10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

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

For the transition period from _________ to __________

Commission File Number: 1-32733

ACRES COMMERCIAL REALTY CORP.

(Exact name of registrant as specified in its charter)

Maryland	20-2287134
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

390 RXR Plaza, Uniondale, New York 11556

(Address of principal executive offices) (Zip Code)

(516) 535-0015

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes  ☑ No

The number of outstanding shares of the registrant’s common stock on May 6, 2022 was 9,100,548 shares.

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

		PAGE
PART I		3
Item 1:	Financial Statements	3
	Consolidated Balance Sheets - March 31, 2022 (unaudited) and December 31, 2021	3
	Consolidated Statements of Operations (unaudited) Three Months Ended March 31, 2022 and 2021	5
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) Three Months Ended March 31, 2022 and 2021	6
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) Three Months Ended March 31, 2022 and 2021	7
	Consolidated Statements of Cash Flows (unaudited) Three Months Ended March 31, 2022 and 2021	8
	Notes to Consolidated Financial Statements - March 31, 2022 (unaudited)	9
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	60
Item 4:	Controls and Procedures	61
PART II		62
Item 1:	Legal Proceedings	62
Item 1A:	Risk Factors	62
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 5	Other Information	62
Item 6:	Exhibits	63
SIGNATURES		67

PART I

ITEM 1. FINANCIAL STATEMENTS

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	March 31, 2022			December 31, 2021
	(unaudited)
ASSETS (1)
Cash and cash equivalents	$	79,561		$	35,500
Restricted cash		5,734			248,431
Accrued interest receivable		6,282			6,112
CRE loans		1,896,425			1,882,551
Less: allowance for credit losses		(4,706	)		(8,805	)
CRE loans, net		1,891,719			1,873,746
Principal paydowns receivable		—			14,899
Loan receivable - related party		11,525			11,575
Investments in unconsolidated entities		1,548			1,548
Property held for sale		17,657			17,846
Investments in real estate		58,782			59,308
Right of use assets		5,918			5,951
Intangible assets		2,987			3,877
Other assets		5,412			5,482
Total assets	$	2,087,125		$	2,284,275
LIABILITIES (2)
Accounts payable and other liabilities	$	8,182		$	7,025
Management fee payable - related party		557			561
Accrued interest payable		2,598			5,937
Borrowings		1,626,204			1,814,424
Lease liabilities		3,514			3,537
Distributions payable		3,262			3,262
Accrued tax liability		106			1
Liabilities held for sale		—			1,333
Total liabilities		1,644,423			1,836,080
STOCKHOLDERS’ EQUITY
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
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; 4,607,857 and 4,607,857 shares issued and outstanding		5			5
Common stock, par value $0.001:  41,666,666 shares authorized; 8,834,527 and 9,149,079 shares issued and outstanding (including 333,329 and 333,329 of unvested restricted shares)		9			9
Additional paid-in capital		1,176,685			1,179,863
Accumulated other comprehensive loss		(7,671	)		(8,127	)
Distributions in excess of earnings		(726,331	)		(723,560	)
Total stockholders’ equity		442,702			448,195
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,087,125		$	2,284,275

The accompanying notes are an integral part of these statements

3

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - (Continued)

(in thousands, except share and per share data)

	March 31, 2022		December 31, 2021
	(unaudited)
(1) Assets of consolidated variable interest entities (“VIEs”) included in total assets above:
Restricted cash	$	4,866	$	248,371
Accrued interest receivable		4,504		3,826
CRE loans, pledged as collateral (3)		1,486,805		1,601,482
Principal paydowns receivable		—		14,899
Other assets		53		36
Total assets of consolidated VIEs	$	1,496,228	$	1,868,614
(2) Liabilities of consolidated VIEs included in total liabilities above:
Accounts payable and other liabilities	$	100	$	315
Accrued interest payable		1,001		997
Borrowings		1,231,153		1,466,499
Total liabilities of consolidated VIEs	$	1,232,254	$	1,467,811

(3) Excludes the allowance for credit losses.

The accompanying notes are an integral part of these statements

4

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

	For the Three Months Ended
	March 31,
	2022			2021
REVENUES
Interest income:
CRE loans	$	22,657		$	24,575
Securities		—			161
Other		19			13
Total interest income		22,676			24,749
Interest expense		14,907			13,724
Net interest income		7,769			11,025
Real estate income		3,138			1,654
Other revenue		16			16
Total revenues		10,923			12,695
OPERATING EXPENSES
General and administrative		3,457			3,153
Real estate expenses		4,794			1,831
Management fees - related party		1,682			1,326
Equity compensation - related party		744			19
Corporate depreciation and amortization		22			44
Reversal of credit losses, net		(1,802	)		(5,641	)
Total operating expenses		8,897			732
		2,026			11,963
OTHER INCOME (EXPENSE)
Net realized and unrealized gain on investment securities available-for-sale and loans and derivatives		—			878
Loss on extinguishment of debt		(460	)		—
Other income		798			215
Total other income		338			1,093
INCOME BEFORE TAXES		2,364			13,056
Income tax expense		(280	)		—
NET INCOME		2,084			13,056
Net income allocated to preferred shares		(4,855	)		(2,588	)
NET (LOSS) INCOME ALLOCABLE TO COMMON SHARES	$	(2,771	)	$	10,468
NET (LOSS) INCOME PER COMMON SHARE - BASIC	$	(0.30	)	$	1.03
NET (LOSS) INCOME PER COMMON SHARE - DILUTED	$	(0.30	)	$	1.03
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		9,096,977			10,196,124
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		9,096,977			10,205,369

The accompanying notes are an integral part of these statements

5

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	For the Three Months Ended
	March 31,
	2022			2021
Net income	$	2,084		$	13,056
Other comprehensive income:
Reclassification adjustments associated with net unrealized losses from interest rate swaps included in net income		456			456
Total other comprehensive income		456			456
Comprehensive income before allocation to preferred shares		2,540			13,512
Net income allocated to preferred shares		(4,855	)		(2,588	)
Comprehensive (loss) income allocable to common shares	$	(2,315	)	$	10,924

The accompanying notes are an integral part of these statements

6

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

	Common Stock					Series C Preferred		Series D Preferred		Additional Paid-In			Accumulated Other Comprehensive			Retained Earnings (Distributions in Excess			Total Stockholders’
	Shares			Amount		Stock		Stock		Capital			(Loss) Income			of Earnings)			Equity
Balance, December 31, 2021		9,149,079		$	9	$	5	$	5	$	1,179,863		$	(8,127	)	$	(723,560	)	$	448,195
Offering costs		—			—		—		—		(37	)		—			—			(37	)
Purchase and retirement of common stock		(314,552	)		—		—		—		(3,885	)		—			—			(3,885	)
Amortization of stock-based compensation		—			—		—		—		744			—			—			744
Net income		—			—		—		—		—			—			2,084			2,084
Distributions and accrual of cumulative preferred stock dividends		—			—		—		—		—			—			(4,855	)		(4,855	)
Amortization of terminated derivatives		—			—		—		—		—			456			—			456
Balance, March 31, 2022		8,834,527		$	9	$	5	$	5	$	1,176,685		$	(7,671	)	$	(726,331	)	$	442,702

	Common Stock						Series C Preferred		Additional Paid-In			Accumulated Other Comprehensive			Retained Earnings (Distributions in Excess			Total Stockholders’
	Shares			Amount			Stock		Capital			(Loss) Income			of Earnings)			Equity
Balance, December 31, 2020		10,162,289		$	10		$	5	$	1,085,941		$	(9,978	)	$	(741,596	)	$	334,382
Purchase and retirement of common stock		(744,778	)		(1	)		—		(9,518	)		—			—			(9,519	)
Amortization of stock-based compensation		—			—			—		19			—			—			19
Net income		—			—			—		—			—			13,056			13,056
Distributions and accrual of cumulative preferred stock dividends		—			—			—		—			—			(2,588	)		(2,588	)
Amortization of terminated derivatives		—			—			—		—			456			—			456
Balance, March 31, 2021		9,417,511		$	9		$	5	$	1,076,442		$	(9,522	)	$	(731,128	)	$	335,806

The accompanying notes are an integral part of these statements

7

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Three Months Ended
	March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,084		$	13,056
Adjustments to reconcile net income from operations to net cash provided by operating activities:
Reversal of credit losses, net		(1,802	)		(5,641	)
Depreciation, amortization and accretion		3,508			2,366
Amortization of stock-based compensation		744			19
Net realized and unrealized gain on investment securities available-for-sale and loans and derivatives		—			(878	)
Loss on extinguishment of debt		460			—
Changes in operating assets and liabilities		(3,440	)		564
Net cash provided by operating activities		1,554			9,486
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination and purchase of loans		(106,768	)		(130,849	)
Principal payments received on loans		107,192			176,988
Investments in real estate		188			—
Proceeds from sale of investment securities available-for-sale		—			2,958
Principal payments received on loan - related party		50			50
Purchase of furniture and fixtures		(9	)		(43	)
Net cash provided by investing activities		653			49,104
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock		(3,885	)		(9,519	)
Proceeds from issuance of preferred stock (net of $37 of underwriting discounts and offering costs)		(37	)		—
Proceeds from borrowings:
Senior secured financing facility		10,150			34,321
Warehouse financing facilities and repurchase agreements		84,992			115,603
Payments on borrowings:
Securitizations		(237,189	)		(127,525	)
Senior secured financing facility		(10,150	)		(22,813	)
Convertible senior notes		(39,839	)		—
Payment of debt issuance costs		(30	)		—
Distributions paid on preferred stock		(4,855	)		(2,588	)
Net cash used in financing activities		(200,843	)		(12,521	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(198,636	)		46,069
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEG. OF PERIOD		283,931			67,741
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	85,295		$	113,810

The accompanying notes are an integral part of these statements

8

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(unaudited)

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 investment in ACRES Realty Funding, Inc. (“ACRES RF”), a wholly-owned subsidiary that holds CRE loans, investments in commercial real estate properties and investments in CRE securitizations, which are consolidated as VIEs as discussed in Note 3.

Reverse Stock Split

Effective February 16, 2021, the Company completed a one-for-three reverse stock split of its outstanding common stock. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. In addition, the Company adopted articles of amendment to its charter, which provided that the par value of the Company’s common stock remained $0.001 immediately after effect was given for the reverse stock split. No fractional shares were issued in connection with the reverse stock split. Stockholders who otherwise held fractional shares of the Company’s common stock as a result of the reverse stock split received a cash payment in lieu of such fractional shares.

In May 2021, the Company adopted articles of amendment to its charter to decrease its authorized shares of capital stock from 225,000,000 shares, consisting of 125,000,000 shares of common stock and 100,000,000 shares of preferred stock to 141,666,666 shares, consisting of 41,666,666 shares of common stock and 100,000,000 shares of preferred stock.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). 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.

Basis of Presentation

All adjustments necessary to fairly present the Company’s financial position, results of operations and cash flows have been made.

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 and derivatives, 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.

The coronavirus (“COVID-19”) pandemic continues to plague countries throughout the globe as virus variants have emerged, leading numerous countries, including the U.S., to declare national emergencies. Many countries responded to the initial outbreak in late 2019 by instituting quarantines, restricting travel and limiting operations of non-essential offices and retail centers, which resulted in the closure or remote operation of non-essential businesses, increased rates of unemployment and market disruption in connection with the economic uncertainty. While the U.S. and certain countries around the world have eased restrictions and financial markets have stabilized to some degree in connection with the development and distribution of vaccines and other effective COVID-19 treatments, the pandemic continues to cause uncertainty on the U.S. and global economies, generally, and the CRE business, specifically. Estimates

9

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

and assumptions as of March 31, 2022, are inherently less certain than they would be absent the current and potential impacts of COVID-19, particularly the reinstatement of restrictions placed on businesses. The Company believes the estimates and assumptions underlying the consolidated financial statements are reasonable and supportable based on the information available at March 31, 2022. Actual results may ultimately differ from those estimates.

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. At March 31, 2022 and December 31, 2021, approximately $77.4 million and $33.3 million, respectively, of the reported cash balances exceeded the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation deposit insurance limits of $250,000 per respective depository or brokerage institution. However, all of the Company’s cash deposits are held at multiple, established financial institutions, in multiple accounts associated with its parent and respective consolidated subsidiaries, to minimize credit risk exposure.

Restricted cash includes required account balance minimums primarily for the Company’s CRE debt securitizations, term warehouse financing facilities and repurchase agreements as well as cash held in the syndicated corporate loan collateralized debt obligations (“CDOs”).

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):

	March 31,
	2022		2021
Cash and cash equivalents	$	79,561	$	70,985
Restricted cash		5,734		42,825
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$	85,295	$	113,810

Investment in Real Estate

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

Category	Term
Building	35 to 40 years
Building improvements	8 to 35 years
Site improvements	10 years
Tenant improvements	180 days to 3 years
Furniture, fixtures and equipment	3 to 12 years
Right of use assets	66.3 years
Intangible assets	180 days to 16.5 years
Lease liabilities	66.3 years

Income Taxes

The Company recorded a full valuation allowance against its net deferred tax assets (tax effected expense of $21.5 million) at March 31, 2022, as the Company believes it is more likely than not that the deferred tax assets will 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.

10

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

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.

Recent Accounting Standards

Accounting Standards Adopted in 2022

In August 2020, the Financial Accounting Standards Board (“FASB”) issued guidance that removes certain separation models for convertible debt instruments and convertible preferred stock that require the separation into a debt component and an equity or derivative component. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, if no other features require bifurcation and recognition as derivatives and the convertible instrument is not issued with substantial premiums accounted for as paid-in capital. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate. The guidance also revises the derivative scope exception for contracts in an entity’s own equity and improves the consistency of EPS calculations. Adoption did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards to be Adopted in Future Periods

In March 2022, the FASB issued an amendment eliminating certain previously issued accounting guidance for troubled debt restructurings (“TDRs”) and enhancing disclosure requirements surrounding refinancings, restructurings, and write-offs. Current GAAP provides an exception to general recognition and measurement guidance for loan restructurings if they meet specific criteria to be considered TDRs. If a modification is a TDR, incremental expected losses are recorded in the allowance for credit losses upon modification and specific disclosures are required. The new amendment eliminates the TDR recognition and measurement guidance and requires the reporting entity to evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with accounting for other loan modifications. The amendment also requires public business entities to disclose current-period gross write-offs by year of origination for certain financing receivables and net investments in leases. For entities that have adopted the previously issued guidance amended by this update, which the Company did during the year ended December 31, 2020, this update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted the previously issued guidance amended by this update. The Company is in the process of evaluating the impact of this guidance.

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 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 five and seven VIEs at March 31, 2022 and December 31, 2021, respectively (collectively, the “Consolidated VIEs”).

The Consolidated VIEs are CRE securitizations and CDOs that were formed on behalf of the Company to invest in real estate-related securities, commercial mortgage-backed securities (“CMBS”), syndicated corporate loans and corporate bonds and 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.

11

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

The Company has exposure to losses on its securitizations to the extent of its investments in the subordinated debt and preferred equity of each securitization. The Company is 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 holds in these securitizations have 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 include 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 are 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 have no recourse to the general credit of the Company, nor to each other. During the three months ended March 31, 2022 and 2021, the Company did not provide any financial support to any of its VIEs nor does it have any requirement to do so, although it may choose to do so in the future to maximize future cash flows from such investments to the Company. There are no explicit arrangements that obligate the Company to provide financial support to any of its Consolidated VIEs.

The following table shows the classification and carrying values of assets and liabilities of the Company’s Consolidated VIEs at March 31, 2022 (in thousands):

	CRE Securitizations		Other		Total
ASSETS
Restricted cash	$	4,482	$	384	$	4,866
Accrued interest receivable		4,504		—		4,504
CRE loans, pledged as collateral (1)		1,486,805		—		1,486,805
Other assets		53		—		53
Total assets (2)	$	1,495,844	$	384	$	1,496,228
LIABILITIES
Accounts payable and other liabilities	$	100	$	—	$	100
Accrued interest payable		1,001		—		1,001
Borrowings		1,231,153		—		1,231,153
Total liabilities	$	1,232,254	$	—	$	1,232,254

(1) Excludes allowance for credit losses.

(2) Assets of each of the Consolidated VIEs may only be used to settle the obligations of each respective VIE.

Unconsolidated VIEs (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 VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. Accordingly, the following VIEs are not consolidated in the Company’s financial statements at March 31, 2022. 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.

Unsecured Junior Subordinated Debentures

The Company has a 100% interest in the common shares of each of 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 March 31, 2022. 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.

12

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

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.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs at March 31, 2022 (in thousands):

	Unsecured Junior Subordinated Debentures			Maximum Exposure to Loss
ASSETS
Accrued interest receivable	$	6		$	—
Investments in unconsolidated entities		1,548		$	1,548
Total assets		1,554
LIABILITIES
Accrued interest payable		186		N/A
Borrowings		51,548		N/A
Total liabilities		51,734		N/A
Net (liability) asset	$	(50,180	)	N/A

At March 31, 2022, there were no explicit arrangements or implicit variable interests that could require the Company to provide financial support to any of its unconsolidated VIEs.

NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION

The following table summarizes the Company’s supplemental disclosure of cash flow information (in thousands):

	For the Three Months Ended
	March 31,
	2022		2021
Supplemental cash flows:
Interest expense paid in cash	$	14,894	$	12,969
Income taxes paid in cash	$	180	$	—
Non-cash operating activities include the following:
Receipt of right of use assets	$	—	$	(6	)
Execution of operating leases	$	—	$	6
Non-cash financing activities include the following:
Distributions on preferred stock accrued but not paid	$	3,262	$	1,725

13

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

NOTE 5 - LOANS

The following is a summary of the Company’s loans (dollars in thousands, except amounts in footnotes):

Description	Quantity		Principal		Unamortized (Discount) Premium, net (1)			Amortized Cost		Allowance for Credit Losses			Carrying Value		Contractual Interest Rates (2)	Maturity Dates (3)(4)
At March 31, 2022:
CRE loans held for investment:
Whole loans (5)(6)		88	$	1,904,974	$	(13,249	)	$	1,891,725	$	(4,470	)	$	1,887,255	1M BR plus 2.75% to 1M BR plus 8.50%	April 2022 to September 2025
Mezzanine loan (5)		1		4,700		—			4,700		(236	)		4,464	10.00%	June 2028
Total CRE loans held for investment			$	1,909,674	$	(13,249	)	$	1,896,425	$	(4,706	)	$	1,891,719
At December 31, 2021:
CRE loans held for investment:
Whole loans (5)(6)		93	$	1,891,795	$	(13,944	)	$	1,877,851	$	(8,550	)	$	1,869,301	1M BR plus 2.70% to 1M BR plus 8.50%	January 2022 to September 2025
Mezzanine loan (5)		1		4,700		—			4,700		(255	)		4,445	10.00%	June 2028
Total CRE loans held for investment			$	1,896,495	$	(13,944	)	$	1,882,551	$	(8,805	)	$	1,873,746

(1) Amounts include unamortized loan origination fees of $13.0 million and $13.6 million and deferred amendment fees of $248,000 and $307,000 at March 31, 2022 and December 31, 2021, respectively. Additionally, the amounts include unamortized loan acquisition costs of $7,300 at December 31, 2021.

(2) The Company’s whole loan portfolio of $1.9 billion at each period presented had weighted-average one-month benchmark rate (“BR”) floors of 0.66% and 0.75% at March 31, 2022 and December 31, 2021, respectively. Benchmark rates comprise one-month London Interbank Offered Rate (“LIBOR”) or one-month Term Secured Overnight Financing Rate (“SOFR”). At March 31, 2022 and December 31, 2021, all but one of the Company’s floating-rate whole loans had one-month benchmark floors.

(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 one and three whole loans, with amortized costs of $8.0 million and $27.9 million, in maturity default at March 31, 2022 and December 31, 2021, respectively.

(5) Substantially all loans are pledged as collateral under various borrowings at March 31, 2022 and December 31, 2021.

(6) CRE whole loans had $145.5 million and $157.6 million in unfunded loan commitments at March 31, 2022 and December 31, 2021, 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.

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	2022		2023		2024 and Thereafter		Total
At March 31, 2022:
Whole loans (1)	$	319,577	$	214,833	$	1,349,290	$	1,883,700
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	319,577	$	214,833	$	1,353,990	$	1,888,400
Description	2022		2023		2024 and Thereafter		Total
At December 31, 2021:
Whole loans (1)	$	377,024	$	230,872	$	1,242,013	$	1,849,909
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	377,024	$	230,872	$	1,246,713	$	1,854,609

14

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

(1) Maturity dates exclude one and three whole loans, with amortized costs of $8.0 million and $27.9 million, in maturity default at March 31, 2022 and December 31, 2021, respectively.

(2) At March 31, 2022, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $52.0 million, $110.0 million and $1.7 billion in 2022, 2023 and 2024 and thereafter, respectively. At December 31, 2021, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $52.0 million, $127.6 million and $1.7 billion in 2022, 2023 and 2024 and thereafter, respectively.

At March 31, 2022, approximately 26.8%, 22.3% and 14.2% of the Company’s CRE loan portfolio was concentrated in the Southeast, Southwest and Mid-Atlantic regions, respectively, based on carrying value, as defined by the National Council of Real Estate Investment Fiduciaries. At December 31, 2021, approximately 28.4%, 18.4% and 15.2% of the Company’s CRE loan portfolio was concentrated in the Southeast, Southwest and Mid-Atlantic regions, respectively, based on carrying value. At March 31, 2022 and December 31, 2021, no single loan or investment represented more than 10% of the Company’s total assets, and no single investor group generated over 10% of the Company’s revenue.

Principal Paydowns Receivable

Principal paydowns receivable represents loan principal payments that have been received by the Company’s servicers and trustees but have not been remitted to the Company. At March 31, 2022, the Company had no loan principal paydowns receivable. At December 31, 2021, the Company had $14.9 million of loan principal paydowns receivable, all of which was received in cash by the Company in January 2022.

NOTE 6 - FINANCING RECEIVABLES

The following table shows the activity in the allowance for credit losses for the three months ended March 31, 2022 and year ended December 31, 2021 (in thousands):

	Three Months Ended March 31, 2022			Year Ended December 31, 2021
	CRE Loans			CRE Loans
Allowance for credit losses:
Allowance for credit losses at beginning of period	$	8,805		$	34,310
Reversal of credit losses, net		(1,802	)		(21,262	)
Charge offs		(2,297	)		(4,243	)
Allowance for credit losses at end of period	$	4,706		$	8,805

During the three months ended March 31, 2022, the Company recorded a reversal of expected credit losses of $1.8 million in connection with resolutions of loans with specific reserves and continued improvements in property-level operations supported by a continued, generally positive outlook on the macroeconomic environment. During the three months ended March 31, 2021, the Company recorded a reversal of expected credit losses of $5.6 million in connection with loan paydowns, improved collateral operating performance, declines in expected unemployment and continued projected recoveries in future CRE asset pricing.

At March 31, 2022, the Company individually evaluated one hotel loan and one retail loan in the Northeast region with principal balances of $14.0 million and $8.0 million, respectively, for which foreclosure was determined to be probable. Each loan had an as-is appraised value in excess of its principal balance, and, as such, had no current expected credit losses (“CECL”) allowance at March 31, 2022.

At December 31, 2021, two additional loans were individually evaluated for impairment: a retail loan in the Pacific region and a hotel loan in the East North Central region. Both loans were repaid in January 2022. The repayment of the retail loan in the Pacific region resulted in a charge off of $2.3 million against the allowance for credit losses. An individual CECL allowance was established for this loan during the fourth quarter of 2021.  

15

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

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 reunderwritten loan-to-collateral value 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 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.

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	• Property performance has surpassed underwritten expectations.
	• 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	• 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	• Property performance lags behind underwritten expectations.
	• Occupancy is not stabilized and the property has some tenancy rollover.
4	• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
	• Occupancy is not stabilized and the property has a large amount of tenancy rollover.
5	• 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.
	• The property has a material vacancy rate and significant rollover of remaining tenants.
	• 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.

16

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

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 (1)
At March 31, 2022:
Whole loans, floating-rate	$	—	$	1,532,355	$	239,871	$	105,503	$	13,996	$	1,891,725
Mezzanine loan		—		—		—		4,700		—		4,700
Total	$	—	$	1,532,355	$	239,871	$	110,203	$	13,996	$	1,896,425
At December 31, 2021:
Whole loans, floating-rate	$	—	$	1,456,330	$	273,078	$	123,762	$	24,681	$	1,877,851
Mezzanine loan		—		—		—		4,700		—		4,700
Total	$	—	$	1,456,330	$	273,078	$	128,462	$	24,681	$	1,882,551

(1) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

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

	2022		2021		2020		2019		2018		Prior		Total (1)
At March 31, 2022:
Whole loans, floating-rate: (2)
Rating 2	$	96,131	$	1,241,086	$	143,059	$	32,605	$	19,474	$	—	$	1,532,355
Rating 3		—		34,707		25,067		101,756		60,841		17,500		239,871
Rating 4		—		—		—		28,465		77,038		—		105,503
Rating 5		—		—		—		13,996		—		—		13,996
Total whole loans, floating-rate		96,131		1,275,793		168,126		176,822		157,353		17,500		1,891,725
Mezzanine loan (rating 4)		—		—		—		—		4,700		—		4,700
Total	$	96,131	$	1,275,793	$	168,126	$	176,822	$	162,053	$	17,500	$	1,896,425
	2021		2020		2019		2018		2017		Prior		Total (1)
At December 31, 2021:
Whole loans, floating-rate: (2)
Rating 2	$	1,230,810	$	150,513	$	55,510	$	19,497	$	—	$	—	$	1,456,330
Rating 3		33,781		24,604		136,305		60,888		—		17,500		273,078
Rating 4		—		—		28,446		86,096		—		9,220		123,762
Rating 5		—		—		22,385		—		—		2,296		24,681
Total whole loans, floating-rate		1,264,591		175,117		242,646		166,481		—		29,016		1,877,851
Mezzanine loan (rating 4)		—		—		—		4,700		—		—		4,700
Total	$	1,264,591	$	175,117	$	242,646	$	171,181	$	—	$	29,016	$	1,882,551

17

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

(1) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

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

At March 31, 2022 and December 31, 2021, the Company had one mezzanine loan included in other assets that had no carrying value.

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 Days (1)		Total Past Due		Current (2)		Total Loans Receivable (3)		Total Loans > 90 Days and Accruing
At March 31, 2022:
Whole loans, floating-rate	$	—	$	—	$	8,025	$	8,025	$	1,883,700	$	1,891,725	$	—
Mezzanine loan		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	8,025	$	8,025	$	1,888,400	$	1,896,425	$	—
At December 31, 2021:
Whole loans, floating-rate	$	—	$	—	$	19,916	$	19,916	$	1,857,935	$	1,877,851	$	19,916
Mezzanine loan		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	19,916	$	19,916	$	1,862,635	$	1,882,551	$	19,916

(1) During the three months ended March 31, 2022, the Company did not recognize interest income on the one loan with a principal payment past due greater than 90 days at March 31, 2022. During the three months ended March 31, 2021, the Company recognized interest income of $153,000 on the one loan with a principal payment past due greater than 90 days at March 31, 2022.

(2) Includes one whole loan, with amortized costs of $8.0 million, in maturity default at December 31, 2021.

(3) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022 and December 31, 2021, the Company had one and three CRE loans in maturity default with total amortized costs of $8.0 million and $27.9 million, respectively. During the three months ended March 31, 2022, two whole loans in maturity default at December 31, 2021 paid off principal of $17.6 million. The payoff on one loan was the result of a discounted payoff and resulted in a realized loss of $2.3 million for which a CECL allowance was established as of December 31, 2021.

At March 31, 2022 , two whole loans, including one loan in maturity default, with a total amortized cost of $22.0 million, were past due on interest payments.

At December 31, 2021, three whole loans, including two loans that had maturity defaults, with total amortized cost of $30.4 million, were past due on interest payments.

Troubled Debt Restructurings

There were no TDRs for the three months ended March 31, 2022 and 2021.

During the three months ended March 31, 2022, the Company entered into two agreements that extended loans by a weighted average period of three months and, in certain cases, modified certain other loan terms. One formerly forborne borrower was in maturity default at March 31, 2022. No loan modifications during the three months ended March 31, 2022 resulted in TDRs.

NOTE 7 - INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

During the three months ended March 31, 2022, the Company did not acquire any real estate through direct equity investments or as a result of its lending activities.

In April 2022, the Company acquired two properties through equity investments for a total investment of $51.6 million. Prior to its acquisition, one property, with an acquisition price of $38.6 million, served as collateral for a loan held by an affiliate of the Manager.

18

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

The following table summarizes the book value of the Company’s investments in real estate and related intangible assets (in thousands, except amounts in the footnotes):

	March 31, 2022									December 31, 2021
	Cost Basis			Accumulated Depreciation & Amortization			Carrying Value			Cost Basis			Accumulated Depreciation & Amortization			Carrying Value
Assets acquired:
Investments in real estate, equity:
Investments in real estate (1)	$	27,097		$	(381	)	$	26,716		$	27,065		$	(191	)	$	26,874
Intangible assets (2)		1,726			(1,611	)		115			1,726			(806	)		920
Subtotal		28,823			(1,992	)		26,831			28,791			(997	)		27,794
Investments in real estate from lending activities:
Investment in real estate (3)		34,133			(2,067	)		32,066			34,124			(1,689	)		32,435
Property held for sale (4)		17,657			—			17,657			17,846			—			17,846
Right of use assets (5)(6)		5,603			(116	)		5,487			5,603			(95	)		5,508
Intangible assets (7)		3,337			(465	)		2,872			3,337			(380	)		2,957
Subtotal		60,730			(2,648	)		58,082			60,910			(2,164	)		58,746
Total		89,553			(4,640	)		84,913			89,701			(3,161	)		86,540
Liabilities assumed:
Equity investments in real estate:
Other liabilities		(247	)		155			(92	)		(247	)		78			(169	)
Investments in real estate from lending activities:
Lease liabilities (6)		(3,113	)		65			(3,048	)		(3,113	)		53			(3,060	)
Total		(3,360	)		220			(3,140	)		(3,360	)		131			(3,229	)
	$	86,193					$	81,773		$	86,341					$	83,311

(1) Includes $22.4 million of land, which is not depreciable, at March 31, 2022 and December 31, 2021.

(2) Carrying value includes approximately $59,000 and $819,000 of an acquired in-place lease intangible asset and $55,000 and $101,000 of an acquired leasing commission intangible asset at March 31, 2022 and December 31, 2021, respectively.

(3) Includes $126,000 and $129,000 of building renovations assets at carrying value at March 31, 2022 and December 31, 2021 made subsequent to the date of acquisition of a property.

(4) Includes a property acquired in October 2021 that is being marketed for sale.

(5) Right of use assets include a right of use asset associated with an acquired ground lease of $3.0 million and $3.1 million accounted for as an operating lease and a below-market lease intangible asset of $2.4 million and $2.4 million at March 31, 2022 and December 31, 2021, respectively.

(6) Refer to Note 8 for additional information on the Company’s remaining operating leases.

(7) Carrying value includes franchise agreement intangible assets of $2.6 million and $2.6 million and a customer list intangible asset of $269,000 and $311,000 at March 31, 2022 and December 31, 2021, respectively.

The right of use assets and lease liabilities comprised an acquired ground lease that was determined to be an operating lease and associated below-market lease intangible asset. The lease payments on the ground lease consist of air rights rent, retail rent and parking rent, the amounts of which are specifically determined in the executed lease agreement and subsequently increased based on the increase of the consumer price index over a specified number of periods. The Company recorded approximately $12,000 of offsetting amortization and accretion on its ground lease right of use assets and lease liabilities during the three months ended March 31, 2022 and 2021.

During the three months ended March 31, 2022 and 2021, the Company recorded amortization expense of approximately $1.2 million and $197,000, respectively, on its intangible assets. The Company expects to record amortization expense of $1.2 million, $401,000, $244,000, $210,000 and $210,000 during the 2022, 2023, 2024, 2025 and 2026 fiscal years, respectively, on its intangible assets.

19

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

NOTE 8 - LEASES

In addition to the ground lease discussed in Note 7, the Company has operating leases for office space and office equipment. The leases have terms that expire between January 2024 and July 2028. 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:

• Office space: payments are made on a fixed schedule, escalating annually, and also include the Company’s responsibility for a percentage of increases in the building’s property taxes and operating expenses over the base year.

• Office equipment: payments are made on a fixed schedule.

The following table summarizes the Company’s operating leases (in thousands):

	March 31, 2022			December 31, 2021
Operating Leases:
Right of use assets	$	431		$	443
Lease liabilities	$	(466	)	$	(477	)
Weighted average remaining lease term:	6.3 years			6.6 years
Weighted average discount rate:		10.65	%		10.65	%

The following table summarizes the Company’s operating lease costs and cash payments for the periods presented (in thousands):

	For the Three Months Ended
	March 31,
	2022		2021
Lease Cost:
Operating lease cost	$	24	$	—
Other Information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	23	$	—

The following table summarizes the Company’s operating leases cash flow obligations on an undiscounted, annual basis (in thousands):

	Operating Leases
2022	$	97
2023		99
2024		99
2025		102
2026		104
Thereafter		170
Subtotal		671
Less: impact of discount		(205	)
Total	$	466

NOTE 9 - INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The Company had no investment securities available-for-sale at March 31, 2022 or December 31, 2021.

The Company sold its final two CMBS positions, resulting in cash proceeds of $3.0 million and gains of $878,000, during the three months ended March 31, 2021.

20

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

NOTE 10 - INVESTMENTS IN UNCONSOLIDATED ENTITIES

The Company’s investments in unconsolidated entities at March 31, 2022 and December 31, 2021 comprised a 100% interest in the common shares of RCT I and RCT II with a value of $1.5 million in the aggregate, or 3.0% of each trust. The Company records its investments in RCT I’s and RCT II’s common shares as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II. During each of the three months ended March 31, 2022 and 2021, the Company recorded dividends from its investments in RCT I’s and RCT II’s common shares, reported in other revenue on the consolidated statement of operations, of $16,000.

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 in the form of securitized notes, secured term warehouse financing facilities, a senior secured financing facility, senior unsecured notes, convertible senior notes and trust preferred securities issuances. 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 March 31, 2022:
ACR 2021-FL1 Senior Notes	$	675,223	$	5,014	$	670,209			1.93	%	14.2 years	$	802,643
ACR 2021-FL2 Senior Notes		567,000		6,056		560,944			2.24	%	14.8 years		700,000
Senior secured financing facility		—		3,280		(3,280	)		5.75	%	5.3 years		153,171
CRE - term warehouse financing facilities (1)		156,070		3,864		152,206			2.57	%	2.6 years		210,412
4.5% Convertible Senior Notes		48,175		528		47,647			4.50	%	137 days		—
5.75% Senior Unsecured Notes (2)		150,000		3,070		146,930			5.75	%	4.4 years		—
Unsecured Junior Subordinated Debentures		51,548		—		51,548			4.60	%	14.4 years		—
Total	$	1,648,016	$	21,812	$	1,626,204			2.60	%	12.0 years	$	1,866,226
	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings			Weighted Average Borrowing Rate			Weighted Average Remaining Maturity	Value of Collateral
At December 31, 2021:
XAN 2020-RSO8 Senior Notes	$	142,375	$	577	$	141,798			2.18	%	13.2 years	$	229,263
XAN 2020-RSO9 Senior Notes		94,814		489		94,325			4.25	%	15.3 years		144,361
ACR 2021-FL1 Senior Notes (3)		675,223		5,410		669,813			1.60	%	14.5 years		802,643
ACR 2021-FL2 Senior Notes		567,000		6,437		560,563			1.90	%	15.1 years		700,000
Senior secured financing facility		—		3,432		(3,432	)		5.75	%	6.2 years		170,791
CRE - term warehouse financing facilities (1)		71,078		4,307		66,771			2.27	%	2.8 years		102,027
4.50% Convertible Senior Notes		88,014		1,583		86,431			4.50	%	227 days		—
5.75% Senior Unsecured Notes (2)		150,000		3,393		146,607			5.75	%	4.6 years		—
Unsecured junior subordinated debentures		51,548		—		51,548			4.12	%	14.7 years		—
Total	$	1,840,052	$	25,628	$	1,814,424			2.44	%	12.7 years	$	2,149,085

(1) Principal outstanding includes accrued interest payable of $134,000 and $58,000 at March 31, 2022 and December 31, 2021, respectively.

(2) Includes deferred debt issuance costs of $128,000 and $306,000 at March 31, 2022 and December 31, 2021, respectively, associated with the 12.00% senior unsecured notes due 2027 (“12.00% Senior Unsecured Notes”) that had no outstanding balance at both March 31, 2022 and December 31, 2021.

(3) Value of collateral excludes interest income of $730,000 and exit fees of $228,000 received as of December 31, 2021.

21

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

Securitizations

The following table sets forth certain information with respect to the Company’s consolidated securitizations at March 31, 2022 (in thousands, except amount in footnotes):

	Closing Date	Maturity Date	Permitted Funded Companion Participation Acquisition Period End (1)	Reinvestment Period End (2)	Total Note Paydowns Received from Closing Date through March 31, 2022
ACR 2021-FL1	May 2021	June 2036	N/A	May 2023	$	—
ACR 2021-FL2	December 2021	January 2037	N/A	December 2023	$	—

(1) The permitted funded companion participation acquisition period is the period in which principal repayments can be utilized to purchase loans held outside of the respective securitization that represent the funded commitments of existing collateral in the respective securitization that were not funded as of the date the respective securitization was closed.

(2) The reinvestment period is the period in which principal proceeds received before the end of the period may be used to acquire CRE loans for reinvestment into the securitization.

The investments held by the Company’s securitizations collateralize the securitizations’ borrowings and, as a result, are not available to the Company, its creditors, or stockholders. All senior notes and preferred shares of the securitizations held by the Company at March 31, 2022 and December 31, 2021 were eliminated in consolidation.

XAN 2020-RSO8

In March 2020, the Company closed Exantas Capital Corp. 2020-RSO8, Ltd. (“XAN 2020-RSO8”), a $522.6 million CRE debt securitization transaction that provided financing for CRE loans. In March 2022, the Company exercised the optional redemption of XAN 2020-RSO8, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitization’s assets.

XAN 2020-RSO9

In September 2020, the Company closed Exantas Capital Corp. 2020-RSO9, Ltd. (“XAN 2020-RSO9”), a $297.0 million CRE debt securitization transaction that provided financing for CRE loans. In February 2022, the Company exercised the optional redemption of XAN 2020-RSO9, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitization’s assets.

Corporate Debt

4.50% Convertible Senior Notes

The Company issued $143.8 million aggregate principal of its 4.50% convertible senior notes due 2022 (“4.50% Convertible Senior Notes”) in August 2017.

During the three months ended March 31, 2022, the Company repurchased $39.8 million of its 4.50% Convertible Senior Notes, resulting in a charge to earnings of $574,000, comprising an extinguishment of debt charge of $460,000 in connection with the acceleration of the market discount and interest expense of $114,000 in connection with the acceleration of deferred debt issuance costs. During the year ended December 31, 2021 , the Company repurchased $55.7 million of its 4.50% Convertible Senior Notes.

22

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

The following table summarizes the 4.50% Convertible Senior Notes at March 31, 2022 (dollars in thousands, except the conversion rate, conversion price and amounts in the footnotes):

	Principal Outstanding		Borrowing Rate			Effective Rate (1)(2)			Conversion Rate (3)(4)	Conversion Price (4)		Maturity Date
4.50% Convertible Senior Notes	$	48,175		4.50	%		7.43	%	27.7222	$	36.06	August 15, 2022

(1) Includes the amortization of the market discounts and deferred debt issuance costs, if any, for the 4.50% Convertible Senior Notes recorded in interest expense on the consolidated statements of operations.

(2) During the three months ended March 31, 2022 and 2021, the effective interest rate for the 4.50% Convertible Senior Notes was 7.43%.

(3) Represents the number of shares of common stock per $1,000 principal amount of the 4.50% Convertible Senior Notes’ principal outstanding, subject to adjustment as provided in the Third Supplemental Indenture (the “4.50% Convertible Senior Notes Indenture”).

(4) The conversion rate and conversion price of the 4.50% Convertible Senior Notes at March 31, 2022 are adjusted to reflect quarterly cash distributions in excess of a $0.30 distribution threshold, as defined in the 4.50% Convertible Senior Notes Indenture.

The 4.50% Convertible Senior Notes are convertible at the option of the holder at any time up until one business day before the respective maturity date and may be settled in cash, the Company’s common stock or a combination of cash and the Company’s common stock, at the Company’s election. The closing price of the Company’s common stock was $13.41 on March 31, 2022, which did not exceed the conversion price of its 4.50% Convertible Senior Notes at March 31, 2022.

Senior Unsecured Notes

12.00% Senior Unsecured Notes Due 2027

On July 31, 2020, the Company entered into a Note and Warrant Purchase Agreement (the “Note and Warrant Purchase Agreement”) with Oaktree Capital Management, L.P. (“Oaktree”) and Massachusetts Mutual Life Insurance Company (“MassMutual”) pursuant to which the Company may issue to Oaktree and MassMutual from time to time up to $125.0 million aggregate principal amount of 12.00% Senior Unsecured Notes. The 12.00% Senior Unsecured Notes had an annual interest rate of 12.00%, payable up to 3.25% (at the election of the Company) as pay-in-kind interest and the remainder as cash interest. On July 31, 2020, the Company issued to Oaktree and MassMutual $42.0 million and $8.0 million aggregate principal amount, respectively, of the 12.00% Senior Unsecured Notes.

On August 18, 2021, the Company entered into an agreement with Oaktree and MassMutual that provided for the redemption in full of the outstanding balance of the 12.00% Senior Unsecured Notes, including a waiver of certain sections of the Note and Warrant Purchase Agreement. On August 20, 2021, the redemption was consummated and a payment to Oaktree and MassMutual was made for an aggregate $55.3 million, which consisted of (i) principal in the amount of $50.0 million, (ii) interest in the amount of approximately $329,000 and (iii) a make-whole amount of approximately $5.0 million. In connection with the redemption, the Company recorded a charge to earnings of $8.0 million, comprising an extinguishment of debt charge of $7.8 million in connection with (i) the $5.0 million net make-whole amount and (ii) the $2.8 million acceleration of the remaining market discount; and interest expense of $218,000 in connection with the acceleration of deferred debt issuance costs.

In January 2022, the Company entered into an amendment of the Note and Warrant Purchase Agreement that extended the time to July 2022 that the Company may elect to issue to Oaktree and MassMutual up to $75.0 million of principal of additional notes. At any time and from time to time prior to July 31, 2022, the Company may elect to issue to Oaktree and MassMutual warrants to purchase an additional 699,992 shares of the common stock for a purchase price equal to the principal amount of the 12.00% Senior Unsecured Notes being issued. The warrants are immediately exercisable on issuance and expire seven years from the issuance date. The warrants can be exercised with cash or as a net exercise.

23

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

Senior Secured Financing Facility and Term Warehouse Financing Facilities

Borrowings under the Company’s senior secured financing facility and term warehouse facilities are guaranteed by the Company or one or more of its subsidiaries. The following table sets forth certain information with respect to the Company’s senior secured financing and term warehouse financing facilities (dollars in thousands, except amounts in footnotes):

	March 31, 2022										December 31, 2021
	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
Senior Secured Financing Facility
Massachusetts Mutual Life Insurance Company (1)	$	(3,280	)	$	153,171		7		5.75	%	$	(3,432	)	$	170,791		9		5.75	%
CRE - Term Warehouse Financing Facilities(2)
JPMorgan Chase Bank, N.A.(3)		45,196			69,709		5		2.75	%		18,875			37,167		3		2.85	%
Morgan Stanley Mortgage Capital Holdings LLC(4)		107,010			140,703		8		2.50	%		47,896			64,860		3		2.03	%
Total	$	148,926		$	363,583						$	63,339		$	272,818

(1) Includes $3.3 million and $3.4 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively.

(2) Outstanding borrowings include accrued interest payable.

(3) Includes $1.6 million and $1.8 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively, in addition to $250,000 and $356,000 of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively, from other term warehouse financing facilities with no balance.

(4) Includes $2.0 million and $2.2 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively.

The following table shows information about the amount at risk under the warehouse financing facilities (dollars in thousands):

	Amount at Risk (1)		Weighted Average Remaining Maturity	Weighted Average Interest Rate
At March 31, 2022:
CRE - Term Warehouse Financing Facilities
JPMorgan Chase Bank, N.A.	$	22,929	2.6 years		2.75	%
Morgan Stanley Mortgage Capital Holdings LLC	$	32,174	2.6 years		2.50	%

(1) Equal to the total of the estimated fair value of loans sold and accrued interest receivable, minus the total of the warehouse financing agreement liabilities and accrued interest payable.

The Company was in compliance with all financial covenants in each of the respective agreements at March 31, 2022 and December 31, 2021.

Senior Secured Financing Facility

In July 2020, an indirect, wholly-owned subsidiary of the Company (“Holdings”), along with its direct wholly-owned subsidiary (the “Borrower”), entered into a loan and servicing agreement (the “MassMutual Loan Agreement”) with MassMutual and the other lenders party thereto (the “Lenders”) to finance the Company’s core CRE lending business.

In connection with the MassMutual Loan Agreement, the Company, with certain of its subsidiaries, entered into a Guaranty (the “MassMutual Guaranty”) in favor of the secured parties under the MassMutual Loan Agreement.  Pursuant to the MassMutual Guaranty, the Company fully guaranteed all payments and performance of the Borrower and Holdings under the MassMutual Loan Agreement. Additionally, the Company and certain of its subsidiaries made certain representations and warranties and agreed not to incur debt or liens, each subject to certain exceptions, and agreed to provide the Lenders with certain information.

The MassMutual Loan Agreement was amended in several instances pursuant to which (i) MassMutual consented to the formation of certain subsidiaries to hold real estate and (ii) such subsidiaries agreed to enter into guaranty agreements in favor of the secured parties under the MassMutual Loan Agreement.

24

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

CRE - Term Warehouse Financing Facilities

In April 2018, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase agreement (the “Barclays Facility”) with Barclays Bank PLC (“Barclays”) to finance the origination of CRE loans. In February 2022, such subsidiary entered into the Third Amendment to Master Repurchase Agreement (the “Barclays Amendment”) with Barclays, which amended the Barclays Facility to add market terms regarding the replacement of LIBOR upon determination of a benchmark transition event.

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. 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.

Contractual maturity dates of the Company’s borrowings’ principal outstanding by category and year are presented in the table below (in thousands):

	Total		2022		2023		2024		2025		2026 and Thereafter
At March 31, 2022:
CRE securitizations	$	1,242,223	$	—	$	—	$	—	$	—	$	1,242,223
Unsecured junior subordinated debentures		51,548		—		—		—		—		51,548
4.50% Convertible Senior Notes		48,175		48,175		—		—		—		—
5.75% Senior Unsecured Notes		150,000		—		—		—		—		150,000
CRE - term warehouse financing facilities(1)		156,070		—		—		156,070		—		—
Total	$	1,648,016	$	48,175	$	—	$	156,070	$	—	$	1,443,771

(1) Includes accrued interest payable in the balances of principal outstanding.

NOTE 12 - SHARE ISSUANCE AND REPURCHASE

In May 2021, and subsequently in June 2021, the Company issued a total of 4.6 million shares of 7.875% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”) at a public offering price of $25.00 per share. The Company received net proceeds of $110.4 million after $4.6 million of underwriting discounts and other offering expenses. Dividends are payable quarterly in arrears at the end of January, April, July and October. The Series D Preferred Stock has no maturity date and the Company is not required to redeem the Series D Preferred Stock at any time. On or after May 21, 2026, the Company may, at its option, redeem the Series D Preferred Stock, in whole or 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.

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 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 three months ended March 31, 2022, 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 distributions, if any, to the redemption date. Effective July 30, 2024 and thereafter, the Company will pay cumulative distributions on the Series C Preferred Stock at a floating rate equal to three-month LIBOR plus 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.

25

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

At March 31, 2022, the Company had 4.8 million shares of Series C Preferred Stock and 4.6 million shares of Series D Preferred Stock outstanding, with weighted average issuance prices, excluding offering costs, of $25.00.

In March 2016, the board of directors (the “Board”) approved a securities repurchase plan, and in November 2020, the Board reauthorized and approved the continued use of this plan to repurchase up to $20.0 million of the outstanding shares of the Company’s common stock. Additionally, the Board authorized the Company to enter into written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”). In July 2021, the authorized amount was fully utilized, and in November 2021, 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.

During the three months ended March 31, 2022 and 2021, the Company repurchased $3.9 million and $9.5 million of its common stock, respectively, representing 314,552 and 744,664 shares, respectively. At March 31, 2022, $12.4 million remains available under this repurchase plan.

In connection with the Note and Warrant Purchase Agreement, the 12.00% Senior Unsecured Notes give Oaktree and MassMutual warrants to purchase an aggregate of up to 1,166,653 shares of common stock at an exercise price of $0.03 per share, subject to certain potential adjustments. On July 31, 2020, concurrently with the issuance of the 12.00% Senior Unsecured Notes, 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 are recorded in additional paid-in capital on the consolidated balance sheet at their fair value of $3.1 million at issuance. At any time and from time to time prior to July 31, 2022, the Company may elect to issue to Oaktree and MassMutual warrants to purchase an additional 699,992 shares of common stock for a purchase price equal to the principal amount of the additional 12.00% Senior Unsecured Notes being issued. The warrants are immediately exercisable on issuance and expire seven years from the issuance date. The warrants can be exercised with cash or as a net exercise.

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, is 1,700,817 shares of common stock.  

The Company recognized restricted stock-based compensation expense of $744,000 and $19,000, respectively, during the three months ended March 31, 2022 and March 31, 2021.

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, 2022		299,999		33,330		333,329	$	17.39
Issued		—		—		—		—
Vested		—		—		—		—
Forfeited		—		—		—		—
Unvested shares at March 31, 2022		299,999		33,330		333,329	$	17.39

26

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

The unvested restricted common stock shares are expected to vest during the following years:

Year	Shares
2022		83,331
2023		83,331
2024		83,331
2025		83,336
Total		333,329

At March 31, 2022, total unrecognized compensation costs relating to unvested restricted stock was $3.4 million based on the grant date fair value of shares granted. The cost is expected to be recognized over a weighted average period of 3.2 years.

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 is paid in cash and at least 25% is paid in the form of an award of common stock, recorded in management fees on the consolidated statements of operations. No incentive compensation was paid to the Manager for the three months ended March 31, 2022 or 2021.

On May 6, 2022, the Company issued 299,999 restricted shares under the Manager Plan and a total of 33,334 shares to its directors under the Omnibus Plan, each grant to vest 25% over four years.

The Omnibus Plan and the Manager Plan are administered by the compensation committee of the 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.

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):

	For the Three Months Ended
	March 31,
	2022			2021
Net income	$	2,084		$	13,056
Net income allocated to preferred shares		(4,855	)		(2,588	)
Net (loss) income allocable to common shares	$	(2,771	)	$	10,468
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding - basic		8,630,316			9,729,463
Weighted average number of warrants outstanding (1)		466,661			466,661
Total weighted average number of common shares outstanding - basic		9,096,977			10,196,124
Effect of dilutive securities - unvested restricted stock		—			9,245
Weighted average number of common shares outstanding - diluted		9,096,977			10,205,369
Net (loss) income per common share - basic	$	(0.30	)	$	1.03
Net (loss) income per common share - diluted	$	(0.30	)	$	1.03

(1) See Note 12 for further details regarding the warrants.

NOTE 15 - DISTRIBUTIONS

In order to qualify as a REIT, the Company must currently 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. 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), in certain circumstances the Company may generate operating cash flow in excess of its distributions or, alternatively, may be required to borrow funds to make sufficient distribution payments.

27

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

The Company’s 2022 distributions are, and will be, determined by the 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 three months ended March 31, 2022, the Company declared and subsequently paid its Series C Preferred Stock and Series D Preferred Stock distributions of $0.54 per share and $0.49 per share, respectively. For the three months ended March 31, 2021, the Company declared and subsequently paid its Series C Preferred Stock distributions of $0.54 per share.

The Company did not pay any common share distributions for the three months ended March 31, 2022 and 2021.

The following tables present distributions declared (on a per share basis) for the three months ended March 31, 2022 and the year ended December 31, 2021:

	Series C Preferred Stock					Series D Preferred Stock
	Date Paid	Total Distributions Paid		Distributions Per Share		Date Paid	Total Distributions Paid		Distributions Per Share
	(in thousands)					(in thousands)
2022
March 31	May 2	$	2,588	$	0.5390625	May 2	$	2,268	$	0.4921875
2021
December 31	January 31, 2022	$	2,588	$	0.5390625	January 31, 2022	$	2,268	$	0.4921875
September 30	November 1	$	2,588	$	0.5390625	November 1	$	2,264	$	0.4921875
June 30	July 30	$	2,588	$	0.5390625	July 30	$	1,736	$	0.3773440
March 31	April 30	$	2,588	$	0.5390625	N/A	N/A		N/A

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 three months ended March 31, 2022 (in thousands):

	Accumulated Other Comprehensive Loss - Net Unrealized Loss on Derivatives
Balance at January 1, 2022	$	(8,127	)
Amounts reclassified from accumulated other comprehensive loss (1)		456
Balance at March 31, 2022	$	(7,671	)

(1) Amounts reclassified from accumulated other comprehensive loss are reclassified to interest expense on the Company’s consolidated statements of operations.

NOTE 17 - RELATED PARTY TRANSACTIONS

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.

28

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

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 three months ended March 31, 2022 and 2021, the Manager earned base management fees of approximately $1.7 million and $1.3 million, respectively. No incentive compensation was earned for the three months ended March 31, 2022 and 2021. At March 31, 2022 and December 31, 2021, $557,000 and $561,000, respectively, of base management fees were payable by the Company to the Manager. There was no incentive compensation payable at March 31, 2022 and December 31, 2021. 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. For the three months ended March 31, 2022 and 2021, the Company reimbursed the Manager $2.0 million and $1.2 million, respectively, for all such compensation and costs. At March 31, 2022 and December 31, 2021, the Company had payables to the Manager pursuant to the Management Agreement totaling approximately $317,000 and $1.2 million, respectively, related to such compensation and costs. The Company’s base management fee payable and expense reimbursements payable were recorded in management fee payable - related party and accounts payable and other liabilities on the consolidated balance sheet, respectively.

On July 31, 2020, ACRES RF, then known as RCC Real Estate, Inc., 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.

During the three months ended March 31, 2022 and 2021, the Company recorded interest income of $87,000 and $89,000, respectively, on the ACRES Loan in other income (expense) on the consolidated statements of operations. At March 31, 2022, the ACRES Loan had a principal balance and accrued interest receivable of $11.5 million and $30,000, respectively, recorded in loan receivable - related party and accrued interest receivable, respectively, on the consolidated balance sheet. At December 31, 2021, the ACRES Loan had a principal balance of $11.6 million, recorded in loan receivable - related party on the consolidated balance sheet, and no accrued interest receivable.

At March 31, 2022, 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 these transactions and was not separately compensated for managing the securitization entities and their assets.

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, serves as the portfolio servicer. Additionally, ACRES Capital Servicing served as the special servicer of Exantas Capital Corp. 2019-RSO7, Ltd. (“XAN 2019-RSO7”), XAN 2020-RSO8 and XAN 2020-RSO9 and serves as special servicer of ACRES Commercial Realty 2021-FL1 Issuer, Ltd. (“ACR 2021-FL1”) and ACRES Commercial Realty 2021-FL2 Issuer, Ltd. (“ACR 2021-FL2”). During the three months ended March 31, 2022 and 2021, ACRES Capital Servicing received no portfolio servicing fees or special servicing fees.

Relationship with ACRES Collateral Manager, LLC. ACRES Collateral Manager, LLC, an affiliate of ACRES Capital Corp. and the Manager, serves as the collateral manager of ACR 2021-FL1 and ACR 2021-FL2, 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. In November 2021 and December 2021, the joint venture entities of the two CRE equity investments acquired through direct investment entered into development agreements with DevCo (the “Development Agreements”). 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 1.5% of all project costs. No fees were incurred or paid to DevCo for services rendered under the Development Agreements during the three months ended March 31, 2022.

29

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

Relationship with ACRES Share Holdings, LLC. In June 2021, the Company’s Manager Plan was approved by its shareholders, which authorized up to 1,100,000 shares of common stock for issuance to the Manager (less shares of common stock issued or subject to awards under the Omnibus Plan). ACRES Share Holdings, LLC, an affiliate of ACRES Capital Corp. and the Manager, was granted 299,999 shares during the year ended December 31, 2021 that will vest 25% each year on the anniversary of the issuance date over four years. There were no shares issued under this plan during the three months ended March 31, 2022.

On May 6, 2022, the Company issued 299,999 restricted shares to ACRES Share Holdings, LLC under the Manager Plan that will vest 25% each year on the anniversary of the issuance date over four years. See Note 13 for additional details.

NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company had no financial instruments carried at fair value on a recurring basis at March 31, 2022 and December 31, 2021.

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, principal paydowns receivable, accrued interest payable and distributions payable approximate their carrying values on the consolidated balance sheets. 

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. Fair values of loans with fixed rates are calculated using the net present values of future cash flows, discounted at market rates. The Company’s floating-rate CRE loans had interest rates from 3.19% to 9.00% and 3.01% to 9.00% at March 31, 2022 and December 31, 2021, respectively.

The fair value of the Company’s mezzanine loan is measured by discounting the remaining contractual cash flows using the current interest rates at which similar instruments would be originated for the same remaining maturity. The Company’s mezzanine loan is discounted at a rate of 10.00%.

The Company’s loan receivable - related party is estimated using a discounted cash flow model.

Senior notes in CRE securitizations are estimated using a discounted cash flow model with implied yields based on trades for similar securities.

The fair value of the senior secured financing facility is measured by discounting the facility’s remaining contractual cash flows using the current interest rate at which a similar debt instrument would be issued for the same remaining maturity. The fair value of the senior secured financing facility is estimated using a discounted cash flow model that discounts the expected future cash flows at a rate of 5.75%. At March 31, 2022 and December 31, 2021, there were no borrowings outstanding on the senior secured financing facility.

Warehouse financing facilities are variable-rate debt instruments indexed to LIBOR that reset periodically and, as a result, their carrying value approximates their fair value, excluding deferred debt issuance costs.

The fair value of the 4.50% Convertible Senior Notes is determined using a discounted cash flow model that discounts the issuance’s contractual future cash flows using the current interest rate on similar debt issuances with similar terms and similar remaining maturities that do not have a conversion option.

The Company’s 5.75% Senior Unsecured Notes are estimated by using a discounted cash flow model.

The fair values of the junior subordinated notes RCT I and RCT II are estimated by using a discounted cash flow model.

30

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

The fair values of the Company’s remaining 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
	Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At March 31, 2022:
Assets:
CRE whole loans	$	1,887,255	$	1,904,974	$	—	$	—	$	1,904,974
CRE mezzanine loan	$	4,464	$	4,700	$	—	$	—	$	4,700
Loan receivable - related party	$	11,525	$	10,004	$	—	$	—	$	10,004
Liabilities:									.
Senior notes in CRE securitizations	$	1,231,153	$	1,223,179	$	—	$	—	$	1,223,179
Warehouse financing facilities	$	152,206	$	156,070	$	—	$	—	$	156,070
4.50% Convertible Senior Notes	$	47,647	$	48,175	$	—	$	—	$	48,175
5.75% Senior Unsecured Notes (1)	$	146,930	$	140,340	$	—	$	—	$	140,340
Junior subordinated notes	$	51,548	$	39,999	$	—	$	—	$	39,999
At December 31, 2021:
Assets:
CRE whole loans	$	1,869,301	$	1,889,499	$	—	$	—	$	1,889,499
CRE mezzanine loan	$	4,445	$	4,700	$	—	$	—	$	4,700
Loan receivable - related party	$	11,575	$	10,407	$	—	$	—	$	10,407
Liabilities:
Senior notes in CRE securitizations	$	1,466,499	$	1,473,893	$	—	$	—	$	1,473,893
Warehouse financing facility	$	66,771	$	68,905	$	—	$	—	$	68,905
4.50% Convertible Senior Notes	$	86,431	$	87,873	$	—	$	—	$	87,873
5.75% Senior Unsecured Notes (1)	$	146,607	$	148,125	$	—	$	—	$	148,125
Junior subordinated notes	$	51,548	$	41,424	$	—	$	—	$	41,424

(1) Carrying value at March 31, 2022 and December 31, 2021 includes deferred debt issuance costs of $128,000 and $307,000, respectively, associated with the 12.00% Senior Unsecured Notes, that had no outstanding balance at both March 31, 2022 and December 31, 2021.

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 used 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 also 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.

31

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

The Company terminated all of its interest rate swap positions associated with its prior financed CMBS portfolio in April 2020. At termination, the Company realized a loss of $11.8 million. At March 31, 2022 and December 31, 2021, the Company had a loss of $8.0 million and $8.5 million, respectively, recorded in accumulated other comprehensive loss, which will be amortized into earnings over the remaining life of the debt. During the three months ended March 31, 2022 and 2021, the Company recorded amortization expense of $479,000, reported in interest expense on the consolidated statements of operations.

At March 31, 2022 and December 31, 2021, the Company had an unrealized gain of $324,000 and $347,000, respectively, 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. For each of the three months ended March 31, 2022 and 2021, the Company recorded accretion income, reported in interest expense on the consolidated statements of operations, of $23,000 to accrete the accumulated other comprehensive income on the terminated swap agreements.

The Company’s prior origination of fixed-rate CRE whole loans exposed it to market pricing risk in connection with the fluctuations of market interest rates. In order to mitigate this market price risk, the Company entered into interest rate swap contracts in which it paid a fixed rate of interest in exchange for a variable rate of interest, usually three-month LIBOR. Unrealized gains and losses on the value of these swap contracts were recorded in other income (expense) on the consolidated statements of operations. In December 2020, these interest rate swap contracts were terminated.

The following tables present the effect of the derivative instruments on the consolidated statements of operations for the three months ended March 31, 2022 and 2021 (in thousands):

	Derivatives
Three Months Ended March 31, 2022	Consolidated Statements of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging	Interest expense	$	(456	)

	Derivatives
Three Months Ended March 31, 2021	Consolidated Statements of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging	Interest expense	$	(456	)

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

NOTE 20 - OFFSETTING OF FINANCIAL LIABILITIES

The following table presents a summary of the Company’s offsetting of financial liabilities (in thousands, except amounts in footnotes):

							(iv) Gross Amounts Not Offset on the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Liabilities		(ii) Gross Amounts Offset on the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Liabilities Included on the Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
At March 31, 2022:
Warehouse financing facilities (2)	$	152,206	$	—	$	152,206	$	152,206	$	—	$	—
At December 31, 2021:
Warehouse financing facilities (2)	$	66,771	$	—	$	66,771	$	66,771	$	—	$	—

(1) Amounts represent financial instruments pledged that are available to be offset against liability balances associated with term warehouse financing facilities and repurchase agreements.

(2) The combined fair values of loans pledged against the Company’s various term warehouse financing facilities and repurchase agreements was $210.4 million and $102.0 million at March 31, 2022 and December 31, 2021, respectively.

All balances associated with warehouse financing facilities are presented on a gross basis on the Company’s consolidated balance sheets.

32

ACRES COMMERCIAL REALTY CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2022

(unaudited)

Certain of the Company’s warehouse financing facilities are governed by underlying agreements that generally provide for a right of offset in the event of default or in the event of a bankruptcy of either party to the transaction.

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. Except as discussed below, the Company is unaware of any contingencies arising from such litigation that would require accrual or disclosure in the consolidated financial statements at March 31, 2022.

The Company’s subsidiary, Primary Capital Mortgage, LLC (“PCM”), is subject to potential litigation related to claims for repurchases or indemnifications on loans that PCM has sold to third parties. At March 31, 2022 and December 31, 2021, no such litigation demand was outstanding. Reserves for such litigation demands are included in the reserve for mortgage repurchases and indemnifications that totaled $1.3 million at March 31, 2022 and December 31, 2021. The reserves for mortgage repurchases and indemnifications are included in accounts payable and other liabilities on the consolidated balance sheets.

The Company did not have any pending litigation matters or general litigation reserve at March 31, 2022 or December 31, 2021.

Impact of COVID-19

As discussed in Note 2, the COVID-19 pandemic continues to plague countries throughout the globe as virus variants have emerged. While the U.S. and certain countries around the world have eased restrictions and financial markets and unemployment rates have stabilized to some degree, due in large part to the discovery and distribution of vaccines and other treatments, the pandemic continues to cause uncertainty on the U.S. and global economies, generally, and the CRE business in particular. The reinstatement of nationwide restrictions placed on businesses in response to COVID-19 may cause significant cash flow disruptions across the economy that may impact the Company’s borrowers and their ability to stay current with their debt obligations in the near term. Due to the fluidity of this situation, along with other world events, any prediction as to the ultimate adverse impact of the pandemic on economic and market conditions remains difficult to assess. The Company had no contingent liabilities recorded in connection with the COVID-19 pandemic at March 31, 2022 or December 31, 2021. However, the impact of the COVID-19 pandemic has had and may continue to have a long-term and material impact on its results of operations, financial condition and cash flows through the fiscal year 2022.

Other Contingencies

PCM is subject to additional claims for repurchases or indemnifications on loans that PCM has sold to investors. At March 31, 2022 and December 31, 2021, outstanding demands for indemnification, repurchase or make whole payments totaled $3.3 million. The Company’s estimated exposure for such outstanding claims, as well as unasserted claims, is included in its reserve for mortgage repurchases and indemnifications.

Unfunded Commitments

Unfunded commitments on the Company’s originated CRE loans generally fall into two categories: (1) pre-approved capital improvement projects and (2) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, the Company would receive additional interest income on the advanced amount. Whole loans had $145.5 million and $157.6 million in unfunded loan commitments at March 31, 2022 and December 31, 2021, respectively.

NOTE 22 - 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 7 and 13, that have occurred that would require adjustments to or disclosures in the consolidated financial statements.

33

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this quarterly report to “we,” “us” or the “Company” refer to ACRES Commercial Realty Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “continue,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “look forward” or other similar words or terms. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, including, without limitation, factors impacting whether we will be able to maintain our sources of liquidity and whether we will be able to identify sufficient suitable investments to increase our originations, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission (the “SEC”). Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

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 (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. 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 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.

In December 2019, a novel strain of coronavirus (“COVID-19”) was identified. The resulting spread of COVID-19 throughout the globe led the World Health Organization to designate COVID-19 as a pandemic and numerous countries, including the U.S, to declare national emergencies. Many countries responded to the initial and ensuing outbreaks of COVID-19 by instituting quarantines and restrictions on travel and limiting operations of non-essential offices and retail centers, which resulted in the closure or remote operation of non-essential businesses, increased rates of unemployment and market disruption in connection with the economic uncertainty. While the U.S. and certain countries around the world have eased restrictions and financial markets and unemployment rates have stabilized to some degree, due in large part to the development and distribution of vaccines and other treatments, the pandemic, exacerbated by virus variants, continues to cause uncertainty in the U.S. and global economies, generally, and the commercial real estate industry in particular.

The aforementioned quarantines and travel restrictions contributed significantly to economic disruptions across the country that directly impacted our borrowers and their ability to pay and to stay current with their debt obligations in 2019 and 2020, causing significant increases in our provisions for credit losses. During this height of the pandemic, we used a variety of legal and structural options to manage credit risk effectively, including through forbearance and extension provisions or agreements. As of March 31, 2022, we have substantially reversed those provisions due to significant improvements in our current and expected macroeconomic operating environments as well as due to improvements in collateral operating performance and market liquidity.

We continue to actively and responsibly manage corporate liquidity and operations in light of the market disruptions caused by COVID-19, and our Manager continuously monitors for new capital opportunities and executes on agreements that enhance our returns. However, it is inherently difficult to accurately assess the continuing impact of the pandemic as well as other domestic or global events on our revenues, profitability and financial position. In response, we are focused on maintaining sufficient liquidity while still growing our loan origination business. We continuously monitor the effects of domestic and global events, including but not limited to the current and expected impact of inflation, labor shortages, supply chain matters and rising interest rates, on our operations and financial position to ensure that we remain responsive and adaptable to the dynamic changes in our operating environment. For additional discussion with respect to the potential impact of COVID-19 on our liquidity and capital resources, see “Liquidity and Capital Resources.”

34

At $1.5 billion in CRE loan commitments originated, the year ended December 31, 2021 was a record year for CRE loan production. Our Manager expects to continue to leverage the complementary nature of our lending platforms, its experience and its network of relationships to enhance our new business loan pipeline prospectively.

We target originating transitional floating-rate CRE loans between $10.0 million and $100.0 million. During the three months ended March 31, 2022, we originated 3 floating-rate CRE whole loans with total commitments of $99.9 million. We anticipate that our CRE loan originations, CRE debt securitizations and other CRE-related investments for the year ended December 31, 2022 will be between $600.0 million and $1.0 billion.

Our CRE loan portfolio, which had a $1.9 billion carrying value at each of March 31, 2022 and December 31, 2021, comprised:

• 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, office, hotel, self-storage, retail, student housing, manufactured housing, industrial, healthcare and mixed-use. At March 31, 2022 and December 31, 2021, our whole loans had a carrying value of $1.9 billion, or 99.8%, of the CRE loan portfolio.

• Mezzanine debt is senior to the 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 March 31, 2022 and December 31, 2021, our mezzanine loan had a carrying value of $4.5 million and $4.4 million, respectively, or 0.2% of the CRE loan portfolio.

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 market rates including the London Interbank Offered Rate (“LIBOR”) and the Secured Overnight Financing Rate (“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.

At March 31, 2022, our $1.9 billion floating-rate CRE loan portfolio, at par, which includes one whole loan without a benchmark floor, had a weighted average LIBOR floor of 0.66%. At December 31, 2021, our par-value $1.9 billion floating-rate CRE loan portfolio, which includes one loan without a benchmark floor, had a weighted average benchmark floor of 0.75%. The decrease in the weighted average benchmark floor was a result of older CRE floating-rate loans with higher floors paying off and being replaced with newer loans with lower floors. If financing rates were increased compared to the conditions at March 31, 2022, net interest margin would be negatively impacted. We expect that as the loan portfolio mix continues to shift toward lower floors, the direct relationship between rising rates and positive net interest margin sensitivity will return by late 2022 to early 2023.

Our portfolio comprised loans with a diverse array of collateral types and locations. At March 31, 2022 and December 31, 2021, 89.4% and 88.0%, respectively, of our CRE loans were collateralized by multifamily, office, self-storage and manufactured housing, with the remaining 10.6% and 12.0%, respectively, collateralized by hotel and retail properties. These properties are located throughout the U.S., with two individual National Council of Real Estate Investment Fiduciaries (“NCREIF”) region making up more than 20% of the total CRE loan portfolio (Southeast at 26.8% and Southwest at 22.3%) at March 31, 2022 and one region in excess of 20% of the total CRE loan portfolio (Southeast at 28.4%) at December 31, 2021.

All but two of our loans were current on contractual payments at March 31, 2022.  In January 2022, one loan that was delinquent and one loan performing in accordance with a forbearance agreement paid off. Additionally, we have executed extensions on two loans at a weighted average extension of three months in exchange for $41,000 of fees during the three months ended March 31, 2022.

Our CRE mezzanine loan earns interest at a fixed rate.

From time to time, we may acquire real estate property through direct equity investments or as a result of our lending activities. At March 31, 2022, the total carrying value of our net real estate-related assets and liabilities was $81.8 million on four properties owned. The existence of net capital loss carryforwards allows for potential future capital gains on these investments to be shielded from income taxes.

35

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.

Our asset-specific borrowings comprised term warehouse financing facilities, CRE debt securitizations and our senior secured financing facility. We executed the optional redemptions on Exantas Capital Corp. 2020-RSO9, Ltd. (“XAN 2020-RSO9”) and Exantas Capital Corp. 2020-RSO8, Ltd. (“XAN 2020-RSO8”) in February 2022 and March 2022, respectively.

At March 31, 2022 and December 31, 2021, we had outstanding balances on our CRE loan term warehouse financing facilities of $152.2 million and $66.8 million, respectively, or 9.4% and 3.7%, respectively, of total outstanding borrowings. At March 31, 2022 and December 31, 2021, we had outstanding balances of $1.2 billion and $1.5 billion, respectively, on CRE debt securitizations, or 75.7% and 80.8%, respectively, of total outstanding borrowings. At March 31, 2022 and December 31, 2021, we had no outstanding borrowings on our senior secured financing facility.

In February 2022, we repurchased approximately $39.8 million par value of our 4.50% convertible senior notes due 2022 (“4.50% Convertible Senior Notes”). In conjunction with the repurchase, we accelerated approximately $460,000 of the convertible note discount, which was recorded as an extinguishment of debt cost, and $114,000 of deferred debt issuance costs, which were recorded in interest expense.

In January 2020, we adopted updated accounting guidance that replaced the incurred loss approach with the current expected credit losses (“CECL”) model for the determination of our allowance for loan losses. We reevaluate our CECL allowance quarterly, incorporating our current expectations of macroeconomic factors considered in the determination of our CECL reserves. At March 31, 2022, the CECL allowance on our CRE loan portfolio was $4.7 million, or 0.25% of our $1.9 billion loan portfolio. At December 31, 2021, the CECL allowance on our CRE loan portfolio was $8.8 million, or 0.46% of our $1.9 billion of our loan portfolio. The CECL model projected significantly increased expected credit losses during the year ended December 31, 2020 in connection with the adverse market conditions caused by the COVID-19 pandemic. During the three months ended March 31, 2022 and for the year ended December 31, 2021, we recorded net reversals of credit losses, which reflected improvements in macroeconomic conditions, improved collateral operating performance and improvements in or resolutions of individually-evaluated loans. Additionally, the steady decline in our CECL reserves from our highest reserve balance in June 30, 2020 of $61.1 million, or 3.44% of the par balance of our CRE loan portfolio, to our current reserve balance at March 31, 2022 of $4.7 million, or 0.25% of the par balance of our CRE loan portfolio, has been due to the successful resolution of our individually evaluated loans with specific reserves, the overall newer vintage of our CRE loan portfolio (with 25% of the portfolio, at March 31, 2022, being originated prior to the fourth quarter of 2020) as well as the increasing percentage allocation of our CRE loan portfolio to multifamily loans over time. Multifamily loans have historically had the lowest credit losses of any asset class for us and as a sample population in the third-party model that we use to support our CECL reserves. Our percentage allocation of our CRE loan portfolio to multifamily has grown from 58% at June 30, 2020 to 73% at March 31, 2022.

During the three months ended March 31, 2022, we recorded charge-offs of $2.3 million primarily attributable to the discounted payoff of one loan that resulted in a realized loss of $2.3 million for which a CECL allowance was established at December 31, 2021.

We historically used derivative financial instruments, including interest rate swaps, to hedge a portion of the interest rate risk associated with our borrowings. In April 2020 we terminated all interest rate hedges in conjunction with the disposition of our financed commercial mortgage-backed securities (“CMBS”) portfolio. At March 31, 2022 and December 31, 2021, we had unrealized losses in connection with the terminated hedges of $8.0 million and $8.5 million, respectively, which will be amortized into interest expense over the remaining life of the debt. We recognized amortization expense on these terminated contracts of $479,000 during the three months ended March 31, 2022 and 2021.

Common stock book value was $24.10 per share at March 31, 2022, a $0.23 per share increase from December 31, 2021, primarily resulting from the accretive benefit of our board of directors, or our Board, approved common stock repurchase program, offset by net losses from operations incurred during the quarter.

Impact of COVID-19

As discussed in the “Overview” section above, the COVID-19 pandemic continues to plague countries throughout the globe as virus variants have emerged. While the U.S. and certain countries around the world have eased restrictions and financial markets and unemployment rates have stabilized to some degree, due in large part to the development and distribution of vaccines and other treatments, the pandemic continues to cause uncertainty on the U.S. and global economies, generally, and the CRE business in particular. The reinstatement of nationwide restrictions placed on businesses in response to COVID-19 may cause significant cash flow disruptions across the economy that may impact our borrowers and their ability to stay current with their debt obligations in the near term.

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Due to the fluidity of this situation along with other world events, any prediction as to the ultimate adverse impact of the pandemic on economic and market conditions remains difficult to assess. The continuing impact of the pandemic has had, and we expect may continue to have, a long-term and material impact on our results of operations, financial condition and our liquidity and capital resources during the fiscal year 2022. Further discussion of the potential impacts on our business from the COVID-19 pandemic is provided in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Impact of Reference Rate Reform

As discussed in the “Overview” section above, our CRE whole loans and our asset-specific borrowings are primarily benchmarked to one-month LIBOR. In March 2021, the United Kingdom’s Financial Conduct Authority announced that it would cease publication of the one-week and two-month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023. Additionally, the U.S. Federal Reserve encouraged companies to cease using LIBOR as a benchmark rate by December 31, 2021.

While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprising large U.S. financial institutions, has identified SOFR, a new index calculated by short-term repurchase agreements backed by U.S. Treasury securities, as its preferred alternative rate for LIBOR. All our underwritten loans contain terms that allow for a change to an alternative benchmark rate upon the discontinuation of LIBOR. In September 2021, January 2022 and February 2022, the term warehouse financing facilities with JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), Morgan Stanley Mortgage Capital Holdings LLC (“Morgan Stanley”) and Barclays Bank PLC (“Barclays”), respectively, were amended to allow for the transition to alternative rates, including rates tied to SOFR, subject to benchmark transition events.

The transition from LIBOR to SOFR or to another alternative rate may result in financial market disruptions and significant increases in benchmark rates, resulting in increased financing costs to us, any of which could have an adverse effect on our business, results of operations, financial condition, and the market price of our common stock. Further discussion of the risk related to ongoing reference rate reform is provided in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Results of Operations

Our net loss allocable to common shares for the three months ended March 31, 2022 was $2.8 million, or $(0.30) per share-basic ($(0.30) per share-diluted), as compared to net income allocable to common shares for the three months ended March 31, 2021 of $10.5 million, or $1.03 per share-basic ($1.03 per share-diluted).

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Net Interest Income

The following tables analyze the change in interest income and interest expense for the comparative three months ended March 31, 2022 and 2021 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):

	Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021
							Due to Changes in
	Net Change			Percent Change (1)			Volume			Rate
Increase (decrease) in interest income:
CRE whole loans (2)	$	(943	)		(4	)%	$	3,873		$	(4,816	)
Legacy CRE loan (2)(3)		(132	)		(82	)%		(132	)		—
CRE mezzanine loan		—			—	%		—			—
CRE preferred equity investments (2)		(843	)		(100	)%		(843	)		—
CMBS		(161	)		(100	)%		(161	)		—
Other		6			46	%		6			—
Total decrease in interest income		(2,073	)		(8	)%		2,743			(4,816	)
Increase (decrease) in interest expense:
Securitized borrowings: (4)
XAN 2019-RSO7 Senior Notes		(2,102	)		(100	)%		(2,102	)		—
XAN 2020-RSO8 Senior Notes		(776	)		(39	)%		(1,167	)		391
XAN 2020-RSO9 Senior Notes		(1,578	)		(62	)%		(1,857	)		279
ACR 2021-FL1 Senior Notes		3,181			100	%		3,181			—
ACR 2021-FL2 Senior Notes		3,183			100	%		3,183			—
Senior secured financing facility		(576	)		(53	)%		(576	)		—
CRE - term warehouse financing facilities (4)		133			15	%		115			18
4.50% Convertible Senior Notes (4)		(1,199	)		(47	)%		(1,199	)		—
5.75% Senior Unsecured Notes (4)		2,301			100	%		2,301			—
12.00% Senior Unsecured Notes (4)		(1,385	)		(89	)%		(1,385	)		—
Unsecured junior subordinated debentures		1			0	%		—			1
Hedging		—			0	%		—			—
Total increase in interest expense		1,183			9	%		494			689
Net (decrease) increase in net interest income	$	(3,256	)				$	2,249		$	(5,505	)

(1) Percent change is calculated as the net change divided by the respective interest income or interest expense for the three months ended March 31, 2021.

(2) Includes decreases in fee income of approximately $515,000, $18,000 and $80,000 recognized on our CRE whole loans, legacy CRE loan and preferred equity investments respectively, that were due to changes in volume.

(3) Includes the change in interest income recognized on one legacy CRE loan with an amortized cost of $11.5 million at December 31, 2021 classified as a CRE loan on the consolidated balance sheet. The loan paid off in January 2022.

(4) Includes increases in amortization expense of approximately $200,000, $145,000 and $94,000 on our securitized borrowings, 5.75% Senior Unsecured Notes and 12.00% senior unsecured notes due 2027 (“12.00% Senior Unsecured Notes”), respectively, and decreases of amortization expense of approximately $47,000 and $343,000 on our CRE - term warehouse financing facilities and 4.50% Convertible Senior Notes, that were due to changes in volume.

Net Change in Interest Income for the Comparative three months ended March 31, 2022 and 2021:

Aggregate interest income decreased by $2.1 million for the comparative three months ended March 31, 2022 and 2021. We attribute the changes to the following:

CRE whole loans. The decrease of $943,000 for the comparative three months ended March 31, 2022 and 2021 was primarily attributable to a decline in the weighted-average benchmark rate floors on new CRE whole loans originated, compounded by a decrease in exit fees of approximately $571,000 that resulted from lower payoff volume. This decrease was partially offset by a net increase in the size of the total loan portfolio period over period.

Legacy CRE loan. The decrease of $132,000 for the comparative three months ended March 31, 2022 and 2021 was primarily attributable to the payoff of our remaining legacy CRE whole loan in January 2022.

CRE preferred equity investments. The decrease of $843,000 for the comparative three months ended March 31, 2022 and 2021 was attributable to the payoffs of the preferred equity investments in March 2021 and April 2021.

CMBS. The decrease of $161,000 for the comparative three months ended March 31, 2022 and 2021 was attributable to the disposition of our two remaining CMBS securities in March 2021.

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Net Change in Interest Expense for the Comparative three months ended March 31, 2022 and 2021:

Aggregate interest expense increased by $1.2 million for the comparative three months ended March 31, 2022 and 2021, respectively. We attribute the changes to the following:

Securitized borrowings. The net increase of $1.9 million for the comparative three months ended March 31, 2022 and 2021 was primarily attributable to the issuances of ACRES Commercial Realty 2021-FL1 Issuer, Ltd. (“ACR 2021-FL1”) and ACRES Commercial Realty 2021-FL2 Issuer, Ltd. (“ACR 2021-FL2”), partially offset by the liquidations of Exantas Capital Corp. 2019-RSO7, Ltd. (“XAN 2019-RSO7”), XAN 2020-RSO8 and XAN 2020-RSO9. The increase was also attributable to an increase in benchmark rates over the comparative periods.

Senior secured financing facility. The decrease of $576,000 for the comparative three months ended March 31, 2022 and 2021 was attributable to decreased utilization of the senior secured financing facility over the comparative periods.

CRE - term warehouse financing facilities. The increase of $133,000 for the comparative three months ended March 31, 2022 and 2021 was primarily attributable to the increased utilization of these facilities during the three months ended March 31, 2022 to finance CRE loans received in the liquidation of XAN 2020-RSO8 and XAN 2020-RSO9.

4.50% Convertible Senior Notes. The decrease of $1.2 million for the comparative three months ended March 31, 2022 and 2021 was primarily attributable to the repurchase of $55.7 million of our 4.50% Convertible Senior Notes during the year ended December 31, 2021 and the repurchase of $39.8 million of our 4.50% Convertible Senior Notes during the three months ended March 31, 2022.

5.75% Senior Unsecured Notes. The increase of $2.3 million for the comparative three months ended March 31, 2022 and 2021 was attributable to the issuance of our 5.75% Senior Unsecured Notes in August 2021.

12.00% Senior Unsecured Notes due 2027. The decrease of $1.4 million for the comparative three months ended March 31, 2022 and 2021 was attributable to the redemption of the full outstanding balance of our 12.00% Senior Unsecured Notes in August 2021.

Average Net Yield and Average Cost of Funds:

The following tables present the average net yield and average cost of funds for the three months ended March 31, 2022 and 2021 (dollars in thousands, except amounts in footnotes):

	For the Three Months Ended March 31, 2022								For the Three Months Ended March 31, 2021
	Average Balance		Interest Income (Expense)			Average Net Yield (Cost of Funds) (1)			Average Balance		Interest Income (Expense)			Average Net Yield (Cost of Funds) (1)
Interest-earning assets
CRE whole loans, floating-rate (2)	$	1,883,227	$	22,511			4.85	%	$	1,500,501	$	23,454			6.34	%
Legacy CRE loan (2)		640		29			18.08	%		11,516		161			5.67	%
CRE mezzanine loan		4,700		117			9.96	%		4,700		117			9.96	%
CRE preferred equity investments (2)		—		—			—	%		26,844		843			12.74	%
CMBS		—		—			—	%		17,017		161			3.84	%
Other		136,673		19			0.06	%		53,814		13			0.10	%
Total interest income/average net yield		2,025,240		22,676			4.54	%		1,614,392		24,749			6.22	%
Interest-bearing liabilities
Collateralized by:
CRE whole loans (3)		1,481,354		(10,077	)		(2.67	)%		1,081,098		(8,612	)		(3.13	)%
General corporate debt:
Unsecured junior subordinated debentures		51,548		(539	)		(4.18	)%		51,548		(538	)		(4.17	)%
4.50% Convertible Senior Notes (4)		67,076		(1,356	)		(8.09	)%		137,724		(2,555	)		(7.42	)%
5.75% Senior Unsecured Notes (5)		146,986		(2,301	)		(6.35	)%		—		—			—	%
12.00% Senior Unsecured Notes (6)(7)		—		(178	)		—	%		46,468		(1,563	)		(13.64	)%
Hedging (8)		—		(456	)		—	%		—		(456	)		—	%
Total interest expense/average cost of funds	$	1,746,964		(14,907	)		(3.23	)%	$	1,316,838		(13,724	)		(3.99	)%
Total net interest income			$	7,769							$	11,025

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

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(2) Includes fee income of approximately $2.1 million on our floating-rate CRE whole loans for the three months ended March 31, 2022 and approximately $2.6 million, $18,000 and $80,000 on our floating-rate CRE whole loans, legacy CRE loan and our CRE preferred equity investments, respectively, for the three months ended March 31, 2021.

(3) Includes amortization expense of approximately $2.5 million and $2.3 million for the three months ended March 31, 2022 and 2021, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.

(4) Includes aggregated amortization expense of approximately $595,000 and $938,000 for the three months ended March 31, 2022 and 2021, respectively, on our 4.50% Convertible Senior Notes. The amortization expense for the three months ended March 31, 2022 included $114,000 of acceleration of deferred debt issuance costs in connection with the repurchase of $39.8 million principal amount of our 4.50% Convertible Senior Notes during the period.

(5) Includes amortization expense of approximately $145,000 for the three months ended March 31, 2022 on our 5.75% Senior Unsecured Notes.

(6) Includes amortization expense of approximately $178,000 and $84,000 for the three months ended March 31, 2022 and 2021, respectively, on our 12.00% Senior Unsecured Notes.

(7) The outstanding par balance of our 12.00% Senior Unsecured Notes was redeemed in full in August 2021. At any time and from time to time prior to July 31, 2022, we may elect to issue up to $75.0 million of principal of additional notes. The interest expense incurred during the three months ended March 31, 2022 comprises amortization of deferred debt issuance costs on the remaining availability.

(8) Includes net amortization expense of $456,000 for each of the three months ended March 31, 2022 and 2021 on 22 terminated interest rate swap agreements that were in net loss positions at the time of termination. The remaining losses, reported in accumulated other comprehensive (loss) income 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 periods presented (dollars in thousands):

	For the Three Months Ended
	March 31,
	2022		2021		Dollar Change		Percent Change
Real estate income and other revenue:
Real estate income	$	3,138	$	1,654	$	1,484		90	%
Other revenue		16		16		-		0	%
Total	$	3,154	$	1,670	$	1,484		89	%

Aggregate real estate income and other revenue increased by $1.5 million for the comparative three months ended March 31, 2022 and 2021. We attribute the changes to the following:

Real estate income. The increase of $1.5 million for the comparative three months ended March 31, 2022 and 2021 was attributable to the acquisition of two revenue-generating properties in the fourth quarter of 2021. One property was acquired by accepting the deed-in-lieu of foreclosure to the property in full satisfaction of our outstanding loan balance. The remaining property was acquired in a purchase and sale transaction with an affiliate of our Manager.

Operating Expenses

The following tables set forth information relating to our operating expenses for the periods presented (dollars in thousands):

	For the Three Months Ended
	March 31,
	2022			2021			Dollar Change			Percent Change
Operating expenses:
General and administrative	$	3,457		$	3,153		$	304			10	%
Real estate expenses		4,794			1,831			2,963			162	%
Management fees - related party		1,682			1,326			356			27	%
Equity compensation - related party		744			19			725			3,816	%
Corporate depreciation and amortization		22			44			(22	)		(50	)%
Reversal of credit losses, net		(1,802	)		(5,641	)		3,839			68	%
Total	$	8,897		$	732		$	8,165			1,115	%

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Aggregate operating expenses increased by $8.2 million for the comparative three months ended March 31, 2022 and 2021. We attribute the changes to the following:

General and administrative. General and administrative expenses increased by $304,000 for the comparative three months ended March 31, 2022 and 2021. General and administrative expenses in the first quarter historically contain expenses that are seasonal in nature, the largest of which is audit expense, included in professional services, and which may vary based on the timing of when the expense is incurred. For the comparative three months ended March 31, 2022 and 2021, there were no significant general and administrative expense matters to discuss. The following table summarizes the information relating to our general and administrative expenses for the periods presented (dollars in thousands):

	For the Three Months Ended
	March 31,
	2022		2021		Dollar Change			Percent Change
General and administrative:
Professional services	$	1,892	$	1,836	$	56			3	%
Wages and benefits		360		405		(45	)		(11	)%
D&O insurance		356		296		60			20	%
Director fees		337		119		218			183	%
Dues and subscriptions		205		177		28			16	%
Operating expenses		130		287		(157	)		(55	)%
Tax penalties, interest and franchise tax		139		1		138			13,800	%
Rent and utilities		29		32		(3	)		(9	)%
Travel		9		—		9			100	%
Total	$	3,457	$	3,153	$	304			10	%

Real estate expenses. The increase of $3.0 million for the comparative three months ended March 31, 2022 and 2021 was primarily attributable to the acquisition of two office properties in October 2021, one property that was acquired through a direct equity investment, which incurred operating expenses of $1.3 million (of which depreciation expense was $919,000) during the three months ended March 31, 2022, and one property that was acquired through the receipt of the deed-in-lieu of foreclosure and held for sale, which incurred operating expenses of $1.4 million during the three months ended March 31, 2022. The increase was also attributable to an increase in real estate operating expenses on one hotel property acquired through the receipt of the deed-in-lieu of foreclosure in November 2020, which incurred $2.1 million in operating expenses (of which depreciation expense was $472,000) during the three months ended March 31, 2022, up from $1.8 million in operating expenses incurred on the property during the three months ended March 31, 2021.

Management fees – related party. The increase of $356,000 for the comparative three months ended March 31, 2022 and 2021 was primarily attributable to an increase in our base management fees during the three months ended March 31, 2022. As of July 31, 2020, as part of the Fourth Amended and Restated Management Agreement, as amended (“Management Agreement”), the monthly base management fee payable to our Manager was amended to be the greater of 1/12th of the amount of our equity multiplied by 1.50% or $442,000 through July 31, 2022. In June 2021, the base management fee calculation exceeded the $442,000 for the first time since the execution of the Management Agreement in connection with the issuance of the 7.875% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”) in the second quarter of 2021. As a result, the management fees were greater than those incurred in the first quarter of 2021.

Equity compensation – related party. The increase of $725,000 for the comparative three months ended March 31, 2022 and 2021 was primarily attributable to shares granted in the second quarter 2021 under our Manager Incentive Plan, which will vest 25% for four years, on each anniversary of the issuance date.

Reversal of credit losses, net. The reversal of credit losses of $1.8 million and $5.6 million for the three months ended March 31, 2022 and 2021, respectively, were each attributable to overall, general improvements in expected macroeconomic conditions and improvements in property-level operations on loan collateral.

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Other Income (Expense)

The following tables set forth information relating to our other income (expense) incurred for the periods presented (dollars in thousands):

	For the Three Months Ended
	March 31,
	2022			2021		Dollar Change			Percent Change
Other income (expense):
Net realized and unrealized gain on investment securities available-for-sale and loans and derivatives	$	—		$	878	$	(878	)		(100	)%
Loss on extinguishment of debt		(460	)		—		(460	)		(100	)%
Other income		798			215		583			271	%
Total	$	338		$	1,093	$	(755	)		(69	)%

Aggregate other income decreased $755,000 for the comparative three months ended March 31, 2022 and 2021. We attribute the changes to the following:

Net realized and unrealized gain on investment securities available-for-sale and loans and derivatives. The decrease of $878,000 for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was attributable to the sale of our two remaining CMBS securities for proceeds of $3.0 million, which generated non-recurring gains of $878,000 in March 2021.

Loss on extinguishment of debt. The increase of $460,000 during the comparative three months ended March 31, 2022 and 2021 was attributable to the partial repurchase of our 4.50% Convertible Senior Notes in February 2022, which resulted in $460,000 of non-cash losses in connection with the ratable acceleration of the 4.50% Convertible Senior Notes’ market discount.

Other Income. The increase of $583,000 during the comparative three months ended March 31, 2022 and 2021 was primarily attributable to a loan recovery received during the quarter ended March 31, 2022 on a middle market loan the was previously charged off.

Financial Condition

Summary

Our total assets were $2.1 billion and $2.3 billion at March 31, 2022 and December 31, 2021, respectively.

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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 March 31, 2022 and December 31, 2021 as follows (dollars in thousands, except amounts in footnotes):

At March 31, 2022	Amortized Cost		Net Carrying Amount(1)		Percent of Portfolio			Weighted Average Coupon
Loans held for investment:
CRE whole loans, floating-rate	$	1,891,725	$	1,887,255		95.55	%	4.44%
CRE mezzanine loan		4,700		4,464		0.23	%	10.00%
		1,896,425		1,891,719		95.78	%
Other investments:
Investments in unconsolidated entities		1,548		1,548		0.08	%	N/A (3)
Investments in real estate (2)		64,116		64,116		3.25	%	N/A (3)
Property held for sale		17,657		17,657		0.89	%	N/A (3)
		83,321		83,321		4.22	%
Total investment portfolio	$	1,979,746	$	1,975,040		100.00	%
At December 31, 2021	Amortized Cost		Net Carrying Amount(1)		Percent of Portfolio			Weighted Average Coupon
Loans held for investment:
CRE whole loans, floating-rate(4)	$	1,877,851	$	1,869,301		95.44	%	4.43%
CRE mezzanine loan		4,700		4,445		0.23	%	10.00%
		1,882,551		1,873,746		95.67	%
Other investments:
Investments in unconsolidated entities		1,548		1,548		0.08	%	N/A (3)
Investment in real estate (2)		65,465		65,465		3.34	%	N/A (3)
Property held for sale		17,846		17,846		0.91	%	N/A (3)
		84,859		84,859		4.33	%
Total investment portfolio	$	1,967,410	$	1,958,605		100.00	%

(1) Net carrying amount includes an allowance for credit losses of $4.7 million and $8.8 million at March 31, 2022 and December 31, 2021, respectively.

(2) Includes real estate-related right of use assets of $5.5 million, intangible assets of $3.0 million and $3.9 million, a lease liability of $3.0 million and $3.1 million and other liabilities of $92,000 and $169,000 at March 31, 2022 and December 31, 2021, respectively.

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

(4) Includes one legacy CRE whole loan with an amortized cost of $11.5 million December 31, 2021 that paid off in January 2022.

CRE loans. During the three months ended March 31, 2022, we originated $99.9 million of floating-rate CRE whole loan commitments (of which $2.8 million was unfunded loan commitments), funded $10.7 million of previously unfunded loan commitments and received $92.3 million in proceeds from loan payoffs and paydowns.

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

Description	Quantity		Principal		Unamortized (Discount) Premium, net (1)			Amortized Cost		Allowance for Credit Losses			Carrying Value		Contractual Interest Rates (2)	Maturity Dates (3)(4)
At March 31, 2022:
CRE loans held for investment:
Whole loans (5)(6)		88	$	1,904,974	$	(13,249	)	$	1,891,725	$	(4,470	)	$	1,887,255	1M BR plus 2.75% to 1M BR plus 8.50%	April 2022 to September 2025
Mezzanine loan (5)		1		4,700		—			4,700		(236	)		4,464	10.00%	June 2028
Total CRE loans held for investment			$	1,909,674	$	(13,249	)	$	1,896,425	$	(4,706	)	$	1,891,719
At December 31, 2021:
CRE loans held for investment:
Whole loans (5)(6)		93	$	1,891,795	$	(13,944	)	$	1,877,851	$	(8,550	)	$	1,869,301	1M BR plus 2.70% to 1M BR plus 8.50%	January 2022 to September 2025
Mezzanine loan (5)		1		4,700		—			4,700		(255	)		4,445	10.00%	June 2028
Total CRE loans held for investment			$	1,896,495	$	(13,944	)	$	1,882,551	$	(8,805	)	$	1,873,746

(1) Amounts include unamortized loan origination fees of $13.0 million and $13.6 million and deferred amendment fees of $248,000 and $307,000 at March 31, 2022 and December 31, 2021, respectively. Additionally, the amounts include unamortized loan acquisition costs of $7,300 at December 31, 2021.

(2) Our whole loan portfolio of $1.9 billion at each period presented had weighted-average one-month benchmark rate (“BR”) floors of 0.66% and 0.75% at March 31, 2022 and December 31, 2021, respectively. At March 31, 2022 and December 31, 2021, all but one of our floating-rate whole loans had one-month benchmark floors.

(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 one and three whole loans, with amortized costs of $8.0 million and $27.9 million, in maturity default at March 31, 2022 and December 31, 2021, respectively.

(5) Substantially all loans are pledged as collateral under various borrowings at March 31, 2022 and December 31, 2021.

(6) CRE whole loans had $145.5 million and $157.6 million in unfunded loan commitments at March 31, 2022 and December 31, 2021, 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.

At March 31, 2022, approximately, 26.8%, 22.3% and 14.2% of our CRE loan portfolio was concentrated in the Southeast, Southwest and Mid-Atlantic regions, respectively, based on carrying value, as defined by the NCREIF. At December 31, 2021, approximately 28.4%, 18.4% and 15.2% of our CRE loan portfolio was concentrated in the Southeast, Southwest and Mid-Atlantic regions respectively, based on carrying value. No single loan or investment represented more than 10% of our total assets and no single investment group generated over 10% of our revenue.

CMBS. In March 2021, we sold our remaining two CMBS securities with an amortized cost and fair value of $2.1 million for cash proceeds of $3.0 million.

Investment in unconsolidated entities. Our investments in unconsolidated entities at March 31, 2022 and December 31, 2021 comprised a 100% interest in the common shares of 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. We record our investments in RCT I’s and RCT II’s common shares as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II. We recorded dividends from our investments in RCT I’s and RCT II’s common shares, reported in other revenue on the consolidated statement of operations, of $16,000 during the three months ended March 31, 2022 and March 31, 2021.

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Financing Receivables

The following tables show the activity in the allowance for credit losses for the three months ended March 31, 2022 and year ended December 31, 2021 (in thousands):

	Three Months Ended March 31, 2022			Year Ended December 31, 2021
	CRE Loans			CRE Loans
Allowance for credit losses:
Allowance for credit losses at beginning of period	$	8,805		$	34,310
Reversal of credit losses, net		(1,802	)		(21,262	)
Charge offs		(2,297	)		(4,243	)
Allowance for credit losses at end of period	$	4,706		$	8,805

During the three months ended March 31, 2022, we recorded a reversal of expected credit losses of $1.8 million in connection with resolutions of loans with specific reserves and continued improvements in property-level operations supported by a continued, generally positive outlook on the macroeconomic environment. During the three months ended March 31, 2021, we recorded a reversal of expected credit losses of $5.6 million in connection with loan paydowns, improved collateral operating performance, declines in expected unemployment and continued projected recoveries in future CRE asset pricing.

At March 31, 2022, we individually evaluated one hotel loan and one retail loan in the Northeast region with principal balances of $14.0 million and $8.0 million, respectively, for which foreclosure was determined to be probable. Each loan had an as-is appraised value in excess of its principal balance, and, as such, had no CECL allowance at March 31, 2022.

At December 31, 2021, two additional loans were individually evaluated for impairment: a retail loan in the Pacific region and a hotel loan in East North Central region. Both loans were repaid in January 2022. The repayment of the retail loan in the Pacific region resulted in a charge off of $2.3 million against the allowance for credit losses. An individual CECL allowance was established for this loan during the fourth quarter of 2021.  

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 reunderwritten 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 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	• Property performance has surpassed underwritten expectations.
	• 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	• 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	• Property performance lags behind underwritten expectations.
	• Occupancy is not stabilized and the property has some tenancy rollover.
4	• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
	• Occupancy is not stabilized and the property has a large amount of tenancy rollover.
5	• 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.
	• The property has a material vacancy rate and significant rollover of remaining tenants.
	• 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, 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. In order to calculate the historical mean loss ratio, we utilize our full, 16 year underwriting history in the determination of historical losses, along with the market loss history from a selected population from an engaged third-party provider’s database that were similar to our loan types, loan sizes, durations, interest rate structure and general LTV profiles.

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 (1)
At March 31, 2022:
Whole loans, floating-rate	$	—	$	1,532,355	$	239,871	$	105,503	$	13,996	$	1,891,725
Mezzanine loan		—		—		—		4,700		—		4,700
Total	$	—	$	1,532,355	$	239,871	$	110,203	$	13,996	$	1,896,425
At December 31, 2021:
Whole loans, floating-rate	$	—	$	1,456,330	$	273,078	$	123,762	$	24,681	$	1,877,851
Mezzanine loan		—		—		—		4,700		—		4,700
Total	$	—	$	1,456,330	$	273,078	$	128,462	$	24,681	$	1,882,551

(1) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, 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):

	2022		2021		2020		2019		2018		Prior		Total (1)
At March 31, 2022:
Whole loans, floating-rate: (2)
Rating 2	$	96,131	$	1,241,086	$	143,059	$	32,605	$	19,474	$	—	$	1,532,355
Rating 3		—		34,707		25,067		101,756		60,841		17,500		239,871
Rating 4		—		—		—		28,465		77,038		—		105,503
Rating 5		—		—		—		13,996		—		—		13,996
Total whole loans, floating-rate		96,131		1,275,793		168,126		176,822		157,353		17,500		1,891,725
Mezzanine loan (rating 4)		—		—		—		—		4,700		—		4,700
Total	$	96,131	$	1,275,793	$	168,126	$	176,822	$	162,053	$	17,500	$	1,896,425
	2021		2020		2019		2018		2017		Prior		Total (1)
At December 31, 2021:
Whole loans, floating-rate: (2)
Rating 2	$	1,230,810	$	150,513	$	55,510	$	19,497	$	—	$	—	$	1,456,330
Rating 3		33,781		24,604		136,305		60,888		—		17,500		273,078
Rating 4		—		—		28,446		86,096		—		9,220		123,762
Rating 5		—		—		22,385		—		—		2,296		24,681
Total whole loans, floating-rate		1,264,591		175,117		242,646		166,481		—		29,016		1,877,851
Mezzanine loan (rating 4)		—		—		—		4,700		—		—		4,700
Total	$	1,264,591	$	175,117	$	242,646	$	171,181	$	—	$	29,016	$	1,882,551

(1) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

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

At March 31, 2022 and December 31, 2021, we had one mezzanine loan included in other assets that had no carrying value.

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 Days (1)		Total Past Due		Current (2)		Total Loans Receivable (3)		Total Loans > 90 Days and Accruing
At March 31, 2022:
Whole loans, floating-rate	$	—	$	—	$	8,025	$	8,025	$	1,883,700	$	1,891,725	$	—
Mezzanine loan		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	8,025	$	8,025	$	1,888,400	$	1,896,425	$	—
At December 31, 2021:
Whole loans, floating-rate	$	—	$	—	$	19,916	$	19,916	$	1,857,935	$	1,877,851	$	19,916
Mezzanine loan		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	19,916	$	19,916	$	1,862,635	$	1,882,551	$	19,916

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(1) During the three months ended March 31, 2022, we did not recognize interest income on the one loan with a principal payment past due greater than 90 days at March 31, 2022. During the three months ended March 31, 2021, we recognized interest income of $153,000 on the one loan with a principal payment past due greater than 90 days at March 31, 2022.

(2) Includes one whole loan with an amortized cost of $8.0 million, in maturity default at December 31, 2021.

(3) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022 and December 31, 2021, we had one and three CRE loans in maturity default, with total amortized costs of $8.0 million and $27.9 million, respectively. During the three months ended March 31, 2022, two whole loans in maturity default at December 31, 2021 paid off principal of $17.6 million. The payoff on one loan was the result of a discounted payoff and resulted in a realized loss of $2.3 million for which a CECL allowance was established as of December 31, 2021.

At March 31, 2022 , two whole loans, including one loan in maturity default, with a total amortized cost of $22.0 million, were past due on interest payments.

At December 31, 2021, three whole loans, including two loans that had maturity defaults, with total amortized cost of $30.4 million, were past due on interest payments.

Troubled Debt Restructurings (“TDRs”)

There were no TDRs for the three months ended March 31, 2022 and 2021.

During the three months ended March 31, 2022, we entered into two agreements that extended loans by a weighted average period of three months and, in certain cases, modified certain other loan terms. One formerly forborne borrower was in maturity default at March 31, 2022. No loan modifications during the three months ended March 31, 2022 resulted in TDRs.

Restricted Cash

At March 31, 2022, we had restricted cash of $5.7 million, which consisted of $4.9 million of restricted cash held within our five consolidated securitization entities and $868,000 held in various reserve accounts. At December 31, 2021, we had restricted cash of $248.4 million, which consisted of $248.1 million held within our seven consolidated securitization entities and $360,000 held in various reserve accounts. The decrease of $242.7 million was primarily attributable to loan purchase activity within two of our consolidated securitization entities.

Accrued Interest Receivable

The following table summarizes our accrued interest receivable at March 31, 2022 and December 31, 2021 (in thousands):

	March 31, 2022		December 31, 2021		Net Change
Accrued interest receivable from loans	$	6,246	$	6,106	$	140
Accrued interest receivable from promissory note, escrow, sweep and reserve accounts		36		6		30
Total	$	6,282	$	6,112	$	170

The increase of $170,000 in accrued interest receivable was primarily attributable to rising coupon rates and an increased loan portfolio balance.

Other Assets

The following table summarizes our other assets at March 31, 2022 and December 31, 2021 (in thousands):

	March 31, 2022		December 31, 2021		Net Change
Tax receivables and prepaid taxes	$	2,124	$	2,120	$	4
Other receivables		1,147		1,573		(426	)
Other prepaid expenses		1,735		1,367		368
Fixed assets - non-real estate		383		401		(18	)
Unsettled trades receivable		—		-		-
Other assets, miscellaneous		24		21		3
CRE fixed-rate whole loans, held for sale		—		-		-
Total	$	5,413	$	5,482	$	(69	)

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The decrease of $69,000 in other assets was primarily attributable to collections on miscellaneous receivables at the real estate properties, offset by a deposit that was posted in conjunction with the acquisition of an investment in real estate, equity that closed in April 2022.

Deferred Tax Assets

At March 31, 2022 and December 31, 2021, our net deferred tax asset was zero, resulting from a full valuation allowance of $21.5 million and $21.4 million, respectively, on our deferred tax asset 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.

Core Asset Classes

Our investment strategy targets the following core asset class:

Core Asset Class	Principal Investments
Commercial real estate-related assets	• First mortgage loans, which we refer to as whole loans;
	• First priority interests in first mortgage loans, which we refer to as A notes;
	• Subordinated interests in first mortgage loans, which we refer to as B notes;
	• Mezzanine debt related to CRE that is senior to the borrower’s equity position but subordinated to other third-party debt;
	• Preferred equity investments related to CRE that are subordinate to first mortgage loans and are not collateralized by the property underlying the investment; and
	• CRE equity investments.

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 March 31, 2022 and December 31, 2021, we had a loss of $8.0 million and $8.5 million, respectively, recorded in accumulated other comprehensive (loss) income, which will be amortized into earnings over the remaining life of the debt. During the three months ended March 31, 2022 and 2021, we recorded amortization expense of $479,000, reported in interest expense on the consolidated statements of operations.

At March 31, 2022 and December 31, 2021, we had an unrealized gain of $324,000 and $347,000, respectively, attributable to two terminated interest rate swaps, in accumulated other comprehensive (loss) income on the consolidated balance sheets, to be accreted into earnings over the remaining life of the debt. We recorded accretion income, reported in interest expense on the consolidated statements of operations, of $23,000 during three months ended March 31, 2022 and 2021, to accrete the accumulated other comprehensive income on the terminated swap agreements.

We were exposed to market pricing risks in connection with our fixed-rate CRE whole loans. The increase or decrease of market interest rates caused the fair value of the fixed-rate CRE whole loans to decrease or increase. In order to mitigate this market price risk, we entered into interest rate swap contracts in which we paid a fixed rate of interest in exchange for a variable rate benchmark, usually three-month LIBOR. In December 2020, these interest rate swap contracts were terminated.

The following tables present the effect of derivative instruments on our consolidated statements of operations for the three months ended March 31, 2022 and 2021 (in thousands):

	Derivatives
Three Months Ended March 31, 2022	Consolidated Statements of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging	Interest expense	$	(456	)

	Derivatives
Three Months Ended March 31, 2021	Consolidated Statements of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging	Interest expense	$	(456	)

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

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Senior Secured Financing Facility and Term Warehouse Financing Facilities

Borrowings under our senior secured financing facility and term warehouse financing facilities are guaranteed by us or one or more of our subsidiaries. The following table sets forth certain information with respect to our senior secured financing and term warehouse financing facilities (dollars in thousands, except amounts in footnotes):

	March 31, 2022										December 31, 2021
	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
Senior Secured Financing Facility
Massachusetts Mutual Life Insurance Company (1)	$	(3,280	)	$	153,171		7		5.75	%	$	(3,432	)	$	170,791		9		5.75	%
CRE - Term Warehouse Financing Facilities(2)
JPMorgan Chase Bank, N.A.(3)		45,196			69,709		5		2.75	%		18,875			37,167		3		2.85	%
Morgan Stanley Mortgage Capital Holdings LLC(4)		107,010			140,703		8		2.50	%		47,896			64,860		3		2.03	%
Total	$	148,926		$	363,583						$	63,339		$	272,818

(1) Includes $3.3 million and $3.4 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively.

(2) Outstanding borrowings include accrued interest payable.

(3) Includes $1.6 million and $1.8 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively, which includes $250,000 and $356,000 of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively, from other term warehouse financing facilities with no balance.

(4) Includes $2.0 million and $2.2 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively.

We were in compliance with all covenants in the respective agreements at March 31, 2022 and December 31, 2021.

Senior Secured Financing Facility

In July 2020, an indirect, wholly-owned subsidiary of ours (“Holdings”), along with its direct wholly-owned subsidiary (the “Borrower”), entered into a loan and servicing agreement (the “MassMutual Loan Agreement”) with Massachusetts Mutual Life Insurance Company (“MassMutual”) and the other lenders party thereto (the “Lenders”) to finance our core CRE lending business.

In connection with the MassMutual Loan Agreement, we, with certain of our subsidiaries, entered into a Guaranty (the “MassMutual Guaranty”) in favor of the secured parties under the MassMutual Loan Agreement.  Pursuant to the MassMutual Guaranty, we fully guaranteed all payments and performance of the Borrower and Holdings under the MassMutual Loan Agreement. Additionally, we, and certain of our subsidiaries, made certain representations and warranties and agreed not to incur debt or liens, each subject to certain exceptions, and agreed to provide the Lenders with certain information.

The MassMutual Loan Agreement was amended in several instances pursuant to which (i) MassMutual consented to the formation of certain subsidiaries to hold real estate and (ii) such subsidiaries agreed to enter into guaranty agreements in favor of the secured parties under the MassMutual Loan Agreement.

CRE - Term Warehouse Financing Facilities

In April 2018, an indirect, wholly-owned subsidiary of ours entered into a master repurchase agreement (the “Barclays Facility”) with Barclays to finance the origination of CRE loans. In February 2022, such subsidiary entered into the Third Amendment to Master Repurchase Agreement (the “Barclays Amendment”) with Barclays, which amended the Barclays Facility to add market terms regarding the replacement of LIBOR upon determination of a benchmark transition event.

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 to finance the origination of CRE loans. 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.

Securitizations

At March 31, 2022, we retained equity in two CRE loan securitizations that we executed, as follows:

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ACR 2021-FL1

In May 2021, we closed ACR 2021-FL1, a $802.6 million CRE debt securitization transaction that provided financing for CRE loans. ACR 2021-FL1 includes a reinvestment period, which ends in May 2023, that allows it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds. ACR 2021-FL1 issued a total of $675.2 million of non-recourse, floating-rate notes to third parties at par. We retained 100% of the Class F and Class G notes in addition to 100% of the outstanding preference shares. The preference shares are subordinated in right of payment to all other securities issued by ACR 2021-FL1.

At closing, the senior notes issued to investors consisted of the following classes: (i) $431.4 million of Class A notes bearing interest at one-month LIBOR plus 1.20%; (ii) $100.3 million of Class A-S notes bearing interest at one-month LIBOR plus 1.60%; (iii) $37.1 million of Class B notes bearing interest at one-month LIBOR plus 1.80%; (iv) $43.1 million of Class C notes bearing interest at one-month LIBOR plus 2.00%; (v) $50.2 million of Class D notes bearing interest at one-month LIBOR plus 2.65%; and (vi) $13.0 million of Class E notes bearing interest at one-month LIBOR plus 3.10%.

All notes issued mature in June 2036, although we have the right to call the notes beginning on the payment date in May 2023 and thereafter.

ACR 2021-FL2

In December 2021, we closed ACR 2021-FL2, a CRE debt securitization transaction that can finance up to $700.0 million of CRE loans. ACR 2021-FL2 includes a reinvestment period, which ends in December 2023, that allows it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds. The reinvestment period includes a 180-day ramp-up acquisition period during which CRE loans for reinvestment into the securitization can be acquired using proceeds from the issuance of the securitization. ACR 2021-FL2 issued a total of $567.0 million of non-recourse, floating-rate notes to third parties at par. We retained 100% of the Class F and Class G notes in addition to 100% of the outstanding preference shares. The preference shares are subordinated in right of payment to all other securities issued by ACR 2021-FL2.

At closing, the senior notes issued to investors consisted of the following classes: (i) $385.0 million of Class A notes bearing interest at one-month LIBOR plus 1.40%; (ii) $30.6 million of Class A-S notes bearing interest at one-month LIBOR plus 1.75%; (iii) $38.5 million of Class B notes bearing interest at one-month LIBOR plus 2.25%; (iv) $47.3 million of Class C notes bearing interest at one-month LIBOR plus 2.65%; (v) $51.6 million of Class D notes bearing interest at one-month LIBOR plus 3.10%; and (vi) $14.0 million of Class E notes bearing interest at one-month LIBOR plus 4.00%.

All notes issued mature in January 2037, although we have the right to call the notes beginning on the payment date in December 2023 and thereafter.

Corporate Debt

4.50% Convertible Senior Notes

We issued $143.8 million aggregate principal of our 4.5% Convertible Senior Notes in August 2017.

During the three months ended March 31, 2022, we repurchased $39.8 million of our 4.50% Convertible Senior Notes, resulting in a charge to earnings of $574,000, comprising an extinguishment of debt charge of $460,000 in connection with the acceleration of the market discount and interest expense of $114,000 in connection with the acceleration of deferred debt issuance costs.

The following table summarizes the 4.50% Convertible Senior Notes at March 31, 2022 (dollars in thousands, except the conversion rate, conversion price and amounts in the footnotes):

	Principal Outstanding		Borrowing Rate			Effective Rate (1)(2)			Conversion Rate (3)(4)	Conversion Price (4)		Maturity Date
4.50% Convertible Senior Notes	$	48,175		4.50	%		7.43	%	27.7222	$	36.06	August 15, 2022

(1) Includes the amortization of the market discounts and deferred debt issuance costs, if any, for the 4.50% Convertible Senior Notes recorded in interest expense on the consolidated statements of operations.

(2) During the three months ended March 31, 2022 and 2021 the effective interest rate for the 4.50% Convertible Senior Notes was 7.43%.

(3) Represents the number of shares of common stock per $1,000 principal amount of the 4.50% Convertible Senior Notes’ principal outstanding, subject to adjustment as provided in the Third Supplemental Indenture (the “4.50% Convertible Senior Notes Indenture”).

(4) The conversion rate and conversion price of the 4.50% Convertible Senior Notes at March 31, 2022 are adjusted to reflect quarterly cash distributions in excess of a $0.30 distribution threshold, as defined in the 4.50% Convertible Senior Notes Indenture.

The 4.50% Convertible Senior Notes are convertible at the option of the holder at any time up until one business day before the respective maturity date and may be settled in cash, our common stock or a combination of cash and our common stock, at our election. The closing price of our common stock was $13.41 on March 31, 2022, which did not exceed the conversion price of our 4.50% Convertible Senior Notes at March 31, 2022.

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Senior Unsecured Notes

12.00% Senior Unsecured Notes Due 2027

On July 31, 2020, we entered into a Note and Warrant Purchase Agreement (the “Note and Warrant Purchase Agreement”) with Oaktree Capital Management, L.P. (“Oaktree”) and MassMutual pursuant to which we may issue to Oaktree and MassMutual from time to time up to $125.0 million aggregate principal amount of 12.00% Senior Unsecured Notes. The 12.00% Senior Unsecured Notes had an annual interest rate of 12.00%, payable up to 3.25% (at our election) as pay-in-kind interest and the remainder as cash interest. On July 31, 2020, we issued to Oaktree and MassMutual $42.0 million and $8.0 million aggregate principal amount, respectively, of the 12.00% Senior Unsecured Notes.

On August 18, 2021, we entered into an agreement with Oaktree and MassMutual that provided for the redemption in full of the outstanding balance of the 12.00% Senior Unsecured Notes, including a waiver of certain sections of the Note and Warrant Purchase Agreement. On August 20, 2021, the redemption was consummated and a payment to Oaktree and MassMutual was made for an aggregate $55.3 million, which consisted of (i) principal in the amount of $50.0 million, (ii) interest in the amount of approximately $329,000 and (iii) a make-whole amount of approximately $5.0 million. In connection with the redemption, we recorded a charge to earnings of $8.0 million, comprising an extinguishment of debt charge of $7.8 million in connection with (i) the $5.0 million net make-whole amount and (ii) the $2.8 million acceleration of the remaining market discount; and interest expense of $218,000 in connection with the acceleration of deferred debt issuance costs.

In January 2022, we entered into an amendment to the Note and Warrant Purchase Agreement that extended the time to July 2022 that we may elect to issue to Oaktree and MassMutual up to $75.0 million of principal of additional notes. At any time and from time to time prior to July 31, 2022, we may elect to issue to Oaktree and MassMutual warrants to purchase an additional 699,992 shares of the common stock for a purchase price equal to the principal amount of the 12.00% Senior Unsecured Notes being issued. The warrants are immediately exercisable on issuance and expire seven years from the issuance date. The warrants can be exercised with cash or as a net exercise.

Stockholders’ Equity

Total stockholders’ equity at March 31, 2022 was $442.7 million and gave effect to $7.7 million of net realized losses on our terminated cash flow hedges, shown as a component of accumulated other comprehensive loss. Stockholders’ equity at December 31, 2021 was $448.2 million and gave effect to $8.1 million of net unrealized losses on our terminated cash flow hedges shown as a component of accumulated other comprehensive loss. The decrease in stockholders’ equity during the three months ended March 31, 2022 was primarily attributable to common stock repurchases.

Balance Sheet - Book Value Reconciliation

The following table rolls forward our common stock book value for the three months ended March 31, 2022 (in thousands, except per share data and amounts in footnotes):

	For the Three Months Ended March 31, 2022
	Total Amount			Per Share Amount
Common stock book value at beginning of period (1)	$	221,596		$	23.87
Net (loss) income allocable to common shares (2)		(2,771	)		(0.31	)
Change in other comprehensive income on derivatives		456			0.05
Repurchase of common stock (3)		(3,885	)		0.41
Impact to equity of share-based compensation		752			0.08
Total net (decrease) increase		(5,448	)		0.23
Common stock book value at end of period (4)	$	216,148		$	24.10

(1) Per share calculations exclude unvested restricted stock, as disclosed on our consolidated balance sheets, of 333,329 shares at March 31, 2022 and December 31, 2021, respectively, and include warrants to purchase up to 466,661 shares of common stock at March 31, 2022 and December 31, 2021. The denominators for the calculations were 8,967,859 and 9,282,411 shares at March 31, 2022 and December 31, 2021, respectively.

(2) The per share amounts are calculated with the denominator referenced in footnote (2) at March 31, 2022. We calculated net income per common share-diluted of $(0.30) using the weighted average diluted shares outstanding during the three months ended March 31, 2022.

(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. We purchased 589,081 shares for $7.6 million through March 31, 2022.

(4) We calculated common stock book value as total stockholders’ equity of $442.7 million less preferred stock equity of $226.6 million at March 31, 2022.

Management Agreement Equity

Our monthly base management fee, as defined in our Management Agreement, is equal to the greater of (i) 1/12 of the amount of our equity multiplied by 1.50% or (ii) $442,000 through July 31, 2022 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):

	Amount
At March 31, 2022:
Proceeds from capital stock issuances, net (1)	$	1,330,573
Retained earnings, net (2)		(651,419	)
Payments for repurchases of capital stock, net		(233,737	)
Total	$	445,417

(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

Commencing with our financial results for the quarter ended March 31, 2022, we replaced the term Core Earnings with the term Earnings Available for Distribution (“EAD”), and Core Earnings results from comparative reporting periods have been relabeled 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 will serve 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, middle market lending, 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, ⁽¹⁾ (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.

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

	For the Three Months Ended
	March 31,
	2022			Per Share Data			2021			Per Share Data
Net (loss) income allocable to common shares - GAAP	$	(2,771	)	$	(0.30	)	$	10,468		$	1.03
Reconciling items from continuing operations:
Non-cash equity compensation expense		744			0.08			19			—
Non-cash reversal of CRE credit losses, net		(1,802	)		(0.20	)		(5,641	)		(0.55	)
Realized loss on core activities (1)		—			—			(5,246	)		(0.51	)
Unrealized gain on core activities (1)		—			—			(878	)		(0.09	)
Real estate depreciation and amortization		1,391			0.15			531			0.05
Non-cash amortization of discounts or premiums associated with borrowings		847			0.09			822			0.08
Net income from non-core assets (2)		(656	)		(0.07	)		(33	)		—
Reconciling items from CRE assets:
Net interest income on legacy CRE assets (2)		(29	)		—			(161	)		(0.02	)
Earnings Available for Distribution allocable to common shares	$	(2,276	)	$	(0.25	)	$	(119	)	$	(0.01	)
Weighted average common shares - diluted on Earnings Available for Distribution allocable to common shares		9,097						10,196
Earnings Available for Distribution per common share - diluted	$	(0.25	)				$	(0.01	)

(1) In March 2021, the CMBS portfolio was sold for $3.0 million, representing a total realized loss of $5.2 million that was included in EAD during the three months ended March 31, 2021. Unrealized (gain) loss on core activities includes the unrealized gains and losses on the residual CMBS portfolio, which were previously excluded from EAD.

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

EAD in accordance with the Management Agreement, which excludes incentive compensation payable, was $(2.3) million, or $(0.25) per common share outstanding, for the three months ended March 31, 2022. There was no incentive compensation payable for the three months ended March 31, 2022.

Incentive Compensation Hurdle

In accordance with the Management Agreement, incentive compensation is earned by our Manager when our EAD per common share (as defined in the Management Agreement) for such quarter exceeds an amount equal to: (1) the weighted average of (a) book value (as defined in the Management Agreement) as of the end of such quarter divided by 10,293,783 shares and (b) the price per share (including the conversion price, if applicable) paid for common shares in each offering (or issuance, upon the conversion of convertible securities) by us subsequent to September 30, 2017, in each case at the time of issuance, multiplied by (2) the greater of (a) 1.75% and (b) 0.4375% plus one-fourth of the ten year treasury rate, as defined in the Management Agreement, for such quarter (the “Incentive Compensation Hurdle”).

For the three months ended March 31, 2022, our EAD, as defined in the Management Agreement, did not exceed the Incentive Compensation Hurdle.

Commencing with the quarter ending December 31, 2022, incentive compensation will be calculated and payable in arrears in an amount, not less than zero, equal to:

(i) for the calendar quarter ending 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;

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(ii) 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) 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

(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.

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 and our ability to maintain and/or obtain additional debt financing and equity capital together with the funds referred to below.

During the three months ended March 31, 2022, our principal sources of liquidity were:  (i) proceeds of $107.7 million from CRE whole loan purchases by our managed CRE securitizations ACR 2021-FL1 and ACR 2021-FL2, (ii) gross proceeds of $84.9 million from our CRE - term warehouse financing facilities, (iii) net proceeds of $17.7 million from repayments on our CRE loan portfolio, (iv) net proceeds of $13.7 million from the liquidation of one of our CRE securitizations and (v) proceeds of $10.2 million from our senior secured financing facility. These sources of liquidity were offset by our deployments in CRE whole loans and real estate investments, the partial repurchase and extinguishment of our 4.50% Convertible Senior Notes, repurchases of common stock, distributions on our preferred stock and ongoing operating expenses and substantially resulted in the $79.6 million of unrestricted cash we held at March 31, 2022.

In October 2021, we entered into a Preferred ATM Agreement with our Manager and 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 Series D Preferred Stock.

In November 2021, our Board authorized and approved the continued use of our existing share repurchase program up to $20.0 million of our outstanding common stock.

In January 2022, we entered into an amendment with Oaktree and MassMutual whereby we extended our ability to issue up to $75.0 million of principal on our 12.00% Senior Unsecured Notes through July 2022.

The outstanding balance of our loan to ACRES Capital Corp., the parent of our Manager, was $11.5 million and $11.6 million at March 31, 2022 and December 2021, 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.

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

1. Senior Secured Financing Facility: Our senior secured financing facility allows us to borrow against loans and investments in real estate that we own. During an initial revolving period, additional loans and investments in real estate may be financed on the senior secured financing facility. After the revolving period, the senior secured financing facility transitions to a term period over the remaining life of the facility. We pay a fixed rate of interest on the senior secured financing facility as well as an unfunded commitment fee when the facility has borrowings below a certain threshold as a percentage of the total commitment.

2. Term Warehouse Financing Facilities (CRE loans): 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.

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3. 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.

The issuances of ACR 2021-FL1 and ACR 2021-FL2 include 24-month reinvestment periods ending in May 2023 and December 2023, respectively, that allow us to reinvest CRE loan payoffs and paydowns into the securitizations upon the satisfaction of certain eligibility and reinvestment criteria along with rating agency approval. The reinvestment features of the securitizations will allow us to extend the securitizations’ financing capabilities at attractive weighted-average rates by increasing the useful lives of the senior notes through the reinvestment of loan proceeds into new loans. We are also able to acquire future funding participations of the collateral in the securitizations during the reinvestment period. We had $4.3 million ($3.2 million at ACR 2021-FL1 and $1.1 million at ACR 2021-FL2) of reinvestment proceeds available to purchase eligible CRE loans and participations at March 31, 2022.

Additionally, ACR 2021-FL2 includes a 180-day ramp-up acquisition period during which unused proceeds at close can be used to acquire CRE loans that meet specified criteria for its portfolio.

We were in compliance with all of our covenants at March 31, 2022, in accordance with the terms provided in agreements with our lenders.

We continue to monitor the COVID-19 pandemic and its potential impact on us, the borrowers underlying our commercial real estate-related loans (and their tenants), our financing sources, and the economy as a whole. Because the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing and difficult to predict, the pandemic’s impact on our operations and liquidity remains uncertain and difficult to predict. Further discussion of the potential impacts on us from the COVID-19 pandemic is provided in the section entitled “Risk Factors-Impact of Current Economic Conditions” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

At March 31, 2022, we had a senior secured financing facility and term warehouse financing facilities as summarized below (in thousands, except amounts in footnotes):

	Execution Date	Maturity Date	Maximum Capacity		Facility Principal Outstanding		Availability
Senior Secured Financing Facility (1)
Massachusetts Mutual Life Insurance Company	July 2020	July 2027	$	250,000	$	—	$	250,000
CRE - Term Warehouse Financing Facilities (2)
Barclays Bank PLC	April 2018	October 2022	$	250,000		—	$	250,000
JPMorgan Chase Bank, N.A.	October 2018	October 2024	$	250,000		47,016	$	202,984
Morgan Stanley Mortgage Capital Holdings LLC	November 2021	November 2024	$	250,000		108,920	$	141,080
Total					$	155,936

(1) Facility principal outstanding excludes deferred debt issuance costs of $3.3 million at March 31, 2022.

(2) Facility principal outstanding excludes accrued interest payable of $134,000 and deferred debt issuance costs and discounts of $3.9 million at March 31, 2022.

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The following table summarizes the average principal outstanding on our senior secured financing facility and term warehouse financing facilities during the three months ended March 31, 2022 and December 31, 2021 and the principal outstanding on our senior secured financing facility and term warehouse financing facilities at March 31, 2022 and December 31, 2021 (in thousands, except amounts in footnotes):

	Three Months Ended March 31, 2022		March 31, 2022		Three Months Ended December 31, 2021		December 31, 2021
	Average Principal Outstanding		Principal Outstanding (1)(2)		Average Principal Outstanding		Principal Outstanding (1)(2)
Financing Arrangement
Senior secured financing facility - CRE loans	$	2,819	$	—	$	32,021	$	—
Term warehouse financing facilities - CRE loans		100,125		155,936		397,744		71,020
Total	$	102,944	$	155,936	$	429,765	$	71,020

(1) Excludes accrued interest payable on the senior secured financing facility collateralized by CRE loans and investments in real estate of $32,000 and $26,000 at March 31, 2022 and December 31, 2021, respectively. Also excludes deferred debt issuance costs on the senior secured financing facility of $3.3 million and $3.4 million at March 31, 2022 and December 31, 2021, respectively.

(2) Excludes accrued interest payable on term warehouse financing facilities collateralized by CRE loans of $134,000 and $58,000 and deferred debt issuance costs and discounts of $3.9 million and $4.3 million at March 31, 2022 and December 31, 2021, respectively.

The following table summarizes the maximum month-end principal outstanding on our senior secured financing facility and term warehouse financing facilities during the periods presented (in thousands):

	Maximum Month-End Principal Outstanding During the
	Three Months Ended		Years Ended December 31,
	March 31, 2022		2021		2020
Financing Arrangement (1)
Senior secured financing facility - CRE loans	$	10,150	$	77,407	$	128,495
Term warehouse financing facilities - CRE loans	$	155,936	$	423,585	$	598,635

(1) Decreases in the maximum month-end outstanding principal balances for the periods presented resulted from the financing of CRE loans into our CRE securitizations.

Historically, we have financed the acquisition of our investments through collateralized debt obligations (“CDOs”) 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 CDOs and securitizations, which will cease if the CDOs and securitizations fail to meet certain tests. Through March 31, 2022, we did not experience difficulty in maintaining our existing CDO and securitization financing and passed all of the critical tests required by these financings.

The following table sets forth the distributions received by us and coverage test summaries for our active securitizations for the periods presented (in thousands, except amount in the footnotes):

	Cash Distributions				Overcollateralization Cushion (1)
Name	For the Three Months Ended March 31, 2022		For the Year Ended December 31, 2021		At March 31, 2022		At the Initial Measurement Date		Permitted Funded Companion Participation Acquisition Period End	Reinvestment Period End (2)
ACR 2021-FL1	$	4,652	$	17,727	$	6,758	$	6,758	N/A	May 2023
ACR 2021-FL2	$	2,466	$	—	$	5,652	$	5,652	N/A	December 2023

(1) Overcollateralization cushion represents the amount by which the collateral held by the securitization issuer exceeds the minimum amount required.

(2) The reinvestment period is the period in which principal proceeds received before the end of the period may be used to acquire CRE loans for reinvestment into the securitization.

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The following table sets forth the distributions received by us and liquidation details for our liquidated securitizations for the periods presented (in thousands):

	Cash Distributions				Liquidation Details
Name	For the Three Months Ended March 31, 2022		For the Year Ended December 31, 2021		Liquidation Date	Remaining Assets at the Liquidation Date (1)
XAN 2019-RSO7	$	—	$	9,339	May 2021	$	391,168
XAN 2020-RSO9 (2)	$	14,308	$	7,944	February 2022	$	111,335
XAN 2020-RSO8	$	1,628	$	13,830	March 2022	$	171,225

(1) The remaining assets at the liquidation date were distributed to us in exchange for our notes owned and preference shares in the respective securitization.

(2) Cash distributions for the three months ended March 31, 2022 included a principal distribution on our preference share at liquidation of $13.5 million for XAN 2020-RSO9.

At April 30, 2022, our liquidity consisted of $30.0 million of unrestricted cash and cash equivalents, $107.9 million of unlevered financeable CRE loans and $75.0 million of availability under the Oaktree and MassMutual 12.00% Senior Unsecured Notes. In April 2022, we acquired two properties through equity investments for a total investment of $51.6 million. Prior to its acquisition, one property, with an acquisition price of $38.6 million, served as collateral for a loan held by an affiliate of our Manager.

Our leverage ratio, defined as the ratio of borrowings to stockholders’ equity, may vary as a result of the various funding strategies we use. At March 31, 2022 and December 31, 2021, our leverage ratio was 3.7 and 4.0 times, respectively. Our net debt to equity ratio, defined as the ratio of borrowings less cash and cash equivalents to stockholders’ equity was 3.5 and 4.0 times at March 31, 2022 and December 31, 2021, respectively. The leverage and net debt to equity ratio decreases through March 31, 2022, were primarily attributable to the liquidation of two of our CRE securitizations in the first quarter of 2022 and partial redemption of our 4.5% convertible notes, which were the primary drivers of a net decrease in our debt of $188.2 million.

Net Operating Losses and Loss Carryforwards

We generated approximately $47.7 million of net operating losses (“NOL”) during the year ended December 31, 2020, which was reported on our tax return that was finalized and filed in October 2021. This amount can generally be carried forward to offset both ordinary taxable income and capital gains in future years. Additionally, we estimate that we will generate approximately $14.8 million of operating losses in during 2021 and 2022. These amounts will offset taxable income in the year they occur, and any excess will be carried forward as additional NOL. The Tax Cuts and Jobs Act (“TCJA”) along with revisions made by the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) reduced the deduction for NOLs to 80% of taxable income and granted an indefinite carryforward period.

Additionally, we estimate we generated approximately $136.9 million of net capital losses as of December 31, 2020, with approximately $3.8 million set to expire as of the year ended December 31, 2021. A net capital loss may be carried forward up to five years to offset future capital gains. NOL carryforwards and expired net capital losses for the year ended December 31, 2021 are subject to the finalization of our 2021 tax return, which we expect to file in October 2022.

We also generate tax assets in our taxable REIT subsidiaries (“TRS”). These tax assets are analyzed and disclosed quarterly in our financial statements. As of the December 31, 2020, our TRSs have approximately $39.9 million of pre-TCJA NOLs, some of which are set to expire beginning in 2044. The TRSs also have approximately $20.3 million of NOLs with an indefinite carryforward period and net capital losses of approximately $969,000.

We are exploring a range of assets and options in which to invest, including investments in commercial real estate equity, with the objective of creating capital gains to take advantage of all or a portion of our collective capital loss carryforwards.

Distributions

We did not pay distributions on our common shares during the three months ended March 31, 2022, as we were focused on prudently retaining and managing sufficient excess liquidity in connection with the economic impact of the COVID-19 pandemic. As a result of losses during the year ended December 31, 2020, we received significant NOL carryforwards, which are expected to grow in 2022, and net capital loss carryforwards, as finalized in our 2020 tax return. Therefore, we did not pay, nor were we required to pay, distributions on our common shares during the three months ended March 31, 2022. We intend to retain taxable income by utilizing our NOL carryforwards and expect to generate capital gains to use a portion of our net capital loss carryforwards, thereby growing book value and our investable equity base. As we continue to take steps necessary to stabilize our Earnings Available for Distribution, our Board will establish 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.

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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.

Contractual Obligations and Commitments

	Contractual Commitments
	(dollars in thousands, except amounts in footnotes)
	Payments due by Period
	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
At March 31, 2022:
CRE securitizations	$	1,242,223	$	—	$	—	$	—	$	1,242,223
Senior secured financing facility (1)		—		—		—		—		—
CRE - term warehouse financing facilities (2)		156,070		—		156,070		—		—
4.50% Convertible Senior Notes (3)		48,175		48,175		—		—		—
5.75% Senior Unsecured Notes (4)		150,000		—		—		150,000		—
Unsecured junior subordinated debentures (5)		51,548		—		—		—		51,548
Unfunded commitments on CRE loans (6)		145,458		19,355		126,103		—		—
Base management fees (7)		6,681		6,681		—		—		—
Total	$	1,800,155	$	74,211	$	282,173	$	150,000	$	1,293,771

(1) Contractual commitments exclude $32,000 of accrued interest payable at March 31, 2022 on our senior secured financing facility.

(2) Contractual commitments include $134,000 of accrued interest payable at March 31, 2022 on our term warehouse financing facilities.

(3) Contractual commitments exclude $1.1 million of interest expense payable through maturity, in August 2022, on our 4.50% Convertible Senior Notes.

(4) Contractual commitments exclude $38.8 million of interest expense payable through maturity, in August 2026, on our 5.75% Senior Unsecured Notes.

(5) Contractual commitments exclude $26.8 million and $27.6 million of estimated interest expense payable through maturity, in June 2036 and October 2036, respectively, on our trust preferred securities.

(6) Unfunded commitments on our originated CRE loans generally fall into two categories: (i) pre-approved capital improvement projects and (ii) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, we would receive additional interest income on the advanced amount. At March 31, 2022, we had unfunded commitments on 58 CRE whole loans.

(7) 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.

We expect to fully redeem the 4.50% Convertible Senior Notes in cash upon maturity on August 15, 2022. At April 30, 2022, the outstanding principal balance on our 4.50% Convertible Senior Notes was $48.2 million.

Off-Balance Sheet Arrangements

General

At March 31, 2022, 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 not established for those purposes. Except as set forth below, 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 at March 31, 2022.

Unfunded CRE Loan 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 $145.5 million and $157.6 million in unfunded loan commitments at March 31, 2022 and December 31, 2021, respectively. Unfunded commitments are not considered in the CECL reserve if they are unconditionally cancellable.

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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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At March 31, 2022, 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.

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.

The coronavirus (“COVID-19”) pandemic has significantly impacted the CRE markets, causing reduced occupancy, requests from tenants for rent deferral or abatement, and delays in construction and development projects currently planned or underway. Our portfolio includes loans collateralized by multifamily, hotel, retail and other property types that are particularly negatively impacted by the pandemic. Approximately 72.7% of our portfolio is in multifamily properties. Residents that experience deteriorating financial conditions as a result of the pandemic may be unwilling or unable to pay rent in full on a timely basis. Furthermore, numerous state, local and federal regulations have also imposed restrictions at present on the borrower’s ability to enforce residents’ contractual lease obligations, and this will affect their ability to collect rent or enforce remedies for the failure to pay rent. Approximately 9.0% of our portfolio is in hotel properties. While many restrictions on hotels have eased, the industry is still experiencing a significant reduction of operations resulting in a decline in group, business and leisure travel. Travelers may continue to be wary to travel despite the easing of restrictions because of concerns of risk of contagion or curtailment of leisure travel due to the economic recession. Approximately 1.6% of our portfolio is in retail properties. While government restrictions effecting retail have eased, complete or partial closure of many retail properties have resulted from tenant action. The reduced economic activity severely impacts the tenants’ businesses, financial condition and liquidity and may result in the tenants being unwilling or unable to meet their obligations to the borrower in part or in full.

These negative 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 the potential impacts of the COVID-19 pandemic on our loans secured by properties experiencing cash flow pressure. 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 from 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 senior secured financing facility and warehouse financing facilities. 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, such as through the impact of the COVID-19 pandemic, 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.

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Interest Rate Risk

Our business model is such that rising interest rates will typically increase our net income, while declining interest rates will typically decrease net income, subject to the impact of interest rate floors. As of March 31, 2022, 99.8% of our CRE loan portfolio by par value earned a floating rate of interest and were 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 approximate 0.2% of our CRE loan portfolio by par value earned a fixed rate of interest. Fixed rate loans financed with floating rate liabilities have a negative correlation with rising interest rates to the extent of our financing. 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 $1.9 billion had a weighted-average benchmark floor of 0.66% at March 31, 2022, which excludes one floating-rate loan without a LIBOR floor. Additionally, approximately 33.9% of the interest rate floors in our CRE loan portfolio were in the money at March 31, 2022.

Our loans, securitizations and term warehouse financing facilities have historically been benchmarked to one-month LIBOR. In June 2021, two of our securitizations replaced LIBOR with compounded SOFR, plus a benchmark adjustment, as the benchmark rate on the third-party owned notes.

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):

		Three Months Ended March 31, 2022
At March 31, 2022		100 Basis Point Decrease (4)				100 Basis Point Increase
Net Assets Subject to Interest Rate Sensitivity (1)(2)(3)		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
$	455,267	$	6,365	$	0.70	$	(702	)	$	(0.08	)

(1) Includes our floating-rate CRE loans at March 31, 2022.

(2) Includes amounts outstanding on our securitizations, 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 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.

ITEM 4. 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 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.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

We may become involved in litigation on various matters due to the nature of our business activities. The resolution of these matters may result in adverse judgments, fines, penalties, injunctions and other relief against us as well as monetary payments or other agreements and obligations. In addition, we may enter into settlements on certain matters in order to avoid the additional costs of engaging in litigation. Except as discussed below, we are unaware of any contingencies arising from such litigation that would require accrual or disclosure in the consolidated financial statements at March 31, 2022.

Our subsidiary, Primary Capital Mortgage, LLC (“PCM”), is subject to potential litigation related to claims for repurchases or indemnifications on loans that PCM has sold to third parties. At March 31, 2022 and December 31, 2021, no such litigation demand was outstanding. Reserves for such litigation demands are included in the reserve for mortgage repurchases and indemnifications that totaled $1.3 million at March 31, 2022 and December 31, 2021. The reserves for mortgage repurchases and indemnifications are included in liabilities held for sale on the consolidated balance sheets. As of March 31, 2022, we have substantially completed disposing of PCM’s business.

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”), except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 and 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.

The following table presents information about our common stock repurchases made during the three months ended March 31, 2022 in accordance with our repurchase program (dollars in thousands, except per share data):

	Common Stock
Period	Total Number of Shares Purchased		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program		Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs
January 3, 2022 - January 31, 2022		153,522	$	12.53		153,522	$	14,409
February 1, 2022 - February 28, 2022		85,777	$	12.05		85,777	$	13,377
March 1, 2022 - March 31, 2022		75,253	$	12.33		75,253	$	12,450

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

ITEM 5.OTHER INFORMATION

On May 6, 2022, we entered into an amendment with ACRES Capital, LLC and ACRES Capital Corp to amend our Management Agreement to rename “Core Earnings” as “Earnings Available for Distribution” (“EAD”). The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the Second Amendment to the Fourth Amended and Restated Management Agreement, which is filed as Exhibit 10.1(c) with this quarterly report on 10-Q and is incorporated herein by reference.

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ITEM 6. EXHIBITS

Exhibit No.	Description
2.1	Asset Purchase Agreement, dated June 6, 2017, by and among Stearns Lending, LLC, Primary Capital Mortgage, LLC, and Resource Capital Corp. (32)
2.1(b)	Mortgage Loan Sale and Purchase Agreement, dated May 29, 2019, by and between RCC Real Estate, Inc. and C-III Commercial Mortgage LLC. (44)
3.1(a)	Amended and Restated Articles of Incorporation of Resource Capital Corp. (1)
3.1(b)	Articles of Amendment to Restated Certificate of Incorporation of Resource Capital Corp. (27)
3.1(c)	Articles Supplementary 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock. (8)
3.1(d)	Articles Supplementary 7.875% Series D Cumulative Redeemable Preferred Stock, as corrected. (59)
3.1(e)	Articles of Amendment, effective May 25, 2018. (39)
3.1(f)	Articles of Amendment, effective February 16, 2021. (56)
3.1(g)	Articles of Amendment, effective May 28, 2021. (60)
3.2	Fourth Amended and Restated Bylaws of ACRES Commercial Realty Corp. (56)
4.1(a)	Form of Certificate for Common Stock for Resource Capital Corp. (1)
4.1(b)	Form of Certificate for 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock. (8)
4.1(c)	Form of Certificate for 7.875% Series D Cumulative Redeemable Preferred Stock. (59)
4.2(a)	Junior Subordinated Indenture between Resource Capital Corp. and Wells Fargo Bank, N.A., dated May 25, 2006. (2)
4.2(b)	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. (6)
4.3(a)	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. (2)
4.3(b)	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. (6)
4.4	Junior Subordinated Note due 2036 in the principal amount of $25,774,000, dated October 26, 2009. (6)
4.5(a)	Junior Subordinated Indenture between Resource Capital Corp. and Wells Fargo Bank, N.A., dated September 29, 2006. (3)
4.5(b)	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. (6)
4.6(a)	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. (3)
4.6(b)	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. (6)
4.7	Junior Subordinated Note due 2036 in the principal amount of $25,774,000, dated October 26, 2009. (6)
4.8(a)	Third Supplemental Indenture, dated August 16, 2017, between Resource Capital Corp. and Wells Fargo Bank, National Association, as Trustee (including the form of 4.50% Convertible Senior Note due 2022). (34)
4.8(b)	Form of 4.50% Convertible Senior Note due 2022 (included in Exhibit 4.8(a)).
4.9	Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (70)
4.10(a)	Base Indenture, dated August 16, 2021, between the Company and the Trustee. (63)
4.10(b)	First Supplemental Indenture, dated August 16, 2021, between the Company and the Trustee. (63)
4.10(c)	Form of 5.75% Senior Note due 2026 (included in Exhibit 4.10(b)).
10.1(a)	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. (51)
10.1(b)	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. (57)
10.1(c)	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.
10.2(a)	2005 Stock Incentive Plan. (1)
10.2(b)	Form of Stock Award Agreement. (7)
10.2(c)	Form of Stock Option Agreement. (7)
10.3(a)	Second Amended and Restated Omnibus Equity Compensation Plan. (45)
10.3(b)	Amendment No. 1 to the Exantas Capital Corp. Second Amended and Restated Omnibus Equity Compensation Plan. (52)
10.3(c)	Third Amended and Restated Omnibus Equity Compensation Plan. (58)
10.3(d)	Form of Stock Award Agreement. (25)
10.3(e)	Form of Stock Award Agreement (for employees with Resource America, Inc. employment agreements). (25)
10.4	Form of Indemnification Agreement. (33)
10.5(a)	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. (51)

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10.5(b)	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. (53)
10.5(c)	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. (62)
10.5(d)	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 Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent.(68)
10.5(e)	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.
10.5(f)	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. (51)
10.5(g)	Guaranty, dated May 25, 2021 between Exantas Phili Holdings, LLC in favor of the Secured Parties
10.5(h)	Guaranty, dated May 25, 2021 between 65 E. Wacker Holdings, LLC in favor of the Secured Parties
10.5(i)	Guaranty, dated May 25, 2021 between Plymouth Meeting Holdings, LLC in favor of the Secured Parties
10.5(j)	Pledge and Guaranty Agreement, dated August 16, 2021 between ACRES Real Estate TRS 9 LLC in favor of the Secured Parties
10.5(k)	Guaranty, dated April 12, 2022 between Appleton Hotel Holdings, LLC and Appleton Hotel Leasing, LLC in favor of the Secured Parties
10.6(a)	Note and Warrant Purchase Agreement, dated as of July 31, 2020, by and among Exantas Capital Corp. and the Purchasers signatory thereto. (51)
10.6(b)	Agreement between the Company, OCM XAN Holdings PT, LLC and the Massachusetts Mutual Life Insurance Company, dated August 18, 2021. (64)
10.6(c)	Amendment No. 1 to Note and Warrant Purchase Agreement, dated January 31, 2022, between ACRES Commercial Realty Corp. and the Purchasers signatory thereto (69)
10.7	Promissory Note, dated as of July 31, 2020, issued by ACRES Capital Corp. to RCC Real Estate, Inc. (51)
10.8(a)	Manager Incentive Plan. (58)
10.8(b)	Form of Stock Award Agreement Under the Manager Incentive Plan. (61)
10.9	Equity Distribution Agreement, dated October 4, 2021, by and among ACRES Commercial Realty Corp., ACRES Capital, LLC and JonesTrading Institutional Services LLC. (66)
31.1	Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Financial Officer.
32.1	Certification Pursuant to 18 U.S.C. Section 1350.
32.2	Certification Pursuant to 18 U.S.C. Section 1350.
99.1(a)	Amended and Restated Master Repurchase and Securities Contract by and between RCC Real Estate SPE 4, LLC, as Seller, and Wells Fargo Bank, National Association, as Buyer, dated as of July 19, 2018. (11)
99.1(b)	First Amendment to Amended and Restated Master Repurchase and Securities Contract by and between RCC Real Estate SPE 4, LLC, as Seller, and Wells Fargo Bank, National Association, as Buyer, dated as of May 29, 2019. (46)
99.1(c)	Second Amendment To Amended And Restated Master Repurchase and Securities Contract by and between RCC Real Estate SPE 4, LLC, as Seller and Wells Fargo Bank, National Association, as Buyer, dated October 2, 2020. (54)
99.1(d)	Amended and Restated Guaranty Agreement made by Exantas Capital Corp., as guarantor, and Wells Fargo Bank, National Association, dated as of July 19, 2018. (11)
99.2(a)	Master Repurchase Agreement between RCC Real Estate SPE 7, LLC and Barclays Bank PLC, dated as of April 10, 2018. (38)
99.2(b)	First Amendment to Master Repurchase Agreement between RCC Real Estate SPE 7, LLC and Barclays Bank PLC dated as of March 9, 2021. (57)
99.2(c)	Second Amendment to Master Repurchase Agreement and First Amendment to Fee Letter, dated October 29, 2021, between RCC Real Estate SPE 7, LLC and Barclays Bank PLC. (67)
99.2(d)	Third Amendment to Guaranty, dated October 29, 2021, made by ACRES Commercial Realty Corp. as guarantor in favor of Barclays Bank PLC. (69)
99.2(e)	Guaranty dated as of April 10, 2018, made by Resource Capital Corp., as guarantor, in favor of Barclays Bank PLC. (38)
99.2(f)	First Amendment to Guaranty dated as of May 7, 2020, made by Exantas Capital Corp., f/k/a Resource Capital Corp., as guarantor, in favor of Barclays Bank PLC. (50)
99.2(g)	Second Amendment to Guaranty, dated October 2, 2020, made by Exantas Capital Corp. as guarantor in favor of Barclays Bank PLC. (54)
99.2(h)	Third Amendment to Guaranty, dated October 29, 2021, made by ACRES Commercial Realty Corp. as guarantor in favor of Barclays Bank PLC. (67)
99.3(a)	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. (40)
99.3(b)	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. (55)
99.3(c)	Amendment No. 2 to Master Repurchase Agreement, dated September 1, 2021 between RCC Real Estate SPE 8, LLC and JPMorgan Chase Bank, National Association. (65)
99.3(d)	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 (67)

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99.3(e)	Guarantee made by Exantas Capital Corp., as guarantor, in favor of JPMorgan Chase Bank, National Association, dated October 26, 2018. (40)
99.3(f)	First Amendment to Guarantee Agreement, dated May 6, 2020, between Exantas Capital Corp. and JPMorgan Chase Bank, National Association. (50)
99.3(g)	Amendment No. 2 To Guarantee Agreement, dated October 2, 2020 between Exantas Capital Corp. and JPMorgan Chase Bank, National Association. (54)
99.4(a)	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.(68)
99.4(b)	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. (69)
99.4(b)	Guaranty made by ACRES Commercial Realty Corp., as Guarantor, in favor of Morgan Stanley Mortgage Capital Holdings LLC, dated November 3, 2021(68)
99.5(a)	Notice of Proposed Settlement of Shareholder Derivative Litigation. (43)
99.5(b)	Stipulation and Agreement of Settlement. (43)
99.6	Material Federal Income Tax Considerations. (70)
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 Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File.

(1)	Filed previously as an exhibit to the Company’s registration statement on Form S-11, Registration No. 333-126517.
(2)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.
(3)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.
(4)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.
(5)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 26, 2014.
(6)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.
(7)	Filed previously as an exhibit to the Company’s Registration Statement on Form S-11 (File No. 333-132836).
(8)	Filed previously as an exhibit to the Company’s Registration Statement on Form 8-A filed on June 9, 2014.
(9)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.
(10)	RESERVED
(11)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on July 25, 2018.
(12)	RESERVED
(13)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on March 2, 2012.
(14)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 13, 2012.
(15)	RESERVED
(16)	RESERVED
(17)	RESERVED
(18)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on September 23, 2014.
(19)	RESERVED
(20)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 1, 2012.
(21)	RESERVED
(22)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on April 8, 2013.
(23)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on July 25, 2013.
(24)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 21, 2013.
(25)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.
(26)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.
(27)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on September 1, 2015.
(28)	RESERVED
(29)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.
(30)	RESERVED
(31)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
(32)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 8, 2017.
(33)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.
(34)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 16, 2017.
(35)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.
(36)	RESERVED
(37)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.
(38)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on April 12, 2018.

65

(39)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on May 25, 2018.
(40)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 30, 2018.
(41)	RESERVED
(42)	RESERVED
(43)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on March 27, 2019.
(44)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on May 30, 2019.
(45)	Filed previously as an exhibit to the Company’s Proxy Statement filed on April 18, 2019.
(46)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.
(47)	RESERVED
(48)	RESERVED
(49)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
(50)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
(51)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 3, 2020.
(52)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.
(53)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on September 22, 2020.
(54)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 7, 2020.
(55)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
(56)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on February 18, 2021.
(57)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
(58)	Filed previously as an exhibit to the Company’s Proxy Statement filed on April 12, 2021.
(59)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on May 21, 2021.
(60)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 1, 2021.
(61)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 9, 2021.
(62)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.
(63)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 17, 2021.
(64)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 20, 2021.
(65)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on September 2, 2021.
(66)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 7, 2021.
(67)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 29, 2021.
(68)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
(69)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on February 3, 2022.
(70)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

66

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ACRES COMMERCIAL REALTY CORP.
		(Registrant)
May 9, 2022	By:	/s/ Mark Fogel
		Mark Fogel
		President & Chief Executive Officer
May 9, 2022	By:	/s/ David J. Bryant
		David J. Bryant
		Senior Vice President
		Chief Financial Officer and Treasurer
May 9, 2022	By:	/s/ Eldron C. Blackwell
		Eldron C. Blackwell
		Vice President
		Chief Accounting Officer

67

EX-10.1(C)

Exhibit 10.1(c)

SECOND AMENDMENT TO

FOURTH AMENDED AND RESTATED

MANAGEMENT AGREEMENT

This Second Amendment to Fourth Amended and Restated Management Agreement, dated May 6, 2022(this “Amendment”), is made by and among ACRES Commercial Realty Corp., a Maryland corporation (the “Company”), ACRES Capital, LLC, a New York limited liability company (together with its permitted assignees, the “Manager”), and ACRES Capital Corp., a Delaware corporation (“ACRES Capital”).

W I T N E S S E T H:

WHEREAS, the Company is a party to that certain Fourth Amended and Restated Management Agreement, dated as of July 31, 2020 by and among the Company, Manager and ACRES Capital, as amended by the First Amendment to Fourth Amended and Restated Management Agreement, dated as of February 16, 2021 (collectively, the “Agreement”);

WHEREAS, Section 21 of the Agreement provides that the Agreement may only be amended by an agreement in writing signed by the parties to the Agreement;

Now, Therefore, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto hereby agree as follows.  Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to them in the Agreement.

Section 1.Defined Term

The Agreement is amended to replace each appearance of the term “Core Earnings” with “Earnings Available for Distribution.”

Section 2.Execution in Counterparts

This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executedthis Amendmentas of the date first written above.

ACRES COMMERCIAL REALTY CORP.

By:/s/ Mark FogelName: Mark Fogel
Title:   President

ACRES CAPITAL, LLC

By:/s/ Mark FogelName: Mark Fogel
Title:  President & CEO

ACRES CAPITAL CORP.

By:/s/ Mark FogelName: Mark Fogel
Title:   President & CEO

2

EX-10.5(E)

Exhibit 10.5(e)

FOURTH AMENDMENT TO LOAN AND SERVICING AGREEMENT

This Fourth Amendment to Loan and Servicing Agreement, dated as of April 12, 2022 (this “Amendment”), is among RCC Real Estate SPE Holdings LLC (“Holdings”), RCC Real Estate SPE 9 LLC (the “Borrower”), the Lenders party hereto, and Wells Fargo Bank, National Association, as Administrative Agent (in such capacity, the “Administrative Agent”).

PRELIMINARY STATEMENTS:

Reference is made to the Loan and Servicing Agreement dated as of July 31, 2020 (as amended by the First Amendment to Loan and Servicing Agreement, dated as of September 16, 2020, the Second Amendment to Loan and Servicing Agreement, dated as of May 25, 2021, the Third Amendment to Loan and Servicing Agreement, dated as of August 16, 2021, and as further amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Loan and Servicing Agreement”), among Holdings, the Borrower, the lenders from time to time party thereto (the “Lenders”), 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.

The Borrower formed and owns all of the equity interest in Appleton Hotel Holdings, LLC (“Propco”) and Acres Real Estate TRS 9 LLC formed and owns all of the equity interest in Appleton Hotel Leasing, LLC (“Opco”) (such event, the “Specified Transaction”).  The Specified Transaction is prohibited under the terms of the Loan and Servicing Agreement.

The Borrower has requested that the Lenders and the Administrative Agent (i) amend the Loan and Servicing Agreement as set forth herein and (ii) consent to the Specified Transaction and, subject to the terms and conditions set forth in this Amendment, the Lenders and the Administrative Agent agree to such request.

AGREEMENT:

In consideration of the foregoing and the mutual agreements contained in this Amendment, the receipt and sufficiency of which are acknowledged, the parties to this Amendment hereby agree as follows:

1.Definitions.  Capitalized terms used in this Amendment and not otherwise defined have the meanings set forth for such terms in the Loan and Servicing Agreement.

2.Consent.   Notwithstanding anything to the contrary in the Loan and Servicing Agreement, and in reliance on the representations and warranties, covenants and conditions set forth herein, the Lenders and the Administrative Agent hereby consent to the Specified Transaction.  The foregoing consent is limited to the Specified Transaction and shall not be deemed to be a consent to any future action.  The Lenders hereby direct the Administrative Agent to execute and deliver (i) this Amendment and (ii) the Opco/Propco Guaranty Agreement and any Leasehold Mortgage Documents, as applicable, each as described in the Loan and Servicing Agreement, as amended.

3.Amendments to the Loan and Servicing Agreement.  The Loan and Servicing Agreement is hereby amended by incorporating the changes shown on the marked copy of the Loan and Servicing Agreement attached hereto as Exhibit A.

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4.Representations and Warranties.  Each Loan Party hereby represents and warrants to the Lenders as follows:

Such Loan Party (i) has the power, authority and legal right to (A) execute and deliver this Amendment and the Loan and Servicing Agreement, as amended, and (B) perform and carry out the terms of this Amendment and the Loan and Servicing Agreement, as amended, and the transactions contemplated hereby and thereby and (ii) has taken all necessary action to  authorize the execution, delivery and performance of this Amendment.  This Amendment has been duly executed and delivered by such Loan Party.

This Amendment and the Loan and Servicing Agreement, as amended, each constitute the legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with their respective terms, except as the enforceability hereof and thereof may be limited by Bankruptcy Laws and by general principles of equity.

The representations and warranties of such Loan Party contained in the Loan and Servicing Agreement are true and correct in all material respects as of the date hereof (or, in the case of any such representation expressly stated to have been made as of a specific date, as of such specific date).

As of the date hereof, after giving effect to this Amendment, no event has occurred or is continuing which constitutes an Unmatured Event of Default, Event of Default or Cash Trap Event.

5.Effectiveness.  This Amendment is effective on and as of the date when the last of the following conditions precedent has been satisfied in a manner satisfactory to the Initial Lender:

This Amendment has been duly executed by, and delivered to, the parties hereto.

The Opco/Propco Guaranty Agreement has been duly executed by Opco, Propco, and the Administrative Agent and delivered to the Initial Lender.

A certificate of an officer of each of Opco and Propco has been delivered to the Initial Lender, certifying (i) the names and true signatures of the incumbent officers of such Person  authorized to sign on behalf of such Person each of the Transaction Documents to which it is a party, (ii) that the copy of the organizational documents of such Person is a complete and correct copy and that such organizational documents have not been amended, modified or supplemented and are in full force and effect, (iii) the authorization document of the managing member approving and authorizing the execution, delivery and performance by such Person of the Transaction Documents to which it is a party, and (iv) the good standing certificate, dated as of a recent date, for such Person issued by the Secretary of State of the State of Delaware.

(i) Acres Real Estate TRS 9 LLC has delivered to the Administrative Agent the certificated equity of Opco representing 100% of the membership interest of Opco, and the related assignment duly executed in blank and (ii) the Borrower has delivered to the Administrative Agent the certificated equity of Propco, representing 100% of the membership interest of Propco, and the related assignment duly executed in blank.

- 2 -

NAI-1528531687v5

 

An opinion of counsel to the Loan Parties, Opco, and Propco, reasonably acceptable to the Initial Lender and the Administrative Agent and addressed to the Administrative Agent and the Lenders has been delivered to the Initial Lender.

The representations and warranties contained in Section 4 are true and correct.

All fees that are required to be paid hereunder or under the Loan and Servicing Agreement have been paid in full.

6.Reaffirmations.  Each Loan Party reaffirms all covenants set forth in the Loan and Servicing Agreement and the other Transaction Documents.  Except as specifically provided herein, all terms and conditions of the Loan and Servicing Agreement remain in full force and effect, without waiver or modification.  This Amendment and the Loan and Servicing Agreement are to be read together as one document.  From and after the date hereof, each reference in the Loan and Servicing Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import, and each reference in the Loan and Servicing Agreement or any other Transaction Document to the Loan and Servicing Agreement or to any term, condition or provision contained “thereunder,” “thereof,” “therein” or words of like import, means and are a reference to the Loan and Servicing Agreement (or such term, condition or provision, as applicable) as amended, restated, supplemented or otherwise modified by this Amendment.

7.Successors and Assigns.  This Amendment is binding upon each party hereto and their respective successors and assign, and inures to the sole benefit of such party and its respective successors and assigns.  Neither the Borrower nor Holdings has the right to assign their respective rights or delegate their respective duties under this Amendment.

8.Costs, Expenses and Taxes.  The Borrower and Holdings affirm and acknowledge that Section 11.07 of the Loan and Servicing Agreement applies to this Amendment and the transactions and agreements and documents contemplated under this Amendment.

9.Governing Law; Severability.  This Amendment shall be governed by the laws of the State of New York.  Wherever possible, each provision of this Amendment will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Amendment is prohibited by or invalid under such law, such provision will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.

10.Counterparts.  This Amendment shall be valid, binding, and enforceable against a party only when executed and delivered by an authorized individual on behalf of the party by means of (i) any electronic signature permitted by the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, and/or any other relevant electronic signatures law, including relevant provisions of the Uniform Commercial Code (collectively, “Signature Law”); (ii) an original manual signature; or (iii) a faxed, scanned, or photocopied manual signature.  Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature.  Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any faxed, scanned, or photocopied manual signature, or other electronic signature, of any party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof.  This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute one and the same instrument.  For avoidance of doubt, original manual signatures shall be used

- 3 -

NAI-1528531687v5

 

for execution or indorsement of writings and authentication of Notes, if any, when required under the UCC or other Signature Law due to the character or intended character of the writings.

[Signature Pages Follow]

- 4 -

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The parties have caused this Amendment to be executed as of the date first above written.

The Borrower

RCC REAL ESTATE SPE 9 LLC

By:/s/ Mark FogelName: Mark Fogel
Title:   President & CEO

Holdings

RCC REAL ESTATE SPE HOLDINGS LLC

By:/s/ Mark FogelName: Mark Fogel
Title:   President & CEO

[Signature Page – Fourth Amendment to Loan and Servicing Agreement]

Lenders

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By: /s/ Andrew C. Dickey

Name:  Andrew C. Dickey

Title:     Head of Alternative and Private Equity

[Signature Page – Fourth Amendment to Loan and Servicing Agreement]

Administrative Agent

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

By: COMPUTERSHARE TRUST COMPANY, N.A., as attorney-in-fact and agent

By: /s/ Scott R. Little

Name:  Scott Little

Title:     Vice President

[Signature Page – Fourth Amendment to Loan and Servicing Agreement]

Exhibit A

[See Attached]

NAI-1528532842v5

 

Conformed to:

First Amendment to Loan and Servicing Agreement, dated as of September 19, 2020

Second Amendment to Loan and Servicing Agreement, dated as of May 25, 2021

Third Amendment to Loan and Servicing Agreement, dated as of August 16, 2021

Fourth Amendment to Loan and Servicing Agreement, dated as of April 12, 2022

LOAN AND SERVICING AGREEMENT

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 hereto,

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

Dated as of July 31, 2020

60551680_43.DOCX

NAI-1528532842v5

 

TABLE OF CONTENTS

Page

ARTICLE I. INTERPRETATION1

Section 1.01 Certain Defined Terms1

Section 1.02 Other Terms23

Section 1.03 Computation of Time Periods23

Section 1.04 Interpretation24

Section 1.05 Changes in GAAP24

Section 1.06 Advances to Constitute Loans25

ARTICLE II. THE FACILITY25

Section 2.01 Advances25

Section 2.02 Procedure for Advances25

Section 2.03 Evidence of Debt26

Section 2.04 Repayment26

Section 2.05 Interest and Fees28

Section 2.06 Payments and Computations, Etc29

Section 2.07 Collections and Allocations29

Section 2.08 Remittance Procedures30

Section 2.09 Grant of a Security Interest33

Section 2.10 Sale of Portfolio Assets34

Section 2.11 Release of Portfolio Assets35

Section 2.12 Increased Costs35

Section 2.13 Taxes36

ARTICLE III. CONDITIONS PRECEDENT40

Section 3.01 Conditions Precedent to Effectiveness40

Section 3.02 Conditions Precedent to the Initial Advance41

Section 3.03 Conditions Precedent to All Advances42

Section 3.04 Conditions to Transfers of Portfolio Assets42

ARTICLE IV. REPRESENTATIONS43

Section 4.01 Representations of the Loan Parties43

Section 4.02 Representations of the Borrower Relating to the Agreement and the Collateral Portfolio50

ARTICLE V. GENERAL COVENANTS51

i

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Page

Section 5.01 Affirmative Covenants of the Loan Parties51

Section 5.02 Negative Covenants of the Loan Parties56

ARTICLE VI. EVENTS OF DEFAULT58

Section 6.01 Events of Default58

Section 6.02 Pledged Equity60

Section 6.03 Additional Remedies62

ARTICLE VII. THE ADMINISTRATIVE AGENT63

Section 7.01 Appointment and Authority63

Section 7.02 Exculpatory Provisions63

Section 7.03 Reliance by Administrative Agent65

Section 7.04 Delegation of Duties66

Section 7.05 Resignation of Administrative Agent66

Section 7.06 Non-Reliance on Agents and Other Lenders67

Section 7.07 Reimbursement by Lenders67

Section 7.08 Administrative Agent May File Proofs of Claim67

Section 7.09 Collateral Matters68

ARTICLE VIII. ADMINISTRATION AND SERVICING OF COLLATERAL PORTFOLIO69

Section 8.01 Appointment and Designation of the Applicable Servicer69

Section 8.02 Duties of the Portfolio Asset Servicer71

Section 8.03 Duties of the Facility Servicer73

Section 8.04 Authorization of the Portfolio Asset Servicer74

Section 8.05 Collection of Payments; Accounts75

Section 8.06 Realization Upon Portfolio Assets76

Section 8.07 Payment of Certain Expenses77

Section 8.08 Reports77

Section 8.09 Applicable Servicer Not to Resign78

Section 8.10 Indemnification of the Facility Servicer78

ARTICLE IX. COLLATERAL CUSTODIAN79

Section 9.01 Designation of Collateral Custodian79

Section 9.02 Duties of Collateral Custodian79

Section 9.03 Merger or Consolidation82

Section 9.04 Collateral Custodian Compensation82

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Page

Section 9.05 Collateral Custodian Removal82

Section 9.06 Limitation on Liability83

Section 9.07 Collateral Custodian Resignation86

Section 9.08 Release of Documents87

Section 9.09 Return of Required Portfolio Documents87

Section 9.10 Access to Certain Documentation and Information Regarding the Collateral Portfolio; Audits of Portfolio Asset Servicer88

Section 9.11 Bailment88

Section 9.12 Indemnification of the Collateral Custodian88

Section 9.13 Borrower’s Certification88

ARTICLE X. INDEMNIFICATION89

Section 10.01 Indemnities by the Loan Parties89

Section 10.02 Legal Proceedings90

ARTICLE XI. MISCELLANEOUS91

Section 11.01 Amendments and Waivers91

Section 11.02 Notices, Etc91

Section 11.03 No Waiver Remedies92

Section 11.04 Binding Effect; Assignability; Multiple Lenders92

Section 11.05 Term of This Agreement94

Section 11.06 GOVERNING LAW; JURY WAIVER94

Section 11.07 Costs and Expenses94

Section 11.08 Recourse Against Certain Parties; Non-Petition95

Section 11.09 Execution in Counterparts; Severability; Integration96

Section 11.10 Consent to Jurisdiction; Service of Process97

Section 11.11 Confidentiality97

Section 11.12 Non-Confidentiality of Tax Treatment98

Section 11.13 Waiver of Set Off99

Section 11.14 Headings, Schedules and Exhibits99

Section 11.15 Ratable Payments99

Section 11.16 Failure of Borrower to Perform Certain Obligations99

Section 11.17 Power of Attorney99

Section 11.18 Delivery of Termination Statements, Releases, Etc100

Section 11.19 Exclusive Remedies100

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Page

Section 11.20 Post-Closing Performance Conditions100

Section 11.21 PATRIOT Act100

Section 11.22 Wells Fargo100

Section 11.23 Platform100

iv

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LIST OF SCHEDULES AND EXHIBITS

SCHEDULES

SCHEDULE I Initial Portfolio Assets

SCHEDULE II Specified CLO Assets

SCHEDULE III Conditions Precedent Documents

SCHEDULE IV Notice Information

SCHEDULE V Competitors

SCHEDULE VI Borrower Authorized Persons

SCHEDULE VII Administrative Agent Authorized Persons

SCHEDULE VIII Collateral Custodian Authorized Persons

SCHEDULE IX Facility Servicer Authorized Persons

SCHEDULE X Portfolio Asset Servicer Authorized Persons

SCHEDULE XI Collateral Custodian Fees

EXHIBITS

EXHIBIT A Form of Note

EXHIBIT B Form of Notice of Borrowing

EXHIBIT C Form of Servicing Report

EXHIBIT D Form of Payment Date Report

EXHIBIT E Form of Quarterly LTV Certificate

EXHIBIT F Form of U.S. Tax Compliance Certificate

EXHIBIT G Form of Release of Required Portfolio Documents

EXHIBIT H Form of Power of Attorney

EXHIBIT I Form of Portfolio Asset Assignment

EXHIBIT J Form of Custodial and Account Control Agreement

EXHIBIT K Form of Portfolio Asset Checklist

EXHIBIT L Form of Account Control Agreement

v

NAI-1528532842v5

 

LOAN AND SERVICING AGREEMENT, dated as of July 31, 2020, by and among:

(1)RCC REAL ESTATE SPE HOLDINGS LLC, a Delaware limited liability company (“Holdings”);

(2)RCC REAL ESTATE SPE 9 LLC, a Delaware limited liability company (the “Borrower”);

(3)MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, and each of the other lenders from time to time party hereto, as Lenders (as defined herein);

(4)WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Administrative Agent (as defined herein);

(5)MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, as the Facility Servicer (as defined herein);

(6)ACRES Capital Servicing LLC, as the Portfolio Asset Servicer (as defined herein); and

(7)WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Collateral Custodian (as defined herein).

The Lenders have agreed, on the terms and conditions set forth herein, to provide a secured revolving loan facility that provides for Advances from time to time in the amounts and in accordance with the terms set forth herein.

The proceeds of the Advances will be provided to the Borrower to be used to finance the origination and acquisition of and investment by the Borrower in the Portfolio Assets (including the repayment of debt secured by such Portfolio Assets), to pay transaction fees and expenses and to make Restricted Junior Payments to Holdings or the Sponsor subject to the terms hereof.

Accordingly, the parties agree as follows:

ARTICLE I.
INTERPRETATION

Section 1.01Certain Defined Terms

.  As used in this Agreement and the exhibits, schedules and other attachments hereto (each of which is hereby incorporated herein and made a part hereof), the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“1940 Act” means the Investment Company Act of 1940 and the rules and regulations promulgated thereunder.

“Account Bank” means Wells Fargo Bank, National Association in its capacity as the depository pursuant to the Account Control Agreement, and each other Person acting in such capacity pursuant to any agreement replacing or substituting for the Account Control Agreement.

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“Account Control Agreement” means the account control agreement among the Borrower, the Facility Servicer, the Account Bank and the Administrative Agent, with respect to the establishment and governance of the Collection Account, and any replacement or substitution therefor.

“Additional Amount” has the meaning assigned to that term in Section 2.12(a).

“Administrative Agent” means Wells Fargo Bank, National Association, in its capacity as administrative agent for the Lenders and collateral agent for the Secured Parties, together with its successors and permitted assigns, including any successor appointed pursuant to Article VII.

“Advance” means the loans made by the Lenders to the Borrower pursuant to Article II.

“Advances Outstanding” means, at any time, the aggregate outstanding principal amount of all Advances at such time.

“Affiliate” when used with respect to a Person, means any other Person Controlling, Controlled by or under common Control with such Person.

“Agent Fee Letter” means, if applicable, any fee letter or letters between the Administrative Agent and the Borrower entered on or before the Closing Date.

“Agreement” means this Loan and Servicing Agreement.

“Anti-Corruption Laws” means any and all Applicable Laws relating to bribery or corruption.

“Anti-Money Laundering Law” means any and all applicable anti-money laundering, financial recordkeeping and reporting requirements of Applicable Law, including those of the Bank Secrecy Act (as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)) and any applicable anti-money laundering statutes of other jurisdictions, as well as the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable governmental agency.

“Appleton Lease” has the meaning assigned to that term in the definition of “Borrowing Base.”

“Applicable Law” means for any Person all existing and future laws, rules, regulations, statutes, treaties, codes, ordinances, permits, certificates, orders, licenses of and interpretations by any Governmental Authority applicable to such Person and applicable judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other administrative, judicial, or quasi-judicial tribunal or agency of competent jurisdiction.

“Applicable Servicer” means the Facility Servicer or the Portfolio Asset Servicer, as the context may require.

“Appraised Value” means, with respect to any real estate owned real property, the appraised value of the property as set forth in the most recently conducted appraisal conducted by an independent appraiser of national reputation with experience appraising similar real estate owned real property reasonably approved by the Initial Lender.

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“Assignment and Assumption Agreement” means an agreement among the Borrower (if required under Section 11.04), a Lender, the Administrative Agent and, unless executed in connection with an assignment under Section 11.04, the Majority Lenders (such consent of the Majority Lenders (if applicable) not to be unreasonably withheld) in a form customarily provided by the Loan Syndications and Trading Association and delivered in connection with a Person becoming a Lender hereunder after the Closing Date.

“Authorized Person” means the individuals set forth on Schedules VI-X, as the same may be amended by Borrower, the Administrative Agent, the Portfolio Asset Servicer and the Facility Servicer from time to time by delivery thereof to the Collateral Custodian.

“Availability Period” means the period commencing on the Closing Date and ending on the earlier of (a) the second anniversary of the Closing Date and (b) the date the Commitments are terminated in accordance with this Agreement, whether as a result of an Event of Default or otherwise.

“Bankruptcy Code” means Title 11, United States Code, 11 U.S.C. §§ 101 et seq.

“Bankruptcy Event” is deemed to have occurred with respect to a Person if either:

(a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under the Bankruptcy Laws, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal Bankruptcy Laws or other similar laws now or hereafter in effect; or

(b) such Person shall commence a voluntary case or other proceeding under any Bankruptcy Laws now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or all or substantially all of its assets under the Bankruptcy Laws, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors or members shall vote to implement any of the foregoing.

“Bankruptcy Laws” means the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, or similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

“Borrower” has the meaning assigned to that term in the preamble hereto.

“Borrower Taxes” means any Taxes imposed on the Borrower with respect to its operations.

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“Borrowing Base” means, as of any date of determination, an amount equal to the sum of (a) with respect to each Eligible Portfolio Asset that is an Initial Portfolio Asset, an amount equal to the product of (i) the advance rate set forth on Schedule I for such Eligible Portfolio Asset and (ii) the most recent Value for such Eligible Portfolio Assets as of such date, (b) with respect to each Eligible Portfolio Asset that is not an Initial Portfolio Asset, an amount equal to the product of (i) the advance rate for such Eligible Portfolio Asset as determined by the Initial Lender under Section 3.04(b) and (ii) the most recent Value for such Eligible Portfolio Asset as of such date, (c) with respect to the real estate owned real property related to Hilton Garden Inn, Philadelphia, an amount equal to the lesser of (i) $10,150,000 and (ii) the product of (A) 26.8% and (ii) the Appraised Value for such Eligible Portfolio Asset as in effect at such time as determined in accordance with the Valuation Policy, (d) with respect to any other real estate owned real property other than as described in clause (c) above, an amount equal to the product of (i) a percentage to be determined by the Initial Lender in its sole discretion and (ii) the Appraised Value of such Eligible Portfolio Asset as of a date determined by the Initial Lender in their sole discretion and as determined in accordance with the Valuation Policy, and (e) with respect to the Eligible Ground Lease located at 333 West College Avenue, Appleton, Wisconsin and held by Propco (the “Appleton Lease”), (i) prior to a Leasehold Mortgage Event, an amount equal to $20,300,000 or (ii) on and after the date the Leasehold Mortgage Event occurs, an amount equal to $0.

“Business Day” means a day of the year other than (a) Saturday or a Sunday or (b) any other day on which commercial banks in New York, New York or the offices of the Administrative Agent, the Account Bank or Collateral Custodian are authorized or required by Applicable Law, regulation or executive order to close.

“Cash Trap Event” means, as at any date of determination, (a) LTV as of such date exceeds the Maximum Quarterly LTV Percentage then applicable, (b) as of the most recent calendar quarter end prior to such date, the Eligible Portfolio Assets that are First Lien Senior Secured Portfolio Assets have a Debt Service Coverage Ratio of (i) 1.0:1.0 or lower during the period commencing on the Closing Date and ending on the first anniversary of the Closing Date, (ii) 1.2:1.0 or lower during the period commencing on the first anniversary of the Closing Date and ending on the third anniversary of the Closing Date and (iii) 1.3:1.0 or lower during the period commencing on the third anniversary of the Closing Date and ending on the Facility Termination Date, (c) as of the most recent calendar quarter end prior to such date, (x) the sum of (i) the aggregate Value of the Eligible Portfolio Assets plus, without duplication, the funds in the Collection Account as of such date that are or would be available to the Borrower under Section 2.08(a)(ix) (on a pro forma basis after giving effect to the provisions of clauses (a)(i) through (a)(viii) of Section 2.08(a)) and (ii) the aggregate Value of the Specified CLO Assets plus, without duplication, the aggregate amount of the Sponsor’s unrestricted and unencumbered cash and cash equivalents is less than (y) 1.6 times the aggregate Advances Outstanding on such date or (d) as of the most recent calendar quarter end prior to such date, the aggregate Value of the Eligible Portfolio Assets that are First Lien Senior Secured Portfolio Assets for which no Underlying Obligor Default exists is less than 75% of the aggregate Value of the Eligible Portfolio Assets as of such date.

“Change in Law” means the occurrence, after the Closing Date, of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all

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requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Change of Control” is deemed to have occurred if (a) the Sponsor fails to own all of the limited liability company interests in Holdings, directly or indirectly, through one or more wholly owned subsidiaries, (b) the Sponsor fails to own all of the equity interest in each TRS Subsidiary, (c) Holdings fails to own all of the limited liability company interests in the Borrower, directly, (d) ACRES Capital Corp., a Delaware corporation, or a wholly owned Subsidiary thereof, fails to be engaged as the manager for the Sponsor, (e) the Borrower, either directly or collectively with a TRS Subsidiary, fails to own all of the Equity Interest in each Permitted REO Subsidiary, as applicable, (f) the Borrower fails to own all of the limited liability company interest in Propco, and (g) the TRS Subsidiary fails to own all of the limited liability company interests in Opco.

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986.

“Collateral” has the meaning assigned to that term in Section 2.09(a).

“Collateral Custodian” means Wells Fargo Bank, National Association, not in its individual capacity, in its capacity as collateral custodian for the Administrative Agent and the Lenders pursuant to the terms of this Agreement, together with its successors and permitted assigns, including any successor appointed pursuant to Article IX.

“Collateral Custodian Fees” means the fees set forth on Schedule XI, between the Collateral Custodian and the Borrower, that are payable to the Collateral Custodian hereunder.

“Collateral Custodian Termination Expenses” has the meaning assigned to that term in Section 9.05.

“Collateral Custodian Termination Notice” has the meaning assigned to that term in Section 9.05.

“Collateral Portfolio” means all right, title and interest (whether now owned or hereafter acquired or arising, and wherever located) of the Borrower in all assets of the Borrower securing the Obligations, including the property identified below in clauses (a) through (d), and all accounts, money, cash and currency, chattel paper, tangible chattel paper, electronic chattel paper, intellectual property, goods, equipment, fixtures, contract rights, general intangibles, documents, instruments, certificates of deposit, certificated securities, uncertificated securities, financial assets, securities entitlements, commercial tort claims, securities accounts, deposit accounts, inventory, investment property, letter-of-credit rights, software, supporting obligations, accessions or other property consisting of, arising out of, or related to any of the following:

(a) the Portfolio Assets and all funds due or to become due in payment under such Portfolio Assets, including all Collections;

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(b) any other Related Portfolio Assets with respect to the Portfolio Assets;

(c) the Collection Account; and

(d) all income and Proceeds of the foregoing.

“Collection Account” means the securities or deposit account established with the Account Bank and governed by the Account Control Agreement in the name of the Borrower and under the “control” (within the meaning of the UCC) of the Administrative Agent for the benefit of the Secured Parties; provided that, subject to the rights of the Administrative Agent hereunder with respect to funds, the funds deposited therein from time to time shall constitute the property and assets of the Borrower, and the Borrower shall be solely liable for any Taxes payable with respect to the Collection Account.

“Collections” means all collections and other cash proceeds with respect to any Portfolio Asset or other Related Portfolio Asset (including payments on account of interest, principal, prepayments, fees, guaranty payments, dividends, distributions, return of capital and all other amounts received in respect of such Portfolio Asset or other Related Portfolio Asset), all Recoveries, all Insurance Proceeds and proceeds of any liquidations or Sales in each case, attributable to such Portfolio Asset or other Related Portfolio Asset, and all other proceeds or other funds of any kind or nature received by the Borrower, the Portfolio Asset Servicer or the Account Bank with respect to any Underlying Collateral.

“Commitment” means, (a) during the Availability Period (i) with respect to the Initial Lender, the Total Facility Amount as such amount may be reduced pursuant to an Assignment and Assumption Agreement and (ii) with respect to any other Lender, the amount set forth as such Lender’s “Commitment” on the Assignment and Assumption Agreement relating to such Lender and (b) after the end of the Availability Period, with respect to any Lender, such Lender’s Pro Rata Share of the aggregate Advances Outstanding.

“Competitor” means a specialty finance company or investment fund engaged in the business of investing in, acquiring or originating commercial real estate finance assets, including (without limitation) any mortgage or hybrid REIT or any company, fund or other vehicle that makes and/or invests in commercial real estate loans and/or other real estate related debt securities,  but excluding any such entities that primarily invest in publicly traded securities and insurance companies, in each case that are identified as competitors on Schedule V attached hereto, as may be modified from time to time with the consent of the Initial Lender and upon 30 days’ written notice to the Initial Lender (such consent not to be unreasonably withheld).  

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.

“Counterparty Lender” means, with respect to any Portfolio Asset that is a loan participation interest, the lender party to the related Loan Agreement and the related Participation Agreement.

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“Covered Entity” means each of (a) the Sponsor, the Borrower, Holdings, and their respective Subsidiaries and any guarantors of the Obligations or pledgors of Collateral under this Agreement and (b) each Person that, directly or indirectly, is in control of a Person described in clause (a) above.  For purposes of this definition, control of a Person means the direct or indirect (i) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person or (ii) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

“Custodial and Account Control Agreements” means, collectively, (a) with respect to such Portfolio Assets listed on Schedule I that the Facility Servicer and Initial Lender reasonably determined require such an agreement to perfect the Administrative Agent’s lien on such Portfolio Assets, a custodial and account control agreement among the Borrower, the Administrative Agent and Wells Fargo Bank, National Association, as securities custodian, substantially in the form of Exhibit J and (b) with respect to any other Portfolio Asset acquired after the Closing Date (with the approval of the Initial Lender), such other agreements as the Administrative Agent may require with respect to such Portfolio Asset.

“Custodial Delivery Failure” means the failure by the Collateral Custodian to produce any document which constitutes a portion of any Portfolio Asset File that was in its possession pursuant to Article IX within one Business Day after required or requested by the Administrative Agent, the Portfolio Asset Servicer, the Facility Servicer or the Borrower in accordance with the provisions of this Agreement, and provided that (a) the Collateral Custodian previously delivered to the Administrative Agent, the Lenders and the Borrower a report pursuant to Section 9.02(a)(iv) that did not list such document as missing, (b) such document was held by the Collateral Custodian on behalf of the Borrower or the Administrative Agent, as applicable and (c) such document is not outstanding pursuant to a request for release pursuant to Section 9.08(a).

“Debt Service Coverage Ratio” means, as of any date of determination with respect to the Eligible Portfolio Assets that are First Lien Senior Secured Portfolio Assets, the ratio of (a) the aggregate NOI (as defined below) of all such Portfolio Assets as of such date to (b) the product of (1) the aggregate Advances Outstanding as of such date multiplied by (2) the interest rate for the Advances under Section 2.05(a).  “NOI” means, as of any date of determination for any Portfolio Asset, the following with respect to the type of property constituting the Underlying Collateral for such Portfolio Asset:

(i) with respect to a multifamily property, the annual operating income of such property equal to the sum of (A) rental income and tenant recoveries and other recurring income for the year of stabilization, less (B) an adjustment to assume a vacancy factor equal to the greater of (1) the vacancy rate projected for such property and (2) a 5.0% vacancy factor, less (C) projected operating expenses incurred in connection with such property for the year of stabilization assuming (1) a base property management fees equal to the greater of (a) the actual amount payable by the applicable Obligors pursuant to the applicable management agreement and (b) a minimum of 2.5% of revenues and (2) a normalized adjustment for capital expenditures equal to a minimum of $200 per unit;

(ii) with respect to office, retail, industrial and mixed use properties, the annual operating income of such property based on underwritten rents for the year of stabilization, but subject to a maximum market occupancy cap of 95%, less projected operating expenses

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incurred in connection with such property for the year of stabilization, and assuming (A) a base property management fees equal to the greater of (1) the actual amount payable by the applicable Obligors pursuant to the applicable management agreement and (2) 2.5% of revenues and (B) a normalized adjustment for capital expenditures equal to a minimum of $0.20 per square foot ($0.10 per square foot for industrial properties); and

(iii) with respect to a hospitality property, the underwritten net operating income of such property for the year of stabilization determined by the Initial Lender as the sum of room, food and beverage, retail and other recurring income, less operating expenses incurred in connection with such property for the year of stabilization and assuming (A) a base property management fees equal to the greater of (1) the actual amount payable by the applicable Obligors pursuant to the applicable management agreement and (2) 2.50% of revenues and (B) a normalized adjustment for FF&E equal to 4.0% of total revenue.

“Default Rate” means, as of any date of determination, a rate per annum equal to the interest rate that is or would be applicable to the Advances at such time plus 2.0%.

“Determination Date” means, for any Payment Date or Reporting Date, the date that is five Business Days prior to such Payment Date or Reporting Date, as applicable.

“Electronic Portfolio Asset File” mean any Portfolio Asset File document that Borrower delivers to the Collateral Custodian electronically in a .pdf format and identified as “unique loan id.document_name.pdf” (example: 12345.mortgage.pdf).

“Electronic Recording” means a mortgage or a mortgage-related document created, generated, sent, communicated, received or stored by electronic means (that complies with the requirements of the Electronic Signatures in Global and National Commerce Act or the Uniform Electronic Transactions Act, as applicable) that has been accepted for recording by a participating county land records office which accepts such electronic record of a mortgage or a mortgage-related document as an alternative to recordation of the original paper form of such document.

“Eligible Assignee” means (a) a Lender or any of its Affiliates, (b) any Person managed by a Lender or any of its Affiliates or (c) any financial or other institution reasonably acceptable to the Administrative Agent (such acceptance not to be unreasonably withheld) acting at the direction of the Majority Lenders (such direction of the Majority Lenders not to be unreasonably withheld).  For the avoidance of doubt, any Competitor is subject to Section 11.04(e).

“Eligible Ground Lease” means a ground lease for a property that (a) has a minimum remaining term of 30 years, including tenant controlled renewal options or acceptable purchase options containing nominal or market based purchase prices, as of any date of determination, (b) has customary notice rights, default cure rights, bankruptcy new lease rights and other customary provisions for the benefit of a leasehold mortgagee or has equivalent protection for a leasehold permanent mortgagee by a non-disturbance agreement in favor of such leasehold permanent mortgagee from the owner of the landlord’s fee interest, (c) does not have provisions that permit the lessor thereunder to increase the rent payable by the tenant thereunder other than usual and customary increases for inflation or fixed and scheduled rent increases, and (d) is otherwise eligible for non-recourse leasehold mortgage financing under customary prudent lending requirements.

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“Eligible Portfolio Asset” means (a) each of the Initial Portfolio Assets and (b) any other Portfolio Asset that has been approved in writing by the Initial Lender in its sole discretion.

“Environmental Laws” means any and all foreign, federal, State and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials.

“ERISA” means the United States Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under the Code.

“Escrow Payment” means any amount received by the Borrower for the account of an Obligor for application toward the payment of Taxes, insurance premiums, assessments, ground rents, deferred maintenance, environmental remediation, rehabilitation costs, capital expenditures and similar items in respect of an applicable Portfolio Asset.

“Event of Default” has the meaning assigned to that term in Section 6.01.

“Excepted Persons” has the meaning assigned to that term in Section 11.11(a).

“Exchange Act” means the United States Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.

“Excluded Amounts” means, without duplication, (a) any amount received in the Collection Account with respect to any Portfolio Asset included as part of the Collateral Portfolio, which amount is attributable to the payment of any Tax, fee or other charge imposed by any Governmental Authority on such Portfolio Asset or on any Underlying Collateral and (b) any amount received in the Collection Account representing (i) any Escrow Payments, (ii) any amounts received on or with respect to a Portfolio Asset that is not a loan participation interest under any Insurance Policy that is required to be used to restore, improve or repair the related real estate or other assets of such Portfolio Asset or required to be paid to any Obligor under the Loan Agreement for such Portfolio Asset, (iii) any amount received in the Collection Account with respect to any Portfolio Asset that is otherwise Sold by the Borrower pursuant to Section 2.10, to the extent such amount is attributable to a time after the effective date of such Sale and (iv) amounts deposited in the Collection Account which were not required to be deposited therein or were deposited in error.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient under any Transaction Document:  (a)  Taxes imposed on (or measured by) net income (however denominated) and any branch profits Taxes (i) imposed by the jurisdiction under the laws of which such Recipient is organized or in which such Recipient’s principal office is located or, in the case of any Lender, in which such Lender’s applicable lending office is located or (ii) that are Other Connection Taxes; (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an

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applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Advance or Commitment or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.12, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office; (c) Taxes attributable to such Recipient’s failure to comply with Section 2.12(d) or (e); and (d) any U.S. federal withholding Taxes imposed under FATCA. “Facility Servicer” means Massachusetts Mutual Life Insurance Company, not in its individual capacity, but in its capacity as facility servicer pursuant to terms of this Agreement, together with its successors and permitted assigns, including any successor appointed pursuant to Article VIII.

“Facility Servicer” means Massachusetts Mutual Life Insurance Company, not in its individual capacity, but in its capacity as facility servicer pursuant to terms of this Agreement, together with its successors and permitted assigns, including any successor appointed pursuant to Article VIII.

“Facility Servicer Fee Letter” means, if applicable, any fee letter or letters between the Facility Servicer and the Borrower entered on or before the Closing Date.

“Facility Servicing Fees” means the fees set forth in the Facility Servicing Fee Letter that are payable to the Facility Servicer.

“Facility Termination Date” means the date on which the aggregate outstanding principal amount of the Advances have been repaid in full and all accrued and unpaid interest thereon, all Fees and all other Obligations (other than contingent indemnification obligations) have been paid in full and the Commitments of the Lenders have been terminated.

“FATCA” means Sections 1471 through 1474 of the Code as in effect on the date hereof (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations promulgated thereunder or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code as of the date hereof (or any amended or successor version described above) and any intergovernmental agreements (or related rules, legislation or official administrative guidance) implementing such provisions of the Code or any non-U.S. laws implementing the foregoing.

“FATCA Withholding Tax” means any withholding or deduction required pursuant to FATCA.

“Fee Letters” means the Agent Fee Letter, Facility Servicer Fee Letter and each other fee letter agreement entered into by and among the Borrower and any of the Administrative Agent, the Facility Servicer, the Initial Lender and any other Lender in connection with the transactions contemplated by this Agreement.

“Fees” means the fees payable to the Administrative Agent, the Collateral Custodian, the Facility Servicer, the Initial Lender, any other Lender or any other applicable agent or party pursuant to the terms of the Fee Letters or the other Transaction Documents.

“First Lien Senior Secured” means, with respect to any Portfolio Asset, that such Portfolio Asset is a loan interest (as opposed to a participation interest or other asset) secured by a Lien on the Underlying Collateral that is prior to any other Lien on such Underlying Collateral other than customary and standard permitted liens.

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“GAAP” means generally accepted accounting principles as in effect from time to time in the United States.

“Governmental Authority” means, with respect to any Person, any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to a government and any court or arbitrator having jurisdiction over such Person (including any supra-national bodies such as the European Union or the European Central Bank).

“Guaranty Agreement” has the meaning assigned to that term in Section 3.01(b).

“Hazardous Materials” means all materials subject to any Environmental Law, including materials listed in 49 C.F.R. § 172.010, materials defined as hazardous pursuant to § 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, flammable, explosive or radioactive materials, hazardous or toxic wastes or substances, lead-based materials, petroleum or petroleum distillates or asbestos or material containing asbestos, polychlorinated biphenyls, radon gas, urea formaldehyde and any substances classified as being “in inventory”, “usable work in process” or similar classification that would, if classified as unusable, be included in the foregoing definition.

“HGI Sub” means Exantas Phili Holdings, LLC.

“Holdings” has the meaning assigned to that term in the preamble hereto.

“Indebtedness” means with respect to any Person at any date, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than accounts payable incurred in the ordinary course of business and payable in accordance with customary trade practices) or that is evidenced by a note, bond, debenture or similar instrument or other evidence of indebtedness customary for indebtedness of that type, (b) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof, (c) all indebtedness, obligations or liabilities of that Person in respect of derivatives and (d) all obligations under direct or indirect guaranties in respect of obligations (contingent or otherwise) to purchase or otherwise acquire, or to otherwise assure a creditor against loss in respect of, indebtedness or obligations of others of the kind referred to in clauses (a) through (c) above.

“Indemnified Amounts” has the meaning assigned to that term in Section 10.01(a).

“Indemnified Party” has the meaning assigned to that term in Section 10.01(a).

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Transaction Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Independent Manager” means the Person holding the Independent Manager position as provided for in the applicable Loan Party’s limited liability company agreement.

“Indorsement” has the meaning specified in Section 8-102(a)(11) of the UCC, and “Indorsed” has a corresponding meaning.

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“Initial Lender” means (a) so long as it holds a Commitment or any portion of an Advance, Massachusetts Mutual Life Insurance Company and (b) otherwise, the Majority Lenders.

“Initial Portfolio Assets” means the Portfolio Assets described on Schedule I.

“Insurance Policy” means, with respect to any Portfolio Asset, an insurance policy covering liability and physical damage to, or loss of, the Underlying Collateral for such Portfolio Asset.

“Insurance Proceeds” means any amounts received on or with respect to a Portfolio Asset under any Insurance Policy or with respect to any condemnation proceeding or award in lieu of condemnation.

“Interest Collections” means, with respect to any Portfolio Asset, all Collections attributable to interest on such Portfolio Asset (including Collections attributable to the portion of the outstanding principal amount of a Portfolio Asset, if any, that represents interest which has accrued in kind and has been added to the principal balance of such Portfolio Asset), including all scheduled payments of interest and payments of interest relating to principal prepayments, all guaranty payments attributable to interest and proceeds of any liquidations, sales or dispositions attributable to interest on such Portfolio Asset.

“Leasehold Mortgage Documents” means the “Leasehold Mortgage Documents” as defined in the Opco/Propco Guaranty.

“Leasehold Mortgage Event” means Opco and Propco have failed to obtain the Leasehold Mortgage Documents and the Initial Lender has not received copies of such Leasehold Mortgage Documents prior to the Leasehold Mortgage Trigger Date.

“Leasehold Mortgage Trigger Date” means June 16, 2022; provided that such date may be extended to July 11, 2022 if the Initial Lender is satisfied, in its sole and reasonable discretion, that the Loan Parties, Propco, and Opco are diligently pursuing the Leasehold Mortgage Documents and all related documentation.  

“Lender” means collectively, the Initial Lender and any other Person to whom any Lender assigns any part of its rights and obligations under this Agreement and the other Transaction Documents in accordance with the terms of Section 11.04 and any other party that becomes a lender pursuant to an Assignment and Assumption Agreement.

“Lien” means any mortgage or deed of trust, pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, claim, preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale, lease or other title retention agreement, sale subject to a repurchase obligation, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

“Loan Agreement” means the loan agreement, credit agreement or other agreement pursuant to which a Portfolio Asset that is a loan interest or an Underlying Loan Obligation of a Portfolio Asset, as applicable, has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Portfolio Asset or Underlying Loan Obligation or of which the holders of such Portfolio Asset are the beneficiaries, including any co-lender or servicing agreement entered into by an applicable Counterparty Lender, Underlying Agent or Underlying Servicer.

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“Loan Parties” means, collectively, the Borrower and Holdings.

“LTV” means, as of any date of determination, the ratio (expressed as a percentage) of (a) the aggregate amount of Advances Outstanding and accrued and unpaid interest thereon as of such date to (b) the most recent Total Portfolio Value as of such date.

“Majority Lenders” means the Lenders representing an aggregate of more than 50% of the aggregate Advances Outstanding; provided that the sum of the aggregate unpaid principal amount of the Advances Outstanding held or deemed held by the Borrower, Holdings, the Sponsor or any of their Affiliates shall be excluded for purposes of making a determination of Majority Lenders at any time.

“Material Adverse Effect” means a material adverse effect on (a) the business, financial condition, operations, liabilities (actual or contingent), performance or properties of the Borrower, (b) the validity or enforceability of this Agreement or any other Transaction Document or the validity or enforceability of the Portfolio Assets generally or any material portion of the Portfolio Assets, (c) the rights and remedies of the Collateral Custodian, the Administrative Agent, the Facility Servicer, any Lender or any other Secured Parties with respect to matters arising under this Agreement or any other Transaction Document, (d) the ability of the Borrower to perform its obligations under this Agreement or any other Transaction Document or (e) the existence, perfection, priority or enforceability of the Administrative Agent’s or the other Secured Parties’ Lien on the Collateral Portfolio; providedthat, there shall be no Material Adverse Effect to the extent such Material Adverse Effect arises from the action (or inaction) of the Collateral Custodian, the Administrative Agent, the Facility Servicer or a Lender.

“Material CLO Modification” means any amendment or waiver of, or modification or supplement to, or termination, cancellation or release of, any term of the documentation executed or delivered in connection with the issuance of a Specified CLO Asset (other than with respect to any such amendment, waiver, modification, supplement, termination, cancellation or release relating to the Underling Loan Obligation for such Specified CLO) for which the Sponsor or a wholly-owned Subsidiary thereof must agree to or consent and could reasonably be expected to have a material effect on the Value of such Specified CLO Asset or the rights of the Sponsor or a wholly owned Subsidiary thereof with respect thereto.

“Material Modification” means any amendment or waiver of, or modification or supplement to, or termination, cancellation or release of, a Loan Agreement for a Portfolio Asset or for the Underlying Loan Obligation for a Portfolio Asset, as applicable, that:

(a) forgives, excuses, reduces, waives or modifies such Loan Agreement or the related loan documents in a manner that would (i) reduce the outstanding principal amount of the amount due thereunder or waive any payment default thereunder, (ii) reduce the interest rate margin thereon by an amount that is more than 50 basis points less than the original margin or (iii) reduce the amount of any prepayment premium or any fees payable thereunder;

(b) extends the final, initial scheduled maturity date for payment of principal payable under such Loan Agreement to a date that is more than six months after the final, scheduled maturity date thereof;

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(c) (i) extends the scheduled date of expiration or termination of any commitment to make future advances thereunder or (ii) increases the commitment to make such future advances;

(d) releases any Obligor from its obligations under such Loan Agreement or the related loan documents or permits an Obligor to assign or transfer its rights and obligations under such Loan Agreement or the related loan documents (in each case other than as expressly contemplated by such loan documents);

(e) releases any material Underlying Collateral for such Portfolio Asset (other than by the granting of Permitted Liens) other than as set forth in such Loan Agreement or the related loan documents; or

(f) alters any provision requiring the pro rata treatment of such Portfolio Asset with pari passu obligations that has the effect of subordinating such Portfolio Asset or commitment in a manner that adversely impacts the holders thereof.

“Maturity Date” means the earlier to occur of (a) if the Extension Conditions (as defined below) have been satisfied, the seventh anniversary of the Closing Date, (b) if the Extension Conditions have not been satisfied, December 1, 2020, and (c) the date the Advances are accelerated after the occurrence and continuance of an Event of Default.  “Extension Condition” means that on or before October 31, 2020, the Borrower has obtained a rating for the credit facility evidenced by this Agreement of BBB or higher from a NRSRO and the Initial Lender has a received a copy of any rating letter issued in connection therewith.

“Maximum Quarterly LTV Percentage” means, as of any Determination Date occurring during the time periods set forth in column (1) below, the percentage of LTV set forth in the corresponding column (2) below:

(1) Determination Date occurs:	(2) Maximum Quarterly LTV Percentage:
After the closing Date and before the fifth anniversary of the Closing Date	55%
On or after the fifth anniversary of the Closing Date and prior to July 31, 2026	20%
On or after July 31, 2026	0%

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate of the Borrower contributed or had any obligation to contribute on behalf of its employees at any time during the current year or the preceding five years.

“NRSRO” means a Nationally Recognized Statistical Rating Organization acceptable to the Initial Lender.

“Note” has the meaning assigned to that term in Section 2.03(a).

“Notice of Borrowing” means a written notice of borrowing from the Borrower to the Administrative Agent and Initial Lender substantially in the form of Exhibit B.

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“Notice of Exclusive Control” has the meaning assigned to that term in the Account Control Agreement.

“Obligations” means all present and future indebtedness and other liabilities and obligations (howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or due or to become due) of the Borrower to the Lenders, the Administrative Agent, the Collateral Custodian, the Facility Servicer or any other Secured Party arising under this Agreement or any other Transaction Document and shall include all liability for principal of and interest on the Advances, Fees, indemnifications and other amounts due or to become due by the Borrower to the Lenders, the Administrative Agent, the Collateral Custodian, the Facility Servicer and any other Secured Party under this Agreement or any other Transaction Document, including any Fee Letter and costs and expenses payable by the Borrower to the Lenders, the Administrative Agent, the Collateral Custodian, the Facility Servicer or any other Secured Party, including reasonable attorneys’ fees, costs and expenses, including interest, fees and other obligations that accrue after the commencement of an insolvency proceeding (in each case whether or not allowed as a claim in such insolvency proceeding).

“Obligor” means, collectively, each Person obligated to make payments under a Loan Agreement, including any guarantor thereof.

“Opco” means Appleton Hotel Leasing, LLC.

“Opco/Propco Guaranty Agreement” means the Guaranty, dated as of April 1, 2022, by Opco and Propco in favor of the Secured Parties.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such 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 payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Transaction Document, or sold or assigned an interest in any Advance or Commitment).

“Other Taxes” means any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes payable or determined to be payable to any Governmental Authority that arise from any payment made under, the execution, delivery, performance, enforcement or registration of, from receipt or perfection of a security interest under, filing and recording of this Agreement, or any other Transaction Documents, or otherwise in connection with this Agreement or any other Transaction Document, except any such Other Connection Taxes imposed with respect to an assignment.

“Participant Register” has the meaning assigned to that term in Section 2.03(c).

“Participation Agreement” means, for any Portfolio Asset that consists of a loan participation interest, any agreement pursuant to which the Borrower participates in the Underlying Loan Obligation for such Portfolio Asset in a form reasonably agreed to by the Borrower and the Majority Lenders.

“Payment Date” means (a) the eighth (8th) Business Day after the tenth (10th) calendar day of each calendar month and (b) the Maturity Date.

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“Payment Date Report” means a report from the Facility Servicer substantially in the form of Exhibit D.

“Pension Plan” has the meaning assigned to that term in Section 4.01(r).

“Permitted Liens” means any of the following:  (a) Liens for Taxes if such Taxes shall not at the time be due or if a Person shall currently be contesting the validity thereof in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of such Person; (b) Liens imposed by law, such as materialmen’s, warehousemen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens, arising by operation of law in the ordinary course of business for sums that are not overdue or are being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of the applicable Person; (c) Liens granted pursuant to or by the Transaction Documents; (d) judgment Liens arising solely as a result of the existence of judgments, orders, or awards that do not constitute an Event of Default; (e) with respect to the Underlying Collateral for any Portfolio Asset, (i) Liens in favor of the lenders, lead agent, administrative agent, collateral agent or similar agent for the benefit of all holders of indebtedness relating to such Portfolio Asset (or the Underlying Loan Obligation as applicable) and (ii) ”permitted liens” as defined in the Loan Agreement for such Portfolio Asset or such comparable definition if “permitted liens” is not defined therein; (f) Liens routinely imposed on cash or securities by the Account Bank or the securities custodian, to the extent permitted under the Account Control Agreement or Custodial Securities Account Agreements, as applicable; and (g) Liens consisting of restrictions on transfer of a Portfolio Asset or rights of set-off or withholding set forth in the underlying Loan Agreement.

“Permitted REO Subsidiaries” means (i) any wholly owned Subsidiary of Borrower or (ii) any subsidiary owned jointly by the Borrower and a TRS Subsidiary, in each case as permitted under Sections 4.01(n) and 5.02(b), as applicable.

“Permitted REO Sub Guaranty Agreement” means any Guaranty by a Permitted REO Subsidiary in favor of the Secured Parties, in form and substance substantially similar to the Guaranty, dated as of May 25, 2021, by Exantas Phili Holdings, LLC in favor of the Secured Parties.

“Person” means an individual, partnership, corporation (including a statutory or business trust), limited liability company, joint stock company, trust, unincorporated association, sole proprietorship, joint venture, government (or any agency or political subdivision thereof) or other entity.

“Platform” has the meaning assigned to that term in Section 11.23.

“Pledge and Guaranty Agreement” means any Pledge and Guaranty Agreement between any TRS Subsidiary in favor of the Secured Parties, in form and substance similar to the Pledge and Guaranty Agreement, dated as of August 16, 2021, by Acres Real Estate TRS 9 LLC in favor of the Secured Parties.

“Pledged Equity” (i) with respect to the equity of the Borrower, has the meaning assigned to that term in Section 2.09(b) and (ii) with respect to the equity of any Permitted REO Subsidiary, Opco, and Propco (a) all investment property and general intangibles consisting of the ownership, equity or other similar interests in the such entity, including such entity’s limited liability company interests; (b) all certificates, instruments, writings and securities evidencing the foregoing; (c) the operating agreement and other organizational documents of such entity and all options or other rights to acquire any

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membership or other interests under such operating agreement or other organizational documents; (d) all dividends, distributions, capital, profits and surplus and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing; (e) all books, records and other written, electronic or other documentation in whatever form maintained now or hereafter by or for the Borrower or any TRS Subsidiary, as applicable in connection with, and relating to, the ownership of, or evidencing or containing information relating to, the foregoing; and (f) all proceeds, supporting obligations and products of any of the foregoing.

“Portfolio Asset” means any loan interest, loan participation interest, real estate owned real property, Eligible Ground Lease, or preferred equity interests owned by or Transferred to the Borrower, any Permitted REO Subsidiary, or Propco, as permitted under this Agreement, in each case free and clear of any Indebtedness or Lien, other than Permitted Liens, which loan interest, loan participation interest, real estate owned real property, Eligible Ground Lease, or preferred equity interests includes (a) the Portfolio Asset File therefor and (b) all right, title and interest in and to (i) such loan interest, the related Loan Agreement and any Underlying Collateral, (ii) such loan participation interest, the related Participation Agreement and, subject to the terms thereof, the related Loan Agreement and any Underlying Collateral, (iii) such real estate owned real property, (iv) such Eligible Ground Lease, and (v) such preferred equity interest, any distributions in connection therewith and the related documentation executed or delivered in connection with the issuance thereof.

“Portfolio Asset Assignment” means an assignment, participation agreement or other agreement pursuant to which any Portfolio Asset not originated by the Borrower is Transferred to the Borrower in a form of Exhibit I hereto or any other form reasonably agreed to by the Borrower and the Initial Lender.

“Portfolio Asset Checklist” means, with respect to each Portfolio Asset, a checklist of all of the agreements, documents and instruments executed or delivered in connection with the origination and acquisition of such Portfolio Asset, substantially in the form of Exhibit K hereto, as prepared by the Borrower or the Portfolio Asset Servicer on its behalf.

“Portfolio Asset File” means, with respect to each Portfolio Asset, a file containing each of the agreements, instruments, certificates and other documents and items set forth on the Portfolio Asset Checklist with respect to such Portfolio Asset.

“Portfolio Asset Servicer” means ACRES Capital Servicing LLC, not in its individual capacity, but in its capacity as portfolio asset servicer pursuant to the terms of this Agreement, together with its successors and permitted assigns, including any successor appointed pursuant to Article VIII.

“Pro Rata Share” means, with respect to any Lender, the ratio of such Lender’s Commitment to the aggregate Commitments of all Lenders.

“Proceeds” means, with respect to the Collateral, all property that is receivable or received when such Collateral is collected, sold, liquidated, foreclosed, exchanged, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes all rights to payment with respect to any insurance relating to such Collateral.

“Propco” means Appleton Hotel Holdings, LLC.

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“Quarterly LTV Certificate” means a certificate setting forth the calculation of LTV and Total Portfolio Value as of the applicable date of determination, substantially in the form of Exhibit E, prepared by the Borrower.

“Recipient” means the Administrative Agent, any Lender or the Collateral Custodian, as applicable.

“Records” means all documents relating to the Portfolio Assets, including books, records and other information executed in connection with the maintenance of the Portfolio Assets in the Collateral Portfolio or maintained with respect to the Collateral Portfolio and the related Obligors that the Borrower or the Portfolio Asset Servicer has generated, or in which the Borrower has otherwise obtained an interest.

“Recoveries” means, as of the time any Underlying Collateral for any Portfolio Asset is Sold, discarded or abandoned (after a determination by the Portfolio Asset Servicer, the Counterparty Lender, Underlying Agent or Underlying Servicer, as applicable, that such Underlying Collateral has little or no remaining value) or otherwise determined to be fully liquidated by the Portfolio Asset Servicer or such Counterparty Lender, Underlying Agent or Underlying Servicer, the proceeds from the Sale of such Underlying Collateral, the proceeds of any related Insurance Policy or any other recoveries (including interest proceeds recovered) with respect to such Underlying Collateral and amounts representing late fees and penalties, net of any amounts received that are required under the Loan Agreement for the applicable Portfolio Asset to be refunded to the related Obligor.

“Register” has the meaning assigned to that term in Section 2.03(b).

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“Related Portfolio Assets” means all Portfolio Assets owned by the Borrower, together with all proceeds thereof and other assets or property related thereto, including all right, title and interest of the Borrower in and to:

(a) subject to the terms of any applicable Participation Agreement, any amounts on deposit in any cash reserve, collection, custody or lockbox accounts securing the Portfolio Assets;

(b) all rights with respect to the Portfolio Assets to which the Borrower is entitled as lender under the applicable Loan Agreement or as a loan participant under the applicable Participation Agreement;

(c) subject to the terms of any applicable Participation Agreement, any Underlying Collateral securing the Portfolio Assets and all Recoveries related thereto, all payments paid in respect thereof and all monies due, to become due and paid in respect thereof, and all net liquidation proceeds;

(d) the Portfolio Asset Files related to the Portfolio Assets, any Records, and the documents, agreements, and instruments included in such Portfolio Asset Files or Records;

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(e) subject to the terms of any applicable Participation Agreement, all Liens, guaranties, indemnities, warranties, letters of credit, accounts, bank accounts and property subject thereto from time to time purporting to secure or support payment of the Portfolio Assets (or the Underlying Loan Obligations, as applicable), together with all UCC financing statements, mortgages or similar filings signed or authorized by an Obligor relating thereto;

(f) each Portfolio Asset Assignment with respect to such Portfolio Assets (including any rights of the Borrower against the Transferor thereunder) and the assignment to the Administrative Agent, for the benefit of the Secured Parties, of all UCC financing statements, if any, filed by the Borrower against any Transferor under or in connection with such Portfolio Asset Assignment;

(g) the assignment to the Administrative Agent, for the benefit of the Secured Parties, of all UCC financing statements for the Portfolio Assets;

(h) all records (including computer records) with respect to the foregoing; and

(i) all Collections, income, payments, proceeds and other benefits of each of the foregoing.

“Release Date” has the meaning assigned to that term in Section 2.10(b).

“Replacement Servicer” has the meaning assigned to that term in Section 8.01(c).

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than an event for which the 30 day notice period has been waived.

“Reporting Date” means, with respect to a Payment Date, the 5th Business Day preceding such Payment Date or if such day is not a Business Day, the immediately preceding Business Day.

“Required Portfolio Documents” means, for each Portfolio Asset or Underlying Loan Obligation, as applicable, the following documents or instruments, all as specified on the related Portfolio Asset Checklist, to the extent applicable for such Portfolio Asset or Underlying Loan Obligation: copies of the executed (a) guaranty, if any, (b) loan agreement, (c) note purchase agreement, if any, (d) security agreement, (e) promissory note and (f) any certificates evidencing a preferred equity interest and the agreements, instruments or other documents executed or delivered in connection therewith, in each case as set forth on the Portfolio Asset Checklist.

“Responsible Officer” means, (a) when used with respect to the Administrative Agent or the Collateral Custodian any officer in the corporate trust office of the Administrative Agent or the Collateral Custodian, including any president, vice president, executive vice president, assistant vice president, treasurer, secretary, assistant secretary, corporate trust officer or any other officer thereof customarily performing functions similar to those performed by the individuals who at the time shall be such officers, respectively, or to whom any matter is referred because of such officer’s knowledge of or familiarity  with the particular subject, and, in each case, having direct responsibility for the administration of this Agreement and the other Transaction Documents to which such Person is a party; provided that any notices sent to the Administrative Agent or the Collateral Custodian in accordance with Section 11.02 shall be deemed to have been received by a Responsible Officer of the Administrative Agent or the Collateral

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Custodian, as applicable and (b) when used with respect to any other Person, any duly authorized person of such Person and, with respect to a particular matter, any other duly authorized person of such Person to whom such matter is referred because of such person’s knowledge of and familiarity with the particular subject, and in each case with direct responsibility for the administration of this Agreement.

“Restricted Junior Payment” means, with respect to the Borrower or Holdings, as applicable, (a) any dividend or other distribution, direct or indirect, on account of any class of membership interests of the Borrower or Holdings, as applicable, now or hereafter outstanding, except a dividend or other distribution paid solely in interests of that class of membership interests or in any pari passu or junior class of membership interests of the Borrower or Holdings, as applicable, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any class of membership interests of the Borrower or Holdings, as applicable, now or hereafter outstanding or (c) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire membership interests of the Borrower or Holdings, as applicable, now or hereafter outstanding.

“Review Criteria” has the meaning assigned to that term in Section 9.02(a)(i).

“Sale” has the meaning assigned to that term in Section 2.10(a) and both “Sold” and “Sell” have  corresponding meanings.

“Sanctioned Country” means a country or territory subject to a sanctions program maintained under any Sanctions and Anti-Terrorism Law (at the time of this Agreement, Cuba, Iran, North Korea, Syria and the Crimea region of Ukraine).

“Sanctioned Person” means (a) any Person included on a list of designated or restricted Persons maintained by OFAC (defined below) (including, without limitation, OFAC’s Specially Designated Nationals and Blocked Persons List and Sectoral Sanctions Identifications List), the U.S. Department of State, the United Nations Security Council, or any other relevant Governmental Authority, (b) any Person located, organized, or resident in a Sanctioned Country, or (c) any Person 50% or more owned, directly or indirectly, individually or in the aggregate, or controlled by any such Person or Persons described in clauses (a) or (b) above.

“Sanctions and Anti-Terrorism Laws” means any and all Applicable Laws relating to terrorism and economic or financial sanctions or trade embargoes administered or enforced by the U.S. Government (including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”)), the United Nations Security Council, or any other relevant Governmental Authority, and any regulation, order, or directive promulgated, issued or enforced pursuant to such applicable Laws, all as amended, supplemented or replaced from time to time.

“Scheduled Payment” means each scheduled payment of principal or interest required to be made by an Obligor on a Portfolio Asset or Underlying Loan Obligation, as applicable, as adjusted pursuant to the terms of the related Loan Agreement.

“Secured Party” means each of the Administrative Agent, each Lender (together with its permitted successors and assigns), each other Indemnified Party, the Facility Servicer and the Collateral Custodian; provided that in any context requiring a Secured Party to give direction to the Administrative

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Agent, such reference to Secured Party shall not include the Administrative Agent or the Collateral Custodian.

“Servicer Termination Event” means, with respect to an Applicable Servicer, the occurrence of any one or more of the following events:

(a) a Bankruptcy Event shall occur with respect to such Applicable Servicer;

(b) such Applicable Servicer shall assign its rights or obligations as “Facility Servicer” or “Portfolio Asset Servicer”, as applicable, hereunder (other than as expressly provided herein);

(c) any failure by such Applicable Servicer to observe or perform any covenant or other agreement of such Applicable Servicer set forth in this Agreement or the other Transaction Documents (other than actions with respect to which another clause of this definition expressly relates), which continues to be unremedied for a period of 30 days (if such failure can be remedied) after the earlier to occur of (i) the date on which written notice of such failure shall have been given to such Applicable Servicer by the Administrative Agent (acting at the direction of the Majority Lenders) or Borrower and (ii) the date on which a Responsible Officer of such Applicable Servicer acquires Knowledge thereof (or such extended period of time reasonably approved by Borrower not to exceed 60 days in the aggregate provided that such Applicable Servicer is diligently proceeding in good faith to cure such failure or breach); and

(d) any representation, warranty or certification made by such Applicable Servicer in any Transaction Document or in any certificate delivered pursuant to any Transaction Document shall prove to have been incorrect when made, which materially and adversely affects the interests of the Administrative Agent, Borrower or the Lenders.

“Servicer Termination Expenses” has the meaning assigned to that term in Section 8.01(b).

“Servicer Termination Notice” has the meaning assigned to that term in Section 8.01(b).

“Servicing Report” means a report from the Portfolio Asset Servicer substantially in the form of Exhibit C.

“Servicing Standard” means, with respect to any Portfolio Assets included in the Collateral Portfolio, to service and administer such Portfolio Assets on behalf of the Borrower in accordance with Applicable Law, the terms of this Agreement, the Loan Agreements and all customary and usual servicing practices for loans or loan participations like the Portfolio Assets.

“Specified CLO Asset” means each collateralized loan obligation in the loan obligations of the applicable Obligor that is owned by the Sponsor or a Subsidiary thereof (free and clear of any Indebtedness or Lien, other than Permitted Liens) and (a) described on Schedule II or (b) approved after the date of this Agreement in writing by the Initial Lender in its sole discretion.

“Sponsor” means Acres Capital Corp.

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“State” means one of the fifty states of the United States or the District of Columbia.

“Subordination Agreement” means any Subordination Agreement between Acres Realty Funding Inc. (or an Affiliate thereof acceptable to the Initial Lender) and the Administrative Agent, in form and substance similar to the Subordination Agreement, dated as of August 16, 2021, by Acres Realty Funding Inc. and the Administrative Agent.

“Subsidiary” means with respect to a person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such person.

“Taxes” means any present or future taxes, levies, imposts, duties, charges, deductions, withholdings (including backup withholding), assessments or fees of any nature (including interest, penalties, and additions thereto) that are imposed by any Governmental Authority.

“Third Amendment Effective Date” means August 16, 2021.

“Total Facility Amount” means $250,000,000, as reduced pursuant to Section 2.04(e).

“Total Portfolio Value” means, as of any date of determination, the aggregate Value of all Portfolio Assets and the Specified CLO Assets.

“Trade Date” has the meaning assigned to that term in Section 11.04(e).

“Transaction Documents” means this Agreement, any Note, the Account Control Agreement, the Fee Letters, each Assignment and Assumption Agreement, each Participation Agreement, the Custodial and Account Control Agreements, the Guaranty Agreement, each Permitted REO Sub Guaranty Agreement, each Pledge and Guaranty Agreement, each Subordination Agreement, the Opco/Propco Guaranty, the Leasehold Mortgage Documents, and each agreement, instrument, certificate or other document related to any of the foregoing.

“Transfer” means (a) the acquisition by, or the transfer or assignment to, the Borrower of an Eligible Portfolio Asset or other Related Portfolio Asset pursuant to a Portfolio Asset Assignment, Participation Agreement, the documentation executed or delivered in connection with the issuance of a preferred equity interest or otherwise in accordance with Section 3.04 or (b) the origination of an Eligible Portfolio Asset that is a loan interest by the Borrower pursuant to a Loan Agreement.

“Transferor” means, with respect to any Transfer pursuant to clause (a) of the definition thereof, the assignor of an Eligible Portfolio Asset under a Portfolio Asset Assignment, Participation Agreement, the documentation executed or delivered in connection with the issuance of a preferred equity interest or otherwise in accordance with Section 3.04.

“TRS” means Exantas Real Estate TRS Inc.

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“TRS Subsidiary” means any wholly owned subsidiary of TRS that jointly owns with the Borrower any Permitted REO Subsidiary as permitted under Sections 4.01(n) and 5.02(b), including Acres Real Estate TRS 9 LLC.

“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

“Underlying Agent” means, with respect to a Portfolio Asset, the administrative agent or other similar agent for the lenders party to the Loan Agreement for such Portfolio Asset.

“Underlying Collateral” means, with respect to a Portfolio Asset, any property or other assets pledged or mortgaged as collateral to secure repayment of such Portfolio Asset or the Underlying Loan Obligation for such Portfolio Asset, as applicable, including, mortgaged property and all proceeds from any sale or other disposition of such property or other assets.

“Underlying Loan Obligation” means, with respect to a Portfolio Asset consisting of a loan participation or a Specified CLO Asset, the loan obligations of any applicable Obligor in which such Portfolio Asset is participating or such Specified CLO Asset has been issued.

“Underlying Obligor Default” means, with respect to any Portfolio Asset the occurrence of one or more of the following events (any of which, for the avoidance of doubt, may occur more than once):

(a) an Obligor payment default in respect of principal or interest has occurred and is continuing under such Portfolio Asset (after giving effect to any grace or cure period set forth in the applicable Loan Agreement);

(b) any other event of default or similar event or circumstance under the Loan Agreement for such Portfolio Asset for which the Borrower (or agent or required lenders pursuant to the applicable Loan Agreement, as applicable) has elected to exercise any of its rights and remedies (excluding rights and remedies related to notices of default or reservation of rights, forbearances, imposition of reserves or any actions to perfect Liens on the Underlying Collateral) to enforce such Portfolio Asset (including the acceleration of the loan relating thereto); or

(c) a Bankruptcy Event occurs with respect to any related Obligor.

“Underlying Servicer” means, with respect to a Portfolio Asset consisting of a loan participation, any sub-agent or servicer appointed by the Underlying Agent or trustee or similar agent for such Portfolio Asset to administer and service the Underlying Loan Obligations for such Portfolio Asset.

“United States” means the United States of America.

“Unmatured Event of Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Valuation Policy” means the Sponsor’s “Fair Value Disclosure” as of the date hereof, as delivered to pursuant to Section 3.01(c), and as may be amended, if required under Section 5.02(p), with the consent of the Initial Lender.

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“Value” means (a) with respect to any Eligible Portfolio Asset as of any date of determination, the most recent internal valuation of such Portfolio Asset by the Borrower in accordance with the Valuation Policy and (b) with respect to any Specified CLO Asset as of any date of determination, the valuation of such Specified CLO Asset as determined, at the sole option of the Borrower, by (x) an independent nationally recognized third-party collateralized loan obligation valuation firm (such as Duff & Phelps) engaged by the Borrower and reasonably approved by the Initial Lender using a discounted cash flow model and such assumptions that are customary and reasonable for such a model or (y) the Borrower or the Portfolio Asset Servicer using a discount cash flow model and assuming 42% severity, 2.0% constant default rate, 0% constant prepayment rate and initial loan maturity; provided that with respect to any Portfolio Asset or Specified CLO Asset to which there has been a Material Modification or Material CLO Modification, as applicable, to which the applicable Lenders have not consented pursuant to the terms hereof, such Portfolio Asset or Specified CLO Asset shall be valued as provided in Section 2.04(b).

“Wells Fargo” means Wells Fargo Bank, National Association, not in its individual capacity, but in its capacity as Administrative Agent, Account Bank and Collateral Custodian, in all cases pursuant to the terms of this Agreement.

Section 1.02Other Terms

.  All accounting terms used but not specifically defined herein shall be construed in accordance with GAAP.  All terms used in Article 9 of the UCC in the State of New York, and used but not specifically defined herein, are used herein as defined in such Article 9.

Section 1.03Computation of Time Periods

.  Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

Section 1.04Interpretation

.  In each Transaction Document, unless a contrary intention appears:

(a)the singular number includes the plural number and vice versa;

(b)reference to any Person includes such Person’s successors and assigns but only if such successors and assigns are not prohibited by the Transaction Documents;

(c)reference to any gender includes each other gender;

(d)reference to day or days without further qualification means calendar days;

(e)the term “or” is not exclusive;

(f)reference to the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;

(g)reference to any agreement (including any Transaction Document), document or instrument means such agreement, document or instrument as amended, modified, waived, supplemented, restated or replaced and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of the other Transaction Documents, and reference to any promissory note includes any promissory note that is an extension or renewal thereof or a substitute or replacement therefor;

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(h)reference to any Applicable Law means such Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any Section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such Section or other provision;

(i)if payment or performance of any obligation of the Borrower hereunder is due on a date which is not a Business Day, the required date for payment or performance shall be the next Business Day; and

(j)unless otherwise specified, all references herein to times of day shall be references to New York City time (daylight or standard, as applicable).

Section 1.05Changes in GAAP.  If any Obligor notifies the Administrative Agent that such Obligor requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies any Obligor that the Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

Section 1.06Advances to Constitute Loans

.  Notwithstanding any provision herein to the contrary, the parties hereto intend that the Advances made hereunder constitute a “loan” and not a “security” for purposes of Section 8-102(15) of the UCC.

ARTICLE II.
THE FACILITY

Section 2.01Advances

.  On the terms and conditions hereinafter set forth, each Lender, severally and not jointly, shall make Advances to the Borrower as the Borrower may request at its option from time to time on any Business Day during the Availability Period in an amount which after giving effect to such Advances (a) would not cause the aggregate Advances made hereunder (without giving effect to any repayment or prepayment thereof) to exceed the Total Facility Amount and (b) would not cause the Advances Outstanding to exceed the Borrowing Base (after giving effect to such Advance and any Transfer effectuated from the use of proceeds thereof).  Notwithstanding anything contained in this Section 2.01 or elsewhere in this Agreement to the contrary, no Lender is obligated to make any Advance in an amount that would, after giving effect to such Advance, exceed such Lender’s Commitment less the aggregate outstanding amount of any Advances funded by such Lender.  Each Advance to be made hereunder shall be made by the Lenders in accordance with their respective Pro Rata Shares.  Subject to the terms and conditions hereof, the Borrower may borrow, repay and reborrow Advances hereunder during the Availability Period.

Section 2.02Procedure for Advances.

(a)The Borrower shall request an Advance by delivery of a Notice of Borrowing to the Administrative Agent and Lenders, with a copy to the Facility Servicer, no later than 2:00 p.m. two Business

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Days immediately prior to the proposed date of such Advance (or such shorter period of time agreed to by the Lenders and the Administrative Agent in their sole discretion); provided that if the proposed date of the initial Advance is the Closing Date, the Notice of Borrowing with respect to the initial Advance may be delivered on the Closing Date.  Each Notice of Borrowing must be accompanied by a duly completed Quarterly LTV Certificate (updated to the date such Advance is requested and giving pro forma effect to the Advance requested and the use of the proceeds thereof) and certify:

(i) the amount of such Advance, which must be at least equal to $250,000;

(ii) that such Advance would not cause (A) the aggregate Advances made hereunder (without giving effect to any repayment or prepayment thereof) to exceed the Total Facility Amount or (B) the Advances Outstanding to exceed the Borrowing Base (after giving effect to such Advance and any Transfer effectuated from the use of proceeds thereof) and a calculation of the Borrowing Base as of such date has been included in the Notice of Borrowing with respect to such Advance;

(iii) the proposed date of such Advance (which must be a Business Day);

(iv) detailed instructions as to where the proceeds of such Advance are to be deposited or transferred; and

(v) all conditions precedent for such Advance described in Article III have been satisfied or will be satisfied on the proposed date of such Advance.

(b)Promptly upon receipt of a Notice of Borrowing, the Administrative Agent shall notify the Lenders of the requested Advance and each Lender shall make the Advance on the terms and conditions set forth herein.  On the date of each Advance, upon satisfaction of the applicable conditions set forth in Article III, each Lender shall, in accordance with instructions received by the Administrative Agent from the Borrower, make available to the Borrower, in same day funds, an amount equal to such Lender’s Pro Rata Share of such Advance, by payment into the account which the Borrower has designated in writing.  Any funds held by the Administrative Agent shall be held uninvested.

(c)The obligation of each Lender to remit its Pro Rata Share of any Advance is several from that of each other Lender and the failure of any Lender to so make such amount available to the Borrower shall not relieve any other Lender of its obligations hereunder.  In no event shall the Administrative Agent have any liability or obligation to fund any Advance.

Section 2.03Evidence of Debt

.  

(a)If requested by a Lender, the Borrower shall deliver to the Lender a duly executed Note payable to such Lender and its registered assigns (the “Note”) in substantially the form of Exhibit A.

(b)The Administrative Agent shall maintain, solely for this purpose as the agent of the Borrower, at its address referred to in Section 11.02 a copy of each Assignment and Assumption Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders, the Commitments of, and principal amounts of (and stated interest on) the Advances owing to each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the

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Administrative Agent, each Lender and the other parties hereto shall treat each person whose name is recorded in the Register as a Lender under this Agreement for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.  

(c)Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts of (and stated interest on) each participant’s interest in the Advances, loans or other obligations under the Transaction Documents (the “Participant Register”); provided that (a) no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any Advances, commitments, loans or its other obligations under any Transaction Document) to any Person except to the extent that such disclosure is necessary to establish that such Advances, commitment, loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations and (b) the Administrative Agent shall have no liability or obligation to make determinations with respect to the rights of Participants hereunder.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

Section 2.04Repayment

.  

(a)The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of all outstanding Advances, together with all accrued and unpaid interest thereon.  The Borrower shall also repay the outstanding principal amount of the Advances as provided in Section 2.08.  The Borrower may not prepay Advances except as provided by this Section 2.04 and Section 2.08.  

(b)Unless consent is obtained with respect to a Material Modification or a Material CLO Modification as provided in Section 5.01(e)(i), the Value of the Portfolio Asset or Specified CLO Asset subject to such Material Modification or Material CLO Modification, as the case may be, for purposes of calculating the Value of such Portfolio Asset or Specified CLO Asset and Total Portfolio Value and determining whether a Cash Trap Event has occurred will be:

(i) with respect to a Material Modification, (A) reduced by 50% until the later of (1) the date occurring 90 days after such Material Modification and (2) the date the Value of such Portfolio Asset is determined after such Material Modification by an independent nationally recognized third-party valuation firm engaged by the Borrower and reasonably approved by the Initial Lender, in each case at the Borrower’s own expense and as part of the Borrower’s valuation procedures and (B) thereafter equal to the value of such Portfolio Asset as determined after such Material Modification by such independent nationally recognized third-party valuation firm (as such valuation may be updated thereafter); and

(ii) with respect to a Material CLO Modification, reduced to zero.

The Borrower acknowledges that the reduction of the Value of a Portfolio Asset or Specified CLO Asset pursuant to this Section 2.04(b) may cause a Cash Trap Event and result in repayments of the Advances Outstanding as required by Section 2.08.

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(c)The Borrower may at any time prepay the Advances Outstanding, in whole or in part, without premium or penalty at the option of the Borrower, in a minimum amount of at least $1,000,000 (for prepayments in part made when the Advances Outstanding are more than $1,000,000), by delivering a notice of such prepayment to the Administrative Agent, with a copy to Initial Lender, at least one Business Day, or in the case of any prepayment in whole, at least three Business Days, prior to such prepayment.

(d)Upon any prepayment of Advances Outstanding pursuant to this Section 2.04, the Borrower shall also pay in full any accrued and unpaid interest, any prepayment fee and all costs and expenses of the Secured Parties related to such Advances then due and payable.  The Administrative Agent shall apply amounts received from the Borrower pursuant to this Section 2.04 to the pro rata payment of all accrued and unpaid interest with respect to such Advances and all due and payable costs and expenses of the Secured Parties related to such Advances until paid in full and thereafter to prepay such Advances Outstanding.

(e)The Borrower may, upon notice to the Administrative Agent, with a copy to Initial Lender, terminate the Commitments, or from time to time reduce the Commitments; provided that (x) each such notice shall be in writing and must be received by the Administrative Agent at least three (3) Business Days prior to the effective date of such termination or reduction, (y) any such partial reduction shall be in an aggregate amount of $1,000,000 and (z) the Borrower shall not terminate or reduce the Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Advances Outstanding would exceed the total Commitments; provided that (1) the Borrower may not terminate or reduce the Commitments in whole or in part prior to the six month anniversary of the Closing Date and (2) on and after the six month anniversary of the Closing Date and prior to the 12 month anniversary of the Closing Date, the Borrower may not terminate or reduce the Commitments in  whole or in part unless the Borrower pays a commitment termination or reduction fee in an amount equal to 1.0% of the aggregate Commitments being terminated or reduced.  The Administrative Agent will promptly notify the Lenders of any termination or reduction of the Commitments pursuant to this Section 2.04(e).  Upon any reduction of Commitments, the Commitment of each Lender shall be reduced by such Lender’s ratable share of the amount of such reduction.

(f)If the Leasehold Mortgage Event occurs, the Borrower shall, on the next Business Day immediately after the occurrence of such Leasehold Mortgage Event, repay any Advances Outstanding, without premium or penalty, in an amount equal to the amount of Advances made to the Borrower in connection with the Appleton Lease, as determined by the Initial Lender in their sole discretion but not to exceed $20,300,000.  

Section 2.05Interest and Fees

.  

(a)The Borrower shall pay interest on the outstanding principal amount of the Advances at a rate per annum equal to 5.75%.  Interest is payable on each Payment Date as and to the extent provided in Section 2.08.  If accrued and unpaid interest is not paid in full on a Payment Date, the Borrower shall pay additional interest on such accrued and unpaid interest at the same rate per annum as the Borrower pays on the Advances, such additional interest being payable on each Payment Date as and to the extent provided in Section 2.08.

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(b)If any amount payable by the Borrower under this Agreement or any other Transaction Document is not paid when due, whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at the Default Rate.  Upon the request of the Majority Lenders, while any Event of Default pursuant to Section 6.01(a) or (d) exists, the Borrower shall pay interest on the principal amount of all Advances outstanding hereunder at the Default Rate.

(c)Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Advance, together with all fees, charges and other amounts that are treated as interest on such Advance under Applicable Law (collectively, “charges”), exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lenders holding such Advance in accordance with Applicable Law, the rate of interest payable in respect of such Advance hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum Rate.  To the extent lawful, the interest and charges that would have been paid in respect of such Advance but were not paid as a result of the operation of this Section 2.05(c) shall be cumulated and the interest and charges payable to such Lender in respect of other Advance or periods shall be increased (but not above the amount collectible at the Maximum Rate therefor) until such cumulated amount shall have been received by such Lender.  Any amount collected by such Lender that exceeds the maximum amount collectible at the Maximum Rate shall be applied to the reduction of the principal balance of such Advance or refunded to the Borrower so that at no time shall the interest and charges paid or payable in respect of such Advance exceed the maximum amount collectible at the Maximum Rate.

(d)During the Availability Period, for any day on which the Advance Outstanding on the applicable day is less than 75% of the aggregate Commitment at such time, the Borrower shall pay an unused commitment fee (an “Unused Commitment Fee”) on the unused amount of the aggregate Commitment at such time, if any, which shall accrue at a rate per annum equal to 0.50%.  Accrued Unused Commitment Fees are payable in arrears on each Payment Date, commencing on the first such date to occur after the Closing Date, as provided in Section 2.08.  All Unused Commitment Fees are fully earned and nonrefundable upon payment.  

(e)The Borrower shall pay the fees set forth in the Fee Letters on the term and conditions provided therein.

(f)All computations of interest and fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed.

Section 2.06Payments and Computations, Etc.

(a)All amounts to be paid or applied by the Facility Servicer from amounts received on the Portfolio Assets in the applicable Collection Account, on Borrower’s behalf, hereunder and in accordance with this Agreement shall be paid or applied in accordance with the terms hereof so that funds are received by the Lenders no later than 2:00 p.m. on the day when due in lawful money of the United States in immediately available funds to the account specified in writing by the Administrative Agent to the Facility Servicer.  Any Obligation hereunder shall not be reduced by any distribution of any portion of Collections if at any time such distribution is rescinded or required to be returned by any Lender to the Borrower, the Facility Servicer or any other Person for any reason.

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(b)Other than as otherwise set forth herein, whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time is reflected in the computation of interest and fees.

(c)To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Bankruptcy Law or otherwise, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred and (ii) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent.

Section 2.07Collections and Allocations

.  

(a)The Borrower or the Portfolio Asset Servicer on the Borrower’s behalf shall direct the Obligors and, if applicable, any agent, administrative agent, Underlying Servicer or issuer for any Portfolio Asset to remit all Collections payable to the Borrower with respect to such Portfolio Asset directly to the Collection Account.

(b)The Borrower and the Portfolio Asset Servicer shall, and shall cause its Affiliates to, deposit all Collections received by it or its Affiliates with respect to the Collateral Portfolio to the Collection Account within two Business Days after receipt and shall, and shall cause its Affiliates to, hold in trust for the benefit of the Administrative Agent, for the benefit of the Secured Parties, all such Collections until so deposited.  

(c)Upon receipt of Collections in the Collection Account, the Portfolio Asset Servicer shall promptly identify any Collections received as being principal, Interest Collections or Excluded Amounts.  The Portfolio Asset Servicer shall further include a statement as to the amount of principal, Interest Collections or Excluded Amounts on deposit in the Collection Account on each Reporting Date in the Servicing Report delivered pursuant to Section 8.08(a).  The Portfolio Asset Servicer shall take commercially reasonable steps to confirm that only funds constituting Collections relating to Portfolio Assets are deposited into the Collection Account.

(d)Notwithstanding the fact that Excluded Amounts (other than items described in clauses (iii) and (iv) of the definition thereof) are part of the Collateral Portfolio and constitute Portfolio Assets, prior to the delivery of a Notice of Exclusive Control by the Administrative Agent to the Facility Servicer and Account Bank in accordance with the terms of the Account Control Agreement, the Facility Servicer may (on behalf of the Borrower and at the direction of the Portfolio Asset Servicer) withdraw from the Collection Account any deposits thereto constituting Excluded Amounts if the Portfolio Asset Servicer has, prior to such withdrawal, identified to the Facility Servicer such Excluded Amounts and deliver such Excluded Amounts to the Borrower or as the Borrower may direct.  After the delivery of a Notice of Exclusive Control in accordance with the terms of the Account Control Agreement, the Administrative

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Agent, upon written direction from the Majority Lenders, may withdraw from the Collection Account any deposits therein constituting Excluded Amounts.

(e)Except as set forth in clause (d) above, neither the Borrower nor the Portfolio Asset Servicer shall have any rights of withdrawal with respect to amounts held in the Collection Account.

(f)Notwithstanding anything in this Agreement to the contrary, the Borrower and the Portfolio Asset Servicer on the Borrower’s behalf shall cause the Collateral Portfolio to be serviced by Underlying Servicers such that there will be no more than ten deposits of Collections to the Collection Account between Payment Dates.  Without limiting the Borrower’s and the Portfolio Asset Servicer’s obligations in the preceding sentence, if either (i) the Borrower or the Portfolio Asset Servicer on the Borrower’s behalf anticipate that more than ten deposits will be made to the Collection Account between Payment Dates or (ii) more than ten deposits are made to the Collection Account between any Payment Dates, then the Borrower shall open a deposit account (the “Excess Collections Account”) with a financial institution reasonably acceptable to the Facility Servicer.  The Administrative Agent shall have a perfected first priority Lien on the Excess Collections Account pursuant to an account control agreement acceptable to the Administrative Agent and the Facility Servicer.  If the Borrower has opened the Excess Collections Account as required pursuant to this Section 2.07(f), then the Borrower and the Portfolio Asset Servicer on the Borrower’s behalf shall thereafter cause deposits of Collections in excess of ten between Payment Dates to be made to the Excess Collections Account and the account control agreement governing the Excess Collections Account shall require that all amounts on deposit therein shall be swept to the Collection Account on each Reporting Date.

Section 2.08Remittance Procedures

.  With respect to Section 2.08(a), on each Payment Date, the Facility Servicer, on behalf of the Borrower, shall instruct the Account Bank to remit funds on deposit in the Collection Account as described in this Section 2.08 and in accordance with the Payment Date Report and shall instruct the Administrative Agent to apply such funds as described in this Section 2.08 and in accordance with the Payment Date Report, such funds to be received by the Administrative Agent no later than 12:00 p.m. on each Payment Date; provided that, at any time after delivery of Notice of Exclusive Control pursuant to the terms of the Account Control Agreement, the Administrative Agent shall instruct the Account Bank to remit funds on deposit in the Collection Account to the Administrative Agent as described in this Section 2.08.

(a)Collections.  So long as no Event of Default has occurred and is continuing, the Facility Servicer (on behalf of the Borrower) shall (as directed pursuant to the first paragraph of this Section 2.08) instruct the Account Bank to transfer Collections held by the Account Bank in the Collection Account, in accordance with the Payment Date Report, and shall instruct the Administrative Agent to distribute such funds to the following Persons in the following amounts, calculated as of the most recent Determination Date, subject to the minimum balance requirement included in the Account Control Agreement, in the following order and priority, with respect to Collections:

(i) first, to the Borrower for payment of Borrower Taxes, registration and filing fees and operating expenses then due and owing by the Borrower that are attributable solely to the operations of the Borrower; provided that transfers from the Account Bank for registration and filing fees and operating expenses payable pursuant to this clause (i) shall not, individually or in the aggregate, exceed (A) $75,000 in any calendar quarter and (B) $200,000 in any calendar year;  

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(ii) second, to the Administrative Agent for the ratable distribution to the Administrative Agent and the Collateral Custodian in payment in full for all accrued fees, expenses and indemnities due and payable to such party hereunder or under any other Transaction Document and under the Fee Letters and Schedule XI;

(iii) third, to the Facility Servicer in payment in full for all accrued fees, expenses and indemnities due and payable to the Facility Servicer hereunder or under any other Transaction Document and under the Fee Letters;

(iv) fourth, to the Administrative Agent for the ratable distribution to the Lenders in payment in full for all accrued fees, expenses and indemnities due and payable to such party hereunder or under any other Transaction Document and under the Fee Letters;

(v) fifth, to the Administrative Agent for distribution to each Lender to pay such Lender’s Pro Rata Share of accrued and unpaid interest owing to such Lender under this Agreement (including any such accrued and unpaid interest or fees from a prior period);

(vi) sixth, if no Event of Default or Cash Trap Event has occurred and is continuing, to the Borrower or as the Borrower may direct (including to make a Restricted Junior Payment to Holdings or for Holdings to make a Restricted Junior Payment to its member or members), an amount equal to the lesser of (a) an amount equal to the minimum amount necessary for the Sponsor to maintain its status as a real estate investment trust for U.S. federal income tax purposes and to avoid income and excise tax under Section 857 and 4981 of the Code (after giving effect to any other available funds of the Sponsor and its Affiliates) as specified in the Servicing Report delivered pursuant to Section 8.08(a) for the most recent Reporting Date and (b) the amount by which Interest Collections exceed the required payments and distributions in clauses (a)(i) through (a)(iv) inclusive;

(vii) seventh, first to the Administrative Agent and the Collateral Custodian for any amounts not paid pursuant to clause (ii) above and second, to the Administrative Agent for distribution to each other Secured Party to pay any other Obligations (other than the principal of the Advances) that are then due and owing to such Secured Party;

(viii) eighth, if a Cash Trap Event has occurred and is continuing, to the Administrative Agent for distribution to each Lender to repay such Lender’s Pro Rata Share of the Advances Outstanding until (A) if such Cash Trap Event arises under clause (a) of the definition thereof, the Advances Outstanding are repaid to an amount where LTV, when recalculated giving effect to such repayment, is equal to the applicable Maximum Quarterly LTV Percentage at the time of such Payment Date or (B) if such Cash Trap Event arises under clauses (b), (c) or (d) of the definition thereof, the Advances Outstanding are paid in full (it being understood that such amount may be only a portion of the outstanding amount with respect to the Advances); and

(ix) ninth, if no Cash Trap Event has occurred and is continuing or would result after giving effect to the payment under this clause (vii), to the Borrower or as the Borrower may direct (including to make a Restricted Junior Payment to Holdings or for Holdings to make a Restricted Junior Payment to its member or members).

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(b)Insufficiency of Funds.  If the funds on deposit in the Collection Account are insufficient to pay any amounts otherwise due and payable on a Payment Date or otherwise, the Borrower nevertheless remains responsible for, and shall pay when due, all amounts payable under this Agreement and the other Transaction Documents in accordance with the terms of this Agreement and the other Transaction Documents, together with interest accrued as set forth in Section 2.05(b) from the date when due until paid hereunder.

(c)Application of Payments after an Event of Default.  Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent (acting at the direction of the Majority Lenders) may direct the Facility Servicer not to apply the collections in accordance with this Section 2.08(c) and instead may instruct the Account Bank to transfer all Collections in the Collection Account to be applied, subject to the minimum balance requirement included in the Account Control Agreement, in the following order and priority:

(i) first, to the Administrative Agent for the ratable distribution to the Administrative Agent and the Collateral Custodian in payment in full for all accrued fees, expenses and indemnities due and payable to such party hereunder or under any other Transaction Document and under the Fee Letters and Schedule XI;

(ii) second, to the Facility Servicer in payment in full for all accrued fees, expenses and indemnities due and payable to Facility Servicer hereunder or under any other Transaction Document or under the Fee Letters;

(iii) third, to the Administrative Agent for the ratable distribution to each Secured Party to pay any Obligations then due and payable to such Persons (other than with respect to interest or the repayment of Advances) under this Agreement and the other Transaction Documents, in payment in full for all such Obligations then due and payable to such Persons;

(iv) fourth, to the Administrative Agent for distribution to each Lender to pay such Lender’s Pro Rata Share of accrued and unpaid interest owing to such Lender under this Agreement (including any such accrued and unpaid interest or fees from a prior period);

(v) fifth, if (x) no Event of Default described in Section 6.01(a) or (b) has occurred and is continuing, (y) the Borrower has provided at least three Business Days’ notice to the Administrative Agent and Initial Lender of the amount of such distribution and (z) the Initial Lender has consented to such distribution, to the Borrower (to make a Restricted Junior Payment to Holdings or for Holdings to make a Restricted Junior Payment to its member or members), an amount equal to the lesser of (a) an amount equal to the minimum amount necessary for the Sponsor to maintain its status as a real estate investment trust for U.S. federal income tax purposes and to avoid income and excise tax under Section 857 and 4981 of the Code (after giving effect to any other available funds of the Sponsor and its Affiliates) and (b) the amount by which Interest Collections exceed the required payments and distributions in clauses (c)(i) through (c)(iv) inclusive;

(vi) sixth, to the Administrative Agent for the ratable distribution to each Lender, to repay such Lender’s Pro Rata Share of the Advances Outstanding, to pay such Advances Outstanding in full; and

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(vii) seventh, the balance, if any, after all Obligations have been paid in full as set forth above, to the Borrower or as otherwise required by Applicable Law.

(d)Instructions to the Account Bank.  All instructions and directions given to the Account Bank by the Facility Servicer, the Borrower or the Administrative Agent (as applicable) pursuant to Section 2.08 shall be in writing (including instructions and directions transmitted to the Account Bank by e-mail) or pursuant to an electronic transmission system established between the Facility Servicer and the Account Bank on the Closing Date.  The Facility Servicer and the Borrower shall transmit to the Administrative Agent by e-mail a copy of all instructions and directions given to the Account Bank by such party pursuant to Section 2.08 concurrently with the delivery thereof.  The Administrative Agent shall transmit to the Facility Servicer and the Borrower by e-mail a copy of all instructions and directions given to the Account Bank by the Administrative Agent pursuant to Section 2.08 concurrently with the delivery thereof.

(e)No Presentment.  Payment by the Administrative Agent to the Lenders in accordance with the terms hereof shall not require presentment of any Note.

Section 2.09Grant of a Security Interest

.  

(a)To secure the prompt and complete payment in full when due, whether by lapse of time, acceleration or otherwise, of the Obligations and the performance by the Borrower of all of the covenants and obligations to be performed pursuant to this Agreement and each other Transaction Document, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, the Borrower hereby grants a security interest to the Administrative Agent, for the benefit of the Secured Parties, in all of the Borrower’s right, title and interest in, to and under (but none of the obligations under) the following, whether now owned or hereinafter acquired (collectively, the “Collateral”):  (i) all accounts, money, cash and currency, chattel paper, tangible chattel paper, electronic chattel paper, intellectual property, goods, equipment, fixtures, contract rights, general intangibles, documents, instruments, certificates of deposit, certificated securities, uncertificated securities, financial assets, securities entitlements, commercial tort claims, securities accounts, deposit accounts, inventory, investment property, letter-of-credit rights, software, supporting obligations, accessions or other property consisting of the Portfolio Assets, the other Related Portfolio Assets and Collections (but excluding the obligations thereunder); (ii) all Records; (iii) all Proceeds of the foregoing; (iv) the Collection Account; and (v) all proceeds and products of the foregoing.

(b)To secure the prompt and complete payment in full when due, whether by lapse of time, acceleration or otherwise, of the Obligations and the performance by the Borrower of all of the covenants and obligations to be performed pursuant to this Agreement and each other Transaction Document, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, Holdings hereby grants a security interest to the Administrative Agent, for the benefit of the Secured Parties, in all of Holding’s right, title and interest in and to, whether now owned or hereinafter acquired (collectively, the “Pledged Equity”):  (i) all investment property and general intangibles consisting of the ownership, equity or other similar interests in the Borrower, including the Borrower’s limited liability company interests; (ii) all certificates, instruments, writings and securities evidencing the foregoing; (iii) the operating agreement and other organizational documents of the Borrower and all options or other rights to acquire any membership or other interests under such operating agreement or other organizational documents; (iv) all dividends, distributions, capital, profits and surplus and other property

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or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing; (v) all books, records and other written, electronic or other documentation in whatever form maintained now or hereafter by or for Holdings in connection with, and relating to, the ownership of, or evidencing or containing information relating to, the foregoing; and (vi) all proceeds, supporting obligations and products of any of the foregoing.

(c)Anything herein to the contrary notwithstanding, (i) the Borrower shall remain liable under the Collateral Portfolio and the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by the Administrative Agent, for the benefit of the Secured Parties, of any of its rights in the Collateral Portfolio, Collateral or the Pledged Equity does not release the Borrower or Holdings from any of its duties or obligations under the Collateral Portfolio, the Collateral or with respect to the Pledged Equity and (iii) none of the Administrative Agent, any Lender nor any other Secured Party shall have any obligations or liability under the Collateral Portfolio or Collateral by reason of this Agreement, nor shall the Administrative Agent, any Lender nor any other Secured Party be obligated to perform any of the obligations or duties of the Borrower thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

(d)At the request of the Initial Lender at any time that a Cash Trap Event has occurred and is continuing, the Borrower shall, at its expense, enter into a mortgage, deed of trust or similar security document granting the Administrative Agent a lien on any Portfolio Asset that is real estate owned real property and take such other actions and enter such other documentation as is customary to grant a lien on such property to a commercial lender.

Section 2.10Sale of Portfolio Assets

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(a)Sales.  The Borrower may not sell or otherwise transfer or dispose of any Portfolio Asset (a “Sale”) unless (i) the Borrower has given the Initial Lender at least five business days advance notice thereof, (ii) either (A) the net cash consideration received by the Borrower in connection with such sale is at least 98% of (1) in the case of a Portfolio Asset that is a loan interest or a loan participation interest, the outstanding principal balance of such Portfolio Asset and (2) in the case of any other Portfolio Asset, the Value of such Portfolio Asset or (B) the Initial Lender has consented to such Sale in its sole discretion and (iii) the net cash proceeds from such Sale will be deposited directly to the Collection Account.  

(b)Release of Lien.  Upon confirmation by the Facility Servicer of the deposit of the amounts set forth in Section 2.10(a) in cash into the Collection Account and the fulfillment of the other terms and conditions set forth in this Section 2.10 for a Sale (such date of fulfillment, a “Release Date”), then the Portfolio Assets and other Related Portfolio Assets subject of such Sale are removed from the Collateral Portfolio.  Subject to compliance by the Borrower with the immediately prior sentence, on the Release Date of each subject Portfolio Asset and Related Portfolio Assets, the Administrative Agent, for the benefit of the Secured Parties, shall automatically and without further action be deemed to have released all right, title and interest and any Lien of the Administrative Agent, for the benefit of the Secured Parties in, to and under such Portfolio Asset and other Related Portfolio Assets and all future monies due or to become due with respect thereto, without recourse, representation or warranty of any kind or nature.

(c)Treatment of Amounts Deposited in the Collection Account.  Amounts deposited by the Borrower or the Portfolio Asset Servicer in the Collection Account pursuant to this Section 2.10 on account

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of Portfolio Assets shall be treated as payments of Collections for purposes of Section 2.08 and shall be applied as provided in Section 2.08(a) or Section 2.08(c), as applicable.

Section 2.11Release of Portfolio Assets

.  The Borrower may obtain the release from the Lien of the Administrative Agent granted under the Transaction Documents of (a) any Portfolio Asset (and the other Related Portfolio Assets pertaining thereto) removed from the Collateral Portfolio in accordance with the applicable provisions of Section 2.10 and (b) any Portfolio Asset (and the other Related Portfolio Assets pertaining thereto) that terminates or expires by its terms and for which all amounts in respect thereof have been paid in full by the related Obligors and deposited in the Collection Account.  The Administrative Agent, for the benefit of the Secured Parties, shall at the sole expense of the Borrower and at the direction of the Majority Lenders, execute such documents and instruments of release as may be prepared by the Borrower and take other such actions as shall reasonably be requested by the Borrower to effect such release of the Lien created pursuant to this Agreement.  Upon the release of the Administrative Agent’s Lien as described in the immediately preceding sentence, the Portfolio Asset File will be returned to the Borrower as provided in Section 9.09.

Section 2.12Increased Costs

.  

(a)If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender;

(ii)subject any Recipient to any Taxes (other than (A) Indemnified Taxes and (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its Advances, Commitments or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii)impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or  Advances made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making, continuing or maintaining any Advance or of maintaining its obligation to make any such Advance or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

(b)If any Lender determines that any Change in Law affecting such Lender or any lending office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

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(c)A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in Section 2.12(a) or (b) and delivered to the Borrower, shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate on the next Payment Date that is not less than ten days after receipt thereof.

(d)Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.12 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

Section 2.13Taxes

.

(a)All payments made by or on account of any obligation of the Borrower under this Agreement or any other Transaction Document (including by the Facility Servicer on behalf of the Borrower) will be made free and clear of and without deduction or withholding for or on account of any Taxes, except as required by Applicable Law.  If any Taxes are required by Applicable Law (as determined in the good faith discretion of an applicable withholding agent) to be deducted and withheld from any such payments, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay 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 amount payable by the Borrower will be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.13) the applicable Recipient receives an amount equal to the sum that it would have received had no such deduction or withholding been made.  Both the Borrower and the Administrative Agent may be a withholding agent.

(b)The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes

(c)The Borrower will indemnify each Recipient for the full amount of Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.13 ) payable or paid by such Recipient or required to be deducted or withheld from payments to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such 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 the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.  All payments in respect of this indemnification shall be made within 15 days from the date a written invoice therefor is delivered to the Borrower, with a copy to the Facility Servicer.

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(d)Within 15 days after the date of any payment by the Borrower or, at the direction of the Borrower, by the Facility Servicer from the Collection Account on behalf of the Borrower (to the extent amounts are available in the Collection Account) to the applicable Governmental Authority of any Taxes pursuant to this Section 2.13, the Borrower or the Facility Servicer, as applicable, will furnish to the Administrative Agent  at the applicable address set forth on this Agreement, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment (to the extent received by the Facility Servicer or the Borrower, as applicable), a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent (acting at the direction of the Majority Lenders).  For the avoidance of doubt, in no case or circumstance is the Facility Servicer liable to pay any Taxes pursuant to this Agreement, and if it pays any such amounts, it will solely be on behalf of the Borrower, from the Collection Account to the extent amounts are available therein.

(i)Each Lender (including any assignee thereof) that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code (a “Non‑U.S. Lender”) shall deliver to the Borrower and the Administrative Agent two properly completed and duly executed copies of whichever (if any) of the following is applicable for claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on any payment by or on behalf of the Borrower under this Agreement:  (i) U.S. Internal Revenue Service Form W-8BEN or W-8BEN-E (claiming the benefits of an applicable tax treaty), W-8IMY, W-8EXP or W-8ECI or (ii) in the case of a Non‑U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest” a statement substantially in the form of Exhibit F to the effect that such Lender is eligible for a complete exemption from withholding of U.S. taxes under Section 871(h) or 881(c) of the Code (a “Tax Compliance Certificate”) and a Form W-8BEN or W-8BEN-E, in each case (A) with any required attachments (including, with respect to any Lender that provides an U.S. Internal Revenue Service Form W-8IMY, any of the forms or other documentation described in clauses (i) and (ii) above for any of the direct or indirect owners of such Lender) and (B) any subsequent versions thereof or successors thereto.  In addition, each Lender (including any assignee thereof) that is not a Non-U.S. Lender shall deliver to the Borrower and the Administrative Agent two copies of U.S. Internal Revenue Service Form W-9, properly completed and duly executed and claiming complete exemption, or shall otherwise establish an exemption, from U.S. backup withholding.  Such forms shall be delivered by each Lender on or about the date it becomes a party to this Agreement and from time to time thereafter as reasonably requested by the Borrower or the Administrative Agent. In addition, each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.  Notwithstanding any other provision of this paragraph, a Lender shall not be required to deliver any form pursuant to this paragraph that such Lender is not legally able to deliver.

(ii)If a payment made to a Lender under any Transaction Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or Administrative Agent such documentation prescribed by law

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(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or Administrative Agent as may be necessary for the Borrower and Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment.  Solely for purposes of this Section 2.13(e), "FATCA" shall include any amendments made to FATCA after the date of this Agreement.

(iii)The Administrative Agent, on or prior to the Closing Date, and any successor Administrative Agent, on or prior to the date any such successor Administrative Agent is appointed successor to the Administrative Agent pursuant to Section 7.05, in each case shall deliver to the Borrower a copy of an IRS Form W-9, properly completed and duly executed and claiming complete exemption, or shall otherwise establish an exemption, from U.S. backup withholding.

(f)A Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation or information prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate (or otherwise permit the Borrower and the Administrative Agent to determine the applicable rate of withholding); providedthat such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s reasonable judgment such completion, execution or submission would not subject such Lender to any material unreimbursed cost or expense or would not materially prejudice the legal or commercial position of such Lender.

(g)If any party hereto determines, in its sole discretion, exercised in good faith, that it has received a refund of any Taxes for which it was indemnified by the Borrower, or the Facility Servicer on behalf of the Borrower, in each case, pursuant to this Section 2.13 (including by the payment of additional amounts pursuant to this Section 2.13) or with respect to which the Borrower or the Facility Servicer on behalf of the Borrower, it shall pay to the Borrower or the Facility Servicer, as applicable, an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.13 with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including additional Taxes, if any) of such party, as the case may be, incurred in obtaining such refund, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  The Borrower, upon the request of such party, shall repay to such party the amount paid over pursuant to this Section 2.13(g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 2.13(g), in no event will the indemnified party be required to pay any amount to the Borrower pursuant to this Section 2.13(g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party 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 indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.

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(h)Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.13 survive the resignation or replacement of the Administrative Agent or Collateral Custodian, any assignment of rights by or replacement of any Lender, the termination of Commitments, the repayment, satisfaction or discharge of all obligations under any Transaction Document or termination of this Agreement.

(i)The Borrower hereby covenants with the Administrative Agent that the Borrower will provide the Administrative Agent with information available to the Borrower so as to enable the Administrative Agent to determine whether or not the Administrative Agent is obliged to make any withholding, including FATCA Withholding Tax, in respect of any payments with respect to an Advance (and if applicable, to provide the necessary detailed information to effectuate any withholding, including FATCA Withholding Tax, such as setting forth applicable amounts to be withheld). For the avoidance of doubt, the term ‘applicable law’ for purposes of this Section 2.13(i) includes U.S. federal tax law and FATCA. Upon request from the Administrative Agent, the Borrower will provide such additional information that the Borrower may have to assist the Administrative Agent in making any withholdings or informational reports.

(j)If the Internal Revenue Service or any authority of the United States of America or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender under this Agreement (because the appropriate form was not delivered or was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify promptly the Administrative Agent fully for all amounts paid by the Administrative Agent, directly or indirectly, as Tax or otherwise, together with all reasonable expenses incurred.

(k)The Lenders and any transferees or assignees thereof after the Closing Date will be required to provide to the Administrative Agent or its agents all information, documentation or certifications reasonably requested by the Administrative Agent to permit the Administrative Agent to comply with its tax reporting obligations under applicable laws, including any applicable cost basis reporting obligations.

ARTICLE III.
CONDITIONS PRECEDENT

Section 3.01Conditions Precedent to Effectiveness

.  This Agreement becomes effective upon, and no Lender is obligated to make any Advance, nor is any Lender, the Collateral Custodian, the Facility Servicer or the Administrative Agent obligated to take, fulfill or perform any other action hereunder until, the satisfaction of the following conditions precedent:

(a)this Agreement, all other Transaction Documents and all other agreements, instruments, certificates and other documents listed on Schedule III have been duly executed by, and delivered to, the parties hereto and thereto;

(b)the Sponsor and each Subsidiary thereof that owns a Specified CLO Asset have entered into a guaranty (the “Guaranty Agreement”) pursuant to which, among other things, (i) the Sponsor guarantees the Obligations, (ii) the Sponsor and such Subsidiaries agree not to incur any indebtedness (other than indebtedness permitted thereunder), (iii) the Sponsor and such Subsidiaries agree not to

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create a Lien on its assets (other than Liens permitted thereunder) and (iv) the Sponsor and such Subsidiaries agree to provide the Lenders with prior notice of any Material CLO Modification;  

(c)the Borrower has provided the Facility Servicer and the Initial Lender with a copy of the Valuation Policy as in effect on the Closing Date;

(d)the representations contained in Sections 4.01 and 4.02 are true and correct;

(e)all up-front expenses and fees (including reasonable legal fees and expenses and any fees required under the Fee Letters and Schedule XI) that are required to be paid hereunder or by the Fee Letters and Schedule XI have been paid in full;

(f)the Borrower has received all material governmental, shareholder and third party consents and approvals necessary (or any other material consents as determined in the reasonable discretion of the Lenders) in connection with the transactions contemplated by this Agreement and the other Transaction Documents and all applicable waiting periods have expired without any action being taken by any Person that could reasonably be expected to restrain, prevent or impose any material adverse conditions on the Borrower or such other transactions or that could seek or threaten any of the foregoing, and no law or regulation is applicable which in the reasonable judgment of the Lenders could reasonably be expected to have such effect;

(g)no action, proceeding or investigation has been instituted, threatened or proposed before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to or arises out of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby, or which, at the Majority Lenders’ discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby; and

(h)the Administrative Agent has received all documentation and other information requested by the Administrative Agent acting at the direction of the Majority Lenders or required by regulatory authorities with respect to the Borrower and the Facility Servicer under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, all in form and substance reasonably satisfactory to the Administrative Agent and the Majority Lenders.

Section 3.02Conditions Precedent to the Initial Advance.  The initial Advance is subject to the further conditions precedent that on the date of such Advance:

(a)the Collection Account has been established pursuant to the Account Control Agreement and the Administrative Agent and the Initial Lender have received a favorable opinion of counsel to the Borrower, reasonably acceptable to the Initial Lender and addressed to the Administrative Agent, the Collateral Custodian and the Lenders, relating thereto;

(b)the Borrower has obtained valid ownership interests in the Initial Portfolio Assets and all actions required to be taken or performed under Section 3.04 with respect to the Transfer of such Initial Portfolio Assets have been taken or satisfied;

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(c)the Borrower (or the Portfolio Asset Servicer on its behalf) has delivered to the Collateral Custodian (with a copy of any electronic delivery to the Initial Lender) (i) hard copies of any promissory notes, possessory collateral and any original Required Portfolio Documents that the Borrower requires of the Obligors, (ii) electronic copies of the other Required Loan Documents, (iii) the Portfolio Asset Checklist pertaining to each Initial Portfolio Asset and (iv) a Custodial and Account Control Agreement as described in clause (a) of the definition thereof, in each case at least five Business Days prior to the date of such Advance;

(d)the Borrower has delivered to the Administrative Agent and the Lenders a Notice of Borrowing and a Quarterly LTV Certificate as provided in Section 2.02(a);

(e)such date occurs during the Availability Period;

(f)on and as of such date, after giving effect to such Advance and the transactions related thereto, including the use of proceeds thereof, (i) the initial Advance does not exceed the Total Facility Amount and (B) the Advances Outstanding do not exceed the Borrowing Base and a calculation of the Borrowing Base as of such date has been included in the Notice of Borrowing with respect to such Advance;

(g)no Unmatured Event of Default, Event of Default or Cash Trap Event has occurred and is continuing or would result from such initial Advance or application of proceeds therefrom;

(h)the representations contained in Sections 4.01 and 4.02 are true and correct in all respects before and after giving effect to such initial Advance and to the application of proceeds therefrom, on and as of such day as though made on and as of such date (or, in the case of any such representation expressly stated to have been made as of a specific date, as of such specific date);

(i)all expenses and fees that are required to be paid hereunder or by the Fee Letters have been paid in full; and

(j)all actions required to be taken or performed (including the filing of UCC financing statements) to give the Administrative Agent, for the benefit of the Secured Parties, a first priority perfected security interest (subject only to Permitted Liens) in the Initial Portfolio Asset and the Related Portfolio Assets related thereto and the proceeds thereof have been taken or performed.

The request for the initial Advance pursuant to this Section 3.02 is deemed a representation by the Borrower that the conditions specified in this Section 3.02 have been met

Section 3.03Conditions Precedent to All Advances

.  Each Advance, other than the initial Advance, is subject to the further conditions precedent that on the date of such Advance:

(a)the Borrower has delivered to the Administrative Agent and the Lenders a Notice of Borrowing and a Quarterly LTV Certificate as provided in Section 2.02(a);

(b)such date occurs during the Availability Period;

(c)on and as of such date, after giving effect to such Advance and the transactions related thereto, including the use of proceeds thereof, (i) the aggregate Advances made hereunder (without

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giving effect to any repayment or prepayment thereof) do not exceed the Total Facility Amount and (B) the Advances Outstanding do not exceed the Borrowing Base and a calculation of the Borrowing Base as of such date has been included in the Notice of Borrowing with respect to such Advance;

(d)no Unmatured Event of Default, Event of Default or Cash Trap Event has occurred and is continuing or would result from such Advance or application of proceeds therefrom;

(e)the representations contained in Sections 4.01 and 4.02 are true and correct in all material respects before and after giving effect to such Advance and to the application of proceeds therefrom, on and as of such day as though made on and as of such date (or, in the case of any such representation expressly stated to have been made as of a specific date, as of such specific date); and

(f)all expenses and fees that are required to be paid hereunder or by the Fee Letters have been paid in full.

Each request for an Advance pursuant to this Section 3.03 is deemed a representation by the Borrower that the conditions specified in this Section 3.03 have been met.

Section 3.04Conditions to Transfers of Portfolio Assets

.  Each Transfer of an Eligible Portfolio Asset, other than the Transfer of the Initial Portfolio Assets, is subject to the further conditions precedent that:

(a)no Event of Default exists or would result from such Transfer;

(b)(i) the Borrower has given the Initial Lender at least five business days advance notice of such Transfer, (ii) the Initial Lender has consented to such Transfer in its sole discretion, (iii) the Borrower has provided the Initial Lender with information relating to the Portfolio Asset subject to such Transfer, including information (1) as is provided on Schedule I, (2) regarding the Transferor of such Portfolio Asset, whether any liens exists on such Portfolio Asset and, if so, describing the actions the Borrower will take to release such liens and (3) as is otherwise requested by the Initial Lender, (iv) the Initial Lender has provided the Borrower in writing with the advance rate for such Portfolio Asset and (v) the Borrower has provided a calculation of the Borrowing Base as of such date giving effect to such Transfer and any related Advance, if applicable;

(c)all actions required to be taken or performed (including the filing of UCC financing statements) to give the Administrative Agent, for the benefit of the Secured Parties, a first priority perfected security interest (subject only to Permitted Liens) in such Portfolio Asset and the Related Portfolio Assets related thereto and the proceeds thereof have been taken or performed; and

(d)the Borrower (or the Portfolio Asset Servicer on its behalf) has delivered to the Collateral Custodian (with a copy of any electronic delivery to the Initial Lender) (i) hard copies of any promissory notes, possessory collateral and any original Required Portfolio Documents that the Borrower requires of the Obligors, (ii) electronic copies of the other Required Loan Documents, (iii) the Portfolio Asset Checklist pertaining to each Initial Portfolio Asset and (iv) if required by the Administrative Agent or Initial Lender, a Custodial and Account Control Agreement as described in clause (b) of the definition thereof, in each case at least five Business Days prior to the Closing Date pertaining to such Portfolio Asset.

Each Transfer of an Eligible Portfolio Asset pursuant to this Section 3.04 is deemed a representation by the Borrower that the conditions specified in this Section 3.04 have been met.

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ARTICLE IV.
REPRESENTATIONS

Section 4.01Representations of the Loan Parties

.  Each Loan Party hereby represents to the Secured Parties as follows:

(a)Organization, Good Standing and Due Qualification.  Such Loan Party is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with all requisite organizational power and authority necessary to own the Portfolio Assets and the Collateral Portfolio and to conduct its business as such business is presently conducted and to enter into and perform its obligations pursuant to this Agreement and the other Transaction Documents to which it is a party.  Such Loan Party is duly qualified to do business, and has obtained all licenses and approvals, under the laws of its jurisdiction of organization and in all other jurisdictions necessary to own its assets and to transact the business in which it is engaged, and is duly qualified and in good standing under the laws of its jurisdiction of organization and in each other jurisdiction where the transaction of such business or its ownership of the Portfolio Assets and the Collateral Portfolio and the conduct of its business requires such qualification, except as would not reasonably be expected to have a Material Adverse Effect.

(b)Power and Authority; Due Authorization; Execution and Delivery.  Such Loan Party (i) has the power, authority, and legal right to (A) execute and deliver this Agreement and the other Transaction Documents to which it is a party and (B) perform and carry out the terms of this Agreement and the other Transaction Documents to which it is a party and the transactions contemplated thereby and (ii) has taken all necessary action to (A) authorize the execution, delivery and performance of this Agreement and each of the other Transaction Documents to which it is a party, (B) grant to the Administrative Agent, for the benefit of the Secured Parties, a first priority perfected security interest in the Collateral on the terms and conditions of this Agreement and the other Transaction Documents, subject only to Permitted Liens and (C) authorize the Facility Servicer to perform the actions contemplated herein.  This Agreement and each other Transaction Document have been duly executed and delivered by such Loan Party party thereto.

(c)Binding Obligation.  This Agreement and each of the other Transaction Documents to which such Loan Party is a party constitutes the legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with their respective terms, except as the enforceability hereof and thereof may be limited by Bankruptcy Laws and by general principles of equity.

(d)All Consents Required.  No consent of any other party and no consent, license, approval or authorization of, or registration or declaration with, any Governmental Authority, bureau or agency is required in connection with the execution, delivery or performance by the Borrower of this Agreement or any Transaction Document to which it is a party or the validity or enforceability of this Agreement or any such Transaction Document or the transfer of an ownership interest in the Portfolio Assets or grant of a security interest in the Collateral, other than such as have been met or obtained and are in full force and effect.

(e)No Violation.  The execution, delivery and performance of this Agreement and the other Transaction Documents and all other agreements and instruments executed and delivered or to be executed and delivered in connection with the Transfer of any Portfolio Asset will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, such Loan Party’s organizational documents, (ii) result in the creation or

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imposition of any Lien on the Collateral other than Permitted Liens or (iii) violate any Applicable Law in any material respect or (iv) violate any contract or other agreement to which such Loan Party is a party or by which the or any property or assets of the Borrower may be bound.

(f)No Proceedings; No Injunctions.  There is no litigation, proceeding or investigation pending or, to the knowledge of such Loan Party, threatened against such Loan Party or any properties of such Loan Party, before any Governmental Authority (i) asserting the invalidity of this Agreement or any other Transaction Document, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document or (iii) that could reasonably be expected to be adversely determined, and, if so determined, either individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.  No injunction, writ, restraining order or other order of any nature adversely affects, in any material respect, such Loan Party’s performance of its obligations under this Agreement or any Transaction Document to which a Loan Party is a party

(g)No Liens.  The Collateral is owned by such Loan Party free and clear of any Liens except for Permitted Liens.  

(h)Transfer of Collateral Portfolio.  Except as otherwise expressly permitted by the terms of this Agreement, no item of Collateral Portfolio has been Sold, assigned or pledged by such Loan Party to any Person, other than in accordance with Article II and the grant of a security interest therein to the Administrative Agent, for the benefit of the Secured Parties, pursuant to the terms of this Agreement.

(i)Sole Purpose.  The Borrower has been formed solely for the purpose of, and has not engaged in any business activity other than, the acquisition of commercial loans, the pledge and financing thereof and transactions incidental thereto and activities of the type expressly permitted under Section 5.01(a).  The Borrower is not party to any agreements other than this Agreement and the other Transaction Documents to which it is a party and the Required Portfolio Documents and other agreements listed on the Portfolio Asset Checklist for each Portfolio Asset in respect of which the Borrower is a lender or loan participant.  

(j)Separate Entity.  Such Loan Party is operated as an entity with assets and liabilities distinct from those of the Sponsor and any Affiliates thereof, and such Loan Party hereby acknowledges that the Administrative Agent and the Lenders are entering into the transactions contemplated by this Agreement in reliance upon such Loan Party’s identity as a separate legal entity from the Sponsor and from each such other Affiliate of the Sponsor.

(k)Taxes.  All tax returns (including all foreign, federal, State, local and other tax returns whether filed on a standalone or group basis) required to be filed by, on behalf of or with respect to the income and assets of the Borrower (including the Collateral Portfolio) have been timely filed and neither the Borrower nor Holdings is liable for Taxes payable by any other Person, except as could not reasonably be expected to have a Material Adverse Effect.  The Borrower and Holdings have paid or made adequate provisions for the payment of all Taxes, assessments and other governmental charges made against it or any of its property (including the Collateral Portfolio) except for those Taxes being contested in good faith by appropriate proceedings and in respect of which it has established proper reserves in accordance with GAAP on its books or as could not reasonably be expected to have a Material Adverse Effect.  No Tax lien (other than a Permitted Lien) or similar adverse claim has been filed, and no claim is being asserted, with

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respect to any such Tax, assessment or other governmental charge, in each case, with respect to such Loan Party or its assets.

(l)Location.  Except as permitted pursuant to Section 5.02(l), such Loan Party’s location (within the meaning of Article 9 of the UCC) is the State of Delaware.  Except as permitted pursuant to Section 5.02(l), the principal place of business and chief executive office of such Loan Party (and the location of the Loan Party’s records regarding the Collateral (other than those delivered to the Collateral Custodian pursuant to this Agreement)) is located at the address set forth under its name in Section 11.02.

(m)Tradenames.  Except as permitted pursuant to Section 5.02(l), such Loan Party’s legal name is as set forth in this Agreement.  Except as permitted pursuant to Section 5.02(l), no Loan Party has changed its name since its formation and neither has tradenames, fictitious names, assumed names or “doing business as” names.  Such Loan Party’s jurisdiction of formation is the State of Delaware, and, except as permitted pursuant to Section 5.02(l), no Loan Party has changed its jurisdiction of formation.

(n)No Subsidiaries.  

(i)The Borrower does not own or hold the equity interests in any other Person other than (x) Propco or (y) any other wholly owned Subsidiary (or any subsidiary jointly owned with any TRS Subsidiary permitted by Section 5.02) that (A) has been approved in writing by the Initial Lender in its sole discretion, (B) has delivered to the Initial Lender (1) a Permitted REO Sub Guaranty Agreement executed by such Subsidiary and (2) such Subsidiary’s limited liability company agreement, which is substantially in the form of HGI Sub’s limited liability company agreement, (C) Borrower has delivered to the Administrative Agent the certificated Pledged Equity of such Subsidiary and the related assignment, duly executed in blank and (D) has agreed (which agreement will be set forth in the applicable Permitted REO Sub Guaranty Agreement) that if the Borrower or such Subsidiary elects to exercise remedies with respect to any Portfolio Asset that is a loan interest or loan participation interest, then (unless otherwise agreed by the Initial Lender) no later than the earlier to occur of (1) the date of any foreclosure sale or the date on which the Borrower or such Subsidiary accepts a deed-in-lieu of foreclosure with respect to any such Portfolio Asset and (2) the date that is 60 days after the date the Borrower or such Subsidiary commences enforcement remedies for such Portfolio Asset, such Subsidiary shall, at its expense, execute and deliver to the Administrative Agent mortgage documents in a form and substance reasonably acceptable to the Initial Lender, in its sole discretion, and sufficient to document a first priority mortgage lien in favor of the Administrative Agent, for the benefit of the Secured Parties, on the real property subject to such foreclosure sale, deed-in-lieu of foreclosure or enforcement remedies.

(ii)Holdings does not own or hold the equity interest in any other Person other than Borrower.

(o)Reports Accurate.  All Notices of Borrowing, Quarterly LTV Certificates and other written or electronic information, exhibits, financial statements, documents, books, records or reports furnished by such Loan Party to the Administrative Agent, the Facility Servicer or the Collateral Custodian in connection with this Agreement and the other Transaction Documents (as modified or supplemented by other information so furnished at that time), taken as a whole, are accurate, true and correct in all material respects, and no such document contains any material misstatement of fact or omits to state a material

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fact or any fact necessary to make the statements contained therein, taken as a whole, in light of the circumstances under which they were made, not materially misleading; provided that (i) solely with respect to written or electronic information furnished by the Borrower which was provided to the Borrower from an Obligor with respect to a Portfolio Asset (or derived thereof), such information need only be accurate, true and correct to the knowledge of the Borrower and (ii) with respect to projected or pro forma financial information, the foregoing representation is only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation and delivery (it being understood that such projected information may vary from actual results and that such variances may be material).

(p)Exchange Act Compliance; Regulations T, U and X.  None of the transactions contemplated herein or in the other Transaction Documents (including the use of Proceeds from the sale of any item in the Collateral Portfolio) will violate or result in a violation of Section 7 of the Exchange Act or Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.  Such Loan Party does not own or intend to carry or purchase, and proceeds from the Advances will not be used to carry or purchase, any “margin stock” within the meaning of Regulation U or to extend “purpose credit” within the meaning of Regulation U.

(q)Event of Default or Unmatured Event of Default. No event has occurred which constitutes an Event of Default or Unmatured Event of Default, in each case, which has not been previously disclosed to the Administrative Agent and the Lenders in writing.

(r)ERISA.  Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) the present value of all vested benefits under each “employee pension benefit plan” as such term is defined in Section 3(2) of ERISA, other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate of the Borrower or to which the Borrower or any ERISA Affiliate of the Borrower contributes or has an obligation to contribute, or has any liability (each, a “Pension Plan”), does not exceed the value of the assets of the Pension Plan allocable to such vested benefits (based on the value of such assets as of the last annual valuation date for the Pension Plan) determined in accordance with the assumptions used for funding such Pension Plan pursuant to Sections 412 and 430 of the Code for the applicable plan year, (ii) no failure by the Borrower to meet the minimum funding standard set forth in Sections 302(a) or 303 of ERISA and Sections 412(a) and 430 of the Code has occurred with respect to any Pension Plan, (iii) neither the Borrower nor any ERISA Affiliate of the Borrower has withdrawn from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA), (iv) no Reportable Event has occurred with respect to any Pension Plan, (v) no notice of intent to terminate a Pension Plan has been filed by the plan administrator under Section 4041 of ERISA, nor has any Pension Plan been terminated under Section 4041 of ERISA and (vi) the Pension Benefit Guaranty Corporation has not instituted proceedings to terminate, or appointed a trustee to administer, a Pension Plan under Section 4042 of ERISA, and no event has occurred or condition exists which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan.

(s)Broker-Dealer.  Such Loan Party is not a broker-dealer or subject to the Securities Investor Protection Act of 1970.

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(t)Instructions for Collections.  The Collection Account is the only account to which the Obligors or any agent, administrative agent, Counterparty Lender, Underlying Agent, Underlying Servicer or issuer of any Portfolio Asset have been instructed by the Borrower or the Portfolio Asset Servicer on Borrower’s behalf, to send Collections with respect to the Portfolio Assets.  The Borrower has not granted any Person other than the Administrative Agent, for the benefit of the Secured Parties, an interest in the Collection Account.

(u)Investment Company Act.  Such Loan Party is not required to register as an “investment company” under the provisions of the 1940 Act.

(v)Compliance with Applicable Law.  Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, such Loan Party is in compliance with all Applicable Law to which it may be subject, and no item of the Collateral Portfolio contravenes any Applicable Law (including all applicable predatory and abusive lending laws, laws, rules and regulations relating to licensing, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy).

(w)Collections.  All Collections received by such Loan Party with respect to the Collateral Portfolio are held in trust for the benefit of the Administrative Agent, for the benefit of the Secured Parties, until deposited into the Collection Account as provided herein.

(x)Set-Off etc.  No Portfolio Asset has been compromised, adjusted, extended, satisfied, subordinated, rescinded, set-off or modified by the Borrower, or the Obligor thereof, and no item in the Collateral Portfolio is subject to compromise, adjustment, extension, satisfaction, subordination, rescission, set-off, counterclaim, defense, abatement, suspension, deferment, deduction, reduction, termination or modification, whether arising out of transactions concerning the Collateral Portfolio or otherwise, by the Borrower or the Obligor with respect thereto, except, in each case, for amendments, extensions and modifications, if any, (x) amendments, extensions and modifications that do not constitute Material Modifications or Material CLO Modifications and (y), with respect to Material Modifications and Material CLO Modifications, Material Modifications and Material CLO Modifications permitted pursuant to Section 5.01(e).

(y)Environmental.  With respect to each item of Underlying Collateral, to the knowledge of such Loan Party, except as expressly disclosed to the Initial Lender with respect to such Portfolio Asset prior to the Transfer thereof or as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect:  (i) the related Obligor’s operations comply in all material respects with all applicable Environmental Laws; (ii) none of the related Obligor’s operations is the subject of a Federal or State investigation evaluating whether any remedial action, involving expenditures, is needed to respond to a release of any Hazardous Materials into the environment; and (iii) the related Obligor does not have any material contingent liability in connection with any release of any Hazardous Materials into the environment.  Such Loan Party has not received any material written notice of, or inquiry from any Governmental Authority regarding, any violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Underlying Collateral.

(z)Anti-Money Laundering Laws.  (i) No Covered Entity (A) is a Sanctioned Person; (B) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person

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in violation of any Anti-Terrorism Law; (C) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (D) engages in any dealings or transactions prohibited by any Anti-Terrorism Law; (ii) the proceeds of the Advances will not be used by the Borrower, or to the Borrower’s actual knowledge by any other Person, to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Law; (iii) the funds used to pay the Lenders, the Administrative Agent or the Facility Servicer, to the extent received from the Borrower, are not derived from any unlawful activity; and (iv) to the Loan Parties’ knowledge, each Covered Entity is in compliance with, and no Covered Entity engages in any dealings or transactions prohibited by, any Anti-Terrorism Law.

(aa)Security Interest.  

(i) This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Collateral in favor of the Administrative Agent, on behalf of the Secured Parties, which security interest is prior to all other Liens (except for Permitted Liens), and is enforceable as such against creditors of and purchasers from the Borrower.

(ii) The Collateral Portfolio is comprised of “instruments”, “financial assets”, “security entitlements”, “general intangibles”, “chattel paper”, “accounts”, “certificated securities”, “uncertificated securities”, “securities accounts”, “deposit accounts”, “supporting obligations” or “insurance” (each as defined in the applicable UCC), and the proceeds of the foregoing, or such other category of collateral under the applicable UCC as to which the Borrower has complied with its obligations under this Section 4.01(aa).

(iii) The Collection Account is not in the name of any Person other than the Borrower, subject to the security interest of the Administrative Agent, for the benefit of the Secured Parties.

(iv) The Collection Account constitutes either a “deposit account” or a “securities account” (each as defined in the applicable UCC) as specified in the Account Control Agreement.

(v) [Reserved].

(vi) The Borrower has authorized the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Collateral and that portion of the Portfolio Assets in which a security interest granted to the Administrative Agent, on behalf of the Secured Parties, under this Agreement may be perfected by filing; provided that filings in respect of real property shall not be required.

(vii) Other than as expressly permitted by the terms of the Transaction Documents (including Permitted Liens), this Agreement and the security interest granted to the Administrative Agent, on behalf of the Secured Parties, pursuant to this Agreement, the Borrower has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of the Collateral.  The Borrower has not authorized the filing of and is not aware of any financing statements against the Borrower that include a description of collateral covering the Collateral other than any financing statement (A) that has been terminated or fully and validly assigned to the Administrative Agent or (B) reflecting the transfer of

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assets on a Release Date pursuant to (and simultaneously with or subsequent to) the consummation of any transaction contemplated under (and in compliance with the conditions set forth in) Section 2.10.

(viii) None of the underlying promissory notes or related loan registers or Participation Agreements or related participation registers, as applicable, that constitute or evidence the Portfolio Assets has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Administrative Agent, on behalf of the Secured Parties.

(ix) With respect to any Collateral that constitutes a “certificated security,” such certificated security has been delivered to the Administrative Agent, on behalf of the Secured Parties and, if in registered form, has been specially Indorsed to the Administrative Agent, for the benefit of the Secured Parties, or in blank by an effective Indorsement or has been registered in the name of the Administrative Agent, for the benefit of the Secured Parties, upon original issue or registration of transfer by the Borrower of such certificated security.

(x) With respect to any Collateral that constitutes an “uncertificated security”, the Borrower has caused the issuer of such uncertificated security to register the Administrative Agent, on behalf of the Secured Parties, as the registered owner of such uncertificated security.

(xi) The Pledged Equity issued by the Borrower has been duly and validly authorized and issued by the Borrower.

(xii) This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Pledged Equity in favor of the Administrative Agent, on behalf of the Secured Parties, which security interest is prior to all other Liens (except for Permitted Liens), and is enforceable as such against creditors of and purchasers from Holdings.

(xiii) Holdings has authorized the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Pledged Equity.

(xiv) Other than as expressly permitted by the terms of the Transaction Documents (including Permitted Liens), this Agreement and the security interest granted to the Administrative Agent, on behalf of the Secured Parties, pursuant to this Agreement, Holdings has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of the Pledged Equity.  Holdings has not authorized the filing of and is not aware of any financing statements against Holdings that include a description of collateral covering the Pledged Equity.  Holdings is not aware of the filing of any judgment or Tax lien filings against Holdings, other than Permitted Liens.

(xv) Holdings consents to the transfer of any Pledged Equity to the Administrative Agent or its designee, in connection with an exercise of remedies in accordance with Applicable Law following, and during the occurrence of, an Event of Default and to the substitution of the Administrative Agent or its designee as a member in the Borrower with all the rights and powers related thereto, subject to the terms of this Agreement.

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(xvi) The Pledged Equity shall not be represented by a certificate unless (A) the limited liability company agreement of the Borrower expressly provides that such interest shall be a “security” within the meaning of Article 8 of the UCC of the applicable jurisdiction and (B) such certificate shall be delivered as provided in clause (xvii) below.

(xvii) If any portion of the Pledged Equity constitutes a “certificated security,” such certificated security has been delivered to the Administrative Agent, on behalf of the Secured Parties and, if in registered form, has been specially Indorsed to the Administrative Agent, for the benefit of the Secured Parties, or in blank by an effective Indorsement or has been registered in the name of the Administrative Agent, for the benefit of the Secured Parties, upon original issue or registration of transfer by Holdings of such certificated security.

(xviii) If any portion of the Pledged Equity constitutes an “uncertificated security”, Holdings has caused the issuer of such uncertificated security to register the Administrative Agent, on behalf of the Secured Parties, as the registered holder of such uncertificated security.

(bb)The Borrower, in connection with the indemnity provided in Section 10.01, has access to sufficient capital to meet any and all indemnity obligations stated therein and covenants.

Section 4.02Representations of the Borrower Relating to the Agreement and the Collateral Portfolio

.  The Borrower hereby represents to the Secured Parties as follows:

(a)Eligibility of Collateral Portfolio.  (i) The written information in a Notice of Borrowing or with respect to the Initial Portfolio Assets and any other Portfolio Asset Transferred to the Borrower that is provided to the Initial Lender is true and correct as of the date so provided and (ii) with respect to each item of Collateral Portfolio, all consents, licenses, approvals or authorizations of or registrations or declarations of any Governmental Authority or any Person required to be obtained, effected or given by the Borrower in connection with the grant of a security interest in each item of Collateral Portfolio to the Administrative Agent, for the benefit of the Secured Parties, have been duly obtained, effected or given and are in full force and effect.

(b)No Fraud.  To the knowledge of the Borrower, each Portfolio Asset was originated without any fraud or misrepresentation on the part of the Obligor or Transferor, if any, of such Portfolio Asset.

ARTICLE V.
GENERAL COVENANTS

Section 5.01Affirmative Covenants of the Loan Parties

.  From the Closing Date until the Facility Termination Date:

(a)Organizational Procedures and Scope of Business.  Each Loan Party shall observe in all material respects all organizational procedures required by its organizational documents and the laws of its jurisdiction of formation.  Without limiting the foregoing, the Borrower shall limit the scope of its business to those set forth in its limited liability company agreement, including:  (i) the acquisition and origination of and investments in Portfolio Assets and the ownership and management of the Related Portfolio Assets; (ii) the Sale of Portfolio Assets as and when permitted under the Transaction Documents; (iii) entering into and performing under the Transaction Documents; (iv) consenting or withholding consent as to proposed amendments, waivers and other modifications of the Loan Agreements to the

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extent not in conflict with the terms of this Agreement or any other Transaction Document; (v) exercising any rights (including but not limited to voting rights and rights arising in connection with a Bankruptcy Event with respect to an Obligor or the consensual or non-judicial restructuring of the debt or equity of an Obligor) or remedies in connection with the Portfolio Assets and participating in the committees (official or otherwise) or other groups formed by creditors of an Obligor to the extent not in conflict with the terms of this Agreement or any other Transaction Document; and (vi) engaging in any activity and to exercise any powers permitted to limited liability companies under the laws of the State of Delaware that are related or incidental to the foregoing and necessary, convenient or advisable to accomplish the foregoing.  

(b)Special Purpose Entity Requirements.  Each Loan Party shall at all times maintain at least one Independent Manager.  The Borrower at all times shall comply in all material respects with the special purpose covenants set forth in Section 7 of its limited liability company agreement as in effect on the Closing Date and Holdings at all times shall comply in all material respects with the special purpose covenants set forth in Section 7 of its limited liability company agreement as in effect on the Closing Date.  Each Loan Party Borrower shall at all times provide (and at all times such Loan Party’s organizational documents shall reflect) that the unanimous consent of all members (including the consent of the Independent Manager) is required for such Loan Party to (i) dissolve or liquidate, in whole or part, or institute proceedings to be adjudicated bankrupt or insolvent, (ii) institute or consent to the institution of bankruptcy or insolvency proceedings against it, (iii) file a petition seeking or consent to reorganization or relief under any applicable federal or State law relating to bankruptcy or insolvency, (iv) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for such Loan Party, (v) make any assignment for the benefit of such Loan Party’s creditors or (vi) admit in writing its inability to pay its debts generally as they become due.

(c)Preservation of Company Existence.  Each Loan Party shall preserve and maintain its organizational existence in the jurisdiction of its formation and shall promptly obtain and thereafter maintain qualifications to do business as a foreign entity in any other jurisdiction in which it does business and in which it is required to so qualify under Applicable Law and preserve and maintain its other rights, franchises and privileges in the jurisdiction of its formation except where the failure to so qualify or maintain would not reasonably be expected to have a Material Adverse Effect.

(d)Deposit of Misdirected Collections.  The Borrower shall promptly (but in no event later than two Business Days after receipt and identification thereof) deposit or cause to be deposited into the Collection Account any and all Collections received by the Borrower.

(e)Material Modifications, Material CLO Modifications and Underlying Obligor Default.  

(i) Subject to the following sentence, the Borrower shall give prior written notice to the Lenders of any proposed Material Modification or Material CLO Modification with respect to any Portfolio Asset.  If notified by the Borrower, the Majority Lenders shall have (A) five Business Days with respect to all Material Modifications not relating to payment defaults and (B) ten Business Days with respect to all Material CLO Modifications or Material Modifications relating to all payment defaults to consent or decline to consent to such Material Modification or Material CLO Modification.  Whether or not such notice is given or such consent is obtained, the Borrower may proceed with such Material Modification or Material CLO Modification, but, if such consent is not obtained, the

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Borrower shall make any necessary adjustments to the calculation of Value and Total Portfolio Value as a result thereof as required by Section 2.04(b).  For the avoidance of doubt, if the Majority Lenders do not respond to the request for consent for any proposed Material Modification or Material CLO Modification within the five Business Day period or ten Business Day period, as the case may be, such consent shall be deemed to have been declined.

(ii) The Borrower shall give written notice to the Facility Servicer and the Collateral Custodian of any occurrence of any Underlying Obligor Default after the Closing Date with respect to any Portfolio Asset promptly after obtaining knowledge thereof.

(f)Rating Agency Information; Maintenance of Credit Rating.  The Borrower shall provide any NRSRO that is then engaged by the Borrower to rate the credit facility evidenced by this Agreement with all available information that is reasonably requested by such NRSRO in connection with its rating of the credit facility evidenced by this Agreement.  At all times on and after the Borrower receives an initial rating (to occur on or before October 31, 2020), the Borrower shall maintain a rating on the credit facility evidenced by this Agreement from a NRSRO acceptable to the Initial Lender and if such rating falls below an equivalent rating of BBB, then at the direction of the Initial Lender, the Borrower shall use commercially reasonable efforts to obtain a rating from an NRSRO as directed by the Initial Lender.

(g)Notices.  The Borrower shall notify the Administrative Agent, with a copy to Initial Lender, with prompt (and in any event within two Business Days following the acquisition of knowledge or receipt of notice by a Responsible Officer of the Borrower) written notice of the occurrence of:

(i) each Unmatured Event of Default or Event of Default and no later than three Business Days following such written notice, the Borrower shall provide to the Administrative Agent, with a copy to Initial Lender, a written statement of a Responsible Officer of the Borrower setting forth the details of such event and the action that the Borrower proposes to take with respect thereto;

(ii) any event or other circumstance known to the Borrower that would reasonably be expected to result in a Material Adverse Effect;

(iii) the filing or commencement of any action, suit, investigation or proceeding by or before any arbitrator or any Governmental Authority against any Loan Party, including pursuant to any applicable Environmental Laws, that would reasonably be expected to be adversely determined, and, if so determined, could reasonably be expected to result in liability of the Borrower in an aggregate amount exceeding $5,000,000;

(iv) any material Lien on the Collateral known to the Borrower (other than Permitted Liens);

(v) the receipt of notice of the occurrence of any Reportable Event with respect to any Pension Plan except as would not reasonably be expected to result in a Material Adverse Effect the Borrower shall provide the Administrative Agent with a copy of such notice;

(vi) any change in the accounting policies of the Borrower constituting a material deviation from GAAP; and

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(vii) any change to the Valuation Policy then in effect, with a copy of such updated Valuation Policy.

(h)Additional Information; Additional Documents.  Each Loan Party shall provide the Administrative Agent and Initial Lender with any financial or other information reasonably requested by the Administrative Agent (acting at the direction of the Initial Lender) or the Initial Lender (through the Administrative Agent) evidencing to support the representations set forth in this Agreement.  Notwithstanding anything to the contrary in this provision, the Loan Parties and its Affiliates are not required to disclose, permit the inspection, examination or making copies or abstracts of, or discuss, any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or agents) is prohibited by Applicable Law or (iii) in such Loan Party’s or Affiliate’s reasonable judgment, would compromise any attorney-client privilege, privilege afforded to attorney work product or similar privilege; provided that the Loan Parties shall make available redacted versions of requested documents or, if unable to do so consistent with the preservation of such privilege, shall make commercially reasonable efforts to disclose information responsive to the requests of the Administrative Agent, any Lender or any of their respective representatives and agents, in a manner that will protect such privilege.

(i)Protection of Security Interest.  Each Loan Party shall take all action that the Administrative Agent (acting at the direction of the Majority Lenders ) may reasonably request to perfect, protect and more fully evidence the first priority (subject to Permitted Liens) perfected security interest of the Administrative Agent, for the benefit of the Secured Parties, in the Collateral, or to enable the Administrative Agent to exercise or enforce any of its rights hereunder, including (i) with respect to the Portfolio Assets and that portion of the Collateral Portfolio in which a security interest may be perfected by filing, filing and maintaining (at the expense of the Loan Parties) effective financing statements against any Transferor in all necessary or appropriate filing offices (including any amendments thereto or assignments thereof) and filing continuation statements, amendments or assignments with respect thereto in such filing offices (including any amendments thereto or assignments thereof), (ii) executing or causing to be executed such other instruments or notices as may be necessary or appropriate, (iii) at the expense of the Loan Parties, take all action necessary to cause a valid, subsisting and enforceable first priority perfected security interest, subject only to Permitted Liens, to exist in favor of the Administrative Agent (for the benefit of the Secured Parties) in the Loan Party’s interests in the Collateral, including the filing of a UCC financing statement in the applicable jurisdiction adequately describing the Collateral (which may include an “all asset” filing), and naming such Loan Party as debtor and the Administrative Agent as the secured party, and filing continuation statements, amendments or assignments with respect thereto in such filing offices (including any amendments thereto or assignments thereof) and (iv) take all additional action that the Facility Servicer or Administrative Agent (acting at the direction of the Majority Lenders) may reasonably request to perfect, protect and more fully evidence the respective first priority (subject to Permitted Liens) perfected security interests of the parties to this Agreement in the Collateral, or to enable the Administrative Agent to exercise or enforce any of their respective rights hereunder (on its own behalf or through the Facility Servicer).  The Loan Parties shall defend the right, title and interest of the Administrative Agent, for the benefit of the Secured Parties, in, to and under the Collateral against all claims of third parties (other than with respect to Permitted Liens).

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(j)Compliance with Applicable Law.  Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Loan Party shall at all times comply with all Applicable Law (including Environmental Laws and all federal securities laws).

(k)Proper Records.  Each Loan Party 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 earning for each fiscal year all such proper reserves in accordance with GAAP.

(l)Satisfaction of Obligations.  Each Loan Party shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves with respect thereto have been provided on the books of such Loan Party.

(m)Payment of Taxes.  Each Loan Party shall pay and discharge all Taxes, levies, liens and other charges on it or its assets and on the Collateral, 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 or as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(n)Tax Treatment.  The Borrower shall treat the Advances as indebtedness of the Borrower (or, so long as the Borrower is treated as a disregarded entity for U.S. federal income tax purposes, as indebtedness of the entity of which it is considered to be a part) for U.S. federal income tax purposes and to file any and all tax forms in a manner consistent therewith.

(o)Access to Records.  From time to time and, prior to the occurrence and continuance of an Unmatured Event of Default or Event of Default, upon not less than five Business Days advance notice, the Loan Parties shall permit the Administrative Agent or any Person designated by the Administrative Agent or Initial Lender and at the sole cost and expense of the Loan Parties, to, during normal hours, visit and inspect at reasonable intervals its and any Person to which it delegates any of its duties under the Transaction Documents books, records and accounts relating to its business, financial condition, operations, assets and its performance under the Transaction Documents, and to make copies thereof or abstracts therefrom, and to discuss the foregoing with its and such Person’s officers, partners, employees and accountants, all as often as the Administrative Agent or Initial Lender may reasonably request; provided that (i) the Administrative Agent and Initial Lender shall use all reasonable efforts to coordinate their inspections and (ii) so long as an Event of Default has not occurred or is continuing, the Loan Parties are responsible for the cost and expense of no more than one site visit in any calendar year.

(p)Financial Reporting.  The Borrower shall furnish to the Administrative Agent, the Facility Servicer and each Lender

(i)  within 120 days after the end of each fiscal year of the Borrower, commencing with the fiscal year ended December 31, 2020, audited consolidated balance sheet and consolidated statements of operations and cash flow, each with respect to the Borrower and each audited by a firm of nationally recognized independent public accountants, as of the end of such fiscal year;

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(ii)  (A) within 45 days after the end of each of the first three fiscal quarters, an unaudited financial report of the Borrower containing a consolidated balance sheet and a consolidated statement of operations for the most recent such fiscal quarter and (B) within 45 days after the end of each fiscal quarter, (i) a Quarterly LTV Certificate, including the report of an independent third party as agreed to by the Majority Lenders, delivered to the Borrower for such fiscal quarter, (ii) a report by an independent third party reasonably acceptable to the Majority Lenders setting forth the Value of the Eligible Portfolio Assets and Specified CLO Assets as of the end of such fiscal quarter and (iii) a calculation of the Debt Service Coverage Ratio for such fiscal quarter, including a breakdown of NOI and outstanding principal balance for each Eligible Portfolio Asset that is a First Lien Senior Secured Portfolio Asset as of the end of such quarter;

(iii) within 120 days after the end of each fiscal year of the Sponsor, commencing with the fiscal year ended December 31, 2020, audited consolidated statements of the Sponsor of assets, liabilities and capital, and audited balance sheet, consolidated statements of operations and cash flow, audited by a firm of nationally recognized independent public accountants, as of the end of such fiscal year; and

(iv) no later than three Business Days prior to any Reporting Date for which the Borrower is requesting a distribution pursuant to Section 2.08(a)(vi), a statement of the amounts to be so distributed , which amounts shall not exceed the amount necessary for the Sponsor to maintain its status as a real estate investment trust for federal income tax purposes and to avoid income and excise tax under Section 857 and 4981 of the Code (after giving effect to any other available funds of the Sponsor and its Affiliates).

The documents required to be delivered pursuant to this Section 5.01(p) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date on which such materials are publicly available as posted on the Electronic Data Gathering, Analysis and Retrieval system (EDGAR); provided that:  (A) upon written request by the Administrative Agent, the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.  The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such document to it and maintaining its copies of such documents.

(q)Sanctions and Anti-Terrorism, Anti-Money Laundering and Anti-Corruption Compliance.  Each Loan Party shall maintain in effect policies and procedures designed to ensure compliance by such Loan Party and its directors, officers, employees, and agents with applicable Sanctions and Anti-Terrorism Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.

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(r)Joinder to Guaranty Agreement.   Each Loan Party shall cause any Subsidiary of the Sponsor that owns any Specified CLO after the date of this Agreement to become party to the Guaranty Agreement to the same extent as the Sponsor’s Subsidiaries party thereto on the Closing Date.

(s)Capitalization. The Borrower, in connection with the indemnity provided in Section 10.01, shall maintain access to sufficient capital as to meet its ongoing indemnity obligations until such obligation ceases to exist (other than such obligations which expressly survive termination of this Agreement) for which a claim has not been made.

Section 5.02Negative Covenants of the Loan Parties

.  From the Closing Date until the Facility Termination Date:

(a)Protection of Title.  Except as otherwise permitted under this Agreement, no Loan Party shall take any action which would directly or indirectly materially impair or materially and adversely affect such Loan Party’s title to the Collateral Portfolio or the Pledged Equity, as applicable.

(b)Transfer Limitations.  Except as permitted pursuant to Sections 2.10, 5.02(f) or 5.02(i), no Loan Party shall transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose of, or pledge or hypothecate, directly or indirectly, any interest in the Collateral to any Person other than the Administrative Agent for the benefit of the Secured Parties or in connection with Permitted Liens, or engage in financing transactions or similar transactions with respect to the Collateral with any person other than pursuant to this Agreement.  Notwithstanding the foregoing, with the prior written approval of the Initial Lender in its sole discretion, the Borrower may transfer a portion of the Pledged Equity to any TRS Subsidiary so long as (1) such TRS Subsidiary is a special purpose entity formed pursuant to limited liability company agreement substantially in the form of Acres Real Estate TRS 9 LLC’s limited liability company agreement, (2) such TRS Subsidiary enters into a Pledge and Guaranty Agreement, (3) such TRS Subsidiary has delivered to the Initial Lender financing statements describing the Collateral and the Pledged Equity and naming such TRS Subsidiary as debtor and the Administrative Agent, on behalf of the Secured Parties, as secured party and other, similar instruments or documents, as may be necessary or, in the opinion of the Administrative Agent, desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the Administrative Agent’s, on behalf of the Secured Parties, interests in the Collateral and such Pledged Equity, (4) such TRS Subsidiary has delivered to the Administrative Agent the certificated equity of the Permitted REO Subsidiary representing the membership interest of such Permitted REO Subsidiary acquired from the Borrower, and the related assignment duly executed in blank, and (5) such TRS Subsidiary has delivered to the Initial Lender any other documents as the Initial Lender or Administrative Agent may require in connection therewith, including a Subordination Agreement if applicable and opinions of counsel to the Loan Parties or such TRS Subsidiary, reasonably acceptable to the Initial Lender and the Administrative Agent.

(c)Indebtedness; Liens.  No Loan Party shall create, incur, assume or suffer to exist any Indebtedness for borrowed money other than the Obligations.  No Loan Party shall create, incur or permit to exist any Lien in or on any of the Collateral other than Permitted Liens.

(d)Organizational Documents.  No Loan Party shall modify or terminate any of its organizational or operational documents in any manner that would adversely affect the interests of the Lenders in any material respect.

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(e)Merger, Acquisitions, Sales, etc.  No Loan Party shall change its organizational structure, enter into any transaction of merger or consolidation or amalgamation or Sale (other than pursuant to Section 2.10), or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) in any manner that would adversely affect the interests of the Lenders without the prior written consent of all Lenders.

(f)Use of Proceeds.  The Borrower shall not use the proceeds of the Advance other than (i) to finance Transfer of the Portfolio Assets and refinancing of related indebtedness, (ii) to pay fees and expenses of the Sponsor, Holdings and the Borrower in connection with the transactions contemplated by this Agreement, including brokers fees, but excluding interest, and (iii) to make a Restricted Junior Payment to Holdings and the Sponsor so long as at the time of such Restricted Junior Payment, the Advances Outstanding do not exceed the Borrowing Base as of such time and no Event of Default or Unmatured Event of Default has occurred and is continuing.  

(g)Limited Assets.  The Borrower shall not hold or own any assets that are not part of the Collateral Portfolio or as otherwise contemplated by Section 5.01(a).

(h)Tax Treatment.  Neither Borrower nor any other Person on Borrower’s behalf shall make an election to be, or take any other action that is reasonably likely to result in the Borrower being treated as a corporation for U.S. federal income tax purposes and the Borrower shall take all steps necessary to avoid being treated as a corporation for U. S. federal income tax purposes.  The Borrower shall not make any election to be, or take any other action that is reasonably likely to result in the Borrower being, treated as other than an entity disregarded from its owner under Treasury Regulation Section 301.7701-3(c).

(i)Restricted Junior Payments.  The Borrower shall not make distributions of Portfolio Assets except as expressly contemplated under Section 2.10.  No Loan Party shall make any Restricted Junior Payment, except as expressly permitted under Section 2.08.

(j)ERISA Matters.  Except as would not reasonably be expected to result in a Material Adverse Effect, the Borrower shall not (i) fail to meet the minimum funding standard set forth in Sections 302(a) and 303 of ERISA and Sections 412(a) and 430 of the Code with respect to any Pension Plan, (ii) fail to make any payments to a Multiemployer Plan that the Borrower may be required to make under the agreement relating to such Multiemployer Plan or any law pertaining thereto, (iii) terminate any Pension Plan so as to result, directly or indirectly in any liability to the Borrower or (iv) permit to exist any occurrence of any Reportable Event with respect to any Pension Plan.

(k)Instructions Regarding Payments.  The Borrower (and the Portfolio Asset Servicer on its behalf) shall not make any change in its instructions to the Obligors or any agent, administrative agent, Counterparty Lender, Underlying Agent, Underlying Servicer or issuer of any Portfolio Asset, as applicable, regarding payments to be made with respect to the related Portfolio Asset to the Collection Account, as applicable, unless the Majority Lenders have directed, or otherwise has consented in writing to, such change.

(l)Change of Jurisdiction, Location, Names or Location of Portfolio Asset Files.  No Loan Party shall change the jurisdiction of its formation, change the location of its principal place of business and chief executive office or make any change to its name or use any tradenames, fictitious names, assumed names, “doing business as” names or other names unless, prior to the effective date of any such change in the jurisdiction of its formation, change in location or name change or use, such Loan Party provides at

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least ten days prior written notice thereof and delivers to the Administrative Agent such financing statements as the Administrative Agent (acting at the direction of the Majority Lenders) may request to reflect such change in the jurisdiction of its formation, change in location or name change or use, together any other documents and instruments as the Administrative Agent (acting at the direction of the Majority Lenders) may reasonably request in connection therewith.

(m)Amendments to Portfolio Assets.  The Borrower shall not amend, waive, modify, supplement, terminate, cancel or release any provision of, or any Required Portfolio Document or other agreement, instrument or other document related to, a Portfolio Asset that is real estate owned real property or a preferred equity interest without the consent of the Initial Lender.

(n)No Changes in Fees.  The Borrower shall not make any changes to the Fees or amend, restate, supplement or otherwise modify the Fee Letters in any material respect without the prior written approval of all parties to any applicable Fee Letter and all Lenders.

(o)Sanctions and Anti-Terrorism, Anti-Money Laundering and Anti-Corruption Compliance.  The Borrower shall not use the proceeds of any Advance, directly or indirectly, for any payments in violation of any applicable Anti‐Terrorism Laws, Anti‐Money Laundering Laws or Anti‐Corruption Laws or in any other manner that would constitute or result in a violation of Sanctions and Anti-Terrorism Laws, Anti-Money Laundering or Anti-Corruption Laws by any Person.

(p)Valuation Policy.  The Borrower shall not make any material change to the Valuation Policy without the consent of the Initial Lender.

ARTICLE VI.
EVENTS OF DEFAULT

Section 6.01Events of Default

.  If any of the following events (each, an “Event of Default”) occurs:

(a)the Borrower fails to make any payment of (i) any Obligation due on the Maturity Date, (ii) any Obligation due upon or immediately after the Leasehold Mortgage Event, or (iii) any Obligation (other than as provided in the preceding clauses (i) and (ii)) when due and such failure is not cured within ten Business Days;

(b)the Borrower defaults in making any payment required to be made under one or more agreements for borrowed money to which it is a party in an aggregate principal amount in excess of $1,000,000, or an event of default is declared under any such agreement, in each case, and such default is not cured or remedied within the applicable cure period, if any, provided for under such agreement;

(c)any failure on the part of the Borrower or Holdings to observe or perform any its covenants or agreements set forth in this Agreement or the other Transaction Documents to which it is a party that has a Material Adverse Effect on the Secured Parties (other than covenants or agreements with respect to which another clause of this Section 6.01 expressly relates, which shall not, on its own, constitute an Event of Default under this clause (c)) and the same continues unremedied for a period of 30 days (if such failure can be remedied) after the earlier to occur of (i) the date on which written notice of such failure requiring the same to be remedied shall have been given to the Borrower by the Administrative Agent or any Lender and (ii) the date on which a Responsible Officer of the Borrower acquires knowledge thereof;

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(d)the occurrence of a Bankruptcy Event relating to the Borrower, Holdings, any TRS Subsidiary, any Permitted REO Subsidiary, Opco, or Propco;

(e)the rendering of one or more final judgments, decrees or orders by a court or arbitrator of competent jurisdiction against the Borrower, Holdings, any TRS Subsidiary, any Permitted REO Subsidiary, Opco, or Propco for the payment of money in excess of $5,000,000 in the aggregate (unless such judgment is covered by third party insurance as to which the insurer has been notified of such judgment, decree or order and has not denied or failed to acknowledge coverage) where the Borrower, Holdings, such TRS Subsidiary, such Permitted REO Subsidiary, Opco, or Propco, as applicable, shall not have either (i) discharged or provided for the discharge of any such judgment, decree or order in accordance with its terms within 60 days or (ii) perfected a timely appeal, decree or order and caused the execution of the same to be stayed during the pendency of the appeal;

(f)(i) the breach by a Loan Party of the covenants set forth in Sections 5.01(c) (with respect to existence only), (d), (e), (f), (g), (h), (i), (o), (p) and (q), (ii) any failure on the part of a Loan Party to observe or perform any covenants or agreements of the Loan Parties set forth in Section 5.02, or (iii) the breach by any TRS Subsidiary, any Permitted REO Subsidiary, Opco, or Propco of the covenants set forth in any Transaction Document to which such TRS Subsidiary, such Permitted REO Subsidiary, Opco, or Propco is a party;

(g)(i) any Transaction Document, or any Lien or security interest granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of the Borrower, Holdings, any TRS Subsidiary, any Permitted REO Subsidiary, Opco, or Propco, as applicable; provided that, there shall be no Event of Default under this clause (g)(i) to the extent such Event of Default arises solely from the action (or inaction) of the Account Bank, the Collateral Custodian, the Administrative Agent, the Facility Servicer or a Lender, (ii) the Borrower, Holdings, any TRS Subsidiary, any Permitted REO Subsidiary, Opco, Propco, the Sponsor or any of their Affiliates shall, directly or indirectly, contest in writing in any manner the effectiveness, validity, binding nature or enforceability of any Transaction Document or any Lien or security interest thereunder or (iii) any security interest securing any obligation under any Transaction Document shall, in whole or in part, cease to be a first priority perfected security interest (subject to Permitted Liens) except as otherwise expressly permitted to be released in accordance with the applicable Transaction Document; provided that there shall be no Event of Default under this clause (g)(iii) to the extent such Event of Default arises from the action (or inaction) of the Account Bank, the Collateral Custodian, the Administrative Agent, the Facility Servicer or a Lender;

(h)any Change of Control shall occur; or

(i)any representation, warranty or certification made by the Borrower, Holdings, any TRS Subsidiary, any Permitted REO Subsidiary, Opco, or Propco in any Transaction Document or in any agreement, instrument, certificate or other document delivered pursuant to any Transaction Document shall prove to have been incorrect in any material respect when made;

then the Administrative Agent shall, at the direction of the Majority Lenders, or the Majority Lenders may, in each case, by notice to the Borrower, declare the Maturity Date to have occurred; provided that, in the case of any event described in Section 6.01(d), the Maturity Date is deemed to have occurred automatically upon the occurrence of such event.  Upon the occurrence and during the continuation of

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any Event of Default, (i) the Administrative Agent shall, at the direction of the Majority Lenders, or the Majority Lenders may declare the Advances to be immediately due and payable in full (without presentment, demand, protest or notice of any kind all of which are hereby waived by the Borrower) and any other Obligations to be immediately due and payable; provided that, in the case of any event described in Section 6.01(d), the Advances and other Obligations become immediately due and payable in full (without presentment, demand, protest or notice of any kind all of which are hereby waived by the Borrower) without the need of any notice to the Borrower upon the occurrence of such event and (ii) the Administrative Agent shall, at the direction of the Majority Lenders, instruct the Account Bank to distribute all amounts on deposit in the Collection Account as described in Section 2.08(c) (provided that the Borrower shall in any event remain liable to pay such Advances and all such amounts and Obligations immediately in accordance with Section 2.08(c)).  In addition, upon the occurrence and during the continuation of any Event of Default, the Lenders and the Administrative Agent, on behalf of the Secured Parties, shall have, in addition to all other rights and remedies under this Agreement, the other Transaction Documents or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction and other Applicable Law, which rights shall be cumulative.

Section 6.02Pledged Equity

.  

(a)Except as otherwise set forth in Section 6.02(b) or 6.02(c):

(i)Holdings shall be entitled to exercise any and all voting or other consensual rights and powers inuring to an owner of Pledged Equity or any part thereof and Holdings agrees that it shall exercise such rights for purposes not in contravention of the terms of this Agreement and the other Transaction Documents.

(ii)Holdings shall be entitled to receive and retain any and all dividends and other distributions paid on or distributed in respect of the Pledged Equity (without any obligation to contribute such amounts to the Collection Account), to the extent and only to the extent that such dividends and other distributions are not prohibited by the terms and conditions of this Agreement; provided that any noncash dividends or other distributions that would constitute Pledged Equity, shall be and become part of the Pledged Equity, and, if received by Holdings, shall not be commingled by Holdings with any of its other property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent and the Secured Parties and Holdings shall promptly take all steps reasonably necessary to ensure the validity, perfection and priority (subject to Permitted Liens), including promptly delivering the same to the Administrative Agent in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).  So long as no Event of Default has occurred and is continuing, the Administrative Agent shall cooperate with Holdings with respect to making exchanges of Pledged Equity in connection with any exchange or redemption of such Pledged Equity not prohibited by this Agreement, which such cooperation shall include delivery of any such Pledged Equity in exchange for replacement Pledged Equity.  For the avoidance of doubt, the Borrower agrees to reimburse the Administrative Agent for any costs or expenses incurred due to the provisions of this Section 6.02(a)(ii).

(b)Upon the occurrence and during the continuance of an Event of Default (and after the delivery of notice to Holdings) or upon the occurrence of any event described in Section 6.01(d) (without notice), all rights of Holdings to dividends or other distributions that Holdings is authorized to receive

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pursuant to Section 6.02(a)(ii) shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends or other distributions during the continuance of an Event of Default.  All dividends or other distributions received by Holdings contrary to the provisions of this Section 6.02(b) shall be held in trust for the benefit of the Administrative Agent, shall be segregated from other property or funds of Holdings and shall be promptly delivered to the Administrative Agent in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).  Any and all money and other property paid over to or received by the Administrative Agent pursuant to the provisions of this Section 6.02(b) shall be retained by the Administrative Agent in the Collection Account and shall be applied in accordance with the terms of this Agreement.  After all Events of Default have been waived or are no longer continuing, the Administrative Agent, upon written direction from the Majority Lenders, shall promptly repay to Holdings (without interest) all dividends or other distributions that Holdings would otherwise be permitted to retain pursuant to the terms of Section 6.02(a)(ii) and that remain in such account.

(c)Upon the occurrence and during the continuance of an Event of Default (and after the delivery of notice to Holdings) or upon the occurrence of any event described in Section 6.01(d) (without notice), then (i) all rights of Holdings to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to Section 6.02(a)(i) shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers acting at the direction of the Majority Lenders; provided that, unless otherwise directed by the Majority Lenders, the Administrative Agent shall have the right from time to time following and during the continuance of an Event of Default to permit Holdings to exercise such rights and (ii) in order to permit the Administrative Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder, Holdings shall promptly execute and deliver (or cause to be executed and delivered) to the Administrative Agent all proxies, dividend payment orders and other instruments as the Administrative Agent may from time to time reasonably request.  After all Events of Default have been waived or are no longer continuing, Holdings shall have the exclusive right to exercise the voting or consensual rights and powers that Holdings would otherwise be entitled to exercise pursuant to the terms of Section 6.02(a)(i).

(d)Any notice given by the Administrative Agent to the Borrower under this Section 6.02 shall be given in writing.

Section 6.03Additional Remedies

.  

(a)Upon the occurrence and during the continuation of an Event of Default, and without limiting the remedies provided in this Article VI, the Administrative Agent shall, at the direction of the Majority Lenders, (i) sell or otherwise dispose of any of the Collateral or the Pledged Equity at public or private sales and take possession of the proceeds of any such sale or disposition, (ii) instruct the obligor or obligors on any account, agreement, instrument or other obligation constituting Collateral or Pledged Equity to make any payment required by the terms of such account, agreement, instrument or other obligation to or at the direction of the Administrative Agent (acting at the direction of the Majority Lenders), (iii) give notice of sole control or any other instruction under the Account Control Agreement or any Custodial and Account Control Agreement and take any action therein with respect to Collateral subject thereto, (iv) in accordance with Section 6.02, transfer and register in its name or in the name of

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its nominee the whole or any part of the Pledged Equity, exchange certificates or instruments representing or evidencing Pledged Equity for certificates or instruments of smaller or larger denominations, exercise the voting and all other rights as a holder with respect thereto, including exchange, subscription or any other rights, privileges or options pertaining to any Pledged Equity, and otherwise act with respect to the Pledged Equity as though the Administrative Agent was the absolute owner thereof and (v) in accordance with Section 6.02, collect and receive all cash dividends, interest, principal and other distributions made on any Pledged Equity.

(b)Any Collateral or Pledged Equity to be sold or otherwise disposed of pursuant to this Article VI may be sold or disposed of in one or more parcels at public or private sale or sales (which sales may be adjourned or continued from time to time with or without notice upon such terms and conditions, including price, as the Administrative Agent may deem commercially reasonable, for cash or on credit or for future delivery without assumption of any credit risk.  Any sale or disposition of Collateral or Pledged Equity may be made without the Administrative Agent giving warranties of any kind with respect to such sale or disposition and the Administrative Agent may specifically disclaim any warranties of title or the like.  The Administrative Agent may comply with any applicable State or federal law requirements in connection with a sale or disposition of the Collateral or Pledged Equity and compliance will not be considered to adversely affect the commercial reasonableness of any such sale or disposition.  If any notice of a proposed sale or disposition of the Collateral or Pledged Equity is required by law, such notice is deemed commercially reasonable and proper if given at least ten days before such sale or disposition.  The Administrative Agent has the right upon any public sale of Collateral or Pledged Equity and, to the extent permitted by law, upon any such private sale of Collateral or Pledged Equity, to purchase the whole or any part of the Collateral or Pledged Equity so sold or disposed of free of any right of equity redemption, which equity redemption the Borrower hereby waives.  Upon any sale or disposition of Collateral or Pledged Equity, the Administrative Agent has the right to deliver and transfer to the purchaser or transferee thereof the Collateral or Pledged Equity so sold or disposed of.

(c)For the avoidance of doubt, this Agreement (including this Article VI) shall be subject to the special servicing activities provisions in Section 8.05.

ARTICLE VII.THE ADMINISTRATIVE AGENT

Section 7.01Appointment and Authority

.  Each of the Lenders hereby irrevocably appoints Wells Fargo Bank, National Association to act on its behalf as the Administrative Agent hereunder and under the other Transaction Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article VII are solely for the benefit of the Administrative Agent, the Lenders and the other Secured Parties, and neither the Borrower nor Holdings shall have rights as a third-party beneficiary of any of such provisions (except Section 7.05(a)).  It is understood and agreed that the use of the term “agent” herein or in any other Transaction Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

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Section 7.02Exculpatory Provisions

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(a)The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Transaction Documents, and its duties hereunder shall be administrative in nature.  Without limiting the generality of the foregoing, the Administrative Agent:

(i)shall not be subject to any fiduciary or other implied duties, regardless of whether an Event of Default or Unmatured Event of Default has occurred and is continuing;

(ii)shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Transaction Documents that the Administrative Agent is required to exercise as directed in writing by the Majority Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Transaction Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Transaction Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Bankruptcy Law; and

(iii)shall not, except as expressly set forth herein and in the other Transaction Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower, Holdings or any of their respective Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

(b)The Administrative Agent shall not be liable for any action taken or not taken by it or errors in judgment made (i) with the consent or at the request of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Article VI and Section 11.01), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.  The Administrative Agent shall not be deemed to have knowledge of any default, Event of Default, Unmatured Event of Default or event or information, or be required to act upon any default, Event of Default, Unmatured Event of Default or event or information (including the sending of any notice) unless a Responsible Officer of the Administrative Agent shall have received written notice or has actual knowledge of such default, Event of Default, Unmatured Event of Default or event or information, and shall have no duty to take any action to determine whether any such event, default, Unmatured Event of Default or Event of Default has occurred.  Delivery of any reports, information and documents to the Administrative Agent provided for herein is for informational purposes only and the Administrative Agent’s receipt of such reports (including monthly distribution reports) and any publicly available information, shall not constitute actual or constructive knowledge or notice of any information contained therein or determinable from information contained therein.

(c)The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Transaction Document, (ii) the contents or accuracy of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith and shall not be required to recalculate, certify or verify any information therein, (iii) the performance or observance of

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any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Event of Default or Unmatured Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Transaction Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

(d)Knowledge of the Administrative Agent shall not be attributed or imputed to Wells Fargo’s other roles in the transaction and knowledge of the Collateral Custodian shall not be attributed or imputed to the Administrative Agent (other than those where the roles are performed by the same group or division within Wells Fargo or otherwise share the same Responsible Officers), or any affiliate, line of business, or other division of Wells Fargo (and vice versa).

(e)Any organization or entity into which the Administrative Agent may be merged or converted or with which it may be consolidated, or any organization or entity resulting from any merger, conversion or consolidation to which the Administrative Agent shall be a party, or any organization or entity succeeding to all or substantially all of the corporate trust business of the Administrative Agent, or of any business line or product type within the corporate trust business of the Administrative Agent, shall be the successor of the Administrative Agent hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto.

(f)To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against the Administrative Agent, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages), including lost profits, arising out of, in connection with, or as a result of, this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Advance, or the use of the proceeds thereof.

(g)Before the Administrative Agent acts or refrains from taking any action under this Agreement, it may require an officer’s certificate or an opinion of counsel (which may come from internal counsel) from the party requesting that the Administrative Agent act or refrain from acting in form and substance reasonably acceptable to the Administrative Agent.  The Administrative Agent shall not be liable for any action it takes or omits to take in good faith in reliance on such officer’s certificates or opinions of counsel.

(h)The Administrative Agent shall not be required to expend or risk its own funds or otherwise incur any liability, financial or otherwise, in the performance of any of its duties, or the exercise of any of its rights or powers.

(i)The Administrative Agent shall incur no liability if, by reason of any provision of any future law or regulation thereunder, or by any force majeure event, including but not limited to natural disaster, act of war or terrorism, or other circumstances beyond its reasonable control, the Administrative Agent shall be prevented or forbidden from doing or performing any act or thing which the terms of this Agreement provide shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in this Agreement or any other Transaction Document.

(j)The right of the Administrative Agent to perform any permissive or discretionary act enumerated in this Agreement or any related document shall not be construed as a duty.

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(k)The Administrative Agent shall not be responsible for, and makes no representation or warranty as to, the validity, legality, enforceability, sufficiency or adequacy of this Agreement, the other Transaction Documents or any related document, or as to the correctness of any statement contained in any thereof.  The recitals contained herein and in the other Transaction Documents shall be construed as the statements of the Borrower.  The Administrative Agent shall not be accountable for the Borrower’s use of the Advances or any money paid to the Borrower pursuant to the provisions hereof, and it shall not be responsible for any statement of the Borrower in this Agreement or in any other Transaction Document.

(l)The Administrative Agent shall not be liable for any action or inaction of the Borrower, Holdings, the Lenders, the Collateral Custodian, the Facility Servicer, the Portfolio Asset Servicer or any other party (or agent thereof) to this Agreement or any related document and may assume compliance by such parties with their obligations under this Agreement or any related agreements, unless a Responsible Officer of the Administrative Agent shall have received written notice to the contrary at the office of the Administrative Agent set forth in Section 11.02.

(m)The rights, benefits, protections, immunities and indemnities afforded the Administrative Agent hereunder shall extend to the Administrative Agent (in any of its capacities) under any other Transaction Document or related agreement as though set forth therein in their entirety mutatis mutandis.

Section 7.03Reliance by Administrative Agent

.  The Administrative Agent shall be entitled to rely conclusively upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, opinion, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of an Advance that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Advance.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower or Holdings), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice or opinion of any such counsel, accountants or experts.  As to any matters not expressly provided for by any Transaction Document, the Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under any Transaction Document in accordance with instructions given by the Majority Lenders or, if provided in this Agreement, in accordance with the instructions given by the Majority Lenders or all Lenders as is required in such circumstance, and such instructions of such Lenders and any action taken or failure to act pursuant to such instructions shall be binding on all of the Lenders.

Section 7.04Delegation of Duties

.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Transaction Document by or through any one or more agents, sub-agents, affiliates or attorneys appointed by the Administrative Agent.  The Administrative Agent and any such agents, sub-agent, affiliates or attorneys may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such party and to the Related Parties of the

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Administrative Agent and any such party.  The Administrative Agent shall not be responsible for the supervision, negligence or misconduct of any agent, sub-agents or attorney appointed by it with due care.

Section 7.05Resignation of Administrative Agent

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(a)The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Majority Lenders shall have the right to appoint a successor (with the consent of the Borrower, such consent not to be unreasonably withheld, conditioned or delayed and no such consent being required when an Event of Default has occurred and is continuing); provided that in no event shall any such successor be a Competitor.  If no such successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Majority Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders, may petition a court of competent jurisdiction for the appointment of a successor Administrative Agent.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b)With effect from the Resignation Effective Date (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Transaction Documents and (ii) except for any fees, expenses and indemnity payments owed to the retiring Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Majority Lenders appoint a successor Administrative Agent as provided for above.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Administrative Agent (other than any rights to fees, expenses and indemnity payments owed to the retiring Administrative Agent), and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Transaction Documents.  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Transaction Documents, the provisions of this Article VII and Section 11.07 shall continue in effect for the benefit of such retiring Administrative Agent, its sub‑agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

Section 7.06Non-Reliance on Agents and Other Lenders

.  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Transaction Document or any related agreement or any document furnished hereunder or thereunder.

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Section 7.07Reimbursement by Lenders

.  To the extent that the Borrower for any reason fails to pay any amount required under Article X or Section 11.07 to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s Pro Rata Share at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity.  The obligations of the Lenders to make payments pursuant to this Section 7.07 are several and not joint.  The failure of any Lender to make any such payment on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its payment under this Section 7.07.

Section 7.08Administrative Agent May File Proofs of Claim

.  In case of the pendency of any proceeding under any Bankruptcy Relief Law or any other judicial proceeding relative to the Borrower or Holdings, the Administrative Agent (irrespective of whether the principal of any Advance shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Advances and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Secured Parties (including any claim for the reasonable compensation, expenses, disbursements and advances of the Secured Parties and their respective agents and counsel and all other amounts due the Secured Parties under Section 11.07) allowed in such judicial proceeding; and

(b)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 11.07.

Section 7.09Collateral Matters

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(a)Each Lender authorizes the Administrative Agent to release any Lien on any Collateral granted to or held by the Administrative Agent, for the benefit of the Secured Parties, under this Agreement or any other Transaction Document (i) as provided in Section 2.11 or (ii) if approved, authorized or ratified in writing in accordance with Section 11.01.  Upon request by the Administrative Agent at any time, the Majority Lenders will confirm in writing the Administrative Agent’s authority to

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release its interest in particular types or items of property.  In each case as specified in this Section 7.09, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the Facility Servicer such documents as the Facility Servicer may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under this Agreement or the other Transaction Documents in accordance with the terms of the Transaction Documents and this Section 7.09.

(b)The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, for the legality, enforceability, effectiveness or sufficiency of the Transaction Documents, the existence, priority, creation, validity, enforceability or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by the Borrower or the Facility Servicer or the Portfolio Asset Servicer in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral or the Lien thereon.

(c)It is understood and agreed that the Administrative Agent (i) shall have no responsibility with respect to the determination of whether any Pledged Equity is certificated or uncertificated and (ii) the Administrative Agent shall only be responsible for holding Pledged Equity to the extent actually received.

(d)The Administrative Agent shall monitor any UCC financing statements filed by the Initial Lender in connection with this Agreement solely to the extent that the Initial Lender provides such financial statements to the Administrative Agent.  The Administrative Agent shall notify the Lenders when the time-period to file continuation statements for such financing statements has commenced and at least 60 days prior to the date such financing statements would terminate; provided that the Administrative Agent shall have no liability or obligation to file any such continuation statements.  The Administrative Agent shall have no other duty to see to, or be responsible for the correctness or accuracy of, any recording, filing or depositing of this Agreement or any agreement referred to herein, or any financing statement or continuation statement evidencing a security interest, or to see to the maintenance of any such recording or filing or depositing or to any rerecording, refilling or re-depositing of any thereof.

ARTICLE VIII.
ADMINISTRATION AND SERVICING OF COLLATERAL PORTFOLIO

Section 8.01Appointment and Designation of the Applicable Servicer

(a).

(a)Initial Applicable Servicer.  

(i)The Borrower hereby appoints Massachusetts Mutual Life Insurance Company, pursuant to the terms and conditions of this Agreement, as Facility Servicer, with the authority to service, administer and exercise rights and remedies, on behalf of Borrower, in respect of the Collection Account, and to take the actions required of it hereunder and under the other Transaction Documents.  Massachusetts Mutual Life Insurance Company hereby accepts such appointment and agrees to perform the duties and responsibilities of the Facility Servicer pursuant to the terms hereof until such time as it resigns or is removed as Facility Servicer pursuant to the terms hereof.  The Facility Servicer and Borrower hereby acknowledge that the Administrative Agent and the Secured Parties are third party beneficiaries of the obligations undertaken by the Facility Servicer hereunder.

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(ii)The Borrower hereby appoints ACRES Capital Servicing LLC, pursuant to the terms and conditions of this Agreement, as Portfolio Asset Servicer, with the authority to service, administer and exercise rights and remedies, on behalf of Borrower, in respect of the payments to Borrower or Portfolio Asset Servicer under the Collateral Portfolio that are to be Collections,  and to take the actions required of it hereunder and under the other Transaction Documents.  ACRES Capital Servicing LLC hereby accepts such appointment and agrees to perform the duties and responsibilities of the Portfolio Asset Servicer pursuant to the terms hereof until such time as it resigns or is removed as Portfolio Asset Servicer pursuant to the terms hereof.  The Portfolio Asset Servicer and Borrower hereby acknowledge that the Administrative Agent and the Secured Parties are third party beneficiaries of the obligations undertaken by the Portfolio Asset Servicer hereunder.

(b)Servicer Termination Notice.  The Borrower, each Applicable Servicer and the Administrative Agent hereby agree that, upon the occurrence of a Servicer Termination Event, the Administrative Agent, by written notice to an Applicable Servicer (a “Servicer Termination Notice”), shall, upon the direction of the Majority Lenders, terminate all of the rights, obligations, power and authority of such Applicable Servicer under this Agreement.  On and after the receipt by such Applicable Servicer of a Servicer Termination Notice pursuant to this Section 8.01(b), such Applicable Servicer shall continue to perform all servicing functions under this Agreement until the date specified in the Servicer Termination Notice or otherwise specified by the Administrative Agent (upon the direction of the Majority Lenders) in writing or, if no such date is specified in such Servicer Termination Notice or otherwise specified by the Administrative Agent (upon direction of the Majority Lenders), until a date mutually agreed upon by such Applicable Servicer and the Administrative Agent (upon direction of the Majority Lenders).  If such Applicable Servicer is the Facility Servicer, such Applicable Servicer shall be entitled to receive, to the extent of funds available therefor pursuant to Section 2.08, the Facility Servicing Fees accrued until such termination date as well as any other fees, amounts, expenses or indemnities it is entitled to pursuant to the provisions of this Agreement and the Facility Servicer Fee Letter (collectively, the “Servicer Termination Expenses”).  To the extent amounts held in the Collection Account and paid in accordance with Section 2.08 are insufficient to pay the Servicer Termination Expenses, Borrower (and to the extent Borrower fails to so pay, the Lenders based on their Pro Rata Share) agree to pay the Servicer Termination Expenses within ten Business Days of receipt of an invoice therefor.  On the termination date specified in this Section 8.01(b), such Applicable Servicer agrees that it will terminate its activities as Facility Servicer or Portfolio Asset Servicer, as applicable, hereunder in a manner that the Administrative Agent (acting at the direction of the Majority Lenders) and, if no Event of Default has occurred and is continuing at such time, the Borrower, believes will facilitate the transition of the performance of such activities to a Replacement Servicer, and the Replacement Servicer shall assume each and all of such Applicable Servicer’s obligations under this Agreement and the other Transaction Documents, on the terms and subject to the conditions herein set forth, and such Applicable Servicer shall use its commercially reasonable efforts to assist the Replacement Servicer in assuming such obligations.

(c)Appointment of Replacement Servicer.  At any time following the delivery of a Servicer Termination Notice or receipt of any notice of resignation under Section 8.09, the Administrative Agent (acting at the direction of the Majority Lenders) shall, with the consent of Borrower (such consent not to be unreasonably withheld or delayed and such consent not being required if an Event of Default has occurred and is continuing), appoint a new servicer (the “Replacement Servicer”), which appointment shall take effect upon the Replacement Servicer accepting such appointment by a written assumption in a form satisfactory to the Administrative Agent (acting at the direction of the Majority Lenders) and, if no

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Event of Default has occurred and is continuing at such time, Borrower (such approval not to be unreasonably withheld or delayed).  Any Replacement Servicer shall be an established financial institution, having a net worth of not less than $50,000,000 and whose regular business includes the servicing of assets similar to the Collateral Portfolio;provided that in no event shall any such Replacement Servicer be a Competitor.

(d)Liabilities and Obligations of Replacement Servicer.  Upon its appointment, any Replacement Servicer shall be the successor in all respects to such Applicable Servicer with respect to servicing functions under this Agreement and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on such Applicable Servicer by the terms and provisions hereof, and all references in this Agreement to such Applicable Servicer shall be deemed to refer to the Replacement Servicer; provided that any Replacement Servicer shall have (i) no liability with respect to any action performed by the prior Applicable Servicer prior to the date that the Replacement Servicer becomes the successor to such Applicable Servicer or any claim of a third party based on any alleged action or inaction of the prior Applicable Servicer, (ii) no obligation with respect to any Taxes on behalf of Borrower, except for any payment made out of the Collection Account as provided in Section 2.13, (iii) no obligation to pay any of the fees and expenses of any other party to the transactions contemplated hereby and (iv) no liability or obligation with respect to any prior Applicable Servicer indemnification obligations of any prior Applicable Servicer.  The indemnification obligations of the Replacement Servicer upon becoming an Applicable Servicer, are expressly limited to those arising on account of its gross negligence or willful misconduct, or the failure to perform materially in accordance with its duties and obligations set forth in this Agreement.

(e)Authority and Power.  All authority and power granted to an Applicable Servicer under this Agreement shall automatically cease and terminate on the Facility Termination Date and shall pass to and be vested in the Borrower thereafter.  Each Applicable Servicer agrees to cooperate with the Borrower in effecting the termination of the responsibilities and rights of each Applicable Servicer to conduct servicing of this Agreement (including the right to direct remittances out of the Collection Accounts).

(f)Subcontracts.  The Facility Servicer may subcontract with any other Person for servicing and administering in respect of the payments to the Borrower or Portfolio Asset Servicer under the Collateral Portfolio that are to be Collections under this Agreement; provided that (A) the Facility Servicer shall select any such Person with reasonable care and shall be solely responsible for the fees and expenses payable to any such Person, (B) the Facility Servicer shall not be relieved of, and shall remain liable for, the performance of the duties and obligations of the Facility Servicer pursuant to the terms hereof without regard to any subcontracting arrangement and (C) any such subcontract shall be terminable upon the occurrence of a Servicer Termination Event.  The Facility Servicer shall not be responsible for the negligence or misconduct of any sub-agent or attorney in fact that it selects with reasonable care.

Section 8.02Duties of the Portfolio Asset Servicer.

(a)Duties.  The Portfolio Asset Servicer shall take or cause to be taken all such actions as may be necessary or advisable to service, administer and collect on the Collateral Portfolio from time to time, all in accordance with Applicable Law and the Servicing Standard and to take the actions of the Portfolio Asset Servicer under this Agreement and the other Transaction Documents.  Without limiting the foregoing, the duties of the Portfolio Asset Servicer shall include the following:

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(i)maintaining the following records for each Portfolio Asset:

a. any Portfolio Asset Assignment;

b. the instructions from the Borrower (or the Portfolio Asset Servicer on Borrower’s behalf) to the Obligors, Underlying Agent, Underlying Servicers, Counterparty Lenders or issuers of any Portfolio Asset to make all payments in respect of such Portfolio Asset directly to the Collection Account;

c. as applicable, any Participation Agreement, any related supplement to such Participation Agreement and the related direction from the related Counterparty Lender to the related Obligor or Underlying Servicer (1) to make all payments in respect of such Portfolio Asset directly to the Collection Account and (2) to deliver to the Portfolio Asset Servicer a copy of all requests, notices and reports required to be delivered by such Counterparty Lender or such Underlying Servicer to Borrower under such Participation Agreement, in each case, acknowledged by such Underlying Servicer;

d. the related Portfolio Asset Checklist or a supplement thereto, copies of the related Loan Agreement and each other agreement instrument or certificate and other document identified in such Portfolio Asset Checklist, and copies of any amendment, waiver, supplement or modification of any thereof that is delivered to the Portfolio Asset Servicer;

e. each request, notice and report delivered by an Obligor, Counterparty Lender, Underlying Agent, Underlying Servicer or issuer of a Portfolio Asset to the Portfolio Asset Servicer, to the extent received by the Portfolio Asset Servicer hereunder, and all requests, notices and other correspondence delivered by the Portfolio Asset Servicer, under a Loan Agreement or Participation Agreement; and

f. all account statements, reports and other documents and correspondence received by the Portfolio Asset Servicer from the Collection Account.

(ii)maintaining all necessary servicing records with respect to the Collateral Portfolio received from the Underlying Servicers and providing such records to the Administrative Agent and each Lender (with a copy to the Collateral Custodian) together with such other information with respect to the Collateral Portfolio (including information relating to the Portfolio Asset Servicer’s performance under this Agreement) as may be required hereunder or as the Administrative Agent, the Initial Lender or the Majority Lenders may reasonably request, including but not limited to:

a. on a monthly basis, as soon as available, but no later than when sent to Borrower, a remittance report for each Portfolio Asset showing the date any payments are or were required to be made with respect to such Portfolio Asset during such month and a description of the type of payment

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(for example, principal, Interest Collections or a combination thereof) to be made on such date;

b. the financial reporting package and all other servicing and other reports for each Obligor and Portfolio Asset described in Section 8.08(c); and

c. any Underlying Obligor Default and the nature thereof.

(iii)maintaining and implementing administrative and operating procedures (including an ability to recreate servicing records received from the Underlying Servicers evidencing the Collateral Portfolio in the event of the destruction of the originals thereof) and keeping and maintaining all documents, books, records and other information received from the Underlying Servicers or pursuant to this Agreement reasonably necessary or advisable for the collection of the Collateral Portfolio;

(iv)promptly delivering to the Administrative Agent, the Collateral Custodian and the Facility Servicer from time to time, such information and servicing records (to the extent received by the Portfolio Asset Servicer), including information relating to the Portfolio Asset Servicer’s performance under this Agreement, as the Administrative Agent, the Collateral Custodian or the Facility Servicer may from time to time reasonably request;

(v)notifying a Responsible Officer of the Administrative Agent of any material action, suit, proceeding, dispute, offset, deduction, defense or counterclaim that is or is threatened to be asserted by an Obligor with respect to any Portfolio Asset (or portion thereof) of which it has knowledge or has received notice;

(vi)monitoring and recording in the records for the Collateral Portfolio any interest rate adjustments in connection with the Loan Agreements to the extent notice thereof is provided by the Underlying Servicers;

(vii)monitoring and recording in the records for the Collateral Portfolio any Tax and insurance escrows and payment with respect to the Underlying Collateral to the extent such information is received from the Underlying Servicers;

(viii)monitoring and recording in the records for the Collateral Portfolio any casualty losses or condemnation proceedings in respect of any related Underlying Collateral and administering any proceeds related thereto in accordance with the applicable Loan Agreements, in each case to the extent such information is provided to the Portfolio Asset Servicer;  

(ix)monitoring all payments made with respect to the Portfolio Assets; and

(x)identifying principal, Interest Collections and Excluded Amounts and preparing statements with respect to Collections, all as required by this Agreement.

(b)Notwithstanding anything to the contrary contained herein, the exercise by the Administrative Agent and the Secured Parties of their rights hereunder shall not release the Portfolio Asset Servicer or the Borrower from any of their duties or responsibilities with respect to the Collateral Portfolio.  The Secured Parties and the Administrative Agent shall not have any obligation or liability with respect to

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any Collateral Portfolio, nor shall any of them be obligated to perform any of the obligations of the Portfolio Asset Servicer or the Borrower hereunder.

Section 8.03Duties of the Facility Servicer.  

(a)The Facility Servicer shall take or cause to be taken all such actions as may be necessary or advisable to service, administer and collect on this Agreement from time to time, all in accordance with Applicable Law.  Without limiting the foregoing, the Facility Servicer shall (i) prepare and provide a Payment Date Report as set forth in Section 8.08(b) and (ii) instruct the Account Bank to apply funds on deposit in the Collection Account as described in Section 2.08 and in accordance with the Payment Date Report.

(b)The Facility Servicer is not required to take any action under this Agreement or any other Transaction Document that, in its opinion or the opinion of its counsel, may expose the Facility Servicer to liability or that is contrary to any Transaction Document or Applicable Law.  The Facility Servicer shall not be liable for any action taken or not taken by it under this Agreement or any other Transaction Document with the consent or at the request of the Borrower, the Administrative Agent or the Majority Lenders (or all Lenders, as applicable and as set forth in Sections 6.01 and 11.01).  In the event the Facility Servicer requests the consent of a Lender pursuant to the foregoing provisions and the Facility Servicer does not receive a response (either positive or negative) from such Person within ten Business Days of such Person’s receipt of such request, then such Lender shall be deemed to have declined to consent to the relevant action.

(c)The Facility Servicer shall not be liable for any action taken or omitted to be taken by it under or in connection with this Agreement or any of the other Transaction Documents in the absence of its own gross negligence or willful misconduct as determined in a final decision by a court of competent jurisdiction.  Without limiting the foregoing, the Facility Servicer (i) may consult with legal counsel (including counsel for the Borrower, the Administrative Agent or the Facility Servicer), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (ii) shall not be responsible for or have any duty to ascertain or inquire into (A) any statement, warranty or representation made in or in connection with this Agreement or any other Transaction Document, (B) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith (other than by the Facility Servicer), (C) except as otherwise expressly provided herein, the performance or observance by any party (other than the Facility Servicer) of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Event of Default or Unmatured Event of Default, (D) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Transaction Document or any other agreement, instrument or document or (E) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Facility Servicer (if any) and (iii) shall incur no liability under or in respect of this Agreement or any of the other Transaction Documents for relying on any notice (including notice by telephone), consent, certificate or other instrument or writing believed by it to be genuine and signed or sent by the proper party or parties.

(d)The Facility Servicer shall be entitled to rely conclusively upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, opinion, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other

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distribution) reasonably believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person, or to inquire as to or verify the veracity of any information or statement made or contained therein.  The Facility Servicer also may rely upon any statement made to it orally or by telephone and reasonably believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  As to any matters not expressly provided for by any Transaction Document, the Facility Servicer shall in all cases be fully protected in acting, or in refraining from acting, under any Transaction Document in accordance with instructions given by the Administrative Agent, Initial Lender or, if provided in this Agreement, in accordance with the instructions given by the Majority Lenders or all Lenders as is required in such circumstance, and such instructions of such Lenders and any action taken or failure to act pursuant to such instructions shall be binding on all of the Lenders.

Section 8.04Authorization of the Portfolio Asset Servicer.

(a)Each of the Borrower, the Administrative Agent and each Lender hereby authorizes the Portfolio Asset Servicer (including any successor thereto) to take any and all reasonable steps in its name and on its behalf necessary or desirable in the determination of the Portfolio Asset Servicer and not inconsistent with the security interest of the Administrative Agent, for the benefit of the Secured Parties, in the Collateral, to collect all amounts due under the Collateral Portfolio, including endorsing any of their names on checks and other instruments representing Collections, executing and delivering any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Collateral Portfolio and, after the delinquency of any Portfolio Asset, and to the extent permitted under and in compliance with Applicable Law, to commence proceedings with respect to enforcing payment thereof.  The Borrower and the Administrative Agent on behalf of the Secured Parties shall furnish the Portfolio Asset Servicer (and any successors thereto) with any powers of attorney and other documents necessary or appropriate to enable the Portfolio Asset Servicer to carry out its servicing and administrative duties hereunder, and shall cooperate with the Portfolio Asset Servicer to the fullest extent in order to facilitate the collectability of the Collateral Portfolio.  In no event shall the Portfolio Asset Servicer be entitled to make the Secured Parties, the Administrative Agent or any Lender a party to any litigation without such party’s express prior written consent, or to make the Borrower a party to any litigation (other than any routine foreclosure or similar collection procedure) without the Administrative Agent’s (at the direction of the Majority Lenders) consent.  In the performance of its obligations hereunder, the Portfolio Asset Servicer shall not be obligated to take, or to refrain from taking, any action which the Borrower or any Lender requests that the Portfolio Asset Servicer take or refrain from taking to the extent that the Portfolio Asset Servicer determines in its reasonable and good faith judgment that such action or inaction (i) may cause a violation of applicable laws, regulations, codes, ordinances, court orders or restrictive covenants with respect to any Portfolio Asset, the Borrower or any Obligor, (ii) may cause a violation of any provision of this Agreement, a Fee Letter or a Required Portfolio Document or any other Transaction Document or (iii) may be a violation of the Servicing Standard.

(b)After the Maturity Date, at the direction of the Administrative Agent (acting at the direction of the Majority Lenders), the Portfolio Asset Servicer shall take such action as the Administrative Agent may deem necessary or advisable to enforce collection of the Portfolio Assets; provided that the Administrative Agent may (at the direction of the Majority Lenders), at any time that an Event of Default has occurred and is continuing, notify the Obligor, agent, administrative agent, Counterparty Lender, Underlying Agent or Underlying Servicer, as applicable, with respect to any Portfolio Asset of the assignment of such Portfolio Asset to the Administrative Agent for the benefit of the Secured Parties and

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direct that payments of all amounts due or to become due thereunder be made directly to the Administrative Agent or any servicer, collection agent or account designated by the Administrative Agent and, upon such notification and at the expense of the Borrower, the Administrative Agent (acting at the direction of the Majority Lenders) may enforce collection of any such Portfolio Asset, and adjust, settle or compromise the amount or payment thereof.  Upon the written request of the Facility Servicer or the Administrative Agent, the Borrower shall furnish the Facility Servicer and Administrative Agent, as applicable, with an appropriate power of attorney to send (at the direction of the Majority Lenders) notification forms to the Obligors or any agent, administrative agent, Counterparty Lender, Underlying Agent, Underlying Servicer or issuer of a Portfolio Asset of the Administrative Agent’s interest in the Collateral and the obligation to make payments as directed by the Administrative Agent (acting at the direction of the Majority Lenders).

Section 8.05Collection of Payments; Accounts

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(a)Collection Efforts, Modification of Collateral Portfolio.  The Portfolio Asset Servicer shall use commercially reasonable efforts to collect or cause to be collected, all payments called for under the terms and provisions of the Portfolio Assets included in the Collateral Portfolio as and when the same become due, all in accordance with the Servicing Standard.  The Portfolio Asset Servicer may not waive, modify or otherwise vary any provision of a Portfolio Asset in any manner contrary to the Servicing Standard.  If the Portfolio Asset Servicer does not receive from the related Underlying Servicer, Counterparty Lender or Obligor the payments to be paid to Borrower or the Portfolio Asset Servicer as Collections on the date when such payments are scheduled to be made (to the extent the Portfolio Asset Servicer has received such payment information from the Underlying Servicer), the Portfolio Asset Servicer shall promptly notify Borrower and such Underlying Servicer, Counterparty Lender or Obligor.

(b)Collection Account.  Each of the parties hereto hereby agrees that (i) the Collection Account is intended to be a “deposit account” or a “securities account” (each within the meaning of the UCC) as specified in the Account Control Agreement and (ii) only the Administrative Agent and the Facility Servicer shall be entitled to exercise the rights with respect to the Collection Account and have the right to direct the disposition of funds in the Collection Account in accordance with Section 2.08.  Each of the parties hereto hereby agrees to cause the Account Bank to agree with the parties hereto that regardless of any provision in any other agreement, for purposes of the UCC, with respect to the Collection Account, New York shall be deemed to be the Account Bank’s jurisdiction (within the meaning of Section 9-304 of the UCC).

(c)Loan and Participation Agreements.  Notwithstanding any term hereof to the contrary, neither the Administrative Agent or the Collateral Custodian shall be under any duty or obligation in connection with the acquisition by the Borrower of, or the grant of a security interest by the Borrower to the Administrative Agent in, any Portfolio Asset to examine or evaluate the sufficiency of the documents or instruments delivered to it by or on behalf of the Borrower under the related Loan Agreements or Participation Agreements, or otherwise to examine the Loan Agreements and Participation Agreements, in order to determine or compel compliance with any applicable requirements of or restrictions on transfer (including any necessary consents).  The Collateral Custodian shall hold any instrument delivered to it evidencing any Portfolio Asset granted to the Administrative Agent hereunder as custodial agent for the Administrative Agent in accordance with the terms of this Agreement.

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(d)Adjustments.  If (i) the Portfolio Asset Servicer makes a deposit into the Collection Account in respect of a Collection of a Portfolio Asset and such Collection was received by the Portfolio Asset Servicer in the form of a check that is not honored for any reason or (ii) the Portfolio Asset Servicer makes a mistake with respect to the amount of any Collection and deposits an amount that is less than or more than the actual amount of such Collection, the Portfolio Asset Servicer shall appropriately adjust the amount subsequently deposited into the Collection Account to reflect such dishonored check or mistake.  Any Scheduled Payment in respect of which a dishonored check is received shall be deemed not to have been paid.

Section 8.06Realization Upon Portfolio Assets

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(a)Consistent with the applicable Loan Agreement or Participation Agreement, the Portfolio Asset Servicer will monitor efforts of each Counterparty Lender or Underlying Servicer with respect to any Eligible Portfolio Asset as to which no satisfactory arrangements can be made for collection of delinquent payments, and any analysis by such Counterparty Lender or Underlying Servicer proposing a course of action to maximize value with respect to any related Underlying Collateral, including whether to hold for value, sell or transfer any equity or other securities it has received in connection with a default, workout, restructuring or plan of reorganization with respect to the related Underlying Loan Obligations.  After the occurrence and during the continuance of an Event of Default, the Portfolio Asset Servicer will comply with the applicable Loan Agreement and Participation Agreement and Applicable Law in directing a Counterparty Lender or Underlying Servicer to realize upon Underlying Collateral, and employ practices and procedures, to direct the related Counterparty Lender or Underlying Servicer to enforce the obligations of Obligors by foreclosing upon, repossessing and causing the sale of such Underlying Collateral at public or private sale.

(b)Notwithstanding anything to the contrary herein, the Facility Servicer shall not take any action with respect to the Collateral Portfolio, nor shall it be required to take any actions, relating to any special servicing activities (it being understood and agreed that the Facility Servicer shall determine whether any obligations or actions of the Facility Servicer expressly set forth in this Agreement or the other Transaction Documents shall constitute special servicing activities), except to the extent (i) agreed to between the Loan Parties, the Lenders and the Facility Servicer, pursuant to a separate fee letter agreement and (ii) the parties to such fee agreement agree to address any conflicts presented by such performance of special servicing activities reasonably requested by the Facility Servicer.

Section 8.07Payment of Certain Expenses.  The Borrower (or the Facility Servicer on its behalf to the extent amounts are available in the Collection Account), shall be required to pay all fees and expenses owing to any financial institution in connection with the maintenance of the Collection Account.  The Facility Servicer shall be reimbursed for any out-of-pocket expenses incurred hereunder (including out-of-pocket expenses paid by the Facility Servicer on behalf of the Borrower), subject to the availability of funds pursuant to Section 2.08; provided that, to the extent funds are not available for such reimbursement, the Facility Servicer shall be entitled to repayment of such expenses from the Borrower and if the Borrower fails to so reimburse the Facility Servicer, the Facility Servicer shall be entitled to be reimbursed by the Lenders (and each Lender hereby agrees to so reimburse the Facility Servicer as provided herein) within ten Business Days of receipt of an invoice therefor.

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Section 8.08Reports

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(a)Servicing Report.  On each Reporting Date, the Portfolio Asset Servicer shall provide to the Borrower, the Administrative Agent and the Facility Servicer a monthly report containing the information set forth on (and substantially in the form of) Exhibit C, including (i) a certification from the Portfolio Asset Servicer that a copy of each amendment, restatement, supplement, waiver or other modification to the Loan Agreement of any Portfolio Asset has been provided in accordance with Section 8.08(d), (ii) the outstanding principal balance of each Eligible Portfolio Asset that is a First Lien Senior Secured Portfolio Asset as of the Determination Date for such Reporting Date, (iii) the identification of Collections as principal, Interest Collections or Excluded Amounts, (iv) a calculation of LTV as of such Determination Date for such Reporting Date, (v) the amounts to be transferred from the Collection Account pursuant to Section 2.08(a)(i) and (vi) the amount of any distributions to be made to the Borrower under Section 2.08(a)(vi) as reported by the Borrower pursuant to Section 5.01(p)(iv).

(b)Payment Date Report.  On each Reporting Date, the Facility Servicer shall provide to the Administrative Agent and the Initial Lender a Payment Date Report containing the information set forth on (and substantially in the form of) Exhibit D, including the amounts to be remitted pursuant to Section 2.08 to the applicable parties on the related Payment Date (which shall include any applicable wiring instructions of the parties receiving payment) with respect to such Payment Date.

(c)Obligor Financial Statements; Valuation Reports; Other Reports.  The Portfolio Asset Servicer shall, with respect to each Obligor for each Portfolio Asset that was an Eligible Portfolio Asset at any time during the applicable fiscal quarter, make available to the Administrative Agent and Initial Lender (which may be done through an online file sharing platform that is reasonably acceptable to the Administrative Agent and the Initial Lender or deliver via email to the Administrative Agent and the Initial Lender) (i) within 60 days after the end of each fiscal quarter of such Obligor, financial reporting packages (including applicable financial statements) delivered by such Obligor pursuant to the applicable Loan Agreement to the extent such financial reporting packages have been received by the Portfolio Asset Servicer during such quarter and (ii) within 30 days of receipt thereof, each servicing report and such other reports in respect of the Loan Agreements prepared by an Underlying Servicer with respect to an Eligible Portfolio Asset to the extent such reports have been received by the Portfolio Asset Servicer (in each case, all to the extent received by the Portfolio Asset Servicer).

(d)Amendments to Portfolio Assets.  The Portfolio Asset Servicer will deliver to the Administrative Agent, the Facility Servicer and the Collateral Custodian a copy of any amendment, restatement, supplement, waiver or other modification to the Required Portfolio Documents of any Portfolio Asset (along with any internal documents that are not privileged prepared by its investment committee (or prepared by the Counterparty Lender and provided to the Counterparty Lender’s investment committee) in connection with such amendment, restatement, supplement, waiver or other modification) (i) with respect to any Material Modification or Material CLO Modification, promptly after receipt thereof and (ii) with respect to any amendment, restatement, supplement, waiver or other modification which is not a Material Modification or Material CLO Modification, within 30 days after the end of each quarter (in each case, to the extent received by the Portfolio Asset Servicer).  The Portfolio Asset Servicer shall also deliver to the Administrative Agent any notice or other correspondence that it receives hereunder or with respect to any Eligible Portfolio Asset, in each case, to the extent it deems such material, promptly upon receipt thereof.

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(e)Delivery Methods.  Notwithstanding anything to the contrary contained herein, information required to be delivered or submitted to any Secured Party pursuant to this Agreement shall be deemed to have been delivered on the date upon which such information is received through e-mail or another delivery method acceptable to the Administrative Agent.

Section 8.09Applicable Servicer Not to Resign.  An Applicable Servicer shall not resign from the obligations and duties hereby imposed on it except (a) upon such Applicable Servicer’s determination that (i) the performance of its duties hereunder is or becomes impermissible under Applicable Law and (ii) there is no reasonable action that such Applicable Servicer could take to make the performance of its duties hereunder permissible under Applicable Law or  (b) upon at least 60 days’ prior notice to the other parties hereto.  If no Replacement Servicer shall have been appointed and an instrument of acceptance by a Replacement Servicer shall not have been delivered to such Applicable Servicer within 30 days after the giving of such notice of resignation, the resigning Applicable Servicer may petition any court of competent jurisdiction for the appointment of a Replacement Servicer.  No such resignation shall become effective until a Replacement Servicer shall have assumed the responsibilities and obligations of such Applicable Servicer in accordance with Section 8.01.  Any Fees then due and owing to such Applicable Servicer and accrued through such date, including any expenses or indemnities it is entitled to pursuant to the provisions of this Agreement and any Fee Letter, shall be due and payable on such discharge date and shall be paid from amounts in the Collection Account in accordance with Section 2.08 and if such amounts are insufficient to pay such amounts then due and owing, shall be paid by the Borrower (or the Lenders if the Borrower fails to so pay such amounts) within ten Business Days of receipt of an invoice therefor.

Section 8.10Indemnification of the Facility Servicer.  Each Lender agrees to indemnify the Facility Servicer from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Facility Servicer in any way relating to or arising out of this Agreement or any of the other Transaction Documents, or any action taken or omitted by the Facility Servicer hereunder or thereunder; provided that (a) the Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Facility Servicer’s gross negligence or willful misconduct as determined in a final decision by a court of competent jurisdiction and (b) no action taken in accordance with the directions of the Majority Lenders, Lenders or the Borrower shall be deemed to constitute gross negligence or willful misconduct for purposes of this Article VIII.  Without limitation of the foregoing, each Lender agrees to reimburse the Facility Servicer, promptly upon demand, for any Fees due to it hereunder, out-of-pocket expenses (including reasonable fees of counsel) incurred by the Facility Servicer in connection with the administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and the other Transaction Documents, to the extent that such expenses are incurred in the interests of or otherwise in respect of the Facility Servicer or Lenders hereunder or thereunder and to the extent that the Facility Servicer is not reimbursed for such expenses by the Borrower under Section 2.08.

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ARTICLE IX.
COLLATERAL CUSTODIAN

Section 9.01Designation of Collateral Custodian

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(a)Initial Collateral Custodian.  The role of Collateral Custodian with respect to the Required Portfolio Documents shall be conducted by the Person designated as Collateral Custodian hereunder from time to time in accordance with this Section 9.01.  Each of the Borrower and the Administrative Agent hereby designates and appoints the Collateral Custodian to act as its agent and hereby authorizes the Collateral Custodian to take such actions on its behalf and to exercise such powers and perform such duties as are expressly granted to the Collateral Custodian by this Agreement; provided, that the Administrative Agent shall have no liability with respect to such appointment.  The Collateral Custodian hereby accepts such agency appointment to act as Collateral Custodian pursuant to the terms of this Agreement, until its resignation or removal as Collateral Custodian pursuant to the terms hereof.  Wells Fargo will perform its duties as Collateral Custodian hereunder through its Document Custody division (including, as applicable, any agents or affiliates appointed hereby).

(b)Successor Collateral Custodian.  Upon the Collateral Custodian’s receipt of a Collateral Custodian Termination Notice from the Administrative Agent of the designation of a successor Collateral Custodian pursuant to the provisions of Section 9.05, the Collateral Custodian agrees that it will terminate its activities as Collateral Custodian hereunder in accordance with the terms of Section 9.05.

Section 9.02Duties of Collateral Custodian

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(a)Duties.  The Collateral Custodian shall perform, on behalf of Administrative Agent, the following duties and obligations:

(i)The Collateral Custodian shall take and retain custody of the Portfolio Asset Files and the Required Portfolio Documents delivered by the Portfolio Asset Servicer and Borrower pursuant to Section 3.02(c) or 3.04(d), all for the benefit of the Administrative Agent on behalf of the Secured Parties.  Within five Business Days of receipt of any Required Portfolio Documents (if the Collateral Custodian receives no more than 10 Portfolio Asset Files during such five Business Day period) or within a reasonable timeframe as mutually agreed upon, the Collateral Custodian shall review such Required Portfolio Documents to confirm that (A) the principal amount and the Obligor name on the applicable Loan Agreement and any related promissory note matches that on the Portfolio Asset Schedule and the Portfolio Asset number on the applicable Loan Agreement matches that on the Portfolio Asset Schedule, as applicable, (B) such Required Portfolio Documents, have been executed (either an original or a copy, as indicated on the related Portfolio Asset Checklist), appear to relate to such Portfolio Asset and have no mutilated pages, (C) filed copies of the UCC financing statements and other filings identified on the related Portfolio Asset Checklist are included and (D) if listed on the related Portfolio Asset Checklist, a copy of an Insurance Policy or insurance certificate with respect to any real or personal property constituting the Underlying Collateral for such Portfolio Asset is included (the items to be reviewed pursuant to this sentence, collectively, the “Review Criteria”).  In order to facilitate the foregoing review by the Collateral Custodian, in connection with each delivery of a Portfolio Asset File hereunder to the Collateral Custodian, the Portfolio Asset Servicer shall provide to the Collateral Custodian a hard copy (which may be proceeded by an electronic copy and separately uploaded by the

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Borrower or the Portfolio Asset Servicer or its designee to the designated CTSLink.com; provided that each .pdf document will be identified with the loan number in the format “LoanNumber.DocumentName.pdf” (example, 12345.mortgage.pdf)) of the related Portfolio Asset Checklist which contains the Portfolio Asset information with respect to the Portfolio Asset File being delivered, identification number and the name of the Obligor with respect to such Portfolio Asset.  Notwithstanding anything herein to the contrary, the Collateral Custodian’s obligation to review the Portfolio Asset File shall be limited to the Review Criteria and based on the information provided on the related Portfolio Asset Checklist.  If, at the conclusion of such review, the Collateral Custodian shall determine that (1) the principal balance of the Portfolio Asset with respect to which it has received the Portfolio Asset File does not match the principal balance set forth on the Portfolio Asset Schedule, the Collateral Custodian shall notify the Administrative Agent, Initial Lender and the Facility Servicer of such discrepancy within one Business Day or (2) any other Review Criteria is not satisfied, the Collateral Custodian shall within one Business Day notify the Borrower,  Administrative Agent, Initial Lender and the Facility Servicer of such determination and provide the Borrower and Facility Servicer with a list of the non-complying Portfolio Assets and the applicable Review Criteria that they fail to satisfy.  The Borrower shall have ten Business Days after notice or knowledge thereof to correct any non-compliance with any Review Criteria.  In addition, if requested in writing by the Borrower or Portfolio Asset Servicer in accordance with Section 9.08 and approved by the Administrative Agent (acting at the direction of the Majority Lenders) within ten Business Days of the Collateral Custodian’s delivery of such report, the Collateral Custodian shall return any Portfolio Asset File which fails to satisfy a Review Criteria to the Borrower.  Other than the foregoing, the Collateral Custodian shall not have any responsibility for reviewing any Portfolio Asset File.

(ii)In taking and retaining custody of the Portfolio Asset Files, the Collateral Custodian shall be deemed to be acting as the agent of the Administrative Agent on behalf of the Secured Parties; providedthat (A) the Collateral Custodian makes no representations as to the existence, perfection or priority of any Lien on the Portfolio Asset Files or the instruments therein and (B) the Collateral Custodian’s duties shall be limited to those expressly contemplated herein.

(iii)All Portfolio Asset Files shall be continuously stored in fire resistant vaults, rooms or cabinets at the locations specified as the address of the Collateral Custodian on Schedule IV or at such other office as shall be specified to the Administrative Agent, Facility Servicer and the Borrower by the Collateral Custodian in a written notice delivered at least 30 days prior to such change.  The Collateral Custodian shall segregate the Portfolio Asset Files on its inventory system.

(iv)On each Reporting Date following the first delivery of Required Portfolio Documents to the Collateral Custodian, the Collateral Custodian shall provide a written report to the Administrative Agent, the Borrower and the Lenders (in a form mutually agreeable to the Administrative Agent (at the direction of the Majority Lenders) and the Collateral Custodian) identifying each Portfolio Asset for which it holds a Portfolio Asset File and the applicable Review Criteria that any Portfolio Asset File fails to satisfy. The Borrower shall have ten Business Days after notice or knowledge thereof to correct any non-compliance with any Review Criteria.

(v)The Collateral Custodian shall have no duties or obligations other than those specifically set forth herein or as may subsequently be agreed to in writing by the parties hereto.

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(b)Notwithstanding any provision to the contrary elsewhere in the Transaction Documents, the Collateral Custodian shall not have any fiduciary relationship with any party hereto or any Secured Party in its capacity as such, and no implied covenants, functions, obligations or responsibilities shall be read into this Agreement, the other Transaction Documents or otherwise exist against the Collateral Custodian.  Without limiting the generality of the foregoing, it is hereby expressly agreed and stipulated by the other parties hereto that the Collateral Custodian shall not be required to exercise any discretion hereunder and shall have no investment or management responsibility.

(c)Collateral Matters.  

(i)The Collateral Custodian agrees to cooperate with the Administrative Agent, Facility Servicer and the Portfolio Asset Servicer regarding the delivery of any Portfolio Asset File to the Facility Servicer, Portfolio Asset Servicer or Administrative Agent (pursuant to a written request in the form of Exhibit G), as applicable, as requested in order to take any action that the Administrative Agent (acting at the direction of the Majority Lenders) or the Facility Servicer deems necessary or desirable in order to perfect, protect or more fully evidence the security interests granted by the Borrower hereunder, or to enable any of them to exercise or enforce any of their respective rights hereunder, including any rights arising with respect to Article VI.  In the event the Collateral Custodian receives instructions from the Facility Servicer or the Portfolio Asset Servicer which conflict with any instructions received by the Administrative Agent, the Collateral Custodian shall rely on and follow the instructions given by the Administrative Agent.

(ii)The Administrative Agent (acting at the direction of the Majority Lenders) may direct the Collateral Custodian to take any such incidental action hereunder.  With respect to other actions which are incidental to the actions specifically delegated to the Collateral Custodian hereunder, the Collateral Custodian shall not be required to take any such incidental action hereunder, but shall be required to act or to refrain from acting (and shall be fully protected in acting or refraining from acting) upon the direction of the Administrative Agent; provided that the Collateral Custodian shall not be required to take any action hereunder at the request of the Administrative Agent, any Secured Party or otherwise if the taking of such action, in the reasonable determination of the Collateral Custodian, (A) shall be in violation of any Applicable Law or contrary to any provisions of this Agreement or (B) shall expose the Collateral Custodian to liability hereunder or otherwise (unless it has received indemnity which it reasonably deems to be satisfactory with respect thereto).  In the event the Collateral Custodian requests the consent of the Administrative Agent and the Collateral Custodian does not receive a consent (either positive or negative) from the Administrative Agent within ten Business Days of its receipt of such request, then the Administrative Agent shall be deemed to have declined to consent to the relevant action.

(iii)The Collateral Custodian shall not be liable for any action taken, suffered or omitted by it in accordance with the request or direction of any Secured Party, to the extent that this Agreement provides such Secured Party the right to so direct the Collateral Custodian, or the Administrative Agent.  The Collateral Custodian shall not be deemed to have notice or knowledge of any matter hereunder, including an Event of Default, unless a Responsible Officer of the Collateral Custodian has actual knowledge of such matter or written notice thereof is received by the Collateral Custodian.

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(iv)In performing its duties, the Collateral Custodian shall comply with the standard of care and express terms of this Agreement with respect to the collateral that it holds hereunder.

Section 9.03Merger or Consolidation

.  Any Person (a) into which the Collateral Custodian may be merged or consolidated, (b) that may result from any merger or consolidation to which the Collateral Custodian shall be a party or (c) that may succeed to the properties and assets of the Collateral Custodian substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Collateral Custodian hereunder, shall be the successor to the Collateral Custodian under this Agreement without further act of any of the parties to this Agreement.

Section 9.04Collateral Custodian Compensation

.  As compensation for its Collateral Custodian activities hereunder, the Collateral Custodian shall be entitled to the Collateral Custodian Fees from the Borrower as set forth on Schedule XI, payable pursuant to the extent of funds available therefor pursuant to the provisions of Section 2.08; provided that if such amounts are insufficient then Sections 9.12 and 11.07 shall be applicable.  The Collateral Custodian’s entitlement to receive the Collateral Custodian Fees shall cease on the earlier to occur of (i) its removal as Collateral Custodian pursuant to Section 9.05, (ii) its resignation as Collateral Custodian pursuant to Section 9.07 of this Agreement or (iii) the termination of this Agreement; provided that the Collateral Custodian shall be entitled to any fees accrued and payable up to such date to the extent not previously paid.

Section 9.05Collateral Custodian Removal

.  The Administrative Agent may (upon the direction of the Majority Lenders) terminate all of the rights, obligations, power and authority of the Collateral Custodian under this Agreement by giving at least 30 days advance written notice thereof to the Collateral Custodian, the Facility Servicer, the Portfolio Asset Servicer and the Borrower (such notice, the “Collateral Custodian Termination Notice”).  On and after the receipt by the Collateral Custodian of a Collateral Custodian Termination Notice, the Collateral Custodian shall continue to act in such capacity until the date specified in the Collateral Custodian Termination Notice (such date not to exceed 30 days after the date of such notice) or otherwise specified by the Administrative Agent (at the direction of the Majority Lenders) in writing or, if no such date is specified in such Collateral Custodian Termination Notice or otherwise specified by the Administrative Agent (at the direction of the Majority Lenders), until a date mutually agreed upon by the Collateral Custodian and the Administrative Agent (at the direction of the Majority Lenders). Upon any such removal, the Majority Lenders shall appoint a successor Collateral Custodian; provided that (i) the consent of the Borrower shall be required to appoint any such successor, unless an Event of Default has occurred and is continuing, and (ii) in no event shall any such successor Collateral Custodian be a Competitor.  If no successor Collateral Custodian shall have been appointed and an instrument of acceptance by a successor Collateral Custodian shall not have been delivered to the Majority Lenders and the Borrower within 30 days after the giving of such notice of removal, the removed Collateral Custodian may petition any court of competent jurisdiction for the appointment of a successor Collateral Custodian and all fees, out-of-pocket costs and reasonable expenses (including reasonable attorneys’ fees and out-of-pocket expenses of outside counsel) incurred by the Collateral Custodian, in connection with any such petition shall be paid or otherwise reimbursed to the Collateral Custodian by Borrower.  No such removal shall become effective until a successor Collateral Custodian shall have assumed the responsibilities and obligations of the Collateral Custodian in accordance with this Section 9.05.  The Collateral Custodian shall be entitled to receive, to the extent of funds available therefor pursuant to Section 2.08, any Fees accrued until such termination date as well as any other fees, amounts, expenses or indemnities it is entitled to pursuant to the provisions of this Agreement and any Fee Letter (the “Collateral Custodian Termination Expenses”).  To the extent amounts held in the Collection Account

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and paid in accordance with Section 2.08 are insufficient to pay the Collateral Custodian Termination Expenses, the Borrower (and to the extent the Borrower fails to so pay, the Lenders) agree to pay the Collateral Custodian Termination Expenses within ten Business Days of receipt of an invoice therefor. After the earlier of (a) the termination date specified in the applicable Collateral Custodian Termination Notice and (b) 30 days thereafter as provided above, the Collateral Custodian agrees that it will terminate its activities as Collateral Custodian hereunder in a manner that the Administrative Agent (at the direction of the Majority Lenders) and prior written consent of the Borrower (provided that the consent of the Borrower shall not be required after the occurrence, and during the continuance, of an Event of Default) believes will facilitate the transition of the performance of such activities to a successor Collateral Custodian, and the successor Collateral Custodian shall assume each and all of the Collateral Custodian’s obligations under this Agreement, on the terms and subject to the conditions herein set forth, and the Collateral Custodian shall use its commercially reasonable efforts to assist the successor Collateral Custodian in assuming such obligations.  The cost of shipping any Loan Asset Files arising out of the removal of the Collateral Custodian shall be an expense of Borrower.  With respect to any Electronic Portfolio Asset Files upon the removal of the Collateral Custodian, the Collateral Custodian will remove from its possession and shall delete all Electronic Portfolio Asset Files held in its possession pursuant to this Agreement and in accordance with the Collateral Custodian’s customary retention and purging policies and procedures of electronic files and data.

Section 9.06Limitation on Liability

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(a)The Collateral Custodian may conclusively rely on and shall be fully protected in acting upon any certificate, instrument, opinion, notice, letter or other document delivered to it and that in good faith it reasonably believes to be genuine and that has been signed by the proper party or parties.  The Collateral Custodian may rely conclusively on and shall be fully protected and shall not be liable in acting upon (in the absence of bad faith, gross negligence or willful misconduct) (i) the written instructions of any designated officer of the Administrative Agent or (ii) the verbal instructions of the Administrative Agent reasonably believed by the Collateral Custodian to be genuine and to have been signed or presented by the applicable designated officer and conforming to the requirements of this Agreement; provided that in the case of any Portfolio Asset File or other request, instruction, document or certificate which by any provision hereof is specifically required to be furnished to the Collateral Custodian, the Collateral Custodian shall be under a duty to examine the same in accordance with the requirements of this Agreement.

(b)The Collateral Custodian may consult with counsel selected by it in good faith and with reasonable care and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in reasonable reliance thereon, in good faith and in accordance with the advice or opinion of such counsel and reasonably believed by Collateral Custodian to be authorized or within the discretion of the rights and powers conferred upon it by this Agreement.

(c)The Collateral Custodian shall not be liable for any error of judgment, or for any act done or step taken or omitted by it, in good faith, or for any mistakes of fact or law, or for anything that it may do or refrain from doing in connection herewith, including, but not limited to, in connection with any requirement to obtain certificated Pledged Equity from Borrower or Holdings, except in the case of its willful misconduct or grossly negligent performance or omission of its duties.

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(d)The Collateral Custodian makes no warranty or representation (except as expressly set forth in this Agreement) and shall have no responsibility (except as expressly set forth in this Agreement) as to the content, enforceability, completeness, validity, sufficiency, value, genuineness, ownership or transferability of any Portfolio Asset File, and will not be required to and will not make any representations as to the validity or value (except as expressly set forth in this Agreement) of any of the Portfolio Assets.  The Collateral Custodian shall not be obligated to take any legal action hereunder that might in its judgment involve any expense or liability unless it has been furnished with an indemnity reasonably satisfactory to it.

(e)The Collateral Custodian shall have no duties or responsibilities except such duties and responsibilities as are specifically set forth in this Agreement and no covenants or obligations shall be implied in this Agreement against the Collateral Custodian.

(f)The Collateral Custodian shall not be required to expend or risk its own funds in the performance of its duties hereunder and shall not be required to take such action where the timely payment of its fees and expenses or the repayment of such funds or adequate indemnity against such risk or liability is not assured to it.

(g)It is expressly agreed and acknowledged that the Collateral Custodian is not guaranteeing or overseeing performance of or assuming any liability for the obligations of the other parties hereto or any parties to a Portfolio Asset.

(h)Subject in all cases to Section 9.02(b), in case any reasonable question arises as to its duties hereunder, the Collateral Custodian may, prior to the occurrence of, and continuance of, an Event of Default, request instructions from the Portfolio Asset Servicer and may, after the occurrence of, and during the continuance of, an Event of Default, request instructions from the Administrative Agent, and shall be entitled at all times to refrain from taking any action unless it has received instructions from the Portfolio Asset Servicer or the Administrative Agent, as applicable.  The Collateral Custodian shall in all events have no liability, risk or cost for any action taken pursuant to and in compliance with the instruction of the Administrative Agent reasonably believed by the Collateral Custodian to be genuine and to have been signed or presented by the applicable designated office and conforming to the requirements of this Agreement.  In no event shall the Collateral Custodian be liable for special, indirect punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Collateral Custodian has been advised of the likelihood of such loss or damage and regardless of the form of action.

(i)It is expressly acknowledged by the parties hereto that application and performance by the Collateral Custodian of its various duties hereunder shall be based upon, and in reliance upon, data, information and notice provided to it by the Administrative Agent, the Borrower and/or any related bank agent, obligor or similar party, and the Collateral Custodian shall have no responsibility for the accuracy of any such information or data provided to it by such persons and shall be entitled to update its records (as it may deem necessary or appropriate).

(j)The parties acknowledge that in accordance with the Customer Identification Program (CIP) requirements under the USA Patriot Act and its implementing regulations, the Collateral Custodian in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an

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account with the Collateral Custodian.  The Borrower hereby agrees that it shall provide the Collateral Custodian with such information as it may request including, but not limited to, the Borrower’s name, physical address, tax identification number and other information that will help the Collateral Custodian to identify and verify the Borrower’s identity such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information.

(k)The Collateral Custodian shall not be responsible for preparing or filing any reports or returns relating to federal, state or local income taxes with respect to this Agreement, other than for the Collateral Custodian’s compensation or for reimbursement of expenses.

(l)The Collateral Custodian shall be under no obligation to make any investigation into the facts or matters stated in any resolution, exhibit, request, representation, opinion, certificate, statement, acknowledgement, consent, order or document in the Portfolio Asset File or any other document or instrument other than as expressly provided for herein.

(m)The Collateral Custodian shall have no duty to see to, or be responsible for the correctness or accuracy of, any recording, filing or depositing of this Agreement or any agreement referred to herein or any financing statement or continuation statement or other similar filing evidencing a security interest, or to see to the maintenance of any such recording or filing or depositing or to any rerecording, refilling or re-depositing of any thereof.

(n)The Collateral Custodian shall use the same degree of care and skill as is reasonably expected of financial institutions acting in comparable capacities; provided that this subsection shall not be interpreted to impose upon the Collateral Custodian a higher standard of care than that set forth herein.

(o)The Collateral Custodian may perform any and all of its duties and exercise its rights and powers hereunder or under any other Transaction Document by or through any one or more agents, affiliates, sub‑agents or attorneys appointed by the Collateral Custodian.  The Collateral Custodian and any such agents, affiliate, sub‑agent or attorneys may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such party and to the Related Parties of the Collateral Custodian and any such party.  The Collateral Custodian shall not be responsible for the negligence or misconduct of any agent, affiliate, sub-agents or attorney appointed by it with due care.

(p)The Collateral Custodian shall not be responsible for or have any duty to ascertain or inquire into (i) any recital, statement, warranty or representation made in or in connection with this Agreement or any other Transaction Document, (ii) the contents or accuracy of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith and shall not be required to recalculate, certify or verify any information therein, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Event of Default or Unmatured Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Transaction Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Collateral Custodian.

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(q)The Collateral Custodian shall incur no liability if, by reason of any provision of any future law or regulation thereunder, or by any force majeure event, including but not limited to natural disaster, epidemic or pandemic, act of war or terrorism, or other circumstances beyond its reasonable control, the Collateral Custodian shall be prevented or forbidden from doing or performing any act or thing which the terms of this Agreement provide shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in this Agreement or any other Transaction Document.

(r)Knowledge of the Collateral Custodian shall not be attributed or imputed to Wells Fargo’s other roles in the transaction (other than those where the roles are performed by the same group or division within Wells Fargo or otherwise share the same Responsible Officers), or any affiliate, line of business, or other division of Wells Fargo (and vice versa).

(s)The Collateral Custodian shall not be responsible for the acts or omissions of any other party to this Agreement.

Section 9.07Collateral Custodian Resignation

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(a)The Collateral Custodian shall not resign from the obligations and duties hereby imposed on it except (i) upon the Collateral Custodian’s determination that (A) the performance of its duties hereunder is or becomes impermissible under Applicable Law and (B) there is no reasonable action that the Collateral Custodian could take to make the performance of its duties hereunder permissible under Applicable Law or (ii) upon at least 60 days’ prior notice to the other parties hereto.  Upon any such resignation, the Borrower and the Initial Lender acting jointly shall appoint a successor Collateral Custodian (provided that the consent of the Borrower shall not be required after the occurrence, and during the continuance, of an Event of Default); provided that in no event shall any successor Collateral Custodian be a Competitor.  If no successor Collateral Custodian shall have been appointed and an instrument of acceptance by a successor Collateral Custodian shall not have been delivered to the Collateral Custodian within 45 days after the giving of such notice of resignation, the resigning Collateral Custodian may petition any court of competent jurisdiction for the appointment of a successor Collateral Custodian and all fees, out-of-pocket costs and reasonable expenses (including without limitation, reasonable attorneys’ fees and out-of-pocket expenses of outside counsel) incurred by the Collateral Custodian, in connection with any such petition shall be paid (or otherwise reimbursed to the Collateral Custodian) by the Borrower.  No such resignation shall become effective until a successor Collateral Custodian shall have assumed the responsibilities and obligations of the Collateral Custodian.

(b)Upon the effective date of such resignation, or if the Administrative Agent gives Collateral Custodian written notice of an earlier termination pursuant to Section 9.05, the Collateral Custodian shall (i) be reimbursed for any costs, fees and expenses that the Collateral Custodian shall incur in connection with its resignation or with the termination of its duties under this Agreement and (ii) deliver all of the Required Portfolio Documents in the possession of Collateral Custodian to the Administrative Agent or to such Person as the Administrative Agent may designate to Collateral Custodian in writing upon the receipt of a request in the form of Exhibit G.  With respect to any Electronic Portfolio Asset Files upon the resignation of the Collateral Custodian, the Collateral Custodian will remove from its possession and shall delete all Electronic Portfolio Asset Files held in its possession pursuant to this Agreement and in accordance with the Collateral Custodian’s customary retention and purging policies and procedures of electronic files and data.

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Section 9.08Release of Documents

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(a)Release for Servicing.  From time to time and as appropriate for the enforcement or servicing of any Portfolio Asset, the Collateral Custodian is hereby authorized (unless and until such authorization is revoked by the Administrative Agent), upon written receipt from an Authorized Person of the Portfolio Asset Servicer of a request for release of documents and receipt in the form of Exhibit G, to release to the Portfolio Asset Servicer within two Business Days of receipt of such request, the related Portfolio Asset File or the documents set forth in such request.  All documents so released to the Portfolio Asset Servicer shall be held by the Portfolio Asset Servicer in trust for the benefit of the Administrative Agent, on behalf of the Secured Parties, in accordance with the terms of this Agreement.  The Portfolio Asset Servicer shall return to the Collateral Custodian such Portfolio Asset File or other such documents (i) promptly upon the request of the Administrative Agent (at the direction of the Majority Lenders) or (ii) when the Portfolio Asset Servicer’s need therefor in connection with such enforcement or servicing no longer exists, unless the related Portfolio Asset is liquidated, in which case, an Authorized Person of the Portfolio Asset Servicer shall deliver an additional request for release of documents to the Collateral Custodian and receipt certifying such liquidation from the Portfolio Asset Servicer to the Administrative Agent, all in the form of Exhibit G.  All Electronic Portfolio Asset Files in the Collateral Custodian’s possession that are requested for release pursuant to this section for a permanent reason will be removed and deleted from the Collateral Custodian’s electronic storage facilities in accordance with the Collateral Custodian’s customary retention and purging policies and procedures of electronic files and data.

(b)Limitation on Release.  Promptly after delivery to the Collateral Custodian of any request for release of documents, the Portfolio Asset Servicer shall provide notice of the same to the Administrative Agent.  Any additional Required Portfolio Documents or documents requested to be released by the Portfolio Asset Servicer may be released only upon written authorization of the Administrative Agent (at the direction of the Majority Lenders).  The limitations of this Section 9.08(b) shall not apply to the release of Required Portfolio Documents to the Portfolio Asset Servicer pursuant to Section 9.08(a).

Section 9.09Return of Required Portfolio Documents

.  The Borrower (or the Portfolio Asset Servicer on their behalf) may require that the Collateral Custodian return each Portfolio Asset File (a) delivered to the Collateral Custodian in error or (b) released from the Lien of the Administrative Agent hereunder pursuant to Section 2.11, in each case by submitting to the Collateral Custodian a written request in the form of Exhibit G (signed by the Borrower or Portfolio Asset Servicer, as applicable) specifying the Portfolio Asset File to be so returned and reciting that the conditions to such release have been met (and specifying the Section or Sections of this Agreement being relied upon for such release).  The Collateral Custodian shall upon its receipt of each such request for return executed by the Borrower or Portfolio Asset Servicer, as applicable, promptly, but in any event within five Business Days, return the Portfolio Asset File so requested to the Borrower or Portfolio Asset Servicer.

Section 9.10Access to Certain Documentation and Information Regarding the Collateral Portfolio; Audits of Portfolio Asset Servicer

.  The Collateral Custodian shall provide to the Administrative Agent, the Facility Servicer, the Portfolio Asset Servicer and the Borrower access to the Portfolio Asset Files and all other documentation regarding the Collateral Portfolio including in such cases where the Administrative Agent, the Facility Servicer, the Portfolio Asset Servicer or the Borrower is required in connection with the enforcement of the rights or interests of the Secured Parties, or by applicable statutes or regulations, to review such documentation, such access being afforded without charge but only (a) upon two Business

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Days prior written request, (b) during normal business hours and (c) subject to the Collateral Custodian’s normal security and confidentiality procedures.  Periodically on and after the Closing Date, the Administrative Agent or Initial Lender may review the Portfolio Asset Servicer’s collection and administration of the Portfolio Asset Files in order to assess compliance by the Portfolio Asset Servicer with the Servicing Standard, as well as with this Agreement and may conduct an audit of the Portfolio Asset Files in conjunction with such a review.  Such review shall be reasonable in scope and shall be completed in a reasonable period of time.  Without limiting the foregoing provisions of this Section 9.10, from time to time, upon at least two (2) Business Days prior written notice to the Collateral Custodian, the Collateral Custodian shall permit Persons appointed by the Portfolio Asset Servicer or Facility Servicer to conduct, at the expense of the Borrower, a review of the Portfolio Asset Files and all other documentation regarding the Collateral Portfolio not more than one time per calendar year for such Applicable Servicer.

Section 9.11Bailment

.  The Collateral Custodian agrees that, with respect to any Portfolio Asset File at any time or times in its possession, the Collateral Custodian is the agent and bailee of the Administrative Agent, for the benefit of the Secured Parties, for purposes of perfecting (to the extent not otherwise perfected) the Administrative Agent’s security interest in the Collateral Portfolio and for the purpose of ensuring that such security interest is entitled to first priority status under the UCC.

Section 9.12Indemnification of the Collateral Custodian

.  Each Lender agrees to indemnify the Collateral Custodian, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (including reasonable attorney’s fees and expenses and court costs) of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Collateral Custodian in any way relating to or arising out of this Agreement or any of the other Transaction Documents, including those incurred in connection with any action, claim or suit brought by the Collateral Custodian to enforce its rights to indemnification, or any action taken or omitted by the Collateral Custodian hereunder or thereunder; providedthat (a) the Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Collateral Custodian’s gross negligence or willful misconduct as determined in a final decision by a court of competent jurisdiction and (b) no action taken in accordance with the directions of the Majority Lenders, the Lenders or the Borrower shall be deemed to constitute gross negligence or willful misconduct for purposes of this Article IX.  The indemnification provided for in this Section 9.12 shall.

survive the resignation or removal of the Collateral Custodian or the termination of this Agreement

Section 9.13Borrower’s Certification.  Solely as between the Borrower and the Collateral Custodian, the Borrower hereby certifies to the Collateral Custodian that, notwithstanding anything to the contrary in this Agreement, the review contemplated by Article IX (the “Review”) is a review to be performed by the Collateral Custodian solely for the purpose of acknowledging receipt of Portfolio Asset Files by the Collateral Custodian from the Borrower.  Any custodial certification (the “Certification”) related to such Review prepared by the Collateral Custodian and furnished to the Borrower is produced solely in connection with this purpose.  The Borrower did not engage the Collateral Custodian to perform the Review, produce the Certification or perform any of the services in this Agreement for the purpose of making findings with respect to the accuracy of the information or data regarding the Portfolio Asset Files provided to the Collateral Custodian by the Borrower for the Review as contemplated by Rule 17g-10 under the Exchange Act.  Given the purpose and scope of the Collateral Custodian’s services with respect

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to the Borrower under this Agreement (including the Review and any Certification) and given the Borrower’s treatment and use of the Review and Certification, the Borrower and the Collateral Custodian agree that the Collateral Custodian’s Review is not commonly understood in the market to be “due diligence services” for purposes of Rule 17g-10 under the Exchange Act.  The Borrower does not consider the Review and the Certification to be “due diligence services” for purposes of Rule 17g-10 under the Exchange Act, and unless the Borrower notifies the Collateral Custodian to the contrary, the Borrower will not treat the Certification as a “third-party due diligence report” for purposes of Rule 15Ga-2 under the Exchange Act.  The Borrower hereby acknowledges that the Collateral Custodian is relying on this certification for purposes of determining that its Review does not constitute “due diligence services” under Rule 17g-10 under the Exchange Act.

ARTICLE X.
INDEMNIFICATION

Section 10.01Indemnities by the Loan Parties

.

(a)Without limiting any other rights which the Secured Parties or any of their respective Affiliates may have hereunder or under Applicable Law, the Loan Parties indemnify the Secured Parties and each of their respective Affiliates, assigns, officers, directors, employees and agents (each, an “Indemnified Party” for purposes of this Article X), on a joint and several basis, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including reasonable attorneys’ fees and disbursements and court costs (all of the foregoing being collectively referred to as “Indemnified Amounts”), incurred by or asserted against such Indemnified Party arising out of or as a result of (i) this Agreement or the other Transaction Documents or in respect of the transactions contemplated thereby or with respect to any of the Collateral, (ii) any action taken or omitted to be taken by any Indemnified Party under this Agreement or any Transaction Document, (iii) any Advance or the use or proposed use of the proceeds therefrom, (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by a Loan Party, and regardless of whether any Indemnified Party is a party thereto or (v) any action, claim or suit brought by an Indemnified Party related to the foregoing to enforce its right to indemnification hereunder, excluding, however, Indemnified Amounts to the extent (A) resulting from gross negligence, bad faith or willful misconduct on the part of an Indemnified Party as determined in a final decision by a court of competent jurisdiction or (B) in the case of any Indemnified Party other than the Administrative Agent or the Collateral Custodian in their capacities as such, resulting from a dispute between Indemnified Parties.  This Section 10.01(a) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(b)Any amounts subject to the indemnification provisions of this Section 10.01 shall be paid by the Loan Parties to the applicable Indemnified Party within 30 days following receipt by the Borrower of such Indemnified Party’s written demand therefor. Any Indemnified Party making a request for indemnification under this Section 10.01, shall submit to the Borrower a certificate setting forth in reasonable detail the basis for and the computations of the Indemnified Amounts with respect to which such indemnification is requested, which certificate shall be conclusive absent demonstrable error.

(c)If for any reason the indemnification provided above in this Section 10.01 is unavailable to the Indemnified Party or is insufficient to hold an Indemnified Party harmless in respect of any losses, claims, damages or liabilities, then the Loan Parties shall contribute to the amount paid or payable by such

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Indemnified Party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect not only the relative benefits received by such Indemnified Party on the one hand and the Loan Parties on the other hand but also the relative fault of such Indemnified Party as well as any other relevant equitable considerations.

(d)If a Loan Party has made any payments in respect of Indemnified Amounts to an Indemnified Party pursuant to this Section 10.01 and such Indemnified Party thereafter collects any of such amounts from others, such Indemnified Party will promptly repay such amounts collected to the Loan Parties in an amount equal to the amount it has collected from others in respect of such Indemnified Amounts, without interest.

(e)The obligations of the Loan Parties under this Section 10.01 shall survive the resignation or removal of the Administrative Agent, the Facility Servicer, the Portfolio Asset Servicer or the Collateral Custodian or the termination or assignment of this Agreement.

Section 10.02Legal Proceedings

.  In the event an Indemnified Party becomes involved in any action, claim, or legal, governmental or administrative proceeding (an “Action”) for which it seeks indemnification hereunder, the Indemnified Party shall promptly notify the other party or parties against whom it seeks indemnification (the “Indemnifying Party”) in writing of the nature and particulars of the Action; provided that its failure to do so shall not relieve the Indemnifying Party of its obligations hereunder except to the extent such failure has a material adverse effect on the Indemnifying Party.  Upon written notice to the Indemnified Party acknowledging in writing that the indemnification provided hereunder applies to the Indemnified Party in connection with the Action, the Indemnifying Party may assume the defense of the Action at its expense with counsel reasonably acceptable to the Indemnified Party.  The Indemnified Party shall have the right to retain separate counsel in connection with the Action, and the Indemnifying Party shall not be liable for the legal fees and expenses of the Indemnified Party after the Indemnifying Party has done so; provided that if the Indemnified Party determines in good faith that there may be a conflict between the positions of the Indemnified Party and the Indemnifying Party in connection with the Action, or that the Indemnifying Party is not conducting the defense of the Action in a manner reasonably protective of the interests of the Indemnified Party, the reasonable legal fees and expenses of the Indemnified Party shall be paid by the Indemnifying Party.  If the Indemnifying Party elects to assume the defense of the Action, it shall have full control over the conduct of such defense; provided that the Indemnifying Party and its counsel shall, as reasonably requested by the Indemnified Party or its counsel, consult with and keep them informed with respect to the conduct of such defense.  The Indemnifying Party shall not settle an Action without the prior written approval of the Indemnified Party unless such settlement provides for the full and unconditional release of the Indemnified Party from all liability in connection with the Action.  The Indemnified Party shall reasonably cooperate with the Indemnifying Party in connection with the defense of the Action.  Each applicable Indemnified Party shall deliver to the Indemnifying Party within a reasonable time after such Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by such Indemnified Party relating to the claim giving rise to the Indemnified Amounts.

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ARTICLE XI.
MISCELLANEOUS

Section 11.01Amendments and Waivers

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(a)Except as set forth herein, (i) no amendment or modification of any provision of this Agreement or any other Transaction Document shall be effective without the written agreement of the Loan Parties party thereto and the Majority Lenders (or the Administrative Agent at the direction of the Majority Lenders) and, solely if such amendment or modification would adversely affect the rights or obligations of the Administrative Agent, the Facility Servicer, the Portfolio Asset Servicer or the Collateral Custodian, the written agreement of the Administrative Agent,  the Facility Servicer, the Portfolio Asset Servicer or the Collateral Custodian, as applicable, and (ii) no termination or waiver of any provision of this Agreement or any other Transaction Document or consent to any departure therefrom by the Loan Parties shall be effective without the written concurrence of the Majority Lenders. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b)Notwithstanding the provisions of Section 11.01(a), the written consent of all of the Lenders affected thereby shall be required for any amendment, modification or waiver (i) reducing (without payment thereon) the principal amount due and owing under any outstanding Advance or the interest thereon, (ii) postponing any date for any payment of any Advance or the interest thereon, (iii) modifying the provisions of this Section 11.01 or the definition of Majority Lenders or change any other provision specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights or make any determination or grant any consent, (iv) extending the Maturity Date, (v) of any provision of Section 2.08, (vi) extending or increasing any Commitment of any Lender, (vii) changing Section 11.15 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly and adversely affected thereby, (viii) waiving any condition set forth in Section 3.01 or (ix) consenting to a Loan Party’s assignment or transfer of its rights and obligations under this Agreement or any other Transaction Document or releasing all or substantially all of the Collateral except as expressly authorized in this Agreement.

(c)In addition, notwithstanding anything in this Section 11.01 to the contrary, if the Initial Lender and the Borrower shall have jointly identified an obvious error or any error or omission of a technical nature, in each case, in any provision of the Loan Documents, then the Initial Lender and the Borrower shall be permitted to amend such provision, and, in each case, such amendment shall become effective without any further action or consent of any other party to any Loan Document if the same is not objected to in writing by the Required Lenders to the Administrative Agent within ten Business Days following receipt of notice thereof

Section 11.02Notices, Etc

.  All notices and other communications hereunder shall, unless otherwise stated herein, be in writing (which shall include communication by e-mail) and faxed, e-mailed or delivered, to each party hereto, at its address set forth on Schedule IV or at such other address as shall be designated by such party in a written notice to the other parties hereto.  Notices and communications by e-mail shall be effective when sent (and shall be followed by hard copy sent by regular mail), and notices and communications sent by other means shall be effective when received.

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The Borrower will provide to any NRSRO with (i) a copy of any amendments or waivers under Section 11.01, (ii) copies of each Servicing Report and Payment Date Report and (iii) copies of any notices delivered by the Borrower to the Administrative Agent pursuant to Sections 5.01(g), (h), (i), (j) and (k).

Section 11.03No Waiver Remedies

.  No failure on the part of the Administrative Agent or any Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

Section 11.04Binding Effect; Assignability; Multiple Lenders

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(a)This Agreement shall be binding upon and inure to the benefit of the Borrower, the Facility Servicer, the Portfolio Asset Servicer, the Administrative Agent, each Lender, the Collateral Custodian and their respective successors and permitted assigns.  Each Lender and their respective successors and assigns may assign, or grant a security interest in, (i) this Agreement and such Lender’s rights and obligations hereunder and interest herein in whole or in part or (ii) any Advance (or portion thereof) or any Note (or any portion thereof) to any Eligible Assignee; provided that unless an Event of Default pursuant to Section 6.01(a) or (d) has occurred and is continuing, the consent of the Borrower (such consent not to be unreasonably withheld) shall be required for a Lender to assign to any Person that is not an Affiliate of such Lender; provided that at all times, Massachusetts Mutual Life Insurance Company and its Affiliates shall hold more than 50% of, (x) during the Availability Period, of the aggregate Commitment and (y) after the Availability Period, Advances Outstanding unless agreed to in writing by the Borrower in its sole discretion.  Any such assignee shall execute and deliver to the Borrower, the Facility Servicer, the Portfolio Asset Servicer, and the Administrative Agent a fully-executed Assignment and Assumption Agreement.  The parties to any such assignment shall execute and deliver to the Administrative Agent for its acceptance and recording in its books and records, such agreement or document as may be satisfactory to such parties and the Administrative Agent. Neither the Facility Servicer nor the Portfolio Asset Servicer may assign, or permit any Lien to exist upon, any of its rights or obligations hereunder or under any Transaction Document or any interest herein or in any Transaction Document without the prior written consent of the Majority Lenders unless otherwise contemplated hereby.  Borrower may not assign, or permit any Lien to exist upon, any of its rights or obligations hereunder or under any Transaction Document or any interest herein or in any Transaction Document without the prior written consent of the Lenders unless otherwise contemplated hereby. Each Lender may sell a participation in its interests hereunder as provided in Section 11.04(d).  No assignment or sale of a participation under this Section 11.04 shall be effective unless and until properly recorded in the Register or Participant Register, as applicable, pursuant to Section 2.03.

(b)Notwithstanding any other provision of this Section 11.04, any Lender may at any time pledge or grant a security interest in all or any portion of its rights (including rights to payment of principal and interest) under this Agreement to secure obligations of such Lender to a Federal Reserve Bank (such agreement, a “Liquidity Agreement”), without notice to or consent of the Borrower or the Administrative Agent; provided that no such pledge or grant of a security interest shall release such Lender from any of its obligations hereunder or under such Liquidity Agreement, or substitute any such pledgee or grantee for such Lender as a party hereto or to such Liquidity Agreement, as the case may be.

(c)Each Indemnified Party shall be an express third party beneficiary of this Agreement.

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(d)Any Lender may at any time (i) without the consent of, or notice to, the Borrower and (ii) without the consent of, but with notice to, the Administrative Agent, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person, or the Borrower or any of the Borrower’s Affiliates) (each, a “Participant”) in all or a portion of such Lender’s rights or obligations under this Agreement (including all or a portion of its Commitment or the Advances owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Borrower, the Administrative Agent and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (iv) such Lender shall register such participation in its Participant Register pursuant to Section 2.03(c).  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 11.01(b) that affects such Participant.  The Borrower agrees that each Participant shall be entitled to the benefits of Section 2.13 (subject to the requirements and limitations therein, including the requirement to provide the forms required by Section 2.13(e) (it being understood that the documentation required under Section 2.13(e) shall be delivered to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment; provided that such Participant (A) agrees to be subject to the provisions of Section 2.13 as if it were an assignee under paragraph (a) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.12 or 2.13, with respect to any participation, than its participating Lender would have been entitled to receive.

(e)No assignment or participation shall be made to any Person that was a Competitor as of the date (the “Trade Date”) on which the assigning Lender or participating Lender entered into a binding agreement to sell and assign or participate all or a portion of its rights and obligations under this Agreement to such Person (unless the Borrower has provided prior written consent to such assignment or participation, in its sole and absolute discretion, in which case such Person will not be considered a Competitor for the purpose of such assignment or participation).  For the avoidance of doubt, with respect to any assignee or Participant that becomes a Competitor after the applicable Trade Date, (x) such assignee or Participant shall not retroactively be disqualified from becoming a Lender or Participant and, (y) with respect to an assignee, the execution by the Borrower of an Assignment and Assumption with respect to such assignee will not by itself result in such assignee no longer being considered a Competitor.

(i)If any assignment or participation is made to any Competitor without the Borrower’s prior written consent in violation of clause (i) above, or if any Person becomes a Competitor after the applicable Trade Date, the Borrower may, at its sole expense and effort, upon notice to the applicable Competitor and the Administrative Agent, (A) terminate the Commitment of such Competitor and repay all obligations of the Borrower owing to such Competitor in connection with such Commitment and/or (B) require such Competitor to assign, without recourse (in accordance with and subject to the restrictions contained in this Section), all of its interest, rights and obligations under this Agreement to one or more Eligible Assignees at the lesser of (x) the principal amount thereof and (y) the amount that such Competitor paid to acquire such interests, rights and obligations, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder.  

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(ii)Notwithstanding anything to the contrary contained in this Agreement, Competitors (A) will not (x) have the right to receive information, reports or other materials provided to Lenders by the Borrower, the Administrative Agent, any other Lender or any other party hereto, (y) attend or participate in meetings attended by the Lenders, the Administrative Agent or any party hereto, or (z) access any electronic site established for the Lenders or confidential communications from counsel to or financial advisors of the Administrative Agent, the Lenders or any other party hereto and (B) (x) for purposes of any consent to any amendment, waiver or modification of, or any action under, and for the purpose of any direction to the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) under this Agreement or any other Loan Document, each Competitor will be deemed to have consented in the same proportion as the Lenders that are not Competitors consented to such matter, and (y) for purposes of voting on any a plan of reorganization or plan of liquidation pursuant to any Bankruptcy Laws (“Debtor Relief Plan”), each Competitor party hereto hereby agrees (1) not to vote on such Debtor Relief Plan, (2) if such Competitor does vote on such Debtor Relief Plan notwithstanding the restriction in the foregoing clause (1), such vote will be deemed not to be in good faith and shall be “designated” pursuant to Section 1126(e) of the Bankruptcy Code (or any similar provision in any other Bankruptcy Laws), and such vote shall not be counted in determining whether the applicable class has accepted or rejected such Debtor Relief Plan in accordance with Section 1126(c) of the Bankruptcy Code (or any similar provision in any other Bankruptcy Laws) and (3) not to contest any request by any party for a determination by the Bankruptcy Court (or other applicable court of competent jurisdiction) effectuating the foregoing clause (2).

Section 11.05Term of This Agreement

.  This Agreement, including the Borrower’s representations and covenants set forth in Articles IV and V, Holdings’ representations and covenants set forth in Articles IV and V and the Collateral Custodian’s representations, covenants and duties set forth in Article IX shall remain in full force and effect until this Agreement has been terminated by the Borrower and the Facility Termination Date has occurred; provided that any representation made or deemed made hereunder survive the execution and delivery hereof and the provisions of Section 2.06, Section 2.12, Section 2.13, Section 11.07, Section 11.08 and Article VII, Article VIII, Article IX and Article X shall be continuing and shall survive any termination of this Agreement.

Section 11.06GOVERNING LAW; JURY WAIVER

.  THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.  EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.

Section 11.07Costs and Expenses

.  In addition to the rights of indemnification hereunder, the Loan Parties, on a joint and several basis, shall pay on demand (a) all out-of-pocket costs and expenses of the Administrative Agent, the Facility Servicer, Initial Lender, and the Collateral Custodian incurred in connection with the pre-closing due diligence, preparation, execution, delivery, administration, syndication, renewal, amendment or modification of, any waiver or consent issued in connection with, this Agreement, the Transaction Documents and the other documents to be delivered hereunder or in connection herewith, including the fees, disbursements and other charges of rating agency and accounting costs and fees, (b) the reasonable out-of-pocket fees and expenses of (i) counsel for the Administrative Agent, the Facility Servicer, Initial Lender, and the Collateral Custodian with respect

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thereto and (ii) a single counsel to the Lenders other than the Initial Lender, in each case, with respect to advising the Administrative Agent, the Facility Servicer, the Lenders and the Collateral Custodian as to their respective rights and remedies under this Agreement and the other documents to be delivered hereunder or in connection herewith and (c) all out‑of-pocket costs and expenses, if any (including reasonable fees and expenses of counsel), incurred by the Administrative Agent, the Facility Servicer, the Lenders, or the Collateral Custodian in connection with the enforcement or potential enforcement of its rights under this Agreement or any other Transaction Document and the other documents to be delivered hereunder or in connection herewith or in connection with the Advances made hereunder, including all such out of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Advances.

Section 11.08Recourse Against Certain Parties; Non-Petition

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(a)No recourse under or with respect to any obligation, covenant or agreement (including the payment of any fees or any other obligations) of the Borrower, the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party as contained in this Agreement or any other agreement, instrument or document entered into by the Borrower, the Facility Servicer, Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party pursuant hereto or in connection herewith shall be had against any administrator of the Borrower (other than with respect to fraud), the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party or any incorporator, affiliate, stockholder, officer, employee or director of the Borrower, the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party or of any such administrator, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that the agreements of each party hereto contained in this Agreement and all of the other agreements, instruments and documents entered into by the Borrower, the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party pursuant hereto or in connection herewith are, in each case, solely the corporate obligations of such party (and nothing in this Section 11.08 shall be construed to diminish in any way such corporate obligations of such party), and that no personal liability whatsoever shall attach to or be incurred by any administrator of the Administrative Agent, the Lenders or any Secured Party or any incorporator, stockholder, affiliate, officer, employee or director of the Lenders, the Borrower, the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian or the Administrative Agent or of any such administrator, as such, or any of them, under or by reason of any of the obligations, covenants or agreements of the Borrower, the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party contained in this Agreement or in any other such instruments, documents or agreements, or are implied therefrom, and that any and all personal liability of every such administrator of the Borrower, the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party and each incorporator, stockholder, affiliate, officer, employee or director of the Borrower, the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party or of any such administrator, or any of them, for breaches by the Borrower, the Facility Servicer, the Portfolio Asset Servicer, Holdings, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party of any such obligations, covenants or agreements, which liability may arise either at common law or in equity, by statute or constitution, or

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otherwise, is hereby expressly waived as a condition of and in consideration for the execution of this Agreement.

(b)Notwithstanding any contrary provision set forth herein, no claim may be made by any party hereto against any other party hereto or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect to any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any other Loan Document, or any act, omission or event occurring in connection therewith; and each party hereto hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected; provided, that nothing contained in this sentence shall limit such Person’s indemnification obligations hereunder to the extent such damages are included in a third party claim in connection with which an indemnified party is entitled to indemnification hereunder.

(c)No obligation or liability to any Obligor under any of the Portfolio Assets is intended to be assumed by the Facility Servicer, the Portfolio Asset Servicer, the Collateral Custodian, the Administrative Agent, the Lenders or any Secured Party under or as a result of this Agreement and the transactions contemplated hereby.

(d)Each of the parties hereto hereby agrees that it will not institute against, or join any other Person in instituting against, the Borrower any bankruptcy or insolvency proceeding so long as there shall not have elapsed one year and one day (or such longer preference period as shall then be in effect) since the Facility Termination Date unless the Majority Lenders otherwise consent to any such action.

(e)The provisions of this Section 11.08 survive the termination of this Agreement.

Section 11.09Execution in Counterparts; Severability; Integration

.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by e-mail in portable document format (.pdf) or facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.  In the event that any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.  This Agreement and any agreements or letters (including Fee Letters) executed in connection herewith contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings.

This Agreement shall be valid, binding, and enforceable against a party when executed and delivered by an authorized individual on behalf of the party by means of (i) an original manual signature; (ii) a faxed, scanned, or photocopied manual signature, or (iii) any other electronic signature permitted by the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, and/or any other relevant electronic signatures law, including any relevant provisions of the UCC (collectively, “Signature Law”), in each case to the extent applicable. Each faxed, scanned, or photocopied manual signature, or other electronic signature, shall for all purposes have the same validity,

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legal effect, and admissibility in evidence as an original manual signature. Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any faxed, scanned, or photocopied manual signature, or other electronic signature, of any other party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof. For the avoidance of doubt, original manual signatures shall be used for execution or indorsement of writings when required under the UCC or other Signature Law due to the character or intended character of the writings.

Section 11.10Consent to Jurisdiction; Service of Process

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(a)Each party hereto hereby irrevocably submits to the exclusive jurisdiction of any New York State or Federal court sitting in New York City in any action or proceeding arising out of or relating to the Transaction Documents, and each party hereto hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court.  The parties hereto hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.  The parties hereto agree 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.

(b)Each party hereto agrees that service of process may be effected by mailing a copy thereof by registered or certified mail, postage prepaid, to the Borrower at its address specified in Section 11.02 or at such other address as the Administrative Agent shall have been notified in accordance herewith.  Nothing in this Section 11.10 shall affect the right of the Lenders or the Administrative Agent to serve legal process in any other manner permitted by law.

Section 11.11Confidentiality

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(a)Each of the Administrative Agent, the Lenders, the Facility Servicer, the Portfolio Asset Servicer, and the Collateral Custodian shall maintain and shall cause each of its employees and officers to maintain the confidentiality of all Information (as defined below), including all Information regarding the business of the Borrower and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that Information may be disclosed (i) to its Affiliates, accountants, investigators, auditors, attorneys or other agents, including any rating agency or valuation firm engaged by such party in connection with any due diligence or comparable activities with respect to the transactions and Portfolio Assets contemplated herein, and the agents of such Persons, taxing authorities and governmental agencies (“Excepted Persons”); provided that each Excepted Person is informed of the confidential nature of such Information and instructed to keep such Information confidential, (ii) as is required by Applicable Law, (iii) in accordance with the Servicing Standard, (iv) when required by any law, regulation, ordinance, court order or subpoena, (v) to the extent the Portfolio Asset Servicer is disseminating general statistical information relating to the mortgage loans being serviced by the Portfolio Asset Servicer (including the Portfolio Assets) hereunder so long as the Portfolio Asset Servicer does not identify the Borrower, any Lender or the Obligors, or (vi) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder.  Notwithstanding the foregoing provisions of this Section 11.11(a), the Borrower may, subject to Applicable Law and the terms of any Loan Agreements, make available copies

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of the documents in the Portfolio Asset Files and such other documents it holds pursuant to the terms of this Agreement, to any of its creditors.

(b)Anything herein to the contrary notwithstanding, the Borrower hereby consents to the disclosure of any Information with respect to it (i) to the Administrative Agent, the Lenders, the Facility Servicer, the Portfolio Asset Servicer or the Collateral Custodian by each other, (ii) by the Administrative Agent, the Lenders, the Facility Servicer, the Portfolio Asset Servicer and the Collateral Custodian to any prospective or actual assignee or participant of any of them provided such Person agrees to hold such information confidential, or (iii) by the Administrative Agent, the Lenders, the Facility Servicer, the Portfolio Asset Servicer, and the Collateral Custodian to any rating agency, commercial paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to any Lender or any Person providing financing to, or holding equity interests in, any Lender, as applicable, and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing, provided each such Person is informed of the confidential nature of such information.  In addition, the Lenders, the Administrative Agent, the Facility Servicer, the Portfolio Asset Servicer, and the Collateral Custodian may disclose any such Information as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).

(c)Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure of any and all Information that is or becomes publicly known, (ii) any disclosure authorized by the Borrower or (iii) disclosure of any and all Information that becomes available to the Administrative Agent, any Lender, the Facility Servicer, the Portfolio Asset Servicer, or the Collateral Custodian on a nonconfidential basis from a source other than the Borrower who did not acquire such information as a result of a breach of this Section 11.11.

(d)The parties hereto may disclose the existence of the Agreement (but not the financial terms hereof, including all fees and other pricing terms), all Events of Default, and priority of payment provisions, in each case except in compliance with this Section 11.11.

(e)“Information” means all information received from the Borrower relating to the Borrower or its businesses, other than any such information that is available to the Administrative Agent, Collateral Custodian, the Facility Servicer, the Portfolio Asset Servicer or any Lender on a nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the Closing Date, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Article XI shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 11.12Non-Confidentiality of Tax Treatment

.  All parties hereto agree that each of them and each of their employees, representatives, and other agents may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure.  “Tax treatment” and “tax structure” shall have the same meaning as such terms have for purposes of Treasury Regulation Section 1.6011-4; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, the provisions of this Section 11.12 shall only apply to such

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portions of the document or similar item that relate to the tax treatment or tax structure of the transactions contemplated hereby.

Section 11.13Waiver of Set Off

.  If an Event of Default has occurred and is continuing, the Administrative Agent, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by the Administrative Agent, such Lender or any such Affiliate, to or for the credit or the account of the Borrower against any and all of the Obligations, irrespective of whether or not the Administrative Agent, such Lender or Affiliate shall have made any demand under this Agreement or any other Transaction Document and although such Obligations may be contingent or unmatured or are owed to a branch office or Affiliate of the Administrative Agent or such Lender different from the branch office or Affiliate holding such deposit or obligated on such indebtedness.  Each party shall notify the Borrower and the Administrative Agent (if applicable) promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

Section 11.14Headings, Schedules and Exhibits

.  The headings herein are for purposes of references only and shall not otherwise affect the meaning or interpretation of any provision hereof.  The schedules and exhibits attached hereto and referred to herein shall constitute a part of this Agreement and are incorporated into this Agreement for all purposes.

Section 11.15Ratable Payments

.  If any Lender, whether by setoff or otherwise, shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of Advances owing to it (other than pursuant to Section 2.12 or Section 2.13) in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided that, if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.

Section 11.16Failure of Borrower to Perform Certain Obligations

.  If the Borrower fails to perform any of its agreements or obligations under Section 5.01, the Administrative Agent may (but shall not be required to, and in any case, acting at the direction of the Majority Lenders) itself perform, or cause performance of, such agreement or obligation, and the expenses of the Administrative Agent incurred in connection therewith shall be payable by the Borrower promptly upon the Administrative Agent’s demand therefore.

Section 11.17Power of Attorney

.  Each of the Borrower and Holdings irrevocably authorizes (without any obligation to do so) the Administrative Agent and appoints the Administrative Agent, as applicable, as its attorney-in-fact to act on its behalf as substantially set forth on Exhibit H to, among other things, perfect and to maintain the perfection and priority of the interest of the Administrative Agent, for the

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benefit of the Secured Parties, in the Collateral, in all cases, acting at the direction of the Majority Lenders.  This appointment is coupled with an interest and is irrevocable.

Section 11.18Delivery of Termination Statements, Releases, Etc

.  Upon the occurrence of the Facility Termination Date, the Administrative Agent shall, upon written direction, execute and deliver to the Portfolio Asset Servicer and Borrower termination statements, reconveyances, releases and other documents and instruments of release as are necessary or appropriate to evidence the termination of the Liens securing the Obligations, all at the expense of the Borrower.

Section 11.19Exclusive Remedies

.  Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy.

Section 11.20Post-Closing Performance Conditions

.  The parties hereto agree to cooperate with reasonable requests made by any other party hereto after signing this Agreement to the extent reasonable necessary for such party to comply with laws and regulations applicable to financial institutions in connection with this transaction (e.g., the USA PATRIOT Act, OFAC and related regulations).

Section 11.21PATRIOT Act

.  The parties hereto acknowledge that in accordance with the Customer Identification Program (CIP) requirements established under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107 56 (signed into law October 26, 2001) and its implementing regulations (collectively, USA PATRIOT Act), the Administrative Agent and the Lenders in order to help fight the funding of terrorism and money laundering, are required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Administrative Agent and the Lenders.  Each party hereby agrees that it shall provide the Administrative Agent and the Lenders with such information as the Administrative Agent or the Lenders may request from time to time in order to comply with any applicable requirements of the Patriot Act.

Section 11.22Wells Fargo.  The parties expressly acknowledge and consent to Wells Fargo Bank, National Association acting in the possible multiple capacities of the Collateral Custodian, and Account Bank and in the capacity as Administrative Agent. Wells Fargo Bank, National Association may, in such multiple capacities, discharge its separate functions fully, without hindrance or regard to conflict of interest principles or other breach of duties to the extent that any such conflict or breach arises from the performance by Wells Fargo Bank, National Association of express duties set forth in Agreement in any of  such capacities, all of which defenses, claims or assertions are hereby expressly waived by the other parties hereto except in the case of gross negligence (other than errors in judgment) and willful misconduct by Wells Fargo Bank, National Association.

Section 11.23Platform.  Each party agrees that the Administrative Agent may, but is not obligated to, make the Communications (as defined below) available to the Lenders by posting the Communications on the Platform. The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the

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Platform. In no event will the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Person for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of Borrower’s, the Portfolio Asset Servicer, the Facility Servicer, any Loan Party’s or the Administrative Agent’s transmission of communications through the Platform. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of Borrower, the Portfolio Asset Servicer or the Facility Servicer pursuant to any Transaction Document or the transactions contemplated therein that is distributed to the Administrative Agent or any Lender by means of electronic communications pursuant to this Section, including through the Platform. “Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system.

[Signature Pages Follow]

NAI-1528532842v5

 

EX-10.5(G)

Exhibit 10.5(g)

GUARANTY

GUARANTY, dated as of May 25, 2021 (this “Guaranty”), by Exantas Phili Holdings, LLC, a Delaware limited liability company (the “Guarantor”), in favor of the Secured Parties under, and as defined in, the Loan and Servicing Agreement referred to below (together with the Guarantor, the “Parties” and each, a “Party”).

RCC REAL ESTATE SPE 9 LLC, Delaware limited liability company (the “Borrower”), owns all of the equity interests of the Guarantor.

The Borrower is indebted to the Secured Parties pursuant to the Loan and Servicing Agreement dated as of the date hereof (as amended by the First Amendment to Loan and Servicing Agreement dated as of September 16, 2020, the Second Amendment to Loan and Servicing Agreement dated as of May 25, 2021 and as further amended, restated, supplemented, replaced or otherwise modified, the “Loan and Servicing Agreement”) among RCC Real Estate SPE Holdings LLC, as Holdings, the Borrower, the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Massachusetts Mutual Life Insurance Company, as Facility Servicer, ACRES Capital Servicing LLC, as Portfolio Asset Servicer, and Wells Fargo Bank, National Association, as Collateral Custodian.   The Guarantor will obtain substantial direct and indirect benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement.

Accordingly, the Parties agree as follows:

SECTION 1.Interpretation:

Capitalized terms used in this Guaranty and not otherwise defined have the meanings set forth for such terms in the Loan and Servicing Agreement.  As used in this Guaranty, the plural includes the singular and the singular includes the plural.  All pronouns and any variations thereof refer to masculine, feminine, neuter, singular or plural as the identity of the Person or Persons may require.  As used in this Guaranty, “include,” “includes” and “including” have the inclusive meaning of “including without limitation.”  Section and other headings are for reference only, and do not affect the interpretation or meaning of any provision of this Guaranty.  

SECTION 2.GUARANTY:

2.1Guarantee.  The Guarantor hereby, irrevocably and unconditionally, guarantees to the Secured Parties the payment of the Guaranteed Obligations as and when such Guaranteed Obligations are due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  “Guaranteed Obligations” means the (a) the full amount of the Obligations then due and payable, and whether for principal, interest, reimbursement obligations, fees, expenses or otherwise, and interest accruing thereon following the commencement of any bankruptcy, insolvency, reorganization, receivership or similar proceeding under any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally (each, an “Insolvency Proceeding”) by or against a Loan Party at the applicable rate specified for the advances in the Loan and Servicing Agreement, whether or not such interest is allowed as a claim in such Insolvency Proceeding and (b) all losses, fees, costs and expenses (including, all court costs and reasonable attorneys’ and paralegals’ fees, costs and expenses) paid or incurred by the Secured Parties in (i) endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, a Loan Party relating to the Loan and Servicing Agreement, the other Transaction Documents or the transactions contemplated thereby, (ii) taking any action with respect to any collateral

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securing the Obligations or the Guarantor’s obligations and (iii) preserving, protecting or defending the enforceability of, or enforcing, this Guaranty or the Secured Parties’ rights or remedies under this Guaranty or applicable law, together with interest on such losses, fees, costs and expenses from the date of demand under this Guaranty until paid in full at the applicable rate specified for the advances in the Loan and Servicing Agreement.  

2.2Nature of Guarantee.  The guarantee hereunder is a guarantee of payment and not of collection.  The Guarantor expressly waives any requirement that the Secured Parties exhaust any right, remedy or power or proceed against the Loan Parties under the Transaction Documents or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.  The guarantee hereunder is a continuing guarantee and applies to all Guaranteed Obligations whenever arising.  The guarantee hereunder is absolute and unconditional, irrespective of the value, genuineness or enforceability of the obligations of the Loan Parties under the Loan and Servicing Agreement or any other agreement, instrument or other document executed or delivered in connection therewith, any substitution, release or exchange of any other guarantee of, or security for, any of the Guaranteed Obligations or to the fullest extent permitted by applicable law, any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety.

2.3Guarantee Irrevocable.  The Guarantor may not revoke this Guaranty and this Guaranty continues to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by the Guarantor.

2.4Limitation on Guarantee.  In any Insolvency Proceeding or any action or proceeding involving any corporate or other organizational law, if the Guarantor’s obligations hereunder would, taking into account any of the Guarantor’s rights to contribution, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability hereunder, then notwithstanding any other provision hereof to the contrary, the amount of such liability is automatically limited and reduced, without any further action by the Guarantor, the Secured Parties or any other Person, to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

2.5Reinstatement of Guaranteed Obligations.  If at any time payment of the Guaranteed Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Guaranteed Obligations, whether as a “voidable preference,” “fraudulent conveyance” or otherwise, all as though such payment or performance had not been made, then this Guaranty is reinstated and the Guaranteed Obligations are deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 3.WAIVERS:

3.1Guarantee Absolute.  Without limiting the generality of any other provision of this Guaranty, the Guarantor’s obligations hereunder are not released, diminished, impaired, reduced or adversely affected by any of the following:

(A) the unenforceability of all or any part of the Guaranteed Obligations or any agreement, instrument or other document executed or delivered in connection with the Guaranteed Obligations for any reason whatsoever;

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(B) any performance or nonperformance of any of the agreements or covenants of the Transaction Documentsor anyextension of the time for performance of, or the waiver of compliance with, any of the Guaranteed Obligations at any time or from time to time;

(C) any acceleration of the maturity of any of the Guaranteed Obligations;

(D) any renewal, extension, increase, amendment or other modification of any of the Guaranteed Obligations in any respect, any waiver, forbearance, indulgence or compromise of any right under the Loan and Servicing Agreement or any other Transaction Document or any assignment, transfer or other disposition of all or part of the Secured Parties’ interests under the Transaction Documents;

(E) the taking or accepting of any other security, collateral or guarantee, or other assurance of payment, for all or any part of the Guaranteed Obligations;

(F) any full or partial release of a Loan Party any other guarantor of the Guaranteed Obligations or any release, exchange or other disposition, in whole or in part, of any security for any of the Guaranteed Obligations;

(G) any lien or security interest granted to, or in favor of, the Secured Parties as security for any of the Guaranteed Obligations being unperfected;

(H) any failure or delay of the Secured Parties to exercise any of its rights or remedies under the Transaction Documents or applicable law or with respect to any other guarantee of, or security for, any of the Guaranteed Obligations;

(I) any Insolvency Proceeding of a Loan Party, the Guarantor or any other guarantor of the Guaranteed Obligations;

(J) any dissolution of a Loan Party, the Guarantor or any other guarantor of the Guaranteed Obligations, any sale, lease, transfer or other disposition of any or all of such Person’s assets or any reorganization, merger or consolidation of any such Person;

(K) any failure of the Secured Parties to notify the Guarantor of any of the foregoing; or

(L) any other action taken or omitted to be taken with respect to the Transaction Documents, the Guaranteed Obligations or the security and collateral therefor, whether such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof.

3.2Waivers.  The Guarantor hereby waives:

(A) diligence, presentment, demand of payment, notice of dishonor and protest;

(B) all rights of subrogation, reimbursement, indemnification and contribution and any other rights and defenses that are or may become available to the Guarantor or other surety by reason of Applicable Law;

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(C) any rights or defenses the Guarantor or other surety may have in respect of its obligations as a guarantor or other surety by reason of any election of remedies by the Secured Parties; and

(D) any common law, equitable, statutory or other rights (including rights to notice) that the Guarantor might otherwise have as a result of or in connection with any of the circumstances described in Section 3.1.

3.3Subrogation.  So long as this Guaranty is in effect, the Guarantor shall not exercise any right or remedy arising by reason of its performance of its guarantee, whether by subrogation, reimbursement, indemnification, contribution or otherwise, against a Loan Party or any other guarantor of the Guaranteed Obligations or any security therefor.

SECTION 4.Representations:

The Guarantor makes the following representations to the Secured Parties, which representations survive the execution and delivery of this Guaranty:

(A) the execution and delivery of this Guaranty and the performance of its obligations hereunder (a) are within the Guarantor’s  organizational power and authority, (b) have been authorized by all necessary organizational action by the Guarantor and (c) do not require the consent or approval of any other Person other than any consent or approval that has been obtained;

(B) the Guarantor is “solvent” within the meaning give that term and similar terms under applicable laws relating to fraudulent transfers or conveyances;

(C) the Guarantor has received, or will receive, direct or indirect substantial benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement and the making of this Guaranty with respect to the Guaranteed Obligations; and

(D) neither a Secured Party nor any other Person has made any representation, warranty or statement to such Person to induce such Person to execute this Guaranty.

SECTION 5.COVENANTS:  

5.1Indebtedness.  The Guarantor shall not create, incur, assume or suffer to exist any indebtedness for borrowed money or for the deferred purchase price of property or services or that is evidenced by a note, bond, debenture or similar instrument or other evidence of indebtedness customary for indebtedness of that type (“Indebtedness”) unless such Indebtedness is consented to by the Initial Lender in its sole discretion.

5.2Liens.  The Guarantor shall not create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired (other than customary permitted Liens that do not secure Indebtedness for borrowed money) unless such Lien is consented to by the Initial Lender in its sole discretion.

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5.3Loan and Servicing Agreement.  Without limiting Section 5.1 or 5.2, the Guarantor shall comply with the covenants set forth in Section 5.01 and 5.02 of the Loan and Servicing Agreement as if it were a Loan Party thereunder.

5.4Payment By Guarantor.  If any part of the Guaranteed Obligations are not paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantor shall, immediately upon demand by the Secured Parties (or by the Administrative Agent on behalf of the Secured Parties, at the direction of the Secured Parties) and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, pay in lawful money of the United States of America the amount due on the Guaranteed Obligations to the Secured Parties at the Secured Parties’ address as set forth herein.  Such demand(s) may be made at any time coincident with or after the time for payment of any of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand is deemed made, given and received in accordance with the notice provisions hereof.

5.5Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the Guarantor’s obligations hereunder are not reduced, discharged or released because or by reason of any existing or future offset, claim or defense of a Loan Party or any other Person against a Secured Party or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

5.6Acceleration of Obligations.  As between the Guarantor and the Secured Parties, the Borrower’s obligations under the Transaction Documents may be declared to be due and payable (and are deemed to have become automatically due and payable in the circumstances provided in the Loan and Servicing Agreement) while an Event of Default has occurred and is continuing for purposes of this Guaranty notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against a Loan Party and in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether due and payable by the Loan Parties) immediately become due and payable by the Guarantor for purposes of this Guaranty.

5.7Set-Off.  If an Event of Default has occurred and is continuing, the Secured Parties and their respective Affiliates are authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all indebtedness at any time owing by such Secured Party or Affiliate to or for the credit or the account of the Guarantor against any and all of the Guaranteed Obligations, irrespective of whether or not the Secured Parties have made any demand under this Guaranty.  Each Secured Party shall notify the Guarantor promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

5.8Mortgage.  At the request of the Initial Lender at any time that a Cash Trap Event has occurred and is continuing, the Guarantor shall, at its expense, enter into a mortgage, deed of trust or similar security document granting the Administrative Agent a lien on all of its assets and take such other actions and enter such other documentation as is customary to grant a lien on such property to a commercial lender.

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SECTION 6.miscellaneous:

6.1Governing Law.  This Guaranty is governed by, and construed in accordance with, the laws of the State of New York.

6.2Expenses.  The Guarantor shall reimburse the Secured Parties for any and all out‑of‑pocket expenses and charges (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Secured Parties in connection with the enforcement of this Guaranty.  Any and all costs and expenses incurred by the Guarantor in the performance of actions required pursuant to the terms of this Guaranty are borne solely by the Guarantor.

6.3Severability.  Any provision of this Guaranty held to be invalid, illegal or unenforceable in any jurisdiction is, as to such jurisdiction, ineffective to the extent of such invalidity, illegality or unenforceability without effecting the validity, legality and enforceability of the remaining provisions of this Guaranty; and the invalidity of a particular provision in a particular jurisdiction does not invalidate such provision in any other jurisdiction.

6.4Integration.  This Guaranty constitutes the entire contract among the Parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

6.5Notices.  All notices and other communications provided for in this Guaranty must be in writing and will be deemed to have been duly given (a) when received if personally delivered, (b) within five days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) upon receipt after being sent by facsimile or electronic transmission, with confirmed answer back or receipt, during normal business hours on a Business Day or otherwise on the next occurring Business Day or (d) within one Business Day of being sent by priority delivery by established overnight courier to the parties at their respective addresses set forth as follows:  

(i)if to the Secured Parties:

Wells Fargo Bank, National Association

9062 Old Annapolis Road

Columbia, MD 21045

Telephone: 410-884-2271 or 443-367-3924

E-mail: ctsbankdebtadministrationteam@wellsfargo.com

Attention: Jason Prisco or Lance Yeagle – RCC REAL ESTATE SPE 9, LLC

(ii)if to the Guarantor:

c/o ACRES Capital Corp.

865 Merrick Avenue, Suite 200S

Westbury, New York 11590

Attention: Mark Fogel

Facsimile No.: 516‐500‐9149

E‐mail: mf@acrescap.com

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Any Party may change its address, telephone, email or facsimile number for notices and other communications hereunder by notice to the other Party.

6.6Amendments.  Neither this Guaranty nor any provision hereof may be amended, modified or waived except pursuant to an agreement or agreements in writing entered into by the Guarantor and the Administrative Agent (at the direction of the Secured Parties).

6.7No Implied Waivers.  No failure to exercise and no delay in exercising any right or remedy under this Guaranty operates as a waiver thereof.  No single or partial exercise of any right or remedy under this Guaranty, or any abandonment or discontinuance thereof, precludes any other or further exercise thereof or the exercise of any other right or remedy.  No waiver or consent under this Guaranty is applicable to any events, acts or circumstances except those specifically covered thereby.

6.8Successors and Assigns.  This Guaranty is binding upon, and inures to the benefit of, the Parties and their respective successors and permitted assigns.  The Guarantor may not assign or transfer any of its interests or rights, or delegate its duties or obligations, under this Guaranty, in whole or in part, without the prior written consent of the Lenders.  The Lenders may assign or transfer any of their respective its interests, rights or remedies, and delegate its duties or obligations, under this Guaranty in connection with an assignment or transfer of its interests under the Loan and Servicing Agreement.  Nothing in this Guaranty, expressed or implied, may be construed to confer upon any Person (other than the parties hereto, their respective successors and permitted assigns) any legal or equitable right, remedy or claim under or by reason of this Guaranty.

6.9Submission to Jurisdiction; Waiver of Jury Trial.

(A) The Parties agree that any action or proceeding with respect to this Guaranty or any judgment entered by any court in respect thereof may be brought in the United States District Court for the Southern District of New York or the courts of the State of New York and each Party submits to the jurisdiction of such court for the purpose of any such action, proceeding or judgment.

(B) Each Party irrevocably consents to service of process in the manner provided for notice in Section 6.5.  Nothing in this Guaranty affects the right of any Party to service process in any other manner permitted by applicable law.

(C) Each Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Guaranty in any court referred to in Section 6.9(A).  Each Party irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(D) EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER REASON).

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6.10Termination.  This Guaranty continues in effect (notwithstanding the fact that from time to time there may be no Guaranteed Obligations outstanding) until the Facility Termination Date.

6.11Counterparts.  This Guaranty may be executed in counterparts (and by different parties hereto in different counterparts), each of which constitutes an original, but all of which when taken together constitute a single contract.  Delivery of an executed counterpart of a signature page of this Guaranty by electronic transmission is as effective as delivery of a manually executed counterpart of this Guaranty.

6.12Financing Statement.  The Guarantor hereby authorizes the filing of a financing statement with the secretary of state (or equivalent office) of its jurisdiction of organization stating that it is restricted from granting a lien on its assets pursuant to this Guaranty.

(Signature page(s) follow)

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The Guarantor has executed and delivered this Guaranty as of the date first above written.

EXANTAS PHILI HOLDINGS, LLC

By:_ /s/ Jaclyn Jesberger   

Name:Jaclyn Jesberger

Title: Vice President

[Signature Page to Permitted REO Sub Guaranty (Exantas Phili Holdings, LLC)]

Accepted:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as administrative agent

By:_ /s/ Todd Landry   

Name:Todd Landry

Title:Vice President

[Signature Page to Permitted REO Sub Guaranty (Exantas Phili Holdings, LLC)]

EX-10.5(H)

Exhibit 10.5(h)

GUARANTY

GUARANTY, dated as of May 25, 2021 (this “Guaranty”), by 65 E. Wacker Holdings, LLC, a Delaware limited liability company (the “Guarantor”), in favor of the Secured Parties under, and as defined in, the Loan and Servicing Agreement referred to below (together with the Guarantor, the “Parties” and each, a “Party”).

RCC REAL ESTATE SPE 9 LLC, Delaware limited liability company (the “Borrower”), owns all of the equity interests of the Guarantor.

The Borrower is indebted to the Secured Parties pursuant to the Loan and Servicing Agreement dated as of the date hereof (as amended by the First Amendment to Loan and Servicing Agreement dated as of September 16, 2020, the Second Amendment to Loan and Servicing Agreement dated as of May 25, 2021 and as further amended, restated, supplemented, replaced or otherwise modified, the “Loan and Servicing Agreement”) among RCC Real Estate SPE Holdings LLC, as Holdings, the Borrower, the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Massachusetts Mutual Life Insurance Company, as Facility Servicer, ACRES Capital Servicing LLC, as Portfolio Asset Servicer, and Wells Fargo Bank, National Association, as Collateral Custodian.   The Guarantor will obtain substantial direct and indirect benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement.

Accordingly, the Parties agree as follows:

SECTION 1.Interpretation:

Capitalized terms used in this Guaranty and not otherwise defined have the meanings set forth for such terms in the Loan and Servicing Agreement.  As used in this Guaranty, the plural includes the singular and the singular includes the plural.  All pronouns and any variations thereof refer to masculine, feminine, neuter, singular or plural as the identity of the Person or Persons may require.  As used in this Guaranty, “include,” “includes” and “including” have the inclusive meaning of “including without limitation.”  Section and other headings are for reference only, and do not affect the interpretation or meaning of any provision of this Guaranty.  

SECTION 2.GUARANTY:

2.1Guarantee.  The Guarantor hereby, irrevocably and unconditionally, guarantees to the Secured Parties the payment of the Guaranteed Obligations as and when such Guaranteed Obligations are due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  “Guaranteed Obligations” means the (a) the full amount of the Obligations then due and payable, and whether for principal, interest, reimbursement obligations, fees, expenses or otherwise, and interest accruing thereon following the commencement of any bankruptcy, insolvency, reorganization, receivership or similar proceeding under any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally (each, an “Insolvency Proceeding”) by or against a Loan Party at the applicable rate specified for the advances in the Loan and Servicing Agreement, whether or not such interest is allowed as a claim in such Insolvency Proceeding and (b) all losses, fees, costs and expenses (including, all court costs and reasonable attorneys’ and paralegals’ fees, costs and expenses) paid or incurred by the Secured Parties in (i) endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, a Loan Party relating to the Loan and Servicing Agreement, the other Transaction Documents or the transactions contemplated thereby, (ii) taking any action with respect to any collateral

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securing the Obligations or the Guarantor’s obligations and (iii) preserving, protecting or defending the enforceability of, or enforcing, this Guaranty or the Secured Parties’ rights or remedies under this Guaranty or applicable law, together with interest on such losses, fees, costs and expenses from the date of demand under this Guaranty until paid in full at the applicable rate specified for the advances in the Loan and Servicing Agreement.  

2.2Nature of Guarantee.  The guarantee hereunder is a guarantee of payment and not of collection.  The Guarantor expressly waives any requirement that the Secured Parties exhaust any right, remedy or power or proceed against the Loan Parties under the Transaction Documents or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.  The guarantee hereunder is a continuing guarantee and applies to all Guaranteed Obligations whenever arising.  The guarantee hereunder is absolute and unconditional, irrespective of the value, genuineness or enforceability of the obligations of the Loan Parties under the Loan and Servicing Agreement or any other agreement, instrument or other document executed or delivered in connection therewith, any substitution, release or exchange of any other guarantee of, or security for, any of the Guaranteed Obligations or to the fullest extent permitted by applicable law, any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety.

2.3Guarantee Irrevocable.  The Guarantor may not revoke this Guaranty and this Guaranty continues to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by the Guarantor.

2.4Limitation on Guarantee.  In any Insolvency Proceeding or any action or proceeding involving any corporate or other organizational law, if the Guarantor’s obligations hereunder would, taking into account any of the Guarantor’s rights to contribution, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability hereunder, then notwithstanding any other provision hereof to the contrary, the amount of such liability is automatically limited and reduced, without any further action by the Guarantor, the Secured Parties or any other Person, to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

2.5Reinstatement of Guaranteed Obligations.  If at any time payment of the Guaranteed Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Guaranteed Obligations, whether as a “voidable preference,” “fraudulent conveyance” or otherwise, all as though such payment or performance had not been made, then this Guaranty is reinstated and the Guaranteed Obligations are deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 3.WAIVERS:

3.1Guarantee Absolute.  Without limiting the generality of any other provision of this Guaranty, the Guarantor’s obligations hereunder are not released, diminished, impaired, reduced or adversely affected by any of the following:

(A) the unenforceability of all or any part of the Guaranteed Obligations or any agreement, instrument or other document executed or delivered in connection with the Guaranteed Obligations for any reason whatsoever;

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(B) any performance or nonperformance of any of the agreements or covenants of the Transaction Documentsor anyextension of the time for performance of, or the waiver of compliance with, any of the Guaranteed Obligations at any time or from time to time;

(C) any acceleration of the maturity of any of the Guaranteed Obligations;

(D) any renewal, extension, increase, amendment or other modification of any of the Guaranteed Obligations in any respect, any waiver, forbearance, indulgence or compromise of any right under the Loan and Servicing Agreement or any other Transaction Document or any assignment, transfer or other disposition of all or part of the Secured Parties’ interests under the Transaction Documents;

(E) the taking or accepting of any other security, collateral or guarantee, or other assurance of payment, for all or any part of the Guaranteed Obligations;

(F) any full or partial release of a Loan Party any other guarantor of the Guaranteed Obligations or any release, exchange or other disposition, in whole or in part, of any security for any of the Guaranteed Obligations;

(G) any lien or security interest granted to, or in favor of, the Secured Parties as security for any of the Guaranteed Obligations being unperfected;

(H) any failure or delay of the Secured Parties to exercise any of its rights or remedies under the Transaction Documents or applicable law or with respect to any other guarantee of, or security for, any of the Guaranteed Obligations;

(I) any Insolvency Proceeding of a Loan Party, the Guarantor or any other guarantor of the Guaranteed Obligations;

(J) any dissolution of a Loan Party, the Guarantor or any other guarantor of the Guaranteed Obligations, any sale, lease, transfer or other disposition of any or all of such Person’s assets or any reorganization, merger or consolidation of any such Person;

(K) any failure of the Secured Parties to notify the Guarantor of any of the foregoing; or

(L) any other action taken or omitted to be taken with respect to the Transaction Documents, the Guaranteed Obligations or the security and collateral therefor, whether such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof.

3.2Waivers.  The Guarantor hereby waives:

(A) diligence, presentment, demand of payment, notice of dishonor and protest;

(B) all rights of subrogation, reimbursement, indemnification and contribution and any other rights and defenses that are or may become available to the Guarantor or other surety by reason of Applicable Law;

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(C) any rights or defenses the Guarantor or other surety may have in respect of its obligations as a guarantor or other surety by reason of any election of remedies by the Secured Parties; and

(D) any common law, equitable, statutory or other rights (including rights to notice) that the Guarantor might otherwise have as a result of or in connection with any of the circumstances described in Section 3.1.

3.3Subrogation.  So long as this Guaranty is in effect, the Guarantor shall not exercise any right or remedy arising by reason of its performance of its guarantee, whether by subrogation, reimbursement, indemnification, contribution or otherwise, against a Loan Party or any other guarantor of the Guaranteed Obligations or any security therefor.

SECTION 4.Representations:

The Guarantor makes the following representations to the Secured Parties, which representations survive the execution and delivery of this Guaranty:

(A) the execution and delivery of this Guaranty and the performance of its obligations hereunder (a) are within the Guarantor’s  organizational power and authority, (b) have been authorized by all necessary organizational action by the Guarantor and (c) do not require the consent or approval of any other Person other than any consent or approval that has been obtained;

(B) the Guarantor is “solvent” within the meaning give that term and similar terms under applicable laws relating to fraudulent transfers or conveyances;

(C) the Guarantor has received, or will receive, direct or indirect substantial benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement and the making of this Guaranty with respect to the Guaranteed Obligations; and

(D) neither a Secured Party nor any other Person has made any representation, warranty or statement to such Person to induce such Person to execute this Guaranty.

SECTION 5.COVENANTS:  

5.1Indebtedness.  The Guarantor shall not create, incur, assume or suffer to exist any indebtedness for borrowed money or for the deferred purchase price of property or services or that is evidenced by a note, bond, debenture or similar instrument or other evidence of indebtedness customary for indebtedness of that type (“Indebtedness”) unless such Indebtedness is consented to by the Initial Lender in its sole discretion.

5.2Liens.  The Guarantor shall not create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired (other than customary permitted Liens that do not secure Indebtedness for borrowed money) unless such Lien is consented to by the Initial Lender in its sole discretion.

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5.3Loan and Servicing Agreement.  Without limiting Section 5.1 or 5.2, the Guarantor shall comply with the covenants set forth in Section 5.01 and 5.02 of the Loan and Servicing Agreement as if it were a Loan Party thereunder.

5.4Payment By Guarantor.  If any part of the Guaranteed Obligations are not paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantor shall, immediately upon demand by the Secured Parties (or by the Administrative Agent on behalf of the Secured Parties, at the direction of the Secured Parties) and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, pay in lawful money of the United States of America the amount due on the Guaranteed Obligations to the Secured Parties at the Secured Parties’ address as set forth herein.  Such demand(s) may be made at any time coincident with or after the time for payment of any of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand is deemed made, given and received in accordance with the notice provisions hereof.

5.5Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the Guarantor’s obligations hereunder are not reduced, discharged or released because or by reason of any existing or future offset, claim or defense of a Loan Party or any other Person against a Secured Party or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

5.6Acceleration of Obligations.  As between the Guarantor and the Secured Parties, the Borrower’s obligations under the Transaction Documents may be declared to be due and payable (and are deemed to have become automatically due and payable in the circumstances provided in the Loan and Servicing Agreement) while an Event of Default has occurred and is continuing for purposes of this Guaranty notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against a Loan Party and in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether due and payable by the Loan Parties) immediately become due and payable by the Guarantor for purposes of this Guaranty.

5.7Set-Off.  If an Event of Default has occurred and is continuing, the Secured Parties and their respective Affiliates are authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all indebtedness at any time owing by such Secured Party or Affiliate to or for the credit or the account of the Guarantor against any and all of the Guaranteed Obligations, irrespective of whether or not the Secured Parties have made any demand under this Guaranty.  Each Secured Party shall notify the Guarantor promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

5.8Mortgage.  At the request of the Initial Lender at any time that a Cash Trap Event has occurred and is continuing, the Guarantor shall, at its expense, enter into a mortgage, deed of trust or similar security document granting the Administrative Agent a lien on all of its assets and take such other actions and enter such other documentation as is customary to grant a lien on such property to a commercial lender.

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SECTION 6.miscellaneous:

6.1Governing Law.  This Guaranty is governed by, and construed in accordance with, the laws of the State of New York.

6.2Expenses.  The Guarantor shall reimburse the Secured Parties for any and all out‑of‑pocket expenses and charges (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Secured Parties in connection with the enforcement of this Guaranty.  Any and all costs and expenses incurred by the Guarantor in the performance of actions required pursuant to the terms of this Guaranty are borne solely by the Guarantor.

6.3Severability.  Any provision of this Guaranty held to be invalid, illegal or unenforceable in any jurisdiction is, as to such jurisdiction, ineffective to the extent of such invalidity, illegality or unenforceability without effecting the validity, legality and enforceability of the remaining provisions of this Guaranty; and the invalidity of a particular provision in a particular jurisdiction does not invalidate such provision in any other jurisdiction.

6.4Integration.  This Guaranty constitutes the entire contract among the Parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

6.5Notices.  All notices and other communications provided for in this Guaranty must be in writing and will be deemed to have been duly given (a) when received if personally delivered, (b) within five days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) upon receipt after being sent by facsimile or electronic transmission, with confirmed answer back or receipt, during normal business hours on a Business Day or otherwise on the next occurring Business Day or (d) within one Business Day of being sent by priority delivery by established overnight courier to the parties at their respective addresses set forth as follows:  

(i)if to the Secured Parties:

Wells Fargo Bank, National Association

9062 Old Annapolis Road

Columbia, MD 21045

Telephone: 410-884-2271 or 443-367-3924

E-mail: ctsbankdebtadministrationteam@wellsfargo.com

Attention: Jason Prisco or Lance Yeagle – RCC REAL ESTATE SPE 9, LLC

(ii)if to the Guarantor:

c/o ACRES Capital Corp.

865 Merrick Avenue, Suite 200S

Westbury, New York 11590

Attention: Mark Fogel

Facsimile No.: 516‐500‐9149

E‐mail: mf@acrescap.com

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Any Party may change its address, telephone, email or facsimile number for notices and other communications hereunder by notice to the other Party.

6.6Amendments.  Neither this Guaranty nor any provision hereof may be amended, modified or waived except pursuant to an agreement or agreements in writing entered into by the Guarantor and the Administrative Agent (at the direction of the Secured Parties).

6.7No Implied Waivers.  No failure to exercise and no delay in exercising any right or remedy under this Guaranty operates as a waiver thereof.  No single or partial exercise of any right or remedy under this Guaranty, or any abandonment or discontinuance thereof, precludes any other or further exercise thereof or the exercise of any other right or remedy.  No waiver or consent under this Guaranty is applicable to any events, acts or circumstances except those specifically covered thereby.

6.8Successors and Assigns.  This Guaranty is binding upon, and inures to the benefit of, the Parties and their respective successors and permitted assigns.  The Guarantor may not assign or transfer any of its interests or rights, or delegate its duties or obligations, under this Guaranty, in whole or in part, without the prior written consent of the Lenders.  The Lenders may assign or transfer any of their respective its interests, rights or remedies, and delegate its duties or obligations, under this Guaranty in connection with an assignment or transfer of its interests under the Loan and Servicing Agreement.  Nothing in this Guaranty, expressed or implied, may be construed to confer upon any Person (other than the parties hereto, their respective successors and permitted assigns) any legal or equitable right, remedy or claim under or by reason of this Guaranty.

6.9Submission to Jurisdiction; Waiver of Jury Trial.

(A) The Parties agree that any action or proceeding with respect to this Guaranty or any judgment entered by any court in respect thereof may be brought in the United States District Court for the Southern District of New York or the courts of the State of New York and each Party submits to the jurisdiction of such court for the purpose of any such action, proceeding or judgment.

(B) Each Party irrevocably consents to service of process in the manner provided for notice in Section 6.5.  Nothing in this Guaranty affects the right of any Party to service process in any other manner permitted by applicable law.

(C) Each Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Guaranty in any court referred to in Section 6.9(A).  Each Party irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(D) EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER REASON).

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6.10Termination.  This Guaranty continues in effect (notwithstanding the fact that from time to time there may be no Guaranteed Obligations outstanding) until the Facility Termination Date.

6.11Counterparts.  This Guaranty may be executed in counterparts (and by different parties hereto in different counterparts), each of which constitutes an original, but all of which when taken together constitute a single contract.  Delivery of an executed counterpart of a signature page of this Guaranty by electronic transmission is as effective as delivery of a manually executed counterpart of this Guaranty.

6.12Financing Statement.  The Guarantor hereby authorizes the filing of a financing statement with the secretary of state (or equivalent office) of its jurisdiction of organization stating that it is restricted from granting a lien on its assets pursuant to this Guaranty.

(Signature page(s) follow)

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The Guarantor has executed and delivered this Guaranty as of the date first above written.

65 E. WACKER HOLDINGS, LLC

By: /s/ Jaclyn Jesberger   

Name:Jaclyn Jesberger

Title: Vice President

[Signature Page to Permitted REO Sub Guaranty (65 E. Wacker Holdings, LLC)]

Accepted:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as administrative agent

By: /s/ Todd Landry   

Name:Todd Landry

Title:Vice President

[Signature Page to Permitted REO Sub Guaranty (65 E. Wacker Holdings, LLC)]

EX-10.5(I)

Exhibit 10.5(i)

GUARANTY

GUARANTY, dated as of May 25, 2021 (this “Guaranty”), by Plymouth Meeting Holdings, LLC, a Delaware limited liability company (the “Guarantor”), in favor of the Secured Parties under, and as defined in, the Loan and Servicing Agreement referred to below (together with the Guarantor, the “Parties” and each, a “Party”).

RCC REAL ESTATE SPE 9 LLC, Delaware limited liability company (the “Borrower”), owns all of the equity interests of the Guarantor.

The Borrower is indebted to the Secured Parties pursuant to the Loan and Servicing Agreement dated as of the date hereof (as amended by the First Amendment to Loan and Servicing Agreement dated as of September 16, 2020, the Second Amendment to Loan and Servicing Agreement dated as of May 25, 2021 and as further amended, restated, supplemented, replaced or otherwise modified, the “Loan and Servicing Agreement”) among RCC Real Estate SPE Holdings LLC, as Holdings, the Borrower, the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Massachusetts Mutual Life Insurance Company, as Facility Servicer, ACRES Capital Servicing LLC, as Portfolio Asset Servicer, and Wells Fargo Bank, National Association, as Collateral Custodian.   The Guarantor will obtain substantial direct and indirect benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement.

Accordingly, the Parties agree as follows:

SECTION 1.Interpretation:

Capitalized terms used in this Guaranty and not otherwise defined have the meanings set forth for such terms in the Loan and Servicing Agreement.  As used in this Guaranty, the plural includes the singular and the singular includes the plural.  All pronouns and any variations thereof refer to masculine, feminine, neuter, singular or plural as the identity of the Person or Persons may require.  As used in this Guaranty, “include,” “includes” and “including” have the inclusive meaning of “including without limitation.”  Section and other headings are for reference only, and do not affect the interpretation or meaning of any provision of this Guaranty.  

SECTION 2.GUARANTY:

2.1Guarantee.  The Guarantor hereby, irrevocably and unconditionally, guarantees to the Secured Parties the payment of the Guaranteed Obligations as and when such Guaranteed Obligations are due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  “Guaranteed Obligations” means the (a) the full amount of the Obligations then due and payable, and whether for principal, interest, reimbursement obligations, fees, expenses or otherwise, and interest accruing thereon following the commencement of any bankruptcy, insolvency, reorganization, receivership or similar proceeding under any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally (each, an “Insolvency Proceeding”) by or against a Loan Party at the applicable rate specified for the advances in the Loan and Servicing Agreement, whether or not such interest is allowed as a claim in such Insolvency Proceeding and (b) all losses, fees, costs and expenses (including, all court costs and reasonable attorneys’ and paralegals’ fees, costs and expenses) paid or incurred by the Secured Parties in (i) endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, a Loan Party relating to the Loan and Servicing Agreement, the other Transaction Documents or the transactions contemplated thereby, (ii) taking any action with respect to any collateral

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securing the Obligations or the Guarantor’s obligations and (iii) preserving, protecting or defending the enforceability of, or enforcing, this Guaranty or the Secured Parties’ rights or remedies under this Guaranty or applicable law, together with interest on such losses, fees, costs and expenses from the date of demand under this Guaranty until paid in full at the applicable rate specified for the advances in the Loan and Servicing Agreement.  

2.2Nature of Guarantee.  The guarantee hereunder is a guarantee of payment and not of collection.  The Guarantor expressly waives any requirement that the Secured Parties exhaust any right, remedy or power or proceed against the Loan Parties under the Transaction Documents or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.  The guarantee hereunder is a continuing guarantee and applies to all Guaranteed Obligations whenever arising.  The guarantee hereunder is absolute and unconditional, irrespective of the value, genuineness or enforceability of the obligations of the Loan Parties under the Loan and Servicing Agreement or any other agreement, instrument or other document executed or delivered in connection therewith, any substitution, release or exchange of any other guarantee of, or security for, any of the Guaranteed Obligations or to the fullest extent permitted by applicable law, any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety.

2.3Guarantee Irrevocable.  The Guarantor may not revoke this Guaranty and this Guaranty continues to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by the Guarantor.

2.4Limitation on Guarantee.  In any Insolvency Proceeding or any action or proceeding involving any corporate or other organizational law, if the Guarantor’s obligations hereunder would, taking into account any of the Guarantor’s rights to contribution, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability hereunder, then notwithstanding any other provision hereof to the contrary, the amount of such liability is automatically limited and reduced, without any further action by the Guarantor, the Secured Parties or any other Person, to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

2.5Reinstatement of Guaranteed Obligations.  If at any time payment of the Guaranteed Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Guaranteed Obligations, whether as a “voidable preference,” “fraudulent conveyance” or otherwise, all as though such payment or performance had not been made, then this Guaranty is reinstated and the Guaranteed Obligations are deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 3.WAIVERS:

3.1Guarantee Absolute.  Without limiting the generality of any other provision of this Guaranty, the Guarantor’s obligations hereunder are not released, diminished, impaired, reduced or adversely affected by any of the following:

(A) the unenforceability of all or any part of the Guaranteed Obligations or any agreement, instrument or other document executed or delivered in connection with the Guaranteed Obligations for any reason whatsoever;

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(B) any performance or nonperformance of any of the agreements or covenants of the Transaction Documentsor anyextension of the time for performance of, or the waiver of compliance with, any of the Guaranteed Obligations at any time or from time to time;

(C) any acceleration of the maturity of any of the Guaranteed Obligations;

(D) any renewal, extension, increase, amendment or other modification of any of the Guaranteed Obligations in any respect, any waiver, forbearance, indulgence or compromise of any right under the Loan and Servicing Agreement or any other Transaction Document or any assignment, transfer or other disposition of all or part of the Secured Parties’ interests under the Transaction Documents;

(E) the taking or accepting of any other security, collateral or guarantee, or other assurance of payment, for all or any part of the Guaranteed Obligations;

(F) any full or partial release of a Loan Party any other guarantor of the Guaranteed Obligations or any release, exchange or other disposition, in whole or in part, of any security for any of the Guaranteed Obligations;

(G) any lien or security interest granted to, or in favor of, the Secured Parties as security for any of the Guaranteed Obligations being unperfected;

(H) any failure or delay of the Secured Parties to exercise any of its rights or remedies under the Transaction Documents or applicable law or with respect to any other guarantee of, or security for, any of the Guaranteed Obligations;

(I) any Insolvency Proceeding of a Loan Party, the Guarantor or any other guarantor of the Guaranteed Obligations;

(J) any dissolution of a Loan Party, the Guarantor or any other guarantor of the Guaranteed Obligations, any sale, lease, transfer or other disposition of any or all of such Person’s assets or any reorganization, merger or consolidation of any such Person;

(K) any failure of the Secured Parties to notify the Guarantor of any of the foregoing; or

(L) any other action taken or omitted to be taken with respect to the Transaction Documents, the Guaranteed Obligations or the security and collateral therefor, whether such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof.

3.2Waivers.  The Guarantor hereby waives:

(A) diligence, presentment, demand of payment, notice of dishonor and protest;

(B) all rights of subrogation, reimbursement, indemnification and contribution and any other rights and defenses that are or may become available to the Guarantor or other surety by reason of Applicable Law;

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(C) any rights or defenses the Guarantor or other surety may have in respect of its obligations as a guarantor or other surety by reason of any election of remedies by the Secured Parties; and

(D) any common law, equitable, statutory or other rights (including rights to notice) that the Guarantor might otherwise have as a result of or in connection with any of the circumstances described in Section 3.1.

3.3Subrogation.  So long as this Guaranty is in effect, the Guarantor shall not exercise any right or remedy arising by reason of its performance of its guarantee, whether by subrogation, reimbursement, indemnification, contribution or otherwise, against a Loan Party or any other guarantor of the Guaranteed Obligations or any security therefor.

SECTION 4.Representations:

The Guarantor makes the following representations to the Secured Parties, which representations survive the execution and delivery of this Guaranty:

(A) the execution and delivery of this Guaranty and the performance of its obligations hereunder (a) are within the Guarantor’s  organizational power and authority, (b) have been authorized by all necessary organizational action by the Guarantor and (c) do not require the consent or approval of any other Person other than any consent or approval that has been obtained;

(B) the Guarantor is “solvent” within the meaning give that term and similar terms under applicable laws relating to fraudulent transfers or conveyances;

(C) the Guarantor has received, or will receive, direct or indirect substantial benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement and the making of this Guaranty with respect to the Guaranteed Obligations; and

(D) neither a Secured Party nor any other Person has made any representation, warranty or statement to such Person to induce such Person to execute this Guaranty.

SECTION 5.COVENANTS:  

5.1Indebtedness.  The Guarantor shall not create, incur, assume or suffer to exist any indebtedness for borrowed money or for the deferred purchase price of property or services or that is evidenced by a note, bond, debenture or similar instrument or other evidence of indebtedness customary for indebtedness of that type (“Indebtedness”) unless such Indebtedness is consented to by the Initial Lender in its sole discretion.

5.2Liens.  The Guarantor shall not create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired (other than customary permitted Liens that do not secure Indebtedness for borrowed money) unless such Lien is consented to by the Initial Lender in its sole discretion.

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5.3Loan and Servicing Agreement.  Without limiting Section 5.1 or 5.2, the Guarantor shall comply with the covenants set forth in Section 5.01 and 5.02 of the Loan and Servicing Agreement as if it were a Loan Party thereunder.

5.4Payment By Guarantor.  If any part of the Guaranteed Obligations are not paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantor shall, immediately upon demand by the Secured Parties (or by the Administrative Agent on behalf of the Secured Parties, at the direction of the Secured Parties) and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, pay in lawful money of the United States of America the amount due on the Guaranteed Obligations to the Secured Parties at the Secured Parties’ address as set forth herein.  Such demand(s) may be made at any time coincident with or after the time for payment of any of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand is deemed made, given and received in accordance with the notice provisions hereof.

5.5Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the Guarantor’s obligations hereunder are not reduced, discharged or released because or by reason of any existing or future offset, claim or defense of a Loan Party or any other Person against a Secured Party or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

5.6Acceleration of Obligations.  As between the Guarantor and the Secured Parties, the Borrower’s obligations under the Transaction Documents may be declared to be due and payable (and are deemed to have become automatically due and payable in the circumstances provided in the Loan and Servicing Agreement) while an Event of Default has occurred and is continuing for purposes of this Guaranty notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against a Loan Party and in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether due and payable by the Loan Parties) immediately become due and payable by the Guarantor for purposes of this Guaranty.

5.7Set-Off.  If an Event of Default has occurred and is continuing, the Secured Parties and their respective Affiliates are authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all indebtedness at any time owing by such Secured Party or Affiliate to or for the credit or the account of the Guarantor against any and all of the Guaranteed Obligations, irrespective of whether or not the Secured Parties have made any demand under this Guaranty.  Each Secured Party shall notify the Guarantor promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

5.8Mortgage.  At the request of the Initial Lender at any time that a Cash Trap Event has occurred and is continuing, the Guarantor shall, at its expense, enter into a mortgage, deed of trust or similar security document granting the Administrative Agent a lien on all of its assets and take such other actions and enter such other documentation as is customary to grant a lien on such property to a commercial lender.

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SECTION 6.miscellaneous:

6.1Governing Law.  This Guaranty is governed by, and construed in accordance with, the laws of the State of New York.

6.2Expenses.  The Guarantor shall reimburse the Secured Parties for any and all out‑of‑pocket expenses and charges (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Secured Parties in connection with the enforcement of this Guaranty.  Any and all costs and expenses incurred by the Guarantor in the performance of actions required pursuant to the terms of this Guaranty are borne solely by the Guarantor.

6.3Severability.  Any provision of this Guaranty held to be invalid, illegal or unenforceable in any jurisdiction is, as to such jurisdiction, ineffective to the extent of such invalidity, illegality or unenforceability without effecting the validity, legality and enforceability of the remaining provisions of this Guaranty; and the invalidity of a particular provision in a particular jurisdiction does not invalidate such provision in any other jurisdiction.

6.4Integration.  This Guaranty constitutes the entire contract among the Parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

6.5Notices.  All notices and other communications provided for in this Guaranty must be in writing and will be deemed to have been duly given (a) when received if personally delivered, (b) within five days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) upon receipt after being sent by facsimile or electronic transmission, with confirmed answer back or receipt, during normal business hours on a Business Day or otherwise on the next occurring Business Day or (d) within one Business Day of being sent by priority delivery by established overnight courier to the parties at their respective addresses set forth as follows:  

(i)if to the Secured Parties:

Wells Fargo Bank, National Association

9062 Old Annapolis Road

Columbia, MD 21045

Telephone: 410-884-2271 or 443-367-3924

E-mail: ctsbankdebtadministrationteam@wellsfargo.com

Attention: Jason Prisco or Lance Yeagle – RCC REAL ESTATE SPE 9, LLC

(ii)if to the Guarantor:

c/o ACRES Capital Corp.

865 Merrick Avenue, Suite 200S

Westbury, New York 11590

Attention: Mark Fogel

Facsimile No.: 516‐500‐9149

E‐mail: mf@acrescap.com

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Any Party may change its address, telephone, email or facsimile number for notices and other communications hereunder by notice to the other Party.

6.6Amendments.  Neither this Guaranty nor any provision hereof may be amended, modified or waived except pursuant to an agreement or agreements in writing entered into by the Guarantor and the Administrative Agent (at the direction of the Secured Parties).

6.7No Implied Waivers.  No failure to exercise and no delay in exercising any right or remedy under this Guaranty operates as a waiver thereof.  No single or partial exercise of any right or remedy under this Guaranty, or any abandonment or discontinuance thereof, precludes any other or further exercise thereof or the exercise of any other right or remedy.  No waiver or consent under this Guaranty is applicable to any events, acts or circumstances except those specifically covered thereby.

6.8Successors and Assigns.  This Guaranty is binding upon, and inures to the benefit of, the Parties and their respective successors and permitted assigns.  The Guarantor may not assign or transfer any of its interests or rights, or delegate its duties or obligations, under this Guaranty, in whole or in part, without the prior written consent of the Lenders.  The Lenders may assign or transfer any of their respective its interests, rights or remedies, and delegate its duties or obligations, under this Guaranty in connection with an assignment or transfer of its interests under the Loan and Servicing Agreement.  Nothing in this Guaranty, expressed or implied, may be construed to confer upon any Person (other than the parties hereto, their respective successors and permitted assigns) any legal or equitable right, remedy or claim under or by reason of this Guaranty.

6.9Submission to Jurisdiction; Waiver of Jury Trial.

(A) The Parties agree that any action or proceeding with respect to this Guaranty or any judgment entered by any court in respect thereof may be brought in the United States District Court for the Southern District of New York or the courts of the State of New York and each Party submits to the jurisdiction of such court for the purpose of any such action, proceeding or judgment.

(B) Each Party irrevocably consents to service of process in the manner provided for notice in Section 6.5.  Nothing in this Guaranty affects the right of any Party to service process in any other manner permitted by applicable law.

(C) Each Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Guaranty in any court referred to in Section 6.9(A).  Each Party irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(D) EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER REASON).

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6.10Termination.  This Guaranty continues in effect (notwithstanding the fact that from time to time there may be no Guaranteed Obligations outstanding) until the Facility Termination Date.

6.11Counterparts.  This Guaranty may be executed in counterparts (and by different parties hereto in different counterparts), each of which constitutes an original, but all of which when taken together constitute a single contract.  Delivery of an executed counterpart of a signature page of this Guaranty by electronic transmission is as effective as delivery of a manually executed counterpart of this Guaranty.

6.12Financing Statement.  The Guarantor hereby authorizes the filing of a financing statement with the secretary of state (or equivalent office) of its jurisdiction of organization stating that it is restricted from granting a lien on its assets pursuant to this Guaranty.

(Signature page(s) follow)

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The Guarantor has executed and delivered this Guaranty as of the date first above written.

PLYMOUTH MEETING HOLDINGS, LLC

By: /s/ Jaclyn Jesberger   

Name:Jaclyn Jesberger

Title: Vice President

[Signature Page to Permitted REO Sub Guaranty (Plymouth Meeting Holdings, LLC)]

Accepted:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as administrative agent

By: /s/ Todd Landry   

Name:Todd Landry

Title:Vice President

[Signature Page to Permitted REO Sub Guaranty (Plymouth Meeting Holdings, LLC)]

EX-10.5(J)

Exhibit 10.5(j)

pledge and GUARANTY agreement

PLEDGE AND GUARANTY AGREEMENT, dated as of August 16, 2021 (this “Agreement”), between Acres Real Estate TRS 9 LLC, a Delaware limited liability company (the “Guarantor”), and Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “Administrative Agent”), in favor of the Secured Parties under, and as defined in, the Loan and Servicing Agreement referred to below (together with the Guarantor, the “Parties” and each, a “Party”).

PRELIMINARY STATEMENTS:

1. Acres Commercial Realty Corp. owns (i) all of the equity interest in Exantas Real Estate TRS Inc., which in turns owns all of the equity interest in the Guarantor, (ii) all of the equity interest in RCC Real Estate, Inc., which in turn owns all of the equity interest in RCC Real Estate SPE Holdings LLC (“Holdings”), which in turn owns all of the equity interest in RCC Real Estate SPE 9 LLC (the “Borrower”), which in turn owns all of the equity interest in Exantas Phili Holdings, LLC (“HGI Sub”), and (iii) all of the equity interest in ACRES Realty Funding Inc. (the “Subordinated Creditor”).

2. The Borrower is indebted to the Secured Parties pursuant to the Loan and Servicing Agreement dated as of July 31, 2020 (as amended by the First Amendment to Loan and Servicing Agreement, dated as of September 16, 2020, the Second Amendment to Loan and Servicing Agreement, dated as of May 25, 2021, the Third Amendment to Loan and Servicing Agreement, dated as of August 16, 2021, and as further amended, restated, supplemented, replaced or otherwise modified, the “Loan and Servicing Agreement”) among Holdings, the Borrower, the Lenders party thereto, the Administrative Agent, Massachusetts Mutual Life Insurance Company, as Facility Servicer, ACRES Capital Servicing LLC, as Portfolio Asset Servicer, and Wells Fargo Bank, National Association, as Collateral Custodian.  

3. The Guarantor and the Borrower (i) are entering into the Purchase and Sale Agreement, dated as of August 16, 2021 (as amended, restated, supplemented, replaced or otherwise modified, the “Purchase Agreement”) pursuant to which the Borrower is selling 74% of its equity interest in HGI Sub to the Guarantor (the “Specified Transaction”) and (ii) may enter into certain future transactions, as permitted under the Loan and Servicing Agreement, pursuant to which the Borrower may sell other assets to the Guarantor from time to time.  The Specified Transaction is subject to the consent of the Lenders and such consent is conditioned on, amongst other things, the Guarantor entering into this Agreement.

4. To finance the Specified Transaction, the Guarantor is issuing the Subordinated Promissory Note, dated as of August 16, 2021 (as amended, restated, supplemented, replaced or otherwise modified, the “Subordinated Note”), made by the Guarantor in favor of the Subordinated Creditor in the original principal amount of $18,539,699.00.

5. Therefore, to induce the Lenders to consent to the Specified Transaction, the Guarantor is willing to enter into this Agreement.

AGREEMENT:

In consideration of the foregoing, the receipt and sufficiency of which are acknowledged, the Guarantor hereby agree as follows:

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SECTION 1.Interpretation:

Capitalized terms used in this Agreement and not otherwise defined have the meanings set forth for such terms in the Loan and Servicing Agreement.  As used in this Agreement, the plural includes the singular and the singular includes the plural.  All pronouns and any variations thereof refer to masculine, feminine, neuter, singular or plural as the identity of the Person or Persons may require.  As used in this Agreement, “include,” “includes” and “including” have the inclusive meaning of “including without limitation.”  Section and other headings are for reference only, and do not affect the interpretation or meaning of any provision of this Agreement.  

SECTION 2.GUARANTY:

2.1Guarantee.  The Guarantor hereby, irrevocably and unconditionally, guarantees to the Secured Parties the payment of the Guaranteed Obligations as and when such Guaranteed Obligations are due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  “Guaranteed Obligations” means the (a) the full amount of the Obligations then due and payable, and whether for principal, interest, reimbursement obligations, fees, expenses or otherwise, and interest accruing thereon following the commencement of any bankruptcy, insolvency, reorganization, receivership or similar proceeding under any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally (each, an “Insolvency Proceeding”) by or against a Loan Party at the applicable rate specified for the advances in the Loan and Servicing Agreement, whether or not such interest is allowed as a claim in such Insolvency Proceeding and (b) all losses, fees, costs and expenses (including, all court costs and reasonable attorneys’ and paralegals’ fees, costs and expenses) paid or incurred by the Secured Parties in (i) endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, a Loan Party relating to the Loan and Servicing Agreement, the other Transaction Documents or the transactions contemplated thereby, (ii) taking any action with respect to any collateral securing the Obligations or the Guarantor’s obligations and (iii) preserving, protecting or defending the enforceability of, or enforcing, this Agreement or the Secured Parties’ rights or remedies under this Agreement or applicable law, together with interest on such losses, fees, costs and expenses from the date of demand under this Agreement until paid in full at the applicable rate specified for the advances in the Loan and Servicing Agreement.  

2.2Nature of Guarantee.  The guarantee hereunder is a guarantee of payment and not of collection. The Guarantor expressly waives any requirement that the Secured Parties exhaust any right, remedy or power or proceed against the Loan Parties under the Transaction Documents or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.  The guarantee hereunder is a continuing guarantee and applies to all Guaranteed Obligations whenever arising.  The guarantee hereunder is absolute and unconditional, irrespective of the value, genuineness or enforceability of the obligations of the Loan Parties under the Loan and Servicing Agreement or any other agreement, instrument or other document executed or delivered in connection therewith, any substitution, release or exchange of any other guarantee of, or security for, any of the Guaranteed Obligations or to the fullest extent permitted by applicable law, any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety.

2.3Guarantee Irrevocable.  The Guarantor may not revoke this Agreement and this Agreement continues to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by the Guarantor.

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2.4Limitation on Guarantee.  In any Insolvency Proceeding or any action or proceeding involving any corporate or other organizational law, if the Guarantor’s obligations hereunder would, taking into account any of the Guarantor’s rights to contribution, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability hereunder, then notwithstanding any other provision hereof to the contrary, the amount of such liability is automatically limited and reduced, without any further action by the Guarantor, the Secured Parties or any other Person, to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

2.5Reinstatement of Guaranteed Obligations.  If at any time payment of the Guaranteed Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Guaranteed Obligations, whether as a “voidable preference,” “fraudulent conveyance” or otherwise, all as though such payment or performance had not been made, then this Agreement is reinstated and the Guaranteed Obligations are deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 3.GRANT OF A SECURITY INTEREST

3.1Grant.To secure the prompt and complete payment in full when due, whether by lapse of time, acceleration or otherwise, of the Obligations and the performance by the Borrower of all of the covenants and obligations to be performed pursuant to the Loan and Servicing Agreement and each other Transaction Document, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, the Guarantor hereby grants a security interest to the Administrative Agent, for the benefit of the Secured Parties, in all of the Guarantor’s right, title and interest in and to, whether now owned or hereinafter acquired (collectively, the “Collateral”): (i) all accounts, money, cash and currency, chattel paper, tangible chattel paper, electronic chattel paper, intellectual property, goods, equipment, fixtures, contract rights, general intangibles, documents, instruments, certificates of deposit, certificated securities, uncertificated securities, financial assets, securities entitlements, commercial tort claims, securities accounts, deposit accounts, inventory, investment property, letter-of-credit rights, software, and supporting obligations and (ii) all proceeds and products of the foregoing.  For purposes herein, “Pledged Equity” refers to the portion of Collateral consisting of: (i) all investment property and general intangibles consisting of the ownership, equity or other similar interests in any subsidiary, including any TRS Subsidiary; (ii) all certificates, instruments, writings and securities evidencing the foregoing; (iii) the operating agreement and other organizational documents of any such subsidiary, including any TRS Subsidiary if applicable, and all options or other rights to acquire any membership or other interests under such operating agreement or other organizational documents; (iv) all dividends, distributions, capital, profits and surplus and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing; (v) all books, records and other written, electronic or other documentation in whatever form maintained now or hereafter by or for the Guarantor in connection with, and relating to, the ownership of, or evidencing or containing information relating to, the foregoing; and (vi) all proceeds, supporting obligations and products of any of the foregoing.

3.2Pledged Equity.

(A) Except as otherwise set forth in Sections 3.2(B) or 3.2(C):

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(i) the Guarantor shall be entitled to exercise any and all voting or other consensual rights and powers inuring to an owner of Pledged Equity or any part thereof and the Guarantor agrees that it shall exercise such rights for purposes not in contravention of the terms of this Agreement, the Loan and Servicing Agreement and the other Transaction Documents.

(ii) the Guarantor shall be entitled to receive and retain any and all dividends and other distributions paid on or distributed in respect of the Pledged Equity (without any obligation to contribute such amounts to the Collection Account), to the extent and only to the extent that such dividends and other distributions are not prohibited by the terms and conditions of this Agreement or the Loan and Servicing Agreement; provided that any noncash dividends or other distributions that would constitute Pledged Equity, shall be and become part of the Pledged Equity, and, if received by the Guarantor, shall not be commingled by the Guarantor with any of its other property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent and the Secured Parties and the Guarantor shall promptly take all steps reasonably necessary to ensure the validity, perfection and priority (subject to Permitted Liens), including promptly delivering the same to the Administrative Agent in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).  So long as no Event of Default has occurred and is continuing, the Administrative Agent shall cooperate with the Guarantor with respect to making exchanges of Pledged Equity in connection with any exchange or redemption of such Pledged Equity not prohibited by the Loan and Servicing Agreement, which such cooperation shall include delivery of any such Pledged Equity in exchange for replacement Pledged Equity.

(B) Upon the occurrence and during the continuance of an Event of Default (and after the delivery of notice to the Guarantor) or upon the occurrence of any event described in Section 6.01(d) of the Loan and Servicing Agreement (without notice), all rights of the Guarantor to dividends or other distributions that the Guarantor is authorized to receive pursuant to Section 3.2(A)(ii) shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends or other distributions during the continuance of an Event of Default.  All dividends or other distributions received by the Guarantor contrary to the provisions of this Section 3.2(B) shall be held in trust for the benefit of the Administrative Agent, shall be segregated from other property or funds of the Guarantor and shall be promptly delivered to the Administrative Agent in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).  Any and all money and other property paid over to or received by the Administrative Agent pursuant to the provisions of this Section 3.2(B) shall be retained by the Administrative Agent in the Collection Account and shall be applied in accordance with the terms of the Loan and Servicing Agreement.  After all Events of Default have been waived or are no longer continuing, the Administrative Agent, upon written direction from the Majority Lenders, shall promptly repay to the Guarantor (without interest) all dividends or other distributions that the Guarantor would otherwise be permitted to retain pursuant to the terms of Section 3.2(A)(ii) and that remain in such account.

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(C) Upon the occurrence and during the continuance of an Event of Default (and after the delivery of written notice to the Guarantor) or upon the occurrence of any event described in Section 6.01(d) of the Loan and Servicing Agreement (without notice), then (i) all rights of the Guarantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to Section 3.2(A)(i) shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers acting at the direction of the Majority Lenders; provided that, unless otherwise directed by the Majority Lenders, the Administrative Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Guarantor to exercise such rights and (ii) in order to permit the Administrative Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder, the Guarantor shall promptly execute and deliver (or cause to be executed and delivered) to the Administrative Agent all proxies, dividend payment orders and other instruments as the Administrative Agent may from time to time reasonably request.  After all Events of Default have been waived or are no longer continuing, the Guarantor shall have the exclusive right to exercise the voting or consensual rights and powers that the Guarantor would otherwise be entitled to exercise pursuant to the terms of Section 3.2(a)(i).  In acting, or refraining from acting under this clause (C), the Administrative Agent shall so act, or refrain from acting, solely upon direction of Majority Lenders.

3.3Remedies.

(A) Upon the occurrence and during the continuation of any Event of Default, the Administrative Agent, on behalf of the Secured Parties, shall have, in addition to all other rights and remedies under this Agreement, the other Transaction Documents or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction and other Applicable Law, which rights shall be cumulative.

(B) Upon the occurrence and during the continuation of an Event of Default, and without limiting the remedies provided in this Section 3, the Administrative Agent shall, at the direction of the Majority Lenders, (i) sell or otherwise dispose of any of the Collateral or the Pledged Equity at public or private sales and take possession of the proceeds of any such sale or disposition, (ii) instruct the obligor or obligors on any account, agreement, instrument or other obligation constituting Collateral or Pledged Equity to make any payment required by the terms of such account, agreement, instrument or other obligation to or at the direction of the Administrative Agent (acting at the direction of the Majority Lenders), (iii) give notice of sole control or any other instruction under any account control agreement and take any action therein with respect to Collateral subject thereto, (iv) in accordance with Section 3.2, transfer and register in its name or in the name of its nominee the whole or any part of the Pledged Equity, exchange certificates or instruments representing or evidencing Pledged Equity for certificates or instruments of smaller or larger denominations, exercise the voting and all other rights as a holder with respect thereto, including exchange, subscription or any other rights, privileges or options pertaining to any Pledged Equity, and otherwise act with respect to the Pledged Equity as though the Administrative Agent was the absolute owner thereof and (v) in

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accordance with Section 3.2, collect and receive all cash dividends, interest, principal and other distributions made on any Pledged Equity.

(C) Any Collateral or Pledged Equity to be sold or otherwise disposed of pursuant to this Section 3 may be sold or disposed of in one or more parcels at public or private sale or sales (which sales may be adjourned or continued from time to time with or without notice upon such terms and conditions, including price, as the Administrative Agent may deem commercially reasonable), for cash or on credit or for future delivery without assumption of any credit risk.  Any sale or disposition of Collateral or Pledged Equity may be made without the Administrative Agent giving warranties of any kind with respect to such sale or disposition and the Administrative Agent may specifically disclaim any warranties of title or the like.  The Administrative Agent may comply with any applicable State or federal law requirements in connection with a sale or disposition of the Collateral or Pledged Equity and compliance will not be considered to adversely affect the commercial reasonableness of any such sale or disposition.  If any notice of a proposed sale or disposition of the Collateral or Pledged Equity is required by law, such notice is deemed commercially reasonable and proper if given at least ten days before such sale or disposition.  The Administrative Agent has the right upon any public sale of Collateral or Pledged Equity and, to the extent permitted by law, upon any such private sale of Collateral or Pledged Equity, to purchase the whole or any part of the Collateral or Pledged Equity so sold or disposed of free of any right of equity redemption, which equity redemption the Borrower hereby waives.  Upon any sale or disposition of Collateral or Pledged Equity, the Administrative Agent has the right to deliver and transfer to the purchaser or transferee thereof the Collateral or Pledged Equity so sold or disposed of.

SECTION 4.WAIVERS:

4.1Guarantee Absolute.  Without limiting the generality of any other provision of this Agreement, the Guarantor’s obligations hereunder are not released, diminished, impaired, reduced or adversely affected by any of the following:

(A) the unenforceability of all or any part of the Guaranteed Obligations or any agreement, instrument or other document executed or delivered in connection with the Guaranteed Obligations for any reason whatsoever;

(B) any performance or nonperformance of any of the agreements or covenants of the Transaction Documentsor anyextension of the time for performance of, or the waiver of compliance with, any of the Guaranteed Obligations at any time or from time to time;

(C) any acceleration of the maturity of any of the Guaranteed Obligations;

(D) any renewal, extension, increase, amendment or other modification of any of the Guaranteed Obligations in any respect, any waiver, forbearance, indulgence or compromise of any right under the Loan and Servicing Agreement or any other Transaction Document or any assignment, transfer or other disposition of all or part of the Secured Parties’ interests under the Transaction Documents;

(E) the taking or accepting of any other security, collateral or guarantee, or other assurance of payment, for all or any part of the Guaranteed Obligations;

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(F) any full or partial release of a Loan Party any other guarantor of the Guaranteed Obligations or any release, exchange or other disposition, in whole or in part, of any security for any of the Guaranteed Obligations;

(G) any lien or security interest granted to, or in favor of, the Secured Parties as security for any of the Guaranteed Obligations being unperfected;

(H) any failure or delay of the Secured Parties to exercise any of its rights or remedies under the Transaction Documents or applicable law or with respect to any other guarantee of, or security for, any of the Guaranteed Obligations;

(I) any Insolvency Proceeding of a Loan Party, the Guarantor or any other guarantor of the Guaranteed Obligations;

(J) any dissolution of a Loan Party, the Guarantor or any other guarantor of the Guaranteed Obligations, any sale, lease, transfer or other disposition of any or all of such Person’s assets or any reorganization, merger or consolidation of any such Person;

(K) any failure of the Secured Parties to notify the Guarantor of any of the foregoing; or

(L) any other action taken or omitted to be taken with respect to the Transaction Documents, the Guaranteed Obligations or the security and collateral therefor, whether such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof.

4.2Waivers.  The Guarantor hereby waives:

(A) diligence, presentment, demand of payment, notice of dishonor and protest;

(B) all rights of subrogation and any other rights and defenses that are or may become available to the Guarantor or other surety by reason of Applicable Law;

(C) any rights or defenses the Guarantor or other surety may have in respect of its obligations as a guarantor or other surety by reason of any election of remedies by the Secured Parties; and

(D) any common law, equitable, statutory or other rights (including rights to notice) that the Guarantor might otherwise have as a result of or in connection with any of the circumstances described in Section 4.1.

4.3Subrogation.  So long as this Agreement is in effect, the Guarantor shall not exercise any right or remedy arising by reason of its performance of its guarantee, whether by subrogation, reimbursement, indemnification, contribution or otherwise, against a Loan Party or any other guarantor of the Guaranteed Obligations or any security therefor.

SECTION 5.Representations:

5.1The Guarantor makes the following representations to the Secured Parties, which representations survive the execution and delivery of this Agreement:

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(A) the execution and delivery of this Agreement and the performance of its obligations hereunder (a) are within the Guarantor’s  organizational power and authority, (b) have been authorized by all necessary organizational action by the Guarantor and (c) do not require the consent or approval of any other Person other than any consent or approval that has been obtained;

(B) the Guarantor is “solvent” within the meaning give that term and similar terms under applicable laws relating to fraudulent transfers or conveyances;

(C) the Guarantor has received, or will receive, direct or indirect substantial benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement and the making of this Agreement with respect to the Guaranteed Obligations; and

(D) neither a Secured Party nor any other Person has made any representation, warranty or statement to such Person to induce such Person to execute this Agreement.

5.2The Guarantor also makes the following representations to the Secured Parties with respect to the security interest granted herein:

(A) this Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Collateral in favor of the Administrative Agent, on behalf of the Secured Parties, which security interest is prior to all other Liens (except for Permitted Liens), and is enforceable as such against creditors of and purchasers from the Guarantor;

(B) the Guarantor has authorized the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Collateral in which a security interest granted to the Administrative Agent, on behalf of the Secured Parties, under this Agreement may be perfected by filing;

(C) other than as expressly permitted by the terms of the Transaction Documents (including Permitted Liens), this Agreement and the security interest granted to the Administrative Agent, on behalf of the Secured Parties, pursuant to this Agreement, the Guarantor has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of the Collateral.  The Guarantor has not authorized the filing of and is not aware of any financing statements against the Guarantor that include a description of collateral covering the Collateral.

(D) the Pledged Equity shall not be represented by a certificate unless (a) the limited liability company agreement of such TRS Subsidiary expressly provides that such interest shall be a “security” within the meaning of Article 8 of the UCC of the applicable jurisdiction and (b) such certificate shall be delivered as provided in Section 6.12;

(E) with respect to any Pledged Equity that constitutes a “certificated security,” such certificated security has been delivered to the Administrative Agent, on behalf of the Secured Parties and, if in registered form, has been specially Indorsed to the Administrative Agent, for the benefit of the Secured Parties, or in blank by an effective Indorsement or has been registered in the name of the Administrative Agent, for the

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benefit of the Secured Parties, upon original issue or registration of transfer by the Guarantor of such certificated security, as provided in Section 6.12;

(F) with respect to any Pledged Equity that constitutes an “uncertificated security”, the Guarantor has caused the issuer of such uncertificated security to register the Administrative Agent, on behalf of the Secured Parties, as the registered owner of such uncertificated security;

(G) the Pledged Equity issued by such TRS Subsidiary has been duly and validly authorized and issued by such TRS Subsidiary;

(H) the Guarantor has authorized the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Pledged Equity; and

(I) the Guarantor consents to the transfer of any Pledged Equity to the Administrative Agent or its designee, in connection with an exercise of remedies in accordance with Applicable Law following, and during the occurrence of, an Event of Default under the Loan and Servicing Agreement and to the substitution of the Administrative Agent or its designee as a member in such TRS Subsidiary with all the rights and powers related thereto, subject to the terms of this Agreement.

SECTION 6.COVENANTS:  

6.1Indebtedness.  The Guarantor shall not create, incur, assume or suffer to exist any indebtedness for borrowed money or for the deferred purchase price of property or services or that is evidenced by a note, bond, debenture or similar instrument or other evidence of indebtedness customary for indebtedness of that type (other than the Subordinated Note).

6.2Liens.  The Guarantor shall not create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired (other than Permitted Liens).

6.3Transfer of Assets.  The Guarantor shall not transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose of, or pledge or hypothecate, directly or indirectly, any interest in any asset to any Person other than the Administrative Agent for the benefit of the Secured Parties.

6.4Distributions.  The Guarantor shall cause all dividends or other distributions owing to it from the proceeds of any disposition or refinancing of any property held by any TRS Subsidiary to be deposited into the Collection Account.  The Guarantor shall not accept any dividend or distribution from any TRS Subsidiary unless such distribution is permitted after giving effect to Section 2.08 of the Loan and Servicing Agreement.

6.5Loan and Servicing Agreement.  Without limiting Section 6.1 or 6.2, the Guarantor shall comply with the covenants set forth in Section 5.01 and 5.02 of the Loan and Servicing Agreement as if it were a Loan Party thereunder.

6.6Payment By the Guarantor.  If any part of the Guaranteed Obligations are not paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantor shall, immediately upon

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demand by the Secured Parties (or by the Administrative Agent on behalf of the Secured Parties, at the direction of the Secured Parties) and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, pay in lawful money of the United States of America the amount due on the Guaranteed Obligations to the Secured Parties at the Secured Parties’ address as set forth herein.  Such demand(s) may be made at any time coincident with or after the time for payment of any of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand is deemed made, given and received in accordance with the notice provisions hereof.

6.7Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the Guarantor’s obligations hereunder are not reduced, discharged or released because or by reason of any existing or future offset, claim or defense of a Loan Party or any other Person against a Secured Party or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

6.8Acceleration of Obligations.  As between the Guarantor and the Secured Parties, the Borrower’s obligations under the Transaction Documents may be declared to be due and payable (and are deemed to have become automatically due and payable in the circumstances provided in the Loan and Servicing Agreement) while an Event of Default has occurred and is continuing for purposes of this Agreement notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against a Loan Party and in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether due and payable by the Loan Parties) immediately become due and payable by the Guarantor for purposes of this Agreement.

6.9Set-Off.  If an Event of Default has occurred and is continuing, the Secured Parties and their respective Affiliates are authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all indebtedness at any time owing by such Secured Party or Affiliate to or for the credit or the account of the Guarantor against any and all of the Guaranteed Obligations, irrespective of whether or not the Secured Parties have made any demand under this Agreement.  Each Secured Party shall notify the Guarantor promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

6.10Protection of Title.  Except as otherwise permitted under the Loan and Servicing Agreement, the Guarantor shall not take any action which would directly or indirectly materially impair or materially and adversely affect the Guarantor’s title to the Collateral.

6.11Protection of Security Interest.  The Guarantor shall take all action that the Administrative Agent (acting at the direction of the Majority Lenders ) may reasonably request to perfect, protect and more fully evidence the first priority (subject to Permitted Liens) perfected security interest of the Administrative Agent, for the benefit of the Secured Parties, in the Collateral, or to enable the Administrative Agent to exercise or enforce any of its rights hereunder, including (i) executing or causing to be executed such other instruments or notices as may be necessary or appropriate, (ii) at the expense of the Guarantor, take all action necessary to cause a valid, subsisting and enforceable first priority perfected security interest, subject only to Permitted Liens, to exist in favor of the Administrative Agent (for the benefit of the Secured Parties) in the Guarantor’s interests in the Collateral, including the filing of

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a UCC financing statement in the applicable jurisdiction adequately describing the Collateral (which may include an “all asset” filing), and naming the Guarantor as debtor and the Administrative Agent as the secured party, and filing continuation statements, amendments or assignments with respect thereto in such filing offices (including any amendments thereto or assignments thereof) and (iii) take all additional action that the Administrative Agent (acting at the direction of the Majority Lenders) may reasonably request to perfect, protect and more fully evidence the respective first priority (subject to Permitted Liens) perfected security interests of the parties to this Agreement in the Collateral, or to enable the Administrative Agent to exercise or enforce any of their respective rights hereunder.  The Loan Parties shall defend the right, title and interest of the Administrative Agent, for the benefit of the Secured Parties, in, to and under the Collateral against all claims of third parties (other than with respect to Permitted Liens).

6.12Delivery of Certificated Pledged Equity.If Guarantor shall at any time hold or acquire any Pledged Equity which are certificated securities, Guarantor shall promptly, and in any event within ten Business Days after receipt thereof, deliver the same to the Administrative Agent, accompanied by stock powers duly executed in blank or other instruments of transfer reasonably satisfactory to the Administrative Agent.

SECTION 7.miscellaneous:

7.1Governing Law.  This Agreement is governed by, and construed in accordance with, the laws of the State of New York.

7.2Expenses.  The Guarantor shall reimburse the Secured Parties for any and all out‑of‑pocket expenses and charges (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Secured Parties in connection with the enforcement of this Agreement.  Any and all costs and expenses incurred by the Guarantor in the performance of actions required pursuant to the terms of this Agreement are borne solely by the Guarantor.

7.3Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction is, as to such jurisdiction, ineffective to the extent of such invalidity, illegality or unenforceability without effecting the validity, legality and enforceability of the remaining provisions of this Agreement; and the invalidity of a particular provision in a particular jurisdiction does not invalidate such provision in any other jurisdiction.

7.4Integration.  This Agreement constitutes the entire contract among the Parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

7.5Notices.  All notices and other communications provided for in this Agreement must be in writing and will be deemed to have been duly given (a) when received if personally delivered, (b) within five days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) upon receipt after being sent by facsimile or electronic transmission, with confirmed answer back or receipt, during normal business hours on a Business Day or otherwise on the next occurring Business Day or (d) within one Business Day of being sent by priority delivery by established overnight courier to the parties at their respective addresses set forth as follows:  

(i)if to the Secured Parties:

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Wells Fargo Bank, National Association

9062 Old Annapolis Road

Columbia, MD 21045

Telephone: 410-884-2271 or 443-367-3924

E-mail: ctsbankdebtadministrationteam@wellsfargo.com

Attention: Jason Prisco or Lance Yeagle – RCC REAL ESTATE SPE 9, LLC

(ii)if to the Guarantor:

c/o ACRES Capital Corp.

865 Merrick Avenue, Suite 200S

Westbury, New York 11590

Attention: Mark Fogel

Facsimile No.: 516‐500‐9149

E‐mail: mf@acrescap.com

Any Party may change its address, telephone, email or facsimile number for notices and other communications hereunder by written notice to the other Party.

7.6Amendments.  Neither this Agreement nor any provision hereof may be amended, modified or waived except pursuant to an agreement or agreements in writing entered into by the Guarantor and the Administrative Agent (at the direction of the Secured Parties).

7.7No Implied Waivers.  No failure to exercise and no delay in exercising any right or remedy under this Agreement operates as a waiver thereof.  No single or partial exercise of any right or remedy under this Agreement, or any abandonment or discontinuance thereof, precludes any other or further exercise thereof or the exercise of any other right or remedy.  No waiver or consent under this Agreement is applicable to any events, acts or circumstances except those specifically covered thereby.

7.8Successors and Assigns.  This Agreement is binding upon, and inures to the benefit of, the Parties and their respective successors and permitted assigns.  The Guarantor may not assign or transfer any of its interests or rights, or delegate its duties or obligations, under this Agreement, in whole or in part, without the prior written consent of the Lenders.  The Lenders may assign or transfer any of their respective its interests, rights or remedies, and delegate its duties or obligations, under this Agreement in connection with an assignment or transfer of its interests under the Loan and Servicing Agreement.  Nothing in this Agreement, expressed or implied, may be construed to confer upon any Person (other than the parties hereto, their respective successors and permitted assigns) any legal or equitable right, remedy or claim under or by reason of this Agreement.

7.9Submission to Jurisdiction; Waiver of Jury Trial.

(A) The Parties agree that any action or proceeding with respect to this Agreement or any judgment entered by any court in respect thereof may be brought in the United States District Court for the Southern District of New York or the courts of the State of New York and each Party submits to the jurisdiction of such court for the purpose of any such action, proceeding or judgment.

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(B) Each Party irrevocably consents to service of process in the manner provided for notice in Section 7.5.  Nothing in this Agreement affects the right of any Party to service process in any other manner permitted by applicable law.

(C) Each Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in Section 7.9(A).  Each Party irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(D) EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER REASON).

7.10Termination.  This Agreement continues in effect (notwithstanding the fact that from time to time there may be no Guaranteed Obligations outstanding) until the Facility Termination Date.

7.11Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which constitutes an original, but all of which when taken together constitute a single contract.  Delivery of an executed counterpart of a signature page of this Agreement by electronic transmission is as effective as delivery of a manually executed counterpart of this Agreement.

7.12Power of Attorney.

(A) The Guarantor irrevocably authorizes the Administrative Agent and appoints the Administrative Agent as its attorney-in-fact to act on its behalf to file financing statements reasonably necessary or desirable (as determined and directed by the Initial Lender) to perfect and to maintain the perfection and priority of the interest of the Administrative Agent, for the benefit of the Secured Parties, in the Collateral.  This appointment is coupled with an interest and is irrevocable.

(B) With effect after the occurrence and during the continuance of an Event of Default, the Guarantor hereby irrevocably constitutes and appoints the Administrative Agent (in such capacity, the “Attorney”) (and all officers, employees or agents designated by Attorney), solely in connection with the enforcement of the rights and remedies of the Administrative Agent, the Lenders and the other Secured Parties under this Agreement and the other Transaction Documents, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the Guarantor’s place and stead and at  the Guarantor’s expense and in the Guarantor’s name or in Attorney’s own name, to take any and all appropriate action and to execute and deliver any and all documents and instruments that may be necessary or desirable to accomplish the purposes of this Agreement and the other Transaction Documents, and, without limiting the generality of the foregoing, hereby grants to Attorney the power and right, on its behalf (in all cases acting at the direction of the Majority Lenders when an Event of Default has occurred and is continuing), without notice to or assent by it, to do the following, each

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in accordance with this Agreement and the other Transaction Documents (provided, that Attorney shall not be obligated to take any such action): (a) open mail for the Guarantor, and ask, demand, collect, give acquittances and receipts for, take possession of, or endorse and receive payment of, any checks, drafts, notes, acceptances, or other instruments for the payment of moneys due, and sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, and notices; (b) continue or obtain any insurance with respect to any of the Guarantor’s assets and pay all or any part of the premiums therefor and costs thereof, and make, settle and adjust all claims under such policies of insurance, and make all determinations and decisions with respect to such policies; (c) pay or discharge any taxes, Liens, or other encumbrances levied or placed on or threatened against the Guarantor or the Guarantor’s property; (d) to the extent related to the Collateral and the transactions contemplated by the Transaction Documents, defend any suit, action or proceeding brought against the Guarantor if the Guarantor does not defend such suit, action or proceeding or if Attorney reasonably believes that it is not pursuing such defense in a manner that will maximize the recovery to Attorney, and settle, compromise or adjust any suit, action, or proceeding described above and, in connection therewith, give such discharges or releases as Attorney may deem appropriate; (e) to the extent related to the Collateral, file or prosecute any claim, litigation, suit or proceeding in any court of competent jurisdiction or before any arbitrator, or take any other action otherwise deemed appropriate by Attorney for the purpose of collecting any and all such moneys due to the Guarantor whenever payable and to enforce any other right in respect of the Guarantor’s property; (f) to the extent related to the Collateral, sell, transfer, pledge, make any agreement with respect to, or otherwise deal with, any of the Guarantor’s property, and execute, in connection with such sale or action, any endorsements, assignments or other instruments of conveyance or transfer in connection therewith; (g) to give any necessary receipts or acquittance for amounts collected or received under the Loan and Servicing Agreement; (h) to make all necessary transfers of the Collateral in connection with any such sale or other disposition made pursuant to the Loan and Servicing Agreement; (i) to execute and deliver for value all necessary or appropriate bills of sale, assignments and other instruments in connection with any such sale or other disposition of the Collateral, the Guarantor hereby ratifying and confirming all that such Attorney (or any substitute) shall lawfully do or cause to be done hereunder and pursuant hereto; (j) to send such notification forms as the Attorney deems appropriate to give notice to Obligors of the Secured Parties’ interest in the Collateral Portfolio; (k) to sign any agreements, orders or other documents in connection with or pursuant to any Transaction Document (if applicable); (l) to cause the certified public accountants then engaged by the Guarantor to prepare and deliver to the Attorney at any time and from time to time, promptly upon Attorney’s request, any reports required to be prepared by or on behalf of the Guarantor under the Transaction Documents, all as though Attorney were the absolute owner of the Guarantor’s property for all purposes, and, to the extent set forth in the this Agreement, to do, at Attorney’s option and the Guarantor’s expense, at any time or from time to time, all acts and other things that Attorney reasonably deems necessary to perfect, preserve or realize upon the Collateral and the Liens of the Administrative Agent, for the benefit of the Secured Parties, thereon (including the execution and filing of UCC financing statements and continuation statements as provided by the terms of the Loan and Servicing Agreement), all as fully and effectively as the Guarantor might do, (m) to make all necessary transfers of the

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Pledged Equity in connection with any such sale or other disposition made pursuant to the Loan and Servicing Agreement; (n) to execute and deliver for value all necessary or appropriate bills of sale, assignments and other instruments in connection with any such sale or other disposition of the Pledged Equity; and (p) to sign any agreements, orders or other documents in connection with or pursuant to any Transaction Document to the extent related to the Pledged Equity, all as though Attorney were the absolute owner of the Pledged Equity for all purposes, and, to the extent set forth in the Loan and Servicing Agreement, to do, at Attorney’s option (acting at the written direction of the Majority Lenders) and Guarantor’s expense, at any time or from time to time, all acts and other things reasonably necessary to perfect, preserve or realize upon the Pledged Equity and the Liens of the Administrative Agent, for the benefit of the Secured Parties, thereon, all as fully and effectively as the General Partner or the Limited Partner might do.  The Guarantor hereby ratifies, to the extent permitted by law, all that said attorneys shall lawfully do or cause to be done by virtue hereof.  No person to whom this power of attorney is presented, as authority for Attorney to take any action or actions contemplated hereby, shall inquire into or seek confirmation from the Guarantor as to the authority of Attorney to take any action described below, or as to the existence of or fulfillment of any condition to this power of attorney, which is intended to grant to Attorney unconditionally the authority to take and perform the actions contemplated herein, and the Guarantor irrevocably waives any claim against any person or entity that acts in reliance in good faith upon the authority granted under this power of attorney with respect to such reliance.  The power of attorney granted hereby is coupled with an interest and may not be revoked or canceled by the Guarantor until the Facility Termination Date.

(Signature page(s) follow)

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The parties have executed and delivered this Agreement as of the date first above written.

ACRES REAL ESTATE TRS 9 LLC

By:/s/ Mark FogelName: Mark Fogel
Title:   President & CEO

[Signature Page to Pledge and Guaranty Agreement (Acres Real Estate TRS 9 LLC)]

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WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

By:  /s/ Linda Lopez

Name: Linda Lopez

Title:Assistant Vice President

[Signature Page to Pledge and Guaranty Agreement (Acres Real Estate TRS 9 LLC)]

NAI-1519907927v6

EX-10.5(K)

Exhibit 10.5(k)

GUARANTY

GUARANTY, dated as of April 12, 2022 (this “Guaranty”), by APPLETON HOTEL HOLDINGS, LLC, a Delaware limited liability company (“Propco”), and APPLETON HOTEL LEASING, LLC, a Delaware limited liability company (“Opco” and together with Propco, each a Guarantor and collectively, the “Guarantors”), in favor of the Secured Parties under, and as defined in, the Loan and Servicing Agreement referred to below (together with the Guarantor, the “Parties” and each, a “Party”).

PRELIMINARY STATEMENTS

1.Acres Commercial Realty Corp. owns (i) all of the equity interest in Exantas Real Estate TRS Inc., which in turns owns all of the equity interest in Acres Real Estate TRS 9 LLC, which in turns owns all of the equity interest in the Opco and (ii) all of the equity interest in ACRES Realty Funding, Inc., which in turn owns all of the equity interest in RCC Real Estate SPE Holdings LLC (“Holdings”), which in turn owns all of the equity interest in RCC Real Estate SPE 9 LLC (the “Borrower”), which in turn owns all of the equity interest in Propco.  

3.The Borrower is indebted to the Secured Parties pursuant to the Loan and Servicing Agreement dated as of the date hereof (as amended by the First Amendment to Loan and Servicing Agreement, dated as of September 16, 2020, the Second Amendment to Loan and Servicing Agreement, dated as of May 25, 2021, the Third Amendment to Loan and Servicing Agreement, dated as of August 16, 2021, the Fourth Amendment to Loan and Servicing Agreement, dated as of April 12, 2022, and as further amended, restated, supplemented, replaced or otherwise modified, the “Loan and Servicing Agreement”) among RCC Real Estate SPE Holdings LLC, as Holdings, the Borrower, the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Massachusetts Mutual Life Insurance Company, as Facility Servicer, ACRES Capital Servicing LLC, as Portfolio Asset Servicer, and Wells Fargo Bank, National Association, as Collateral Custodian.

4.Each Guarantor will obtain substantial direct and indirect benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement.

AGREEMENT

Accordingly, the Parties agree as follows:

SECTION 1.Interpretation:

Capitalized terms used in this Guaranty and not otherwise defined have the meanings set forth for such terms in the Loan and Servicing Agreement.  As used in this Guaranty, the plural includes the singular and the singular includes the plural.  All pronouns and any variations thereof refer to masculine, feminine, neuter, singular or plural as the identity of the Person or Persons may require.  As used in this Guaranty, “include,” “includes” and “including” have the inclusive meaning of “including without limitation.”  Section and other headings are for reference only, and do not affect the interpretation or meaning of any provision of this Guaranty.  

SECTION 2.GUARANTY:

2.1Guarantee.  Each Guarantor hereby, irrevocably and unconditionally, guarantees to the Secured Parties the payment of the Guaranteed Obligations as and when such Guaranteed Obligations

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are due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  “Guaranteed Obligations” means the (a) the full amount of the Obligations then due and payable, and whether for principal, interest, reimbursement obligations, fees, expenses or otherwise, and interest accruing thereon following the commencement of any bankruptcy, insolvency, reorganization, receivership or similar proceeding under any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally (each, an “Insolvency Proceeding”) by or against a Loan Party at the applicable rate specified for the advances in the Loan and Servicing Agreement, whether or not such interest is allowed as a claim in such Insolvency Proceeding and (b) all losses, fees, costs and expenses (including, all court costs and reasonable attorneys’ and paralegals’ fees, costs and expenses) paid or incurred by the Secured Parties in (i) endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, a Loan Party relating to the Loan and Servicing Agreement, the other Transaction Documents or the transactions contemplated thereby, (ii) taking any action with respect to any collateral securing the Obligations or each Guarantor’s obligations and (iii) preserving, protecting or defending the enforceability of, or enforcing, this Guaranty or the Secured Parties’ rights or remedies under this Guaranty or applicable law, together with interest on such losses, fees, costs and expenses from the date of demand under this Guaranty until paid in full at the applicable rate specified for the advances in the Loan and Servicing Agreement.  

2.2Nature of Guarantee.  The guarantee hereunder is a guarantee of payment and not of collection.  Each Guarantor expressly waives any requirement that the Secured Parties exhaust any right, remedy or power or proceed against the Loan Parties under the Transaction Documents or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.  The guarantee hereunder is a continuing guarantee and applies to all Guaranteed Obligations whenever arising.  The guarantee hereunder is absolute and unconditional, irrespective of the value, genuineness or enforceability of the obligations of the Loan Parties under the Loan and Servicing Agreement or any other agreement, instrument or other document executed or delivered in connection therewith, any substitution, release or exchange of any other guarantee of, or security for, any of the Guaranteed Obligations or to the fullest extent permitted by applicable law, any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety.

2.3Guarantee Irrevocable.  Neither Guarantor may revoke this Guaranty and this Guaranty continues to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by any Guarantor.

2.4Limitation on Guarantee.  In any Insolvency Proceeding or any action or proceeding involving any corporate or other organizational law, if any Guarantor’s obligations hereunder would, taking into account any of such Guarantor’s rights to contribution, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability hereunder, then notwithstanding any other provision hereof to the contrary, the amount of such liability is automatically limited and reduced, without any further action by such Guarantor, the Secured Parties or any other Person, to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

2.5Reinstatement of Guaranteed Obligations.  If at any time payment of the Guaranteed Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Guaranteed Obligations, whether as a “voidable preference,” “fraudulent conveyance” or otherwise, all as though such payment or performance had not

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been made, then this Guaranty is reinstated and the Guaranteed Obligations are deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 3.WAIVERS:

3.1Guarantee Absolute.  Without limiting the generality of any other provision of this Guaranty, neither Guarantor’s obligations hereunder are released, diminished, impaired, reduced or adversely affected by any of the following:

(A) the unenforceability of all or any part of the Guaranteed Obligations or any agreement, instrument or other document executed or delivered in connection with the Guaranteed Obligations for any reason whatsoever;

(B) any performance or nonperformance of any of the agreements or covenants of the Transaction Documentsor anyextension of the time for performance of, or the waiver of compliance with, any of the Guaranteed Obligations at any time or from time to time;

(C) any acceleration of the maturity of any of the Guaranteed Obligations;

(D) any renewal, extension, increase, amendment or other modification of any of the Guaranteed Obligations in any respect, any waiver, forbearance, indulgence or compromise of any right under the Loan and Servicing Agreement or any other Transaction Document or any assignment, transfer or other disposition of all or part of the Secured Parties’ interests under the Transaction Documents;

(E) the taking or accepting of any other security, collateral or guarantee, or other assurance of payment, for all or any part of the Guaranteed Obligations;

(F) any full or partial release of a Loan Party any other guarantor of the Guaranteed Obligations or any release, exchange or other disposition, in whole or in part, of any security for any of the Guaranteed Obligations;

(G) any lien or security interest granted to, or in favor of, the Secured Parties as security for any of the Guaranteed Obligations being unperfected;

(H) any failure or delay of the Secured Parties to exercise any of its rights or remedies under the Transaction Documents or applicable law or with respect to any other guarantee of, or security for, any of the Guaranteed Obligations;

(I) any Insolvency Proceeding of a Loan Party, any Guarantor or any other guarantor of the Guaranteed Obligations;

(J) any dissolution of a Loan Party, any Guarantor or any other guarantor of the Guaranteed Obligations, any sale, lease, transfer or other disposition of any or all of such Person’s assets or any reorganization, merger or consolidation of any such Person;

(K) any failure of the Secured Parties to notify any Guarantor of any of the foregoing; or

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(L) any other action taken or omitted to be taken with respect to the Transaction Documents, the Guaranteed Obligations or the security and collateral therefor, whether such action or omission prejudices any Guarantor or increases the likelihood that any Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof.

3.2Waivers.  Each Guarantor hereby waives:

(A) diligence, presentment, demand of payment, notice of dishonor and protest;

(B) all rights of subrogation, reimbursement, indemnification and contribution and any other rights and defenses that are or may become available to such Guarantor or other surety by reason of Applicable Law;

(C) any rights or defenses such Guarantor or other surety may have in respect of its obligations as a guarantor or other surety by reason of any election of remedies by the Secured Parties; and

(D) any common law, equitable, statutory or other rights (including rights to notice) that such Guarantor might otherwise have as a result of or in connection with any of the circumstances described in Section 3.1.

3.3Subrogation.  So long as this Guaranty is in effect, no Guarantor shall exercise any right or remedy arising by reason of its performance of its guarantee, whether by subrogation, reimbursement, indemnification, contribution or otherwise, against a Loan Party or any other guarantor of the Guaranteed Obligations or any security therefor.

SECTION 4.Representations:

Each Guarantor makes the following representations to the Secured Parties, which representations survive the execution and delivery of this Guaranty:

(A) the execution and delivery of this Guaranty and the performance of its obligations hereunder (a) are within such Guarantor’s  organizational power and authority, (b) have been authorized by all necessary organizational action by such Guarantor and (c) do not require the consent or approval of any other Person other than any consent or approval that has been obtained;

(B) such Guarantor is “solvent” within the meaning give that term and similar terms under applicable laws relating to fraudulent transfers or conveyances;

(C) such Guarantor has received, or will receive, direct or indirect substantial benefits from the extensions of credit made by the Lenders under the Loan and Servicing Agreement and the making of this Guaranty with respect to the Guaranteed Obligations; and

(D) neither a Secured Party nor any other Person has made any representation, warranty or statement to such Person to induce such Person to execute this Guaranty.

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SECTION 5.COVENANTS:  

5.1Indebtedness.  No Guarantor shall create, incur, assume or suffer to exist any indebtedness for borrowed money or for the deferred purchase price of property or services or that is evidenced by a note, bond, debenture or similar instrument or other evidence of indebtedness customary for indebtedness of that type (“Indebtedness”) unless such Indebtedness is consented to by the Initial Lender in its sole discretion.

5.2Liens.  No Guarantor shall create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired (other than customary permitted Liens that do not secure Indebtedness for borrowed money) unless such Lien is consented to by the Initial Lender in its sole discretion.

5.3Loan and Servicing Agreement.  Without limiting Section 5.1 or 5.2, each Guarantor shall comply with the covenants set forth in Section 5.01 and 5.02 of the Loan and Servicing Agreement as if it were a Loan Party thereunder.

5.4Payment By Guarantors.  If any part of the Guaranteed Obligations are not paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantors shall, immediately upon demand by the Secured Parties (or by the Administrative Agent on behalf of the Secured Parties, at the direction of the Secured Parties) and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, pay in lawful money of the United States of America the amount due on the Guaranteed Obligations to the Secured Parties at the Secured Parties’ address as set forth herein.  Such demand(s) may be made at any time coincident with or after the time for payment of any of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand is deemed made, given and received in accordance with the notice provisions hereof.

5.5Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the Guarantors’ obligations hereunder are not reduced, discharged or released because or by reason of any existing or future offset, claim or defense of a Loan Party or any other Person against a Secured Party or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

5.6Acceleration of Obligations.  As between each Guarantor and the Secured Parties, the Borrower’s obligations under the Transaction Documents may be declared to be due and payable (and are deemed to have become automatically due and payable in the circumstances provided in the Loan and Servicing Agreement) while an Event of Default has occurred and is continuing for purposes of this Guaranty notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against a Loan Party and in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether due and payable by the Loan Parties) immediately become due and payable by the Guarantors for purposes of this Guaranty.

5.7Set-Off.  If an Event of Default has occurred and is continuing, the Secured Parties and their respective Affiliates are authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all indebtedness at any time owing by such Secured Party

5

or Affiliate to or for the credit or the account of the Guarantors against any and all of the Guaranteed Obligations, irrespective of whether or not the Secured Parties have made any demand under this Guaranty.  Each Secured Party shall notify the Guarantors promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

5.8Security.  The Guarantors shall, at their sole cost and expense (including, without limitation, the reimbursement of Initial Lender’s attorneys’ fees and expenses), satisfy the following terms and conditions prior to the Leasehold Mortgage Trigger Date (all such documents described in clauses (A) and (B) below, the “Leasehold Mortgage Documents”):

(A) Appleton Hotel Holdings, LLC (“Ground Lessee”) shall deliver a leasehold mortgage (the “LH Mortgage”) to and for the benefit of Administrative Agent, on behalf of the Secured Parties, in form and substance reasonably satisfactory to the Initial Lender, which LH Mortgage shall, among other things: (a) provide a perfected first priority security interest in all of Ground Lessee’s assets, including, without limitation, all of its right, title and interest in and to its leasehold interest under the Eligible Ground Lease located at 333 West College Avenue, Appleton, Wisconsin (the “Ground Lease” and the land and improvements thereunder, the “Hotel”); (b) assign its interest as the landlord under that certain Lease Agreement dated April 1, 2022 between Ground Lessee and Appleton Hotel Leasing, LLC (“Appleton Hotel”) (the “Operating Lease”), together with all rents and other payments payable thereunder (and agree to the subordination of the same to the rights of the Administrative Agent, on behalf of the Secured Parties); and (c) contain representations and covenants with respect to the Hotel and its ownership, management and operation, including, if requested by the Initial Lender, covenants with respect to the establishment of a cash management structure for the Hotel revenues and expenses (including customary reserves for taxes, insurance and FF&E (furniture, fixtures and equipment).

(B) Concurrently with the delivery of the LH Mortgage:

(i) Appleton Hotel shall enter into an agreement for the benefit of Administrative Agent, on behalf of the Secured Parties, that shall, among other things: (i) consent to the LH Mortgage and the assignment of Ground Lessee’s interest as landlord under the Operating Lease; (ii) subordinate its interest under the Operating Lease to the LH Mortgage and Administrative Agent’s rights thereunder; and (iii) agree that upon an Event of Default, the Operating Lease may be terminated upon the direction of the Initial Lender.

(ii) The Guarantors shall cause the landlord under the Ground Lease (“Ground Lessor”) and its mortgagee under its mortgage financing, to enter into an agreement on commercially reasonable terms for the benefit of the Administrative Agent, on behalf of the Secured Parties, that shall, among other things: (i) consent to the LH Mortgage; (ii) acknowledge that the LH Mortgage constitutes a “Leasehold Mortgage” under the terms of the Ground Lease and that the Administrative Agent, on behalf of the Secured Parties, shall have the rights and remedies of a leasehold mortgagee under the terms of the Ground Lease (including, without limitation, rights of notice and cure); (iii) acknowledge that the LH Mortgage and the leasehold financing evidenced thereby does not

6

violate any of the terms of the Ground Lease, the Subordination, Attornment and Non-Disturbance Agreement dated as of July 18, 2017 or the Ground Lease Estoppel Certificate; Recognition and Attornment Agreement dated as of January 12, 2018, or any other similar agreement, and that the Administrative Agent, on behalf of the Secured Parties, as “leasehold mortgagee” or “leasehold lender,” as applicable, shall have all rights, remedies and benefits thereunder; and (iv) provide the estoppel provisions as required thereunder.

(iii) The Guarantors shall cause (i) the manager at the Hotel to enter into a commercially reasonable and customary management subordination agreement for the benefit of the Administrative Agent, on behalf of the Secured Parties and (ii) the franchisor at the Hotel to enter into a commercially reasonable and customary “comfort letter” for the benefit of the Administrative Agent, on behalf of the Secured Parties.

(iv) The Guarantors shall provide a title insurance policy with respect to the LH Mortgage insuring its first lien priority, with such endorsements as the Initial Lender may reasonably request.

(v) The Guarantors shall cause the parties to the “skywalk leases” and related agreements, and the agreements for the management of the convention center to enter into commercially reasonable agreements for the benefit of the Administrative Agent, on behalf of the Secured Parties, to consent to the LH Mortgage (to the extent consent is required under such leases and agreements), and recognizing the interest and rights of the Administrative Agent, on behalf of the Secured Parties, under the LH Mortgage.

(vi) The Guarantors shall provide any or all of the following, as may reasonably be required by the Initial Lender and in form and substance reasonably acceptable to the Initial Lender: (i) an ALTA survey of the Hotel, to the extent required by the title company to issue the title policy without a survey exception; (ii) a Phase I (and if required, Phase II) environmental audit; (iii) evidence that any and all applicable transfer taxes and mortgage taxes have been paid; (iv) certificates, copies of policies and such other evidence of property and liability insurance as the Initial Lender may reasonably require; (v) opinions of counsel from Ground Lessee and Appleton Hotel and of local Wisconsin counsel, in customary form for real estate mortgage transaction; (vi) evidence that any litigation and other proceedings affecting the Hotel have been terminated or settled; and (vii)  such other customary documentation and agreements relating to mortgage loans as the Initial Lender may reasonably require.  

SECTION 6.miscellaneous:

6.1Governing Law.  This Guaranty is governed by, and construed in accordance with, the laws of the State of New York.

6.2Expenses.  The Guarantors shall reimburse the Secured Parties for any and all out‑of‑pocket expenses and charges (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Secured Parties in connection with the enforcement of this Guaranty.  Any and all

7

costs and expenses incurred by the Guarantors in the performance of actions required pursuant to the terms of this Guaranty are borne solely by the Guarantors.

6.3Severability.  Any provision of this Guaranty held to be invalid, illegal or unenforceable in any jurisdiction is, as to such jurisdiction, ineffective to the extent of such invalidity, illegality or unenforceability without effecting the validity, legality and enforceability of the remaining provisions of this Guaranty; and the invalidity of a particular provision in a particular jurisdiction does not invalidate such provision in any other jurisdiction.

6.4Integration.  This Guaranty constitutes the entire contract among the Parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

6.5Notices.  All notices and other communications provided for in this Guaranty must be in writing and will be deemed to have been duly given (a) when received if personally delivered, (b) within five days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) upon receipt after being sent by facsimile or electronic transmission, with confirmed answer back or receipt, during normal business hours on a Business Day or otherwise on the next occurring Business Day or (d) within one Business Day of being sent by priority delivery by established overnight courier to the parties at their respective addresses set forth as follows:  

(i)if to the Secured Parties:

Wells Fargo Bank, National Association

9062 Old Annapolis Road

Columbia, MD 21045

Telephone: 410-884-2271 or 443-367-3924

E-mail: ctsbankdebtadministrationteam@wellsfargo.com

Attention: Jason Prisco or Lance Yeagle – RCC REAL ESTATE SPE 9, LLC

(ii)if to the Guarantors:

c/o ACRES Capital Corp.

865 Merrick Avenue, Suite 200S

Westbury, New York 11590

Attention: Mark Fogel

Facsimile No.: 516‐500‐9149

E‐mail: mf@acrescap.com

Any Party may change its address, telephone, email or facsimile number for notices and other communications hereunder by notice to the other Party.

6.6Amendments.  Neither this Guaranty nor any provision hereof may be amended, modified or waived except pursuant to an agreement or agreements in writing entered into by the Guarantors and the Administrative Agent (at the direction of the Secured Parties).

6.7No Implied Waivers.  No failure to exercise and no delay in exercising any right or remedy under this Guaranty operates as a waiver thereof.  No single or partial exercise of any right or remedy

8

under this Guaranty, or any abandonment or discontinuance thereof, precludes any other or further exercise thereof or the exercise of any other right or remedy.  No waiver or consent under this Guaranty is applicable to any events, acts or circumstances except those specifically covered thereby.

6.8Successors and Assigns.  This Guaranty is binding upon, and inures to the benefit of, the Parties and their respective successors and permitted assigns.  No Guarantor may assign or transfer any of its interests or rights, or delegate its duties or obligations, under this Guaranty, in whole or in part, without the prior written consent of the Lenders.  The Lenders may assign or transfer any of their respective its interests, rights or remedies, and delegate its duties or obligations, under this Guaranty in connection with an assignment or transfer of its interests under the Loan and Servicing Agreement.  Nothing in this Guaranty, expressed or implied, may be construed to confer upon any Person (other than the parties hereto, their respective successors and permitted assigns) any legal or equitable right, remedy or claim under or by reason of this Guaranty.

6.9Submission to Jurisdiction; Waiver of Jury Trial.

(A) The Parties agree that any action or proceeding with respect to this Guaranty or any judgment entered by any court in respect thereof may be brought in the United States District Court for the Southern District of New York or the courts of the State of New York and each Party submits to the jurisdiction of such court for the purpose of any such action, proceeding or judgment.

(B) Each Party irrevocably consents to service of process in the manner provided for notice in Section 6.5.  Nothing in this Guaranty affects the right of any Party to service process in any other manner permitted by applicable law.

(C) Each Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Guaranty in any court referred to in Section 6.9(A).  Each Party irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(D) EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER REASON).

6.10Termination.  This Guaranty continues in effect (notwithstanding the fact that from time to time there may be no Guaranteed Obligations outstanding) until the Facility Termination Date.

6.11Counterparts.  This Guaranty shall be valid, binding, and enforceable against a party only when executed and delivered by an authorized individual on behalf of the party by means of (i) any electronic signature permitted by the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, and/or any other relevant electronic signatures law, including relevant provisions of the Uniform Commercial Code (collectively, “Signature Law”); (ii) an original manual signature; or (iii) a faxed, scanned, or photocopied manual signature.  Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the

9

same validity, legal effect, and admissibility in evidence as an original manual signature.  Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any faxed, scanned, or photocopied manual signature, or other electronic signature, of any party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof.  This Guaranty may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute one and the same instrument.  For avoidance of doubt, original manual signatures shall be used for execution or indorsement of writings and authentication of Notes, if any, when required under the UCC or other Signature Law due to the character or intended character of the writings.

6.12Financing Statement.  The Guarantors hereby authorizes the filing of a financing statement with the secretary of state (or equivalent office) of its jurisdiction of organization stating that it is restricted from granting a lien on its assets pursuant to this Guaranty.

(Signature page(s) follow)

10

The Guarantors have executed and delivered this Guaranty as of the date first above written.

APPLETON HOTEL HOLDINGS, LLC

By:/s/ Mark FogelName: Mark Fogel
Title:   President & CEO

APPLETON HOTEL LEASING, LLC

By:/s/ Mark FogelName: Mark Fogel
Title:   President & CEO

[Signature Page - Guaranty]

Accepted:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as administrative agent

By: COMPUTERSHARE TRUST COMPANY, N.A., as attorney-in-fact and agent

By:/s/ Scott R. Little

Name:Scott Little

Title:Vice President

[Signature Page - Guaranty]

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Mark Fogel, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended March 31, 2022 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:

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;

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;

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

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):

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

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.

May 9, 2022	/s/ Mark Fogel
	Mark Fogel
	President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David J. Bryant, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended March 31, 2022 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:

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;

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;

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

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):

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

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.

May 9, 2022	/s/ David J. Bryant
	David J. Bryant
	Chief Financial Officer

EX-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 Quarterly Report of ACRES Commercial Realty Corp. (the “Company”) on Form 10-Q for the quarter ended March 31, 2022 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:

(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.

May 9, 2022	/s/ Mark Fogel
	Mark Fogel
	President & Chief Executive 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.

EX-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 Quarterly Report of ACRES Commercial Realty Corp. (the “Company”) on Form 10-Q for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. Bryant, 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:

(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.

May 9, 2022	/s/ David J. Bryant
	David J. Bryant
	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.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 06, 2022
Document Information [Line Items]
Entity Registrant Name	ACRES COMMERCIAL REALTY CORP.
Entity Central Index Key	0001332551
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding (in shares)		9,100,548
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity File Number	1-32733
Entity Tax Identification Number	20-2287134
Entity Address, Address Line One	390 RXR Plaza
Entity Address, City or Town	Uniondale
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11556
City Area Code	516
Local Phone Number	535-0015
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	MD
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	ACR
Security Exchange Name	NYSE
8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock
Trading Symbol	ACRPrC
Security Exchange Name	NYSE
7.875% Series D Cumulative Redeemable Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	7.875% Series D Cumulative Redeemable Preferred Stock
Trading Symbol	ACRPrD
Security Exchange Name	NYSE

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
ASSETS:
Cash and cash equivalents	$ 79,561	$ 35,500
Restricted cash	5,734	248,431
Accrued interest receivable	6,282	6,112
CRE loans	1,896,425	1,882,551
Less: allowance for credit losses	(4,706)	(8,805)
CRE loans, net	1,891,719	1,873,746
Principal paydowns receivable	0	14,899
Loan receivable - related party	11,525	11,575
Investments in unconsolidated entities	1,548	1,548
Property held for sale	17,657	17,846
Investments in real estate	58,782	59,308
Right of use assets	5,918	5,951
Intangible assets	2,987	3,877
Other assets	5,412	5,482
Total assets	2,087,125	2,284,275
LIABILITIES
Accounts payable and other liabilities	8,182	7,025
Management fee payable - related party	557	561
Accrued interest payable	2,598	5,937
Borrowings	1,626,204	1,814,424
Lease liabilities	3,514	3,537
Distributions payable	3,262	3,262
Accrued tax liability	106	1
Liabilities held for sale		1,333
Total liabilities	1,644,423	1,836,080
STOCKHOLDERS’ EQUITY
Common stock, par value $0.001: 41,666,666 shares authorized; 8,834,527 and 9,149,079 shares issued and outstanding (including 333,329 and 333,329 of unvested restricted shares)	9	9
Additional paid-in capital	1,176,685	1,179,863
Accumulated other comprehensive loss	(7,671)	(8,127)
Distributions in excess of earnings	(726,331)	(723,560)
Total stockholders’ equity	442,702	448,195
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	2,087,125	2,284,275
8.625% Series C Preferred Stock
STOCKHOLDERS’ EQUITY
Preferred stock, value	5	5
7.875% Series D Preferred Stock
STOCKHOLDERS’ EQUITY
Preferred stock, value	$ 5	$ 5

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	41,666,666	41,666,666
Common stock, shares issued (in shares)	8,834,527	9,149,079
Common stock, shares outstanding (in shares)	8,834,527	9,149,079
Common stock, shares issued, non-vested restricted shares (in shares)	333,329	333,329
Assets of consolidated variable interest entities (VIEs) included in total assets above:
Restricted cash	$ 5,734	$ 248,431
Accrued interest receivable	6,282	6,112
Other assets	5,412	5,482
Total assets of consolidated VIEs	2,087,125	2,284,275
Accounts payable and other liabilities	8,182	7,025
Accrued interest payable	2,598	5,937
Borrowings	1,626,204	1,814,424
Total liabilities of consolidated VIEs	$ 1,644,423	$ 1,836,080
8.625% Series C Preferred Stock
Assets of consolidated variable interest entities (VIEs) included in total assets above:
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, coupon authorized	8.625%	8.625%
Preferred stock, shares issued (in shares)	4,800,000	4,800,000
Preferred stock, shares outstanding (in shares)	4,800,000	4,800,000
7.875% Series D Preferred Stock
Assets of consolidated variable interest entities (VIEs) included in total assets above:
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	6,800,000	6,800,000
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, coupon authorized	7.875%	7.875%
Preferred stock, shares issued (in shares)	4,607,857	4,607,857
Preferred stock, shares outstanding (in shares)	4,607,857	4,607,857
VIE, Primary Beneficiary
Assets of consolidated variable interest entities (VIEs) included in total assets above:
Restricted cash	$ 4,866	$ 248,371
Accrued interest receivable	4,504	3,826
CRE loans, pledged as collateral	1,486,805	1,601,482
Principal paydowns receivable	0	14,899
Other assets	53	36
Total assets of consolidated VIEs	1,496,228	1,868,614
Accounts payable and other liabilities	100	315
Accrued interest payable	1,001	997
Borrowings	1,231,153	1,466,499
Total liabilities of consolidated VIEs	$ 1,232,254	$ 1,467,811

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Interest income:
CRE loans	$ 22,657	$ 24,575
Securities		161
Other	19	13
Total interest income	22,676	24,749
Interest expense	14,907	13,724
Net interest income	7,769	11,025
Real estate income	3,138	1,654
Other revenue	$ 16	$ 16
Revenue, Product and Service [Extensible Enumeration]	us-gaap:ProductAndServiceOtherMember	us-gaap:ProductAndServiceOtherMember
Total revenues	$ 10,923	$ 12,695
OPERATING EXPENSES
General and administrative	3,457	3,153
Real estate expenses	4,794	1,831
Management fees - related party	1,682	1,326
Equity compensation - related party	744	19
Corporate depreciation and amortization	22	44
Reversal of credit losses, net	(1,802)	(5,641)
Total operating expenses	8,897	732
Net interest and other revenues less operating expenses	2,026	11,963
OTHER INCOME (EXPENSE)
Net realized and unrealized gain on investment securities available-for-sale and loans and derivatives		878
Loss on extinguishment of debt	(460)
Other income	798	215
Total other income	338	1,093
INCOME BEFORE TAXES	2,364	13,056
Income tax expense	(280)
NET INCOME	2,084	13,056
Net income allocated to preferred shares	(4,855)	(2,588)
NET (LOSS) INCOME ALLOCABLE TO COMMON SHARES	$ (2,771)	$ 10,468
NET (LOSS) INCOME PER COMMON SHARE - BASIC	$ (0.30)	$ 1.03
NET (LOSS) INCOME PER COMMON SHARE - DILUTED	$ (0.30)	$ 1.03
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC	9,096,977	10,196,124
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED	9,096,977	10,205,369

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 2,084	$ 13,056
Other comprehensive income:
Reclassification adjustments associated with net unrealized losses from interest rate swaps included in net income	456	456
Total other comprehensive income	456	456
Comprehensive income before allocation to preferred shares	2,540	13,512
Net income allocated to preferred shares	(4,855)	(2,588)
Comprehensive (loss) income allocable to common shares	$ (2,315)	$ 10,924

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Preferred Stock 8.625% Series C Preferred Stock	Preferred Stock 7.875% Series D Preferred Stock	Additional Paid-in Capital	Accumulated Other Comprehensive (Loss) Income	Retained Earnings (Distributions In Excess of Earnings)
Beginning balance at Dec. 31, 2020	$ 334,382	$ 10	$ 5		$ 1,085,941	$ (9,978)	$ (741,596)
Beginning balance (in shares) at Dec. 31, 2020		10,162,289
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Purchase and retirement of common stock	(9,519)	$ (1)			(9,518)
Purchase and retirement of common stock (in shares)		(744,778)
Amortization of stock-based compensation	19				19
Net income	13,056						13,056
Distributions and accrual of cumulative preferred stock dividends	(2,588)						(2,588)
Amortization of terminated derivatives	456					456
Ending balance at Mar. 31, 2021	335,806	$ 9	5		1,076,442	(9,522)	(731,128)
Ending balance (in shares) at Mar. 31, 2021		9,417,511
Beginning balance at Dec. 31, 2021	$ 448,195	$ 9	5	$ 5	1,179,863	(8,127)	(723,560)
Beginning balance (in shares) at Dec. 31, 2021	9,149,079	9,149,079
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Offering costs	$ (37)				(37)
Purchase and retirement of common stock	(3,885)				(3,885)
Purchase and retirement of common stock (in shares)		(314,552)
Amortization of stock-based compensation	744				744
Net income	2,084						2,084
Distributions and accrual of cumulative preferred stock dividends	(4,855)						(4,855)
Amortization of terminated derivatives	456					456
Ending balance at Mar. 31, 2022	$ 442,702	$ 9	$ 5	$ 5	$ 1,176,685	$ (7,671)	$ (726,331)
Ending balance (in shares) at Mar. 31, 2022	8,834,527	8,834,527

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 2,084	$ 13,056
Adjustments to reconcile net income from operations to net cash provided by operating activities:
Reversal of credit losses, net	(1,802)	(5,641)
Depreciation, amortization and accretion	3,508	2,366
Amortization of stock-based compensation	744	19
Net realized and unrealized gain on investment securities available-for-sale and loans and derivatives		(878)
Loss on extinguishment of debt	460
Changes in operating assets and liabilities	(3,440)	564
Net cash provided by operating activities	1,554	9,486
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination and purchase of loans	(106,768)	(130,849)
Principal payments received on loans	107,192	176,988
Investments in real estate	188
Proceeds from sale of investment securities available-for-sale		2,958
Principal payments received on loan - related party	50	50
Purchase of furniture and fixtures	(9)	(43)
Net cash provided by investing activities	653	49,104
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock	(3,885)	(9,519)
Proceeds from issuance of preferred stock (net of $37 of underwriting discounts and offering costs)	(37)
Proceeds from borrowings:
Senior secured financing facility	10,150	34,321
Warehouse financing facilities and repurchase agreements	84,992	115,603
Payments on borrowings:
Securitizations	(237,189)	(127,525)
Senior secured financing facility	(10,150)	(22,813)
Convertible senior notes	(39,839)
Payment of debt issuance costs	(30)
Distributions paid on preferred stock	(4,855)	(2,588)
Net cash used in financing activities	(200,843)	(12,521)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(198,636)	46,069
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEG. OF PERIOD	283,931	67,741
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$ 85,295	$ 113,810

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Statement Of Cash Flows [Abstract]
Underwriting discounts and offering costs	$ 37

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ORGANIZATION

3 Months Ended

Mar. 31, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

ORGANIZATION

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 investment in ACRES Realty Funding, Inc. (“ACRES RF”), a wholly-owned subsidiary that holds CRE loans, investments in commercial real estate properties and investments in CRE securitizations, which are consolidated as VIEs as discussed in Note 3.

Reverse Stock Split

Effective February 16, 2021, the Company completed a one-for-three reverse stock split of its outstanding common stock. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. In addition, the Company adopted articles of amendment to its charter, which provided that the par value of the Company’s common stock remained $0.001 immediately after effect was given for the reverse stock split. No fractional shares were issued in connection with the reverse stock split. Stockholders who otherwise held fractional shares of the Company’s common stock as a result of the reverse stock split received a cash payment in lieu of such fractional shares.

In May 2021, the Company adopted articles of amendment to its charter to decrease its authorized shares of capital stock from 225,000,000 shares, consisting of 125,000,000 shares of common stock and 100,000,000 shares of preferred stock to 141,666,666 shares, consisting of 41,666,666 shares of common stock and 100,000,000 shares of preferred stock.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). 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.

Basis of Presentation

All adjustments necessary to fairly present the Company’s financial position, results of operations and cash flows have been made.

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 and derivatives, 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.

The coronavirus (“COVID-19”) pandemic continues to plague countries throughout the globe as virus variants have emerged, leading numerous countries, including the U.S., to declare national emergencies. Many countries responded to the initial outbreak in late 2019 by instituting quarantines, restricting travel and limiting operations of non-essential offices and retail centers, which resulted in the closure or remote operation of non-essential businesses, increased rates of unemployment and market disruption in connection with the economic uncertainty. While the U.S. and certain countries around the world have eased restrictions and financial markets have stabilized to some degree in connection with the development and distribution of vaccines and other effective COVID-19 treatments, the pandemic continues to cause uncertainty on the U.S. and global economies, generally, and the CRE business, specifically. Estimates

and assumptions as of March 31, 2022, are inherently less certain than they would be absent the current and potential impacts of COVID-19, particularly the reinstatement of restrictions placed on businesses. The Company believes the estimates and assumptions underlying the consolidated financial statements are reasonable and supportable based on the information available at March 31, 2022. Actual results may ultimately differ from those estimates.

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. At March 31, 2022 and December 31, 2021, approximately $77.4 million and $33.3 million, respectively, of the reported cash balances exceeded the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation deposit insurance limits of $250,000 per respective depository or brokerage institution. However, all of the Company’s cash deposits are held at multiple, established financial institutions, in multiple accounts associated with its parent and respective consolidated subsidiaries, to minimize credit risk exposure.

Restricted cash includes required account balance minimums primarily for the Company’s CRE debt securitizations, term warehouse financing facilities and repurchase agreements as well as cash held in the syndicated corporate loan collateralized debt obligations (“CDOs”).

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):

	March 31,
	2022		2021
Cash and cash equivalents	$	79,561	$	70,985
Restricted cash		5,734		42,825
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$	85,295	$	113,810

Investment in Real Estate

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

Category	Term
Building	35 to 40 years
Building improvements	8 to 35 years
Site improvements	10 years
Tenant improvements	180 days to 3 years
Furniture, fixtures and equipment	3 to 12 years
Right of use assets	66.3 years
Intangible assets	180 days to 16.5 years
Lease liabilities	66.3 years

Income Taxes

The Company recorded a full valuation allowance against its net deferred tax assets (tax effected expense of $21.5 million) at March 31, 2022, as the Company believes it is more likely than not that the deferred tax assets will 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.

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.

Recent Accounting Standards

Accounting Standards Adopted in 2022

In August 2020, the Financial Accounting Standards Board (“FASB”) issued guidance that removes certain separation models for convertible debt instruments and convertible preferred stock that require the separation into a debt component and an equity or derivative component. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, if no other features require bifurcation and recognition as derivatives and the convertible instrument is not issued with substantial premiums accounted for as paid-in capital. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate. The guidance also revises the derivative scope exception for contracts in an entity’s own equity and improves the consistency of EPS calculations. Adoption did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards to be Adopted in Future Periods

In March 2022, the FASB issued an amendment eliminating certain previously issued accounting guidance for troubled debt restructurings (“TDRs”) and enhancing disclosure requirements surrounding refinancings, restructurings, and write-offs. Current GAAP provides an exception to general recognition and measurement guidance for loan restructurings if they meet specific criteria to be considered TDRs. If a modification is a TDR, incremental expected losses are recorded in the allowance for credit losses upon modification and specific disclosures are required. The new amendment eliminates the TDR recognition and measurement guidance and requires the reporting entity to evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with accounting for other loan modifications. The amendment also requires public business entities to disclose current-period gross write-offs by year of origination for certain financing receivables and net investments in leases. For entities that have adopted the previously issued guidance amended by this update, which the Company did during the year ended December 31, 2020, this update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted the previously issued guidance amended by this update. The Company is in the process of evaluating the impact of this guidance.

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VARIABLE INTEREST ENTITIES

3 Months Ended

Mar. 31, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

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 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 five and seven VIEs at March 31, 2022 and December 31, 2021, respectively (collectively, the “Consolidated VIEs”).

The Consolidated VIEs are CRE securitizations and CDOs that were formed on behalf of the Company to invest in real estate-related securities, commercial mortgage-backed securities (“CMBS”), syndicated corporate loans and corporate bonds and 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 Company has exposure to losses on its securitizations to the extent of its investments in the subordinated debt and preferred equity of each securitization. The Company is 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 holds in these securitizations have 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 include 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 are 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 have no recourse to the general credit of the Company, nor to each other. During the three months ended March 31, 2022 and 2021, the Company did not provide any financial support to any of its VIEs nor does it have any requirement to do so, although it may choose to do so in the future to maximize future cash flows from such investments to the Company. There are no explicit arrangements that obligate the Company to provide financial support to any of its Consolidated VIEs.

The following table shows the classification and carrying values of assets and liabilities of the Company’s Consolidated VIEs at March 31, 2022 (in thousands):

	CRE Securitizations		Other		Total
ASSETS
Restricted cash	$	4,482	$	384	$	4,866
Accrued interest receivable		4,504		—		4,504
CRE loans, pledged as collateral (1)		1,486,805		—		1,486,805
Other assets		53		—		53
Total assets (2)	$	1,495,844	$	384	$	1,496,228
LIABILITIES
Accounts payable and other liabilities	$	100	$	—	$	100
Accrued interest payable		1,001		—		1,001
Borrowings		1,231,153		—		1,231,153
Total liabilities	$	1,232,254	$	—	$	1,232,254

(1) Excludes allowance for credit losses.

(2) Assets of each of the Consolidated VIEs may only be used to settle the obligations of each respective VIE.

Unconsolidated VIEs (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 VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. Accordingly, the following VIEs are not consolidated in the Company’s financial statements at March 31, 2022. 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.

Unsecured Junior Subordinated Debentures

The Company has a 100% interest in the common shares of each of 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 March 31, 2022. 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.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs at March 31, 2022 (in thousands):

	Unsecured Junior Subordinated Debentures			Maximum Exposure to Loss
ASSETS
Accrued interest receivable	$	6		$	—
Investments in unconsolidated entities		1,548		$	1,548
Total assets		1,554
LIABILITIES
Accrued interest payable		186		N/A
Borrowings		51,548		N/A
Total liabilities		51,734		N/A
Net (liability) asset	$	(50,180	)	N/A

At March 31, 2022, there were no explicit arrangements or implicit variable interests that could require the Company to provide financial support to any of its unconsolidated VIEs.

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SUPPLEMENTAL CASH FLOW INFORMATION

3 Months Ended

Mar. 31, 2022

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION

The following table summarizes the Company’s supplemental disclosure of cash flow information (in thousands):

	For the Three Months Ended
	March 31,
	2022		2021
Supplemental cash flows:
Interest expense paid in cash	$	14,894	$	12,969
Income taxes paid in cash	$	180	$	—
Non-cash operating activities include the following:
Receipt of right of use assets	$	—	$	(6	)
Execution of operating leases	$	—	$	6
Non-cash financing activities include the following:
Distributions on preferred stock accrued but not paid	$	3,262	$	1,725

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LOANS

3 Months Ended

Mar. 31, 2022

Loans Held For Investment [Abstract]

LOANS

NOTE 5 - LOANS

The following is a summary of the Company’s loans (dollars in thousands, except amounts in footnotes):

Description	Quantity		Principal		Unamortized (Discount) Premium, net (1)			Amortized Cost		Allowance for Credit Losses			Carrying Value		Contractual Interest Rates (2)	Maturity Dates (3)(4)
At March 31, 2022:
CRE loans held for investment:
Whole loans (5)(6)		88	$	1,904,974	$	(13,249	)	$	1,891,725	$	(4,470	)	$	1,887,255	1M BR plus 2.75% to 1M BR plus 8.50%	April 2022 to September 2025
Mezzanine loan (5)		1		4,700		—			4,700		(236	)		4,464	10.00%	June 2028
Total CRE loans held for investment			$	1,909,674	$	(13,249	)	$	1,896,425	$	(4,706	)	$	1,891,719
At December 31, 2021:
CRE loans held for investment:
Whole loans (5)(6)		93	$	1,891,795	$	(13,944	)	$	1,877,851	$	(8,550	)	$	1,869,301	1M BR plus 2.70% to 1M BR plus 8.50%	January 2022 to September 2025
Mezzanine loan (5)		1		4,700		—			4,700		(255	)		4,445	10.00%	June 2028
Total CRE loans held for investment			$	1,896,495	$	(13,944	)	$	1,882,551	$	(8,805	)	$	1,873,746

(1) Amounts include unamortized loan origination fees of $13.0 million and $13.6 million and deferred amendment fees of $248,000 and $307,000 at March 31, 2022 and December 31, 2021, respectively. Additionally, the amounts include unamortized loan acquisition costs of $7,300 at December 31, 2021.

(2) The Company’s whole loan portfolio of $1.9 billion at each period presented had weighted-average one-month benchmark rate (“BR”) floors of 0.66% and 0.75% at March 31, 2022 and December 31, 2021, respectively. Benchmark rates comprise one-month London Interbank Offered Rate (“LIBOR”) or one-month Term Secured Overnight Financing Rate (“SOFR”). At March 31, 2022 and December 31, 2021, all but one of the Company’s floating-rate whole loans had one-month benchmark floors.

(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 one and three whole loans, with amortized costs of $8.0 million and $27.9 million, in maturity default at March 31, 2022 and December 31, 2021, respectively.

(5) Substantially all loans are pledged as collateral under various borrowings at March 31, 2022 and December 31, 2021.

(6) CRE whole loans had $145.5 million and $157.6 million in unfunded loan commitments at March 31, 2022 and December 31, 2021, 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.

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	2022		2023		2024 and Thereafter		Total
At March 31, 2022:
Whole loans (1)	$	319,577	$	214,833	$	1,349,290	$	1,883,700
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	319,577	$	214,833	$	1,353,990	$	1,888,400
Description	2022		2023		2024 and Thereafter		Total
At December 31, 2021:
Whole loans (1)	$	377,024	$	230,872	$	1,242,013	$	1,849,909
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	377,024	$	230,872	$	1,246,713	$	1,854,609

(1) Maturity dates exclude one and three whole loans, with amortized costs of $8.0 million and $27.9 million, in maturity default at March 31, 2022 and December 31, 2021, respectively.

(2) At March 31, 2022, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $52.0 million, $110.0 million and $1.7 billion in 2022, 2023 and 2024 and thereafter, respectively. At December 31, 2021, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $52.0 million, $127.6 million and $1.7 billion in 2022, 2023 and 2024 and thereafter, respectively.

At March 31, 2022, approximately 26.8%, 22.3% and 14.2% of the Company’s CRE loan portfolio was concentrated in the Southeast, Southwest and Mid-Atlantic regions, respectively, based on carrying value, as defined by the National Council of Real Estate Investment Fiduciaries. At December 31, 2021, approximately 28.4%, 18.4% and 15.2% of the Company’s CRE loan portfolio was concentrated in the Southeast, Southwest and Mid-Atlantic regions, respectively, based on carrying value. At March 31, 2022 and December 31, 2021, no single loan or investment represented more than 10% of the Company’s total assets, and no single investor group generated over 10% of the Company’s revenue.

Principal Paydowns Receivable

Principal paydowns receivable represents loan principal payments that have been received by the Company’s servicers and trustees but have not been remitted to the Company. At March 31, 2022, the Company had no loan principal paydowns receivable. At December 31, 2021, the Company had $14.9 million of loan principal paydowns receivable, all of which was received in cash by the Company in January 2022.

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FINANCING RECEIVABLES

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

FINANCING RECEIVABLES

NOTE 6 - FINANCING RECEIVABLES

The following table shows the activity in the allowance for credit losses for the three months ended March 31, 2022 and year ended December 31, 2021 (in thousands):

	Three Months Ended March 31, 2022			Year Ended December 31, 2021
	CRE Loans			CRE Loans
Allowance for credit losses:
Allowance for credit losses at beginning of period	$	8,805		$	34,310
Reversal of credit losses, net		(1,802	)		(21,262	)
Charge offs		(2,297	)		(4,243	)
Allowance for credit losses at end of period	$	4,706		$	8,805

During the three months ended March 31, 2022, the Company recorded a reversal of expected credit losses of $1.8 million in connection with resolutions of loans with specific reserves and continued improvements in property-level operations supported by a continued, generally positive outlook on the macroeconomic environment. During the three months ended March 31, 2021, the Company recorded a reversal of expected credit losses of $5.6 million in connection with loan paydowns, improved collateral operating performance, declines in expected unemployment and continued projected recoveries in future CRE asset pricing.

At March 31, 2022, the Company individually evaluated one hotel loan and one retail loan in the Northeast region with principal balances of $14.0 million and $8.0 million, respectively, for which foreclosure was determined to be probable. Each loan had an as-is appraised value in excess of its principal balance, and, as such, had no current expected credit losses (“CECL”) allowance at March 31, 2022.

At December 31, 2021, two additional loans were individually evaluated for impairment: a retail loan in the Pacific region and a hotel loan in the East North Central region. Both loans were repaid in January 2022. The repayment of the retail loan in the Pacific region resulted in a charge off of $2.3 million against the allowance for credit losses. An individual CECL allowance was established for this loan during the fourth quarter of 2021.  

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 reunderwritten loan-to-collateral value 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 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.

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	• Property performance has surpassed underwritten expectations.
	• 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	• 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	• Property performance lags behind underwritten expectations.
	• Occupancy is not stabilized and the property has some tenancy rollover.
4	• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
	• Occupancy is not stabilized and the property has a large amount of tenancy rollover.
5	• 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.
	• The property has a material vacancy rate and significant rollover of remaining tenants.
	• 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 footnotes):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Total (1)
At March 31, 2022:
Whole loans, floating-rate	$	—	$	1,532,355	$	239,871	$	105,503	$	13,996	$	1,891,725
Mezzanine loan		—		—		—		4,700		—		4,700
Total	$	—	$	1,532,355	$	239,871	$	110,203	$	13,996	$	1,896,425
At December 31, 2021:
Whole loans, floating-rate	$	—	$	1,456,330	$	273,078	$	123,762	$	24,681	$	1,877,851
Mezzanine loan		—		—		—		4,700		—		4,700
Total	$	—	$	1,456,330	$	273,078	$	128,462	$	24,681	$	1,882,551

(1) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

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

	2022		2021		2020		2019		2018		Prior		Total (1)
At March 31, 2022:
Whole loans, floating-rate: (2)
Rating 2	$	96,131	$	1,241,086	$	143,059	$	32,605	$	19,474	$	—	$	1,532,355
Rating 3		—		34,707		25,067		101,756		60,841		17,500		239,871
Rating 4		—		—		—		28,465		77,038		—		105,503
Rating 5		—		—		—		13,996		—		—		13,996
Total whole loans, floating-rate		96,131		1,275,793		168,126		176,822		157,353		17,500		1,891,725
Mezzanine loan (rating 4)		—		—		—		—		4,700		—		4,700
Total	$	96,131	$	1,275,793	$	168,126	$	176,822	$	162,053	$	17,500	$	1,896,425
	2021		2020		2019		2018		2017		Prior		Total (1)
At December 31, 2021:
Whole loans, floating-rate: (2)
Rating 2	$	1,230,810	$	150,513	$	55,510	$	19,497	$	—	$	—	$	1,456,330
Rating 3		33,781		24,604		136,305		60,888		—		17,500		273,078
Rating 4		—		—		28,446		86,096		—		9,220		123,762
Rating 5		—		—		22,385		—		—		2,296		24,681
Total whole loans, floating-rate		1,264,591		175,117		242,646		166,481		—		29,016		1,877,851
Mezzanine loan (rating 4)		—		—		—		4,700		—		—		4,700
Total	$	1,264,591	$	175,117	$	242,646	$	171,181	$	—	$	29,016	$	1,882,551

(1) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

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

At March 31, 2022 and December 31, 2021, the Company had one mezzanine loan included in other assets that had no carrying value.

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 Days (1)		Total Past Due		Current (2)		Total Loans Receivable (3)		Total Loans > 90 Days and Accruing
At March 31, 2022:
Whole loans, floating-rate	$	—	$	—	$	8,025	$	8,025	$	1,883,700	$	1,891,725	$	—
Mezzanine loan		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	8,025	$	8,025	$	1,888,400	$	1,896,425	$	—
At December 31, 2021:
Whole loans, floating-rate	$	—	$	—	$	19,916	$	19,916	$	1,857,935	$	1,877,851	$	19,916
Mezzanine loan		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	19,916	$	19,916	$	1,862,635	$	1,882,551	$	19,916

(1) During the three months ended March 31, 2022, the Company did not recognize interest income on the one loan with a principal payment past due greater than 90 days at March 31, 2022. During the three months ended March 31, 2021, the Company recognized interest income of $153,000 on the one loan with a principal payment past due greater than 90 days at March 31, 2022.

(2) Includes one whole loan, with amortized costs of $8.0 million, in maturity default at December 31, 2021.

(3) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022 and December 31, 2021, the Company had one and three CRE loans in maturity default with total amortized costs of $8.0 million and $27.9 million, respectively. During the three months ended March 31, 2022, two whole loans in maturity default at December 31, 2021 paid off principal of $17.6 million. The payoff on one loan was the result of a discounted payoff and resulted in a realized loss of $2.3 million for which a CECL allowance was established as of December 31, 2021.

At March 31, 2022 , two whole loans, including one loan in maturity default, with a total amortized cost of $22.0 million, were past due on interest payments.

At December 31, 2021, three whole loans, including two loans that had maturity defaults, with total amortized cost of $30.4 million, were past due on interest payments.

Troubled Debt Restructurings

There were no TDRs for the three months ended March 31, 2022 and 2021.

During the three months ended March 31, 2022, the Company entered into two agreements that extended loans by a weighted average period of three months and, in certain cases, modified certain other loan terms. One formerly forborne borrower was in maturity default at March 31, 2022. No loan modifications during the three months ended March 31, 2022 resulted in TDRs.

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

3 Months Ended

Mar. 31, 2022

Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Abstract]

Investments In Real Estate And Other Acquired Assets And Assumed Liabilities

NOTE 7 - INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

During the three months ended March 31, 2022, the Company did not acquire any real estate through direct equity investments or as a result of its lending activities.

In April 2022, the Company acquired two properties through equity investments for a total investment of $51.6 million. Prior to its acquisition, one property, with an acquisition price of $38.6 million, served as collateral for a loan held by an affiliate of the Manager.

The following table summarizes the book value of the Company’s investments in real estate and related intangible assets (in thousands, except amounts in the footnotes):

	March 31, 2022									December 31, 2021
	Cost Basis			Accumulated Depreciation & Amortization			Carrying Value			Cost Basis			Accumulated Depreciation & Amortization			Carrying Value
Assets acquired:
Investments in real estate, equity:
Investments in real estate (1)	$	27,097		$	(381	)	$	26,716		$	27,065		$	(191	)	$	26,874
Intangible assets (2)		1,726			(1,611	)		115			1,726			(806	)		920
Subtotal		28,823			(1,992	)		26,831			28,791			(997	)		27,794
Investments in real estate from lending activities:
Investment in real estate (3)		34,133			(2,067	)		32,066			34,124			(1,689	)		32,435
Property held for sale (4)		17,657			—			17,657			17,846			—			17,846
Right of use assets (5)(6)		5,603			(116	)		5,487			5,603			(95	)		5,508
Intangible assets (7)		3,337			(465	)		2,872			3,337			(380	)		2,957
Subtotal		60,730			(2,648	)		58,082			60,910			(2,164	)		58,746
Total		89,553			(4,640	)		84,913			89,701			(3,161	)		86,540
Liabilities assumed:
Equity investments in real estate:
Other liabilities		(247	)		155			(92	)		(247	)		78			(169	)
Investments in real estate from lending activities:
Lease liabilities (6)		(3,113	)		65			(3,048	)		(3,113	)		53			(3,060	)
Total		(3,360	)		220			(3,140	)		(3,360	)		131			(3,229	)
	$	86,193					$	81,773		$	86,341					$	83,311

(1) Includes $22.4 million of land, which is not depreciable, at March 31, 2022 and December 31, 2021.

(2) Carrying value includes approximately $59,000 and $819,000 of an acquired in-place lease intangible asset and $55,000 and $101,000 of an acquired leasing commission intangible asset at March 31, 2022 and December 31, 2021, respectively.

(3) Includes $126,000 and $129,000 of building renovations assets at carrying value at March 31, 2022 and December 31, 2021 made subsequent to the date of acquisition of a property.

(4) Includes a property acquired in October 2021 that is being marketed for sale.

(5) Right of use assets include a right of use asset associated with an acquired ground lease of $3.0 million and $3.1 million accounted for as an operating lease and a below-market lease intangible asset of $2.4 million and $2.4 million at March 31, 2022 and December 31, 2021, respectively.

(6) Refer to Note 8 for additional information on the Company’s remaining operating leases.

(7) Carrying value includes franchise agreement intangible assets of $2.6 million and $2.6 million and a customer list intangible asset of $269,000 and $311,000 at March 31, 2022 and December 31, 2021, respectively.

The right of use assets and lease liabilities comprised an acquired ground lease that was determined to be an operating lease and associated below-market lease intangible asset. The lease payments on the ground lease consist of air rights rent, retail rent and parking rent, the amounts of which are specifically determined in the executed lease agreement and subsequently increased based on the increase of the consumer price index over a specified number of periods. The Company recorded approximately $12,000 of offsetting amortization and accretion on its ground lease right of use assets and lease liabilities during the three months ended March 31, 2022 and 2021.

During the three months ended March 31, 2022 and 2021, the Company recorded amortization expense of approximately $1.2 million and $197,000, respectively, on its intangible assets. The Company expects to record amortization expense of $1.2 million, $401,000, $244,000, $210,000 and $210,000 during the 2022, 2023, 2024, 2025 and 2026 fiscal years, respectively, on its intangible assets.

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LEASES

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

LEASES

NOTE 8 - LEASES

In addition to the ground lease discussed in Note 7, the Company has operating leases for office space and office equipment. The leases have terms that expire between January 2024 and July 2028. 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:

• Office space: payments are made on a fixed schedule, escalating annually, and also include the Company’s responsibility for a percentage of increases in the building’s property taxes and operating expenses over the base year.

• Office equipment: payments are made on a fixed schedule.

The following table summarizes the Company’s operating leases (in thousands):

	March 31, 2022			December 31, 2021
Operating Leases:
Right of use assets	$	431		$	443
Lease liabilities	$	(466	)	$	(477	)
Weighted average remaining lease term:	6.3 years			6.6 years
Weighted average discount rate:		10.65	%		10.65	%

The following table summarizes the Company’s operating lease costs and cash payments for the periods presented (in thousands):

	For the Three Months Ended
	March 31,
	2022		2021
Lease Cost:
Operating lease cost	$	24	$	—
Other Information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	23	$	—

The following table summarizes the Company’s operating leases cash flow obligations on an undiscounted, annual basis (in thousands):

	Operating Leases
2022	$	97
2023		99
2024		99
2025		102
2026		104
Thereafter		170
Subtotal		671
Less: impact of discount		(205	)
Total	$	466

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INVESTMENT SECURITIES AVAILABLE-FOR-SALE

3 Months Ended

Mar. 31, 2022

Available For Sale Securities [Abstract]

INVESTMENT SECURITIES AVAILABLE-FOR-SALE

NOTE 9 - INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The Company had no investment securities available-for-sale at March 31, 2022 or December 31, 2021.

The Company sold its final two CMBS positions, resulting in cash proceeds of $3.0 million and gains of $878,000, during the three months ended March 31, 2021.

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INVESTMENTS IN UNCONSOLIDATED ENTITIES

3 Months Ended

Mar. 31, 2022

Equity Method Investments And Joint Ventures [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

NOTE 10 - INVESTMENTS IN UNCONSOLIDATED ENTITIES

The Company’s investments in unconsolidated entities at March 31, 2022 and December 31, 2021 comprised a 100% interest in the common shares of RCT I and RCT II with a value of $1.5 million in the aggregate, or 3.0% of each trust. The Company records its investments in RCT I’s and RCT II’s common shares as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II. During each of the three months ended March 31, 2022 and 2021, the Company recorded dividends from its investments in RCT I’s and RCT II’s common shares, reported in other revenue on the consolidated statement of operations, of $16,000.

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BORROWINGS

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

BORROWINGS

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 in the form of securitized notes, secured term warehouse financing facilities, a senior secured financing facility, senior unsecured notes, convertible senior notes and trust preferred securities issuances. 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 March 31, 2022:
ACR 2021-FL1 Senior Notes	$	675,223	$	5,014	$	670,209			1.93	%	14.2 years	$	802,643
ACR 2021-FL2 Senior Notes		567,000		6,056		560,944			2.24	%	14.8 years		700,000
Senior secured financing facility		—		3,280		(3,280	)		5.75	%	5.3 years		153,171
CRE - term warehouse financing facilities (1)		156,070		3,864		152,206			2.57	%	2.6 years		210,412
4.5% Convertible Senior Notes		48,175		528		47,647			4.50	%	137 days		—
5.75% Senior Unsecured Notes (2)		150,000		3,070		146,930			5.75	%	4.4 years		—
Unsecured Junior Subordinated Debentures		51,548		—		51,548			4.60	%	14.4 years		—
Total	$	1,648,016	$	21,812	$	1,626,204			2.60	%	12.0 years	$	1,866,226
	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings			Weighted Average Borrowing Rate			Weighted Average Remaining Maturity	Value of Collateral
At December 31, 2021:
XAN 2020-RSO8 Senior Notes	$	142,375	$	577	$	141,798			2.18	%	13.2 years	$	229,263
XAN 2020-RSO9 Senior Notes		94,814		489		94,325			4.25	%	15.3 years		144,361
ACR 2021-FL1 Senior Notes (3)		675,223		5,410		669,813			1.60	%	14.5 years		802,643
ACR 2021-FL2 Senior Notes		567,000		6,437		560,563			1.90	%	15.1 years		700,000
Senior secured financing facility		—		3,432		(3,432	)		5.75	%	6.2 years		170,791
CRE - term warehouse financing facilities (1)		71,078		4,307		66,771			2.27	%	2.8 years		102,027
4.50% Convertible Senior Notes		88,014		1,583		86,431			4.50	%	227 days		—
5.75% Senior Unsecured Notes (2)		150,000		3,393		146,607			5.75	%	4.6 years		—
Unsecured junior subordinated debentures		51,548		—		51,548			4.12	%	14.7 years		—
Total	$	1,840,052	$	25,628	$	1,814,424			2.44	%	12.7 years	$	2,149,085

(1) Principal outstanding includes accrued interest payable of $134,000 and $58,000 at March 31, 2022 and December 31, 2021, respectively.

(2) Includes deferred debt issuance costs of $128,000 and $306,000 at March 31, 2022 and December 31, 2021, respectively, associated with the 12.00% senior unsecured notes due 2027 (“12.00% Senior Unsecured Notes”) that had no outstanding balance at both March 31, 2022 and December 31, 2021.

(3) Value of collateral excludes interest income of $730,000 and exit fees of $228,000 received as of December 31, 2021.

Securitizations

The following table sets forth certain information with respect to the Company’s consolidated securitizations at March 31, 2022 (in thousands, except amount in footnotes):

	Closing Date	Maturity Date	Permitted Funded Companion Participation Acquisition Period End (1)	Reinvestment Period End (2)	Total Note Paydowns Received from Closing Date through March 31, 2022
ACR 2021-FL1	May 2021	June 2036	N/A	May 2023	$	—
ACR 2021-FL2	December 2021	January 2037	N/A	December 2023	$	—

(1) The permitted funded companion participation acquisition period is the period in which principal repayments can be utilized to purchase loans held outside of the respective securitization that represent the funded commitments of existing collateral in the respective securitization that were not funded as of the date the respective securitization was closed.

(2) The reinvestment period is the period in which principal proceeds received before the end of the period may be used to acquire CRE loans for reinvestment into the securitization.

The investments held by the Company’s securitizations collateralize the securitizations’ borrowings and, as a result, are not available to the Company, its creditors, or stockholders. All senior notes and preferred shares of the securitizations held by the Company at March 31, 2022 and December 31, 2021 were eliminated in consolidation.

XAN 2020-RSO8

In March 2020, the Company closed Exantas Capital Corp. 2020-RSO8, Ltd. (“XAN 2020-RSO8”), a $522.6 million CRE debt securitization transaction that provided financing for CRE loans. In March 2022, the Company exercised the optional redemption of XAN 2020-RSO8, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitization’s assets.

XAN 2020-RSO9

In September 2020, the Company closed Exantas Capital Corp. 2020-RSO9, Ltd. (“XAN 2020-RSO9”), a $297.0 million CRE debt securitization transaction that provided financing for CRE loans. In February 2022, the Company exercised the optional redemption of XAN 2020-RSO9, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitization’s assets.

Corporate Debt

4.50% Convertible Senior Notes

The Company issued $143.8 million aggregate principal of its 4.50% convertible senior notes due 2022 (“4.50% Convertible Senior Notes”) in August 2017.

During the three months ended March 31, 2022, the Company repurchased $39.8 million of its 4.50% Convertible Senior Notes, resulting in a charge to earnings of $574,000, comprising an extinguishment of debt charge of $460,000 in connection with the acceleration of the market discount and interest expense of $114,000 in connection with the acceleration of deferred debt issuance costs. During the year ended December 31, 2021 , the Company repurchased $55.7 million of its 4.50% Convertible Senior Notes.

The following table summarizes the 4.50% Convertible Senior Notes at March 31, 2022 (dollars in thousands, except the conversion rate, conversion price and amounts in the footnotes):

	Principal Outstanding		Borrowing Rate			Effective Rate (1)(2)			Conversion Rate (3)(4)	Conversion Price (4)		Maturity Date
4.50% Convertible Senior Notes	$	48,175		4.50	%		7.43	%	27.7222	$	36.06	August 15, 2022

(1) Includes the amortization of the market discounts and deferred debt issuance costs, if any, for the 4.50% Convertible Senior Notes recorded in interest expense on the consolidated statements of operations.

(2) During the three months ended March 31, 2022 and 2021, the effective interest rate for the 4.50% Convertible Senior Notes was 7.43%.

(3) Represents the number of shares of common stock per $1,000 principal amount of the 4.50% Convertible Senior Notes’ principal outstanding, subject to adjustment as provided in the Third Supplemental Indenture (the “4.50% Convertible Senior Notes Indenture”).

(4) The conversion rate and conversion price of the 4.50% Convertible Senior Notes at March 31, 2022 are adjusted to reflect quarterly cash distributions in excess of a $0.30 distribution threshold, as defined in the 4.50% Convertible Senior Notes Indenture.

The 4.50% Convertible Senior Notes are convertible at the option of the holder at any time up until one business day before the respective maturity date and may be settled in cash, the Company’s common stock or a combination of cash and the Company’s common stock, at the Company’s election. The closing price of the Company’s common stock was $13.41 on March 31, 2022, which did not exceed the conversion price of its 4.50% Convertible Senior Notes at March 31, 2022.

Senior Unsecured Notes

12.00% Senior Unsecured Notes Due 2027

On July 31, 2020, the Company entered into a Note and Warrant Purchase Agreement (the “Note and Warrant Purchase Agreement”) with Oaktree Capital Management, L.P. (“Oaktree”) and Massachusetts Mutual Life Insurance Company (“MassMutual”) pursuant to which the Company may issue to Oaktree and MassMutual from time to time up to $125.0 million aggregate principal amount of 12.00% Senior Unsecured Notes. The 12.00% Senior Unsecured Notes had an annual interest rate of 12.00%, payable up to 3.25% (at the election of the Company) as pay-in-kind interest and the remainder as cash interest. On July 31, 2020, the Company issued to Oaktree and MassMutual $42.0 million and $8.0 million aggregate principal amount, respectively, of the 12.00% Senior Unsecured Notes.

On August 18, 2021, the Company entered into an agreement with Oaktree and MassMutual that provided for the redemption in full of the outstanding balance of the 12.00% Senior Unsecured Notes, including a waiver of certain sections of the Note and Warrant Purchase Agreement. On August 20, 2021, the redemption was consummated and a payment to Oaktree and MassMutual was made for an aggregate $55.3 million, which consisted of (i) principal in the amount of $50.0 million, (ii) interest in the amount of approximately $329,000 and (iii) a make-whole amount of approximately $5.0 million. In connection with the redemption, the Company recorded a charge to earnings of $8.0 million, comprising an extinguishment of debt charge of $7.8 million in connection with (i) the $5.0 million net make-whole amount and (ii) the $2.8 million acceleration of the remaining market discount; and interest expense of $218,000 in connection with the acceleration of deferred debt issuance costs.

In January 2022, the Company entered into an amendment of the Note and Warrant Purchase Agreement that extended the time to July 2022 that the Company may elect to issue to Oaktree and MassMutual up to $75.0 million of principal of additional notes. At any time and from time to time prior to July 31, 2022, the Company may elect to issue to Oaktree and MassMutual warrants to purchase an additional 699,992 shares of the common stock for a purchase price equal to the principal amount of the 12.00% Senior Unsecured Notes being issued. The warrants are immediately exercisable on issuance and expire seven years from the issuance date. The warrants can be exercised with cash or as a net exercise.

Senior Secured Financing Facility and Term Warehouse Financing Facilities

Borrowings under the Company’s senior secured financing facility and term warehouse facilities are guaranteed by the Company or one or more of its subsidiaries. The following table sets forth certain information with respect to the Company’s senior secured financing and term warehouse financing facilities (dollars in thousands, except amounts in footnotes):

	March 31, 2022										December 31, 2021
	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
Senior Secured Financing Facility
Massachusetts Mutual Life Insurance Company (1)	$	(3,280	)	$	153,171		7		5.75	%	$	(3,432	)	$	170,791		9		5.75	%
CRE - Term Warehouse Financing Facilities(2)
JPMorgan Chase Bank, N.A.(3)		45,196			69,709		5		2.75	%		18,875			37,167		3		2.85	%
Morgan Stanley Mortgage Capital Holdings LLC(4)		107,010			140,703		8		2.50	%		47,896			64,860		3		2.03	%
Total	$	148,926		$	363,583						$	63,339		$	272,818

(1) Includes $3.3 million and $3.4 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively.

(2) Outstanding borrowings include accrued interest payable.

(3) Includes $1.6 million and $1.8 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively, in addition to $250,000 and $356,000 of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively, from other term warehouse financing facilities with no balance.

(4) Includes $2.0 million and $2.2 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively.

The following table shows information about the amount at risk under the warehouse financing facilities (dollars in thousands):

	Amount at Risk (1)		Weighted Average Remaining Maturity	Weighted Average Interest Rate
At March 31, 2022:
CRE - Term Warehouse Financing Facilities
JPMorgan Chase Bank, N.A.	$	22,929	2.6 years		2.75	%
Morgan Stanley Mortgage Capital Holdings LLC	$	32,174	2.6 years		2.50	%

(1) Equal to the total of the estimated fair value of loans sold and accrued interest receivable, minus the total of the warehouse financing agreement liabilities and accrued interest payable.

The Company was in compliance with all financial covenants in each of the respective agreements at March 31, 2022 and December 31, 2021.

Senior Secured Financing Facility

In July 2020, an indirect, wholly-owned subsidiary of the Company (“Holdings”), along with its direct wholly-owned subsidiary (the “Borrower”), entered into a loan and servicing agreement (the “MassMutual Loan Agreement”) with MassMutual and the other lenders party thereto (the “Lenders”) to finance the Company’s core CRE lending business.

In connection with the MassMutual Loan Agreement, the Company, with certain of its subsidiaries, entered into a Guaranty (the “MassMutual Guaranty”) in favor of the secured parties under the MassMutual Loan Agreement.  Pursuant to the MassMutual Guaranty, the Company fully guaranteed all payments and performance of the Borrower and Holdings under the MassMutual Loan Agreement. Additionally, the Company and certain of its subsidiaries made certain representations and warranties and agreed not to incur debt or liens, each subject to certain exceptions, and agreed to provide the Lenders with certain information.

The MassMutual Loan Agreement was amended in several instances pursuant to which (i) MassMutual consented to the formation of certain subsidiaries to hold real estate and (ii) such subsidiaries agreed to enter into guaranty agreements in favor of the secured parties under the MassMutual Loan Agreement.

CRE - Term Warehouse Financing Facilities

In April 2018, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase agreement (the “Barclays Facility”) with Barclays Bank PLC (“Barclays”) to finance the origination of CRE loans. In February 2022, such subsidiary entered into the Third Amendment to Master Repurchase Agreement (the “Barclays Amendment”) with Barclays, which amended the Barclays Facility to add market terms regarding the replacement of LIBOR upon determination of a benchmark transition event.

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. 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.

Contractual maturity dates of the Company’s borrowings’ principal outstanding by category and year are presented in the table below (in thousands):

	Total		2022		2023		2024		2025		2026 and Thereafter
At March 31, 2022:
CRE securitizations	$	1,242,223	$	—	$	—	$	—	$	—	$	1,242,223
Unsecured junior subordinated debentures		51,548		—		—		—		—		51,548
4.50% Convertible Senior Notes		48,175		48,175		—		—		—		—
5.75% Senior Unsecured Notes		150,000		—		—		—		—		150,000
CRE - term warehouse financing facilities(1)		156,070		—		—		156,070		—		—
Total	$	1,648,016	$	48,175	$	—	$	156,070	$	—	$	1,443,771

(1) Includes accrued interest payable in the balances of principal outstanding.

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SHARE ISSUANCE AND REPURCHASE

3 Months Ended

Mar. 31, 2022

Stockholders Equity Note [Abstract]

SHARE ISSUANCE AND REPURCHASE

NOTE 12 - SHARE ISSUANCE AND REPURCHASE

In May 2021, and subsequently in June 2021, the Company issued a total of 4.6 million shares of 7.875% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”) at a public offering price of $25.00 per share. The Company received net proceeds of $110.4 million after $4.6 million of underwriting discounts and other offering expenses. Dividends are payable quarterly in arrears at the end of January, April, July and October. The Series D Preferred Stock has no maturity date and the Company is not required to redeem the Series D Preferred Stock at any time. On or after May 21, 2026, the Company may, at its option, redeem the Series D Preferred Stock, in whole or 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.

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 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 three months ended March 31, 2022, 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 distributions, if any, to the redemption date. Effective July 30, 2024 and thereafter, the Company will pay cumulative distributions on the Series C Preferred Stock at a floating rate equal to three-month LIBOR plus 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 March 31, 2022, the Company had 4.8 million shares of Series C Preferred Stock and 4.6 million shares of Series D Preferred Stock outstanding, with weighted average issuance prices, excluding offering costs, of $25.00.

In March 2016, the board of directors (the “Board”) approved a securities repurchase plan, and in November 2020, the Board reauthorized and approved the continued use of this plan to repurchase up to $20.0 million of the outstanding shares of the Company’s common stock. Additionally, the Board authorized the Company to enter into written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”). In July 2021, the authorized amount was fully utilized, and in November 2021, 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.

During the three months ended March 31, 2022 and 2021, the Company repurchased $3.9 million and $9.5 million of its common stock, respectively, representing 314,552 and 744,664 shares, respectively. At March 31, 2022, $12.4 million remains available under this repurchase plan.

In connection with the Note and Warrant Purchase Agreement, the 12.00% Senior Unsecured Notes give Oaktree and MassMutual warrants to purchase an aggregate of up to 1,166,653 shares of common stock at an exercise price of $0.03 per share, subject to certain potential adjustments. On July 31, 2020, concurrently with the issuance of the 12.00% Senior Unsecured Notes, 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 are recorded in additional paid-in capital on the consolidated balance sheet at their fair value of $3.1 million at issuance. At any time and from time to time prior to July 31, 2022, the Company may elect to issue to Oaktree and MassMutual warrants to purchase an additional 699,992 shares of common stock for a purchase price equal to the principal amount of the additional 12.00% Senior Unsecured Notes being issued. The warrants are immediately exercisable on issuance and expire seven years from the issuance date. The warrants can be exercised with cash or as a net exercise.

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SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

SHARE-BASED COMPENSATION

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, is 1,700,817 shares of common stock.  

The Company recognized restricted stock-based compensation expense of $744,000 and $19,000, respectively, during the three months ended March 31, 2022 and March 31, 2021.

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, 2022		299,999		33,330		333,329	$	17.39
Issued		—		—		—		—
Vested		—		—		—		—
Forfeited		—		—		—		—
Unvested shares at March 31, 2022		299,999		33,330		333,329	$	17.39

The unvested restricted common stock shares are expected to vest during the following years:

Year	Shares
2022		83,331
2023		83,331
2024		83,331
2025		83,336
Total		333,329

At March 31, 2022, total unrecognized compensation costs relating to unvested restricted stock was $3.4 million based on the grant date fair value of shares granted. The cost is expected to be recognized over a weighted average period of 3.2 years.

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 is paid in cash and at least 25% is paid in the form of an award of common stock, recorded in management fees on the consolidated statements of operations. No incentive compensation was paid to the Manager for the three months ended March 31, 2022 or 2021.

On May 6, 2022, the Company issued 299,999 restricted shares under the Manager Plan and a total of 33,334 shares to its directors under the Omnibus Plan, each grant to vest 25% over four years.

The Omnibus Plan and the Manager Plan are administered by the compensation committee of the 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.

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

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):

	For the Three Months Ended
	March 31,
	2022			2021
Net income	$	2,084		$	13,056
Net income allocated to preferred shares		(4,855	)		(2,588	)
Net (loss) income allocable to common shares	$	(2,771	)	$	10,468
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding - basic		8,630,316			9,729,463
Weighted average number of warrants outstanding (1)		466,661			466,661
Total weighted average number of common shares outstanding - basic		9,096,977			10,196,124
Effect of dilutive securities - unvested restricted stock		—			9,245
Weighted average number of common shares outstanding - diluted		9,096,977			10,205,369
Net (loss) income per common share - basic	$	(0.30	)	$	1.03
Net (loss) income per common share - diluted	$	(0.30	)	$	1.03

(1) See Note 12 for further details regarding the warrants.

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DISTRIBUTIONS

3 Months Ended

Mar. 31, 2022

Distributions [Abstract]

DISTRIBUTIONS

NOTE 15 - DISTRIBUTIONS

In order to qualify as a REIT, the Company must currently 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. 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), in certain circumstances the Company may generate operating cash flow in excess of its distributions or, alternatively, may be required to borrow funds to make sufficient distribution payments.

The Company’s 2022 distributions are, and will be, determined by the 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 three months ended March 31, 2022, the Company declared and subsequently paid its Series C Preferred Stock and Series D Preferred Stock distributions of $0.54 per share and $0.49 per share, respectively. For the three months ended March 31, 2021, the Company declared and subsequently paid its Series C Preferred Stock distributions of $0.54 per share.

The Company did not pay any common share distributions for the three months ended March 31, 2022 and 2021.

The following tables present distributions declared (on a per share basis) for the three months ended March 31, 2022 and the year ended December 31, 2021:

	Series C Preferred Stock					Series D Preferred Stock
	Date Paid	Total Distributions Paid		Distributions Per Share		Date Paid	Total Distributions Paid		Distributions Per Share
	(in thousands)					(in thousands)
2022
March 31	May 2	$	2,588	$	0.5390625	May 2	$	2,268	$	0.4921875
2021
December 31	January 31, 2022	$	2,588	$	0.5390625	January 31, 2022	$	2,268	$	0.4921875
September 30	November 1	$	2,588	$	0.5390625	November 1	$	2,264	$	0.4921875
June 30	July 30	$	2,588	$	0.5390625	July 30	$	1,736	$	0.3773440
March 31	April 30	$	2,588	$	0.5390625	N/A	N/A		N/A

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ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

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 three months ended March 31, 2022 (in thousands):

	Accumulated Other Comprehensive Loss - Net Unrealized Loss on Derivatives
Balance at January 1, 2022	$	(8,127	)
Amounts reclassified from accumulated other comprehensive loss (1)		456
Balance at March 31, 2022	$	(7,671	)

(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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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 17 - RELATED PARTY TRANSACTIONS

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 three months ended March 31, 2022 and 2021, the Manager earned base management fees of approximately $1.7 million and $1.3 million, respectively. No incentive compensation was earned for the three months ended March 31, 2022 and 2021. At March 31, 2022 and December 31, 2021, $557,000 and $561,000, respectively, of base management fees were payable by the Company to the Manager. There was no incentive compensation payable at March 31, 2022 and December 31, 2021. 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. For the three months ended March 31, 2022 and 2021, the Company reimbursed the Manager $2.0 million and $1.2 million, respectively, for all such compensation and costs. At March 31, 2022 and December 31, 2021, the Company had payables to the Manager pursuant to the Management Agreement totaling approximately $317,000 and $1.2 million, respectively, related to such compensation and costs. The Company’s base management fee payable and expense reimbursements payable were recorded in management fee payable - related party and accounts payable and other liabilities on the consolidated balance sheet, respectively.

On July 31, 2020, ACRES RF, then known as RCC Real Estate, Inc., 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.

During the three months ended March 31, 2022 and 2021, the Company recorded interest income of $87,000 and $89,000, respectively, on the ACRES Loan in other income (expense) on the consolidated statements of operations. At March 31, 2022, the ACRES Loan had a principal balance and accrued interest receivable of $11.5 million and $30,000, respectively, recorded in loan receivable - related party and accrued interest receivable, respectively, on the consolidated balance sheet. At December 31, 2021, the ACRES Loan had a principal balance of $11.6 million, recorded in loan receivable - related party on the consolidated balance sheet, and no accrued interest receivable.

At March 31, 2022, 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 these transactions and was not separately compensated for managing the securitization entities and their assets.

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, serves as the portfolio servicer. Additionally, ACRES Capital Servicing served as the special servicer of Exantas Capital Corp. 2019-RSO7, Ltd. (“XAN 2019-RSO7”), XAN 2020-RSO8 and XAN 2020-RSO9 and serves as special servicer of ACRES Commercial Realty 2021-FL1 Issuer, Ltd. (“ACR 2021-FL1”) and ACRES Commercial Realty 2021-FL2 Issuer, Ltd. (“ACR 2021-FL2”). During the three months ended March 31, 2022 and 2021, ACRES Capital Servicing received no portfolio servicing fees or special servicing fees.

Relationship with ACRES Collateral Manager, LLC. ACRES Collateral Manager, LLC, an affiliate of ACRES Capital Corp. and the Manager, serves as the collateral manager of ACR 2021-FL1 and ACR 2021-FL2, 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. In November 2021 and December 2021, the joint venture entities of the two CRE equity investments acquired through direct investment entered into development agreements with DevCo (the “Development Agreements”). 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 1.5% of all project costs. No fees were incurred or paid to DevCo for services rendered under the Development Agreements during the three months ended March 31, 2022.

Relationship with ACRES Share Holdings, LLC. In June 2021, the Company’s Manager Plan was approved by its shareholders, which authorized up to 1,100,000 shares of common stock for issuance to the Manager (less shares of common stock issued or subject to awards under the Omnibus Plan). ACRES Share Holdings, LLC, an affiliate of ACRES Capital Corp. and the Manager, was granted 299,999 shares during the year ended December 31, 2021 that will vest 25% each year on the anniversary of the issuance date over four years. There were no shares issued under this plan during the three months ended March 31, 2022.

On May 6, 2022, the Company issued 299,999 restricted shares to ACRES Share Holdings, LLC under the Manager Plan that will vest 25% each year on the anniversary of the issuance date over four years. See Note 13 for additional details.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company had no financial instruments carried at fair value on a recurring basis at March 31, 2022 and December 31, 2021.

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, principal paydowns receivable, accrued interest payable and distributions payable approximate their carrying values on the consolidated balance sheets. 

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. Fair values of loans with fixed rates are calculated using the net present values of future cash flows, discounted at market rates. The Company’s floating-rate CRE loans had interest rates from 3.19% to 9.00% and 3.01% to 9.00% at March 31, 2022 and December 31, 2021, respectively.

The fair value of the Company’s mezzanine loan is measured by discounting the remaining contractual cash flows using the current interest rates at which similar instruments would be originated for the same remaining maturity. The Company’s mezzanine loan is discounted at a rate of 10.00%.

The Company’s loan receivable - related party is estimated using a discounted cash flow model.

Senior notes in CRE securitizations are estimated using a discounted cash flow model with implied yields based on trades for similar securities.

The fair value of the senior secured financing facility is measured by discounting the facility’s remaining contractual cash flows using the current interest rate at which a similar debt instrument would be issued for the same remaining maturity. The fair value of the senior secured financing facility is estimated using a discounted cash flow model that discounts the expected future cash flows at a rate of 5.75%. At March 31, 2022 and December 31, 2021, there were no borrowings outstanding on the senior secured financing facility.

Warehouse financing facilities are variable-rate debt instruments indexed to LIBOR that reset periodically and, as a result, their carrying value approximates their fair value, excluding deferred debt issuance costs.

The fair value of the 4.50% Convertible Senior Notes is determined using a discounted cash flow model that discounts the issuance’s contractual future cash flows using the current interest rate on similar debt issuances with similar terms and similar remaining maturities that do not have a conversion option.

The Company’s 5.75% Senior Unsecured Notes are estimated by using a discounted cash flow model.

The fair values of the junior subordinated notes RCT I and RCT II are estimated by using a discounted cash flow model.

The fair values of the Company’s remaining 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
	Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At March 31, 2022:
Assets:
CRE whole loans	$	1,887,255	$	1,904,974	$	—	$	—	$	1,904,974
CRE mezzanine loan	$	4,464	$	4,700	$	—	$	—	$	4,700
Loan receivable - related party	$	11,525	$	10,004	$	—	$	—	$	10,004
Liabilities:									.
Senior notes in CRE securitizations	$	1,231,153	$	1,223,179	$	—	$	—	$	1,223,179
Warehouse financing facilities	$	152,206	$	156,070	$	—	$	—	$	156,070
4.50% Convertible Senior Notes	$	47,647	$	48,175	$	—	$	—	$	48,175
5.75% Senior Unsecured Notes (1)	$	146,930	$	140,340	$	—	$	—	$	140,340
Junior subordinated notes	$	51,548	$	39,999	$	—	$	—	$	39,999
At December 31, 2021:
Assets:
CRE whole loans	$	1,869,301	$	1,889,499	$	—	$	—	$	1,889,499
CRE mezzanine loan	$	4,445	$	4,700	$	—	$	—	$	4,700
Loan receivable - related party	$	11,575	$	10,407	$	—	$	—	$	10,407
Liabilities:
Senior notes in CRE securitizations	$	1,466,499	$	1,473,893	$	—	$	—	$	1,473,893
Warehouse financing facility	$	66,771	$	68,905	$	—	$	—	$	68,905
4.50% Convertible Senior Notes	$	86,431	$	87,873	$	—	$	—	$	87,873
5.75% Senior Unsecured Notes (1)	$	146,607	$	148,125	$	—	$	—	$	148,125
Junior subordinated notes	$	51,548	$	41,424	$	—	$	—	$	41,424

(1) Carrying value at March 31, 2022 and December 31, 2021 includes deferred debt issuance costs of $128,000 and $307,000, respectively, associated with the 12.00% Senior Unsecured Notes, that had no outstanding balance at both March 31, 2022 and December 31, 2021.

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MARKET RISK AND DERIVATIVE INSTRUMENTS

3 Months Ended

Mar. 31, 2022

Derivative Instruments And Hedging Activities Disclosure [Abstract]

MARKET RISK AND DERIVATIVE INSTRUMENTS

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 used 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 also 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.

The Company terminated all of its interest rate swap positions associated with its prior financed CMBS portfolio in April 2020. At termination, the Company realized a loss of $11.8 million. At March 31, 2022 and December 31, 2021, the Company had a loss of $8.0 million and $8.5 million, respectively, recorded in accumulated other comprehensive loss, which will be amortized into earnings over the remaining life of the debt. During the three months ended March 31, 2022 and 2021, the Company recorded amortization expense of $479,000, reported in interest expense on the consolidated statements of operations.

At March 31, 2022 and December 31, 2021, the Company had an unrealized gain of $324,000 and $347,000, respectively, 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. For each of the three months ended March 31, 2022 and 2021, the Company recorded accretion income, reported in interest expense on the consolidated statements of operations, of $23,000 to accrete the accumulated other comprehensive income on the terminated swap agreements.

The Company’s prior origination of fixed-rate CRE whole loans exposed it to market pricing risk in connection with the fluctuations of market interest rates. In order to mitigate this market price risk, the Company entered into interest rate swap contracts in which it paid a fixed rate of interest in exchange for a variable rate of interest, usually three-month LIBOR. Unrealized gains and losses on the value of these swap contracts were recorded in other income (expense) on the consolidated statements of operations. In December 2020, these interest rate swap contracts were terminated.

The following tables present the effect of the derivative instruments on the consolidated statements of operations for the three months ended March 31, 2022 and 2021 (in thousands):

	Derivatives
Three Months Ended March 31, 2022	Consolidated Statements of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging	Interest expense	$	(456	)

	Derivatives
Three Months Ended March 31, 2021	Consolidated Statements of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging	Interest expense	$	(456	)

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

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OFFSETTING OF FINANCIAL LIABILITIES

3 Months Ended

Mar. 31, 2022

Offsetting [Abstract]

OFFSETTING OF FINANCIAL LIABILITIES

NOTE 20 - OFFSETTING OF FINANCIAL LIABILITIES

The following table presents a summary of the Company’s offsetting of financial liabilities (in thousands, except amounts in footnotes):

							(iv) Gross Amounts Not Offset on the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Liabilities		(ii) Gross Amounts Offset on the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Liabilities Included on the Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
At March 31, 2022:
Warehouse financing facilities (2)	$	152,206	$	—	$	152,206	$	152,206	$	—	$	—
At December 31, 2021:
Warehouse financing facilities (2)	$	66,771	$	—	$	66,771	$	66,771	$	—	$	—

(1) Amounts represent financial instruments pledged that are available to be offset against liability balances associated with term warehouse financing facilities and repurchase agreements.

(2) The combined fair values of loans pledged against the Company’s various term warehouse financing facilities and repurchase agreements was $210.4 million and $102.0 million at March 31, 2022 and December 31, 2021, respectively.

All balances associated with warehouse financing facilities are presented on a gross basis on the Company’s consolidated balance sheets.

Certain of the Company’s warehouse financing facilities are governed by underlying agreements that generally provide for a right of offset in the event of default or in the event of a bankruptcy of either party to the transaction.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2022

Commitments And Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

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. Except as discussed below, the Company is unaware of any contingencies arising from such litigation that would require accrual or disclosure in the consolidated financial statements at March 31, 2022.

The Company’s subsidiary, Primary Capital Mortgage, LLC (“PCM”), is subject to potential litigation related to claims for repurchases or indemnifications on loans that PCM has sold to third parties. At March 31, 2022 and December 31, 2021, no such litigation demand was outstanding. Reserves for such litigation demands are included in the reserve for mortgage repurchases and indemnifications that totaled $1.3 million at March 31, 2022 and December 31, 2021. The reserves for mortgage repurchases and indemnifications are included in accounts payable and other liabilities on the consolidated balance sheets.

The Company did not have any pending litigation matters or general litigation reserve at March 31, 2022 or December 31, 2021.

Impact of COVID-19

As discussed in Note 2, the COVID-19 pandemic continues to plague countries throughout the globe as virus variants have emerged. While the U.S. and certain countries around the world have eased restrictions and financial markets and unemployment rates have stabilized to some degree, due in large part to the discovery and distribution of vaccines and other treatments, the pandemic continues to cause uncertainty on the U.S. and global economies, generally, and the CRE business in particular. The reinstatement of nationwide restrictions placed on businesses in response to COVID-19 may cause significant cash flow disruptions across the economy that may impact the Company’s borrowers and their ability to stay current with their debt obligations in the near term. Due to the fluidity of this situation, along with other world events, any prediction as to the ultimate adverse impact of the pandemic on economic and market conditions remains difficult to assess. The Company had no contingent liabilities recorded in connection with the COVID-19 pandemic at March 31, 2022 or December 31, 2021. However, the impact of the COVID-19 pandemic has had and may continue to have a long-term and material impact on its results of operations, financial condition and cash flows through the fiscal year 2022.

Other Contingencies

PCM is subject to additional claims for repurchases or indemnifications on loans that PCM has sold to investors. At March 31, 2022 and December 31, 2021, outstanding demands for indemnification, repurchase or make whole payments totaled $3.3 million. The Company’s estimated exposure for such outstanding claims, as well as unasserted claims, is included in its reserve for mortgage repurchases and indemnifications.

Unfunded Commitments

Unfunded commitments on the Company’s originated CRE loans generally fall into two categories: (1) pre-approved capital improvement projects and (2) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, the Company would receive additional interest income on the advanced amount. Whole loans had $145.5 million and $157.6 million in unfunded loan commitments at March 31, 2022 and December 31, 2021, respectively.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 22 - 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 7 and 13, that have occurred that would require adjustments to or disclosures in the consolidated financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). 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.

Basis of Presentation

Basis of Presentation

All adjustments necessary to fairly present the Company’s financial position, results of operations and cash flows have been made.

Use of Estimates

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 and derivatives, 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.

The coronavirus (“COVID-19”) pandemic continues to plague countries throughout the globe as virus variants have emerged, leading numerous countries, including the U.S., to declare national emergencies. Many countries responded to the initial outbreak in late 2019 by instituting quarantines, restricting travel and limiting operations of non-essential offices and retail centers, which resulted in the closure or remote operation of non-essential businesses, increased rates of unemployment and market disruption in connection with the economic uncertainty. While the U.S. and certain countries around the world have eased restrictions and financial markets have stabilized to some degree in connection with the development and distribution of vaccines and other effective COVID-19 treatments, the pandemic continues to cause uncertainty on the U.S. and global economies, generally, and the CRE business, specifically. Estimates

and assumptions as of March 31, 2022, are inherently less certain than they would be absent the current and potential impacts of COVID-19, particularly the reinstatement of restrictions placed on businesses. The Company believes the estimates and assumptions underlying the consolidated financial statements are reasonable and supportable based on the information available at March 31, 2022. Actual results may ultimately differ from those estimates.

Cash and Cash Equivalents

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. At March 31, 2022 and December 31, 2021, approximately $77.4 million and $33.3 million, respectively, of the reported cash balances exceeded the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation deposit insurance limits of $250,000 per respective depository or brokerage institution. However, all of the Company’s cash deposits are held at multiple, established financial institutions, in multiple accounts associated with its parent and respective consolidated subsidiaries, to minimize credit risk exposure.

Restricted cash includes required account balance minimums primarily for the Company’s CRE debt securitizations, term warehouse financing facilities and repurchase agreements as well as cash held in the syndicated corporate loan collateralized debt obligations (“CDOs”).

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):

	March 31,
	2022		2021
Cash and cash equivalents	$	79,561	$	70,985
Restricted cash		5,734		42,825
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$	85,295	$	113,810

Investment In Real Estate

Investment in Real Estate

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

Category	Term
Building	35 to 40 years
Building improvements	8 to 35 years
Site improvements	10 years
Tenant improvements	180 days to 3 years
Furniture, fixtures and equipment	3 to 12 years
Right of use assets	66.3 years
Intangible assets	180 days to 16.5 years
Lease liabilities	66.3 years

Income Taxes

Income Taxes

The Company recorded a full valuation allowance against its net deferred tax assets (tax effected expense of $21.5 million) at March 31, 2022, as the Company believes it is more likely than not that the deferred tax assets will 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.

Earnings Per Share

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.

Recent Accounting Standards

Recent Accounting Standards

Accounting Standards Adopted in 2022

In August 2020, the Financial Accounting Standards Board (“FASB”) issued guidance that removes certain separation models for convertible debt instruments and convertible preferred stock that require the separation into a debt component and an equity or derivative component. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, if no other features require bifurcation and recognition as derivatives and the convertible instrument is not issued with substantial premiums accounted for as paid-in capital. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate. The guidance also revises the derivative scope exception for contracts in an entity’s own equity and improves the consistency of EPS calculations. Adoption did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards to be Adopted in Future Periods

In March 2022, the FASB issued an amendment eliminating certain previously issued accounting guidance for troubled debt restructurings (“TDRs”) and enhancing disclosure requirements surrounding refinancings, restructurings, and write-offs. Current GAAP provides an exception to general recognition and measurement guidance for loan restructurings if they meet specific criteria to be considered TDRs. If a modification is a TDR, incremental expected losses are recorded in the allowance for credit losses upon modification and specific disclosures are required. The new amendment eliminates the TDR recognition and measurement guidance and requires the reporting entity to evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with accounting for other loan modifications. The amendment also requires public business entities to disclose current-period gross write-offs by year of origination for certain financing receivables and net investments in leases. For entities that have adopted the previously issued guidance amended by this update, which the Company did during the year ended December 31, 2020, this update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted the previously issued guidance amended by this update. The Company is in the process of evaluating the impact of this guidance.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Reconciliation of cash, cash equivalents and restricted cash

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):

	March 31,
	2022		2021
Cash and cash equivalents	$	79,561	$	70,985
Restricted cash		5,734		42,825
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$	85,295	$	113,810

Schedule of Investments in Real Estate and Amortizes Intangible Assets Over The Estimated Useful Lives of Assets

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

Category	Term
Building	35 to 40 years
Building improvements	8 to 35 years
Site improvements	10 years
Tenant improvements	180 days to 3 years
Furniture, fixtures and equipment	3 to 12 years
Right of use assets	66.3 years
Intangible assets	180 days to 16.5 years
Lease liabilities	66.3 years

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VARIABLE INTEREST ENTITIES (Tables)

3 Months Ended

Mar. 31, 2022

VIE, Primary Beneficiary

Schedule of variable interest entities

The following table shows the classification and carrying values of assets and liabilities of the Company’s Consolidated VIEs at March 31, 2022 (in thousands):

	CRE Securitizations		Other		Total
ASSETS
Restricted cash	$	4,482	$	384	$	4,866
Accrued interest receivable		4,504		—		4,504
CRE loans, pledged as collateral (1)		1,486,805		—		1,486,805
Other assets		53		—		53
Total assets (2)	$	1,495,844	$	384	$	1,496,228
LIABILITIES
Accounts payable and other liabilities	$	100	$	—	$	100
Accrued interest payable		1,001		—		1,001
Borrowings		1,231,153		—		1,231,153
Total liabilities	$	1,232,254	$	—	$	1,232,254

(1) Excludes allowance for credit losses.

(2) Assets of each of the Consolidated VIEs may only be used to settle the obligations of each respective VIE.

VIE, Not Primary Beneficiary

Schedule of variable interest entities

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs at March 31, 2022 (in thousands):

	Unsecured Junior Subordinated Debentures			Maximum Exposure to Loss
ASSETS
Accrued interest receivable	$	6		$	—
Investments in unconsolidated entities		1,548		$	1,548
Total assets		1,554
LIABILITIES
Accrued interest payable		186		N/A
Borrowings		51,548		N/A
Total liabilities		51,734		N/A
Net (liability) asset	$	(50,180	)	N/A

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Supplemental Cash Flow Elements [Abstract]

Schedule of other significant noncash transactions

The following table summarizes the Company’s supplemental disclosure of cash flow information (in thousands):

	For the Three Months Ended
	March 31,
	2022		2021
Supplemental cash flows:
Interest expense paid in cash	$	14,894	$	12,969
Income taxes paid in cash	$	180	$	—
Non-cash operating activities include the following:
Receipt of right of use assets	$	—	$	(6	)
Execution of operating leases	$	—	$	6
Non-cash financing activities include the following:
Distributions on preferred stock accrued but not paid	$	3,262	$	1,725

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LOANS (Tables)

3 Months Ended

Mar. 31, 2022

Loans Held For Investment [Abstract]

Summary of loans held for Investments

The following is a summary of the Company’s loans (dollars in thousands, except amounts in footnotes):

Description	Quantity		Principal		Unamortized (Discount) Premium, net (1)			Amortized Cost		Allowance for Credit Losses			Carrying Value		Contractual Interest Rates (2)	Maturity Dates (3)(4)
At March 31, 2022:
CRE loans held for investment:
Whole loans (5)(6)		88	$	1,904,974	$	(13,249	)	$	1,891,725	$	(4,470	)	$	1,887,255	1M BR plus 2.75% to 1M BR plus 8.50%	April 2022 to September 2025
Mezzanine loan (5)		1		4,700		—			4,700		(236	)		4,464	10.00%	June 2028
Total CRE loans held for investment			$	1,909,674	$	(13,249	)	$	1,896,425	$	(4,706	)	$	1,891,719
At December 31, 2021:
CRE loans held for investment:
Whole loans (5)(6)		93	$	1,891,795	$	(13,944	)	$	1,877,851	$	(8,550	)	$	1,869,301	1M BR plus 2.70% to 1M BR plus 8.50%	January 2022 to September 2025
Mezzanine loan (5)		1		4,700		—			4,700		(255	)		4,445	10.00%	June 2028
Total CRE loans held for investment			$	1,896,495	$	(13,944	)	$	1,882,551	$	(8,805	)	$	1,873,746

(1) Amounts include unamortized loan origination fees of $13.0 million and $13.6 million and deferred amendment fees of $248,000 and $307,000 at March 31, 2022 and December 31, 2021, respectively. Additionally, the amounts include unamortized loan acquisition costs of $7,300 at December 31, 2021.

(2) The Company’s whole loan portfolio of $1.9 billion at each period presented had weighted-average one-month benchmark rate (“BR”) floors of 0.66% and 0.75% at March 31, 2022 and December 31, 2021, respectively. Benchmark rates comprise one-month London Interbank Offered Rate (“LIBOR”) or one-month Term Secured Overnight Financing Rate (“SOFR”). At March 31, 2022 and December 31, 2021, all but one of the Company’s floating-rate whole loans had one-month benchmark floors.

(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 one and three whole loans, with amortized costs of $8.0 million and $27.9 million, in maturity default at March 31, 2022 and December 31, 2021, respectively.

(5) Substantially all loans are pledged as collateral under various borrowings at March 31, 2022 and December 31, 2021.

(6) CRE whole loans had $145.5 million and $157.6 million in unfunded loan commitments at March 31, 2022 and December 31, 2021, 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.

Summary of Contractual Maturities of Commercial Real Estate Loans at Amortized Cost

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	2022		2023		2024 and Thereafter		Total
At March 31, 2022:
Whole loans (1)	$	319,577	$	214,833	$	1,349,290	$	1,883,700
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	319,577	$	214,833	$	1,353,990	$	1,888,400
Description	2022		2023		2024 and Thereafter		Total
At December 31, 2021:
Whole loans (1)	$	377,024	$	230,872	$	1,242,013	$	1,849,909
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	377,024	$	230,872	$	1,246,713	$	1,854,609

(1) Maturity dates exclude one and three whole loans, with amortized costs of $8.0 million and $27.9 million, in maturity default at March 31, 2022 and December 31, 2021, respectively.

(2) At March 31, 2022, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $52.0 million, $110.0 million and $1.7 billion in 2022, 2023 and 2024 and thereafter, respectively. At December 31, 2021, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $52.0 million, $127.6 million and $1.7 billion in 2022, 2023 and 2024 and thereafter, respectively.

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FINANCING RECEIVABLES (Tables)

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Activity in Allowance for Credit Losses

The following table shows the activity in the allowance for credit losses for the three months ended March 31, 2022 and year ended December 31, 2021 (in thousands):

	Three Months Ended March 31, 2022			Year Ended December 31, 2021
	CRE Loans			CRE Loans
Allowance for credit losses:
Allowance for credit losses at beginning of period	$	8,805		$	34,310
Reversal of credit losses, net		(1,802	)		(21,262	)
Charge offs		(2,297	)		(4,243	)
Allowance for credit losses at end of period	$	4,706		$	8,805

Credit quality indicators for bank loans and commercial real estate loans

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	• Property performance has surpassed underwritten expectations.
	• 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	• 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	• Property performance lags behind underwritten expectations.
	• Occupancy is not stabilized and the property has some tenancy rollover.
4	• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
	• Occupancy is not stabilized and the property has a large amount of tenancy rollover.
5	• 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.
	• The property has a material vacancy rate and significant rollover of remaining tenants.
	• 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 footnotes):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Total (1)
At March 31, 2022:
Whole loans, floating-rate	$	—	$	1,532,355	$	239,871	$	105,503	$	13,996	$	1,891,725
Mezzanine loan		—		—		—		4,700		—		4,700
Total	$	—	$	1,532,355	$	239,871	$	110,203	$	13,996	$	1,896,425
At December 31, 2021:
Whole loans, floating-rate	$	—	$	1,456,330	$	273,078	$	123,762	$	24,681	$	1,877,851
Mezzanine loan		—		—		—		4,700		—		4,700
Total	$	—	$	1,456,330	$	273,078	$	128,462	$	24,681	$	1,882,551

(1) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

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

	2022		2021		2020		2019		2018		Prior		Total (1)
At March 31, 2022:
Whole loans, floating-rate: (2)
Rating 2	$	96,131	$	1,241,086	$	143,059	$	32,605	$	19,474	$	—	$	1,532,355
Rating 3		—		34,707		25,067		101,756		60,841		17,500		239,871
Rating 4		—		—		—		28,465		77,038		—		105,503
Rating 5		—		—		—		13,996		—		—		13,996
Total whole loans, floating-rate		96,131		1,275,793		168,126		176,822		157,353		17,500		1,891,725
Mezzanine loan (rating 4)		—		—		—		—		4,700		—		4,700
Total	$	96,131	$	1,275,793	$	168,126	$	176,822	$	162,053	$	17,500	$	1,896,425
	2021		2020		2019		2018		2017		Prior		Total (1)
At December 31, 2021:
Whole loans, floating-rate: (2)
Rating 2	$	1,230,810	$	150,513	$	55,510	$	19,497	$	—	$	—	$	1,456,330
Rating 3		33,781		24,604		136,305		60,888		—		17,500		273,078
Rating 4		—		—		28,446		86,096		—		9,220		123,762
Rating 5		—		—		22,385		—		—		2,296		24,681
Total whole loans, floating-rate		1,264,591		175,117		242,646		166,481		—		29,016		1,877,851
Mezzanine loan (rating 4)		—		—		—		4,700		—		—		4,700
Total	$	1,264,591	$	175,117	$	242,646	$	171,181	$	—	$	29,016	$	1,882,551

(1) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

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

Loan portfolios 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 Days (1)		Total Past Due		Current (2)		Total Loans Receivable (3)		Total Loans > 90 Days and Accruing
At March 31, 2022:
Whole loans, floating-rate	$	—	$	—	$	8,025	$	8,025	$	1,883,700	$	1,891,725	$	—
Mezzanine loan		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	8,025	$	8,025	$	1,888,400	$	1,896,425	$	—
At December 31, 2021:
Whole loans, floating-rate	$	—	$	—	$	19,916	$	19,916	$	1,857,935	$	1,877,851	$	19,916
Mezzanine loan		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	19,916	$	19,916	$	1,862,635	$	1,882,551	$	19,916

(1) During the three months ended March 31, 2022, the Company did not recognize interest income on the one loan with a principal payment past due greater than 90 days at March 31, 2022. During the three months ended March 31, 2021, the Company recognized interest income of $153,000 on the one loan with a principal payment past due greater than 90 days at March 31, 2022.

(2) Includes one whole loan, with amortized costs of $8.0 million, in maturity default at December 31, 2021.

(3) The total amortized cost of CRE loans excluded accrued interest receivable of $6.2 million and $6.1 million at March 31, 2022 and December 31, 2021, respectively.

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2022

Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Abstract]

Schedule of Investments in Real Estate and Related Intangible Assets

The following table summarizes the book value of the Company’s investments in real estate and related intangible assets (in thousands, except amounts in the footnotes):

	March 31, 2022									December 31, 2021
	Cost Basis			Accumulated Depreciation & Amortization			Carrying Value			Cost Basis			Accumulated Depreciation & Amortization			Carrying Value
Assets acquired:
Investments in real estate, equity:
Investments in real estate (1)	$	27,097		$	(381	)	$	26,716		$	27,065		$	(191	)	$	26,874
Intangible assets (2)		1,726			(1,611	)		115			1,726			(806	)		920
Subtotal		28,823			(1,992	)		26,831			28,791			(997	)		27,794
Investments in real estate from lending activities:
Investment in real estate (3)		34,133			(2,067	)		32,066			34,124			(1,689	)		32,435
Property held for sale (4)		17,657			—			17,657			17,846			—			17,846
Right of use assets (5)(6)		5,603			(116	)		5,487			5,603			(95	)		5,508
Intangible assets (7)		3,337			(465	)		2,872			3,337			(380	)		2,957
Subtotal		60,730			(2,648	)		58,082			60,910			(2,164	)		58,746
Total		89,553			(4,640	)		84,913			89,701			(3,161	)		86,540
Liabilities assumed:
Equity investments in real estate:
Other liabilities		(247	)		155			(92	)		(247	)		78			(169	)
Investments in real estate from lending activities:
Lease liabilities (6)		(3,113	)		65			(3,048	)		(3,113	)		53			(3,060	)
Total		(3,360	)		220			(3,140	)		(3,360	)		131			(3,229	)
	$	86,193					$	81,773		$	86,341					$	83,311

(1) Includes $22.4 million of land, which is not depreciable, at March 31, 2022 and December 31, 2021.

(2) Carrying value includes approximately $59,000 and $819,000 of an acquired in-place lease intangible asset and $55,000 and $101,000 of an acquired leasing commission intangible asset at March 31, 2022 and December 31, 2021, respectively.

(3) Includes $126,000 and $129,000 of building renovations assets at carrying value at March 31, 2022 and December 31, 2021 made subsequent to the date of acquisition of a property.

(4) Includes a property acquired in October 2021 that is being marketed for sale.

(5) Right of use assets include a right of use asset associated with an acquired ground lease of $3.0 million and $3.1 million accounted for as an operating lease and a below-market lease intangible asset of $2.4 million and $2.4 million at March 31, 2022 and December 31, 2021, respectively.

(6) Refer to Note 8 for additional information on the Company’s remaining operating leases.

(7) Carrying value includes franchise agreement intangible assets of $2.6 million and $2.6 million and a customer list intangible asset of $269,000 and $311,000 at March 31, 2022 and December 31, 2021, respectively.

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LEASES (Tables)

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Summary of Operating Leases

The following table summarizes the Company’s operating leases (in thousands):

	March 31, 2022			December 31, 2021
Operating Leases:
Right of use assets	$	431		$	443
Lease liabilities	$	(466	)	$	(477	)
Weighted average remaining lease term:	6.3 years			6.6 years
Weighted average discount rate:		10.65	%		10.65	%

Summary of Operating Lease Costs and Cash Payments

The following table summarizes the Company’s operating lease costs and cash payments for the periods presented (in thousands):

	For the Three Months Ended
	March 31,
	2022		2021
Lease Cost:
Operating lease cost	$	24	$	—
Other Information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	23	$	—

Summary of Operating Leases by Maturity Date Based on Undiscounted Cash Flows

The following table summarizes the Company’s operating leases cash flow obligations on an undiscounted, annual basis (in thousands):

	Operating Leases
2022	$	97
2023		99
2024		99
2025		102
2026		104
Thereafter		170
Subtotal		671
Less: impact of discount		(205	)
Total	$	466

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BORROWINGS (Tables)

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Information with respect to 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 March 31, 2022:
ACR 2021-FL1 Senior Notes	$	675,223	$	5,014	$	670,209			1.93	%	14.2 years	$	802,643
ACR 2021-FL2 Senior Notes		567,000		6,056		560,944			2.24	%	14.8 years		700,000
Senior secured financing facility		—		3,280		(3,280	)		5.75	%	5.3 years		153,171
CRE - term warehouse financing facilities (1)		156,070		3,864		152,206			2.57	%	2.6 years		210,412
4.5% Convertible Senior Notes		48,175		528		47,647			4.50	%	137 days		—
5.75% Senior Unsecured Notes (2)		150,000		3,070		146,930			5.75	%	4.4 years		—
Unsecured Junior Subordinated Debentures		51,548		—		51,548			4.60	%	14.4 years		—
Total	$	1,648,016	$	21,812	$	1,626,204			2.60	%	12.0 years	$	1,866,226
	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings			Weighted Average Borrowing Rate			Weighted Average Remaining Maturity	Value of Collateral
At December 31, 2021:
XAN 2020-RSO8 Senior Notes	$	142,375	$	577	$	141,798			2.18	%	13.2 years	$	229,263
XAN 2020-RSO9 Senior Notes		94,814		489		94,325			4.25	%	15.3 years		144,361
ACR 2021-FL1 Senior Notes (3)		675,223		5,410		669,813			1.60	%	14.5 years		802,643
ACR 2021-FL2 Senior Notes		567,000		6,437		560,563			1.90	%	15.1 years		700,000
Senior secured financing facility		—		3,432		(3,432	)		5.75	%	6.2 years		170,791
CRE - term warehouse financing facilities (1)		71,078		4,307		66,771			2.27	%	2.8 years		102,027
4.50% Convertible Senior Notes		88,014		1,583		86,431			4.50	%	227 days		—
5.75% Senior Unsecured Notes (2)		150,000		3,393		146,607			5.75	%	4.6 years		—
Unsecured junior subordinated debentures		51,548		—		51,548			4.12	%	14.7 years		—
Total	$	1,840,052	$	25,628	$	1,814,424			2.44	%	12.7 years	$	2,149,085

(1) Principal outstanding includes accrued interest payable of $134,000 and $58,000 at March 31, 2022 and December 31, 2021, respectively.

(2) Includes deferred debt issuance costs of $128,000 and $306,000 at March 31, 2022 and December 31, 2021, respectively, associated with the 12.00% senior unsecured notes due 2027 (“12.00% Senior Unsecured Notes”) that had no outstanding balance at both March 31, 2022 and December 31, 2021.

(3) Value of collateral excludes interest income of $730,000 and exit fees of $228,000 received as of December 31, 2021.

Schedule of securitizations

The following table sets forth certain information with respect to the Company’s consolidated securitizations at March 31, 2022 (in thousands, except amount in footnotes):

	Closing Date	Maturity Date	Permitted Funded Companion Participation Acquisition Period End (1)	Reinvestment Period End (2)	Total Note Paydowns Received from Closing Date through March 31, 2022
ACR 2021-FL1	May 2021	June 2036	N/A	May 2023	$	—
ACR 2021-FL2	December 2021	January 2037	N/A	December 2023	$	—

(1) The permitted funded companion participation acquisition period is the period in which principal repayments can be utilized to purchase loans held outside of the respective securitization that represent the funded commitments of existing collateral in the respective securitization that were not funded as of the date the respective securitization was closed.

(2) The reinvestment period is the period in which principal proceeds received before the end of the period may be used to acquire CRE loans for reinvestment into the securitization.

Schedule of convertible senior notes

The following table summarizes the 4.50% Convertible Senior Notes at March 31, 2022 (dollars in thousands, except the conversion rate, conversion price and amounts in the footnotes):

	Principal Outstanding		Borrowing Rate			Effective Rate (1)(2)			Conversion Rate (3)(4)	Conversion Price (4)		Maturity Date
4.50% Convertible Senior Notes	$	48,175		4.50	%		7.43	%	27.7222	$	36.06	August 15, 2022

(1) Includes the amortization of the market discounts and deferred debt issuance costs, if any, for the 4.50% Convertible Senior Notes recorded in interest expense on the consolidated statements of operations.

(2) During the three months ended March 31, 2022 and 2021, the effective interest rate for the 4.50% Convertible Senior Notes was 7.43%.

(3) Represents the number of shares of common stock per $1,000 principal amount of the 4.50% Convertible Senior Notes’ principal outstanding, subject to adjustment as provided in the Third Supplemental Indenture (the “4.50% Convertible Senior Notes Indenture”).

(4) The conversion rate and conversion price of the 4.50% Convertible Senior Notes at March 31, 2022 are adjusted to reflect quarterly cash distributions in excess of a $0.30 distribution threshold, as defined in the 4.50% Convertible Senior Notes Indenture.

Senior secured warehouse financing facilities and repurchase agreements

The following table sets forth certain information with respect to the Company’s senior secured financing and term warehouse financing facilities (dollars in thousands, except amounts in footnotes):

	March 31, 2022										December 31, 2021
	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
Senior Secured Financing Facility
Massachusetts Mutual Life Insurance Company (1)	$	(3,280	)	$	153,171		7		5.75	%	$	(3,432	)	$	170,791		9		5.75	%
CRE - Term Warehouse Financing Facilities(2)
JPMorgan Chase Bank, N.A.(3)		45,196			69,709		5		2.75	%		18,875			37,167		3		2.85	%
Morgan Stanley Mortgage Capital Holdings LLC(4)		107,010			140,703		8		2.50	%		47,896			64,860		3		2.03	%
Total	$	148,926		$	363,583						$	63,339		$	272,818

(1) Includes $3.3 million and $3.4 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively.

(2) Outstanding borrowings include accrued interest payable.

(3) Includes $1.6 million and $1.8 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively, in addition to $250,000 and $356,000 of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively, from other term warehouse financing facilities with no balance.

(4) Includes $2.0 million and $2.2 million of deferred debt issuance costs at March 31, 2022 and December 31, 2021, respectively.

Schedule of amount at risk under credit facility

The following table shows information about the amount at risk under the warehouse financing facilities (dollars in thousands):

	Amount at Risk (1)		Weighted Average Remaining Maturity	Weighted Average Interest Rate
At March 31, 2022:
CRE - Term Warehouse Financing Facilities
JPMorgan Chase Bank, N.A.	$	22,929	2.6 years		2.75	%
Morgan Stanley Mortgage Capital Holdings LLC	$	32,174	2.6 years		2.50	%

(1) Equal to the total of the estimated fair value of loans sold and accrued interest receivable, minus the total of the warehouse financing agreement liabilities and accrued interest payable.

Schedule of contractual obligations and commitments

Contractual maturity dates of the Company’s borrowings’ principal outstanding by category and year are presented in the table below (in thousands):

	Total		2022		2023		2024		2025		2026 and Thereafter
At March 31, 2022:
CRE securitizations	$	1,242,223	$	—	$	—	$	—	$	—	$	1,242,223
Unsecured junior subordinated debentures		51,548		—		—		—		—		51,548
4.50% Convertible Senior Notes		48,175		48,175		—		—		—		—
5.75% Senior Unsecured Notes		150,000		—		—		—		—		150,000
CRE - term warehouse financing facilities(1)		156,070		—		—		156,070		—		—
Total	$	1,648,016	$	48,175	$	—	$	156,070	$	—	$	1,443,771

(1) Includes accrued interest payable in the balances of principal outstanding.

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SHARE-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of restricted common stock transactions

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, 2022		299,999		33,330		333,329	$	17.39
Issued		—		—		—		—
Vested		—		—		—		—
Forfeited		—		—		—		—
Unvested shares at March 31, 2022		299,999		33,330		333,329	$	17.39

Summary of unvested restricted common stock expected to vest

The unvested restricted common stock shares are expected to vest during the following years:

Year	Shares
2022		83,331
2023		83,331
2024		83,331
2025		83,336
Total		333,329

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Reconciliation of basic and diluted earnings (losses) per common 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):

	For the Three Months Ended
	March 31,
	2022			2021
Net income	$	2,084		$	13,056
Net income allocated to preferred shares		(4,855	)		(2,588	)
Net (loss) income allocable to common shares	$	(2,771	)	$	10,468
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding - basic		8,630,316			9,729,463
Weighted average number of warrants outstanding (1)		466,661			466,661
Total weighted average number of common shares outstanding - basic		9,096,977			10,196,124
Effect of dilutive securities - unvested restricted stock		—			9,245
Weighted average number of common shares outstanding - diluted		9,096,977			10,205,369
Net (loss) income per common share - basic	$	(0.30	)	$	1.03
Net (loss) income per common share - diluted	$	(0.30	)	$	1.03

(1) See Note 12 for further details regarding the warrants.

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DISTRIBUTIONS (Tables)

3 Months Ended

Mar. 31, 2022

Distributions [Abstract]

Distributions Declared

The following tables present distributions declared (on a per share basis) for the three months ended March 31, 2022 and the year ended December 31, 2021:

	Series C Preferred Stock					Series D Preferred Stock
	Date Paid	Total Distributions Paid		Distributions Per Share		Date Paid	Total Distributions Paid		Distributions Per Share
	(in thousands)					(in thousands)
2022
March 31	May 2	$	2,588	$	0.5390625	May 2	$	2,268	$	0.4921875
2021
December 31	January 31, 2022	$	2,588	$	0.5390625	January 31, 2022	$	2,268	$	0.4921875
September 30	November 1	$	2,588	$	0.5390625	November 1	$	2,264	$	0.4921875
June 30	July 30	$	2,588	$	0.5390625	July 30	$	1,736	$	0.3773440
March 31	April 30	$	2,588	$	0.5390625	N/A	N/A		N/A

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Schedule of 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 three months ended March 31, 2022 (in thousands):

	Accumulated Other Comprehensive Loss - Net Unrealized Loss on Derivatives
Balance at January 1, 2022	$	(8,127	)
Amounts reclassified from accumulated other comprehensive loss (1)		456
Balance at March 31, 2022	$	(7,671	)

(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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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair value financial and non-financial assets not reported at fair value

The fair values of the Company’s remaining 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
	Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At March 31, 2022:
Assets:
CRE whole loans	$	1,887,255	$	1,904,974	$	—	$	—	$	1,904,974
CRE mezzanine loan	$	4,464	$	4,700	$	—	$	—	$	4,700
Loan receivable - related party	$	11,525	$	10,004	$	—	$	—	$	10,004
Liabilities:									.
Senior notes in CRE securitizations	$	1,231,153	$	1,223,179	$	—	$	—	$	1,223,179
Warehouse financing facilities	$	152,206	$	156,070	$	—	$	—	$	156,070
4.50% Convertible Senior Notes	$	47,647	$	48,175	$	—	$	—	$	48,175
5.75% Senior Unsecured Notes (1)	$	146,930	$	140,340	$	—	$	—	$	140,340
Junior subordinated notes	$	51,548	$	39,999	$	—	$	—	$	39,999
At December 31, 2021:
Assets:
CRE whole loans	$	1,869,301	$	1,889,499	$	—	$	—	$	1,889,499
CRE mezzanine loan	$	4,445	$	4,700	$	—	$	—	$	4,700
Loan receivable - related party	$	11,575	$	10,407	$	—	$	—	$	10,407
Liabilities:
Senior notes in CRE securitizations	$	1,466,499	$	1,473,893	$	—	$	—	$	1,473,893
Warehouse financing facility	$	66,771	$	68,905	$	—	$	—	$	68,905
4.50% Convertible Senior Notes	$	86,431	$	87,873	$	—	$	—	$	87,873
5.75% Senior Unsecured Notes (1)	$	146,607	$	148,125	$	—	$	—	$	148,125
Junior subordinated notes	$	51,548	$	41,424	$	—	$	—	$	41,424

(1) Carrying value at March 31, 2022 and December 31, 2021 includes deferred debt issuance costs of $128,000 and $307,000, respectively, associated with the 12.00% Senior Unsecured Notes, that had no outstanding balance at both March 31, 2022 and December 31, 2021.

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MARKET RISK AND DERIVATIVE INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Instruments And Hedging Activities Disclosure [Abstract]

The effect of derivative instruments on the statement of income

The following tables present the effect of the derivative instruments on the consolidated statements of operations for the three months ended March 31, 2022 and 2021 (in thousands):

	Derivatives
Three Months Ended March 31, 2022	Consolidated Statements of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging	Interest expense	$	(456	)

	Derivatives
Three Months Ended March 31, 2021	Consolidated Statements of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging	Interest expense	$	(456	)

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

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OFFSETTING OF FINANCIAL LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2022

Offsetting [Abstract]

Offsetting financial liabilities

The following table presents a summary of the Company’s offsetting of financial liabilities (in thousands, except amounts in footnotes):

							(iv) Gross Amounts Not Offset on the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Liabilities		(ii) Gross Amounts Offset on the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Liabilities Included on the Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
At March 31, 2022:
Warehouse financing facilities (2)	$	152,206	$	—	$	152,206	$	152,206	$	—	$	—
At December 31, 2021:
Warehouse financing facilities (2)	$	66,771	$	—	$	66,771	$	66,771	$	—	$	—

(1) Amounts represent financial instruments pledged that are available to be offset against liability balances associated with term warehouse financing facilities and repurchase agreements.

(2) The combined fair values of loans pledged against the Company’s various term warehouse financing facilities and repurchase agreements was $210.4 million and $102.0 million at March 31, 2022 and December 31, 2021, respectively.

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ORGANIZATION (Details)	Feb. 16, 2021 $ / shares shares	Mar. 31, 2022 $ / shares shares	Dec. 31, 2021 $ / shares shares	May 31, 2021 shares	Apr. 30, 2021 shares
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Reverse stock split of common stock	0.333
Number of fractional shares issued	0
Common stock, par value (in dollars per share) | $ / shares	$ 0.001	$ 0.001	$ 0.001
Capital stock, shares authorized				141,666,666	225,000,000
Common stock, shares authorized		41,666,666	41,666,666	41,666,666	125,000,000
Preferred stock, shares authorized				100,000,000	100,000,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Cash balance in excess of federal deposit Insurance limit, amount	$ 77.4	$ 33.3
Operating loss carryforwards, valuation allowance, tax expense impact	$ 21.5

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Cash and cash equivalents	$ 79,561	$ 35,500	$ 70,985
Restricted cash	5,734	248,431	42,825
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$ 85,295	$ 283,931	$ 113,810	$ 67,741

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Investments in Real Estate and Amortizes Intangible Assets Over The Estimated Useful Lives of Assets (Details)	3 Months Ended
	Mar. 31, 2022
Summary Of Significant Accounting Policies [Line Items]
Building	35 years
Building improvements	8 years
Site improvements	10 years
Tenant improvements	180 days
Furniture, fixtures and equipment	3 years
Right of use assets	66 years 3 months 18 days
Intangible assets	180 days
Lease liabilities	66 years 3 months 18 days
Maximum
Summary Of Significant Accounting Policies [Line Items]
Building	40 years
Building improvements	35 years
Tenant improvements	3 years
Furniture, fixtures and equipment	12 years
Intangible assets	16 years 6 months

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VARIABLE INTEREST ENTITIES (Consolidated VIEs) (the Company is the primary beneficiary) (Details) - VIE, Primary Beneficiary	3 Months Ended	12 Months Ended
	Mar. 31, 2022 USD ($) entity	Dec. 31, 2021 USD ($) entity
Variable Interest Entity [Line Items]
Number of consolidated VIEs | entity	5	7
Financial support, amount | $	$ 0	$ 0

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VARIABLE INTEREST ENTITIES (Schedule of Carrying Value of Assets and Liabilities of Consolidated VIEs) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
ASSETS:
Restricted cash	$ 5,734	$ 248,431	$ 42,825
Accrued interest receivable	6,282	6,112
Other assets	5,412	5,482
Total assets	2,087,125	2,284,275
LIABILITIES
Accounts payable and other liabilities	8,182	7,025
Accrued interest payable	2,598	5,937
Borrowings	1,626,204	1,814,424
Total liabilities	1,644,423	1,836,080
VIE, Primary Beneficiary
ASSETS:
Restricted cash	4,866	248,371
Accrued interest receivable	4,504	3,826
CRE loans, pledged as collateral	1,486,805	1,601,482
Other assets	53	36
Total assets	1,496,228	1,868,614
LIABILITIES
Accounts payable and other liabilities	100	315
Accrued interest payable	1,001	997
Borrowings	1,231,153	1,466,499
Total liabilities	1,232,254	$ 1,467,811
CRE Securitizations | VIE, Primary Beneficiary
ASSETS:
Restricted cash	4,482
Accrued interest receivable	4,504
CRE loans, pledged as collateral	1,486,805
Other assets	53
Total assets	1,495,844
LIABILITIES
Accounts payable and other liabilities	100
Accrued interest payable	1,001
Borrowings	1,231,153
Total liabilities	1,232,254
Other | VIE, Primary Beneficiary
ASSETS:
Restricted cash	384
Accrued interest receivable	0
CRE loans, pledged as collateral	0
Other assets	0
Total assets	384
LIABILITIES
Accounts payable and other liabilities	0
Accrued interest payable	0
Borrowings	0
Total liabilities	$ 0

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VARIABLE INTEREST ENTITIES (Unconsolidated VIEs) (the Company is not the primary beneficiary, but has a variable interest) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	$ 1,548,000	$ 1,548,000
Borrowings	$ 1,626,204,000	$ 1,814,424,000
VIE, Not Primary Beneficiary | Investment in RCT I and II
Variable Interest Entity [Line Items]
Ownership percentage in VIE	100.00%
Investments in unconsolidated entities	$ 1,500,000
VIE, Not Primary Beneficiary | Interest in RCT I
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	$ 774,000
Percentage of value of trusts owned	3.00%
Borrowings	$ 25,800,000
VIE, Not Primary Beneficiary | Interest in RCT II
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	$ 774,000
Percentage of value of trusts owned	3.00%
Borrowings	$ 25,800,000

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VARIABLE INTEREST ENTITIES (Schedule of Classification, Carrying Value, and Maximum Exposure to Loss of Unconsolidated VIEs) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
ASSETS:
Total assets	$ 2,087,125	$ 2,284,275
LIABILITIES
Total liabilities	1,644,423	$ 1,836,080
VIE, Not Primary Beneficiary | Interest Receivable
ASSETS:
Maximum Exposure to Loss	0
VIE, Not Primary Beneficiary | Investments in Unconsolidated Entities
ASSETS:
Maximum Exposure to Loss	1,548
Unsecured Junior Subordinated Debentures | VIE, Not Primary Beneficiary
ASSETS:
Accrued interest receivable	6
Investments in unconsolidated entities	1,548
Total assets	1,554
LIABILITIES
Accrued interest payable	186
Borrowings	51,548
Total liabilities	51,734
Net (liability) asset	$ (50,180)

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Supplemental cash flows:
Interest expense paid in cash	$ 14,894	$ 12,969
Income taxes paid in cash	180
Non-cash operating activities include the following:
Receipt of right of use assets		(6)
Execution of operating leases		6
Preferred Stock
Non-cash financing activities include the following:
Distributions accrued but not paid	$ 3,262	$ 1,725

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LOANS (Summary of Loans) (Details)	Mar. 31, 2022 USD ($) Loan	Dec. 31, 2021 USD ($) Loan	Dec. 31, 2020 USD ($)
Receivables With Imputed Interest [Line Items]
Amortized Cost, Loans held for investment	$ 1,896,425,000	$ 1,882,551,000
Allowance for Credit Losses	(4,706,000)	(8,805,000)
Commercial Real Estate Loans
Receivables With Imputed Interest [Line Items]
Principal, Loans held for investment	1,909,674,000	1,896,495,000
Unamortized (Discount) Premium, net	(13,249,000)	(13,944,000)
Amortized Cost, Loans held for investment	1,896,425,000	1,882,551,000
Allowance for Credit Losses	(4,706,000)	(8,805,000)	$ (34,310,000)
Carrying Value, Loans held for investment	1,891,719,000	1,873,746,000
Loan origination fees	13,000,000.0	13,600,000
Deferred amendment fees	248,000	307,000
Unamortized loan acquisition costs		7,300
Commercial Real Estate Loans | Whole Loans
Receivables With Imputed Interest [Line Items]
Principal, Loans held for investment	1,904,974,000	1,891,795,000
Unamortized (Discount) Premium, net	(13,249,000)	(13,944,000)
Amortized Cost, Loans held for investment	1,891,725,000	1,877,851,000
Allowance for Credit Losses	(4,470,000)	(8,550,000)
Carrying Value, Loans held for investment	$ 1,887,255,000	$ 1,869,301,000
Quantity | Loan	88	93
Loans held for investment, unfunded loan commitments	$ 145,500,000	$ 157,600,000
Commercial Real Estate Loans | Whole Loans | Benchmark Rate
Receivables With Imputed Interest [Line Items]
Loan receivable, floor interest rate	0.66%	0.75%
Commercial Real Estate Loans | Whole Loans | Benchmark Rate | Minimum
Receivables With Imputed Interest [Line Items]
Contractual Interest Rates	2.75%	2.70%
Commercial Real Estate Loans | Whole Loans | Benchmark Rate | Maximum
Receivables With Imputed Interest [Line Items]
Contractual Interest Rates	8.50%	8.50%
Commercial Real Estate Loans | Mezzanine loan
Receivables With Imputed Interest [Line Items]
Principal, Loans held for investment	$ 4,700,000	$ 4,700,000
Amortized Cost, Loans held for investment	4,700,000	4,700,000
Allowance for Credit Losses	(236,000)	(255,000)
Carrying Value, Loans held for investment	$ 4,464,000	$ 4,445,000
Quantity | Loan	1	1
Contractual Interest Rates	10.00%	10.00%
Commercial Real Estate Loans | Whole Loans in Default
Receivables With Imputed Interest [Line Items]
Amortized Cost, Loans held for investment	$ 8,000,000.0	$ 27,900,000
Quantity | Loan	1	3

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LOANS (Commercial Real Estate Loans, at Amortized Cost) (Details) $ in Thousands	Mar. 31, 2022 USD ($) Loan	Dec. 31, 2021 USD ($) Loan
Receivables With Imputed Interest [Line Items]
CRE loans	$ 1,896,425	$ 1,882,551
Commercial Real Estate Loans
Receivables With Imputed Interest [Line Items]
CRE loans	1,896,425	1,882,551
Commercial Real Estate Loans | Whole Loans in Default
Receivables With Imputed Interest [Line Items]
CRE loans	$ 8,000	$ 27,900
Number of loans | Loan	1	3
Commercial Real Estate Debt Investments
Receivables With Imputed Interest [Line Items]
2022	$ 319,577	$ 377,024
2023	214,833	230,872
2024 and Thereafter	1,353,990	1,246,713
Amortized Cost, Loans held for investment	1,888,400	1,854,609
Commercial Real Estate Debt Investments | Whole Loans
Receivables With Imputed Interest [Line Items]
2022	319,577	377,024
2023	214,833	230,872
2024 and Thereafter	1,349,290	1,242,013
Amortized Cost, Loans held for investment	1,883,700	1,849,909
Commercial Real Estate Debt Investments | Mezzanine loan
Receivables With Imputed Interest [Line Items]
2024 and Thereafter	4,700	4,700
Amortized Cost, Loans held for investment	4,700	4,700
Commercial Real Estate Debt Investments | Whole Loans | Whole Loan in Extension Option
Receivables With Imputed Interest [Line Items]
2022	52,000	52,000
2023	110,000	127,600
2024 and Thereafter	$ 1,700,000	$ 1,700,000

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LOANS (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Principal paydowns receivable	$ 0	$ 14,899
Commercial Real Estate Loans | Southwest Region
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk	22.30%	18.40%
Commercial Real Estate Loans | Mountain Region
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk	26.80%	28.40%
Commercial Real Estate Loans | Southeast Region
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk	14.20%	15.20%

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FINANCING RECEIVABLES (Activity in Allowance for Credit Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Allowance for credit losses:
Allowance for credit losses at beginning of period	$ 8,805
Reversal of credit losses, net	(1,802)	$ (5,641)
Allowance for credit losses at end of period	4,706		$ 8,805
Commercial Real Estate Loans
Allowance for credit losses:
Allowance for credit losses at beginning of period	8,805	34,310	34,310
Reversal of credit losses, net	(1,802)	$ (5,600)	(21,262)
Charge offs	(2,297)		(4,243)
Allowance for credit losses at end of period	$ 4,706		$ 8,805

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FINANCING RECEIVABLES (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2022 USD ($) Loan Contract Borrower	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($) Loan
Accounts Notes And Loans Receivable [Line Items]
Reversal of credit losses, net	$ (1,802,000)	$ (5,641,000)
Number of defaulted additional loans | Loan			2
Repayment of additional loans			2022-01
Recorded investment	22,000,000.0		$ 30,400,000
Troubled-debt restructurings	$ 0	0
Extension Agreements
Accounts Notes And Loans Receivable [Line Items]
No of extension agreements | Contract	2
Weighted average extension period of contracts	3 months
Principal Forgiveness
Accounts Notes And Loans Receivable [Line Items]
Number of borrowers | Borrower	1
Hotel Loan
Accounts Notes And Loans Receivable [Line Items]
Current expected credit losses (CECL) allowance	$ 0
Retail Loan
Accounts Notes And Loans Receivable [Line Items]
Current expected credit losses (CECL) allowance	0
Whole Loans In Maturity Default
Accounts Notes And Loans Receivable [Line Items]
Number of bank loans | Loan			1
Recorded investment			$ 8,000,000.0
Northeast Region | Hotel Loan
Accounts Notes And Loans Receivable [Line Items]
Principal balance individually evaluated	$ 14,000,000.0
Number of loans individually evaluated | Loan	1
Northeast Region | Retail Loan
Accounts Notes And Loans Receivable [Line Items]
Principal balance individually evaluated	$ 8,000,000.0
Number of loans individually evaluated | Loan	1
Pacific Region | Retail Loan
Accounts Notes And Loans Receivable [Line Items]
Charge offs			2,300,000
Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Reversal of credit losses, net	$ (1,802,000)	$ (5,600,000)	(21,262,000)
Current expected credit losses (CECL) allowance			2,300,000
Charge offs	$ 2,297,000		$ 4,243,000
Number of bank loans | Loan	1		3
Recorded investment	$ 8,000,000.0		$ 27,900,000
Commercial Real Estate Loans | Whole Loans In Maturity Default
Accounts Notes And Loans Receivable [Line Items]
Number of bank loans | Loan	2
Commercial Real Estate Loans | Principal Receivable
Accounts Notes And Loans Receivable [Line Items]
Proceeds from the payoffs of loans receivable	$ 17,600,000
Commercial Real Estate Loans | Whole Loans
Accounts Notes And Loans Receivable [Line Items]
Number of bank loans | Loan	2		3

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FINANCING RECEIVABLES (Credit Risk Profiles and Allowance For Loan Losses) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Schedule Of Financing Receivables [Line Items]
CRE loans	$ 1,896,425	$ 1,882,551
Commercial Real Estate Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	1,896,425	1,882,551
Commercial Real Estate Loans | Whole Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	1,891,725	1,877,851
Commercial Real Estate Loans | Mezzanine loan
Schedule Of Financing Receivables [Line Items]
CRE loans	4,700	4,700
Rating 1 | Commercial Real Estate Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	0	0
Rating 1 | Commercial Real Estate Loans | Whole Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	0	0
Rating 1 | Commercial Real Estate Loans | Mezzanine loan
Schedule Of Financing Receivables [Line Items]
CRE loans	0	0
Rating 2 | Commercial Real Estate Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	1,532,355	1,456,330
Rating 2 | Commercial Real Estate Loans | Whole Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	1,532,355	1,456,330
Rating 2 | Commercial Real Estate Loans | Mezzanine loan
Schedule Of Financing Receivables [Line Items]
CRE loans	0	0
Rating 3 | Commercial Real Estate Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	239,871	273,078
Rating 3 | Commercial Real Estate Loans | Whole Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	239,871	273,078
Rating 3 | Commercial Real Estate Loans | Mezzanine loan
Schedule Of Financing Receivables [Line Items]
CRE loans	0	0
Rating 4 | Commercial Real Estate Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	110,203	128,462
Rating 4 | Commercial Real Estate Loans | Whole Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	105,503	123,762
Rating 4 | Commercial Real Estate Loans | Mezzanine loan
Schedule Of Financing Receivables [Line Items]
CRE loans	4,700	4,700
Rating 5 | Commercial Real Estate Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	13,996	24,681
Rating 5 | Commercial Real Estate Loans | Whole Loans
Schedule Of Financing Receivables [Line Items]
CRE loans	13,996	24,681
Rating 5 | Commercial Real Estate Loans | Mezzanine loan
Schedule Of Financing Receivables [Line Items]
CRE loans	$ 0	$ 0

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FINANCING RECEIVABLES (Credit Risk Profiles and Allowance For Loan Losses) (Parenthetical) (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Recorded investment excluded accrued interest receivable	$ 6.2	$ 6.1

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FINANCING RECEIVABLES (Credit Risk Profiles of CRE Loans by Origination Year at Amortized Costs) (Details) - Commercial Real Estate Loans - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2022	$ 96,131	$ 1,264,591
Loans and receivables by origination year, 2021	1,275,793	175,117
Loans and receivables by origination year, 2020	168,126	242,646
Loans and receivables by origination year, 2019	176,822	171,181
Loans and receivables by origination year, 2018	162,053	0
Loans and receivables by origination year, Prior	17,500	29,016
Loans and receivables by origination year, Total	1,896,425	1,882,551
Whole Loans
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2022	96,131	1,264,591
Loans and receivables by origination year, 2021	1,275,793	175,117
Loans and receivables by origination year, 2020	168,126	242,646
Loans and receivables by origination year, 2019	176,822	166,481
Loans and receivables by origination year, 2018	157,353	0
Loans and receivables by origination year, Prior	17,500	29,016
Loans and receivables by origination year, Total	1,891,725	1,877,851
Whole Loans | Rating 2
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2022	96,131	1,230,810
Loans and receivables by origination year, 2021	1,241,086	150,513
Loans and receivables by origination year, 2020	143,059	55,510
Loans and receivables by origination year, 2019	32,605	19,497
Loans and receivables by origination year, 2018	19,474	0
Loans and receivables by origination year, Prior	0	0
Loans and receivables by origination year, Total	1,532,355	1,456,330
Whole Loans | Rating 3
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2022	0	33,781
Loans and receivables by origination year, 2021	34,707	24,604
Loans and receivables by origination year, 2020	25,067	136,305
Loans and receivables by origination year, 2019	101,756	60,888
Loans and receivables by origination year, 2018	60,841	0
Loans and receivables by origination year, Prior	17,500	17,500
Loans and receivables by origination year, Total	239,871	273,078
Whole Loans | Rating 4
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2022	0	0
Loans and receivables by origination year, 2021	0	0
Loans and receivables by origination year, 2020	0	28,446
Loans and receivables by origination year, 2019	28,465	86,096
Loans and receivables by origination year, 2018	77,038	0
Loans and receivables by origination year, Prior	0	9,220
Loans and receivables by origination year, Total	105,503	123,762
Whole Loans | Rating 5
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2022	0	0
Loans and receivables by origination year, 2021	0	0
Loans and receivables by origination year, 2020	0	22,385
Loans and receivables by origination year, 2019	13,996	0
Loans and receivables by origination year, 2018	0	0
Loans and receivables by origination year, Prior	0	2,296
Loans and receivables by origination year, Total	13,996	24,681
Mezzanine loan | Rating 4
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2022	0	0
Loans and receivables by origination year, 2021	0	0
Loans and receivables by origination year, 2020	0	0
Loans and receivables by origination year, 2019	0	4,700
Loans and receivables by origination year, 2018	4,700	0
Loans and receivables by origination year, Prior	0	0
Loans and receivables by origination year, Total	$ 4,700	$ 4,700

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FINANCING RECEIVABLES (Credit Risk Profiles of CRE Loans by Origination Year at Amortized Costs) (Parenthetical) (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment excluded accrued interest receivable	$ 6.2	$ 6.1

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FINANCING RECEIVABLES (Loan Portfolio Aging Analysis) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	$ 1,896,425	$ 1,882,551
CRE loans	1,896,425	1,882,551
CRE loans	0	19,916
30-59 Days
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
CRE loans	0	0
60-89 Days
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
CRE loans	0	0
Greater than 90 Days
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	8,025	19,916
CRE loans	8,025	19,916
Total Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	8,025	19,916
CRE loans	8,025	19,916
Current
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	1,888,400	1,862,635
CRE loans	1,888,400	1,862,635
Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	1,896,425	1,882,551
CRE loans	1,896,425	1,882,551
Commercial Real Estate Loans | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	1,891,725	1,877,851
CRE loans	1,891,725	1,877,851
CRE loans	0	19,916
Commercial Real Estate Loans | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	4,700	4,700
CRE loans	4,700	4,700
CRE loans	0	0
Commercial Real Estate Loans | 30-59 Days | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
CRE loans	0	0
Commercial Real Estate Loans | 30-59 Days | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
CRE loans	0	0
Commercial Real Estate Loans | 60-89 Days | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
CRE loans	0	0
Commercial Real Estate Loans | 60-89 Days | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
CRE loans	0	0
Commercial Real Estate Loans | Greater than 90 Days | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	8,025	19,916
CRE loans	8,025	19,916
Commercial Real Estate Loans | Greater than 90 Days | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
CRE loans	0	0
Commercial Real Estate Loans | Total Past Due | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	8,025	19,916
CRE loans	8,025	19,916
Commercial Real Estate Loans | Total Past Due | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
CRE loans	0	0
Commercial Real Estate Loans | Current | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	1,883,700	1,857,935
CRE loans	1,883,700	1,857,935
Commercial Real Estate Loans | Current | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	4,700	4,700
CRE loans	$ 4,700	$ 4,700

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FINANCING RECEIVABLES (Loan Portfolio Aging Analysis) (Parenthetical) (Details)	3 Months Ended
	Mar. 31, 2022 USD ($) Loan	Mar. 31, 2021 USD ($) Loan	Dec. 31, 2021 USD ($) Loan
Financing Receivable Recorded Investment Past Due [Line Items]
Interest income	$ 22,676,000	$ 24,749,000
Recorded investment	$ 22,000,000.0		$ 30,400,000
Whole Loans In Maturity Default
Financing Receivable Recorded Investment Past Due [Line Items]
Number of bank loans | Loan			1
Recorded investment			$ 8,000,000.0
Whole Loans In Maturity Default | Greater than 90 Days
Financing Receivable Recorded Investment Past Due [Line Items]
Number of bank loans | Loan	1	1
Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Number of bank loans | Loan	1		3
Recorded investment	$ 8,000,000.0		$ 27,900,000
Recorded investment excluded accrued interest receivable	6,200,000		$ 6,100,000
Commercial Real Estate Loans | Whole Loans In Maturity Default
Financing Receivable Recorded Investment Past Due [Line Items]
Interest income	$ 0	$ 153,000
Number of bank loans | Loan	2

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES (Details)	1 Months Ended	3 Months Ended
	Apr. 30, 2022 USD ($) Property	Mar. 31, 2022 USD ($) Property	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Amortization expense on intangible assets		$ 1,200,000	$ 197,000
Amortization expense on intangible assets during 2022		1,200,000
Amortization expense on intangible assets during 2023		401,000
Amortization expense on intangible assets during 2024		244,000
Amortization expense on intangible assets during 2025		210,000
Amortization expense on intangible assets during 2026		210,000
Ground Lease
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Offsetting amortization and accretion on right of use assets and lease liabilities		$ 12,000	$ 12,000
Investments In Real Estate Equity
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Number of properties acquired | Property		0
Investments in real estate		$ 27,097,000		$ 27,065,000
Investments In Real Estate From Lending Activities
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Number of properties acquired | Property		0
Investments in real estate		$ 34,133,000		$ 34,124,000
Subsequent Event | Investments In Real Estate Equity
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Number of properties acquired | Property	2
Number of properties acquired served as collateral for loan prior to acquisition | Property	1
Investments in real estate	$ 51,600,000
Acquisition price of property served as collateral for loan prior to acquisition	$ 38,600,000

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES (Schedule of Investments in Real Estate and Related Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Investment in Real Estate, Carrying Value	$ 58,782	$ 59,308
Liabilities Assumed, Cost	(3,360)	(3,360)
Liabilities Assumed, Accumulated Depreciation & Amortization	220	131
Liabilities Assumed, Carrying Value	(3,140)	(3,229)
Assets Acquired and Liabilities Assumed, Cost	86,193	86,341
Asset Acquired and Liabilities Assumed, Carrying Value	81,773	83,311
Assets Acquired, Cost	89,553	89,701
Assets Acquired, Accumulated Depreciation & Amortization	(4,640)	(3,161)
Assets Acquired, Carrying Value	84,913	86,540
Investments In Real Estate Equity
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Investment in Real Estate, Cost	27,097	27,065
Investment in Real Estate Accumulated Depreciation & Amortization	(381)	(191)
Investment in Real Estate, Carrying Value	26,716	26,874
Intangible Assets, Cost	1,726	1,726
Intangible Assets, Accumulated Depreciation & Amortization	(1,611)	(806)
Intangible Assets, Carrying Value	115	920
Assets Acquired, Cost	28,823	28,791
Assets Acquired, Accumulated Depreciation & Amortization	(1,992)	(997)
Assets Acquired, Carrying Value	26,831	27,794
Other Liabilities, Cost	(247)	(247)
Other Liabilities, Accumulated Depreciation & Amortization	155	78
Other Liabilities, Carrying Value	(92)	(169)
Investments In Real Estate From Lending Activities
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Right of use Assets, Cost	5,603	5,603
Right of use Assets Accumulated Depreciation & Amortization	(116)	(95)
Right of use Assets, Carrying Value	5,487	5,508
Investment in Real Estate, Cost	34,133	34,124
Investment in Real Estate Accumulated Depreciation & Amortization	(2,067)	(1,689)
Investment in Real Estate, Carrying Value	32,066	32,435
Intangible Assets, Cost	3,337	3,337
Intangible Assets, Accumulated Depreciation & Amortization	(465)	(380)
Intangible Assets, Carrying Value	2,872	2,957
Property Held for Sale, Cost	17,657	17,846
Property Held for Sale, Carrying Value	17,657	17,846
Lease Liabilities, Cost	(3,113)	(3,113)
Lease Liabilities, Accumulated Depreciation & Amortization	65	53
Lease Liabilities, Carrying Value	(3,048)	(3,060)
Assets Acquired, Cost	60,730	60,910
Assets Acquired, Accumulated Depreciation & Amortization	(2,648)	(2,164)
Assets Acquired, Carrying Value	$ 58,082	$ 58,746

XML

INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES (Schedule of Investments in Real Estate and Related Intangible Assets) (Parenthetical) (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Investments In Real Estate Equity
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Investments in real estate	$ 22,400,000	$ 22,400,000
Acquired in-place lease intangible asset	59,000	819,000
Leasing commission intangible asset	55,000	101,000
Intangible assets	115,000	920,000
Investments In Real Estate From Lending Activities
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Building renovation assets	126,000	129,000
Ground leases	3,000,000.0	3,100,000
Below market lease intangible asset	2,400,000	2,400,000
Intangible assets	2,872,000	2,957,000
Franchise Agreement | Investments In Real Estate From Lending Activities
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Intangible assets	2,600,000	2,600,000
Customer Lists | Investments In Real Estate From Lending Activities
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Intangible assets	$ 269,000	$ 311,000

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LEASES (Details) - Office Space and Office Equipment	3 Months Ended
	Mar. 31, 2022
Minimum
Lessee Lease Description [Line Items]
Operating lease expiration date	2024-01
Maximum
Lessee Lease Description [Line Items]
Operating lease expiration date	2028-07

XML

LEASES (Summary of Operating Leases) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Right of use assets	$ 431	$ 443
Lease liabilities	$ (466)	$ (477)
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Other Liabilities	Other Liabilities
Weighted average remaining lease term:	6 years 3 months 18 days	6 years 7 months 6 days
Weighted average discount rate:	10.65%	10.65%

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LEASES (Summary of Operating Lease Costs and Cash Payments) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Lease Cost:
Operating lease cost	$ 24
Other Information:
Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases	$ 23

XML

LEASES (Summary of Operating Leases by Maturity Date Based on Undiscounted Cash Flows) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Leases [Abstract]
2022	$ 97
2023	99
2024	99
2025	102
2026	104
Thereafter	170
Subtotal	671
Less: impact of discount	(205)
Total	$ 466	$ 477
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Other Liabilities	Other Liabilities

XML

INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Details)	3 Months Ended
	Mar. 31, 2021 USD ($) position	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Schedule Of Trading Securities And Other Trading Assets [Line Items]
Investment securities, available-for-sale		$ 0	$ 0
Proceeds from sale of investment securities available-for-sale	$ 2,958,000
Commercial Mortgage Backed Securities
Schedule Of Trading Securities And Other Trading Assets [Line Items]
Positions Sold/Redeemed | position	2
Proceeds from sale of investment securities available-for-sale	$ 3,000,000.0
Realized gain	$ 878,000

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INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Schedule Of Equity Method Investments [Line Items]
Investments in unconsolidated entities	$ 1,548,000	$ 1,548,000
VIE, Not Primary Beneficiary | Investment in RCT I and II
Schedule Of Equity Method Investments [Line Items]
Ownership percentage in VIE	100.00%	100.00%
Investments in unconsolidated entities	$ 1,500,000	$ 1,500,000
Dividends from investments in unconsolidated entities	$ 16,000	$ 16,000
VIE, Not Primary Beneficiary | Interest in RCT I
Schedule Of Equity Method Investments [Line Items]
Percentage of value of trusts owned	3.00%	3.00%
VIE, Not Primary Beneficiary | Interest in RCT II
Schedule Of Equity Method Investments [Line Items]
Percentage of value of trusts owned	3.00%	3.00%

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BORROWINGS (Schedule of Debt) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Principal Outstanding	$ 1,648,016	$ 1,840,052
Unamortized Issuance Costs and Discounts	21,812	25,628
Outstanding Borrowings	$ 1,626,204	$ 1,814,424
Weighted Average Borrowing Rate	2.60%	2.44%
Weighted Average Remaining Maturity	12 years	12 years 8 months 12 days
Value of Collateral	$ 1,866,226	$ 2,149,085
XAN 2020-RSO8 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding		142,375
Unamortized Issuance Costs and Discounts		577
Outstanding Borrowings		$ 141,798
Weighted Average Borrowing Rate		2.18%
Weighted Average Remaining Maturity		13 years 2 months 12 days
Value of Collateral		$ 229,263
XAN 2020-RSO9 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding		94,814
Unamortized Issuance Costs and Discounts		489
Outstanding Borrowings		$ 94,325
Weighted Average Borrowing Rate		4.25%
Weighted Average Remaining Maturity		15 years 3 months 18 days
Value of Collateral		$ 144,361
ACR 2021-FL1 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding	675,223	675,223
Unamortized Issuance Costs and Discounts	5,014	5,410
Outstanding Borrowings	$ 670,209	$ 669,813
Weighted Average Borrowing Rate	1.93%	1.60%
Weighted Average Remaining Maturity	14 years 2 months 12 days	14 years 6 months
Value of Collateral	$ 802,643	$ 802,643
ACR 2021-FL2 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding	567,000	567,000
Unamortized Issuance Costs and Discounts	6,056	6,437
Outstanding Borrowings	$ 560,944	$ 560,563
Weighted Average Borrowing Rate	2.24%	1.90%
Weighted Average Remaining Maturity	14 years 9 months 18 days	15 years 1 month 6 days
Value of Collateral	$ 700,000	$ 700,000
Senior Secured Financing Facility
Debt Instrument [Line Items]
Unamortized Issuance Costs and Discounts	3,280	3,432
Outstanding Borrowings, Unamortized Issuance Costs and Discounts	$ (3,280)	$ (3,432)
Weighted Average Borrowing Rate	5.75%	5.75%
Weighted Average Remaining Maturity	5 years 3 months 18 days	6 years 2 months 12 days
Value of Collateral	$ 153,171	$ 170,791
4.5% Convertible Senior Notes
Debt Instrument [Line Items]
Principal Outstanding	48,175	88,014
Unamortized Issuance Costs and Discounts	528	1,583
Outstanding Borrowings	$ 47,647	$ 86,431
Weighted Average Borrowing Rate	4.50%	4.50%
Weighted Average Remaining Maturity	137 days	227 days
Value of Collateral	$ 0	$ 0
5.75% Senior Unsecured Notes
Debt Instrument [Line Items]
Principal Outstanding	150,000	150,000
Unamortized Issuance Costs and Discounts	3,070	3,393
Outstanding Borrowings	$ 146,930	$ 146,607
Weighted Average Borrowing Rate	5.75%	5.75%
Weighted Average Remaining Maturity	4 years 4 months 24 days	4 years 7 months 6 days
CRE - Term Warehouse Financing Facilities
Debt Instrument [Line Items]
Principal Outstanding	$ 156,070	$ 71,078
Unamortized Issuance Costs and Discounts	3,864	4,307
Outstanding Borrowings	$ 152,206	$ 66,771
Weighted Average Borrowing Rate	2.57%	2.27%
Weighted Average Remaining Maturity	2 years 7 months 6 days	2 years 9 months 18 days
Value of Collateral	$ 210,412	$ 102,027
Unsecured Junior Subordinated Debentures
Debt Instrument [Line Items]
Principal Outstanding	51,548	51,548
Unamortized Issuance Costs and Discounts		0
Outstanding Borrowings	$ 51,548	$ 51,548
Weighted Average Borrowing Rate	4.60%	4.12%
Weighted Average Remaining Maturity	14 years 4 months 24 days	14 years 8 months 12 days
Value of Collateral		$ 0

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BORROWINGS (Schedule of Debt) (Parenthetical) (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Aug. 31, 2017
Debt Instrument [Line Items]
Accrued interest payable	$ 2,598,000		$ 5,937,000
Unamortized issuance costs and discounts	21,812,000		25,628,000
Outstanding Borrowings	1,626,204,000		$ 1,814,424,000
Interest income	$ 22,657,000	$ 24,575,000
4.5% Convertible Senior Notes
Debt Instrument [Line Items]
Interest rate, stated percentage	4.50%		4.50%	4.50%
Unamortized issuance costs and discounts	$ 528,000		$ 1,583,000
Outstanding Borrowings	$ 47,647,000		$ 86,431,000
5.75% Senior Unsecured Notes
Debt Instrument [Line Items]
Interest rate, stated percentage	5.75%		5.75%
Unamortized issuance costs and discounts	$ 3,070,000		$ 3,393,000
Outstanding Borrowings	146,930,000		146,607,000
CRE - Term Warehouse Financing Facilities
Debt Instrument [Line Items]
Accrued interest payable	134,000		58,000
Unamortized issuance costs and discounts	3,864,000		4,307,000
Outstanding Borrowings	152,206,000		66,771,000
12.00% Senior Unsecured Notes
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	128,000		306,000
Outstanding Borrowings	0		0
ACR 2021-FL1 Senior Notes
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	5,014,000		5,410,000
Outstanding Borrowings	$ 670,209,000		669,813,000
Exit fees			228,000
Interest income			$ 730,000

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BORROWINGS (Securitization) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
ACR 2021-FL1 Senior Notes
Debt Instrument [Line Items]
Closing Date	2021-05
Maturity Date	2036-06
End of Designated Principal Reinvestment Period	2023-05
Total Note Paydowns Received from Closing Date through March 31, 2022	$ 0
ACR 2021-FL2 Senior Notes
Debt Instrument [Line Items]
Closing Date	2021-12
Maturity Date	2037-01
End of Designated Principal Reinvestment Period	2023-12
Total Note Paydowns Received from Closing Date through March 31, 2022	$ 0

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BORROWINGS (XAN 2020-RSO8) (Details) $ in Millions	Mar. 31, 2020 USD ($)
XAN 2020-RSO8 Senior Notes
Debt Instrument [Line Items]
Closing transaction amount	$ 522.6

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BORROWINGS (XAN 2020-RSO9) (Details) $ in Millions	Sep. 30, 2020 USD ($)
XAN 2020-RSO9 Senior Notes
Debt Instrument [Line Items]
Closing transaction amount	$ 297.0

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BORROWINGS (4.50% Convertible Senior Notes) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Aug. 31, 2017
Debt Instrument [Line Items]
Face amount of debt issued	$ 148,926,000		$ 63,339,000
Loss on extinguishment of debt	(460,000)
Interest expense	$ 14,907,000	$ 13,724,000
4.5% Convertible Senior Notes
Debt Instrument [Line Items]
Face amount of debt issued				$ 143,800,000
Debt instrument, interest rate, stated percentage	4.50%		4.50%	4.50%
Repurchase of convertible senior notes	$ 39,800,000		$ 55,700,000
Charge to earnings	574,000
Loss on extinguishment of debt	460,000
Interest expense	$ 114,000
Closing price of common stock	$ 13.41

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BORROWINGS (Schedule of Convertible Senior Notes) (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) $ / shares	Dec. 31, 2021 USD ($)	Mar. 31, 2021	Aug. 31, 2017
Debt Instrument [Line Items]
Principal Outstanding	$ 1,648,016	$ 1,840,052
4.5% Convertible Senior Notes
Debt Instrument [Line Items]
Principal Outstanding	$ 48,175	$ 88,014
Borrowing Rate	4.50%	4.50%		4.50%
Effective Rate	7.43%		7.43%
Conversion Rate	27.7222
Conversion Price | $ / shares	$ 36.06
Maturity Date	Aug. 15, 2022

XML

BORROWINGS (Schedule of Convertible Senior Notes) (Parenthetical) (Details) - 4.5% Convertible Senior Notes - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Aug. 31, 2017
Debt Instrument [Line Items]
Effective interest rate	7.43%		7.43%
Conversion principal amount				$ 1,000
Debt instrument convertible distribution threshold (in dollars per share)	$ 0.30
Borrowing Rate	4.50%	4.50%		4.50%

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BORROWINGS (12.00% Senior Unsecured Notes Due 2027) (Details) - USD ($)			1 Months Ended	3 Months Ended
	Aug. 18, 2021	Jul. 31, 2020	Jan. 31, 2022	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Debt Instrument [Line Items]
Face amount of debt issued				$ 148,926,000		$ 63,339,000
Loss on extinguishment of debt				(460,000)
Interest expense				$ 14,907,000	$ 13,724,000
Note and Warrant Purchase Agreement | Oaktree and MassMutual
Debt Instrument [Line Items]
Warrants to purchase additional shares of common stock		699,992
Date from which remaining unissued warrants can be issued		Jul. 31, 2022
Warrants expiration term		7 years
12.00% Senior Unsecured Notes | Note and Warrant Purchase Agreement | Oaktree and MassMutual
Debt Instrument [Line Items]
Debt instrument, maximum borrowing capacity		$ 125,000,000.0
Debt instrument, interest rate, stated percentage		12.00%
Debt instrument, pay-in-kind interest rate maximum percentage		3.25%
Face amount of debt issued	$ 50,000,000.0		$ 75,000,000.0
Debt instrument, redemption amount	55,300,000
Debt instrument redemption interest amount	329,000
Debt instrument make-whole amount	5,000,000.0
Debt instrument, charge to earnings in connection with redemption	8,000,000.0
Loss on extinguishment of debt	7,800,000
Debt instrument net make-whole amount	5,000,000.0
Debt instrument, acceleration of remaining market discount	2,800,000
Interest expense	$ 218,000
Warrants to purchase additional shares of common stock			699,992
Date from which remaining unissued warrants can be issued			Jul. 31, 2022
Warrants expiration term			7 years
12.00% Senior Unsecured Notes | Note and Warrant Purchase Agreement | Oaktree
Debt Instrument [Line Items]
Face amount of debt issued		$ 42,000,000.0
12.00% Senior Unsecured Notes | Note and Warrant Purchase Agreement | MassMutual
Debt Instrument [Line Items]
Face amount of debt issued		$ 8,000,000.0

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BORROWINGS (Senior Secured Financing Facility and Term Warehouse Financing Facilities) (Details) $ in Thousands	Mar. 31, 2022 USD ($) Loan	Dec. 31, 2021 USD ($) Loan
Debt Instrument [Line Items]
Outstanding Borrowings	$ 148,926	$ 63,339
Value of Collateral	$ 363,583	$ 272,818
Weighted Average Interest Rate	2.60%	2.44%
Senior Secured Financing Facility | Massachusetts Mutual Life Insurance Company
Debt Instrument [Line Items]
Outstanding Borrowings, Unamortized Issuance Costs and Discounts	$ (3,280)	$ (3,432)
Value of Collateral	$ 153,171	$ 170,791
Number of Positions as Collateral | Loan	7	9
Weighted Average Interest Rate	5.75%	5.75%
CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Debt Instrument [Line Items]
Outstanding Borrowings	$ 45,196	$ 18,875
Value of Collateral	$ 69,709	$ 37,167
Number of Positions as Collateral | Loan	5	3
Weighted Average Interest Rate	2.75%	2.85%
CRE - Term Warehouse Financing Facilities | Morgan Stanley Mortgage Capital Holdings LLC
Debt Instrument [Line Items]
Outstanding Borrowings	$ 107,010	$ 47,896
Value of Collateral	$ 140,703	$ 64,860
Number of Positions as Collateral | Loan	8	3
Weighted Average Interest Rate	2.50%	2.03%

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BORROWINGS (Senior Secured Financing Facility and Term Warehouse Financing Facilities (Parenthetical) (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	$ 21,812,000	$ 25,628,000
Senior Secured Financing Facility | Massachusetts Mutual Life Insurance Company
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	3,300,000	3,400,000
CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	1,600,000	1,800,000
CRE - Term Warehouse Financing Facilities | Morgan Stanley Mortgage Capital Holdings LLC
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	2,000,000.0	2,200,000
Interest Receivable | JP Morgan Chase Bank, N.A.
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	$ 250,000	$ 356,000

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BORROWINGS (Amount at Risk Under Warehouse Financing Facilities) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	12 years	12 years 8 months 12 days
Weighted Average Interest Rate	2.60%	2.44%
CRE - Term Warehouse Financing Facilities
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	2 years 7 months 6 days	2 years 9 months 18 days
Weighted Average Interest Rate	2.57%	2.27%
CRE - Term Warehouse Financing Facilities | Morgan Stanley Mortgage Capital Holdings LLC
Debt Instrument [Line Items]
Amount at Risk	$ 32,174
Weighted Average Remaining Maturity	2 years 7 months 6 days
Weighted Average Interest Rate	2.50%
CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Debt Instrument [Line Items]
Amount at Risk	$ 22,929
Weighted Average Remaining Maturity	2 years 7 months 6 days
Weighted Average Interest Rate	2.75%

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BORROWINGS (Contractual Commitments) (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Debt Instrument [Line Items]
Total	$ 1,648,016
2022	48,175
2023	0
2024	156,070
2025	0
2026 and Thereafter	1,443,771
CRE securitizations
Debt Instrument [Line Items]
Total	1,242,223
2022	0
2023	0
2024	0
2025	0
2026 and Thereafter	1,242,223
Unsecured Junior Subordinated Debentures
Debt Instrument [Line Items]
Total	51,548
2022	0
2023	0
2024	0
2025	0
2026 and Thereafter	51,548
Convertible Debt | 4.5% Convertible Senior Notes
Debt Instrument [Line Items]
Total	48,175
2022	48,175
2023	0
2024	0
2025	0
2026 and Thereafter	0
5.75% Senior Unsecured Notes
Debt Instrument [Line Items]
Total	150,000
2022	0
2023	0
2024	0
2025	0
2026 and Thereafter	150,000
CRE - Term Warehouse Financing Facilities
Debt Instrument [Line Items]
Total	156,070
2022	0
2023	0
2024	156,070
2025	0
2026 and Thereafter	$ 0

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SHARE ISSUANCE AND REPURCHASE (Details) - USD ($)		2 Months Ended	3 Months Ended		12 Months Ended
	Jul. 31, 2020	Jun. 30, 2021	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Nov. 30, 2021	Nov. 30, 2020
Class Of Stock [Line Items]
Proceeds from issuance of preferred stock, net			$ (37,000)
Shares repurchased during period, value			$ 3,900,000	$ 9,500,000
Shares repurchased during period, shares			314,552	744,664
Equity and Debt Securities Repurchase Program
Class Of Stock [Line Items]
Stock repurchase program, authorized amount (up to)						$ 20,000,000.0	$ 20,000,000.0
Stock repurchase program, remaining authorized repurchase amount			$ 12,400,000
Note and Warrant Purchase Agreement | Oaktree and MassMutual
Class Of Stock [Line Items]
Warrant Exercise price	$ 0.03
Warrants recorded in additional paid-in capital, fair value	$ 3,100,000
Date from which remaining unissued warrants can be issued	Jul. 31, 2022
Warrants to purchase additional shares of common stock	699,992
Warrants expiration term	7 years
Note and Warrant Purchase Agreement | Oaktree
Class Of Stock [Line Items]
Warrants issued to purchase common stock	391,995
Purchase price of common stock for warrants issued	$ 42,000,000.0
Note and Warrant Purchase Agreement | MassMutual
Class Of Stock [Line Items]
Warrants issued to purchase common stock	74,666
Purchase price of common stock for warrants issued	$ 8,000,000.0
Note and Warrant Purchase Agreement | Maximum | Oaktree and MassMutual
Class Of Stock [Line Items]
Aggregate purchase of common stock warrants	1,166,653
7.875% Series D Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares issued (in shares)		4,600,000	4,607,857		4,607,857
Preferred stock, coupon authorized		7.875%	7.875%		7.875%
Offering price		$ 25.00
Proceeds from issuance of preferred stock, net		$ 110,400,000
Underwriting discounts and other offering expenses		$ 4,600,000
Preferred stock, liquidation preference (in dollars per share)			$ 25.00		$ 25.00
Preferred stock, shares outstanding (in shares)			4,607,857		4,607,857
Series D Preferred Stock | Equity Distribution Agreement
Class Of Stock [Line Items]
Preferred stock, shares issued (in shares)			0
Series D Preferred Stock | Equity Distribution Agreement | Maximum | JonesTrading Institutional Services LLC
Class Of Stock [Line Items]
Number of shares that may be issued or sold from time to time under agreement			2,200,000
Commission fee payable of gross proceeds from sale of stock in percentage			3.00%
8.625% Series C Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares issued (in shares)			4,800,000		4,800,000
Preferred stock, coupon authorized			8.625%		8.625%
Preferred stock, liquidation preference (in dollars per share)			$ 25.00		$ 25.00
Preferred stock, shares outstanding (in shares)			4,800,000		4,800,000
Preferred stock, weighted average issuance price (in dollars per share)			$ 25.00
8.625% Series C Preferred Stock | London Interbank Offered Rate (LIBOR)
Class Of Stock [Line Items]
Dividend payment rate, variable, basis spread on variable rate			5.927%

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SHARE-BASED COMPENSATION (Details) - USD ($)			1 Months Ended	3 Months Ended
	May 06, 2022	May 31, 2021	Jun. 30, 2021	Mar. 31, 2022	Mar. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized compensation costs related to unvested restricted stock				$ 3,400,000
Cost is expected to be recognized over a weighted average period				3 years 2 months 12 days
Manager Pursuant To Management Agreement
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cash awards, percentage (up to)				75.00%
Common stock awards, percentage (at least)				25.00%
Incentive management fee pursuant to the management agreement				$ 0	$ 0
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Recognized stock-based compensation expense				$ 744,000	$ 19,000
Restricted shares issued				0
Restricted Stock | Manager
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted shares issued				0
Restricted Stock | Manager | Subsequent Event
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted shares issued	299,999
Vesting period	4 years
Vesting percentage	25.00%
Restricted Stock | Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted shares issued				0
Restricted Stock | Directors | Subsequent Event
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted shares issued	33,334
Vesting period	4 years
Vesting percentage	25.00%
2007 Omnibus Equity Compensation Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of share authorized for issue (in shares)				1,100,000
Share based compensation expiration period		2029-06	2031-06
Common shares granted				1,700,817

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SHARE-BASED COMPENSATION (Common Stock Activity) (Details) - Restricted Stock	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Restricted common stock transactions
Unvested shares, beginning of period (in shares)	333,329
Issued (shares)	0
Vested (shares)	0
Forfeited (shares)	0
Unvested shares, end of period (in shares)	333,329
Weighted-Average Grant-Date Fair Value, beginning of period (in shares) | $ / shares	$ 17.39
Weighted-Average Grant-Date Fair Value, Issued | $ / shares	0
Weighted-Average Grant-Date Fair Value, Vested | $ / shares	0
Weighted-Average Grant-Date Fair Value, Forfeited | $ / shares	0
Weighted-Average Grant-Date Fair Value, end of period (in shares) | $ / shares	$ 17.39
Manager
Restricted common stock transactions
Unvested shares, beginning of period (in shares)	299,999
Issued (shares)	0
Vested (shares)	0
Forfeited (shares)	0
Unvested shares, end of period (in shares)	299,999
Directors
Restricted common stock transactions
Unvested shares, beginning of period (in shares)	33,330
Issued (shares)	0
Vested (shares)	0
Forfeited (shares)	0
Unvested shares, end of period (in shares)	33,330

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SHARE-BASED COMPENSATION (Common Stock Expected to Vest) (Details) - Restricted Stock - shares	Mar. 31, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
2022	83,331
2023	83,331
2024	83,331
2025	83,336
Total	333,329	333,329

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share [Abstract]
Net income	$ 2,084	$ 13,056
Net income allocated to preferred shares	(4,855)	(2,588)
NET (LOSS) INCOME ALLOCABLE TO COMMON SHARES	$ (2,771)	$ 10,468
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding - basic	8,630,316	9,729,463
Weighted average number of warrants outstanding	466,661	466,661
Total weighted average number of common shares outstanding - basic	9,096,977	10,196,124
Effect of dilutive securities - unvested restricted stock	0	9,245
Weighted average number of common shares outstanding - diluted	9,096,977	10,205,369
Net (loss) income per common share - basic	$ (0.30)	$ 1.03
Net (loss) income per common share - diluted	$ (0.30)	$ 1.03

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DISTRIBUTIONS (Details) - $ / shares	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021
Class Of Stock [Line Items]
REIT required taxable income distribution, percentage (at least)	90.00%
REIT taxable income distribution required for exempt federal income taxes, percentage	100.00%
Common Stock
Class Of Stock [Line Items]
Dividend per share (in dollars per share)	$ 0				$ 0
Series C Preferred Stock
Class Of Stock [Line Items]
Dividend per share (in dollars per share)	0.5390625	$ 0.5390625	$ 0.5390625	$ 0.5390625	$ 0.5390625
Series D Preferred Stock
Class Of Stock [Line Items]
Dividend per share (in dollars per share)	$ 0.4921875	$ 0.4921875	$ 0.4921875	$ 0.3773440

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DISTRIBUTIONS (Distributions Declared) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021
Series C Preferred Stock
Class Of Stock [Line Items]
Date Paid	May 02, 2022	Jan. 31, 2022	Nov. 01, 2021	Jul. 30, 2021	Apr. 30, 2021
Total Distributions Paid	$ 2,588	$ 2,588	$ 2,588	$ 2,588	$ 2,588
Distributions Per Share	$ 0.5390625	$ 0.5390625	$ 0.5390625	$ 0.5390625	$ 0.5390625
Series D Preferred Stock
Class Of Stock [Line Items]
Date Paid	May 02, 2022	Jan. 31, 2022	Nov. 01, 2021	Jul. 30, 2021
Total Distributions Paid	$ 2,268	$ 2,268	$ 2,264	$ 1,736
Distributions Per Share	$ 0.4921875	$ 0.4921875	$ 0.4921875	$ 0.3773440

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Accumulated Other Comprehensive Loss [Roll Forward]
Beginning balance	$ 448,195
Ending balance	442,702
Net Unrealized Loss on Derivatives
Accumulated Other Comprehensive Loss [Roll Forward]
Beginning balance	(8,127)
Amounts reclassified from accumulated other comprehensive loss	456
Ending balance	$ (7,671)

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RELATED PARTY TRANSACTIONS (Relationship with ACRES Capital Corp and Certain of its Subsidiaries) (Details)			3 Months Ended		12 Months Ended
	May 06, 2022 shares	Jul. 31, 2020 USD ($) extension	Mar. 31, 2022 USD ($) entity shares	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($) shares
Related Party Transaction [Line Items]
Base management fees paid by the Company			$ 1,682,000	$ 1,326,000
General and administrative			3,457,000	3,153,000
Interest income			22,676,000	24,749,000
Accrued interest receivable			6,282,000		$ 6,112,000
Restricted Stock | Manager | Subsequent Event
Related Party Transaction [Line Items]
Shares of common stock vest percentage	25.00%
Vest in installments	4 years
Manager Pursuant To Management Agreement | ACRES Commercial Realty Corp
Related Party Transaction [Line Items]
Base management fees paid by the Company			1,700,000	1,300,000
Total indebtedness			557,000		561,000
Incentive compensation			0	0
Incentive compensation payable and Servicing fees payable			0		0
General and administrative			2,000,000.0	1,200,000
Manager Pursuant To Management Agreement | ACRES Commercial Realty Corp | Other Liabilities
Related Party Transaction [Line Items]
Total indebtedness			$ 317,000		1,200,000
ACRES Capital Corp
Related Party Transaction [Line Items]
Number of securitization entities | entity			2
ACRES Capital Corp | XAN 2020-RSO9 Senior Notes
Related Party Transaction [Line Items]
Portfolio servicing fees			$ 0	0
Special servicing fees			0	0
ACRES Capital Corp | ACRES Commercial Realty Corp | Loan Evidenced by Promissory Note
Related Party Transaction [Line Items]
Related party transaction, loan amount		$ 12,000,000.0
Related party transaction, interest rate		3.00%
Related party transaction, monthly amortization payment		$ 25,000
Related party debt, maturity month and year		2026-07
Number of options to extend | extension		2
Related party debt, extension term		1 year
Related party debt, percentage of extension fee		0.50%
Principal balance			11,500,000		11,600,000
Accrued interest receivable			30,000		$ 0
ACRES Capital Corp | ACRES Commercial Realty Corp | Loan Evidenced by Promissory Note | Other Income (Expense)
Related Party Transaction [Line Items]
Interest income			87,000	$ 89,000
DevCo
Related Party Transaction [Line Items]
Fees payments			$ 0
DevCo | Minimum
Related Party Transaction [Line Items]
Market rate for fees			1.25%
DevCo | Maximum
Related Party Transaction [Line Items]
Market rate for fees			1.50%
ACRES Share Holdings, LLC
Related Party Transaction [Line Items]
Number of share authorized for issue (in shares) | shares			1,100,000
Common shares granted | shares					299,999
Shares of common stock vest percentage					25.00%
Vest in installments					4 years
Shares of common stock issued | shares			0
ACRES Share Holdings, LLC | Restricted Stock | Manager | Subsequent Event
Related Party Transaction [Line Items]
Shares of common stock vest percentage	25.00%
Vest in installments	4 years
Shares of common stock issued | shares	299,999

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial instruments carried at fair value	$ 0	$ 0
Mezzanine loan | Expected Future Cash Flows | Measurement Input, Discount Rate | VIE, Not Primary Beneficiary
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	0.1000
Senior Secured Financing Facility
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Borrowings outstanding	$ 0	$ 0
Senior Secured Financing Facility | Measurement Input, Discount Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	0.0575
Minimum | Level 3 | Loans Pledged as Collateral | Expected Future Cash Flows
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans receivable, interest rate, stated percentage	3.19%	3.01%
Maximum | Level 3 | Loans Pledged as Collateral | Expected Future Cash Flows
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans receivable, interest rate, stated percentage	9.00%	9.00%
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial instruments carried at fair value	$ 0	$ 0

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value, by Balance Sheet Grouping) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	$ 1,891,719	$ 1,873,746
Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party	0	0
Senior notes in CRE securitizations	0	0
Warehouse financing facilities	0	0
Junior subordinated notes	0	0
Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1) | CRE whole loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	0	0
Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1) | Mezzanine loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	0	0
Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1) | 4.50% Convertible Senior Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
4.50% Convertible Senior Notes	0	0
Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1) | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Senior Unsecured Notes	0	0
Significant Other Observable Inputs (Level 2)
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party	0	0
Senior notes in CRE securitizations	0	0
Warehouse financing facilities	0	0
Junior subordinated notes	0	0
Significant Other Observable Inputs (Level 2) | CRE whole loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	0	0
Significant Other Observable Inputs (Level 2) | Mezzanine loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	0	0
Significant Other Observable Inputs (Level 2) | 4.50% Convertible Senior Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
4.50% Convertible Senior Notes	0	0
Significant Other Observable Inputs (Level 2) | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Senior Unsecured Notes	0	0
Significant Unobservable Inputs (Level 3)
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party	10,004	10,407
Senior notes in CRE securitizations	1,223,179	1,473,893
Warehouse financing facilities	156,070	68,905
Junior subordinated notes	39,999	41,424
Significant Unobservable Inputs (Level 3) | CRE whole loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	1,904,974	1,889,499
Significant Unobservable Inputs (Level 3) | Mezzanine loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	4,700	4,700
Significant Unobservable Inputs (Level 3) | 4.50% Convertible Senior Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
4.50% Convertible Senior Notes	48,175	87,873
Significant Unobservable Inputs (Level 3) | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Senior Unsecured Notes	140,340	148,125
Carrying Value
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party	11,525	11,575
Senior notes in CRE securitizations	1,231,153	1,466,499
Warehouse financing facilities	152,206	66,771
Junior subordinated notes	51,548	51,548
Carrying Value | CRE whole loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	1,887,255	1,869,301
Carrying Value | Mezzanine loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	4,464	4,445
Carrying Value | 4.50% Convertible Senior Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
4.50% Convertible Senior Notes	47,647	86,431
Carrying Value | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Senior Unsecured Notes	146,930	146,607
Fair Value
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party	10,004	10,407
Senior notes in CRE securitizations	1,223,179	1,473,893
Warehouse financing facilities	156,070	68,905
Junior subordinated notes	39,999	41,424
Fair Value | CRE whole loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	1,904,974	1,889,499
Fair Value | Mezzanine loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables	4,700	4,700
Fair Value | 4.50% Convertible Senior Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
4.50% Convertible Senior Notes	48,175	87,873
Fair Value | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Senior Unsecured Notes	$ 140,340	$ 148,125

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value, by Balance Sheet Grouping) (Parenthetical) (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Unamortized issuance costs and discounts	$ 21,812,000	$ 25,628,000
Outstanding Borrowings	1,626,204,000	1,814,424,000
12.00% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Unamortized issuance costs and discounts	128,000	307,000
Outstanding Borrowings	$ 0	$ 0

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MARKET RISK AND DERIVATIVE INSTRUMENTS (Details) - Terminated interest rate swap	1 Months Ended	3 Months Ended		12 Months Ended
	Apr. 30, 2020 USD ($)	Mar. 31, 2022 USD ($) derivative	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)
Derivatives, Fair Value [Line Items]
Realized loss on derivatives, net	$ (11,800,000)
Gain (loss) on derivatives		$ (8,000,000.0)		$ (8,500,000)
Amortization expense reported in interest expense		479,000	$ 479,000
Unrealized gains (loss) on derivatives, net		$ 324,000		$ 347,000
Number of hedges terminated | derivative		2
Interest expense to fully amortize		$ 23,000	$ 23,000

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MARKET RISK AND DERIVATIVE INSTRUMENTS (Fair Value and Classification of Derivatives) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Interest rate swaps | Interest expense
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)	$ (456)	$ (456)

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OFFSETTING OF FINANCIAL LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Warehouse financing facilities
Gross Amounts of Recognized Liabilities	$ 152,206	$ 66,771
Gross Amounts Offset on the Consolidated Balance Sheets	0	0
Net Amounts of Liabilities Included on the Consolidated Balance Sheets	152,206	66,771
Gross Amounts Not Offset on the Consolidated Balance Sheets- Financial Instruments	152,206	66,771
Gross Amounts Not Offset on the Consolidated Balance Sheets- Cash Collateral Pledged	0	0
Net Amount	0	0
Fair value of securities pledged against term warehouse financing facilities	$ 210,400	$ 102,000

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Loss Contingencies [Line Items]
Estimated litigation liability	$ 0	$ 0
Commercial Real Estate Loans | CRE whole loans
Loss Contingencies [Line Items]
Loans held for investment, unfunded loan commitments	145,500,000	157,600,000
Indemnification Agreement
Loss Contingencies [Line Items]
Estimated litigation liability	1,300,000	1,300,000
PCM
Loss Contingencies [Line Items]
Outstanding demands to indemnify purchaser of residential mortgage loans	3,300,000	3,300,000
PCM | Indemnification Agreement
Loss Contingencies [Line Items]
Outstanding litigation demands	$ 0	$ 0