NYSE: PMT

•
We are externally managed by Pennymac Capital Management, LLC (“PCM” or our “Manager”), a wholly-owned subsidiary of PFSI and an investment adviser registered with the United States Securities and Exchange Commission (“SEC”) that specializes in, and focuses on, U.S. mortgage assets.

•
Our loan production and servicing activities (as described below) are performed on our behalf by another wholly-owned PFSI subsidiary, PennyMac Loan Services, LLC (“PLS” or our “Servicer”).

Our objective is to provide attractive risk-adjusted returns to our investors over the long-term, primarily through dividends and secondarily through capital appreciation. A significant portion of our investment portfolio is comprised of mortgage-related assets that we have created through our correspondent production activities, including mortgage servicing rights (“MSRs”), subordinate and senior mortgage-backed securities (“MBS”), and credit risk transfer (“CRT”) arrangements, which absorb credit losses on certain of the loans we have sold. We also invest in Agency and senior non-Agency MBS, subordinate MBS, interest-only ("IO"), principal-only ("PO") stripped MBS and Agency floating rate collateralized mortgage obligations ("CMOs").

A significant portion of our business involves Government-Sponsored Enterprises ("GSEs"), specifically the Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal National Mortgage Association ("Fannie Mae"). Freddie Mac and Fannie Mae are each referred to as an “Agency” and, collectively as the "Agencies".

We operate our business in three segments: credit sensitive strategies, interest rate sensitive strategies and correspondent production. Non-segment activities are included in our corporate operations.

Our segment and corporate activities are described below.

•
The credit sensitive strategies segment represents our investments in CRT arrangements referencing loans from our own correspondent production and subordinate and credit-linked MBS.

•
The interest rate sensitive strategies segment represents our investments in MSRs, Agency MBS and structured products (including IO and PO MBS and floating rate CMOs), senior non-Agency MBS and the related interest rate hedging activities.

•
The correspondent production segment represents our operations aimed at serving as an intermediary between lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality loans either directly or in the form of MBS, using the services of PCM and PLS.

We primarily sell the loans we acquire through our correspondent production activities to the Agencies. We also securitize certain of our loans directly and may retain interests, such as senior and subordinate MBS, from these securitizations.

6

•
Our corporate operations include management fees, compensation, professional services, and other amounts attributable to the Company’s corporate operations and certain interest income and expense.

Following is a summary of our segment and corporate results for the years presented:

Year ended December 31,

2025

2024

2023

(in thousands)

Net investment income:

Credit sensitive strategies

$

65,643

$

123,675

$

232,624

Interest rate sensitive strategies

149,644

112,305

132,941

Correspondent production

87,402

90,494

56,239

Corporate

4,772

7,720

7,216

$

307,461

$

334,194

$

429,020

Pretax income (loss):

Credit sensitive strategies

$

65,203

$

123,112

$

230,304

Interest rate sensitive strategies

50,453

15,588

44,593

Correspondent production

32,079

56,981

23,285

Corporate

(53,917

)

(53,033

)

(53,787

)

$

93,818

$

142,648

$

244,395

Total assets at end of year:

Credit sensitive strategies

$

1,604,694

$

1,474,751

$

1,632,431

Interest rate sensitive strategies

16,512,045

10,322,044

10,281,904

Correspondent production

2,767,400

2,170,638

788,771

Corporate

462,743

441,273

410,781

$

21,346,882

$

14,408,706

$

13,113,887

In our correspondent production segment, we purchase Agency-eligible, jumbo, and non-qualified mortgage loans. A jumbo loan is a loan in an amount that exceeds the maximum loan amount for loans that are eligible for sale to the Agencies under their guidelines. A non-qualified mortgage loans is a residential mortgage loan that is not eligible for treatment as a “qualified mortgage” under the ability-to-repay rules but is underwritten to alternative credit standards. We then either:

•
sell certain Agency-eligible loans meeting the guidelines of the GSEs to Fannie Mae or Freddie Mac (“GSE-Eligible Loans”) on a servicing-retained basis and retain the related MSRs;

•
create and issue structured MBS and retain a portion of the interests, such as certain senior and subordinate securities, and sell the remaining senior MBS; or

•
sell loans to banks or other investors, generally on a servicing retained basis.

Our correspondent production segment involves purchases of loans through PLS from approved mortgage originators that meet specific criteria related to management experience, financial strength, risk management controls and loan quality. Before July 1, 2025, we were the initial purchaser of loans from correspondent sellers and sold a portion of our correspondent production, including all of the U.S. Government-insured or guaranteed loans, to PLS. After June 30, 2025, PLS became the initial purchaser of loans from correspondent sellers and we retained the right to purchase up to 100% of PLS's non-government correspondent production.

7

Following is a summary of our correspondent production activities:

Year ended December 31,

2025

2024

2023

(in thousands)

Correspondent loan purchases at fair value:

GSE-eligible loans (1)

$

40,976,218

$

54,294,006

$

46,395,294

Government insured or guaranteed for sale to PLS

27,128,340

42,066,828

41,103,974

Jumbo

2,636,524

393,222

4,234

Non-qualified

29,638

—

—

Home equity lines of credit

—

10

102

$

70,770,720

$

96,754,066

$

87,503,604

Interest rate lock commitments issued

$

65,515,030

$

99,665,304

$

91,096,344

Fair value of loans at end of year pending sale to:

Nonaffiliates

$

2,699,398

$

1,514,210

$

500,715

PLS

—

602,108

168,303

$

2,699,398

$

2,116,318

$

669,018

(1)
The Company sells or finances a portion of its GSE-Eligible Loans to or with other investors, including PLS.

Our correspondent production activities generate investments in MSRs and non-Agency interests through loan sales to nonaffiliates and the retention of interests in securitizations, as summarized below:

Year ended December 31,

2025

2024

2023

(in thousands)

Sales of loans held for sale:

To nonaffiliates

$

10,292,463

$

12,414,391

$

15,936,124

To PennyMac Financial Services, Inc.

52,895,921

81,997,773

72,441,699

$

63,188,384

$

94,412,164

$

88,377,823

Net gains on loans held for sale

$

52,194

$

73,124

$

39,857

Investments resulting from correspondent production:

Retention of interests in securitizations of loans, net of

associated asset-backed financings (1)

$

527,752

$

64,253

$

—

Receipt of MSRs as proceeds from sales of loans

190,141

219,001

292,527

Total investments resulting from correspondent production

activities

$

717,893

$

283,254

$

292,527

(1)
The trusts issuing the securities are consolidated on our consolidated balance sheets. Therefore, our investments in these securities are shown as their underlying assets, Loans held for investment at fair value, with the securities held by nonaffiliates being shown as Asset-backed financings of variable interest entities at fair value.

8

Our portfolio of mortgage investments was comprised of the following:

Year ended December 31,

2025

2024

2023

(in thousands)

Credit sensitive assets:

CRT arrangements, net (1)

$

998,344

$

1,101,803

$

1,146,299

Subordinate interests in loans held in variable interest entities,

net of associated asset-backed financings

554,927

130,839

85,344

Subordinate credit-linked mortgage-backed securities

—

196,472

301,180

Distressed loans

1,705

1,866

2,131

Real estate acquired in settlement of loans

1,421

2,464

4,541

Home equity lines of credit

942

1,368

1,803

1,557,339

1,434,812

1,541,298

Interest rate sensitive assets:

Mortgage-backed securities

Agency fixed-rate pass-through

2,850,447

3,079,492

4,270,056

Floating rate collateralized mortgage obligations

855,997

—

—

Principal-only stripped

521,129

596,300

53,336

Senior non-Agency

152,784

105,182

117,489

Interest-only stripped

72,502

86,260

94,231

Mortgage servicing rights

3,644,702

3,867,394

3,919,107

Senior interests in loans held in variable interest entities,

net of associated asset-backed financings

93,232

—

—

Net interest rate hedges

20,094

23,728

149,603

8,210,887

7,758,356

8,603,822

$

9,768,226

$

9,193,168

$

10,145,120

(1)
Investments in CRT arrangements include deposits securing CRT arrangements, CRT derivatives, CRT strips and an interest-only security payable.

Over time, our targeted asset classes may change as a result of changes in the opportunities that are available in the market, among other factors. We may not continue to invest in certain of the investments described above if we believe those types of investments will not provide us with suitable returns or if we believe other types of our targeted assets provide us with better returns.

Investment Policies

Our board of trustees has adopted the policies set forth below for our investments and borrowings.

•
No investment shall be made that would cause us to fail to qualify as a REIT for U.S. federal income tax purposes;

•
No investment shall be made that would cause us to be regulated as an investment company under the Investment Company Act of 1940 (the “Investment Company Act”); and

•
With the exception of real estate and housing, no single industry shall represent more than 20% of the investments or total risk exposure in our portfolio.

These investment policies may be changed by a majority of our board of trustees without the approval of, or prior notice to, our shareholders.

We have not adopted a policy that expressly prohibits our trustees, officers, shareholders or affiliates from having a direct or indirect financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. However, our code of business conduct and ethics contains a conflicts of interest policy that prohibits our trustees and officers, as well as employees of PFSI and its subsidiaries who provide services to us, from engaging in any transaction that involves an actual or apparent conflict of interest with us without the appropriate approval. We also have written policies and procedures for the review and approval of related party transactions, including oversight by designated committees of our board of trustees and PFSI’s board of directors.

9

Competition

In our investing and acquisition of mortgage assets, we compete with specialty finance companies, private funds, thrifts, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, governmental bodies and other mortgage REITs such as Chimera Investment Corporation, Invesco Mortgage Capital Inc., Rithm Capital Corp., Ellington Financial, Inc., MFA Financial, Inc., Adamas Trust, Inc., Redwood Trust Inc. Two Harbors Investment Corp., AGNC Investments Corp., and Annaly Capital Management Inc., all of which may also be focused on acquiring mortgage-related assets, and therefore may increase competition for the available supply of mortgage assets suitable for purchase.

In our correspondent production activities, we compete with large financial institutions, the GSE cash windows and other independent residential loan producers and servicers such as Rocket Mortgage, Rithm Capital Corp., Freedom Mortgage, Truist Financial Corporation, Western Alliance Bank and Onity Group Inc. We compete on the basis of product offerings, technical knowledge, loan quality, speed of execution, rate and fees.

Many of our competitors are significantly larger than we are and have stronger financial positions and greater access to capital and other resources than we have and may have other advantages over us. Such advantages include the ability to obtain lower-cost financing, such as deposits, and operational efficiencies arising from their larger size.

Some of our competitors may have higher risk tolerances or different risk assessments and may not be subject to the operating constraints associated with REIT tax compliance or maintenance of an exclusion from the Investment Company Act, any of which could allow them to consider a wider variety of investments and funding strategies and to establish more relationships with sellers of mortgage assets than we can.

Because the availability of mortgage assets may fluctuate, the competition for assets and sources of financing may increase. Increased competition for assets may result in our accepting lower returns for acquisitions of assets or adversely influence our ability to bid for such assets at levels that allow us to acquire the assets.

To address this competition, we have access to PCM’s professionals and their industry expertise that helps us assess investment risks and determine appropriate pricing for potential investments. Furthermore, we believe that our access to PLS servicing expertise provides us with a competitive advantage over other companies with a similar focus. However, we can provide no assurance that we will be able to achieve our business goals or expectations due to the competition and other risks that we face.

Cyclicality and Seasonality

The demand for loan originations is affected by consumer demand for home loans. Demand for home loans generally comes from the demand for loans made to finance the purchase of homes and the demand for loans made to refinance existing loans.

The demand for loans made to finance the purchase of homes is most significantly influenced by the overall strength of the economy, housing prices and availability and societal factors such as household formation and government support for home ownership.

The demand for loans made to refinance existing loans is most significantly influenced by movements in interest rates and to a lesser extent, to changes in property values and employment.

10

Financing

Our debt financing is summarized below:

December 31, 2025

Assets (1)

Financing

Consolidated

Adjustments for VIE Financing (2)

Excluding VIE Financing

Assets sold under agreements to

repurchase

Notes payable secured by CRT

arrangements and MSRs

Total

(in thousands except for debt-to equity amounts)

Assets

Cash and short-term investments

$

462,488

$

—

$

462,488

$

—

$

—

$

—

Mortgage-backed securities at fair value

Agency-backed securities

4,300,075

—

4,300,075

4,241,557

—

4,241,557

Senior non-agency securities

152,784

—

152,784

146,089

—

146,089

Credit risk transfer securities relating to consolidated

variable interest entities

—

998,344

998,344

141,443

607,297

748,740

Non-agency securities relating to consolidated variable

interest entities

—

648,159

648,159

531,750

—

531,750

4,452,859

1,646,503

6,099,362

5,060,839

607,297

5,668,136

Loans held for sale at fair value

2,699,398

—

2,699,398

2,462,629

—

2,462,629

Loans held for investment at fair value

8,532,644

(8,530,939

)

1,705

—

—

—

Derivative assets

55,943

(32,659

)

23,284

—

—

—

Deposits securing credit risk transfer arrangements

1,009,334

(1,009,334

)

—

—

—

—

Mortgage servicing rights and servicing advances

3,741,532

93,478

3,835,010

495,133

1,650,831

2,145,964

20,954,198

(7,832,951

)

13,121,247

8,018,601

2,258,128

10,276,729

Other

392,684

—

392,684

—

—

—

Total assets and secured financing

$

21,346,882

$

(7,832,951

)

$

13,513,931

$

8,018,601

$

2,258,128

10,276,729

Unsecured debt

1,028,300

Debt excluding non-recourse

11,305,029

Debt in consolidated variable interest entities (2)

7,826,953

Total debt

$

19,131,982

Equity

$

1,887,331

Debt-to equity ratio:

Excluding non-recourse debt (3)

6.0:1

Total (4)

10.1:1

(1)
The balance sheet information depicted under the column captioned “Consolidated” represents information prepared in compliance with accounting principles generally accepted in the United States (“GAAP”). The subsequent columns reflect adjustments to deconsolidate the assets held in the trusts issuing beneficial interests in those assets and to provide investors with a more creditor-aligned view of how our debt relates to the assets we finance. After adjustment, the assets are shown in the securitized form in which they are financed which excludes non-recourse financing which we refer to as Asset-backed financings of variable interest entities at fair value on our consolidated balance sheet. The adjusted balance sheet information should not be considered in isolation or as a substitute for an analysis of our results as calculated based upon GAAP.

(2)
Does not include adjustments for credit risk transfer strip liabilities of $6.0 million.

(3)
Total borrowings reduced by asset-backed financings and interest-only security payable, divided by shareholders’ equity.

(4)
Total borrowings divided by shareholders’ equity.

Debt

Our current debt financing strategy is to finance our assets in such a way as to match the term of the liabilities used to finance them to the expected life of the underlying assets where we believe such borrowing is prudent, appropriate and available. Our borrowings are primarily collateralized borrowings in the form of sales of assets under agreements to repurchase, and asset-backed financing in the form of long-term securitized notes, including secured term financing for our MSRs and our CRT arrangements. Terms of our borrowings are summarized in Notes 14 and 15 to our consolidated financial statements included in this Report.

A significant portion of our balance sheet is comprised of longer-lived assets - such as MSRs, servicing advances and CRT arrangements - that have historically been less liquid, and more difficult to finance than our newly originated mortgage loans and our holdings of MBS. As a result, we have historically relied on shorter-term financing arrangements, primarily sales of the assets under agreements to repurchase, to finance our longer-lived assets. As we have grown, we have financed more of our assets under longer

11

term secured financing arrangements that more closely align the term of the borrowings with the expected life of the corresponding assets. We also rely on unsecured financing arrangements.

Following is a summary of the types of debt we use to finance our investing and operating activities:

Short-term debt

Sales of assets under agreements to repurchase

Our largest source of debt financing is the sale of assets under agreements to repurchase. Under these agreements, we sell assets or participation certificates to a lender under a commitment to repurchase the asset or participation certificate within a specified period - generally ranging from 30 to 90 days for MBS and CRT assets, 60 to 120 days for mortgage loans and one to two years for participation certificates secured by MSRs.

During the period the agreement to repurchase is outstanding, our lender is generally contractually authorized to repledge the assets underlying the repurchase agreement. The repurchase agreements generally contain margin provisions that require us to maintain our borrowings at a specified percentage of the fair value of the assets pledged to secure the borrowings. As a result, we are subject to margin calls during the period the repurchase agreements are outstanding and, therefore, may be required to repay a portion of the borrowings before the respective repurchase agreements mature if the fair value (as determined by the applicable lender) of the assets securing those repurchase agreements decreases.

To mitigate this market-price volatility, in December 2025, we began financing certain subordinate bonds related to our securitizations under a “mark-to-credit” facility. This change represents a significant benefit to PMT, as it eliminates exposure to mark-to-market margin calls for these assets. While the facility remains subject to certain credit-related paydown requirements, it effectively shields our liquidity position from non-credit related market price volatility and provides greater stability to our financing structure.

Our repurchase agreement facilities include a mix of committed and uncommitted amounts. Committed amounts contractually bind the lender to purchase assets meeting the criteria of the credit facility up to a committed amount, whereas the lender is not required to fund repurchase agreements on uncommitted amounts. We pay facility commitment fees to maintain adequate committed amounts to fund our expected loan inventory levels during the facility commitment period and endeavor to minimize our borrowing costs.

We are exposed to loss in the event a lender makes a margin call to us and we are unable to fund the margin call. In such a circumstance, the lender is contractually allowed to liquidate the assets securing the repurchase agreement and pursue repayment from us for any balance not satisfied through the sale of the collateral. To the extent we finance long-lived assets with repurchase agreements, we are also exposed to the risk of our being unable to refinance these assets under terms that are reasonable to us when the repurchase agreements mature.

Mortgage loan participation purchase and sale agreements

We finance a portion of our inventory of loans held for sale using mortgage loan participation purchase and sale agreements. Under mortgage loan participation purchase and sale agreements, we sell participation certificates to a lender, representing undivided beneficial ownership interests in pools of loans deemed eligible to back pass-through MBS issued and guaranteed by Fannie Mae or Freddie Mac, while the pools are pending securitization and the sale of the resulting securities. As part of the sale of the participation certificates, we arrange to deliver the resulting securities to the lender, and assign to the lender the commitments between us and nonaffiliates to sell the securities.

Mortgage loan participation purchase and sale certificates generally have a term of up to 45 days based on the anticipated delivery date of the related MBS and are repaid when the nonaffiliated investors purchase the securities.

Our mortgage loan participation purchase and sale agreement facilities are both committed and uncommitted facilities. Mortgage loan participation purchase and sale certificates do not contain margin call provisions. However, in the event the purchasers of the securities fail to settle the purchase, we are obligated to purchase the securities from the lender.

Loan and security agreements

We finance our MSRs related to mortgage loans pooled into Freddie Mac securities using a loan and security agreement or similar credit agreements with terms to maturity of two years from their original effective dates. Under the agreements, we borrow amounts collateralized by the MSRs, the fair value of which is determined by the lender or a third-party agent, on a monthly basis, or at the discretion of the lender. The lender makes available both committed and uncommitted amounts, with the maximum maturity of borrowed balances not to exceed the maturity of the agreements.

12

The agreements include provisions that require us to maintain our borrowings at a level not to exceed a specified percentage of the fair value of the MSRs pledged to secure the borrowings. As a result, we are subject to margin calls during the period if any amount is outstanding under the agreements. We are exposed to loss in the event the lender makes a margin call to us and we are unable to fund the margin call. In such a circumstance, the lender is contractually allowed to liquidate any portion of the MSRs securing the agreements and pursue repayment from us for any balance not satisfied through their subsequent sale of the MSRs.

Long-term debt

Notes payable secured by credit risk transfer and mortgage servicing assets

Our notes payable secured by CRT arrangements and MSRs represent long-term financing of our CRT and MSR assets and include:

•
$725 million in secured term notes issued to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”), and syndicated secured term loans issued to banking entities. The term notes are secured by MSR participation certificates on Fannie Mae loans that are pledged to a subsidiary trust that has also issued variable funding notes (“VFNs”) that may be financed with certain lenders in the form of sales of assets under agreements to repurchase. VFNs are typically used to finance a portion of the fair value of MSR participation certificates held by the subsidiary trust in excess of the fair value required to collateralize the secured term notes and term loans. The term notes and term loans include margin call provisions that require us to maintain a certain advance rate based on the fair value of the underlying MSR participation certificates. As the fair value of the underlying MSRs is subject to periodic fluctuation, we may be required to either pledge additional MSR participation certificates or cash to the subsidiary trust when the fair value of the MSR participation certificates decreases even though the borrowings have long-term maturities.

•
$928 million in various credit agreements secured by Freddie Mac MSRs.

•
$609 million of term notes secured by our investment in CRT assets issued to qualified institutional buyers under Rule 144A of the Securities Act. These term notes do not include margin call provisions. However, these term notes must be repaid based on the amortization of the CRT assets that collateralize them. These term notes have maturities ranging from February 2024 through September 2028. A portion of these term notes have terms that provide for optional extensions of two years under conditions provided in the respective agreements.

Unsecured senior notes

Exchangeable senior notes

Our subsidiary, PennyMac Corp. (“PMC”), has $711.5 million in outstanding exchangeable senior notes with maturities through June 2029. The exchangeable senior notes are unsecured obligations. The exchangeable senior notes are exchangeable into 46.1063 PMT common shares of beneficial interest (“Common Shares”) per $1,000 principal amount for the exchangeable senior notes maturing on March 15, 2026 (the “2026 Exchangeable Notes”) and 63.3332 PMT Common Shares per $1,000 principal amount for the exchangeable senior notes maturing on June 1, 2029 (the “2029 Exchangeable Notes”), subject to adjustment upon the occurrence of certain events. Upon exchange, PMC will pay (1) cash for the principal amount of the exchangeable senior notes to be exchanged; and (2) cash, Common Shares or a combination of cash and Common Shares, at the Company’s election, for the remainder, if any, of the exchange obligation in excess of the principal amount of the exchangeable senior notes exchanged. The exchangeable senior notes bear interest at rates of 5.50%, in the case of the 2026 Exchangeable Notes, and 8.50%, in the case of the 2029 Exchangeable Notes, and are fully and unconditionally guaranteed by the Company.

Senior notes

The Company issued three tranches of senior unsecured notes totaling $331.0 million in principal amount, including $53.5 million of 8.50% senior notes due September 30, 2028 (the "2028 Senior Notes"), and $172.5 million and $105.0 million of 9.00% senior notes due February 15, 2030 and June 15, 2030, respectively (collectively, the "2030 Senior Notes"). The Senior notes are fully and unconditionally guaranteed by PMC. The 2028 Senior Notes are redeemable beginning September 30, 2025, while the 2030 Senior Notes are redeemable beginning February 15, 2027 and June 15, 2027, respectively, in each case at 100% of the principal amount plus accrued and unpaid interest up to, but excluding, the redemption date.

13

Interest-only security payable at fair value

One of the classes of the securities issued by the trusts relating to our investments in CRT arrangements is an IO security that we issued to a nonaffiliate. As discussed in Note 6 – Variable Interest Entities to the consolidated financial statements included in this Report, we consolidate the trusts that issue the securities underlying our investments in the CRT arrangements. As part of the consolidation of the CRT arrangements, we recognize this IO security as debt on our consolidated balance sheet.

This debt is repaid by the issuing trust from the cash flows based on the reference loans underlying this security. Cash flows from those loans represent the sole source of repayment of this security and its holder has no recourse to other assets on our consolidated balance sheet.

Asset-backed financings of variable interest entities at fair value

We have participated in various transactions whereby we invest in subordinate securities issued in loan securitizations. These transactions are sponsored by us or a nonaffiliate. We acquire the loans underlying these loan securitizations through our correspondent lending activities. We then either sell the loans to a nonaffiliate which pools the loans into securities, or we pool the loans into securities issued by a securitization trust. We have purchased subordinate securities from nonaffiliate sponsored transactions and retain subordinate securities in the transactions we sponsored. Any mortgage servicing rights for the loans underlying these securities are owned by us, and sub-serviced by PLS for the securitization trusts issuing the securities.

Because we hold substantially all of the subordinate securities created in these transactions and we or PLS is the servicer or subservicer of the underlying loans, we include the assets of the issuing trust on our consolidated balance sheet, in Loans held for investment at fair value. We also include the securities issued to nonaffiliates by the issuing trusts as Asset-backed financings of variable interest entities at fair value on our consolidated balance sheet.

This debt is repaid by the issuing trust from the cash flows received on the loans and the related mortgaged properties underlying these subordinate securities. Cash flows from those loans and properties represent the sole source of repayment of this debt and the holders of this debt have no recourse to other assets on our consolidated balance sheet. The maturities of these financings are based on the loan(s) with the latest maturity of the loans in the issuing securitization trusts.

Equity

Our shareholders’ equity includes both Common Shares and cumulative preferred shares, partially offset by our accumulated deficit as summarized below:

December 31,

2025

2024

2023

(in thousands)

Paid-in capital

Preferred shares

$

541,482

$

541,482

$

541,482

Common shares

1,928,674

1,925,936

1,924,303

2,470,156

2,467,418

2,465,785

Accumulated deficit

(582,825

)

(528,918

)

(508,695

)

$

1,887,331

$

1,938,500

$

1,957,090

We actively manage our equity financing and endeavor to obtain an equity structure that optimizes the returns to our common shareholders. This approach to managing our equity includes supplementing our Common Shares with issuances of preferred shares and common share repurchase activities. At December 31, 2025, we had $200 million of Common Shares available for issuance under our at-the-market equity offering program and $73.4 million authorized for share repurchases.

14

Following is a summary of our repurchases of Common Shares:

Year ended December 31,

Share repurchases

(in thousands)

2025

$

—

2024

$

—

2023

$

28,490

Our preferred shares are comprised of three series of $25 par value cumulative preferred shares that have dividend rates ranging from 6.75% to 8.125% of their par values and liquidation preferences totaling $560 million. Our preferred shares have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless we redeem or repurchase the shares or the shares are converted into Common Shares in connection with a change of control by the holders of the preferred shares, as provided in the respective articles supplementary establishing the terms of each series of preferred shares. The Series A and Series B preferred shares are presently redeemable and the Series C preferred shares become redeemable on August 24, 2026. We did not redeem any preferred shares during the year ended December 31, 2025.

As a REIT, we face limits on our ability to finance our operations and investments with retained earnings, as we are generally required to distribute to our shareholders at least 90% of our taxable income each year for us to qualify as a REIT under the Internal Revenue Code of 1986 (the “Internal Revenue Code”). To the extent we satisfy the 90% distribution requirement but distribute less than 100% of our taxable income, we are subject to U.S. federal corporate income tax on our undistributed taxable income. We establish the level of our periodic Common Share distributions based on this requirement as well as our earnings, our financial condition and such other factors as our board of trustees may deem relevant from time to time.

Operating and Regulatory Structure

Taxation – REIT Qualification

We have elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code beginning with our taxable year ended December 31, 2009. Our qualification as a REIT depends upon our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our Common Shares. We believe that we are organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code, and that our manner of operation enables us to meet the requirements for qualification and taxation as a REIT.

As a REIT, we generally are not subject to U.S. federal income tax on the REIT taxable income we distribute to our shareholders. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we lost our REIT qualification. Accordingly, our failure to qualify as a REIT could have a material adverse impact on our income and amounts available for distribution to our shareholders.

Even though we have elected to be taxed as a REIT, we are subject to some U.S. federal, state and local taxes on our income or property. A portion of our business is conducted through, and a portion of our income is earned in, our TRS that is subject to corporate income taxation. In general, a TRS of ours may hold assets and engage in activities that we cannot hold or engage in directly and may engage in any real estate or non-real estate related business. A TRS is subject to U.S. federal, state and local corporate income taxes. To maintain our REIT election, at the end of each quarter no more than 20% (25% for taxable years beginning after December 31, 2025) of the value of a REIT’s assets may consist of stock or securities of one or more TRSs.

If our TRS generates net income, our TRS can declare dividends to us, which will be included in our taxable income and necessitate a distribution to our shareholders. Conversely, if we retain earnings at the TRS level, no distribution is required and we can increase shareholders’ equity of the consolidated entity. As discussed in