participation Interest, the participation agreement and any other documents evidencing such Participation Interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) an assignment of any management agreements, permits, contracts and any other material agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) reports of UCC, tax lien, judgment and litigation searches, conducted by search firms reasonably acceptable to Administrative Agent with respect to such Purchased Asset, Seller and the related underlying obligor, such searches to be conducted in each location Administrative Agent shall reasonably designate and such reports reasonably satisfactory to Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) the original or a copy of the intercreditor or co-lender agreement executed in connection with such Purchased Asset, to the extent the subject borrower or an affiliate thereof, has encumbered its assets with senior, junior or other similar financing, whether mortgage financing or mezzanine loan financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) copies of all documents relating to the formation and organization of the related obligor under such Purchased Asset, together with all consents and resolutions delivered in connection with such obligor's obtaining such Purchased Asset; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) all other material documents and instruments evidencing, guaranteeing, insuring, securing or modifying such Purchased Asset, executed and delivered in connection with, or otherwise relating to, such Purchased Asset, including, but not limited to, all documents establishing or implementing any

SCHEDULE 2-2

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lockbox pursuant to which Seller is entitled to receive any payments from cash flow of the underlying real property.

With respect to each Purchased Asset that is a Mezzanine Loan, the following documents, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the original executed Mezzanine Note relating to such Mezzanine Loan, which Mezzanine Note shall (A) be endorsed (either on the face thereof or pursuant to a separate allonge) by the most recent endorsee prior to the applicable Seller, without recourse, to the order of such Seller and further reflect a complete, unbroken chain of endorsement from the related originator to such Seller and (B) be accompanied by a separate allonge pursuant to which such Seller has endorsed such Note, without recourse, in blank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) true and correct copies of the related intercreditor agreement (if any) and the related Mezzanine Pledge Agreement and all other material documents (including, without limitation, opinions of counsel) or agreements relating to such Mezzanine Loan or affecting the rights (including, without limitation, the security interests) of any holder thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) as applicable, true and correct copies of any assignment, assumption, modification, consolidation or extension made prior to the related Purchase Date in respect of such Mezzanine Note or any document or agreement referred to in clause (ii) above, in each case, if the document or agreement being assigned, assumed, modified, consolidated or extended is recordable, with evidence of recording thereon (unless the particular item has not been returned from the applicable recording office);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) as applicable, an original assignment of each agreement referred to in clause (ii) above, in recordable form if the agreement being assigned is a recordable document, executed in blank by the applicable Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) each LLC Certificate, together with an undated power covering each such certificate, duly executed in blank with, if Buyer so requests signature guaranteed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) copies of all UCC financing statements filed in respect of such Mezzanine Loan prior to the related Purchase Date, including all amendments and assignments related thereto, if any, in each case with evidence of filing in the applicable jurisdiction indicated thereon;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) an original assignment of each UCC financing statement filed in respect of such Mezzanine Loan, prepared in blank, in form suitable for filing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the related original omnibus assignment, if any, executed in blank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the original Title Policy for such Mezzanine Loan (provided that any exception to this item shall note whether the related Purchased Asset File includes a "marked up" commitment or *pro forma* policy marked as binding and countersigned or evidenced as binding by an escrow letter or closing instructions), if any, together with an original mezzanine endorsement, if any, and date down to owner's policy, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) any additional documents identified on the related Purchased Asset File Checklist delivered to Custodian in accordance with Article II of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) any additional documents required to be added to the related Purchased Asset File pursuant to this Agreement.

SCHEDULE 2-3

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**Schedule 3**

**PROHIBITED TRANSFEREES**

1. Apollo Commercial Real Estate Finance

2. Arbor Realty

3. Ares Commercial Real Estate Corp.

4. Blackstone Group

5. Five Oaks Investment Corp.

6. Granite Point Mortgage Trust

7. KKR & Co.

8. Starwood Property Trust

9. TPG Capital Management.

SCHEDULE 3-1

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**Exhibit I**

**CONFIRMATION<br>MORGAN STANLEY BANK, N.A.**

Ladies and Gentlemen:

Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent, on behalf of Buyers (together with its successors and assigns, "<u>Administrative Agent</u>") is pleased to deliver our written **CONFIRMATION** of our agreement (subject to satisfaction of the Transaction Conditions Precedent) to enter into the Transaction pursuant to which Administrative Agent, on behalf of Buyers, shall purchase from ACRES Real Estate SPE 10, LLC ("<u>Seller</u>"), the Purchased Asset identified in <u>Schedule 1</u> attached hereto, pursuant to the Master Repurchase and Securities Contract Agreement among Administrative Agent, Buyers, and Seller, dated as of November 3, 2021 (as the same may have been or may be amended from time to time, the "<u>Repurchase Agreement</u>"; capitalized terms used herein without definition have the meanings given in the Repurchase Agreement), as follows below and on <u>Schedule 1</u>:

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seller: | &nbsp;&nbsp;ACRES Real Estate SPE 10, LLC |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Date: | &nbsp;&nbsp;[__________], [______] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchased Asset: | &nbsp;&nbsp;As identified on attached <u>Schedule 1</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aggregate Principal<br>Amount of Purchased Asset: | &nbsp;&nbsp;$[__________] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Remaining Future<br>Advance Amount (if any): | &nbsp;&nbsp;$[__________] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Buyer Approved Future Funding: | &nbsp;&nbsp;$[___________] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repurchase Date: | &nbsp;&nbsp;[__________],[_______] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initial Purchase Price: | &nbsp;&nbsp;$[_______] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current Purchase Price: | &nbsp;&nbsp;$[_______] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pricing Rate: | &nbsp;&nbsp;Term SOFR + [__]% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Percentage: | &nbsp;&nbsp;[_]%<sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maximum Purchase Percentage | &nbsp;&nbsp;[_]% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maximum Asset Exposure<br>Threshold: | &nbsp;&nbsp;[_]% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Type of Funding: | &nbsp;&nbsp;[Table Funded]/[Non-Table Funded] |

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<sup>1</sup> To reflect actual advance rate for Purchased Loan.

Exhibit I-1

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Governing Agreement: | &nbsp;&nbsp;As identified on attached <u>Schedule 1</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seller's Wiring Instructions: | &nbsp;&nbsp;Bank: TD Bank NA<br>ABA: 031-101-266<br>Account Name: ACRES Realty Funding Inc.<br>Account #: xxxxxxxxxx |

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Name and address for communications: | &nbsp;&nbsp;<u>Buyer</u>: | &nbsp;&nbsp;Morgan Stanley Mortgage Capital Holdings LLC<br>1585 Broadway, 25th Floor<br>New York, New York 10036<br>Attention: Anthony Preisano<br>Telephone: (212) 761-5688<br>Email: Anthony.Preisano@morganstanley.com |
|  | &nbsp;&nbsp;with a copy to: | &nbsp;&nbsp;Morgan Stanley Bank, N.A.<br>One Utah Center, 201 South Main Street<br>Salt Lake City, Utah 84111 |
|  | &nbsp;&nbsp;and to: | &nbsp;&nbsp;Morgan Stanley Bank, N.A.<br>1 New York Plaza, 41st Floor<br>New York, New York 10004<br>Attention: Tom O'Donnell<br>Telephone: (212) 276-0616<br>Email: wltapes@morganstanley.com |
|  | &nbsp;&nbsp;and to: | &nbsp;&nbsp;Paul Hastings LLP<br>200 Park Avenue<br>New York, New York 10166<br>Attention: Lisa A. Chaney, Esq.<br>Telephone: (212) 318-6773<br>Email: lisachaney@paulhastings.com |
|  | &nbsp;&nbsp;Seller: | &nbsp;&nbsp;ACRES Real Estate SPE 10, LLC<br>c/o ACRES Capital, LLC<br>390 RXR Plaza<br>Uniondale, NY 11556<br>Attention: Mark Fogel<br>Telephone: (516) 336-8122<br>Email: MF@acrescap.com |
|  | &nbsp;&nbsp;with a copy to: | &nbsp;&nbsp;Melissa C. Hinkle, Esq.<br>Partner<br>Cadwalader, Wickersham & Taft LLP<br>200 Liberty Street<br>36-117<br>New York, NY 10281<br>Telephone: (212) 504-6972<br>Email: melissa.hinkle@cwt.com |

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Exhibit I-2

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and to: ACRES Real Estate SPE 10, LLC<br>c/o ACRES Capital, LLC<br>390 RXR Plaza<br>Uniondale, NY 11556<br>Attention: Jaclyn Jesberger<br>Telephone: (516) 882-1662<br>Email: jjesberger@acrescap.com

[SIGNATURES ON THE NEXT PAGE]

Exhibit I-3

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**MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC**<br>a New York limited liability company<br>

By: _______________________________<br>Name:<br>Title:

<u>AGREED AND ACKNOWLEDGED</u>:

**ACRES REAL ESTATE SPE 10, LLC**,<br>a Delaware limited liability company<br>

By: _____________________________________<br>Name:<br>Title:

Exhibit I-4

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**SCHEDULE 1 TO CONFIRMATION STATEMENT**

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| | |
|:---|:---|
| &nbsp;&nbsp;Purchased Asset: | &nbsp;&nbsp;[Asset Type] dated as of [______] in the original principal amount of $[_________], made by [____] to [____] under and pursuant to that certain [loan agreement]/[applicable document], and subsequently assigned to Seller (as amended from time to time, the "<u>Governing Agreement</u>"). |
| &nbsp;&nbsp;Aggregate Principal Amount: | &nbsp;&nbsp;$[_________] [(plus up to $[______] of future advances under Section [____] of the Governing Agreement). Buyers obligation to fund any future advances [subject to approval by Administrative Agent, on behalf of Buyers, in its sole discretion exercised in good faith is contingent on (a) Seller's satisfaction of the conditions contained in <u>Section 3(h)</u> of the Repurchase Agreement and (b) a bringdown by Seller of all representations and warranties made on the date hereof with regard to the Purchased Asset pursuant to <u>Section 10</u> of the Repurchase Agreement.] |
| &nbsp;&nbsp;Representations: | &nbsp;&nbsp;Seller acknowledges and agrees that upon funding by Buyers of the Purchase Price for the Purchased Asset [and, in connection with any subsequent funding of the Purchase Percentage of a future advance under the Purchased Asset, (i)] Seller shall be deemed to have confirmed that all of the representations and warranties set forth in <u>Section 10</u> of the Repurchase Agreement are true and correct as of the Purchase Date with respect to all Purchased Assets [or the applicable funding date, as the case may be,], except such representations and warranties which by their terms speak as of a specified date and except as set forth in the attached Exception Report or in the Exception Report delivered with respect to any other Purchased Asset [and (ii) with respect to the funding of a Future Advance Purchase, Seller shall be deemed to have represented and warranted that all of the conditions to funding of such advance set forth in Section [___] of the Governing Agreement have been satisfied (and no conditions have been waived, except as has been previously disclosed by Seller to Administrative Agent, on behalf of Buyers, in writing)]. |
| &nbsp;&nbsp;Fixed/Floating: | &nbsp;&nbsp;[Fixed]/[Floating] |
| &nbsp;&nbsp;Coupon: | &nbsp;&nbsp;[___]% |
| &nbsp;&nbsp;Term of Loan including Extension Options: | &nbsp;&nbsp;[__________],[_______] |

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Exhibit I-5

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Amortization (*e.g.*, IO, full amortization, etc.): [__]-year amortization[, with [__]-month IO.]

Exhibit I-6

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**EXCEPTION REPORT**

Representation numbers referred to below relate to the corresponding Representations and Warranties Regarding the Purchased Assets set forth in <u>Exhibit III</u> to the Repurchase Agreement.

Exhibit I-7

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**Exhibit II-1**

**FORM OF POWER OF ATTORNEY TO ADMINISTRATIVE AGENT,<br>ON BEHALF OF BUYERS**

Know All Men by These Presents, that ACRES REAL ESTATE SPE 10, LLC ("<u>Seller</u>"), does hereby appoint MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company, as administrative agent on behalf of Buyers (in such capacity, together with its permitted successors and assigns "<u>Administrative Agent</u>"), in connection with the Repurchase Agreement (defined below) its attorney-in-fact to act in Seller's name, place and stead in any way which Seller could do with respect to, at all times after the occurrence and during the continuance of an Event of Default (i) the completion of the endorsements of the Mortgage Notes and Participation Certificates (as applicable) and the Assignments of Mortgages, (ii) the recordation of the Assignments of Mortgages and (iii) the enforcement of Seller's rights under the Purchased Assets purchased by Administrative Agent, on behalf of Buyers (as defined below), pursuant to the Master Repurchase and Securities Contract Agreement dated as of November 3, 2021, as amended from time to time, by and among Administrative Agent, on behalf of MORGAN STANLEY BANK, N.A., a national banking association ("<u>MSBNA</u>"), and such other financial institutions from time to time party thereto, as buyers (MSBNA, together with such other financial institutions from time to time party thereto, as buyers, and together with their respective successors and assigns, collectively, "<u>Buyers</u>" and individually, each a "<u>Buyer</u>") and Seller (the "<u>Repurchase Agreement</u>") (including, for the avoidance of doubt, the enforcement and exercise of Seller's rights in respect of any interest reserve account or other deposit account or securities account established by any borrower or any other related obligor in connection with any Purchased Assets (including the enforcement and exercise of Seller's rights in respect of all funds or other assets deposited in, or credited to, such accounts)) and to take such other steps as may be necessary or desirable to enforce the rights of Administrative Agent, on behalf of Buyers, against such Purchased Assets, the related Purchased Asset Files, the Servicing Records and the Hedging Transactions to the extent that Seller is permitted by law to act through an agent. Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Repurchase Agreement.

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OR SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER'S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

Exhibit II-1-1

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IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be executed this ____ day of __________, 20__.

**ACRES REAL ESTATE SPE 10, LLC**,<br>a Delaware limited liability company<br>

By: _________________________________________<br>Name:<br>Title:

STATE OF))<br>COUNTY OF)

On this _____ of ____________, before me, the undersigned, a Notary Public in and for said state, personally appeared _______________________________, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

<br>___________________________________<br>Notary Public <br> (Seal)]

Exhibit II-1-2

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**Exhibit II-2**

**FORM OF POWER OF ATTORNEY TO SELLER**

Know All Men by These Presents, that MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company, as administrative agent no behalf of Buyers (in such capacity, together with its permitted successors and assigns "<u>Administrative Agent</u>"), on behalf of MORGAN STANLEY BANK, N.A., a national banking association ("<u>MSBNA</u>"), and such other financial institutions from time to time party thereto, as buyers (MSBNA, together with such other financial institutions from time to time party thereto, as buyers, and together with their respective successors and assigns, collectively, "<u>Buyers</u>" and individually, each a "<u>Buyer</u>") does hereby appoint ACRES REAL ESTATE SPE 10, LLC ("<u>Seller</u>"), its attorney-in-fact to act in the name, place and stead of Administrative Agent, on behalf of Buyers in any way which Administrative Agent, on behalf of Buyers, could with respect to modifications described below, to mortgage loan documents with respect to Purchased Assets sold by Seller to Administrative Agent, on behalf of Buyers, under that certain Master Repurchase and Securities Contract Agreement dated as of November 3, 2021, as amended from time to time, among Seller, Administrative Agent, on behalf of Buyers, and Buyers (the "<u>Repurchase Agreement</u>"). Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Repurchase Agreement. Seller is permitted to administer and service the Purchased Assets without the consent of Administrative Agent, on behalf of Buyers, any assignee or any other Person, pursuant to this power of attorney delivered by Administrative Agent, on behalf of Buyers, which power of attorney shall not be revoked by Administrative Agent, on behalf of Buyers, unless an Event of Default under the Repurchase Agreement has occurred and is then continuing. Notwithstanding the foregoing, Seller shall not consent or assent to a Significant Modification without the prior written consent of Administrative Agent, on behalf of Buyers. All waivers or material actions entered into or taken in respect of the Purchased Assets pursuant to this power of attorney shall be in writing. Seller shall notify Administrative Agent, on behalf of Buyers, and Custodian, in writing, of any waiver or other action entered into or taken thereby in respect of any such Purchased Asset pursuant to this power of attorney, and shall deliver to Custodian (with a copy to Administrative Agent, on behalf of Buyers) for deposit in the related Purchased Asset File, an original counterpart of the agreement, if any, relating to such waiver or other action, within three (3) Business Days following the execution thereof. Actions taken under the foregoing power of attorney shall be binding upon each holder of the Purchased Assets.

THIS POWER OF ATTORNEY MAY BE REVOKED BY ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS, BY DELIVERY OF WRITTEN NOTICE TO SELLER DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT UNDER THE REPURCHASE AGREEMENT. IF THIS POWER OF ATTORNEY HAS NOT BEEN REVOKED AND IF REQUESTED BY SELLER, ADMINISTRATIVE AGENT, ON BEHALF OF BUYERS, WILL PROMPTLY CONFIRM IN WRITING TO SELLER, AND ANY OTHER PERSON OR ENTITY REASONABLY DESIGNATED BY SELLER, THAT THIS POWER OF ATTORNEY HAS NOT BEEN REVOKED AND IS IN FULL FORCE AND EFFECT.

Exhibit II-2-1

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IN WITNESS WHEREOF, Administrative Agent, on behalf of Buyers, has caused this Power of Attorney to be executed this ____ day of ________, 20__.

**MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC**, a New York limited liability company<br>

By: ________________________________________<br>Name:<br>Title:

STATE OF))<br>COUNTY OF)

On this _____ of ____________, before me, the undersigned, a Notary Public in and for said state, personally appeared _______________________________, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

<br>___________________________________<br>Notary Public <br> (Seal)]

Exhibit II-2-2

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**Exhibit III-1**

**REPRESENTATIONS AND WARRANTIES<br><u>REGARDING THE PURCHASED ASSETS</u>**

With respect to each Purchased Asset and the related Mortgaged Property or Mortgaged Properties, on the related Purchase Date and at all times while this Agreement and any Transaction contemplated hereunder is in effect, Seller shall be deemed to make the following representations and warranties to Administrative Agent, on behalf of Buyers, as of such date; <u>provided</u>, *however*, that, with respect to any Purchased Asset+, such representations and warranties shall be deemed to be modified by any Exception Report delivered by Seller to Administrative Agent, on behalf of Buyers, prior to the issuance of a Confirmation with respect thereto.

(1) <u>Whole Loan; Ownership of Purchased Assets</u>. Each Purchased Asset is an Eligible Asset. At the time of the sale, transfer and assignment to Administrative Agent, on behalf of Buyers, no Mortgage Note, Mortgage or Participation Certificate was subject to any assignment (other than assignments to Seller), participation (other than with respect to the Participation Interests) or pledge, and Seller had good title to, and was the sole owner of, each Purchased Asset free and clear of any and all liens, charges, pledges, encumbrances, participations (other than with respect to the Participation Interests), any other ownership interests on, in or to such Purchased Asset. Seller has full right and authority to sell, assign and transfer each Purchased Asset, and the assignment to Administrative Agent, on behalf of Buyers, constitutes a legal, valid and binding assignment of such Purchased Asset free and clear of any and all liens, pledges, charges or security interests of any nature encumbering such Purchased Asset.

(2) <u>Loan Document Status</u>. Each related Mortgage Note, Mortgage, Assignment of Leases (if a separate instrument), guaranty and other agreement executed by or on behalf of the related Mortgagor, guarantor or other obligor in connection with such Purchased Asset is the legal, valid and binding obligation of the related Mortgagor, guarantor or other obligor (subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency, one-action or market value limit deficiency legislation), as applicable, and is enforceable in accordance with its terms, except (a) as such enforcement may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law) and (b) that certain provisions in such Purchased Asset Documents (including, without limitation, provisions requiring the payment of default interest, late fees or prepayment/yield maintenance or prepayment fees, charges and/or premiums) are, or may be, further limited or rendered unenforceable by or under applicable law, but (subject to the limitations set forth in <u>clause (a)</u> above) such limitations or unenforceability will not render such Purchased Asset Documents invalid as a whole or materially interfere with the mortgagee's realization of the principal benefits and/or security provided thereby (<u>clauses (a)</u> and <u>(b)</u> collectively, the "<u>Standard Qualifications</u>"). Except as set forth in the immediately preceding sentences, there is no valid offset, defense, counterclaim or right of rescission available to the related borrower with respect to any of the related Mortgage Notes, Mortgages or other Purchased Asset Documents, including, without limitation, any such valid offset, defense, counterclaim or right based on intentional fraud by Seller in connection with the origination of the Purchased Asset, that would deny the mortgagee the principal benefits intended to be provided by the Mortgage Note, Mortgage or other Purchased Asset Documents.

Exhibit III-1-1

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(3) <u>Mortgage Provisions</u>. The Purchased Asset Documents for each Purchased Asset contain provisions that render the rights and remedies of the holder thereof adequate for the practical realization against the Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, non-judicial foreclosure subject to the limitations set forth in the Standard Qualifications.

(4) <u>Hospitality Provisions</u>. The Purchased Asset Documents for each Purchased Asset that is secured by a hospitality property operated pursuant to a franchise agreement includes an executed comfort letter or similar agreement signed by the Mortgagor and franchisor of such property enforceable against such franchisor, either directly or as an assignee of the originator. The Mortgage or related security agreement for each Purchased Asset secured by a hospitality property creates a security interest in the revenues of such property for which a UCC financing statement has been filed in the appropriate filing office.

(5) <u>Mortgage Status; Waivers and Modifications</u>. Since origination and except by written instruments set forth in the related Purchased Asset File or as otherwise provided in the related Purchased Asset Documents (a) the material terms of such Mortgage, Mortgage Note, guaranty, participation agreement, if applicable, and related Purchased Asset Documents have not been waived, impaired, modified, altered, satisfied, canceled, subordinated or rescinded in any respect that could have a material adverse effect on Purchased Asset; (b) no related Mortgaged Property or any portion thereof has been released from the lien of the related Mortgage in any manner which materially interferes with the security intended to be provided by such Mortgage or the use or operation of the remaining portion of such Mortgaged Property; and (c) neither the related borrower nor the related guarantor nor the related participating Person has been released from its material obligations under the Purchased Asset Documents. With respect to each Purchased Asset, except as contained in a written document included in the Purchased Asset File, there have been no modifications, amendments or waivers, that could be reasonably expected to have a material adverse effect on such Purchased Asset consented to by Seller.

(6) <u>Lien; Valid Assignment</u>. Subject to the Standard Qualifications, each assignment of Mortgage and assignment of Assignment of Leases to Administrative Agent, on behalf of Buyers, constitutes a legal, valid and binding assignment to Administrative Agent, on behalf of Buyers. Each related Mortgage and Assignment of Leases is freely assignable without the consent of the related Mortgagor. Each related Mortgage is a legal, valid and enforceable first lien on the related Mortgagor's fee or leasehold interest in the Mortgaged Property in the principal amount of such Purchased Asset or allocated loan amount (subject only to Permitted Encumbrances, except as the enforcement thereof may be limited by the Standard Qualifications. Such Mortgaged Property (subject to and excepting Permitted Encumbrances) is free and clear of any recorded mechanics' liens, recorded materialmen's liens and other recorded encumbrances, and no rights exist which under law could give rise to any such lien or encumbrance that would be prior to or equal with the lien of the related Mortgage, except those which are bonded over, escrowed for or insured against by a lender's title insurance policy (as described below). Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Purchased Asset establishes and creates a valid and enforceable lien on property described therein, except as such enforcement may be limited by Standard Qualifications subject to the limitations described in <u>Paragraph (9)</u> below. Notwithstanding anything herein to the contrary, no representation is made as to the perfection of any security interest in rents or other personal property to the extent that possession or control of such items or actions other than the filing of UCC financing statements is required in order to effect such perfection.

Exhibit III-1-2

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(7) <u>Permitted Liens; Title Insurance</u>. Each Mortgaged Property securing a Purchased Asset is covered by a Title Policy in the original principal amount of such Purchased Asset (or with respect to a Purchased Asset secured by multiple properties, an amount equal to at least the allocated loan amount with respect to the Title Policy for each such property) after all advances of principal (including any advances held in escrow or reserves), that insures for the benefit of the owner of the indebtedness secured by the Mortgage, the first priority lien of the Mortgage, which lien is subject only to Permitted Encumbrances. None of the Permitted Encumbrances are mortgage liens that are senior to or coordinate and co-equal with the lien of the related Mortgage. Such Title Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, all premiums thereon have been paid and no claims have been made by Seller thereunder and no claims have been paid thereunder. Neither Seller, nor to Seller's knowledge, any other holder of the Purchased Asset, has done, by act or omission, anything that would materially impair the coverage under such Title Policy. Each Title Policy contains no exclusion for, or affirmatively insures (except for any Mortgaged Property located in a jurisdiction where such affirmative insurance is not available in which case such exclusion may exist), (a) that the area shown on the survey is the same as the property legally described in the Mortgage and (b) to the extent that the Mortgaged Property consists of two or more adjoining parcels, such parcels are contiguous.

(8) <u>Junior Liens</u>. There are no subordinate mortgages or junior liens securing the payment of money encumbering the related Mortgaged Property (other than Permitted Encumbrances). Seller has no knowledge of any mezzanine debt secured directly by interests in the related Mortgagor, except as disclosed to Administrative Agent.

(9) <u>Assignment of Leases</u>. There exists as part of the related Purchased Asset File an Assignment of Leases (either as a separate instrument or incorporated into the related Mortgage). Subject to the Permitted Encumbrances, each related Assignment of Leases creates a valid first-priority collateral assignment of, or a valid first-priority lien or security interest in, rents and certain rights under the related lease or leases, subject only to a license granted to the related Mortgagor to exercise certain rights and to perform certain obligations of the lessor under such lease or leases, including the right to operate the related leased property, except as the enforcement thereof may be limited by the Standard Qualifications. No Person other than the related Mortgagor owns any interest in any payments due under such lease or leases that is superior to or of equal priority with the lender's interest therein. The related Mortgage or related Assignment of Leases, subject to applicable law, provides that, upon an event of default under the Purchased Asset, a receiver is permitted to be appointed for the collection of rents or for the related mortgagee to enter into possession to collect the rents or for rents to be paid directly to the mortgagee.

(10) <u>UCC Filings</u>. Seller has filed and/or recorded or caused to be filed and/or recorded (or, if not filed and/or recorded, have been submitted in proper form for filing and/or recording), UCC-1 financing statements in the appropriate public filing and/or recording offices necessary at the time of the origination of the Purchased Asset to perfect a valid security interest in all items of physical personal property reasonably necessary to operate such Mortgaged Property owned by such Mortgagor and located on the related Mortgaged Property (other than any non-material personal property, any personal property subject to a purchase money security interest, a sale and leaseback financing arrangement as permitted under the terms of the related Purchased Asset Documents or any other personal property leases applicable to such personal property), to the extent perfection may be effected pursuant to applicable law by recording or filing, as the case may be. Subject to the Standard Qualifications, each related Mortgage (or equivalent document) creates a valid and enforceable lien and security interest on the items of personalty described above. No representation is made as to the perfection of any security interest in rents or other personal property to the extent that possession or control of such items or actions other than the filing of UCC-1 financing

Exhibit III-1-3

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statements are required in order to effect such perfection. Each UCC-1 financing statement, if any, filed with respect to personal property constituting a part of the related Mortgaged Property and each UCC-2 or UCC-3 assignment, if any, of such financing statement to Seller was in suitable form for filing in the filing office in which such financing statement was filed.

(11) <u>Condition of Property</u>. Seller or the originator of the Purchased Asset inspected or caused to be inspected each related Mortgaged Property within six months of origination of the Purchased Asset and within twelve months of the Purchase Date. An engineering report or property condition assessment was prepared in connection with the origination of each Purchased Asset no more than twelve months prior to the Purchase Date. To Seller's knowledge, based solely upon due diligence customarily performed in connection with the origination of comparable mortgage loans, each related Mortgaged Property was (a) free and clear of any material damage, (b) in good repair and condition and (c) is free of structural defects, except in each case (i) for any damage or deficiencies that would not materially and adversely affect the use, operation or value of such Mortgaged Property as security for the Purchased Asset, (ii) if such repairs have been completed or (iii) if escrows in an aggregate amount consistent with the standards utilized by Seller with respect to similar loans its holds for its own account have been established, which escrows will in all events be in an aggregate amount not less than the estimated cost of such repairs. Seller has no knowledge of any material issues with the physical condition of the Mortgaged Property that Seller believes would have a material adverse effect on the use, operation or value of the Mortgaged Property other than those disclosed in the engineering report and those addressed in <u>clauses (i)</u>, <u>(ii)</u> and <u>(iii)</u> above.

(12) <u>Taxes and Assessments</u>. All real estate taxes, governmental assessments and other similar outstanding governmental charges (including, without limitation, water and sewage charges), or installments thereof, that could be a lien on the related Mortgaged Property that would be of equal or superior priority to the lien of the Mortgage and that prior to the Purchase Date have become delinquent in respect of each related Mortgaged Property have been paid, or, if the appropriate amount of such taxes or charges is being appealed or is otherwise in dispute, an escrow of funds has been established in an amount sufficient to cover such payments and reasonably estimated interest and penalties, if any, thereon. For purposes of this <u>Paragraph (12)</u>, real estate taxes and governmental assessments and other outstanding governmental charges and installments thereof shall not be considered delinquent until the earlier of (a) the date on which interest and/or penalties would first be payable thereon and (b) the date on which enforcement action is entitled to be taken by the related taxing authority.

(13) <u>Condemnation</u>. As of the date of origination and to Seller's knowledge as of the Purchase Date, there is no proceeding pending, and, to Seller's knowledge as of the date of origination and as of the Purchased Date, there is no proceeding threatened, for the total or partial condemnation of such Mortgaged Property that would have a material adverse effect on the value, use or operation of the Mortgaged Property.

(14) <u>Actions Concerning Purchased Asset</u>. As of the date of origination and to Seller's knowledge as of the Purchase Date, there was no pending, filed or threatened action, suit or proceeding, arbitration or governmental investigation involving any Mortgagor, guarantor, or the Mortgaged Property, an adverse outcome of which would reasonably be expected to materially and adversely affect (a) such Mortgagor's title to the Mortgaged Property, (b) the validity or enforceability of the Mortgage, (c) such Mortgagor's ability to perform under the related Purchased Asset Documents, (d) such guarantor's ability to perform under the related guaranty, (e) the use, operation or value of the Mortgaged Property, (f) the principal benefit of the security intended to be provided by the Purchased Asset Documents, (g) the current ability of the Mortgaged Property to generate net cash

Exhibit III-1-4

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flow sufficient to service such Purchased Asset or (h) the current principal use of the Mortgaged Property.

(15) <u>Escrow Deposits</u>. All escrow deposits and payments required to be escrowed with lender pursuant to the Purchased Asset Documents are in the possession, or under the control, of Seller or its servicer, and there are no deficiencies (subject to any applicable grace or cure periods) in connection therewith, and all such escrows and deposits (or the right thereto) that are required to be escrowed with lender under the related Purchased Asset Documents are being conveyed by Seller to Administrative Agent, on behalf of Buyers, or its servicer. Any and all requirements under the Purchased Asset Documents as to completion of any material improvements and as to disbursements of any funds escrowed for such purpose, which requirements were to have been complied with on or before the Purchase Date, have been complied with in all material respects or the funds so escrowed have not been released. No other escrow amounts have been released except in accordance with the terms and conditions of the Purchased Asset Documents.

(16) <u>No Holdbacks</u>. The principal balance of the Purchased Asset set forth on the Purchased Asset Schedule has been fully disbursed as of the Purchase Date and there is no requirement for future advances thereunder (except in those cases where the full amount of the Purchased Asset has been disbursed but a portion thereof is being held in escrow or reserve accounts pending the satisfaction of certain conditions relating to leasing, repairs or other matters with respect to the related Mortgaged Property, the Mortgagor or other considerations determined by Seller to merit such holdback), and any requirements or conditions to disbursements of any loan proceeds held in escrow have been satisfied with respect to any disbursements of any such escrow fund made on or prior to the date hereof.

(17) <u>Insurance</u>. Each related Mortgaged Property is, and is required pursuant to the related Mortgage to be, insured by a property insurance policy providing coverage for loss in accordance with coverage found under a "special cause of loss form" or "all risk form" that includes replacement cost valuation issued by an insurer meeting the requirements of the related Purchased Asset Documents and having a claims-paying or financial strength rating of any one of the following: (i) at least "A-:VII" from A.M. Best Company, Inc., (ii) at least "A3" (or the equivalent) from Moody's or (iii) at least "A-" from Standard & Poor's (collectively, the "<u>Insurance Rating Requirements</u>"), in an amount (subject to a customary deductible) not less than the lesser of (1) the original principal balance of the Purchased Asset and (2) the full insurable value on a replacement cost basis of the improvements, furniture, furnishings, fixtures and equipment owned by the Mortgagor and included in the Mortgaged Property (with no deduction for physical depreciation), but, in any event, not less than the amount necessary or containing such endorsements as are necessary to avoid the operation of any coinsurance provisions with respect to the related Mortgaged Property.

Each related Mortgaged Property is also covered, and required to be covered pursuant to the related Loan Documents, by business interruption or rental loss insurance which (subject to a customary deductible) (i) covers a period of not less than 12 months (or with respect to each Purchased Asset on a single asset with a principal balance of $50 million or more, 18 months); (ii) for a Purchased Asset with a principal balance of $50 million or more, contains a 180 day "extended period of indemnity"; and (iii) covers the actual loss sustained during restoration.

If any material part of the improvements, exclusive of a parking lot, located on a Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, the related Mortgagor is required to maintain an insurance policy issued by the National Flood Insurance Program, the Federal Emergency Management Agency, or such similar Federal agency acting in its capacity as an insurer against losses from

Exhibit III-1-5

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flooding, in the maximum amount available under the National Flood Insurance Program, plus such additional excess flood coverage in an amount as is generally required by prudent institutional commercial mortgage lenders originating mortgage loans for securitization.

If windstorm and/or windstorm related perils and/or "named storms" are excluded from the primary property damage insurance policy, the Mortgaged Property is insured by a separate windstorm insurance policy issued by an insurer meeting the Insurance Rating Requirements or endorsement covering damage from windstorm and/or windstorm related perils and/or named storms in an amount at least equal to 100% of the full insurable value on a replacement cost basis of the improvements and personalty and fixtures included in the related Mortgaged Property by an insurer meeting the Insurance Rating Requirement.

The Mortgaged Property is covered, and required to be covered pursuant to the related Purchased Asset Documents, by a commercial general liability insurance policy issued by an insurer meeting the Insurance Rating Requirements including coverage for property damage, contractual damage and personal injury (including bodily injury and death) in amounts as are generally required by a prudent institutional commercial mortgage lender for loans originated for securitization, and in any event not less than $1 million per occurrence and $2 million in the aggregate.

An architectural or engineering consultant has performed an analysis of each of the Mortgaged Properties located in seismic zones 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing either the scenario expected limit (the "<u>SEL</u>") or the probable maximum loss (the "<u>PML</u>") for the Mortgaged Property in the event of an earthquake. In such instance, the SEL or PML, as applicable, was based on a 475-year return period, an exposure period of 50 years and a 10% probability of exceedance. If the resulting report concluded that the SEL or PML, as applicable, would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Mortgaged Property was obtained by an insurer rated at least "A:VII" by A.M. Best Company, Inc. or "A3" (or the equivalent) from Moody's or "A-" by Standard & Poor's in an amount not less than 150% of the SEL or PML, as applicable.

The Purchased Asset Documents require insurance proceeds in respect of a property loss to be applied either (a) to the repair or restoration of all or part of the related Mortgaged Property, with respect to all property losses in excess of 5% of the then outstanding principal amount of the related Purchased Asset, the lender (or a trustee appointed by it) having the right to hold and disburse such proceeds as the repair or restoration progresses, or (b) to the reduction of the outstanding principal balance of such Purchased Asset together with any accrued interest thereon.

All premiums on all insurance policies referred to in this <u>Paragraph (17)</u> required to be paid as of the Purchase Date have been paid, and such insurance policies name the lender under the Purchased Asset and its successors and assigns as a loss payee under a mortgagee endorsement clause or, in the case of the general liability insurance policy, as named or additional insured. Such insurance policies will inure to the benefit of Administrative Agent, on behalf of Buyers. Each related Purchased Asset obligates the related Mortgagor to maintain all such insurance and, at such Mortgagor's failure to do so, authorizes the lender to maintain such insurance at the Mortgagor's cost and expense and to charge such Mortgagor for related premiums and other related expenses, including reasonable attorney's fees. All such insurance policies (other than commercial liability policies) require at least 10 days' prior notice to the lender of termination or cancellation arising because of nonpayment of a premium and at least 30 days prior notice to the lender of termination or cancellation (or such lesser period, not less than 10 days, as may be required by applicable law)

Exhibit III-1-6

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arising for any reason other than non-payment of a premium and no such notice has been received by Seller.

(18) <u>Access; Utilities; Separate Tax Lots</u>. Each Mortgaged Property (a) is located on or adjacent to a public road and has direct legal access to such road, or has access via an irrevocable easement or irrevocable right of way permitting ingress and egress to/from a public road, (b) is served by or has uninhibited access rights to public or private water and sewer (or well and septic) and all required utilities, all of which are appropriate for the current use of the Mortgaged Property, and (c) constitutes one or more separate tax parcels which do not include any property which is not part of the Mortgaged Property or is subject to an endorsement under the related Title Policy insuring the Mortgaged Property, or in certain cases, an application has been, or will be, made to the applicable governing authority for creation of separate tax lots, in which case the Purchased Asset Documents require the Mortgagor to escrow an amount sufficient to pay taxes for the existing tax parcel of which the Mortgaged Property is a part until the separate tax lots are created or the non-recourse carveout guarantor under the Purchased Asset Documents has indemnified the mortgagee for any loss suffered in connection therewith.

(19) <u>No Encroachments</u>. To Seller's knowledge based solely on surveys obtained in connection with origination (which may have been a previously existing "as built" survey) and the lender's Title Policy (or, if such policy is not yet issued, a pro forma title policy, a preliminary title policy with escrow instructions or a "marked up" commitment) obtained in connection with the origination of each Purchased Asset, all material improvements that were included for the purpose of determining the appraised value of the related Mortgaged Property at the time of the origination of such Purchased Asset are within the boundaries of the related Mortgaged Property, except encroachments that do not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements were obtained under the Title Policy. No improvements on adjoining parcels encroach onto the related Mortgaged Property except for encroachments that do not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements were obtained under the Title Policy. No material improvements encroach upon any easements except for encroachments the removal of which would not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements have been obtained under the Title Policy.

(20) <u>No Contingent Interest or Equity Participation</u>. No Purchased Asset has a shared appreciation feature, any other contingent interest feature or a negative amortization feature (except that an anticipated repayment date loan may provide for the accrual of the portion of interest in excess of the rate in effect prior to the anticipated Repayment Date) or an equity participation by Seller.

(21) <u>[Reserved]</u>.

(22) <u>Compliance with Usury Laws</u>. The interest rate (exclusive of any default interest, late charges, yield maintenance charges, exit fees, or prepayment premiums) of such Purchased Asset complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

(23) <u>Authorized to do Business</u>. To the extent required under applicable law, as of the Purchase Date and as of each date that such entity held the Mortgage Note, each holder of the Mortgage Note was authorized to transact and do business in the jurisdiction in which each related Mortgaged Property is located, or the failure to be so authorized does not materially and adversely affect the enforceability of such Purchased Asset by Administrative Agent, on behalf of Buyers.

Exhibit III-1-7

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(24) <u>Trustee under Deed of Trust</u>. With respect to each Mortgage which is a deed of trust, a trustee, duly qualified under applicable law to serve as such, currently so serves and is named in the deed of trust or has been substituted in accordance with the Mortgage and applicable law or may be substituted in accordance with the Mortgage and applicable law by the related mortgagee, and except in connection with a trustee's sale after a default by the related Mortgagor or in connection with any full or partial release of the related Mortgaged Property or related security for such Purchased Asset, and except in connection with a trustee's sale after a default by the related Mortgagor, no fees are payable to such trustee except for *de minimis* fees paid.

(25) <u>Local Law Compliance</u>. To Seller's knowledge, based upon any of a letter from any governmental authorities, a legal opinion, an architect's letter, a zoning consultant's report, an endorsement to the related Title Policy, or other affirmative investigation of local law compliance consistent with the investigation conducted by Seller for similar commercial, multifamily and manufactured housing community mortgage loans intended for securitization, with respect to the improvements located on or forming part of each Mortgaged Property securing a Purchased Asset, there are no material violations of applicable laws, zoning ordinances, rules, covenants, building codes, restrictions and land laws (collectively, "<u>Zoning Regulations</u>") other than those which (i) constitute a legal non-conforming use or structure, as to which the Mortgaged Property may be restored or repaired to the full extent necessary to maintain the use of the structure immediately prior to a casualty or the inability to restore or repair to the full extent necessary to maintain the use or structure immediately prior to the casualty would not materially and adversely affect the use or operation of the Mortgaged Property, (ii) are insured by the Title Policy or other insurance policy, (iii) are insured by law and ordinance insurance coverage in amounts customarily required by prudent commercial mortgage lenders for loans originated for securitization that provides coverage for additional costs to rebuild and/or repair the property to current Zoning Regulations or (iv) would not have a material adverse effect on the Purchased Asset. The terms of the Purchased Asset Documents require the Mortgagor to comply in all material respects with all applicable governmental regulations, zoning and building laws.

(26) <u>Licenses and Permits</u>. Each Mortgagor covenants in the Purchased Asset Documents that it shall keep all material licenses, permits, franchises, certificates of occupancy, consents and applicable governmental authorizations necessary for its operation of the Mortgaged Property in full force and effect, and to Seller's knowledge based upon a letter from any government authorities or other affirmative investigation of local law compliance consistent with the investigation conducted by Seller for similar commercial, multifamily and manufactured housing community mortgage loans intended for securitization, all such material licenses, permits and applicable governmental authorizations are in effect. The Purchased Asset Documents require the related Mortgagor to be qualified to do business in the jurisdiction in which the related Mortgaged Property is located and for the Mortgagor and the Mortgaged Property to be in compliance in all material respects with all regulations, zoning and building laws.

(27) <u>Recourse Obligations</u>. The Purchased Asset Documents for each Purchased Asset provide that such Purchased Asset is non-recourse to the related parties thereto except that: (a) the related Mortgagor and a guarantor (which is a natural person or persons, or an entity distinct from the Mortgagor (but may be affiliated with Mortgagor) that has assets other than equity in the related Mortgaged property that are not *de minimis*) shall be fully liable for losses, liabilities, costs and damages arising from certain acts of the related Mortgagor and/or its principals specified in the related Purchased Asset Documents, which acts generally include the following: (i) acts of fraud or intentional material misrepresentation, (ii) misappropriation of rents (following an event of default), insurance proceeds or condemnation awards, (iii) intentional material physical waste of the Mortgaged Property, (iv) intentional misconduct and (v) any breach of the environmental covenants contained

Exhibit III-1-8

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in the related Loan Documents, and (b) the Purchased Asset shall become full recourse to the related Mortgagor and a guarantor (which is a natural person or persons, or an entity distinct from the Mortgagor (but may be affiliated with Mortgagor) that has assets other than equity in the related Mortgaged property that are not *de minimis*), upon any of the following events: (i) if any petition for bankruptcy, insolvency, dissolution or liquidation pursuant to federal bankruptcy law, or nay similar federal or state law, shall be filed, consented to, or acquiesced in by the Mortgagor, (ii) Mortgagor and/or its principals shall have colluded with other creditors to cause an involuntary bankruptcy filing with respect to the Mortgagor or (iii) upon the transfer of either the Mortgaged Property or equity interests in Mortgagor made in violation of the Purchased Asset Documents.

(28) <u>Mortgage Releases</u>. The terms of the related Mortgage or related Purchased Asset Documents do not provide for release of any material portion of the Mortgaged Property from the lien of the Mortgage except (a) a partial release, accompanied by principal repayment of not less than a specified percentage at least equal to the lesser of (i) 110% of the related allocated loan amount of such portion of the Mortgaged Property and (ii) the outstanding principal balance of the Purchased Asset, (b) upon payment in full of such Purchased Asset, (c) releases of out-parcels that are unimproved or other portions of the Mortgaged Property which will not have a material adverse effect on the underwritten value of the Mortgaged Property and which were not afforded any material value in the appraisal obtained at the origination of the Purchased Asset and are not necessary for physical access to the Mortgaged Property or compliance with zoning requirements, or (d) as required pursuant to an order of condemnation or taking by a State or any political subdivision or authority thereof.

No such Purchased Asset that is secured by more than one Mortgaged Property or that is cross-collateralized with another Purchased Asset permits the release of cross-collateralization of the related Mortgaged Properties.

(29) <u>Financial Reporting and Rent Rolls</u>. The Purchased Asset Documents for each Purchased Asset require the Mortgagor to provide the owner or holder of the Mortgage with quarterly (other than for single-tenant properties) and annual operating statements, and quarterly (other than for single-tenant properties) rent rolls for properties that have leases contributing more than 5% of the in-place base rent and annual financial statements, which annual financial statements with respect to each Purchased Asset with more than one Mortgagor are in the form of an annual combined balance sheet of the Mortgagor entities (and no other entities), together with the related combined statements of operations, members' capital and cash flows, including a combining balance sheet and statement of income for the Mortgaged Properties on a combined basis.

(30) <u>Acts of Terrorism Exclusion</u>. With respect to each Purchased Asset over $20 million, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) do not specifically exclude Acts of Terrorism, as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 and 2015 (collectively, the "<u>TRIA</u>"), from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each other Purchased Asset, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) does not specifically exclude Acts of Terrorism, as defined in TRIA, from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each Purchased Asset, the related Purchased Asset Documents do not expressly waive or prohibit the mortgagee from requiring coverage for Acts of Terrorism, as defined in the TRIA, or damages related thereto except to the extent that any right to require such coverage may be limited by commercial availability on commercially reasonable terms; <u>provided</u>, *however*, that if the TRIA or a similar or

Exhibit III-1-9

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subsequent statute is not in effect, then, <u>provided</u> that terrorism insurance is commercially available, the Mortgagor under each Purchased Asset is required to carry terrorism insurance, but in such event the Mortgagor shall not be required to spend on terrorism insurance coverage more than two times the amount of the insurance premium that is payable in respect of the property and business interruption/rental loss insurance required under the related Purchased Asset Documents (without giving effect to the cost of terrorism and earthquake components of such casualty and business interruption/rental loss insurance) at the time of the origination of the Purchased Asset, and if the cost of terrorism insurance exceeds such amount, the borrower is required to purchase the maximum amount of terrorism insurance available with funds equal to such amount.

(31) <u>Due on Sale or Encumbrance</u>. Subject to specific exceptions set forth below, each Purchased Asset contains a "due on sale" or other such provision for the acceleration of the payment of the unpaid principal balance of such Purchased Asset if, without the consent of the holder of the Mortgage (which consent, in some cases, may not be unreasonably withheld) and/or complying with the requirements of the related Purchased Asset Documents (which provide for transfers without the consent of the lender which are customarily acceptable to prudent commercial and multifamily mortgage lending institutions on the security of property comparable to the related Mortgaged Property, including, without limitation, transfers of worn-out or obsolete furnishings, fixtures, or equipment promptly replaced with property of equivalent value and functionality and transfers by leases entered into in accordance with the Purchased Asset Documents), (a) the related Mortgaged Property, or any equity interest of greater than 50% in the related Mortgagor, is directly or indirectly pledged, transferred or sold, other than as related to (i) family and estate planning transfers or transfers upon death or legal incapacity, (ii) transfers to certain affiliates as defined in the related Purchased Asset Documents, (iii) transfers that do not result in a change of Control of the related Mortgagor or transfers of passive interests so long as the guarantor retains Control, (iv) transfers to another holder of direct or indirect equity in the Mortgagor, a specific Person designated in the related Purchased Asset Documents or a Person satisfying specific criteria identified in the related Purchased Asset Documents, such as a qualified equityholder, (v) transfers of stock or similar equity units in publicly traded companies or (vi) a substitution or release of collateral within the parameters of <u>Paragraph (28)</u> herein, or (vii) to the extent set forth in any Exception Report, by reason of any mezzanine debt that existed at the origination of the related Purchased Asset, or future permitted mezzanine debt in each case as set forth in any Exception Report or (b) the related Mortgaged Property is encumbered with a subordinate lien or security interest against the related Mortgaged Property, other than any Permitted Encumbrances. The Mortgage or other Purchased Asset Documents provide that to the extent any rating agency fees are incurred in connection with the review of and consent to any transfer or encumbrance, the Mortgagor is responsible for such payment along with all other reasonable fees and expenses incurred by the Mortgagee relative to such transfer or encumbrance. For purposes of the foregoing representation, "Control" means the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise.

(32) <u>Single-Purpose Entity</u>. Each Purchased Asset requires the borrower to be a Single-Purpose Entity for at least as long as the Purchased Asset is outstanding. Both the Purchased Asset Documents and the organizational documents of the Mortgagor with respect to each Purchased Asset with a principal amount on the Purchase Date of $5 million or more provide that the borrower is a Single-Purpose Entity, and each Purchased Asset with a principal amount on the Purchase Date of $20 million or more has a counsel's opinion regarding non-consolidation of the Mortgagor. For purposes of this <u>Paragraph (32)</u>, a "<u>Single-Purpose Entity</u>" shall mean an entity, other than an individual, whose organizational documents provide substantially to the effect that it was formed or organized solely for the purpose of owning and operating one or more of the Mortgaged Properties securing the Purchased Assets and prohibit it from engaging in any business unrelated

Exhibit III-1-10

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to such Mortgaged Property or Properties, and whose organizational documents further provide, or which entity represented in the related Purchased Asset Documents, substantially to the effect that it does not have any assets other than those related to its interest in and operation of such Mortgaged Property or Properties, or any indebtedness other than as permitted by the related Mortgage(s) or the other related Purchased Asset Documents, that it has its own books and records and accounts separate and apart from those of any other person, and that it holds itself out as a legal entity, separate and apart from any other person or entity.

(33) <u>[Reserved]</u>.

(34) <u>Ground Leases</u>. For purposes of this <u>Exhibit III</u>, a "<u>Ground Lease</u>" shall mean a lease creating a leasehold estate in real property where the fee owner as the ground lessor conveys for a term or terms of years its entire interest in the land and buildings and other improvements, if any, comprising the premises demised under such lease to the ground lessee (who may, in certain circumstances, own the building and improvements on the land), subject to the reversionary interest of the ground lessor as fee owner and does not include industrial development agency (IDA) or similar leases for purposes of conferring a tax abatement or other benefit.

With respect to any Purchased Asset where the Purchased Asset is secured by a leasehold estate under a Ground Lease in whole or in part, and the related Mortgage does not also encumber the related lessor's fee interest in such Mortgaged Property, based upon the terms of the Ground Lease and any estoppel or other agreement received from the ground lessor in favor of Seller, its successors and assigns, Seller represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i) the Ground Lease or a memorandum regarding such Ground Lease has been duly recorded or submitted for recordation in a form that is acceptable for recording in the applicable jurisdiction; (ii) the Ground Lease or an estoppel or other agreement received from the ground lessor permits the interest of the lessee to be encumbered by the related Mortgage and does not restrict the use of the related Mortgaged Property by such lessee, its successors or assigns in a manner that would materially adversely affect the security provided by the related Mortgage and (iii) no material change in the terms of the Ground Lease had occurred since its recordation, except by any written instrument which are included in the related Purchased Asset File;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the lessor under such Ground Lease has agreed in a writing included in the related Purchased Asset File (or in such Ground Lease) that the Ground Lease may not be amended or modified, or canceled or terminated, without the prior written consent of the lender (except termination or cancellation if (i) notice of a default under the Ground Lease is provided to lender and (ii) such default is curable by lender as provided in the Ground Lease but remains uncured beyond the applicable cure period), and no such consent has been granted by Seller since the origination of the Purchased Asset except as reflected in any written instruments which are included in the related Purchased Asset File;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Ground Lease has an original term (or an original term plus one or more optional renewal terms, which, under all circumstances, may be exercised, and will be enforceable, by either Mortgagor or the mortgagee) that extends not less than 20 years beyond the stated maturity of the related Purchased Asset, or 10 years past the stated maturity if such Purchased Asset fully amortizes by the stated maturity (or with respect to a Purchased Asset that accrues on an actual 360 basis, substantially amortizes);

Exhibit III-1-11

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Ground Lease either (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage, except for the related fee interest of the ground lessor and the Permitted Encumbrances, or (ii) is subject to a subordination, non-disturbance and attornment agreement to which the mortgagee on the lessor's fee interest in the Mortgaged Property is subject;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Ground Lease does not place commercially unreasonable restrictions on the identity of the mortgagee and the Ground Lease is assignable to the holder of the Purchased Asset and its successors and assigns without the consent of the lessor thereunder, and in the event it is so assigned, it is further assignable by the holder of the Purchased Asset and its successors and assigns without the consent of the lessor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Seller has not received any written notice of material default under or notice of termination of such Ground Lease and, to Seller's knowledge, there is no material default under such Ground Lease and no condition that, but for the passage of time or giving of notice, would result in a material default under the terms of such Ground Lease and to Seller's knowledge, such Ground Lease is in full force and effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give to the lender written notice of any default, and provides that no notice of default or termination is effective against the lender unless such notice is given to the lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) a lender is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease through legal proceedings) to cure any default under the Ground Lease which is curable after the lender's receipt of notice of any default before the lessor may terminate the Ground Lease;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial mortgage lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) under the terms of the Ground Lease, an estoppel or other agreement received from the ground lessor and the related Mortgage (taken together), any related insurance proceeds or the portion of the condemnation award allocable to the ground lessee's interest (other than (i) *de minimis* amounts for minor casualties or (ii) in respect of a total or substantially total loss or taking as addressed in <u>Paragraph (34)(k)</u> below) will be applied either to the repair or to restoration of all or part of the related Mortgaged Property with (so long as such proceeds are in excess of the threshold amount specified in the related Purchased Asset Documents) the lender or a trustee appointed by it having the right to hold and disburse such proceeds as repair or restoration progresses, or to the payment of the outstanding principal balance of the Purchased Asset, together with any accrued interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) in the case of a total or substantially total taking or loss, under the terms of the Ground Lease, an estoppel or other agreement and the related Mortgage (taken together), any related insurance proceeds, or portion of the condemnation award allocable to ground lessee's interest in respect of a total or substantially total loss or taking of the related Mortgaged Property to the extent not applied to restoration, will be applied first to the payment of the outstanding principal balance of the Purchased Asset, together with any accrued interest; and

Exhibit III-1-12

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>provided</u> that the lender cures any defaults which are susceptible to being cured, the ground lessor has agreed to enter into a new lease with the lender upon termination of the Ground Lease for any reason, including rejection of the Ground Lease in a bankruptcy proceeding.

(35) <u>Servicing</u>. The servicing and collection practices used by Seller with respect to the Purchased Asset have been, in all material respects, legal and have met customary industry standards for servicing of similar commercial loans.

(36) <u>Origination and Underwriting</u>. The origination practices of Seller (or the related originator if Seller was not the originator) with respect to each Purchased Asset have been, in all material respects, legal and as of the date of its origination, such Purchased Asset and the origination thereof complied in all material respects with, or was exempt from, all requirements of federal, state or local laws and regulations relating to the origination of such Purchased Asset. At the time of origination of such Purchased Asset, the origination, due diligence and underwriting performed by or on behalf of Seller in connection with each Purchased Asset complied in all material respects with the terms, conditions and requirements of Seller's origination, due diligence, underwriting procedures, guidelines and standards for similar commercial and multifamily loans.

(37) <u>Rent Rolls; Operating Histories</u>. Seller has obtained a rent roll (other than with respect to hospitality properties) certified by the related Mortgagor or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Purchased Asset. Seller has obtained operating histories (the "<u>Certified Operating Histories</u>") with respect to each Mortgaged Property certified by the related Mortgagor or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Purchased Asset. The Certified Operating Histories collectively report on operations for a period equal to (a) at least a continuous three-year period or (b) in the event the Mortgaged Property was owned, operated or constructed by the Mortgagor or an affiliate for less than three years then for such shorter period of time.

(38) <u>No Material Default; Payment Record</u>. No Purchased Asset has been more than 30 days delinquent, without giving effect to any grace or cure period, in making required payments since origination, and as of the Purchased Date, no Purchased Asset is delinquent (beyond any applicable grace or cure period) in making required payments. To Seller's knowledge, there is (a) no, and since origination there has been no, material default, breach, violation or event of acceleration existing under the related Purchased Asset Documents, or (b) no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default, breach, violation or event of acceleration, which default, breach, violation or event of acceleration, in the case of either <u>clause (a)</u> or <u>(b)</u>, materially and adversely affects the value of the Purchased Asset, or the value, use or operation of the related Mortgaged Property, <u>provided</u>, *however*, that this <u>Paragraph (38)</u> does not cover any default, breach, violation or event of acceleration that specifically pertains to or arises out of an exception scheduled to any other representation and warranty made by Seller in any Exception Report. No person other than the holder of such Purchased Asset may declare any event of default under the Purchased Asset or accelerate any indebtedness under the Purchased Asset Documents.

(39) <u>Bankruptcy</u>. As of the date of origination of the related Purchased Asset and to Seller's knowledge as of the Purchase Date, neither the Mortgaged Property nor any portion thereof is the subject of, and no Mortgagor, guarantor or tenant occupying a single-tenant property is a debtor in state or federal bankruptcy, insolvency or similar proceeding.

Exhibit III-1-13

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(40) <u>Organization of Mortgagor</u>. With respect to each Purchased Asset, in reliance on certified copies of the organizational documents of the Mortgagor delivered by the Mortgagor in connection with the origination of such Purchased Asset, the Mortgagor is an entity organized under the laws of a state of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico. No Purchased Asset has a Mortgagor that is an Affiliate of another borrower.

Seller has obtained an organizational chart or other description of each Mortgagor which identifies all beneficial controlling owners of the Mortgagor (*i.e.*, managing members, general partners or similar controlling person for such Mortgagor) (the "<u>Controlling Owner</u>") and all owners that hold a 20% or greater direct ownership share (the "<u>Major Sponsors</u>"). Seller (a) required questionnaires to be completed by each Controlling Owner and guarantor or performed other processes designed to elicit information from each Controlling Owner and guarantor regarding such Controlling Owner's or guarantor's prior history regarding any bankruptcies or other insolvencies, any felony convictions, and (b) performed or caused to be performed searches of the public records or services such as Lexis/Nexis, or a similar service designed to elicit information about each Controlling Owner, Major Sponsor and guarantor regarding such Controlling Owner's, Major Sponsor's or guarantor's prior history regarding any bankruptcies or other insolvencies, any felony convictions, and <u>provided</u>, *however*, that manual public records searches were limited to the last 10 years (<u>clauses (a)</u> and <u>(b)</u> collectively, the "<u>Sponsor Diligence</u>"). Based solely on the Sponsor Diligence, to the knowledge of Seller, no Major Sponsor or guarantor (i) was in a state or federal bankruptcy or insolvency proceeding, (ii) had a prior record of having been in a state of federal bankruptcy or insolvency, or (iii) had been convicted of a felony.

(41) <u>Environmental Conditions</u>. At origination, each Mortgagor represented and warranted that to its knowledge no hazardous materials or any other substances or materials which are included under or regulated by Environmental Laws are located on, or have been handled, manufactured, generated, stored, processed, or disposed of on or released or discharged from the Mortgaged Property, except for those substances commonly used in the operation and maintenance of properties of kind and nature similar to those of the Mortgaged Property in compliance with all Environmental Laws and in a manner that does not result in contamination of the Mortgaged Property or in a material adverse effect on the value, use or operations of the Mortgaged Property.

A Phase I environmental site assessment (or update of a previous Phase I and or Phase II site assessment) and, with respect to certain Purchased Assets, a Phase II environmental site assessment (collectively, an "<u>ESA</u>") meeting ASTM requirements was conducted by a reputable environmental consultant in connection with such Purchased Asset within 12 months prior to its origination date (or an update of a previous ESA was prepared), and such ESA either (i) did not identify the existence of recognized "environmental conditions" as such term is defined in ASTM E1527-05 or its successor (the "<u>Environmental Conditions</u>") at the related Mortgaged Property or the need for further investigation with respect to any Environmental Condition that was identified, or (ii) if the existence of an Environmental Condition or need for further investigation was indicated in any such ESA, then at least one of the following statements is true: (A) an amount reasonably estimated by a reputable environmental consultant to be sufficient to cover the estimated cost to cure any material noncompliance with applicable environmental laws or the Environmental Condition has been escrowed by the related Mortgagor and is held or controlled by the related lender; (B) if the only Environmental Condition relates to the presence of asbestos-containing materials, radon in indoor air, lead based paint or lead in drinking water, and the only recommended action in the ESA is the institution of such a plan, an operations or maintenance plan has been required to be instituted by the related Mortgagor that can reasonably be expected to mitigate the identified risk; (C) the Environmental Condition identified in the related environmental report was remediated or abated in all material respects prior to the date hereof, and, if and as appropriate, a no further action or

Exhibit III-1-14

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closure letter was obtained from the applicable governmental regulatory authority (or the Environmental Condition affecting the related Mortgaged Property was otherwise listed by such governmental authority as "closed" or a reputable environmental consultant has concluded that no further action is required); (D) a secured creditor environmental policy or a pollution legal liability insurance policy that covers liability for the Environmental Condition was obtained from an insurer rated no less than "A-" (or the equivalent) by Moody's, Standard & Poor's and/or Fitch, Inc.; (E) a party not related to the Mortgagor was identified as the responsible party for such Environmental Condition and such responsible party has financial resources reasonably estimated to be adequate to address the situation; or (F) a party related to the Mortgagor having financial resources reasonably estimated to be adequate to address the situation is required to take action. To Seller's actual knowledge, except as set forth in the ESA, there is no Environmental Condition (as such term is defined in ASTM E1527-05 or its successor) at the related Mortgaged Property.

In the case of each Purchased Asset with respect to which there is an environmental insurance policy (the "<u>Environmental Insurance Policy</u>"), (i) such Environmental Insurance Policy has been issued by the issuer set forth in the related Exception Report (the "<u>Policy Issuer</u>") and is effective as of the Purchase Date, (ii) as of origination and to Seller's knowledge as of the Purchase Date the Environmental Insurance Policy is in full force and effect, there is no deductible and Seller is a named insured under such policy, (iii) (A) a property condition or engineering report was prepared, if the related Mortgaged Property was constructed prior to 1985, with respect to asbestos-containing materials ("<u>ACM</u>") and, if the related Mortgaged Property is a multifamily property, with respect to radon gas ("<u>RG</u>") and lead-based paint ("<u>LBP</u>"), and (B) if such report disclosed the existence of a material and adverse LBP, ACM or RG environmental condition or circumstance affecting the related Mortgaged Property, the related Mortgagor (1) was required to remediate the identified condition prior to closing the Purchased Asset or provide additional security or establish with the mortgagee a reserve in an amount deemed to be sufficient by Seller, for the remediation of the problem, and/or (2) agreed in the Purchased Asset Documents to establish an operations and maintenance plan after the closing of the Purchased Asset that should reasonably be expected to mitigate the environmental risk related to the identified LBP, ACM or RG condition, (iv) on the effective date of the Environmental Insurance Policy, Seller as originator had no knowledge of any material and adverse environmental condition or circumstance affecting the Mortgaged Property (other than the existence of LBP, ACM or RG) that was not disclosed to the Policy Issuer in one or more of the following: (A) the application for insurance, (B) a Mortgagor questionnaire that was provided to the Policy Issuer, or (C) an engineering or other report provided to the Policy Issuer, and (v) the premium of any Environmental Insurance Policy has been paid through the maturity of the policy's term and the term of such policy extends at least five years beyond the maturity of the Purchased Asset.

(42) <u>Lease Estoppels</u>. With respect to each Purchased Asset secured by retail, office or industrial properties, Seller requested the related Mortgagor to obtain estoppels from each commercial tenant with respect to the rent roll delivered as of the origination date. With respect to each Purchased Asset predominantly secured by a retail, office or industrial property leased to a single tenant, Seller reviewed such estoppel obtained from such tenant no earlier than 90 days prior to the origination date of the related Purchased Asset, and to Seller's knowledge, (i) the related lease is in full force and effect and (ii) there exists no default under such lease, either by the lessee thereunder or by the lessor subject, in each case, to customary reservations of tenant's rights, such as with respect to common area maintenance ("<u>CAM</u>") and pass-through audits and verification of landlord's compliance with co-tenancy provisions. With respect to each Purchased Asset predominantly secured by a retail, office or industrial property, Seller has received lease estoppels executed within 90 days of the origination date of the related Purchased Asset that collectively account for at least 65% of the in-place base rent for the Mortgaged Property that secure a Purchased Asset that is

Exhibit III-1-15

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represented as of the origination date. To Seller's knowledge, (i) each lease represented on the rent roll delivered as of the origination date is in full force and effect and (ii) there exists no material default under any such related lease that represents 20% or more of the in-place base rent for the Mortgaged Property either by the lessee thereunder or by the related Mortgagor, subject, in each case, to customary reservations of tenant's rights, such as with respect to CAM and pass-through audits and verification of landlord's compliance with co-tenancy provisions.

(43) <u>Appraisal</u>. The Purchased Asset File contains an appraisal of the related Mortgaged Property with an appraisal date within six months of the Purchased Asset origination date, and within 12 months of the Purchase Date. The appraisal is signed by an appraiser who is a Member of the Appraisal Institute. Each appraiser has represented in such appraisal or in a supplemental letter that the appraisal satisfies the requirements of the "Uniform Standards of Professional Appraisal Practice" as adopted by the Appraisal Standards Board of the Appraisal Foundation and has certified that such appraiser had no interest, direct or indirect, in the Mortgaged Property or the borrower or in any loan made on the security thereof, and its compensation is not affected by the approval or disapproval of the Purchased Asset.

(44) <u>Purchased Asset Schedule</u>. The information pertaining to each Purchased Asset which is set forth in the Purchased Asset Schedule is true and correct in all material respects as of the Purchased Date and contains all information required by the Repurchase Agreement to be contained therein.

(45) <u>Cross-Collateralization</u>. No Purchased Asset is cross-collateralized or cross-defaulted with any other mortgage loan that is not held by Administrative Agent.

(46) <u>Advance of Funds by Seller</u>. After origination, no advance of funds has been made by Seller to the related Mortgagor other than in accordance with the Purchased Asset Documents, and, to Seller's knowledge, no funds have been received from any person other than the related Mortgagor or an affiliate for, or on account of, payments due on the Purchased Asset (other than as contemplated by the Purchased Asset Documents, such as, by way of example and not in limitation of the foregoing, amounts paid by the tenant(s) into a lender-controlled lockbox if required or contemplated under the related lease or Purchased Asset Documents). Neither Seller nor any affiliate thereof has any obligation to make any capital contribution to any Mortgagor under a Purchased Asset, other than contributions made on or prior to the date hereof.

(47) <u>Compliance with Anti-Money Laundering Laws</u>. Seller has complied in all material respects with the Prescribed Laws. Seller has established an anti-money laundering compliance program as required by the Prescribed Laws, has conducted the requisite due diligence in connection with the origination of the Purchased Asset for purposes of the Prescribed Laws, including with respect to the legitimacy of the applicable Mortgagor and the origin of the assets used by the said Mortgagor to purchase the property in question, and maintains, and will maintain, sufficient information to identify the applicable Mortgagor for purposes of the Prescribed Laws.

(48) <u>OFAC</u>. (a) No Purchased Asset is (i) subject to nullification pursuant to Executive Order 13224 or the regulations promulgated by OFAC (the "<u>OFAC Regulations</u>") or (ii) in violation of Executive Order 13224 or the OFAC Regulations, and (b) no Mortgagor is (i) subject to the provisions of Executive Order 13224 or (ii) listed as a "blocked person" for purposes of the OFAC Regulations.

(49) <u>Floating Interest Rates</u>. Each Purchased Asset bears interest at a floating rate of interest that is based on Term SOFR plus a margin (which interest rate may be subject to a minimum or "floor" rate).

Exhibit III-1-16

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(50) <u>Senior Participations</u>. With respect to each Purchased Asset that is a Participation Interest: (i) either (A) the Participation Interest is treated as a real estate asset for purposes of Section 856(c) of the Code, and the interest payable pursuant to such Participation Interest is treated as interest on an obligation secured by a mortgage on real property or on an interest in real property for purposes of Section 856(c) of the Code, or (B) the Participation Interest qualifies as a security that would not otherwise cause any parent REIT to fail to qualify as a REIT under the Code (including after the sale, transfer and assignment to Administrative Agent, on behalf of Buyers, of such Participation Interest); (ii) to the actual knowledge of Seller, as of the Purchase Date, the related participating Person was not a debtor in any outstanding proceeding pursuant to the federal bankruptcy code; and (iii) Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such Participation Interest is or may become obligated.

Exhibit III-1-17

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**Exhibit III-2**

**REPRESENTATIONS AND WARRANTIES<br>REGARDING EACH PURCHASED ASSET THAT IS A MEZZANINE LOAN**

With respect to each Purchased Asset that is a Mezzanine Loan and the related Mortgaged Property or Mortgaged Properties, on the related Purchase Date and at all times while this Agreement and any Transaction contemplated hereunder is in effect, Seller shall be deemed to make the following representations and warranties to Administrative Agent, on behalf of Buyers, as of such date; <u>provided</u>, *however*, that, with respect to any Purchased Asset, such representations and warranties shall be deemed to be modified by any Exception Report delivered by Seller to Administrative Agent, on behalf of Buyers, prior to the issuance of a Confirmation with respect thereto.

(1) The representations and warranties set forth in <u>Exhibit III-1</u> regarding Mortgage Loans shall be deemed incorporated herein in respect of each underlying Mortgage Loan and the related Mortgaged Property and Mortgagor related to the Purchased Asset; provided that if such representation is duplicative of any specific representation regarding the underlying Mortgage Loan, underlying Mortgaged Property or the Mortgagor, the representation hereunder shall control.

(2) The Mezzanine Loan is a performing mezzanine loan secured by a pledge of all of the Capital Stock of a Mortgagor on the performing underlying Mortgage Loan that owns income producing commercial real estate.

(3) <u>Whole Loan; Ownership of Purchased Assets</u>. Each Purchased Asset is an Eligible Asset. At the time of the sale, transfer and assignment to Administrative Agent, on behalf of Buyers, no Mezzanine Note was subject to any assignment (other than assignments to Seller), participation or pledge, and Seller had good title to, and was the sole owner of, each Purchased Asset free and clear of any and all liens, charges, pledges, encumbrances, participations, any other ownership interests on, in or to such Purchased Asset, but subject to any related intercreditor agreement provided to Administrative Agent, on behalf of Buyers, prior to the Purchase Date. Seller has full right and authority to sell, assign and transfer each Purchased Asset, and the assignment to Administrative Agent, on behalf of Buyers, constitutes a legal, valid and binding assignment of such Purchased Asset free and clear of any and all liens, pledges, charges or security interests of any nature encumbering such Purchased Asset, but subject to any related intercreditor agreement provided to Administrative Agent, on behalf of Buyers, prior to the Purchase Date.

(4) <u>Loan Document Status</u>. Each related Mezzanine Note, Mezzanine Pledge Agreement, guaranty and other agreement executed by or on behalf of the Mezzanine Borrower, guarantor or other obligor in connection with such Purchased Asset is the legal, valid and binding obligation of the Mezzanine Borrower, guarantor or other obligor (subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency, one-action or market value limit deficiency legislation), as applicable, and is enforceable in accordance with its terms, except (a) as such enforcement may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law) and (b) that certain provisions in such Purchased Asset Documents (including, without limitation, provisions requiring the payment of default interest, late fees or prepayment/yield maintenance or prepayment fees, charges and/or premiums) are, or may be, further limited or rendered unenforceable by or under applicable law, but (subject to the limitations set forth in <u>clause (a)</u> above) such limitations or unenforceability will not render such Purchased Asset Documents invalid as a whole or materially interfere with the lender's realization of the

Exhibit III-2-1

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principal benefits and/or security provided thereby (<u>clauses (a)</u> and <u>(b)</u> collectively, the "<u>Standard Qualifications</u>"). Except as set forth in the immediately preceding sentences, there is no valid offset, defense, counterclaim or right of rescission available to Mezzanine Borrower with respect to any of the related Mezzanine Notes or other Purchased Asset Documents, including, without limitation, any such valid offset, defense, counterclaim or right based on intentional fraud by Seller in connection with the origination of the Purchased Asset, that would deny the lender the principal benefits intended to be provided by the Mezzanine Note, or other Purchased Asset Documents.

(5) <u>Purchased Asset Document Provisions</u>. The Purchased Asset Documents for each Purchased Asset contain provisions that render the rights and remedies of the holder thereof adequate for the practical realization against the Capital Stock of the principal benefits of the security intended to be provided thereby, including realization by foreclosure subject to the limitations set forth in the Standard Qualifications.

(6) <u>Hospitality Provisions</u>. The Purchased Asset Documents for each Purchased Asset for which the underlying Mortgage Loan is secured by a hospitality property operated pursuant to a franchise agreement includes an executed comfort letter or similar agreement signed by the Mortgagor and franchisor of such property enforceable against such franchisor, either directly or as an assignee of the originator.

(7) <u>Waivers and Modifications</u>. Since origination and except by written instruments set forth in the related Purchased Asset File or as otherwise provided in the related Purchased Asset Documents (a) the material terms of such Mezzanine Note, guaranty, Mezzanine Pledge Agreement and related Purchased Asset Documents have not been waived, impaired, modified, altered, satisfied, canceled, subordinated or rescinded in any respect that could have a material adverse effect on the Purchased Asset, (b) no related Capital Stock or any portion thereof has been released from the lien of the related Mezzanine Pledge Agreement in any manner which materially interferes with the security intended to be provided by such Mezzanine Pledge Agreement, and (c) neither Mezzanine Borrower nor the related guarantor nor the related participating Person has been released from its material obligations under the Purchased Asset Documents. With respect to each Purchased Asset, except as contained in a written document included in the Purchased Asset File, there have been no modifications, amendments or waivers, that could be reasonably expected to have a material adverse effect on such Purchased Asset consented to by Seller.

(8) <u>Lien</u>. Any security agreement, Mezzanine Pledge Agreement or equivalent document related to and delivered in connection with the Purchased Asset establishes and creates a valid and enforceable lien on property described therein, except as such enforcement may be limited by Standard Qualifications.

Exhibit III-2-2

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(10) <u>UCC Filings</u>. Seller has filed or caused to be filed and (or, if not filed, have been submitted in proper form for filing), UCC-1 financing statements in the appropriate public filing offices necessary at the time of the origination of the Purchased Asset to perfect a valid security interest in all items of personal property owned by Mezzanine Borrower, to the extent perfection may be effected pursuant to applicable law by filing. Subject to the Standard Qualifications, each related Mezzanine Pledge Agreement (or equivalent document) creates a valid and enforceable lien and security interest on the items of personalty described above. No representation is made as to the perfection of any security interest in personal property to the extent that possession or control of such items or actions other than the filing of UCC-1 financing statements are required in order to effect such perfection. Each UCC-1 financing statement, if any, filed with respect to personal property owned by such Mezzanine Borrower and each UCC-2 or UCC-3 assignment, if any, of such financing statement to Seller was in suitable form for filing in the filing office in which such financing statement was filed.

(11) <u>Actions Concerning Purchased Asset</u>. As of the date of origination and to Seller's knowledge as of the Purchase Date, there was no pending, filed or threatened action, suit or proceeding, arbitration or governmental investigation involving any Mezzanine Borrower, guarantor or Mortgagor, an adverse outcome of which would reasonably be expected to materially and adversely affect (a) such Mezzanine Borrower's ownership of the Capital Stock in Mortgagor, (b) the validity or enforceability of the Purchased Asset Documents, (c) such Mezzanine Borrower's or Mortgagor's ability to perform under the related Purchased Asset Documents, (d) such guarantor's ability to perform under the related guaranty, (e) the principal benefit of the security intended to be provided by the Purchased Asset Documents or (f) the current ability of the Mortgaged Property to generate net cash flow sufficient to service such Purchased Asset.

(12) <u>Escrow Deposits</u>. All escrow deposits and payments required to be escrowed with lender pursuant to the Purchased Asset Documents are in the possession, or under the control, of Seller or its servicer, and there are no deficiencies (subject to any applicable grace or cure periods) in connection therewith, and all such escrows and deposits (or the right thereto) that are required to be escrowed with lender under the related Purchased Asset Documents are being conveyed by Seller to Administrative Agent, on behalf of Buyers, or its servicer. Any and all requirements under the Purchased Asset Documents as to disbursements of any funds escrowed, which requirements were to have been complied with on or before the Purchase Date, have been complied with in all material respects or the funds so escrowed have not been released. No other escrow amounts have been released except in accordance with the terms and conditions of the Purchased Asset Documents.

(13) <u>No Holdbacks</u>. The principal balance of the Purchased Asset set forth on the Purchased Asset Schedule has been fully disbursed as of the Purchase Date and there is no requirement for future advances thereunder (except in those cases where the full amount of the Purchased Asset has been disbursed but a portion thereof is being held in escrow or reserve accounts pending the satisfaction of certain conditions relating to leasing, repairs or other matters with respect to the related Mortgaged Property, the Mortgagor or other considerations determined by Seller to merit such holdbacks), and any requirements or conditions to disbursements of any loan proceeds held in escrow have been satisfied with respect to any disbursements of any such escrow fund made on or prior to the date hereof.

(14) <u>Insurance</u>. The Purchased Asset Documents require insurance proceeds in respect of a property loss to be applied either (a) to the repair or restoration of all or part of the underlying Mortgaged Property, with respect to all property losses in excess of 5% of the then outstanding principal amount of the related underlying Mortgage Loan, the mortgage lender (or a trustee appointed by it)

Exhibit III-2-3

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having the right to hold and disburse such proceeds as the repair or restoration progresses, or (b) to the reduction of the outstanding principal balance of the underlying Mortgage Loan together with any accrued interest thereon, with any excess applied to the existing outstanding principal balance of the Mezzanine Loan. All premiums on all insurance policies referred to in this <u>Paragraph (14)</u> required to be paid as of the Purchase Date have been paid, and such insurance policies name the lender under the Purchased Asset and its successors and assigns as a loss payee under a mortgagee endorsement clause or, in the case of the general liability insurance policy, as named or additional insured. Such insurance policies will inure to the benefit of Administrative Agent, on behalf of Buyers. Each related Purchased Asset obligates the underlying Mortgagor to maintain all such insurance and, at such Mortgagor's failure to do so, authorizes the lender to maintain such insurance at the Mortgagor's cost and expense and to charge such Mortgagor for related premiums and other related expenses, including reasonable attorney's fees. All such insurance policies (other than commercial liability policies) require at least 10 days' prior notice to the lender of termination or cancellation and no such notice has been received by Seller.

(15) <u>No Contingent Interest or Equity Participation</u>. No Purchased Asset has a shared appreciation feature, any other contingent interest feature or a negative amortization feature (except that an anticipated repayment date loan may provide for the accrual of the portion of interest in excess of the rate in effect prior to the anticipated Repayment Date) or an equity participation by Seller.

(16) <u>Compliance with Usury Laws</u>. The interest rate (exclusive of any default interest, late charges, yield maintenance charges, exit fees, or prepayment premiums) of such Purchased Asset complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

(17) <u>Authorized to do Business</u>. To the extent required under applicable law, as of the Purchase Date and as of each date that such entity held the Mezzanine Note, each holder of the Mezzanine Note was authorized to transact and do business in the jurisdiction in which the underlying Mortgaged Property is located, or the failure to be so authorized does not materially and adversely affect the enforceability of such Purchased Asset by Administrative Agent, on behalf of Buyers.

(18) <u>Compliance With Laws</u>. The Mezzanine Loan complies in all material respects with, or is exempt from, all requirements of federal, state or local law relating to such Mezzanine Loan. The terms of the Purchased Asset Documents require Mezzanine Borrower and the underlying Mortgagor to comply in all material respects with all applicable governmental regulations, zoning and building laws.

(19) <u>Licenses and Permits</u>. The Purchased Asset Documents require that Mezzanine Borrower shall cause each underlying Mortgagor to keep all material licenses, permits, franchises, certificates of occupancy, consents and applicable governmental authorizations necessary for its operation of the underlying Mortgaged Property in full force and effect, and to Seller's knowledge based upon a letter from any government authorities or other affirmative investigation of local law compliance consistent with the investigation conducted by Seller for similar commercial, multifamily and manufactured housing community mortgage loans intended for securitization, all such material licenses, permits and applicable governmental authorizations are in effect. The Purchased Asset Documents require the related underlying Mortgagor to be qualified to do business in the jurisdiction in which the related underlying Mortgaged Property is located and for Mezzanine Borrower, the underlying Mortgagor and the Mortgaged Property to be in compliance in all material respects with all regulations, zoning and building laws.

Exhibit III-2-4

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(20) <u>Recourse Obligations</u>. The Purchased Asset Documents for each Purchased Asset provide that such Purchased Asset is non-recourse to the related parties thereto except that: (a) Mezzanine Borrower and a guarantor (which is a natural person or persons, or an entity distinct from Mezzanine Borrower (but may be affiliated with Mezzanine Borrower) that has assets other than equity in the underlying Mortgagor that are not *de minimis*) shall be fully liable for losses, liabilities, costs and damages arising from certain acts of Mezzanine Borrower and/or its principals specified in the related Purchased Asset Documents, which acts generally include the following: (i) acts of fraud or intentional material misrepresentation, (ii) misappropriation of rents (following an event of default), insurance proceeds or condemnation awards, (iii) intentional material physical waste of the underlying Mortgaged Property, (iv) intentional misconduct and (v) any breach of the environmental covenants contained in the related Purchased Asset Documents, and (b) the Purchased Asset shall become full recourse to Mezzanine Borrower and a guarantor (which is a natural person or persons, or an entity distinct from Mezzanine Borrower (but may be affiliated with Mezzanine Borrower) that has assets other than equity in the underlying Mortgagor that are not *de minimis*), upon any of the following events: (i) if any petition for bankruptcy, insolvency, dissolution or liquidation pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed or consented to by Mezzanine Borrower, (ii) Mezzanine Borrower and/or its principals shall have colluded with other creditors to cause an involuntary bankruptcy filing with respect to Mezzanine Borrower or (iii) upon the transfer of the equity interests in the underlying Mortgagor made in violation of the Purchased Asset Documents.

(21) <u>Collateral Release</u>. The terms of the related Mezzanine Pledge Agreement or related Purchased Asset Documents do not provide for release of any material portion of the collateral securing the Mezzanine Loan from the lien of the Mezzanine Pledge Agreement except (a) a partial release, accompanied by principal repayment of not less than a specified percentage at least equal to the lesser of (i) 110% of the related allocated loan amount of such portion of the collateral securing the Mezzanine Loan and (ii) the outstanding principal balance of the Purchased Asset, or (b) upon payment in full of such Purchased Asset.

(22) <u>Financial Reporting and Rent Rolls</u>. The Purchased Asset Documents for each Purchased Asset require Mezzanine Borrower to provide the mezzanine lender with quarterly (other than for single-tenant properties) and annual operating statements, and quarterly (other than for single-tenant properties) rent rolls for properties that have leases contributing more than 5% of the in-place base rent and annual financial statements, which annual financial statements with respect to each Purchased Asset with more than one underlying Mortgagor or more than one Mezzanine Borrower are in the form of an annual combined balance sheet, as applicable, of the Mezzanine Borrower entities and the underlying Mortgagor entities (and no other entities), together with the related combined statements of operations, members' capital and cash flows, including a combining balance sheet and statement of income for the underlying Mortgaged Properties on a combined basis.

(23) <u>Acts of Terrorism Exclusion</u>. With respect to each Purchased Asset over $20 million, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) do not specifically exclude Acts of Terrorism, as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (collectively, the "<u>TRIA</u>"), from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each other Purchased Asset, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) does not specifically exclude Acts of Terrorism, as defined in TRIA, from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each Purchased Asset, the

Exhibit III-2-5

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related Purchased Asset Documents do not expressly waive or prohibit the mezzanine lender from requiring coverage for Acts of Terrorism, as defined in the TRIA, or damages related thereto except to the extent that any right to require such coverage may be limited by commercial availability on commercially reasonable terms; *provided*, *however*, that if the TRIA or a similar or subsequent statute is not in effect, then, *provided* that terrorism insurance is commercially available, the underlying Mortgagor under each Purchased Asset is required to carry terrorism insurance, but in such event the underlying Mortgagor shall not be required to spend on terrorism insurance coverage more than two times the amount of the insurance premium that is payable in respect of the property and business interruption/rental loss insurance required under the related Purchased Asset Documents (without giving effect to the cost of terrorism and earthquake components of such casualty and business interruption/rental loss insurance) at the time of the origination of the Purchased Asset, and if the cost of terrorism insurance exceeds such amount, the borrower is required to purchase the maximum amount of terrorism insurance available with funds equal to such amount.

(24) <u>Due on Sale or Encumbrance</u>. Subject to specific exceptions set forth below, each Purchased Asset contains a "due on sale" or other such provision for the acceleration of the payment of the unpaid principal balance of such Purchased Asset if, without the consent of the mezzanine lender (which consent, in some cases, may not be unreasonably withheld) and/or complying with the requirements of the related Purchased Asset Documents (which provide for transfers without the consent of the lender which are customarily acceptable to prudent commercial and multifamily mortgage lending institutions on the security of property comparable to the collateral for the Mezzanine Loan, including, without limitation, transfers of worn-out or obsolete furnishings, fixtures, or equipment promptly replaced with property of equivalent value and functionality and transfers by leases entered into in accordance with the Purchased Asset Documents), (a) the related underlying Mortgaged Property or equity interest of greater than 50% in the related underlying Mortgagor, is directly or indirectly pledged, transferred or sold, other than as related to (i) family and estate planning transfers or transfers upon death or legal incapacity, (ii) transfers to certain affiliates as defined in the related Purchased Asset Documents, (iii) transfers that do not result in a change of Control of Mezzanine Borrower or the related underlying Mortgagor or transfers of passive interests so long as the guarantor retains Control, (iv) transfers to another holder of direct or indirect equity in the underlying Mortgagor, a specific Person designated in the related Purchased Asset Documents or a Person satisfying specific criteria identified in the related Purchased Asset Documents, such as a qualified equityholder, (v) transfers of stock or similar equity units in publicly traded companies, or (vi) to the extent set forth in any Exception Report, by reason of any mezzanine debt that existed at the origination of the related Purchased Asset, or future permitted mezzanine debt in each case as set forth in any Exception Report or (b) the related underlying Mortgaged Property is encumbered with a subordinate lien or security interest against the related underlying Mortgaged Property, other than any Permitted Encumbrances, or the collateral for the Mezzanine Loan is encumbered with a subordinate lien or security interest against such collateral, other than any liens granted pursuant to the Purchased Asset Documents. The Purchased Asset Documents provide that to the extent any rating agency fees are incurred in connection with the review of and consent to any transfer or encumbrance, the Mezzanine Borrower is responsible for such payment along with all other reasonable fees and expenses incurred by the mezzanine lender relative to such transfer or encumbrance. For purposes of the foregoing representation, "Control" means the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise.

(25) <u>Single-Purpose Entity</u>. Each Purchased Asset requires Mezzanine Borrower to be a Single-Purpose Entity for at least as long as the Purchased Asset is outstanding. Both the Purchased Asset Documents and the organizational documents of Mezzanine Borrower with respect to each

Exhibit III-2-6

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Purchased Asset with a principal amount on the Purchase Date of $5 million or more provide that Mezzanine Borrower is a Single-Purpose Entity, and each Purchased Asset with a principal amount on the Purchase Date of $20 million or more has a counsel's opinion regarding non-consolidation of Mezzanine Borrower. For purposes of this <u>Paragraph (32)</u>, a "<u>Single-Purpose Entity</u>" shall mean an entity, other than an individual, whose organizational documents provide substantially to the effect that it was formed or organized solely for the purpose of owning the Capital Stock of the underlying Mortgagor securing the Purchased Assets and prohibit it from engaging in any business unrelated to owning such Capital Stock, and whose organizational documents further provide, or which entity represented in the related Purchased Asset Documents, substantially to the effect that it does not have any assets other than those related to its interest in the underlying Mortgagor, or any indebtedness other than as permitted by the related Mezzanine Pledge Agreement or the other related Purchased Asset Documents, that it has its own books and records and accounts separate and apart from those of any other person, and that it holds itself out as a legal entity, separate and apart from any other person or entity.

(26) <u>Ground Leases</u>. With respect to any Purchased Asset where the underlying Mortgage Loan is secured by a leasehold estate under a Ground Lease in whole or in part, and the related underlying Mortgage does not also encumber the related lessor's fee interest in such Mortgaged Property, based upon the terms of the Ground Lease and any estoppel or other agreement received from the ground lessor in favor of Seller, its successors and assigns, Seller represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i) the Ground Lease or a memorandum regarding such Ground Lease has been duly recorded or submitted for recordation in a form that is acceptable for recording in the applicable jurisdiction; (ii) the Ground Lease or an estoppel or other agreement received from the ground lessor permits the interest of the lessee to be encumbered by the related Mortgage and does not restrict the use of the related Mortgaged Property by such lessee, its successors or assigns in a manner that would materially adversely affect the security provided by the related Mortgage and (iii) no material change in the terms of the Ground Lease had occurred since its recordation, except by any written instrument which are included in the related Purchased Asset File;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the lessor under such Ground Lease has agreed in a writing included in the related Purchased Asset File (or in such Ground Lease) that the Ground Lease may not be amended or modified in any material respect, or canceled or terminated, without the prior written consent of the mezzanine lender (except termination or cancellation if (i) notice of a default under the Ground Lease is provided to mezzanine lender and (ii) such default is curable by mezzanine lender as provided in the Ground Lease but remains uncured beyond the applicable cure period), and no such consent has been granted by Seller since the origination of the Purchased Asset except as reflected in any written instruments which are included in the related Purchased Asset File;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Ground Lease has an original term (or an original term plus one or more optional renewal terms, which, under all circumstances, may be exercised, and will be enforceable, by either the underlying Mortgagor or the mortgagee) that extends not less than 20 years beyond the stated maturity of the related Purchased Asset, or 10 years past the stated maturity if such Purchased Asset fully amortizes by the stated maturity (or with respect to a Purchased Asset that accrues on an actual 360 basis, substantially amortizes);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Ground Lease either (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the underlying Mortgage, except for the related fee interest of the ground lessor and the Permitted Encumbrances, or (ii) is subject to a subordination,

Exhibit III-2-7

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non-disturbance and attornment agreement to which the mortgagee on the lessor's fee interest in the underlying Mortgaged Property is subject;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Ground Lease does not place commercially unreasonable restrictions on the identity of the mortgagee and the Ground Lease is assignable to the holder of the Purchased Asset and its successors and assigns without the consent of the lessor thereunder, and in the event it is so assigned, it is further assignable by the holder of the Purchased Asset and its successors and assigns without the consent of the lessor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Seller has not received any written notice of material default under or notice of termination of such Ground Lease and, to Seller's knowledge, there is no material default under such Ground Lease and no condition that, but for the passage of time or giving of notice, would result in a material default under the terms of such Ground Lease and to Seller's knowledge, such Ground Lease is in full force and effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give to the lender written notice of any default, and provides that no notice of default or termination is effective against the lender unless such notice is given to the lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) a lender is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease through legal proceedings) to cure any default under the Ground Lease which is curable after the lender's receipt of notice of any default before the lessor may terminate the Ground Lease;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial mortgage lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) under the terms of the Ground Lease, an estoppel or other agreement received from the ground lessor and the related underlying Mortgage (taken together), any related insurance proceeds or the portion of the condemnation award allocable to the ground lessee's interest (other than (i) *de minimis* amounts for minor casualties or (ii) in respect of a total or substantially total loss or taking as addressed in <u>Paragraph (26)(k)</u> below) will be applied either to the repair or to restoration of all or part of the related underlying Mortgaged Property with (so long as such proceeds are in excess of the threshold amount specified in the related Purchased Asset Documents) the lender or a trustee appointed by it having the right to hold and disburse such proceeds as repair and restoration progresses, or, to the payment of the outstanding principal balance of the underlying Mortgage Loan, together with any accrued interest, with excess, if any, applied to the Mezzanine Loan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) in the case of a total or substantially total taking or loss, under the terms of the Ground Lease, an estoppel or other agreement and the related underlying Mortgage (taken together), any related insurance proceeds, or portion of the condemnation award allocable to ground lessee's interest in respect of a total or substantially total loss or taking of the related underlying Mortgaged Property to the extent not applied to restoration, will be applied first, pro rata, to the payment of the outstanding principal balance of the underlying Mortgage Loan and the Purchased Asset, together with any accrued interest; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>provided</u> that the lender cures any defaults which are susceptible to being cured, the ground lessor has agreed to enter into a new lease with the lender upon termination of the Ground Lease for any reason, including rejection of the Ground Lease in a bankruptcy proceeding.

Exhibit III-2-8

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If applicable, the ground lessor consented to and acknowledged that (i) the Mezzanine Loan is permitted / approved, (ii) any foreclosure of the Mezzanine Loan and related change in ownership of the ground lessee will not require the consent of the ground lessor or constitute a default under the ground lease, (iii) copies of default notices would be sent to mezzanine lender (or, in the alternative, mortgage lender has agreed to send such notice to mezzanine lender pursuant to the related intercreditor agreement) and (iv) it would accept cure from mezzanine lender on behalf of the ground lessee (or, in the alternative, mortgage lender has agreed to tender such cure on behalf of mezzanine lender pursuant to the related intercreditor agreement).

(27) <u>Servicing</u>. The servicing and collection practices used by Seller with respect to the Purchased Asset have been, in all material respects, legal and have met customary industry standards for servicing of similar commercial loans.

(28) <u>Origination and Underwriting</u>. The origination practices of Seller (or the related originator if Seller was not the originator) with respect to each Purchased Asset have been, in all material respects, legal and as of the date of its origination, such Purchased Asset and the origination thereof complied in all material respects with, or was exempt from, all requirements of federal, state or local laws and regulations relating to the origination of such Purchased Asset. At the time of origination of such Purchased Asset, the origination, due diligence and underwriting performed by or on behalf of Seller in connection with each Purchased Asset complied in all material respects with the terms, conditions and requirements of Seller's origination, due diligence, underwriting procedures, guidelines and standards for similar commercial and multifamily loans.

(29) <u>Rent Rolls; Operating Histories</u>. Seller has obtained a rent roll (other than with respect to hospitality properties) certified by the related Mezzanine Borrower or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Purchased Asset. Seller has obtained operating histories (the "<u>Certified Operating Histories</u>") with respect to each underlying Mortgaged Property certified by the related Mezzanine Borrower or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Purchased Asset. The Certified Operating Histories collectively report on operations for a period equal to (a) at least a continuous three-year period or (b) in the event the underlying Mortgaged Property was owned, operated or constructed by the underlying Mortgagor or an affiliate for less than three years then for such shorter period of time.

(30) <u>No Material Default; Payment Record</u>. No Purchased Asset has been more than 30 days delinquent, without giving effect to any grace or cure period, in making required payments since origination, and as of the Purchased Date, no Purchased Asset is delinquent (beyond any applicable grace or cure period) in making required payments. To Seller's knowledge, there is (a) no, and since origination there has been no, material default, breach, violation or event of acceleration existing under the related Purchased Asset Documents, or (b) no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default, breach, violation or event of acceleration, which default, breach, violation or event of acceleration, in the case of either <u>clause (a)</u> or <u>(b)</u>, materially and adversely affects the value of the Purchased Asset or the collateral for the Mezzanine Loan, or the value, use or operation of the underlying Mortgaged Property, *provided*, *however*, that this <u>Paragraph (30)</u> does not cover any default, breach, violation or event of acceleration that specifically pertains to or arises out of an exception scheduled to any other representation and warranty made by Seller in any Exception Report. No person other than the holder of such Purchased Asset may declare any event of default under the Purchased Asset or accelerate any indebtedness under the Purchased Asset Documents.

Exhibit III-2-9

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(31) <u>Bankruptcy</u>. As of the date of origination of the related Purchased Asset and to Seller's knowledge as of the Purchase Date, no Mezzanine Borrower, guarantor or issuer is a debtor in state or federal bankruptcy, insolvency or similar proceeding.

(32) <u>Organization of Mezzanine Borrower</u>. With respect to each Purchased Asset, in reliance on certified copies of the organizational documents of Mezzanine Borrower delivered by Mezzanine Borrower in connection with the origination of such Purchased Asset, Mezzanine Borrower is an entity organized under the laws of a state of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico. No Purchased Asset has a Mezzanine Borrower that is an Affiliate of another Mezzanine Borrower. Seller has obtained an organizational chart or other description of each Mezzanine Borrower which identifies all beneficial controlling owners of the Mezzanine Borrower (*i.e.*, managing members, general partners or similar controlling person for such Mezzanine Borrower) (the "<u>Controlling Owner</u>") and all owners that hold a 20% or greater direct ownership share (the "<u>Major Sponsors</u>"). Seller (a) required questionnaires to be completed by each Controlling Owner and guarantor or performed other processes designed to elicit information from each Controlling Owner and guarantor regarding such Controlling Owner's or guarantor's prior history regarding any bankruptcies or other insolvencies, any felony convictions, and (b) performed or caused to be performed searches of the public records or services such as Lexis/Nexis, or a similar service designed to elicit information about each Controlling Owner, Major Sponsor and guarantor regarding such Controlling Owner's, Major Sponsor's or guarantor's prior history regarding any bankruptcies or other insolvencies, any felony convictions, and <u>provided</u>, *however*, that manual public records searches were limited to the last 10 years (<u>clauses (a)</u> and <u>(b)</u> collectively, the "<u>Sponsor Diligence</u>"). Based solely on the Sponsor Diligence, to the knowledge of Seller, no Major Sponsor or guarantor (i) was in a state or federal bankruptcy or insolvency proceeding, (ii) had a prior record of having been in a state of federal bankruptcy or insolvency, or (iii) had been convicted of a felony.

(33) <u>Environmental Conditions</u>. In the case of each Purchased Asset with respect to which there is an environmental insurance policy (the "<u>Environmental Insurance Policy</u>"), (i) such Environmental Insurance has been issued by the issuer set forth in the related Exception Report (the "<u>Policy Issuer</u>") and is effective as of the Purchase Date, (ii) as of origination and to Seller's knowledge as of the Purchase Date the Environmental Insurance Policy is in full force and effect, there is no deductible and Seller is a named insured under such policy, (iii) (A) a property condition or engineering report was prepared, if the related underlying Mortgaged Property was constructed prior to 1985, with respect to asbestos-containing materials ("<u>ACM</u>") and, if the related underlying Mortgaged Property is a multifamily property, with respect to radon gas ("<u>RG</u>") and lead-based paint ("<u>LBP</u>"), and (B) if such report disclosed the existence of a material and adverse LBP, ACM or RG environmental condition or circumstance affecting the related underlying Mortgaged Property, the related underlying Mortgagor (1) was required to remediate the identified condition prior to closing the Purchased Asset or provide additional security or establish with the mortgagee a reserve in an amount deemed to be sufficient by Seller, for the remediation of the problem, and/or (2) agreed in the Purchased Asset Documents to establish an operations and maintenance plan after the closing of the Purchased Asset that should reasonably be expected to mitigate the environmental risk related to the identified LBP, ACM or RG condition, (iv) on the effective date of the Environmental Insurance Policy, Seller as originator had no knowledge of any material and adverse environmental condition or circumstance affecting the underlying Mortgaged Property (other than the existence of LBP, ACM or RG) that was not disclosed to the Policy Issuer in one or more of the following: (A) the application for insurance, (B) an underlying Mortgagor questionnaire that was provided to the Policy Issuer, or (C) an engineering or other report provided to the Policy Issuer, and (v) the premium of any Environmental Insurance Policy has been paid through the

Exhibit III-2-10

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maturity of the policy's term and the term of such policy extends at least five years beyond the maturity of the Purchased Asset.

(34) <u>Lease Estoppels</u>. With respect to each Purchased Asset for which the underlying Mortgage Loan is secured by retail, office or industrial properties, Seller requested the related underlying Mortgagor to obtain estoppels from each commercial tenant with respect to the rent roll delivered as of the origination date. With respect to each Purchased Asset for which the underlying Mortgage Loan is predominantly secured by a retail, office or industrial property leased to a single tenant, Seller reviewed such estoppel obtained from such tenant no earlier than 90 days prior to the origination date of the related Purchased Asset, and to Seller's knowledge, (i) the related lease is in full force and effect and (ii) there exists no default under such lease, either by the lessee thereunder or by the lessor subject, in each case, to customary reservations of tenant's rights, such as with respect to common area maintenance ("<u>CAM</u>") and pass-through audits and verification of landlord's compliance with co-tenancy provisions. With respect to each Purchased Asset for which the underlying Mortgage Loan is predominantly secured by a retail, office or industrial property, Seller has received lease estoppels executed within 90 days of the origination date of the related Purchased Asset that collectively account for at least 65% of the in-place base rent for the underlying Mortgaged Property related to the Purchased Asset that is represented as of the origination date. To Seller's knowledge, (i) each lease represented on the rent roll delivered as of the origination date is in full force and effect and (ii) there exists no material default under any such related lease that represents 20% or more of the in-place base rent for the underlying Mortgaged Property either by the lessee thereunder or by the related underlying Mortgagor, subject, in each case, to customary reservations of tenant's rights, such as with respect to CAM and pass-through audits and verification of landlord's compliance with co-tenancy provisions.

(35) <u>Appraisal</u>. The Purchased Asset File contains an appraisal of the related underlying Mortgaged Property with an appraisal date within six months of the Purchased Asset origination date, and within 12 months of the Purchase Date. The appraisal is signed by an appraiser who is a Member of the Appraisal Institute. Each appraiser has represented in such appraisal or in a supplemental letter that the appraisal satisfies the requirements of the "Uniform Standards of Professional Appraisal Practice" as adopted by the Appraisal Standards Board of the Appraisal Foundation and has certified that such appraiser had no interest, direct or indirect, in the underlying Mortgaged Property or the borrower or in any loan made on the security thereof, and its compensation is not affected by the approval or disapproval of the Purchased Asset.

(36) <u>Purchased Asset Schedule</u>. The information pertaining to each Purchased Asset which is set forth in the Purchased Asset Schedule is true and correct in all material respects as of the Purchased Date and contains all information required by the Repurchase Agreement to be contained therein.

(37) <u>Cross-Collateralization</u>. No Purchased Asset is cross-collateralized or cross-defaulted with any other loan, other than the related Mortgage Loan.

(38) <u>Advance of Funds by Seller</u>. After origination, no advance of funds has been made by Seller to Mezzanine Borrower other than in accordance with the Purchased Asset Documents, and, to Seller's knowledge, no funds have been received from any person other than Mezzanine Borrower or an affiliate for, or on account of, payments due on the Purchased Asset (other than as contemplated by the Purchased Asset Documents). Neither Seller nor any affiliate thereof has any obligation to make any capital contribution to any Mezzanine Borrower under a Purchased Asset, other than contributions made on or prior to the date hereof.

Exhibit III-2-11

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(39) <u>Compliance with Anti-Money Laundering Laws</u>. Seller has complied in all material respects with the Prescribed Laws. Seller has established an anti-money laundering compliance program as required by the Prescribed Laws, has conducted the requisite due diligence in connection with the origination of the Purchased Asset for purposes of the Prescribed Laws, including with respect to the legitimacy of the applicable Mezzanine Borrower and the origin of the assets used by said Mezzanine Borrower to acquire the Capital Stock, and maintains, and will maintain, sufficient information to identify the applicable Mezzanine Borrower for purposes of the Prescribed Laws.

(40) <u>OFAC</u>. (a) No Purchased Asset is (i) subject to nullification pursuant to Executive Order 13224 or the regulations promulgated by OFAC (the "<u>OFAC Regulations</u>") or (ii) in violation of Executive Order 13224 or the OFAC Regulations, and (b) no Mezzanine Borrower is (i) subject to the provisions of Executive Order 13224 or (ii) listed as a "blocked person" for purposes of the OFAC Regulations.

(41) <u>Floating Interest Rates</u>. Each Purchased Asset bears interest at a floating rate of interest that is based on Term SOFR plus a margin (which interest rate may be subject to a minimum or "floor" rate).

(42) No consent or approval by any Person is required in connection with Seller's sale and/or Administrative Agent's acquisition of such Mezzanine Loan, for Administrative Agent's exercise of any rights or remedies in respect of such Mezzanine Loan or for Administrative Agent's, sale, pledge or other disposition of such Mezzanine Loan. No third party holds any "right of first refusal", "right of first negotiation", "right of first offer", purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

(43) The related Purchased Asset Documents provide for the acceleration of the payment of the unpaid principal balance of the Mezzanine Loan if (i) Mezzanine Borrower voluntarily transfers or encumbers all or any portion of any related Capital Stock, or (ii) any direct or indirect interest in Mezzanine Borrower is voluntarily transferred or assigned, other than, in each case, as permitted under the terms and conditions of the related loan documents.

(44) Pursuant to the terms of the related Purchased Asset Documents: (a) no material terms of any related underlying Mortgage Loan may be waived, canceled, subordinated or modified in any material respect and no material portion of such Mortgage or the underlying Mortgaged Property may be released without the consent of the holder of the Mezzanine Loan; (b) no material action may be taken by the Mortgagor with respect to the underlying Mortgaged Property without the consent of the holder of the Mezzanine Loan; and (c) the holder of the Mezzanine Loan's consent is required prior to the Mortgagor incurring any additional indebtedness.

(45) <u>Article 8 Opt-In</u>. The LLC Certificate of the issuer of the Capital Stock securing the Purchased Asset constitutes a "security" within the meaning of Article 8 of the UCC, and no amendment of the issuer's operating agreement that amends the opt-in may be effected without the consent of the holder of the Mezzanine Loan.

Exhibit III-2-12

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**Exhibit IV**

**FORM OF BAILEE AGREEMENT<br>[SELLER'S NAME AND ADDRESS]**

_______________ __, 20__

[ ]

Re: Bailee Agreement (this "<u>Bailee Agreement</u>") in connection with the sale of [description of Purchased Asset] by ACRES Real Estate SPE 10, LLC, as seller ("<u>Seller</u>") to Morgan Stanley Mortgage Capital Holdings LLC, as administrative agent, on behalf of Buyers (together with its permitted successors and assigns, "<u>Administrative Agent</u>")

Ladies and Gentlemen:

In consideration of the mutual premises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, Administrative Agent, on behalf of Buyers, and [_________] ("<u>Bailee</u>") hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Seller shall deliver to Bailee in connection with any Purchased Assets delivered to Bailee hereunder a Custodial Delivery Certificate in the form of <u>Attachment 1</u> attached hereto (the "<u>Custodial Delivery Certificate</u>") to which shall be attached a Purchased Asset Schedule identifying the Purchased Asset(s) being delivered to Bailee hereunder. Such Purchased Asset Schedule shall contain the following fields of information: (a) the loan identifying number; (b) the obligor's name; (c) the street address, city, state and zip code for the applicable real property; (d) the original balance; and (e) the current principal balance if different from the original balance and such other information as Administrative Agent, on behalf of Buyers, shall require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. On or prior to the date indicated on the Custodial Delivery Certificate (the "<u>Purchase Date</u>"), Seller shall have delivered to Bailee, as bailee for hire, the original Purchased Asset File (as set forth on Exhibit B to <u>Attachment 1</u>) for each of the Purchased Assets listed in Exhibit A to <u>Attachment 1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Bailee shall issue and deliver to Administrative Agent, on behalf of Buyers, and Custodian (as defined in <u>Section 5</u> below) on or prior to the Purchase Date by facsimile or other electronic transmission, in the name of Administrative Agent, on behalf of Buyers, an initial trust receipt and certification in the form of <u>Attachment 1</u> attached hereto (the "<u>Trust Receipt</u>"), which Trust Receipt shall state that Bailee has received the original documents comprising the Purchased Asset File as set forth in the Custodial Delivery Certificate, in addition to such other documents required to be delivered to Administrative Agent, on behalf of Buyers, and/or Custodian pursuant to the Master Repurchase and Securities Contract Agreement dated as of November 3, 2021, among by and among Administrative Agent, on behalf of Morgan Stanley Bank, N.A., a national banking association ("<u>MSBNA</u>"), and such other financial institutions from time to time party thereto, as buyers (MSBNA, together with such other financial institutions from time to time party thereto, as buyers, and together with their respective successors and assigns, collectively, "<u>Buyers</u>" and individually, each a "<u>Buyer</u>") and Seller (as the same may have been or may be amended from time to time, the "<u>Repurchase Agreement</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. On the applicable Purchase Date, in the event that Administrative Agent, on behalf of Buyers, fails to purchase any New Asset from Seller that is identified in the related Custodial Delivery Certificate, Administrative Agent shall deliver by facsimile or other electronic transmission to Bailee at

Exhibit IV-1

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[_______] to the attention of [________], an authorization (the "<u>Electronic Authorization</u>") to release the Purchased Asset Files with respect to the Purchased Assets identified therein to Seller. Upon receipt of such Electronic Authorization, Bailee shall release the Purchased Asset Files to Seller in accordance with Seller's instructions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Following the Purchase Date, Bailee shall forward the Purchased Asset Files to [________________] ("<u>Custodian</u>") by insured overnight courier for receipt by Custodian no later than 1:00 p.m. on the third (3rd) Business Day following the applicable Purchase Date (the "<u>Delivery Date</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. From and after the applicable Purchase Date until the time of receipt of the Electronic Authorization or the applicable Delivery Date, as applicable, Bailee (a) shall maintain continuous custody and control of the related Purchased Asset Files as bailee for Administrative Agent, on behalf of Buyers, and (b) is holding the related Purchased Asset Files as sole and exclusive bailee for Administrative Agent, on behalf of Buyers, unless and until otherwise instructed in writing by Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Seller agrees to indemnify and hold Bailee and its partners, directors, officers, agents and employees harmless against any and all actual and out-of-pocket third party liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable attorney's fees, that may be imposed on, incurred by, or asserted against it or them in any way relating to or arising out of this Bailee Agreement or any action taken or not taken by it or them hereunder unless such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (other than special, indirect, punitive or consequential damages, which shall in no event be paid by Seller) were imposed on, incurred by or asserted against Bailee because of the breach by Bailee of its obligations hereunder, which breach was caused by negligence, lack of good faith or willful misconduct on the part of Bailee or any of its partners, directors, officers, agents or employees. The foregoing indemnification shall survive any resignation or removal of Bailee or the termination or assignment of this Bailee Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. In the event that the Bailee fails to produce any document in a Purchased Asset File related to a Purchased Asset that is (or was required to be) then in its possession within three (3) Business Days after required or requested by Seller or Administrative Agent, on behalf of Buyers (a "<u>Bailee Delivery Failure</u>"), the Bailee shall indemnify and hold Administrative Agent and Buyers harmless against actual out of pocket liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable attorneys fees, that may be imposed on, incurred by, or asserted against it in any way relating to or arising out of such Bailee Delivery Failure (but excluding special, indirect, punitive or consequential damages).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Seller agrees to indemnify and hold Administrative Agent and Buyers and their respective affiliates and designees harmless against any and all actual and out-of-pocket third party liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable attorneys fees, that may be imposed on, incurred by, or asserted against it or them in any way relating to or arising out of a Custodial Delivery Failure (as defined in the Custodial Agreement) or the Bailee's negligence, lack of good faith or willful misconduct. The foregoing indemnification shall survive any termination or assignment of this Bailee Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. Seller hereby represents, warrants and covenants that Bailee is not an affiliate of or otherwise controlled by Seller. Notwithstanding the foregoing, the parties hereby acknowledge that Bailee hereunder may act as counsel to Seller in connection with a proposed transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. This Bailee Agreement may not be modified, amended or altered, except by written instrument, executed by all of the parties hereto.

Exhibit IV-2

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. This Bailee Agreement may not be assigned by Seller or Bailee without the prior written consent of Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. For the purpose of facilitating the execution of this Bailee Agreement as herein provided and for other purposes, this Bailee Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute and be one and the same instrument. Each party to this Bailee Agreement (a) agrees that it will be bound by its own Electronic Signature, (b) accepts the Electronic Signature of each other party to this Bailee Agreement, and (c) agrees that such Electronic Signatures shall be the legal equivalent of manual signatures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. This Bailee Agreement shall be construed in accordance with the laws of the State of New York, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Repurchase Agreement.

[SIGNATURES COMMENCE ON NEXT PAGE]

Very truly yours,

**ACRES REAL ESTATE SPE 10, LLC,**<br>a Delaware limited liability company, Seller

By: ________________________________________<br>Name:<br>Title:

Exhibit IV-3

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ACCEPTED AND AGREED:<br>[_______], Bailee

By: ___________________________________<br>Name:<br>Title:

ACCEPTED AND AGREED:<br>**MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,**<br>a New York limited liability company, Administrative Agent

By: ___________________________________<br>Name:<br>Title:

**ATTACHMENT 1 TO BAILEE AGREEMENT<br>CUSTODIAL DELIVERY CERTIFICATE**<sup>2</sup>

------

<sup>2</sup> Note: EXHIBIT A – Purchased Asset Schedule; EXHIBIT B – Purchased Asset Documents.

Exhibit IV-4

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**ATTACHMENT 2 TO BAILEE AGREEMENT<br>FORM OF BAILEE'S TRUST RECEIPT**

____________, 20__<br>Morgan Stanley Mortgage Capital Holdings LLC<br>1585 Broadway, 2nd Floor<br>New York, New York 10036<br>Attention: Anthony Preisano

Re: Bailee Agreement, dated __________, 20___ (the "<u>Bailee Agreement</u>") among ACRES Real Estate SPE 10, LLC ("<u>Seller</u>"), Morgan Stanley Mortgage Capital Holdings LLC, as administrative agent, on behalf of Buyers (together with its permitted successors and assigns, "<u>Administrative Agent</u>") and _______________ ("<u>Bailee</u>")

Ladies and Gentlemen:

In accordance with the provisions of <u>Section 3</u> of the Bailee Agreement, the undersigned, as Bailee, hereby certifies that as to the Purchased Asset described in the Purchased Asset Schedule (Exhibit A to Attachment 1 to the Bailee Agreement), it has reviewed the Purchased Asset File (Exhibit B to Attachment 1 to the Bailee Agreement) and has determined that (i) all documents listed in the Purchased Asset File attached to the Bailee Agreement are in its possession and (ii) such documents have been reviewed by it and appear regular on their face and relate to the Purchased Asset.

Bailee hereby confirms that it is holding the Purchased Asset File as agent and bailee for the exclusive use and benefit of Administrative Agent, on behalf of Buyers, pursuant to the terms of the Bailee Agreement.

All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Bailee Agreement.

<br>__________________________________________<br>Bailee<br>

By:________________________________________<br>Name:<br>Title:

Exhibit IV-5

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**Exhibit V**

**AUTHORIZED REPRESENTATIVES OF SELLER**

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| | |
|:---|:---|
| &nbsp;&nbsp;**Name** | &nbsp;&nbsp;**Specimen Signature** |
| &nbsp;&nbsp;[●] |  |
| &nbsp;&nbsp;[●] |  |
| &nbsp;&nbsp;[●] |  |
| &nbsp;&nbsp;[●] |  |
| &nbsp;&nbsp;[●] |  |

---

Signature Page to Master Repurchase and Securities Contract Agreement

Exhibit V-1

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**Exhibit VI**

**FORM OF FINANCIAL COVENANT COMPLIANCE CERTIFICATE**

[_____________], 20[__]

Morgan Stanley Mortgage<br>Capital Holdings LLC<br>1585 Broadway, 25th Floor<br>New York, New York 10036<br>Attention: Anthony Preisano

This Financial Covenant Compliance Certificate is furnished pursuant to that certain Master Repurchase and Securities Contract Agreement, dated as of November 3, 2021 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the "<u>Master Repurchase and Securities Contract Agreement</u>"), by and among Morgan Stanley Mortgage Capital Holdings LLC, a New York limited liability company, as administrative agent (in such capacity, together with its permitted successors and assigns, the "<u>Administrative Agent</u>") for Morgan Stanley Bank, N.A., a national banking association ("<u>MSBNA</u>"), as Buyer (MSBNA, together with its successors and assigns, and together with such other financial institutions from time to time party thereto, collectively "<u>Buyers</u>" and individually, each a "<u>Buyer</u>"), and ACRES Real Estate SPE 10, LLC, a Delaware limited liability company, as seller ("<u>Seller</u>"). Unless otherwise defined in the Master Repurchase and Securities Contract Agreement, capitalized terms used in this Financial Covenant Compliance Certificate have the respective meanings ascribed thereto in the Guaranty.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

(1) The Person executing this Financial Covenant Compliance Certificate on behalf of Seller is a duly elected responsible officer of Seller and such Person provides this Financial Covenant Compliance Certificate solely in such Person's capacity as an officer of Seller and not in such Person's individual capacity.

(2) All of the financial statements, calculations and other information set forth in this Financial Covenant Compliance Certificate, including, without limitation, in any exhibit or other attachment hereto, are true, complete and correct as of the date hereof.

(3) The Seller and Guarantor have reviewed the terms of the Master Repurchase and Securities Contract Agreement and have made, or have caused to be made under its supervision, a detailed review of the transactions and financial condition of Seller, and Guarantor during the accounting period covered by the financial statements attached (or most recently delivered to Buyer if none are attached).

(4) I am not aware of any facts, or pending developments that have caused, or may in the future cause the Market Value of any Purchased Asset to decline at any time within the reasonably foreseeable future.

(5) Each of Seller and Guarantor has, during the period since the delivery of the immediately preceding Financial Covenant Compliance Certificate, observed or performed all of its covenants, duties and agreements in all material respects, and satisfied in all material respects every condition contained in the Master Repurchase and Securities Contract Agreement and the related documents to be observed, performed or satisfied by it, and Seller and Guarantor have no knowledge of the occurrence during such period, or present existence, of any condition or event which constitutes an

Exhibit VI-1

------

Event of Default or Default (including after giving effect to any pending Transactions requested to be entered into), except as set forth below.

(6) Attached as <u>Exhibit 1</u> hereto are the financial statements required to be delivered pursuant to the Master Repurchase and Securities Contract Agreement (or, if none are required to be delivered as of the date of this Financial Covenant Compliance Certificate, the financial statements most recently delivered pursuant to the Master Repurchase and Securities Contract Agreement), which financial statements, to the best knowledge of Seller and Guarantor after due inquiry, fairly and accurately present in all material respects, the consolidated financial condition and operations of Guarantor, Guarantor's Consolidated Subsidiaries and the consolidated results of their operations as of the date or with respect to the period therein specified, determined in accordance with GAAP.

(7) Guarantor is in compliance in all respects with the financial covenants set forth in <u>Section 9</u> of the Guaranty (the "<u>Financial Covenants</u>"). Attached as <u>Exhibit 2</u> hereto are the calculations demonstrating compliance with the Financial Covenants.

(8) Except as otherwise set forth herein, all representations and warranties made by Seller, and Guarantor in, pursuant to or in connection with the Master Repurchase and Securities Contract Agreement or any other document, agreement, statement, affirmation, certificate, notice, report or financial or other statement delivered in connection herewith or therewith, are true, correct and complete on and as of the date of this Financial Covenant Compliance Certificate as though made on and as of such day and shall be deemed to be made on such day, except as to the extent disclosed in an Exception Report.

To the extent that financial statements are being delivered in connection with this Financial Covenant Compliance Certificate, Seller hereby makes the following representations and warranties: (i) it is in compliance with all of the terms and conditions of the Master Repurchase and Securities Contract Agreement and (ii) it has no claim or offset against Administrative Agent and/or any Buyer under the Transaction Documents.

Described below are the exceptions, if any, to the above paragraphs, setting forth in detail the nature of the condition or event, the period during which it has existed and the action which Seller and/or Guarantor has taken, is taking, or proposes to take with respect to each such condition or event:

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

The foregoing certifications, together with the financial statements, updates, reports, materials, calculations and other information set forth in any exhibit or other attachment hereto, or otherwise covered by this Financial Covenant Compliance Certificate, are made and delivered this [__________], 20[__].

Exhibit VI-2

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**<u>SELLER</u>:**<br>ACRES REAL ESTATE SPE 10, LLC,<br>a Delaware limited liability company

By: ______________________<br>Name:<br>Title:<br>Date:

**<u>GUARANTOR</u>:**<br>ACRES COMMERCIAL REALTY CORP.,<br>a Maryland corporation

By: ______________________<br>Name:<br>Title:<br>Date:

Exhibit VI-3

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**Annex I<br>NOTICE INSTRUCTIONS**

<u>ADMINISTRATIVE AGENT</u>: Morgan Stanley Mortgage Capital Holdings LLC<br>1585 Broadway, 25th Floor<br>New York, New York 10036<br>Attention: Anthony Preisano<br>Telephone: (212) 761-5688<br>Email: Anthony.Preisano@morganstanley.com

with a copy to: Morgan Stanley Bank, N.A.<br>One Utah Center, 201 South Main Street<br>Salt Lake City, Utah 84111

and to: Morgan Stanley Bank, N.A.<br>1 New York Plaza, 41st Floor<br>New York, New York 10004<br>Attention: Tom O'Donnell<br>Telephone: (212) 276-0616<br>Email: wltapes@morganstanley.com

and to: Paul Hastings LLP<br>200 Park Avenue<br>New York, New York 10166<br>Attention: Lisa A. Chaney, Esq.<br>Telephone: (212) 318-6773<br>Email: lisachaney@paulhastings.com

<u>SELLER</u>: ACRES Real Estate SPE 10, LLC<br>c/o ACRES Capital, LLC<br>390 RXR Plaza<br>Uniondale, NY 11556<br>Attention: Mark Fogel<br>Telephone: (516) 336-8122<br>Email: MF@acrescap.com

with a copy to: Melissa C. Hinkle, Esq., Partner<br>Cadwalader, Wickersham & Taft LLP<br>200 Liberty Street, 36-117<br>New York, NY 10281<br>Telephone: (212) 504-6972<br>Email: melissa.hinkle@cwt.com

and to: ACRES Real Estate SPE 10, LLC<br>c/o ACRES Capital, LLC<br>390 RXR Plaza<br>Uniondale, NY 11556<br>Attention: Jaclyn Jesberger<br>Telephone: (516) 882-1662<br>Email: jjesberger@acrescap.com

Annex I

------

**Annex II<br>WIRING INSTRUCTIONS**

<u>Payments to Administrative Agent, on behalf of Buyers</u>: Payments to Administrative Agent, on behalf of Buyers under this Agreement shall be made by transfer, via wire transfer, to the following account of Administrative Agent, on behalf of Buyers:

Bank Name: Citibank, N.A.<br>ABA #: 021000089<br>Account #: xxxxxxxxxx<br>Account Name: Morgan Stanley Mortgage Capital Holdings LLC<br>Ref: NY Warehouse, ACRES

Administrative Agent, on behalf of Buyers, may consider on a case-by-case-basis in its sole and absolute discretion alternative funding arrangements.

<u>Payments to Seller</u>: Payments to Seller under this Agreement shall be made by transfer, via wire transfer, to the following account of Seller:

Bank: TD Bank NA

ABA: 031-101-266

Account Name: ACRES Realty Funding Inc.

Account #: xxxxxxxxxx

Annex II

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## Exhibit 99.4

**Exhibit 99.4**

**MATERIAL FEDERAL INCOME TAX CONSIDERATIONS**

The following is a summary of the material federal income tax considerations relating to ACRES Commercial Realty Corp.'s qualification and taxation as a real estate investment trust, or REIT, and the acquisition, holding, and disposition of ACRES Commercial Realty Corp.'s capital stock. For purposes of this Exhibit, references to "we," "us," "our" and "company" refer to "ACRES Commercial Realty Corp." only and not its subsidiaries or other lower-tier entities, except as otherwise indicated.

This summary is based upon the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, the Treasury regulations, current administrative interpretations and practices of the Internal Revenue Service, or the IRS, (including administrative interpretations and practices expressed in private letter rulings that are binding on the IRS only with respect to the particular taxpayers who requested and received those rulings) and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. No advance ruling has been or will be sought from the IRS regarding any matter discussed in this summary. The summary is also based upon the assumption that the operation of the company, and of its subsidiaries and other lower-tier and affiliated entities, will, in each case, be in accordance with its applicable organizational documents. This summary is for general information only, and does not purport to discuss all aspects of federal income taxation that may be important to a particular stockholder in light of its investment or tax circumstances or to stockholders subject to special tax rules, such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•U.S. expatriates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•persons who mark-to-market shares of our capital stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•subchapter S corporations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•U.S. stockholders (as defined below) whose functional currency is not the U.S. dollar;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•financial institutions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•insurance companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•broker-dealers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•regulated investment companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•trusts and estates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•holders who receive shares of our capital stock through the exercise of employee shares options or otherwise as compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•persons holding shares of our capital stock as part of a "straddle," "hedge," "conversion transaction," "synthetic security" or other integrated investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•persons subject to the alternative minimum tax provisions of the Internal Revenue Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•persons holding shares of our capital stock through a partnership or similar pass-through entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•persons holding a 10% or more (by vote or value) beneficial interest in the company; and, except to the extent discussed below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•tax-exempt organizations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•non-U.S. stockholders (as defined below).

This summary assumes that stockholders will hold our shares of capital stock as capital assets, which generally means as property held for investment.

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THE FEDERAL INCOME TAX TREATMENT OF HOLDERS OF SHARES OF OUR CAPITAL STOCK DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX PROVISIONS OF FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. IN ADDITION, THE TAX CONSEQUENCES OF HOLDING SHARES OF OUR CAPITAL STOCK FOR ANY PARTICULAR STOCKHOLDER WILL DEPEND ON THE STOCKHOLDER'S PARTICULAR TAX CIRCUMSTANCES. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES TO YOU, IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES, OF ACQUIRING, HOLDING, AND DISPOSING OF SHARES OF OUR CAPITAL STOCK.

**Taxation of Our Company**

We elected to be taxed as a REIT under the federal income tax laws effective for our initial taxable year ended on December 31, 2005. We believe that, commencing with such taxable year, we have been organized and operated in such a manner so as to qualify for taxation as a REIT under the federal income tax laws, and we intend to continue to operate in such a manner, but no assurances can be given that we have qualified or will continue to operate in a manner so as to qualify or remain qualified as a REIT. This section discusses the laws governing the federal income tax treatment of a REIT and its stockholders. These laws are highly technical and complex.

We believe that we have been organized and operated in a manner that will allow us to qualify for taxation as a REIT under the Internal Revenue Code, and we intend to continue to be organized and operated in such a manner. Qualification and taxation as a REIT depends on our ability to meet, on a continuing basis, through actual operating results, distribution levels, diversity of stock ownership, and various qualification requirements imposed upon REITs by the Internal Revenue Code and the Treasury regulations issued thereunder, including requirements relating to the nature and composition of our assets and income. Our ability to comply with the REIT asset requirements also depends, in part, upon the fair market values of assets that we own directly or indirectly. Such values may not be susceptible to a precise determination. For a discussion of the federal income tax consequences of our failure to qualify as a REIT, see "—Failure to Qualify."

If we qualify as a REIT, we generally will not be subject to federal income tax on our net taxable income that we distribute currently to our stockholders, but taxable income generated by all of our domestic "taxable REIT subsidiaries," or TRSs, will be subject to regular corporate income tax. However, our stockholders will generally be taxed on dividends that they receive at ordinary income rates unless such dividends are designated by us as capital gain dividends, return of capital or qualified dividend income. This differs from non-REIT C corporations, which generally are subject to federal corporate income taxes but whose individual and certain non-corporate trust and estate stockholders are generally taxed on dividends they receive at a preferential rate, and whose corporate stockholders generally receive the benefits of a dividends received deduction that substantially reduces the effective rate that they pay on such dividends. In general, income earned by a REIT and distributed to its stockholders will be subject to less federal income taxation than if such income were earned by a non-REIT C corporation, subjected to corporate income tax, and then distributed and taxed to stockholders.

While we generally are not subject to corporate income tax on income that we distribute currently to our stockholders, we will be subject to federal tax in the following circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We will pay federal income tax on net taxable income, including net capital gain, that we do not distribute to our stockholders during, or within a specified time period after, the calendar year in which the income is earned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We may be subject to the "alternative minimum tax" on any items of tax preference that we do not distribute or allocate to our stockholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We will pay income tax at the highest corporate rate on:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•net income from the sale or other disposition of property acquired through foreclosure, or foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•other non-qualifying income from foreclosure property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We will pay a 100% tax on net income earned on sales or other dispositions of property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If we fail to satisfy the 75% gross income test or the 95% gross income test due to reasonable cause and not willful neglect, as described below under "—Requirements for Qualification—Gross Income Tests," and nonetheless continue to qualify as a REIT, we will pay a 100% tax on the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, multiplied, in either case, by a fraction intended to reflect our profitability.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•In the event of a failure of any of the asset tests (other than certain *de minimis* failures of the 5% and 10% asset tests), as described below under "—Requirements for Qualification—Asset Tests," as long as the failure was due to reasonable cause and not to willful neglect, we dispose of the assets or otherwise comply with such asset tests within six months after the last day of the quarter in which we identify such failure, and we file a schedule with the IRS describing the assets that caused such failure, we will pay a tax equal to the greater of (i) $50,000 or (ii) an amount determined by multiplying the highest federal income tax rate applicable to corporations by the net income from the nonqualifying assets during the period in which we failed to satisfy such asset tests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, and the failure is due to reasonable cause and not willful neglect, we may retain our qualification as a REIT but will be required to pay a penalty of $50,000 for each such failure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If we fail to distribute during a calendar year at least the sum of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•85% of our REIT ordinary income for the year,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•95% of our REIT capital gain net income for the year,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any undistributed taxable income from earlier periods, and

we will pay a 4% nondeductible excise tax on the excess of the required distribution over the amount we actually distributed, plus any retained amounts on which income tax has been paid at the corporate level.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We may elect to retain and pay income tax on our net long-term capital gain. In that case, a U.S. stockholder (as defined below) would include its proportionate share of our undistributed long-term capital gain in its income (to the extent that we make a timely designation of such gain to the stockholder) and would receive a credit for its proportionate share of the tax we paid or receive a refund to the extent the tax paid by us exceeds the U.S. stockholder's tax liability on the undistributed capital gains.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We will be subject to a 100% excise tax on amounts received by us from a TRS (or on certain expenses deducted by a TRS or income earned by a TRS) if certain arrangements between us and a TRS are not conducted on an arm's-length basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If we acquire any asset from a C corporation, or a corporation that generally is subject to full corporate-level tax, in a merger or other transaction in which we acquire a basis in the asset that is determined by reference either to the C corporation's basis in the asset or to another asset, we will pay tax at the highest regular corporate rate applicable if we recognize gain on the sale or disposition of the asset during the five-year period after we acquire the asset. The amount of gain on which we will pay tax is the lesser of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the amount of gain that we recognize at the time of the sale or disposition, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the amount of gain that we would have recognized if we had sold the asset at the time we acquired it, assuming that the C corporation will not elect in lieu of this treatment to an immediate tax when the asset is acquired.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If we own a residual interest in a real estate mortgage investment conduit, or REMIC, we will be taxable at the highest corporate rate on the portion of any excess inclusion income that we derive from the REMIC residual interests allocable to stockholders that are "disqualified organizations." Similar rules will also apply if we own an equity interest in a taxable mortgage pool. To the extent that we own a REMIC residual interest or a taxable mortgage pool through a TRS, we will not be subject to this tax. For a discussion of "excess inclusion income," see "—Requirements for Qualification—Taxable Mortgage Pools." A "disqualified organization" includes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any state or political subdivision of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any foreign government;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any international organization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any agency or instrumentality of any of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any other tax-exempt organization, other than a farmer's cooperative described in section 521 of the Internal Revenue Code, that is exempt both from income taxation and from taxation under the unrelated business taxable income provisions of the Internal Revenue Code; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any rural electrical or telephone cooperative.

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We do not currently hold, or intend to hold, REMIC residual interests nor do we currently own residual interests in taxable mortgage pools.

In addition, notwithstanding our qualification as a REIT, we may also have to pay certain state and local income taxes, because not all states and localities treat REITs in the same manner that they are treated for federal income tax purposes. Moreover, as further described below, any domestic TRS in which we own an interest will be subject to federal corporate income tax on its taxable income. In addition, we may be subject to a variety of taxes other than income tax, including state and local franchise, property, and other taxes and foreign taxes. We could also be subject to tax in situations and on transactions not presently contemplated.

**Requirements for Qualification**

A REIT is a corporation, trust, or association that meets each of the following requirements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•It is managed by one or more trustees or directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Its beneficial ownership is evidenced by transferable shares, or by transferable certificates of beneficial interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•It would be taxable as a domestic corporation, but for the REIT provisions of the federal income tax laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•It is neither a financial institution nor an insurance company subject to special provisions of the federal income tax laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•At least 100 persons are beneficial owners of its shares or ownership certificates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Not more than 50% in value of its outstanding shares or ownership certificates is owned, directly or indirectly, by five or fewer individuals, which the federal income tax laws define to include certain entities, after applying certain attribution rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•It elects to be a REIT, or has made such an election for a previous taxable year, which has not been revoked or terminated, and satisfies all filing and other administrative requirements established by the IRS that must be met to elect and maintain REIT status.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•It meets certain other qualification tests, described below, regarding the nature of its income and assets.

We must meet the first four requirements during our entire taxable year and must meet the fifth requirement during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. The sixth requirement must be met during the last half of each taxable year, but neither the fifth nor the sixth requirement applies to the first taxable year for which an election to become a REIT is made. If we comply with regulatory rules pursuant to which we are required to send annual letters to our stockholders requesting information regarding the actual ownership of our stock, and we do not know, or exercising reasonable diligence would not have known, whether we failed to meet the sixth requirement, we will be treated as having met the requirement. For purposes of determining share ownership under the sixth requirement, an "individual" generally includes a supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes. An "individual," however, generally does not include a trust that is a qualified employee pension or profit sharing trust under the federal income tax laws, and beneficiaries of such a trust will be treated as holding our stock in proportion to their actuarial interests in the trust for purposes of the sixth requirement.

We believe that we have issued sufficient common stock with sufficient diversity of ownership to satisfy the fifth and sixth requirements. In addition, our charter contains restrictions regarding the ownership and transfer of our stock that are intended to assist us in continuing to satisfy these requirements. These restrictions, however, may not ensure that we will be able to satisfy these share ownership requirements. If we fail to do so, we will fail to qualify as a REIT.

To monitor compliance with the share ownership requirements, we generally are required to maintain records regarding the actual ownership of our stock. To do so, we must demand written statements each year from the recordholders of significant percentages of our stock pursuant to which the record holders must disclose the actual owners of the shares (*i.e.*, the persons required to include our dividends in their gross income). We must maintain a list of those persons failing or refusing to comply with this demand as part of our records. We could be subject to monetary penalties if we fail to comply with these record-keeping requirements. If you fail or refuse to comply with the demands, you will be required by Treasury regulations to submit a statement with your tax return disclosing your actual ownership of our shares and other information. In addition, we must satisfy all relevant filing and other administrative requirements established by the IRS that must be met to elect and maintain our REIT qualification, use a calendar year for federal income tax purposes, and comply with the record keeping requirements of the Internal Revenue Code and regulations promulgated thereunder which we have satisfied or intend to satisfy.

*Qualified REIT Subsidiaries*. A corporation that is a "qualified REIT subsidiary" is not treated as a corporation separate from its parent REIT. A "qualified REIT subsidiary" is a corporation, other than a TRS, all of the capital stock of which is owned by the REIT. All assets, liabilities, and items of income, deduction and credit of a "qualified REIT subsidiary" are treated as assets,

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liabilities, and items of income, deduction and credit of the REIT. A qualified REIT subsidiary is not subject to federal corporate income taxation, although it may be subject to state and local taxation in some states.

In the event that a qualified REIT subsidiary or disregarded subsidiary ceases to be wholly owned by us (for example, if any equity interest in the subsidiary is acquired by a person other than us or another disregarded subsidiary of us), the subsidiary's separate existence would no longer be disregarded for federal income tax purposes. Instead, it would have multiple owners and would be treated as either a partnership or a taxable corporation. Such an event could, depending on the circumstances, adversely affect our ability to satisfy the various asset and gross income tests applicable to REITs, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the value or voting power of the outstanding securities of another corporation. See "—Asset Tests" and "—Gross Income Tests."

*Other Disregarded Entities and Partnerships*. An unincorporated domestic entity, such as a partnership, limited liability company, or trust, that has a single owner generally is not treated as an entity separate from its parent for federal income tax purposes, including for purposes of the gross income and asset tests applicable to REITs. An unincorporated domestic entity with two or more owners generally is treated as a partnership for federal income tax purposes. In the case of a REIT that is a partner in an entity that is treated as a partnership for federal income tax purposes, the REIT is treated as owning its proportionate share of the assets of the partnership and as earning its proportionate share of the gross income of the partnership based on its pro rata share of capital interests in the partnership for purposes of the applicable REIT qualification tests, as described below. However, solely for purposes of the 10% value test (described in "—Asset Tests"), the determination of our interest in partnership assets is based on our proportionate interest in any securities issued by the partnership, excluding for these purposes certain excluded securities as described in the Internal Revenue Code. In addition, the assets and gross income of the partnership generally are deemed to retain the same character in the hands of a REIT. Thus, our proportionate share of the assets, liabilities and items of income of any partnership, joint venture, or limited liability company that is treated as a partnership for federal income tax purposes in which we acquire an interest, directly or indirectly, will be treated as our assets and gross income for purposes of applying the various REIT qualification requirements. Consequently, to the extent that we directly or indirectly hold a preferred or other equity interest in a partnership, joint venture, or limited liability company, the partnership's, joint venture's, or limited liability company's assets and operations may affect our ability to qualify as a REIT, even though we may have no control or only limited influence over the partnership.

*Taxable REIT Subsidiaries*. A REIT is permitted to own up to 100% of the stock of one or more TRSs. A TRS is generally a fully taxable corporation in which a REIT directly or indirectly owns stock that may earn income that would not be qualifying income if earned directly by the parent REIT. The subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. However, an entity will not qualify as a TRS if it directly or indirectly operates or manages a lodging or health care facility or, generally, provides to another person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated. We generally may not own more than 10%, as measured by voting power or value, of the securities of a corporation that is not a qualified REIT subsidiary or a REIT unless we and such corporation elect to treat such corporation as a TRS. Overall, no more than 25% of the value of a REIT's assets may consist of stock or securities of one or more TRSs.

TRSs are subject to federal income tax, and state and local income tax where applicable, on their taxable income. To the extent that a TRS is required to pay taxes, it will have less cash available for distribution to us. If our TRSs pay dividends to us, then the dividends we pay to our stockholders who are taxed as individuals, up to the amount of dividends we receive from such TRSs, will generally be eligible to be taxed at the reduced rate applicable to qualified dividend income. See "—Taxation of Taxable U.S. Stockholders." The decision as to whether our TRSs will distribute their after-tax income to us will be made on a periodic basis, subject to our compliance with the 25% asset test with respect to TRSs.

We have made a TRS election with respect to Exantas Real Estate TRS Inc., or XAN RE TRS, and we may in the future make TRS elections with respect to certain entities that issue equity interests to us pursuant to CDO securitizations.

The TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT's tenants that are not conducted on an arm's-length basis. We intend to scrutinize all of our transactions with any of our subsidiaries that are treated as TRSs in an effort to ensure that we do not become subject to this penalty tax; however, we cannot assure that we will be successful in avoiding this penalty tax.

*Taxable Mortgage Pools and REMICs*. An entity, or a portion of an entity, that does not elect to be treated as a REMIC may be classified as a taxable mortgage pool under the Internal Revenue Code if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•substantially all of its assets consist of debt obligations or interests in debt obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•more than 50% of those debt obligations are real estate mortgage loans or interests in real estate mortgage loans as of specified testing dates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the entity has issued debt obligations that have two or more maturities; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the payments required to be made by the entity on its debt obligations "bear a relationship" to the payments to be received by the entity on the debt obligations that it holds as assets.

Under the Treasury regulations, if less than 80% of the assets of an entity (or a portion of an entity) consists of debt obligations, these debt obligations are considered not to comprise "substantially all" of its assets, and therefore the entity would not be treated as a taxable mortgage pool.

We have made and may continue in the future to make investments or enter into financing and securitization transactions that give rise to us being considered to own an interest in one or more taxable mortgage pools. Where an entity, or a portion of an entity, is classified as a taxable mortgage pool, it is generally treated as a taxable corporation for federal income tax purposes. However, special rules apply to a REIT, a portion of a REIT, or a qualified REIT subsidiary that is a taxable mortgage pool. The portion of the REIT's assets, held directly or through a qualified REIT subsidiary that qualifies as a taxable mortgage pool is treated as a qualified REIT subsidiary that is not subject to corporate income tax, and the taxable mortgage pool classification does not affect the tax qualification of the REIT. Rather, the consequences of the taxable mortgage pool classification are generally, except as described below, limited to the tax liability on the REIT and the REIT's stockholders. The Treasury Department has yet to issue regulations governing the tax treatment of the stockholders of a REIT that owns an interest in a taxable mortgage pool.

A portion of our income from a REMIC residual interest or taxable mortgage pool arrangement, which might be non-cash accrued income, or "phantom" taxable income, could be treated as "excess inclusion income" and allocated to our stockholders. Excess inclusion income is an amount, with respect to any calendar quarter, equal to the excess, if any, of (i) income allocable to the holder of a REMIC residual interest or taxable mortgage pool interest during such calendar quarter over (ii) the sum of an amount for each day in the calendar quarter equal to its ratable portion of the product of (a) the adjusted issue price of the interest at the beginning of the quarter multiplied by (b) 120% of the long-term federal rate (determined on the basis of compounding at the close of each calendar quarter and properly adjusted for the length of such quarter). This non-cash or "phantom" income would be subject to the distribution requirements that apply to us and could therefore adversely affect our liquidity. See "—Distribution Requirements."

Our excess inclusion income would be allocated among our stockholders in proportion to dividends paid. A stockholder's share of excess inclusion income (i) would not be allowed to be offset by any net operating losses otherwise available to the stockholder, (ii) would be subject to tax as unrelated business taxable income in the hands of most types of stockholders that are otherwise generally exempt from federal income tax, (iii) would result in the application of federal income tax withholding, without reduction for any otherwise applicable income tax treaty, to the extent allocable to most types of foreign stockholders and (iv) in the case of a stockholder that is a REIT, a regulated investment company or common trust fund, would be considered excess inclusion income of such entity. The manner in which excess inclusion income would be allocated to dividends attributable to a tax year that are not paid until a subsequent tax year or to dividends attributable to a portion of a tax year when no excess inclusion income-generating assets were held or how such income is to be reported to stockholders is not clear under current law.

Although the law is unclear, the IRS has taken the position that a REIT is taxable at the highest corporate tax rate on the portion of any excess inclusion income that it derives from an equity interest in a taxable mortgage pool equal to the percentage of its stock that is held in record name by disqualified organizations (as defined above under "—Taxation of Our Company"). Similar rules apply if we own a residual interest in a REMIC. Nominees who hold our shares on behalf of disqualified organizations are subject to this tax on the portion of our excess inclusion income allocable to the capital stock held on behalf of disqualified organizations. A regulated investment company or other pass-through entity owning our capital stock in record name will be subject to tax at the highest corporate tax rate on any excess inclusion income allocated to their owners that are disqualified organizations. In addition, we will withhold on dividends paid to non-U.S. stockholders (as defined below) with respect to the excess inclusion portion of dividends paid to such stockholders without regard to any treaty exception or reduction in tax rate.

**The manner in which excess inclusion income would be allocated among shares of different classes of stock is not clear under current law. Tax-exempt investors, regulated investment company or REIT investors, foreign investors and taxpayers with net operating losses should consult their tax advisors with respect to excess inclusion income.**

If we own less than 100% of the ownership interests in a subsidiary that is a taxable mortgage pool, or if we made a TRS election with respect to a subsidiary that is a taxable mortgage pool, the foregoing rules would not apply. Rather, the subsidiary would be treated as a corporation for federal income tax purposes, and would potentially be subject to corporate income tax. In addition, this characterization would alter our REIT income and asset test calculations and could adversely affect our compliance with those requirements. We currently do not have any subsidiary in which we own some, but less than all, of the ownership interests that is or will become a taxable mortgage pool and for which we have not made a TRS election. We intend to monitor the structure of any taxable mortgage pools in which we have an interest to ensure that they will not adversely affect our qualification as a REIT.

**Gross Income Tests**

We must satisfy two gross income tests annually to maintain our qualification as a REIT. First, at least 75% of our gross income for each taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating

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to real property or mortgage loans on real property or qualified temporary investment income. Qualifying income for purposes of the 75% gross income test generally includes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•rents from real property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•interest on debt secured by a mortgage on real property or on interests in real property and interest on debt secured by a mortgage on real property and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property, and interest on qualified mezzanine loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•dividends or other distributions on, and gain from the sale of, shares in other REITs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•gain from the sale of real estate assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•abatements and refunds of taxes on real property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•income and gain derived from foreclosure property (as described below);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•amounts (other than amounts the determination of which depends in whole or in part on the income or profits of any person) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on real property or on interests in real property or (ii) to purchase or lease real property (including interests in real property and interests in mortgages on real property);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•income derived from a REMIC in proportion to the real estate assets held by the REMIC, unless at least 95% of the REMIC's assets are real estate assets, in which case all of the income derived from the REMIC; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•interest or dividend income derived from the temporary investment in stock or debt instruments of new capital that is attributable to the issuance of our stock or a public offering of our debt with a maturity date of at least five years and that we receive during the one-year period beginning on the date on which we received such new capital.

Although a debt instrument issued by a "publicly offered REIT" (*i.e.*, a REIT that is required to file annual and periodic reports with the SEC under the Exchange Act) is treated as a "real estate asset" for the asset tests, the interest income and gain from the sale of such debt instruments is not treated as qualifying income for the 75% gross income test unless the debt instrument is secured by real property or an interest in real property.

Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of stock or securities or any combination of these. Cancellation of indebtedness income, certain foreign currency gains, and gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business are excluded from both the numerator and the denominator in both income tests. In addition, income and gain from certain "hedging transactions," as defined in "—Hedging Transactions," that we enter into in the normal course of our business to hedge indebtedness incurred or to be incurred to acquire or carry real estate assets or to manage risk of currency fluctuations with respect to certain items of income or gain and that are clearly and timely identified as such will be excluded from both the numerator and the denominator for purposes of the gross income tests. We will monitor the amount of our non-qualifying income and we will manage our investment portfolio to comply at all times with the gross income tests. The following paragraphs discuss some of the specific applications of the gross income tests to us.

*Interest*. The term "interest," as defined for purposes of both gross income tests, generally excludes any amount that is based in whole or in part on the income or profits of any person. However, interest generally includes the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an amount that is based on a fixed percentage or percentages of receipts or sales; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an amount that is based on the income or profits of a debtor, as long as the debtor derives substantially all of its income from the real property securing the debt from leasing substantially all of its interest in the property, and only to the extent that the amounts received by the debtor would be qualifying, "rents from real property" if received directly by a REIT.

If a loan contains a provision that entitles a REIT to a percentage of the borrower's gain upon the sale of the real property securing the loan or a percentage of the appreciation in the property's value as of a specific date, income attributable to that loan provision will be treated as gain from the sale of the property securing the loan, which generally is qualifying income for purposes of both gross income tests, provided that the property is not held as inventory or dealer property in the hands of the borrower or the REIT.

Interest on debt secured by a mortgage on real property or on interests in real property, including, for this purpose, market discount, original issue discount, prepayment penalties, loan assumption fees, and late payment charges that are not compensation for services, generally is qualifying income for purposes of the 75% gross income test. However, if a loan is secured by real property and other property and the highest principal amount of a loan outstanding during a taxable year exceeds the fair market value of the

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real property (including, for loans secured by real property and personal property where the fair market value of the personal property is less than 15% of the total fair market value of all such property, such personal property) securing the loan as of the date (1) the REIT agreed to originate or acquire the loan or (2) as discussed further below, in the event of a "significant modification," the date we modified the loan, a portion of the interest income from such loan will not be qualifying income for purposes of the 75% gross income test, but will be qualifying income for purposes of the 95% gross income test. In the case of real estate mortgage loans secured by both real and personal property, if the fair market value of such personal property does not exceed 15% of the total fair market value of all property securing the loan, then the personal property securing the loan will be treated as real property for purposes of determining whether the mortgage is qualifying under the 75% asset test and interest income that qualifies for purposes of the 75% gross income test. If apportionment is required, the percentage of the interest income that will not be qualifying income for purposes of the 75% gross income test will be equal to the percentage of the principal amount of the loan that is not secured by real property—that is, the amount by which the loan exceeds the value of the real estate that is security for the loan.

The interest, original issue discount, and market discount income that we receive from our mortgage-related assets generally, including B notes, will be qualifying income for purposes of both gross income tests. We expect that some of our loans, which we have called mezzanine loans, will not be secured by a direct interest in real property. Instead, such loans will be secured by ownership interests in a non-corporate entity owning real property. In Revenue Procedure 2003-65, the IRS established a safe harbor under which interest from loans secured by a first priority security interest in ownership interests in a partnership or limited liability company owning real property will be treated as qualifying income for both the 75% and 95% gross income tests, and the loans will be treated as qualifying assets for the purposes of the 75% asset test described below, provided several requirements are satisfied. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive law. In situations where a loan is secured by interests in non-corporate entities but not all of the requirements of the safe harbor are met, the interest income from the loan will be qualifying income for purposes of the 95% gross income test, but there is a risk that such interest income will not be qualifying income for purposes of the 75% gross income test. We have not limited ourselves to acquiring mezzanine loans that comply with all requirements of the safe harbor. Based on advice of counsel, we believe that substantially all of our mezzanine loans should be treated as qualifying assets notwithstanding the failures to comply with all of the requirements of the safe harbor and we will not treat any future mezzanine loans as qualifying assets absent such advice. Nevertheless, in light of the sparse guidance regarding mezzanine loans that do not meet with foregoing safe harbor, it is possible that the IRS could disagree and challenge the treatment of these loans as qualifying assets and/or our qualification as a REIT. In addition, certain investments characterized by us as debt for federal income tax purposes could, if successfully challenged and determined to represent equity for federal income tax purposes, result in us failing to meet the REIT gross income tests; the result of which could cause us to fail to qualify as a REIT or be subject to a penalty tax. Finally, some of our loans will not be secured by mortgages on real property or interests in real property. Our interest income from those loans will be qualifying income for purposes of the 95% gross income test, but not the 75% gross income test. Further, as discussed above, if the fair market value of the real estate securing any of our loans is less than the principal amount of the loan, a portion of the income from that loan will be qualifying income for purposes of the 95% gross income test but not the 75% gross income test.

We have modified some of our loans by agreement with the borrowers and we may agree to additional loan modifications. If an amendment to an outstanding loan results in a "significant modification" under the applicable Treasury regulations, the modified debt is generally treated for federal income tax purposes as a new debt instrument issued in exchange for the original loan. IRS Revenue Procedure 2014-51 provides a safe harbor pursuant to which we will not be required to redetermine the fair market value of the real property securing a loan for purposes of the gross income and asset tests in connection with a loan modification that is (i) occasioned by a borrower default or (ii) made at a time when we reasonably believe that the modification to the loan will substantially reduce a significant risk of default on the original loan. To the extent we significantly modify loans in a manner that does not qualify for that safe harbor, we will be required to redetermine the value of the real property securing the loan at the time it was significantly modified, which could result in a portion of the interest income on the loan being treated as nonqualifying income for purposes of the 75% gross income test. In determining the value of the real property securing such a loan, we may obtain third-party appraisals or rely on internal valuations.

*Fee Income*. We may receive various fees in connection with our operations. The fees generally will be qualifying income for purposes of both the 75% and 95% gross income tests if they are received in consideration for entering into an agreement to

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make a loan secured by mortgages on real property and the fees are not determined by income and profits. Other fees generally are not qualifying income for purposes of either gross income test, and thus cannot exceed 5% of our annual gross income. Any fees earned by XAN RE TRS and any other TRS will not be included in our gross income for purposes of the gross income tests.

*Dividends*. Our share of any dividends received from any corporation (including any TRS, but excluding any REIT) in which we own an equity interest will qualify for purposes of the 95% gross income test but not for purposes of the 75% gross income test. Our share of any dividends received from any other REIT in which we own an equity interest will be qualifying income for purposes of both gross income tests.

*Rents from Real Property*. We have acquired real property through foreclosure, the receipt of the deed-in-lieu of foreclosure and direct investment and may acquire additional real property or an interest therein in the future. To the extent that we acquire real property or an interest therein, rents we receive will qualify as "rents from real property" in satisfying the gross income requirements for a REIT described above only if the following conditions are met:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•First, the amount of rent must not be based in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from rents from real property solely by reason of being based on fixed percentages of receipts or sales.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Second, rents we receive from a "related party tenant" will not qualify as rents from real property in satisfying the gross income tests unless the tenant is a TRS, at least 90% of the property is leased to unrelated tenants, the rent paid by the TRS is substantially comparable to the rent paid by the unrelated tenants for comparable space and, if the tenant is a "controlled taxable REIT subsidiary" (*i.e*., a TRS in which we own directly or indirectly more than 50% of the voting power or value of the stock), the rent is not attributable to an increase in rent due to a modification of a lease with a controlled taxable REIT subsidiary. A tenant is a related party tenant if the REIT, or an actual or constructive owner of 10% or more of the REIT, actually or constructively owns 10% or more of the tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Third, if rent attributable to personal property, leased in connection with a lease of real property, is greater than 15% of the total rent received under the lease, then the portion of rent attributable to the personal property will not qualify as rents from real property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Fourth, we generally must not operate or manage our real property or furnish or render services to our tenants, other than through an "independent contractor" who is adequately compensated and from whom we do not derive revenue. However, we may provide services directly to tenants if the services are "usually or customarily rendered" in connection with the rental of space for occupancy only and are not considered to be provided for the tenants' convenience. In addition, we may provide a minimal amount of "non-customary" services to the tenants of a property, other than through an independent contractor, as long as our income from the services does not exceed 1% of our income from the related property. Furthermore, we may own up to 100% of the stock of a TRS, which may provide customary and non-customary services to tenants without tainting our rental income from the related properties.

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*Hedging Transactions and Foreign Currency Gains*. From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Hedging transactions could take a variety of forms, including interest rate swap agreements, interest rate cap agreements, options, futures contracts, forward rate agreements, or similar financial instruments. Income and gain from a "hedging transaction" that is clearly identified as a hedging transaction as specified in the Internal Revenue Code will not constitute gross income and thus will be exempt from the 95% gross income test and the 75% gross income test. The term "hedging transaction" as used above generally means any transaction entered into in the normal course of business primarily to manage risk of (1) interest rate or price changes or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, including gain from the sale or disposition of such a transaction, or (2) currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income test. In addition, if we entered into a hedging transaction (i) to manage the risk of interest rate, price changes or currency fluctuations with respect to borrowings made or to be made or (ii) to manage the risk of currency fluctuations, and a portion of the hedged indebtedness or property is disposed of and in connection with such extinguishment or disposition we enter into a new clearly identified hedging transaction (a "Counteracting Hedge"), income from the applicable hedge and income from the Counteracting Hedge (including gain from the disposition of such Counteracting Hedge) will not be treated as gross income for purposes of the 95% and 75% gross income tests. We are required to clearly identify any such hedging transaction before the close of the day on which it was acquired, originated, or entered into. To the extent that we do not properly identify such transactions as hedges or hedge with other types of financial instruments, the income from those transactions will likely be treated as nonqualifying income for purposes of the gross income tests. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT. In addition, certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests.

*Prohibited Transactions*. A REIT will incur a 100% tax on the net income derived from any sale or other disposition of property, other than foreclosure property, that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. Any such income will be excluded from the application of the 75% and 95% gross income tests. We believe that none of our assets will be held primarily for sale to customers and that a sale of any of our assets will not be in the ordinary course of our business. Whether a REIT holds an asset "primarily for sale to customers in the ordinary course of a trade or business" depends, however, on the facts and circumstances in effect from time to time, including those related to a particular asset. Nevertheless, we will attempt to comply with the terms of safe-harbor provisions in the federal income tax laws prescribing when a sale of real property will not be characterized as a prohibited transaction. We cannot assure you however, that we can comply with the safe-harbor provisions or that we will avoid owning property that may be characterized as property that we hold "primarily for sale to customers in the ordinary course of a trade or business." To the extent necessary to avoid the prohibited transactions tax, we will conduct sales of our assets through a TRS.

*Foreclosure Property*. We will be subject to tax at the maximum corporate rate on any income from foreclosure property, other than income that otherwise would be qualifying income for purposes of the 75% gross income test, less expenses directly connected with the production of that income. However, gross income from foreclosure property will qualify under the 75% and 95% gross income tests. Foreclosure property is any real property, including interests in real property, and any personal property incident to such real property:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•that is acquired by a REIT as the result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was default or default was imminent on a lease of such property or on indebtedness that such property secured;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•for which the related loan or lease was acquired by the REIT at a time when the default was not imminent or anticipated; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•for which the REIT makes a proper election to treat the property as foreclosure property.

However, a REIT will not be considered to have foreclosed on a property where the REIT takes control of the property as a mortgage-in-possession and cannot receive any profit or sustain any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property at the end of the third taxable year following the taxable year in which the REIT acquired the property, or longer if an extension is granted by the Secretary of the Treasury. This grace period terminates and foreclosure property ceases to be foreclosure property on the first day:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•on which any construction takes place on the property, other than completion of a building or any other improvement, where more than 10% of the construction was completed before default became imminent; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business that is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income.

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*Failure to Satisfy Gross Income Tests*. If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for that year if we qualify for relief under certain provisions of the federal income tax laws. Those relief provisions generally will be available if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our failure to meet such tests is due to reasonable cause and not due to willful neglect; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•following such failure for any taxable year, a schedule of the sources of our income is filed in accordance with regulations prescribed by the Secretary of the Treasury.

It is not possible, however, to state whether in all circumstances we would be entitled to the benefit of these relief provisions. In addition, as discussed above in "—Taxation of Our Company," even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the amount by which we fail the 75% or 95% gross income test, multiplied, in either case, by a fraction intended to reflect our profitability.

**Asset Tests**

To qualify as a REIT, we also must satisfy the following asset tests at the end of each quarter of each taxable year. First, at least 75% of the value of our total assets (or, the 75% asset class) must consist of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•cash or cash items, including certain receivables;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•government securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•interests in real property, including leaseholds and options to acquire real property and leaseholds, and personal property to the extent such personal; property is leased in connection with real property and rents attributable to such personal property are treated as "rents from real property";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•interests in mortgage loans secured by real property (including mortgages secured by both real and personal property if the value of such property does not exceed 15% of the total property securing the loan) ;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•stock in other REITs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•debt instruments issued by "publicly offered REITs" (not to exceed 25% of our assets unless secured by real property or interests in real property);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•investments in stock or debt instruments during the one-year period following our receipt of new capital that we raise through equity offerings or public offerings of debt with at least a five-year term; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•regular or residual interests in a REMIC.

However, if less than 95% of the assets of a REMIC consists of assets that are qualifying real estate-related assets under the federal income tax laws, determined as if we held such assets directly, we will be treated as holding directly our proportionate share of the assets of such REMIC.

Second, of our investments not included in the 75% asset class, the value of our interest in any one issuer's securities may not exceed 5% of the value of our total assets.

Third, of our investments not included in the 75% asset class, we may not own more than 10% of the voting power or value of any one issuer's outstanding securities.

Fourth, of our investments not included in the 75% asset class, no more than 25% of the value of our total assets may consist of the securities of one or more TRSs.

Fifth, of our investments not included in the 75% asset class, no more than 25% of the value of our total assets may consist of securities other than those in the 75% asset class.

For purposes of the second, third and fifth asset tests, the term "securities" does not include stock in another REIT, equity or debt securities of a qualified REIT subsidiary or TRS, mortgage loans that constitute real estate assets, or equity interests in a partnership. The term "securities", however, generally includes debt securities issued by a partnership or another REIT (other than a "publicly offered REIT"), except that, for purposes of the 10% value test, the term "securities" does not include debt securities that meet the straight debt safe harbor described below.

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For purposes of the 10% value test, the term "securities" does not include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•"Straight debt" securities, which is defined as a written unconditional promise to pay on demand or on a specified date a sum certain in money if (i) the debt is not convertible, directly or indirectly, into stock, and (ii) the interest rate and interest payment dates are not contingent on profits, the borrower's discretion, or similar factors. "Straight debt" securities do not include any securities issued by a partnership or a corporation in which we or any controlled TRS (i.e., a TRS in which we own directly or indirectly more than 50% of the voting power or value of the stock) hold non- "straight debt" securities that have an aggregate value of more than 1% of the issuer's outstanding securities. However, "straight debt" securities include debt subject to the following contingencies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a contingency relating to the time of payment of interest or principal, as long as either (i) there is no change to the effective yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield, or (ii) neither the aggregate issue price nor the aggregate face amount of the issuer's debt obligations held by us exceeds $1 million and no more than 12 months of unaccrued interest on the debt obligations can be required to be prepaid; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a contingency relating to the time or amount of payment upon a default or prepayment of a debt obligation, as long as the contingency is consistent with customary commercial practice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Any loan to an individual or an estate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Any "section 467 rental agreement," other than an agreement with a related party tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Any obligation to pay "rents from real property."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Certain securities issued by governmental entities that are not dependent in whole or in part on the profits of (or payments made by) a non-governmental entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Any security (including debt securities) issued by a REIT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Any debt instrument issued by an entity treated as a partnership for federal income tax purposes in which we are a partner to the extent of our proportionate interest in the equity and certain debt securities issued by that partnership.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Any debt instrument issued by an entity treated as a partnership for federal income tax purposes not described above if at least 75% of the partnership's gross income, excluding income from prohibited transaction, is qualifying income for purposes of the 75% gross income test described above in "—Gross Income Tests."

As discussed above under "—Gross Income Tests", we hold and may make additional mezzanine loans that do not comply with the IRS safe harbor, but which we treat as qualifying assets. Although we believe substantially all of our mezzanine loans are qualifying assets, it is possible that the IRS could challenge our characterization of such loans and our qualification as a REIT. If any such IRS challenge was successful, the applicable mezzanine loan would be subject to the second, third and fifth asset tests described above.

We believe that most of the residential mortgage loans (including the B notes) and mortgage-backed securities, or MBS, that we have held and expect to hold have been and will be qualifying assets for purposes of the 75% asset test. For purposes of these rules, however, if the outstanding principal balance of a mortgage loan exceeds the fair market value of the real property securing the loan at the time we commit to acquire the loan, a portion of such loan likely will not be a qualifying real estate asset under the federal income tax laws. Furthermore, we may be required to retest modified loans that we hold to determine if the modified loan is adequately secured by real property if the modification results in a significant modification, as discussed above in "—Gross Income Tests—Interest." Although the law on the matter is not entirely clear, it appears that the non-qualifying portion of that mortgage loan will be equal to the portion of the loan amount that exceeds the value of the associated real property that is security for that loan.

In the event that we invest in a mortgage loan that is secured by both real property and other property, Revenue Procedure 2014-51 may apply to determine what portion of the mortgage loan will be treated as a real estate asset for purposes of the 75% asset test. Pursuant to Revenue Procedure 2014-51, modifying and superseding Revenue Procedure 2011-16, the IRS will not challenge a REIT's treatment of a loan as being, in part, a qualifying real estate asset in an amount equal to the lesser of (1) the fair market value of the loan on the date of the relevant quarterly REIT asset testing date or (2) the greater of (a) the fair market value of the real property securing the loan on the date of the relevant quarterly REIT asset testing date or (b) the fair market value of the real property securing the loan determined as of the date the REIT committed to acquire the loan. Our debt securities issued by other REITs or corporations that are not secured by mortgages on real property will not be qualifying assets for purposes of the 75% asset test. We believe that any stock that we will acquire in other REITs will be qualifying assets for purposes of the 75% asset test. However, if a REIT in which we own stock fails to qualify as a REIT in any year, the stock in such REIT will not be a qualifying asset for purposes of the 75% asset test. Instead, we would be subject to the second, third, and fifth assets tests described above with respect to our investment in such a disqualified REIT. We will also be subject to those assets tests with respect to our investments

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in any non-REIT C corporations for which we do not make a TRS election. We believe that the value of our investment in XAN RE TRS has been and will continue to be less than 25% of the value of our total assets.

We will monitor the status of our assets for purposes of the various asset tests and will seek to manage our portfolio to comply at all times with such tests. There can be no assurances, however, that we will be successful in this effort. In this regard, to determine our compliance with these requirements, we will need to estimate the value of the real estate securing our mortgage loans at various times, including at the time of any modification that results in a significant modification to a debt instrument we hold. In addition, we will have to value our investment in our other assets to ensure compliance with the asset tests. Although we will seek to be prudent in making these estimates, there can be no assurances that the IRS might not disagree with these determinations and assert that a different value is applicable, in which case we might not satisfy the 75% and the other asset tests and would fail to qualify as a REIT. If we fail to satisfy the asset tests at the end of a calendar quarter, we will not lose our REIT qualification if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•we satisfied the asset tests at the end of the preceding calendar quarter; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets

If we did not satisfy the condition described in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose.

In the event that we violate the second or third asset tests described above at the end of any calendar quarter, we will not lose our REIT qualification if the failure is *de minimis* (up to the lesser of 1% of the total value of our assets at the end of the quarter in which the failure occurs or $10 million) and we dispose of assets or otherwise comply with the asset tests within six months after the last day of the quarter. In the event of a failure of any of the asset tests (other than a *de minimis* failure of the 5% and 10% asset tests described in the preceding sentence), as long as the failure was due to reasonable cause and not to willful neglect, we will not lose our REIT qualification if we identify the failure on a separate schedule, dispose of assets or otherwise comply with the asset tests within six months after the last day of the quarter in which our identification of the failure occurs and pay a tax equal to the greater of $50,000 or an amount determined by multiplying the highest federal income tax rate applicable to corporations by the net income from the nonqualifying assets during the period in which we failed to satisfy the asset tests.

We currently believe that the mortgage-related assets, securities and other assets that we expect to hold will satisfy the foregoing asset test requirements. However, no independent appraisals will be obtained to support our conclusions as to the value of our assets and securities, or in many cases, the real estate collateral for the mortgage loans that we hold. Moreover, the values of some assets, such as the securities of our TRS, may not be susceptible to a precise determination. As a result, there can be no assurance that the IRS will not contend that our ownership of securities and other assets violates one or more of the asset tests applicable to REITs.

We currently have financing arrangements that are structured as sale and repurchase agreements pursuant to which we sell certain of our assets to a counter party and simultaneously enter into an agreement to repurchase these assets at a later date in exchange for a purchase price. Economically, these agreements are financings that are secured by the assets sold pursuant thereto. We believe that we would be treated for REIT asset and income test purposes as the owner of the assets that are the subject of any such sale and repurchase agreement notwithstanding that such agreements may transfer record ownership of the assets to the counterparty during the term of the agreement. It is possible, however, that the IRS could assert that we did not own the assets during the term of the sale and repurchase agreement, in which case we could fail to qualify as a REIT.

**Distribution Requirements**

Each taxable year, we generally must distribute dividends, other than capital gain dividends and deemed distributions of retained capital gain, to our stockholders in an aggregate amount at least equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the sum of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•90% of our "REIT taxable income," computed without regard to the dividends paid deduction and our net capital gain, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•90% of our after-tax net income, if any, from foreclosure property, *minus*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the excess of the sum of specified items of non-cash income (including original issue discount on our senior and mezzanine loans) over 5% of our REIT taxable income, computed without regard to the dividends paid deduction and our net capital gain.

We generally must make such distributions in the taxable year to which they relate, or in the following taxable year if either (i) we declare the distribution before we timely file our federal income tax return for the year and pay the distribution on or before the first regular dividend payment date after such declaration or (ii) we declare the distribution in October, November or December of the taxable year, payable to stockholders of record on a specified day in any such month, and we actually make the distribution before the end of January of the following year. The distributions under clause (i) are taxable to the stockholders in the year in which

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paid, and the distributions in clause (ii) are treated as paid on December 31 of the prior taxable year. In both instances, these distributions relate to our prior taxable year for purposes of the 90% distribution requirement.

If we cease to be a "publicly offered REIT," then, for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not have been "preferential dividends." A dividend is not a preferential dividend if the distribution is (i) pro-rata among all outstanding shares of stock within a particular class, and (ii) in accordance with the preferences among different classes of stock as set forth in our organizational documents.

We may satisfy the 90% distribution test with taxable distributions of our stock or debt securities. The IRS has issued a revenue procedure authorizing "publicly offered REITs" to treat certain distributions that are paid partly in cash and partly in stock as dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for federal income tax purposes. As a "publicly offered REIT," as long as at least 20% of the total dividend is available in cash and certain other requirements are satisfied, the IRS will treat the stock distribution as a dividend (to the extent applicable rules treat such distribution as being made out of our earnings and profits). We have no current intention to make a taxable dividend payable in our stock.

We will pay federal income tax on taxable income, including net capital gain, that we do not distribute to stockholders at regular corporate rates. Furthermore, if we fail to distribute during a calendar year, or by the end of January following the calendar year in the case of distributions with declaration and record dates falling in the last three months of the calendar year, at least the sum of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•85% of our ordinary income for such year,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•95% of our capital gain net income for such year, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any undistributed taxable income from prior periods.

we will incur a 4% nondeductible excise tax on the excess of such required distribution over the sum of (i) amounts we actually distribute (taking into account excess distributions from prior years) and (ii) the amounts of income retained on which we have paid corporate income tax.. We may elect to retain rather than distribute and pay income tax on all or a portion of the net capital gain we receive in a taxable year. See "—Taxation of Taxable U.S. Stockholders." In that case, we may elect to have our stockholders include their proportionate share of the undistributed net capital gains in income as long-term capital gains and receive a credit for their share of the tax paid by us. We will also be treated as having distributed any such retained amount for purposes of the 4% nondeductible excise tax described above. We intend to make timely distributions sufficient to satisfy the annual distribution requirements and to avoid corporate income tax and the 4% nondeductible excise tax.

It is possible that, from time to time, we may experience timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at our REIT taxable income. Possible examples of those timing differences include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Because we may deduct capital losses only to the extent of our capital gains, we may have taxable income that exceeds our economic income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We will recognize taxable income in advance of the related cash flow if any of our MBS are deemed to have original issue discount. We generally must accrue original issue discount based on a constant yield method that takes into account projected prepayments but that defers taking into account credit losses until they are actually incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We may recognize taxable market discount income when we receive the proceeds from the disposition of, or principal payments on, loans that have a stated redemption price at maturity that is greater than our tax basis in those loans, although such proceeds often will be used to make non-deductible principal payments on related borrowings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We may recognize phantom taxable income from any residual interests in REMICs or equity interests in taxable mortgage pools not held through a TRS.

Although several types of non-cash income are excluded in determining the annual distribution requirement, we will incur corporate income tax and the 4% nondeductible excise tax with respect to those non-cash income items if we do not distribute those items on a current basis. As a result of the foregoing, we may have less cash than is necessary to distribute all of our taxable income and thereby avoid corporate income tax and the excise tax imposed on certain undistributed income. In such a situation, we may need to borrow funds or issue additional common or preferred stock.

Under certain circumstances, we may be able to correct a failure to meet the distribution requirement for a year by paying "deficiency dividends" to our stockholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest to the IRS based upon the amount of any deduction we take for deficiency dividends.

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**Failure to Qualify**

If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, we could avoid disqualification if our failure is due to reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure. In addition, there are relief provisions for a failure of the gross income tests and asset tests, as described in "—Gross Income Tests" and "—Asset Tests."

If we fail to qualify as a REIT in any taxable year, and no relief provision applies, we would be subject to federal income tax on our taxable income at regular corporate rates. In calculating our taxable income in a year in which we fail to qualify as a REIT, we would not be able to deduct amounts paid out to stockholders. In fact, we would not be required to distribute any amounts to stockholders in that year. In such event, to the extent of our current and accumulated earnings and profits, all distributions to stockholders would be taxable as dividend income, whether or not attributable to capital gains of ours. Subject to certain limitations of the federal income tax laws, corporate stockholders might be eligible for the dividends received deduction, and individual and certain non-corporate trust and estate stockholders may be eligible for the reduced federal income tax rate of 15% on such dividends. Unless we qualified for relief under specific statutory provisions, we also would be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. We cannot predict whether in all circumstances we would qualify for such statutory relief.

**Taxation of Taxable U.S. Stockholders**

The term "U.S. stockholder" means a beneficial owner of our capital stock that, for federal income tax purposes, is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a citizen or resident (as defined in Section 7701(b) of the Internal Revenue Code) of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a corporation (including an entity treated as a corporation for federal income tax purposes) created or organized under the laws of the United States, any of its States, or the District of Columbia;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an estate whose income is subject to federal income taxation regardless of its source; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any trust if (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in place to be treated as a U.S. person.

If a partnership, entity or arrangement treated as a partnership for federal income tax purposes holds our capital stock, the federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership holding our capital stock, you should consult your tax advisor regarding the consequences of the purchase, ownership and disposition of our capital stock by the partnership. A "non-U.S. stockholder" is a beneficial owner of our capital stock that is not a U.S. stockholder, a partnership or an entity classified as a partnership for U.S. federal income tax purposes.

As long as we qualify as a REIT, a taxable "U.S. stockholder" must generally take into account as ordinary income taxable at ordinary income tax rates distributions made out of our current or accumulated earnings and profits that we do not designate as capital gain dividends or retained long-term capital gain. For purposes of determining whether a distribution is made out of our current or accumulated earnings and profits, our earnings and profits will be allocated first to our preferred stock, then to our common stock. A U.S. stockholder will not qualify for the dividends received deduction generally available to corporations. In addition, dividends paid to a U.S. stockholder generally will not qualify as "qualified dividend income" and thus will not qualify for the reduced capital gains rates that currently generally apply to distributions by non-REIT C corporations to certain non-corporate U.S. stockholders. Because we are not generally subject to federal income tax on the portion of our REIT taxable income distributed to our stockholders (see "—Taxation of Our Company" above), our dividends generally will not be eligible for the preferential tax rate on qualified dividend income. However, the preferential tax rate for qualified dividend income will apply to our ordinary REIT dividends attributable to dividends received by us from non-REIT corporations, such as our domestic TRS, and to the extent attributable to income upon which we have paid corporate income tax (e.g., to the extent that we distribute less than 100% of our taxable income). In general, to qualify for the reduced tax rate on qualified dividend income, a stockholder must hold our capital stock for more than 60 days during the 121-day period beginning on the date that is 60 days before the date on which our capital stock became ex-dividend. U.S. stockholders other than corporations are also subject to a Medicare surtax on investment income (including both qualified and nonqualified dividends) if certain thresholds of modified adjusted gross income are exceeded.

A U.S. stockholder generally will recognize distributions that we designate as capital gain dividends as long-term capital gain without regard to the period for which the U.S. stockholder has held our capital stock. A corporate U.S. stockholder, however, may be required to treat up to 20% of certain capital gain dividends as ordinary income.

The aggregate amount of dividends that we may designate as "capital gain dividends" or "qualified dividend income" with respect to any taxable year may not exceed the dividends paid by us with respect to such year, including dividends that are paid in the following year (if they are declared before we timely file our tax return for the year and if made with or before the first regular dividend payment after such declaration) are treated as paid with respect to such year.

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A U.S. stockholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the distribution does not exceed the adjusted basis of the U.S. stockholder's capital stock. Instead, the distribution will reduce the adjusted basis of such capital stock. A U.S. stockholder will recognize a distribution in excess of both our current and accumulated earnings and profits and the U.S. stockholder's adjusted basis in his or her capital stock as long-term capital gain, or short-term capital gain if the shares of capital stock have been held for one year or less, assuming the shares of capital stock are a capital asset in the hands of the U.S. stockholder. In addition, if we declare a distribution in October, November, or December of any year that is payable to a U.S. stockholder of record on a specified date in any such month, such distribution will be treated as both paid by us and received by the U.S. stockholder on December 31 of such year, provided that we actually pay the distribution during January of the following calendar year.

Stockholders may not include in their individual income tax returns any of our net operating losses or capital losses. Instead, these losses generally are carried over by us for potential offset against our future income. Taxable distributions from us and gain from the disposition of our capital stock will not be treated as passive activity income and, therefore, stockholders generally will not be able to apply any "passive activity losses," such as losses from certain types of limited partnerships in which the stockholder is a limited partner, against such income. In addition, taxable distributions from us and gain from the disposition of our capital stock generally will be treated as investment income for purposes of the investment interest limitations. We will notify stockholders after the close of our taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital and capital gain.

Any excess inclusion income (see "—Requirements for Qualification-Taxable Mortgage Pools" for a definition of excess inclusion income) that we recognize generally will be allocated among our stockholders to the extent that it exceeds our undistributed REIT taxable income in a particular year. A stockholder's share of excess inclusion income would not be allowed to be offset by any net operating losses or other deductions otherwise available to the stockholder.

**Taxation of U.S. Stockholders on the Disposition of Capital Stock**

In general, a U.S. stockholder who is not a dealer in securities must treat any gain or loss realized upon a taxable disposition of our capital stock as long-term capital gain or loss if the U.S. stockholder has held the capital stock for more than one year and otherwise as short-term capital gain or loss. In general, a U.S. stockholder will realize gain or loss in an amount equal to the difference between (i) the sum of the fair market value of any property and the amount of cash received in such disposition, and (ii) the U.S. stockholder's adjusted basis in the shares for tax purposes. Such adjusted tax basis will equal the U.S. stockholder's acquisition cost, increased by the excess of net capital gains deemed distributed to the U.S. stockholder (discussed above) less tax deemed paid on it and reduced by any returns of capital. However, a U.S. stockholder must treat any loss upon a sale or exchange of capital stock held by such stockholder for six months or less as a long-term capital loss to the extent of capital gain dividends and any other actual or deemed distributions from us that such U.S. stockholder treats as long-term capital gain. All or a portion of any loss that a U.S. stockholder realizes upon a taxable disposition of our capital stock may be disallowed if the U.S. stockholder purchases other capital stock within 30 days before or after the disposition.

**Taxation of U.S. Stockholders on Conversion of Preferred Stock**

Except as provided below, (i) a U.S. stockholder generally will not recognize gain or loss upon a conversion of preferred stock into our common stock, and (ii) a U.S. stockholder's basis and holding period in our common stock received upon conversion generally will be the same as those of the converted preferred stock (but the basis will be reduced by the portion of adjusted tax basis allocated to any fractional share exchanged for cash). Any of our common stock received in a conversion that is attributable to accumulated and unpaid dividends on the converted preferred stock will be treated as a distribution that is potentially taxable as a dividend. Cash received upon conversion in lieu of a fractional share generally will be treated as a payment in a taxable exchange for such fractional share, and gain or loss will be recognized on the receipt of cash in an amount equal to the difference between the amount of cash received and the adjusted tax basis allocable to the fractional share deemed exchanged. This gain or loss will be long-term capital gain or loss if the U.S. stockholder has held the preferred stock for more than one year at the time of conversion. U.S. stockholders are urged to consult with their tax advisors regarding the federal income tax consequences of any transaction by which such holder exchanges common shares received on a conversion of preferred stock for cash or other property.

**Taxation of U.S. Stockholders on Redemption of Preferred Stock**

Redemption of preferred stock for cash will be treated under Section 302 of the Internal Revenue Code as a distribution taxable as a dividend (to the extent of our current and accumulated earnings and profits) at ordinary income rates, unless the redemption satisfies one of the tests set forth in Section 302(b) of the Internal Revenue Code for the sale or exchange of the redeemable shares. The redemption will be treated as a sale or exchange if it (i) is "substantially disproportionate" with respect to the U.S. stockholder's interest in our shares, (ii) results in a "complete termination" of the U.S. stockholder's interest in all of our classes of shares, or (iii) is "not essentially equivalent to a dividend" with respect to the U.S. stockholder, all within the meaning of Section 302(b) of the Internal Revenue Code.

In determining whether any of these tests have been met, common stock, all series of preferred stock and any options to acquire the foregoing considered to be owned by the U.S. stockholder by reason of certain constructive ownership rules set forth in the Internal Revenue Code, as well as common stock, all series of preferred stock and any options to acquire the foregoing actually

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owned by such U.S. stockholder, must generally be taken into account. If a U.S. stockholder does not own (actually or constructively) any of our common stock, or a U.S. stockholder owns an insubstantial percentage of our outstanding common or preferred stock, based upon current law, a redemption of such stockholder's preferred stock is likely to qualify for sale or exchange treatment because the redemption would not be "essentially equivalent to a dividend." However, because the determination as to whether any of the alternative tests of Section 302(b) of the Internal Revenue Code will be satisfied with respect to a U.S. stockholder's preferred stock depends upon the facts and circumstances at the time the determination must be made, prospective investors are advised to consult their tax advisor to determine such tax treatment.

If a redemption of preferred stock is not treated as a distribution taxable as a dividend, it will be treated as a taxable sale or exchange of the stock. As a result, a U.S. stockholder will recognize gain or loss for federal income tax purposes in an amount equal to the difference between (i) the amount of cash and the fair market value of any property received (less any portion thereof attributable to accumulated and declared but unpaid dividends, which will be taxable as a dividend to the extent of our current and accumulated earnings and profits), and (ii) such stockholder's adjusted basis in the preferred stock for tax purposes. Such gain or loss will be capital gain or loss if the preferred stock has been held as a capital asset, and will be long-term gain or loss if the preferred stock has been held for more than one year at the time of the redemption. If a redemption of preferred stock is treated as a distribution taxable as a dividend, the amount of the distribution will be measured by the amount of cash and the fair market value of any property received by the U.S. stockholder. In that case, a U.S. stockholder's adjusted basis in the redeemable preferred stock for tax purposes will be transferred to such U.S. stockholder's remaining shares in us. If the U.S. stockholder does not own any of our other shares, such basis may, under certain circumstances, be transferred to a related person or it may be lost entirely.

**Capital Gains and Losses**

A taxpayer generally must hold a capital asset for more than one year for gain or loss derived from its sale or exchange to be treated as long-term capital gain or loss, which generally entitles the taxpayer to a preferential rate on such gain. The rate on capital gain from the sale or exchange of "section 1250 property," or depreciable real property, applies to the lesser of the total amount of the gain or the accumulated depreciation on the Section 1250 property. With respect to distributions that we designate as capital gain dividends and any retained capital gain that we are deemed to distribute, we generally may designate whether such a distribution is from the sale of "Section 1250 property" or of other capital assets in order to determine which individual tax rate applies. The tax rate differential between capital gain and ordinary income for those taxpayers may be significant. In addition, the characterization of income as capital gain or ordinary income may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum annual amount. A non-corporate taxpayer may carry forward unused capital losses indefinitely. A corporate taxpayer must pay tax on its net capital gain at ordinary corporate rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses being carried back three years and forward five years. Capital gains (as well as other investment income taxed at ordinary rates) are also subject to the Medicare surtax in the case of certain taxpayers whose modified adjusted gross income exceeds certain thresholds depending on filing status.

**Medicare Tax on Unearned Income**

As noted above, U.S. stockholders that are individuals, estates or trusts to pay an additional tax on "net investment income" earned directly or indirectly by U.S. stockholders that are individuals, trusts and estates whose income exceeds certain thresholds. Among other items, net investment income generally includes interest on debt instruments and dividends on stock and net gain attributable to the disposition of such securities to the extent that such gain would be otherwise included in taxable income. U.S. stockholders should consult their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of our capital stock.

**Taxation of Tax-Exempt Stockholders**

Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from federal income taxation. However, they are subject to taxation on their unrelated business taxable income, or UBTI. While many investments in real estate generate UBTI, the IRS has issued a ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute UBTI so long as the exempt employee pension trust does not otherwise use the shares of the REIT in an unrelated trade or business of the pension trust. Based on that ruling, amounts that we distribute to tax-exempt stockholders generally should not constitute UBTI. However, if a tax-exempt stockholder were to finance (or be deemed to finance) its acquisition of capital stock with debt, a portion of the income that it receives from us would constitute UBTI pursuant to the "debt-financed property" rules. Moreover, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from taxation under special provisions of the federal income tax laws are subject to different UBTI rules, which generally will require them to characterize distributions that they receive from us as UBTI. Furthermore, a tax-exempt stockholder's share of any excess inclusion income that we recognize would be subject to tax as UBTI. Finally, in certain circumstances, a qualified employee pension or profit sharing trust that owns more than 10% of our stock must treat a percentage of the dividends that it receives from us as UBTI. Such percentage is equal to the gross income we derive from an unrelated trade or business, determined as if we were a pension trust, divided by our total gross income for the year in which we pay the dividends. That rule applies to a pension trust holding more than 10% of our stock only if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the percentage of our dividends that the tax-exempt trust must treat as UBTI is at least 5%;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our stock be owned by five or fewer individuals that allows the beneficiaries of the pension trust to be treated as holding our stock in proportion to their actuarial interests in the pension trust; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•one pension trust owns more than 25% of the value of our stock; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a group of pension trusts individually holding more than 10% of the value of our stock collectively owns more than 50% of the value of our stock.

**Taxation of Non-U.S. Stockholders**

The rules governing federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships, and other foreign stockholders are complex. This section is only a summary of such rules. **We urge non-U.S. stockholders to consult their own tax advisors to determine the impact of federal, state, and local income tax laws on ownership of our capital stock, including any reporting requirements.**

*Ordinary Dividends*. A non-U.S. stockholder that receives a distribution that is not attributable to gain from our sale or exchange of United States real property interests, as defined below, and that we do not designate as a capital gain dividend or retained capital gain will recognize ordinary income to the extent that we pay the distribution out of our current or accumulated earnings and profits. A withholding tax on the gross amount of the distribution ordinarily will apply unless an applicable tax treaty reduces or eliminates the tax. However, if a distribution is treated as effectively connected with the non-U.S. stockholder's conduct of a U.S. trade or business, the non-U.S. stockholder generally will be subject to federal income tax on the distribution at graduated rates, in the same manner as U.S. stockholders are taxed on distributions and also may be subject to the branch profits tax in the case of a corporate non-U.S. stockholder. We plan to withhold federal income tax at the applicable rate on the gross amount of any distribution paid to a non-U.S. stockholder unless either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a lower treaty rate applies and the non-U.S. stockholder files an IRS Form W-8BEN or W-8BEN-E evidencing eligibility for that reduced rate with us; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the non-U.S. stockholder files an IRS Form W-8ECI with us claiming that the distribution is effectively connected income.

However, reduced treaty rates are not available to the extent that the income allocated to the non-U.S. stockholder is excess inclusion income. Our excess inclusion income generally will be allocated among our stockholders to the extent that it exceeds our undistributed REIT taxable income in a particular year.

*Non-Dividend Distributions*. A non-U.S. stockholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the excess portion of the distribution does not exceed the adjusted basis of its capital stock. Instead, the excess portion of the distribution will reduce the adjusted basis of that capital stock. A non-U.S. stockholder will be subject to tax on a distribution that exceeds both our current and accumulated earnings and profits and the adjusted basis of its capital stock if the non-U.S. stockholder otherwise would be subject to tax on gain from the sale or exchange of its capital stock, as described below. Because we generally cannot determine at the time we make a distribution whether the distribution will exceed our current and accumulated earnings and profits, we normally will withhold tax on the entire amount of any distribution at the same rate as we would withhold on a dividend. However, a non-U.S. stockholder may obtain a refund from the IRS of amounts that we withhold if we later determine that a distribution in fact exceeded our current and accumulated earnings and profits.

*Capital Gain Dividends*. A non-U.S. stockholder will incur tax on distributions that are attributable to gain from our sale or exchange of "United States real property interests" under the Foreign Investment in Real Property Act of 1980 ("FIRPTA"). The term "United States real property interests" includes interests in real property, other than interests in real property solely in a capacity as a creditor, and shares in corporations at least 50% of whose assets consist of United States real property interests. As a result, we do not anticipate that we will generate material amounts of gain that would be subject to FIRPTA. Nonetheless, we cannot exclude the possibility, for example, if we are able to resell a foreclosure property for an amount higher than the fair market value of such property at the time of foreclosure. Under the FIRPTA rules, a non-U.S. stockholder is taxed on distributions attributable to gain from sales of United States real property interests as if the gain were effectively connected with a U.S. business of the non-U.S. stockholder. A non-U.S. stockholder thus would be taxed on such a distribution at the normal capital gain rates applicable to U.S. stockholders, subject to a special alternative minimum tax in the case of nonresident alien individuals. A non-U.S. corporate stockholder not entitled to treaty relief or exemption also may be subject to the branch profits tax on such a distribution. We must withhold on any such distribution that we could designate as a capital gain dividend. A non-U.S. stockholder may receive a credit against our tax liability for the amount we withhold. However, a non-U.S. stockholder that owns, actually or constructively, no more than 10% of our capital stock at all times during the one-year period ending on the date of the distribution will not be subject to the FIRPTA withholding tax with respect to distributions that are attributable to gain from our sale or exchange of United States real property interests, provided our capital stock is regularly traded on an established securities market. Instead, non-U.S. stockholders generally would be subject to withholding tax on such capital gain distributions in the same manner as they are subject to withholding tax on ordinary dividends.

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*Sale of Capital Stock*. In the unlikely event that our capital stock constituted a United States real property interest (which generally requires that at least 50% of our assets consist of United States real property interests), gains from the sale of our capital stock by a non-U.S. stockholder could be subject to a FIRPTA tax. However, even if that event were to occur, a non-U.S. stockholder generally would not incur tax under FIRPTA on gain from the sale of our capital stock if we were a "domestically controlled qualified investment entity." We will be a domestically controlled qualified investment entity if, at all times during a specified testing period, we are a REIT and less than 50% in value of our stock is held directly or indirectly by non-U.S. stockholders. Because our capital stock is publicly traded, no assurance can be given that we will be a domestically controlled qualified investment entity.

Even if we are a domestically controlled qualified investment entity, upon disposition of our capital stock, a non-U.S. stockholder may be treated as having gain from the sale or exchange of a United States real property interest if the non-U.S. stockholder disposes of an interest in our stock and directly or indirectly acquires, enters into a contract or option to acquire or is deemed to acquire, other shares of our stock within a specified period. This rule does not apply if the exception for distributions to 10% or smaller stockholder of regularly traded classes of stock is satisfied

Even if we do not qualify as a domestically controlled qualified investment entity at the time the non-U.S. stockholder sells or exchanges our capital stock, the gain from such a sale or exchange will not be subject to tax under FIRPTA as a sale of United States real property interests if our capital stock is regularly traded, as defined by the applicable Treasury regulations, on an established securities market, and such non-U.S. stockholder owned, actually or constructively, 10% or less of our capital stock at all times during a specified testing period.

If the gain on the sale of the capital stock were taxed under FIRPTA, a non-U.S. stockholder would be taxed on that gain in the same manner as a taxable U.S. stockholder, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals, and the purchaser of the stock could be required to withhold on the purchase price and remit such amount to the IRS. Furthermore, a non-U.S. stockholder generally will incur tax on gain not subject to FIRPTA if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the gain is effectively connected with the non-U.S. stockholder's U.S. trade or business, in which case the non-U.S. stockholder will be subject to the same treatment as U.S. stockholders with respect to such gain, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the non-U.S. stockholder is a nonresident alien individual who is present in the U.S. for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. stockholder will incur a tax on his or her capital gains.

*Qualified Shareholders*. Subject to the exception discussed below, any distribution to a "qualified shareholder" who holds REIT stock directly or indirectly (through one or more partnerships) will not be subject to FIRPTA, and thus will not be subject to special withholding rules under FIRPTA. While a "qualified shareholder" will not be subject to FIRPTA withholding on our distributions or dispositions of our capital stock, certain investors of a "qualified shareholder" (i.e., non-U.S. persons who hold interests in the "qualified shareholder" (other than interests solely as a creditor), and hold more than 10% of the applicable class of our stock (whether or not by reason of the investor's ownership in the "qualified shareholder")) may be subject to FIRPTA withholding.

In addition, a sale of our stock by a "qualified shareholder" who holds such stock directly or indirectly (through one or more partnerships) will not be subject to U.S. federal income taxation under FIRPTA. As with distributions, certain investors of a "qualified shareholder" (i.e., non-U.S. persons who hold interests in the "qualified shareholder" (other than interests solely as a creditor), and hold more than 10% of the stock of such REIT (whether or not by reason of the investor's ownership in the "qualified shareholder")) may be subject to FIRPTA withholding. REIT distributions received by a "qualified shareholder" that are exempt from FIRPTA withholding may still be subject to regular U.S. withholding tax.

A "qualified shareholder" is a foreign person that (i) either is eligible for the benefits of a comprehensive income tax treaty that includes an exchange of information program and whose principal class of interests is listed and regularly traded on one or more recognized stock exchanges (as defined in such comprehensive income tax treaty), or is a foreign partnership that is created or organized under foreign law as a limited partnership in a jurisdiction that has an agreement for the exchange of information with respect to taxes with the United States and has a class of limited partnership units representing greater than 50% of the value of all the partnership units that is regularly traded on the NYSE or NASDAQ markets, (ii) is a qualified collective investment vehicle (defined below), and (iii) maintains records on the identity of each person who, at any time during the foreign person's taxable year, is the direct owner of 5% or more of the class of interests or units (as applicable) described in (i), above.

A qualified collective investment vehicle is a foreign person that (i) would be eligible for a reduced rate of withholding under the comprehensive income tax treaty described above, even if such entity holds more than 10% of the applicable class of stock of such REIT, (ii) is publicly traded, is treated as a partnership under the Internal Revenue Code, is a withholding foreign partnership, and would be treated as a "United States real property holding corporation" if it were a domestic corporation, or (iii) is designated as such by the Secretary of the Treasury and is either (a) fiscally transparent within the meaning of section 894 of the Internal Revenue Code, or (b) required to include dividends in its gross income, but is entitled to a deduction for distributions to its investors.

*Qualified Foreign Pension Funds*. Any distribution to a "qualified foreign pension fund" (or an entity all of the interests of which are held by a "qualified foreign pension fund") who holds our capital stock directly or indirectly (through one or more partnerships) will not be subject to U.S. federal income taxation under FIRPTA, and thus will not be subject to special withholding

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rules under FIRPTA. REIT distributions received by a "qualified foreign pension fund" that are exempt from FIRPTA withholding may still be subject to regular U.S. withholding tax. In addition, a sale of our stock by a "qualified foreign pension fund" that holds such stock directly or indirectly (through one or more partnerships) will not be subject to U.S. federal income taxation under FIRPTA.

A qualified foreign pension fund is any trust, corporation or other organization or arrangement (i) which is created or organized under the law of a country other than the United States, (ii) which is established to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, (iii) which does not have a single participant or beneficiary with a right to more than 5% of its assets or income, (iv) which is subject to government regulation and provides annual information reporting about its beneficiaries to the relevant tax authorities in the country in which it is established or operates, and (v) with respect to which, under the laws of the country in which it is established or operates, (a) contributions to such organization or arrangement that would otherwise be subject to tax under such laws are deductible or excluded from the gross income of such entity or taxed at a reduced rate, or (b) taxation of any investment income of such organization or arrangement is deferred or such income is taxed at a reduced rate.

**Taxation of Non-U.S. Stockholders on Conversion or Redemption of Preferred Stock**

*Conversion of Preferred Stock*. The conversion of our preferred stock into our common stock may be a taxable exchange for a non-U.S. stockholder if our preferred stock constitutes a United States real property interest. Even if our preferred stock constitutes a United States real property interest, provided our common stock also constitutes a United States real property interest, a non-U.S. stockholder generally will not recognize gain or loss upon a conversion of preferred stock into our common stock so long as certain FIRPTA-related reporting requirements are satisfied. If our preferred stock constitutes a United States real property interest and such requirements are not satisfied, however, a conversion will be treated as a taxable exchange of preferred stock for our common stock. Such a deemed taxable exchange will be subject to tax under FIRPTA at the rate of tax, including any applicable capital gains rates, that would apply to a U.S. stockholder of the same type (e.g., a corporate or a non-corporate stockholder, as the case may be) on the excess, if any, of the fair market value of such non-U.S. stockholder's common stock received over such non-U.S. stockholder's adjusted basis in its preferred stock. Collection of such tax will be enforced by a refundable withholding tax on the value of the common stock.

Any shares of common stock received in a conversion that are attributable to accumulated and unpaid dividends on the converted preferred stock will be treated as a distribution that is potentially taxable as a dividend as described under "—Taxation of Taxable U.S. Stockholders" above. Cash received upon conversion in lieu of a fractional share of common stock generally will be treated as a payment in a taxable exchange for such fractional share as described under "—Taxation of Non-U.S. Stockholders" above.

Non-U.S. stockholders are urged to consult with their tax advisors regarding the U.S. federal income tax consequences of any transaction by which such non-U.S. stockholder exchanges shares of our common stock received on a conversion of preferred stock for cash or other property.

*Redemption of Preferred Stock*. As described under "—Taxation of U.S. Stockholders on Redemption of Preferred Stock" above, a redemption that satisfies certain tests set forth in Section 302(b) of the Internal Revenue Code will be treated as a taxable exchange and a redemption that does not satisfy certain tests under Section 302(b) of the Internal Revenue Code will be treated as a distribution that is taxable as dividend income (to the extent of our current or accumulated earnings and profits). For a more detailed discussion of the treatment of a redemption of preferred stock, see "—Taxation of U.S. Stockholders on Redemption of Preferred Stock."

Non-U.S. stockholders are urged to consult with their tax advisors regarding the U.S. federal income tax consequences of any transaction by which such non-U.S. stockholder redeems our preferred stock.

**Additional Withholding Requirements**

Under sections 1471 through 1474 of the Internal Revenue Code (such sections commonly referred to as "FATCA"), a U.S. federal withholding tax will apply to dividends that we pay to certain foreign entities if such entities do not satisfy disclosure requirements related to U.S. accounts or ownership. Foreign entities must provide documentation evidencing compliance with or an exemption from FATCA, typically provided on IRS Form W-8BEN-E, to avoid this withholding tax. If a payment is both subject to withholding under FATCA and subject to withholding tax discussed above, the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax. Non-U.S. stockholders and U.S. stockholders holding through foreign

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accounts or intermediaries should consult their tax advisors to determine the applicability of FATCA in light of their individual circumstances.

**Information Reporting Requirements and Backup Withholding**

We will report to our stockholders and to the IRS the amount of distributions we pay during each calendar year, and the amount of tax we withhold, if any. Under the backup withholding rules, a stockholder may be subject to backup withholding with respect to distributions unless the holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

A stockholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the stockholder's income tax liability. In addition, we may be required to withhold a portion of capital gain distributions to any stockholders who fail to certify their non-foreign status to us.

Backup withholding generally will not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. stockholder provided that the non-U.S. stockholder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as providing a valid IRS Form W-8BEN, W-8BEN-E, or Form W-8ECI, or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient. Payments of the net proceeds from a disposition or a redemption effected outside the U.S. by a non-U.S. stockholder made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) generally will apply to such a payment if the broker has certain connections with the U.S. unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. stockholder and specified conditions are met or an exemption is otherwise established. Payment of the net proceeds from a disposition by a non-U.S. stockholder of our shares made by or through the U.S. office of a broker generally is subject to information reporting and backup withholding unless the non-U.S. stockholder certifies under penalties of perjury that it is not a U.S. person and satisfies certain other requirements, or otherwise establishes an exemption from information reporting and backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the stockholder's U.S. federal income tax liability if certain required information is furnished to the IRS. Stockholders are urged to consult their tax advisors regarding the application of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.

**Legislative or Other Actions Affecting REITs**

The present federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time. The REIT rules are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department, which may result in statutory changes as well as revisions to regulations and interpretations. In addition, several proposals have been made that would make substantial changes to the federal income tax laws generally. We cannot predict whether any of these changes will become law. We cannot predict the long-term effect of any future law changes on REITs or their stockholders. Prospective investors are urged to consult their tax advisors regarding the effect of potential changes to the federal income tax laws on an investment in our capital stock.

**State and Local Taxes**

We and/or our stockholders may be subject to taxation by various states and localities, including those in which we or a stockholder transacts business, owns property or resides. The state and local tax treatment may differ from the federal income tax treatment described above. Consequently, stockholders should consult their own tax advisors regarding the effect of state and local tax laws upon an investment in our capital stock.

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