Risk Factors Update Summary

• Declining real estate valuations and impairment charges may adversely affect earnings and financial condition. This resulted in net impairment losses of $89.5 million in 2023, significantly higher than $2.4 million in 2022.
• The accrual of dividends on preferred stock at a floating rate could adversely affect cash distributions. This change may impact the ability to make cash distributions to stockholders.
• The transition from LIBOR to SOFR may adversely impact borrowings, operations, cash flows, and assets. This transition could affect the value of investments in Series D Preferred Stock and Series E Preferred Stock.
• Interest rate changes may reduce economic activity and impact asset values. Higher interest rates could lead to fair value declines and yields below market rates, affecting the fair value of assets.
• Changes in market values of assets may reduce earnings and book value. Market value fluctuations could impact securities and constrain the investment portfolio diversification criteria.
• Investments in multi-family properties may be affected by various factors. Risks include borrower repayment ability, regional rental rates, and interest rate increases, impacting the ability to repay loans.
• The transition from LIBOR to SOFR may impact the cost of capital. This change could affect results of operations, cash flows, and the market value and liquidity of investments.