STHO

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are included with respect to, among other things, Star Holdings’ (the “Company’s”) current business plan, business strategy, portfolio management, prospects and liquidity. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results or outcomes to differ materially from those contained in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in this Form 10-Q and the uncertainties and risks described in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), all of which could affect our future results of operations, financial condition and liquidity. For purposes of Management’s Discussion and Analysis of Financial Condition and Results of Operations, the terms “we,” “our” and “us” refer to Star Holdings and its consolidated subsidiaries, unless the context indicates otherwise. The discussion below should be read in conjunction with our consolidated financial statements and related notes in this quarterly report on Form 10-Q and our 2025 Annual Report. These historical financial statements may not be indicative of our future performance. Our Development Portfolio ​ Asbury Park Waterfront ​ We are the managing member in Asbury Partners, LLC, which is the joint venture that owns the Asbury Park Waterfront investment. The aggregate carrying value of the Asbury Park Waterfront investment was approximately $120.9 million as of June 30, 2026. The Asbury Park Waterfront investment includes the following: ● Asbury Ocean Club Surfside Resort and Residences: a 16-story mixed use project featuring 130 residential condominium units, a 54-key luxury boutique hotel, 24,000 square feet of retail space, 410 structured parking spaces and a 15,000 square foot gym and spa amenity area. The property was completed in 2019. The hotel is managed by a third party. As of June 30, 2026, all residential condominium units have been sold. ● The Asbury: a 110-key independent boutique hotel with indoor and outdoor event spaces, and a rooftop bar. The hotel was completed in 2016 and is managed by a third party. ● Asbury Lanes: a 12,000 square foot music and entertainment venue. The venue was completed in 2018, is connected to The Asbury and managed by a third party. 22 Table of Contents In addition to the operating assets, we also own remaining development sites. Our current strategy for the Asbury Park Waterfront investment is to actively asset manage our operating assets, and strategically monetize the remaining development sites and our operating assets through sales to third party developers and operators while meeting our obligations under the redevelopment agreement with the city of Asbury Park. ​ Magnolia Green ​ Magnolia Green is an approximately 1,900 acre multi-generational master planned residential community that is entitled for 3,550 single and multifamily dwelling units and approximately 193 acres of land for commercial development. The community is located 19 miles southwest of Richmond, Virginia and offers distinct phases designed for people in different life stages, from first home buyers to empty nesters in single family and townhomes built by the area’s top homebuilders. The project is anchored by the Magnolia Green Golf Club, a semi-private 18-hole Nicklaus Design championship golf course with full-service clubhouse and driving range. There are also numerous community amenities, including the Aquatic Center, featuring multiple pools and a snack bar, Arbor Walk, featuring a junior Olympic competition pool, water slide and sports courts, the Tennis Center, featuring tennis and pickleball courts and a pro shop, and miles of paved trails. The aggregate carrying value of our Magnolia Green assets as of June 30, 2026 was $33.0 million. As of June 30, 2026, 2,240 residential lots have been sold to homebuilders. We anticipate selling our remaining residential lots to homebuilders either upon completion of horizontal lot development or in bulk as unimproved lots. We currently expect such sales to occur over the next two years; however, it could take substantially longer. We anticipate selling the golf course operations to a third party upon completion of residential lot sellout. There can be no assurance, however, that these sales will be completed. Our Monetizing Portfolio ​ As of June 30, 2026, we owned assets that we expect to monetize primarily through asset sales, loan repayments or active asset management. These assets had an aggregate carrying value of approximately $77.0 million and were comprised primarily of loans and other lending investments, operating properties, land and other assets. Summarized information regarding these assets is set forth below. ​ Loans and other lending investments. The loans and other lending investments included in our monetizing portfolio as of June 30, 2026 includes one loan with a carrying value of $16.4 million and 11 available-for-sale debt securities with an aggregate carrying value of $46.1 million. ​ Land. The land asset included in our portfolio as of June 30, 2026 has a carrying value of approximately $14.4 million. Our general strategy is to seek to sell the land to third party developers. ​ Other. The remainder of the monetizing assets primarily consist of one property that was leased to us under a short term lease which had a carrying value of $0.1 million as of June 30, 2026 and a group of loans and equity interests that are recorded as having no carrying value in our financial statements. Our general strategy is to monetize the leased asset, although we may hold it until lease expiration. For the assets with no carrying value, we may seek to sell these assets but can give no assurance that we will recover any value from them ​ Investment in Safe. In addition to the assets described above, we also own the Safe Shares which had a fair value of $212.3 million based on the closing price of $15.70 as of June 30, 2026. Our Margin Loan Facility is collateralized by the Safe Shares as of the date of this filing. The net proceeds from the sale of any Safe Shares must be applied in accordance with the terms of the Margin Loan Facility. ​ Declines in the market value of the Safe Shares could require us to make prepayments of some or all of the outstanding borrowings under the Margin Loan Facility or post additional cash collateral. Accessing incremental borrowings under the Safe Credit Facility will increase our interest expense because the interest rate on all borrowings increases to 10.0% per annum while incremental borrowings remain outstanding. 23 Table of Contents ​ Results of Operations for the Three Months Ended June 30, 2026 compared to the Three Months Ended June 30, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ (in thousands) Operating lease income ​ $ 2,443 ​ $ 1,855 ​ $ 588 Interest income ​ 1,046 ​ 1,089 ​ (43) Other income ​ 14,657 ​ 12,504 ​ 2,153 Land development revenue ​ 1,215 ​ 26,606 ​ (25,391) Total revenue ​ 19,361 ​ 42,054 ​ (22,693) Interest expense ​ 4,076 ​ 3,956 ​ 120 Real estate expense ​ 14,055 ​ 12,348 ​ 1,707 Land development cost of sales ​ — ​ 18,505 ​ (18,505) Depreciation and amortization ​ 856 ​ 952 ​ (96) General and administrative ​ 2,616 ​ 3,255 ​ (639) Provision for (recovery of) loan losses ​ 6 ​ 25 ​ (19) Other expense ​ 1 ​ 2 ​ (1) Total costs and expenses ​ 21,610 ​ 39,043 ​ (17,433) Unrealized gain (loss) on equity investment ​ ​ 29,344 ​ ​ (42,732) ​ ​ 72,076 Income from sales of real estate ​ 14,365 ​ — ​ 14,365 Net income (loss) ​ $ 41,460 ​ $ (39,721) ​ $ 81,181 ​ Revenue—Operating lease income, which primarily includes income from commercial operating properties, was $2.4 million and $1.9 million, respectively, during the three months ended June 30, 2026 and 2025. The increase in 2026 was due primarily to an increase in percentage rent at one property and an increase in revenues at an entertainment venue, which was partially offset by a lease expiration in December 2025. Interest income decreased to $1.0 million for the three months ended June 30, 2026 from $1.1 million for the same period in 2025. The decrease in interest income was due primarily to a decrease in the average balance of our performing loans and other lending investments due to loan repayments. ​ Other income increased to $14.7 million during the three months ended June 30, 2026 from $12.5 million for the same period in 2025. Other income consists primarily of dividend income from our investment in Safe and income from our hotel properties and other operating properties, including Asbury Lanes and the Magnolia Green Golf Club, and other ancillary income. The increase in other income in 2026 was due primarily to $2.5 million related to a legal settlement with respect to one of iStar’s (refer to Note 1 to the consolidated financial statements) legacy assets. This amount was recorded upon settlement due to uncertainty regarding collectability of the funds and represents the gross amount of the settlement. Land development revenue and cost of sales—During the three months ended June 30, 2026, we recognized land development revenue of $1.2 million as variable consideration received in connection with a prior sale from our land and development portfolio. The variable consideration is based on the current owner’s sale activity from the land parcel and is recognized in revenue as earned upon actual sales occurring due to uncertainty around the extent and timing of such sales. During the three months ended June 30, 2025, we sold residential lots and recognized land development revenue of $26.6 million which had associated cost of sales of $18.5 million. The decrease in 2026 was primarily due to a bulk sale at our Asbury properties and lot sales at our Magnolia Green property in 2025. As we execute future sales and have fewer remaining residential and development assets, we expect our land development revenue will decline. The timing and amount of such sales cannot be predicted with certainty. Costs and expenses—For the three months ended June 30, 2026, we incurred $2.3 million of interest expense on the Safe Credit Facility and $1.8 million of interest expense on our Margin Loan Facility, net of amounts capitalized. We may elect to pay interest in kind ("PIK") on the Margin Loan Facility in respect of certain quarterly interest payments 24 Table of Contents and such PIK has been added to the principal balance on the Margin Loan Facility. The applicable margin on the Margin Loan Facility increases by 25 basis points for the entirety of the interest period immediately succeeding any interest period with respect to which we make a PIK election. For the three months ended June 30, 2025, we incurred $2.2 million of interest expense on the Safe Credit Facility and $1.7 million of interest expense on our Margin Loan Facility, net of amounts capitalized. Real estate expense was $14.1 million during the three months ended June 30, 2026 and $12.3 million for the same period in 2025. Real estate expense typically includes expenses at our hotel and retail operating properties and land properties. The increase in 2026 was due primarily to $1.2 million of expense related to a legal settlement with respect to one of iStar’s (refer to Note 1) legacy assets and an increase in expense at an entertainment venue. This amount was recorded upon settlement due to uncertainty regarding payment, which was contingent on the settlement. Depreciation and amortization was $0.9 million during the three months ended June 30, 2026 and $1.0 million for the same period in 2025. The decrease in 2026 was due primarily to certain assets at a property being fully depreciated. During the three months ended June 30, 2026, we incurred $2.6 million of general and administrative expense, primarily resulting from management fees to Safe and director costs. The annual management fee payable to our Manager under the Management Agreement declined from $15.0 million to $10.0 million for the third annual term of the Management Agreement which ended on March 31, 2026, and further declined to $7.5 million for the annual term ending March 31, 2027. During the three months ended June 30, 2025, we incurred $3.3 million of general and administrative expense, primarily resulting from management fees to Safe and director fees. The decrease in 2026 was due primarily to a decrease in management fees. The provision for loan losses was $6 thousand for the three months ended June 30, 2026 as compared to a provision for loan losses of $25 thousand for the same period in 2025. Unrealized gain (loss) on equity investment represents the unrealized gain or loss on our Safe Shares. We account for our Safe Shares as an equity investment under ASC 321, which requires that we adjust our investment in the Safe Shares to fair value through income at each reporting period. The unrealized gain for the three months ended June 30, 2026 represents the difference between the fair value of our investment in the Safe Shares as of June 30, 2026 and March 31, 2026. The unrealized loss for the three months ended June 30, 2025 represents the difference between the fair value of our investment in the Safe Shares as of June 30, 2025 and March 31, 2025. Income from sales of real estate for the three months ended June 30, 2026 resulted from the recognition of a sale of an asset from our monetizing portfolio. This sale was recognized in connection with the expiration of a lease as we surrendered the property back to a local municipality. Income recognized was primarily comprised of previously deferred income that was included in “Accounts payable, accrued expenses and other liabilities” in our consolidated balance sheets. ​ 25 Table of Contents Results of Operations for the Six Months Ended June 30, 2026 compared to the Six Months Ended June 30, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ (in thousands) Operating lease income ​ $ 4,480 ​ $ 3,709 ​ $ 771 Interest income ​ 1,543 ​ 2,188 ​ (645) Other income ​ 22,048 ​ 18,993 ​ 3,055 Land development revenue ​ 12,229 ​ 31,788 ​ (19,559) Total revenue ​ 40,300 ​ 56,678 ​ (16,378) Interest expense ​ 10,164 ​ 7,719 ​ 2,445 Real estate expense ​ 25,561 ​ 22,042 ​ 3,519 Land development cost of sales ​ 9,342 ​ 25,332 ​ (15,990) Depreciation and amortization ​ 3,084 ​ 1,929 ​ 1,155 General and administrative ​ 5,902 ​ 7,972 ​ (2,070) Provision for (recovery of) loan losses ​ 425 ​ (112) ​ 537 Other expense ​ 366 ​ 7 ​ 359 Total costs and expenses ​ 54,844 ​ 64,889 ​ (10,045) Unrealized gains (losses) on equity investments ​ ​ 27,181 ​ (39,486) ​ 66,667 Income from sales of real estate ​ 14,365 ​ — ​ 14,365 Loss on early extinguishment of debt, net ​ — ​ (70) ​ 70 Net income (loss) ​ $ 27,002 ​ $ (47,767) ​ $ 74,769 ​ Revenue—Operating lease income, which primarily includes income from commercial operating properties, was $4.5 million and $3.7 million, respectively, during the six months ended June 30, 2026 and 2025. The increase in 2026 was due primarily to one property beginning operations in September 2025 and an increase in revenues at an entertainment venue, which was partially offset by a lease expiration in December 2025. Interest income decreased to $1.5 million for the six months ended June 30, 2026 from $2.2 million for the same period in 2025. The decrease in interest income was due primarily to a decrease in the average balance of our performing loans and other lending investments due to loan repayments. ​ Other income increased to $22.0 million during the six months ended June 30, 2026 from $19.0 million for the same period in 2025. Other income consists primarily of dividend income from our investment in Safe and income from our hotel properties and other operating properties, including Asbury Lanes and the Magnolia Green Golf Club, and other ancillary income. The increase in other income in 2026 was due primarily to $3.5 million related to a legal settlement with respect to one of iStar’s (refer to Note 1 to the consolidated financial statements) legacy assets. This amount was recorded upon settlement due to uncertainty regarding collectability of the funds and represents the gross amount of the settlement. Land development revenue and cost of sales—During the six months ended June 30, 2026, we recognized land development revenue of $1.5 million as variable consideration received in connection with a prior sale from our land and development portfolio. The variable consideration is based on the current owner’s sale activity from the land parcel and is recognized in revenue as earned upon actual sales occurring due to uncertainty around the extent and timing of such sales. During the six months ended June 30, 2026, we sold residential lots and units and recognized land development revenue of $10.7 million which had associated cost of sales of $9.3 million. During the six months ended June 30, 2025, we sold residential lots and recognized land development revenue of $31.8 million which had associated cost of sales of $25.3 million. The decrease in 2026 was primarily due to a decrease in lot sales at our Magnolia Green property. As we execute future sales and have fewer remaining residential and development assets, we expect our land development revenue will decline. The timing and amount of such sales cannot be predicted with certainty. Costs and expenses—For the six months ended June 30, 2026, we incurred $4.6 million of interest expense on the Safe Credit Facility, $3.5 million of interest expense on our Margin Loan Facility, net of amounts capitalized and $2.1 million on the Loan (refer to Note 9 to the consolidated financial statements). We may elect to pay interest 26 Table of Contents in kind ("PIK") on the Margin Loan Facility in respect of certain quarterly interest payments and such PIK has been added to the principal balance on the Margin Loan Facility. The applicable margin on the Margin Loan Facility increases by 25 basis points for the entirety of the interest period immediately succeeding any interest period with respect to which we make a PIK election. For the six months ended June 30, 2025, we incurred $4.4 million of interest expense on the Safe Credit Facility and $3.3 million of interest expense on our Margin Loan Facility, net of amounts capitalized. Real estate expense was $25.6 million during the six months ended June 30, 2026 and $22.0 million for the same period in 2025. Real estate expense typically includes expenses at our hotel and retail operating properties and land properties. The increase in 2026 was due primarily to one property beginning operations in September 2025, an increase in expense at an entertainment venue in 2026 and $1.7 million of expense related to a legal settlement with respect to one of iStar’s (refer to Note 1) legacy assets. This amount was recorded upon settlement due to uncertainty regarding payment, which was contingent on the settlement. Depreciation and amortization was $3.1 million during the six months ended June 30, 2026 and $1.9 million for the same period in 2025. The increase in 2026 was due primarily to one property beginning operations in September 2025. During the six months ended June 30, 2026, we incurred $5.9 million of general and administrative expense, primarily resulting from management fees to Safe and director costs. The annual management fee payable to our Manager under the Management Agreement declined from $15.0 million to $10.0 million for the third annual term of the Management Agreement which ended on March 31, 2026, and further declined to $7.5 million for the annual term ending March 31, 2027. During the six months ended June 30, 2025, we incurred $8.0 million of general and administrative expense, primarily resulting from management fees to Safe and director fees. The decrease in 2026 was due primarily to a decrease in management fees. The provision for loan losses was $0.4 million for the six months ended June 30, 2026 as compared to a recovery of loan losses of $0.1 million for the same period in 2025. The provision for loan losses for the six months ended June 30, 2026 resulted primarily from a $0.5 million charge-off on a loan that was repaid. The recovery of loan losses for the six months ended June 30, 2025 resulted primarily from a net decrease in the balance of our loan portfolio during the period and an improving economic forecast. Other expense was $0.4 million during the six months ended June 30, 2026 and $7 thousand for the same period in 2025. Other expense for the six months ended June 30, 2026 resulted primarily from a loss on deconsolidation of a venture (refer to Note 5 to the consolidated financial statements). Unrealized gain (loss) on equity investment represents the unrealized gain or loss on our Safe Shares. We account for our Safe Shares as an equity investment under ASC 321, which requires that we adjust our investment in the Safe Shares to fair value through income at each reporting period. The unrealized gain for the six months ended June 30, 2026 represents the difference between the fair value of our investment in the Safe Shares as of June 30, 2026 and December 31, 2025. The unrealized loss for the six months ended June 30, 2025 represents the difference between the fair value of our investment in the Safe Shares as of June 30, 2025 and December 31, 2024. Income from sales of real estate for the six months ended June 30, 2026 resulted from the recognition of a sale of an asset from our monetizing portfolio. This sale was recognized in connection with the expiration of a lease as we surrendered the property back to a local municipality. Income recognized was primarily comprised of previously deferred income that was included in “Accounts payable, accrued expenses and other liabilities” in our consolidated balance sheets. Loss on early extinguishment of debt during the six months ended June 30, 2025 resulted from the partial repayment of the Margin Loan Facility. Liquidity and Capital Resources Liquidity is a measure of our ability to meet potential cash requirements, including to pay interest and repay borrowings, develop our assets and maintain our operations, make distributions to our shareholders and meet other general business needs. We were formed in 2023 and we have not paid any dividends. We do not expect to pay regular dividends. 27 Table of Contents We intend to make distributions of available cash from time to time, primarily dependent upon our ability to sell assets and the prices at which we sell our assets. Our sources of cash will be largely dependent on asset sales, which are difficult to predict in terms of timing and amount. While we may be able to anticipate and plan for certain liquidity needs, there may be unexpected increases in uses of cash that are beyond our control and which would affect our financial position, liquidity and results of operations, such as prepayments on the Margin Loan Facility resulting from declines in the market value of the Safe Shares. Even if there are no material changes to our anticipated liquidity requirements, our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or needed. Our primary sources of liquidity will generally consist of our cash on hand and proceeds from asset sales. We expect our short-term and long-term liquidity requirements to include: ● capital expenditures on our Asbury Park Waterfront and Magnolia Green development projects; ​ ● debt service on the Safe Credit Facility and the Margin Loan Facility (refer to Note 9 to the consolidated financial statements), and any other indebtedness including any repurchase agreements; ● repayment or refinancing of the Margin Loan Facility and the Safe Credit Facility at their respective maturities; ​ ● management fees and expense reimbursements payable to our Manager (refer to Note 7 to the consolidated financial statements); ​ ● operating expenses; and ​ ● distributions to shareholders if we have excess cash on hand from asset sales after the payment of our debt obligations. ​ ​ We expect to meet our short-term liquidity requirements through any cash flows from operations, proceeds from asset sales, borrowings on available debt facilities and our unrestricted cash. We expect to meet our long-term liquidity requirements through any cash flows from operations and proceeds from asset sales and through refinancing maturing debt. Our future cash sources will be largely dependent on proceeds from asset sales. The amount and timing of asset sales, including the sale of Safe Shares, could be adversely affected by a number of factors, some of which are outside of our control, including the macroeconomic factors discussed below. We cannot predict with certainty the specific transactions we will undertake to generate sufficient liquidity to meet our obligations as they come due. We will adjust our plans as appropriate in response to changes in our expectations and changes in market conditions. The uncertainty related to macroeconomic factors such as inflation, changes in interest rates, market volatility, disruptions in the banking sector, tariff policy, geopolitical uncertainty and the availability of financing, and the effects of these factors on the economy generally and on the commercial real estate markets in which we operate, make it impossible for us to predict or to quantify the impact of these or other trends on our financial results or liquidity. ​ The following table outlines our cash flows from operating activities, cash flows from investing activities and cash flows from financing activities for the six months ended June 30, 2026 and 2025 ($ in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended June 30, ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ Cash flows provided by (used in) operating activities ​ $ (11,230) ​ $ (8,966) Cash flows provided by (used in) investing activities ​ ​ (5,793) ​ ​ (4,403) Cash flows provided by (used in) financing activities ​ ​ 2,658 ​ ​ 23,710 ​ The increase in cash flows used in operating activities during 2026 was due primarily to a real estate property beginning operations in the second half of 2025. The increase in cash flows used in investing activities during 2026 was due primarily to the purchase of other lending investments, a decrease in proceeds received from sales of land and development assets and the deconsolidation of a venture in 2026, which was partially offset by a decrease in capital expenditures. The decrease in cash flows provided by financing activities during 2026 was due primarily to a net decrease in borrowings on debt obligations and the repurchase of common stock in 2026. ​ 28 Table of Contents Debt Covenants—The Margin Loan Facility requires that we comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, indebtedness, liens, investments and the payment of dividends. Additionally, the Margin Loan Facility includes customary representations and warranties, events of default and other creditor protections for this type of facility. Upon the occurrence of certain events which are customary for this type of facility, we may be required to prepay all amounts due under the Margin Loan Facility or post additional collateral in accordance with the Margin Loan Facility and related agreements. As part of the amendment to the Margin Loan Facility that we entered into on March 28, 2025, the loan-to-value ratios that would require us to post additional collateral with the lender or permit us to request a release of collateral were eased from then existing levels. ​ The Safe Credit Facility requires that we comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, indebtedness, liens, investments, mergers, asset sales and the payment of certain dividends. Additionally, the Safe Credit Facility includes customary representations and warranties as well as customary events of default, the occurrence of which, following any applicable grace period, would permit Safe to, among other things, declare the principal, accrued interest and other obligations of ours under the Safe Credit Facility to be immediately due and payable and foreclose on the collateral securing the Safe Credit Facility. As of June 30, 2026, we were in compliance with all of our financial covenants. Critical Accounting Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments in certain circumstances that affect amounts reported as assets, liabilities, revenues and expenses. We have established detailed policies and control procedures intended to ensure that valuation methods, including any judgments made as part of such methods, are well controlled, reviewed and applied consistently from period to period. We base our estimates on historical corporate and industry experience and various other assumptions that we believe to be appropriate under the circumstances. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and, therefore, routinely require adjustment. For a discussion of our critical accounting policies, refer to the combined and consolidated financial statements of our 2025 Annual Report. ​

Market Risks Market risk is the exposure to loss resulting from changes in interest rates, commodity prices and equity prices. In pursuing our business plan, the primary market risk to which we are exposed is interest rate risk. Our operating results will depend in part on the difference between the interest and related income earned on our assets and the interest expense incurred in connection with our interest-bearing liabilities. Changes in the general level of interest rates prevailing in the financial markets will affect our floating liabilities. Any significant increase in interest rates on our interest-bearing liabilities could have a material adverse effect on us. There can be no assurance that our profitability will not be materially adversely affected during any period as a result of changing interest rates. In the event of a significant rising interest rate environment or economic downturn, defaults could increase and cause us to incur additional credit losses which would adversely affect our liquidity and operating results. Such delinquencies or defaults would likely have a material adverse effect on the spreads between interest-earning assets and interest-bearing liabilities. In addition, an increase in interest rates could, among other things, reduce the value of our fixed-rate interest-bearing assets and our ability to realize gains from the sale of such assets. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control. We monitor the spreads between our interest-earning assets and interest-bearing liabilities and may implement hedging strategies to limit the effects of changes in interest rates on our operations, including engaging in interest rate swaps, interest rate caps and other interest 29 Table of Contents rate-related derivative contracts. Such strategies are designed to reduce our exposure, on specific transactions or on a portfolio basis, to changes in cash flows as a result of interest rate movements in the market. We do not enter into derivative contracts for speculative purposes or as a hedge against changes in our credit risk or the credit risk of our borrowers. The following table quantifies the potential changes in annual net income, assuming no change in our interest earning assets or interest-bearing liabilities, should interest rates decrease or increase by 10, 50 or 100 basis points, assuming no change in the shape of the yield curve (i.e., relative interest rates). Actual results could differ significantly from those estimated in the table. Estimated Change In Net Income ($ in thousands) ​ ​ ​ ​ Change in Interest Rates ​ ​ ​ ​ Net Income(1) -100 Basis Points ​ $ 417 -50 Basis Points ​ 209 -10 Basis Points ​ ​ 42 Base Interest Rate ​ — +10 Basis Points ​ (42) +50 Basis Points ​ (209) +100 Basis Points ​ (417) (1) As of June 30, 2026, we had $94.5 million principal amount of floating-rate debt obligations outstanding and $52.8 million of cash and restricted cash. ​ ​

The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to the Company’s business as a finance and investment company focused on the commercial real estate industry, including foreclosure-related proceedings. The Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding that would have a material adverse effect on the Company’s consolidated financial statements. ​

There were no material changes from the risk factors previously disclosed in our 2025 Annual Report. ​