The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The Company consolidates all entities that are controlled either through majority ownership or voting rights. The Company also identifies entities for which control is achieved through means other than through voting rights (a variable interest entity or “VIE”) using the analysis as set forth in the Accounting Standards Codification (“ASC”) 810, Consolidation of Variable Interest Entities and determines when and which variable interest holder, if any, should consolidate the VIE. The Company has no consolidated variable interest entities as of December 31, 2021 and 2020. All significant intercompany transactions and balances have been eliminated in consolidation.

The liabilities of wholly-owned subsidiaries are non-recourse to the Company and are limited to the assets of such wholly-owned subsidiary, except in the case of the Company’s repurchase agreements, which in general are partially recourse to the Company, and in limited situations in which the Company has provided a guaranty contingent upon the occurrence of certain events.

In the normal course of business, the Company primarily encounters two significant types of economic risk: credit and market. Credit risk is the risk of default on the Company’s loans receivable that results from a borrower's or counterparty's inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of the loans receivable due to changes in interest rates, spreads or other market factors, including risks that impact the value of the collateral underlying the Company’s investments. Management believes that the carrying values of its loans receivable are reasonable taking into consideration these risks along with estimated financings, collateral values and other information.

During the first quarter of 2020, there was a global outbreak of a novel coronavirus (“COVID-19”). The World Health Organization has designated COVID-19 a pandemic, and numerous countries, including the United States, have declared national emergencies with respect to COVID-19. The global impact of the outbreak has rapidly evolved,

and many countries have reacted by instituting quarantines and restrictions on travel, and limiting operations of non-essential businesses. The full extent of the impact and effects of COVID-19 will depend on future developments, including, among other factors, the duration and spread of the outbreak, along with related travel advisories, quarantines and restrictions, the effectiveness and efficiency of distribution of vaccines, the recovery time of the disrupted supply chains and industries, the impact of the labor market interruptions, the impact of government interventions, and uncertainty with respect to the duration of the global economic slowdown. In 2021, the global economy has begun to recover and the widespread availability of vaccines has encouraged greater economic activity. Nonetheless, the outbreak of COVID-19 and its impact on the current and future financial, economic and capital markets environment, and future developments in these and other areas could remain uneven, and presents uncertainty and risk with respect to the performance of the Company’s loans receivable, interests in loans receivable and real estate owned, the Company’s financial condition, results of operations, liquidity, and ability to pay dividends.

A significant portion of the Company’s loan receivable portfolio and secured financings reference certain tenors of the London Interbank Offering Rate (“LIBOR”). In July 2017, the Financial Conduct Authority of the United Kingdom (“FCA”), the financial regulatory body that regulates LIBOR, announced their intention to phase out LIBOR after 2021. In March 2021, the FCA announced that LIBOR settings will cease to be provided by any administrators or will no longer be representative after specific dates, which will be (i) June 30, 2023, in the case of the principal U.S. dollar LIBOR tenors (overnight and one, three, six and 12 months), and (ii) December 31, 2021, in all other cases (i.e., one week and two month U.S. dollar LIBOR and all tenors of non-U.S. dollar LIBOR).

In the United States, the Alternative Reference Rates Committee, or the ARRC, a committee of private sector entities with ex-officio official sector members convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has recommended the Secured Overnight Financing Rate, or SOFR, plus a recommended spread adjustment as LIBOR’s replacement. Market participants have begun the transition to SOFR, in line with this guidance. As of December 31, 2021, one-month SOFR is utilized as the floating rate benchmark on the Company’s secured term loan. As of December 31, 2021, one-month SOFR was 0.05%.

The Company’s agreements generally allow for a new interest rate index to be used if LIBOR is no longer available. While the impact that the phasing out of LIBOR will have on the Company is not yet determinable, the Company has begun and expects that it will continue to utilize alternative rates referenced in its agreements or negotiate a replacement reference rate for LIBOR.

Tax Risks - The Company is subject to significant tax risks. If the Company fails to maintain its qualification as a REIT in a given taxable year, it may be subject to penalties as well as federal, state and local income tax on its taxable income, which could be material. It will also not be able to qualify as a REIT for the subsequent four taxable years, unless entitled to relief under certain statutory provisions.

A REIT must distribute at least 90% of its taxable income to its stockholders, determined without regard to the deduction for dividends paid and excluding net capital gains. In addition to the 90% distribution requirement, a REIT is subject to a nondeductible excise tax if it fails to make certain minimum distributions by calendar year-end. The excise tax imposed is equal to 4% of the excess of the required distribution (specified under U.S. federal tax law) over the distributed amount for such year. Distribution of the remaining balance may extend until timely filing of the REIT’s tax return in the subsequent taxable year. Qualifying distributions of taxable income are deductible by a REIT in computing taxable income.

Regulatory Risks - The Company is subject to significant regulatory risks. If the Company were unable to rely upon an exemption from registration available under the Investment Company Act of 1940, as amended, the Company could be required to restructure its assets or activities, including the disposition of assets during periods of adverse market conditions that could result in material losses to the Company.

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Estimates that are particularly susceptible to the

Company’s judgment include, but are not limited to, the adequacy of allowance for loan losses, recoverability of deferred tax assets, the determination of effective yield for recognition of interest income and interest expense and recognition of equity compensation expense.

Loans that the Company has originated or acquired and has the intent and ability to hold to maturity or payoff are reported at their outstanding principal balances net of any unearned income, unamortized deferred fees and expected credit losses, if applicable. Loan origination, extension and exit fees are deferred and recognized in interest income over the estimated life of the loans using the effective interest method, adjusted for actual prepayments.

Loans that the Company has acquired in a transfer that did not meet the qualifications of a sale and has the intent and ability to hold to maturity or payoff are reported at their outstanding principal balances net of any unearned income, unamortized deferred fees and expected credit losses, if applicable. Loan discounts and extension and exit fees are deferred and recognized in interest income over the estimated life of the loans using the effective interest method, adjusted for actual prepayments.

The Company holds certain loans whereby a portion of the loan’s unfunded commitment may be used to fund monthly interest payments, so long as certain conditions are met. As a result, such loan’s unpaid principal balance increases at the interest payment date and the Company does not receive cash. This type of loan term is referred to as non-cash advance in lieu of interest, and the increase in unpaid principal balance is reflected in the operating section of the Company’s consolidated statements of cash flows, as opposed to the investing section as if the cash had been directly advanced to a borrower. The Company also has certain financings that allow for non-cash advances in lieu of interest, and the increase in unpaid principal balance is reflected in the operating section of the Company’s consolidated statements of cash flows, as opposed to the financing section as if cash had been directly received by the Company.

The current expected credit loss (“CECL”) reserve required under ASU 2016-13 “Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments (Topic 326)” (“ASU 2016-13”), reflects the Company’s current estimate of potential credit losses related to the Company’s loan portfolio. The initial CECL allowance recorded on January 1, 2021 is reflected as a direct charge to retained earnings on the Company’s consolidated statements of changes in redeemable common stock and stockholders’ equity. Subsequent changes to the CECL allowance are recognized through net income on the Company’s consolidated statements of operations. ASU 2016-13 specifies the reserve should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions and reasonable and supportable forecasts for the duration of each respective loan. Given prior period loss models were based on the incurred loss model, management notes that prior periods are not measured on a comparable basis.

The Company considers key credit quality indicators in underwriting loans and estimating credit losses, including, but not limited to: the capitalization of borrowers and sponsors; the expertise of the borrowers and sponsors in a particular real estate sector and geographic market; collateral type; geographic region; use and occupancy of the property; property market value; loan-to-value (“LTV”) ratio; loan amount and lien position; debt service coverage ratio; the Company’s risk rating for the same and similar loans; and prior experience with the borrower and sponsor. This information is used to assess the financial and operating capability, experience and profitability of the sponsor/borrower. Ultimate repayment of the Company’s loans is sensitive to interest rate changes, general economic conditions, liquidity, LTV ratio, existence of a liquid investment sales market for commercial properties, and availability of replacement short-term or long-term financing. The loans in the Company’s commercial mortgage loan portfolio are primarily secured by collateral in the following property types: multifamily, office, hospitality, mixed-use, land, and for-sale condominium.

The Company’s loans are typically collateralized by real estate, or in the case of mezzanine loans, by an equity interest in an entity that owns real estate. As a result, the Company regularly evaluates on a loan-by-loan basis, the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, and the financial and operating capability of the borrower/sponsor, at least quarterly. The Company also evaluates the financial strength of loan guarantors, if any, and the borrower’s competency in managing and operating the property or properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such analyses are completed and reviewed by asset management personnel and evaluated by senior management, who utilize various data sources, including, to the extent available (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrower’s business plan, and capitalization and discount rates, (ii) site inspections, (iii) sales and financing comparables, (iv) current credit spreads for refinancing and (v) other market data.

Given the length of the Company’s loan terms, management’s reasonable and supportable forecast period exceeds the loan terms and as such the Company does not need to apply a reversion method.

The Company has classified its loans receivable into the following categories to assess the impact of CECL:

For the Company’s loan receivable portfolio, the Company, with assistance from a third party service provider, performed a quantitative assessment of the impact of CECL using the Expected Loss (“EL”) approach and the Lifetime Loss Rate (“LLR”) method depending on the allocated category. For transitional loans, steady & improving loans and stabilized loans, the Company has applied an EL approach because of the consistency in assessing credit risks and estimating expected credit losses. Due to the nature of construction loans, where repayment does not depend on the operating performance of the underlying property, the Company has applied a LLR approach to estimate the CECL impact. In certain circumstances the Company may determine that a loan is no longer suited for the model-based approach due to its unique risk characteristics, or because the repayment of the loan’s principal is collateral-dependent. The Company may instead elect to employ different methods to estimate loan losses that also conform to ASU 2016-13 and related guidance. If the recovery of a loan’s principal balance is entirely collateral-dependent, the Company may assess such an asset individually and elect to apply a practical expedient in accordance with ASU 2016-13. The Company’s allowance for loan losses reflects its estimate of the current and future economic conditions that impact the performance of the commercial real estate assets securing the Company’s loans. These estimates include unemployment rates, interest rates, price indices for commercial property, and other macroeconomic factors that may influence the likelihood and magnitude of potential credit losses for the Company’s loans during their anticipated term. The Company licenses certain macroeconomic financial forecasts to inform its view of the potential future impact that broader economic conditions may have on its loan portfolio’s performance. The forecasts are embedded in the licensed model that the Company uses to estimate its allowance for loan losses as discussed below. Selection of these economic forecasts require significant judgement about future events that, while based on the information available to the Company as of the balance sheet date, are ultimately unknowable with certainty, and the actual economic conditions impacting the Company’s portfolio could vary significantly from the estimates the Company made for the periods presented.

Additionally, the Company assesses the obligation to extend credit through its unfunded loan commitments over each loan’s contractual period, which is considered in the estimate of the allowance for loan losses.

For any loan that is deemed to have significantly differing risk characteristics from the rest of the loan portfolio, the Company would measure the specific allowance of each loan separately by using the fair value of the collateral or the net present value of cash flows. If the fair value of the collateral is less than the carrying value of the loan, an asset-specific allowance is created as a component of our overall allowance for loan losses (following the adoption of CECL, or as a loan loss allowance prior to the adoption of CECL). Asset-specific allowances for loan losses are equal to the excess of a loan’s carrying value to the present value of its expected cash flows discounted at the loan’s effective rate or the fair value of the collateral, less estimated costs to sell, if recovery of the Company’s investment is expected solely from the collateral.

If the Company has determined that a loan or a portion of a loan is uncollectible, the Company will write-off the loan through a charge to its current expected credit loss reserve based on the present value of future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Significant judgment is required in determining impairment and in estimating the resulting credit loss reserve, and actual losses, if any, could materially differ from those estimates.

Prior to the adoption of ASU 2016-13, the Company would measure the specific impairment of each loan separately by using the fair value of the collateral or the net present value of cash flows. If the fair value or the net present value of the cash flows of the collateral was less than the carrying value of the loan, an allowance was created with a corresponding charge to the provision for loan losses. The loan loss allowance for each loan was maintained at a level the Company believed was adequate to absorb incurred losses, if any. As of December 31, 2020, the Company had a loan loss reserve of $6.0 million relating to one loan.

The Company evaluates the credit quality of each of its loans receivable on an individual basis and assigns a risk rating at least quarterly. The Company has developed a loan grading system for all of its outstanding loans receivable that are collateralized directly or indirectly by real estate. Grading criteria include as-is or as-stabilized debt yield and debt service coverage ratios, term of loan, property type, loan type and other more subjective variables that include property or collateral location, as-is or as-stabilized collateral value, market conditions, industry conditions and sponsor’s financial stability. The Company utilizes the grading system to determine each loan’s risk of loss and to provide a determination as to whether an individual loan is impaired and whether a special loan loss allowance is necessary. Based on a 5-point scale, the loans are graded “1” through “5,” from less risk to greater risk, which gradings are defined as follows:

4 – High Risk/Potential for Loss: A loan that has a risk of realizing a principal loss

5 – Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss

The Company has considered the impact of COVID-19 in its evaluation of the credit quality of its loans receivable which reflects the material uncertainty and risks with respect to certain of the loan portfolio’s collateral.

The Company may modify the terms of a loan agreement by granting a concession to a borrower experiencing financial difficulty that it would not otherwise consider. Such modifications may include, among other items, reductions in contractual interest rates, payment date extensions or the modification of loan covenants. If such modification is deemed to be significant and meets the criteria above, it may be considered a Troubled Debt Restructuring (“TDR”) under GAAP which requires additional disclosure. Prior to the adoption of ASU 2016-13, a loan was also considered impaired if its terms were modified in a TDR. Impairments on TDR loans were generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loan. Loans which are modified and classified as a TDR that are performing and current with respect to the payment of debt service as of the date of the modification remain current, while loans which are modified and classified as a TDR that are on non-accrual status as of the date of the modification will generally remain on non-accrual status until the prospect of future payments in accordance with the modification terms are reasonably assured and there is a consistent period of repayment by the borrower.

Financial instruments held by the Company include cash and cash equivalents, restricted cash, reserves held for loans receivable, loans receivable held-for-investment, interests in loans receivable held for investment, other assets, loan principal payments held by servicer, accounts payable, repurchase agreements, notes payable, loan participations sold, secured term loans and debt related to real estate owned. The fair value of cash and cash equivalents, restricted cash, reserves held for loans receivable, other assets, loan principal payments held by servicer and accounts payable approximates their current carrying amount.

GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation. See Note 6 – Fair Value Measurements for details of the Company’s valuation policy.

The Company considers all investments with original maturities of three months or less, at the time of acquisition, to be cash equivalents. The Company maintains cash accounts which from time to time exceed the insured maximum of $250,000 per account. The carrying amount of cash on deposit and in money market funds approximates fair value.

Restricted cash includes reserve balances for interest, real estate taxes, and insurance, as well as lockbox accounts held pursuant to the terms of the financings. The carrying amount of restricted cash approximates fair value.

The Company may assume legal title or physical possession of the underlying collateral of a defaulted loan through foreclosure. If the Company intends to hold, operate or develop the property for a period of at least 12 months, the asset is classified as real estate owned, net. If the Company intends to market a property for sale in the near term, the asset is classified as real estate held for sale. Foreclosed real estate held for use is initially recorded at estimated fair value and is presented net of accumulated depreciation and impairment charges. Depreciation is computed using a straight-line method over the estimated useful lives of up to 40 years for buildings and up to 10 years for furniture, fixtures and equipment. Renovations and/or replacements that improve or extend the life of the real estate asset are capitalized and depreciated over the estimated useful lives. The cost of ordinary repairs and maintenance are expensed as incurred.

Real estate assets are evaluated for indicators of impairment on a quarterly basis. Factors that the Company may consider in its impairment analysis include, among others: (1) significant underperformance relative to historical or anticipated operating results; (2) significant negative industry or economic trends; (3) costs necessary to extend the life or improve the real estate asset; (4) significant increase in competition; and (5) ability to hold and dispose of the real estate asset in the ordinary course of business. A real estate asset is considered impaired when the sum of estimated future undiscounted cash flows expected to be generated by the real estate asset over the estimated remaining holding period is less than the carrying amount of such real estate asset. Cash flows include operating cash flows and anticipated capital proceeds generated by the real estate asset. An impairment charge is recorded equal to the excess of the carrying value of the real estate asset over the fair value. When determining the fair value of a real estate asset, the Company makes certain assumptions including, but not limited to, consideration of projected operating cash flows, comparable selling prices and projected cash flows from the eventual disposition of the real estate asset based upon the Company’s estimate of a capitalization rate and discount rate.

Loan principal payments which are held by loan servicers and are expected to be remitted to the Company during the subsequent remittance cycle are reflected as loan principal payments held by servicer on the Company’s consolidated balance sheets.

Other assets include miscellaneous receivables and prepaid expenses, deferred tax asset (net of any valuation allowance), deposits funded relating to unclosed transactions, and treasury stock repurchased but not yet settled.

The deferred financing costs on the Company’s consolidated balance sheets include costs related to the establishment and ongoing operations of the repurchase agreements. These costs are amortized over the contractual term of the repurchase agreements as interest expense using the straight-line method.

Management evaluates whether the transaction constitutes a sale through legal isolation of the transferred financial asset from the Company, the ability of the transferee to pledge or exchange the transferred financial asset without constraint and the transfer of control of the transferred financial asset.

The Company finances certain of its loans receivable using repurchase agreements. Under a repurchase agreement, an asset is sold to a counterparty to be repurchased at a later date at a predetermined price. Prior to repurchase, interest is paid to the counterparty based upon the sales price and a predetermined interest rate. Other than amounts guaranteed by the Company, borrowings under the repurchase agreements are non-recourse to the Company. The Company accounts for its repurchase agreements as secured financings under GAAP. When treated as a secured financing, the transferred assets remain on the Company’s consolidated balance sheets, and the financing proceeds are recorded as a liability.

Loan participations sold represent an interest in a loan receivable that the Company sold, however, the Company presents the loan participation sold as a liability on its consolidated balance sheets because the arrangement does not qualify as a sale under GAAP. Other than amounts guaranteed by the Company, these participations are non-recourse and remain on the Company’s consolidated balance sheets until the loan is repaid. The gross presentation of the loan participations sold does not impact equity or net income.

The Company finances certain of its loans receivable using direct financing, collateralized by the loans receivable. Other than amounts guaranteed by the Company, borrowings under notes payable are non-recourse to the Company.

The Company’s secured term loan is collateralized by a pledge of equity in certain subsidiaries and their related assets, as well as a first priority security interest in selected assets. The secured term loan is presented net of any original issue discount, and transaction expenses are deferred and recognized in interest expense over the life of the loan using the effective interest method.

Debt assumed in an acquisition/foreclosure of real estate is recorded at its estimated fair value at the time of the acquisition. Subsequently, debt related to real estate owned, net is held net of principal repayments and any unamortized debt issuance costs. Other than amounts guaranteed by the Company, debt related to real estate owned is non-recourse to the Company.

Costs related to obtaining notes payable, loan participations sold, secured term loans, and debt related to real estate owned are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the obligations. These costs are amortized over the contractual term of the obligations as interest expense using the effective interest method.

The Company holds reserves for interest, real estate taxes and insurance relating to the loans receivable on behalf of the borrowers on certain loans receivable. These reserves are reflected as other liabilities on the Company’s consolidated balance sheets. In certain cases, other reserves may be held by a third-party loan servicer, and therefore not included on the Company’s consolidated balance sheets.

Interest income from loans receivable is recorded on the accrual basis based on the outstanding principal amount and the contractual terms of the loans. Recognition of fees, premiums, discounts and direct costs associated with these investments is deferred until the loan is advanced and is then amortized or accreted into interest income over the term of the loan as an adjustment to yield using the effective interest method based on expected cash flows through the expected recovery period. Income accrual is generally suspended for loans at the earlier of the date at which payments become 90 days past due or when recovery of income and principal becomes doubtful. While on non-accrual status, based on the Company’s estimation as to collectability of principal, loans are either accounted for on a cash basis, where interest income is recognized only upon actual receipt of cash, or on a cost-recovery basis, where all cash receipts reduce a loan's carrying value. If and when a loan is brought back into compliance with its contractual terms, and our Manager has determined that the borrower has demonstrated an ability and willingness to continue to make contractually required payments related to the loan, the Company resumes accrual of interest.

Revenue from real estate owned represents revenue associated with the operations of hotel properties classified as real estate owned. Revenue from the operations of the hotel properties is recognized when guestrooms are occupied, services have been rendered or fees have been earned. Revenues are recorded net of any discounts and sales and other taxes collected from customers. Revenues consist of room sales, food and beverage sales and other hotel revenues.

In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when the Company transfers promised services to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those services. ASC 606 includes a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied. The Company's contracts generally have a single performance obligation, such as renting a hotel room to a customer, or providing food and beverage to a customer, or providing a hotel property related good or service to a customer. The Company's performance obligations are generally satisfied at a point in time.

Equity compensation consists of both service-based and performance-based awards issued to certain individuals employed by (or members of) affiliates of the Manager. Equity compensation expense is recognized over the vesting period based on service or on the number of shares that are probable of vesting at each reporting date.

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Certain of the Company’s common stock featured certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. These rights terminated upon the completion of the Company’s initial public offering, which was completed on November 3, 2021. Accordingly, on this date redeemable common stock was reclassified to common stock at its redemption value.

Common stock issued and outstanding excludes Restricted Stock Units (“RSUs”) which have not been delivered, regardless of vesting status. Fully vested RSUs are included in the calculation of basic and diluted weighted-average shares outstanding and receive dividends payable on common stock.

On October 6, 2021, the Company effected a reverse stock split of shares of the Company’s common stock on a 2-for-1 basis. All references to common stock outstanding, restricted stock units, share data and per common stock share amounts have been stated to reflect the effect of the reverse stock split for all periods presented.

The non-controlling interests included on the Company’s consolidated balance sheets represents the common equity interests in CMTG/TT that are not owned by the Company. The Company owns 51% of CMTG/TT, which commenced operations on June 8, 2016. CMTG/TT is governed by its two-member board of directors, which is comprised of representatives of the board of directors of the Company. The Company controls the operations of CMTG/TT, and as a result consolidates CMTG/TT in its financial statements. The portion of CMTG/TT’s consolidated equity and results of operations allocated to non-controlling interests is equal to the remaining 49% ownership of CMTG/TT. As of December 31, 2021 and 2020, CMTG/TT’s total equity was $76.8 million and $72.0 million, respectively, of which $37.6 million and $35.3 million, respectively, was characterized as non-controlling interests.

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of an equity financing, these costs are recorded in stockholders' equity as a reduction of additional paid-in capital generated as a result of the offering. Should the in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations.

Costs of $0 and $16,000 relating to equity capital raises that have not yet closed have been recorded as an other asset on the consolidated balance sheets as of December 31, 2021 and 2020, of which $0 and $16,000 have been accrued and are reflected in the accounts payable and accrued expenses total on the consolidated balance sheets. For the years ended December 31, 2021 and 2020, the Company incurred offering costs of $11.8 million and $1.0 million, respectively, which have been charged against additional paid-in capital on the consolidated balance sheets. As of December 31, 2021 and 2020, offering costs of $0.3 million and $1.5 million, respectively have been accrued and are reflected in the accounts payable and accrued expenses total on the consolidated balance sheets.

The Company accounts for the repurchases of its common stock based on the settlement date. Payments for stock repurchases that are not yet settled as of the reporting date are included in other assets on the Company’s consolidated balance sheets. As of December 31, 2021, the Company has not retired any of its treasury stock.

The Company evaluates the operating performance of the Company’s investments as a whole. The Company previously determined that it had one operating segment and one reporting segment. However as a result of the foreclosure of the hotel portfolio on February 8, 2021, the Company has determined that it has two operating segments, with activities related to investing in income-producing loans collateralized by institutional quality commercial real estate and with activities related to operating real estate. However, due to materiality thresholds, the Company has determined it has one reportable segment.

Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform with the current period presentation. These reclassifications had no effect on the results of operations or financial position for any period presented.

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments (Topic 326)” (“ASU 2016-13”). This standard replaces the previous measurement of the allowance for credit losses that was based on the Manager’s best estimate of probable incurred credit losses inherent in the Company’s lending activities with the Manager’s best estimate of lifetime expected credit losses inherent in the Company’s relevant financial assets.

The Company elected to early adopt the standard on January 1, 2021 and recorded a $78.3 million cumulative effect adjustment to retained earnings. The following table details the impact of this adoption (dollars in thousands):


Assets
Loans receivable held-for-investment	$	64,274
Interests in loans receivable held-for-investment		406
Accrued interest receivable		357
Liabilities
Unfunded loan commitments		13,214
Total impact of ASU 2016-13 adoption on retained earnings	$	78,251

In August 2020, the FASB issued ASU 2020-06 “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” or ASU 2020-06. ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models. ASU 2020-06 also updates the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the impact ASU 2020-06 will have on its consolidated financial statements.

The FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective upon issuance of ASU 2020-04 for contract modifications and hedging relationships on a prospective basis. The Company has not adopted any of the optional expedients or exceptions through December 31, 2021, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period as circumstances evolve.

The FASB issued ASU 2019-12, Income Taxes (Topic 740), (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also improves the consistent application of, and simplifies, GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2021, with early adoption permitted. The adoption of ASU 2019-12 is not expected to have a material impact on the consolidated financial statements.