•

In July 2020, Exantas’s management agreement was acquired by a subsidiary of ACRES Capital Corp. (the “ACRES acquisition”), $50.0 million of 12.00% Senior Unsecured Notes due 2027 (“Senior Unsecured Notes due 2027”) were issued to Oaktree Capital Management, L.P. (“Oaktree”) and the Massachusetts Mutual Life Insurance Company (“MassMutual”) and the Company entered into a $250.0 million seven-year senior secured financing facility with MassMutual.

•

In September 2020, Exantas paid off its commercial real estate (“CRE”) term warehouse financing facilities, which remain active with total availability of $750.0 million, and liquidated the Exantas Capital Corp. 2018-RSO6, Ltd. (“XAN 2018-RSO6”) CRE debt securitization by refinancing the remaining assets on:

•

A new CRE debt securitization, which financed CRE loan commitments of $297.0 million at a weighted average cost of the one-month London Interbank Offered Rate (“LIBOR”) plus 3.13%; and

•

The senior secured financing facility with the MassMutual, which maintained availability of $121.5 million at September 30, 2020.

•

Exantas paid all previously accrued and current cash dividends on its 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”) on October 30, 2020.

•

On November 2, 2020, the board of directors (the “Board”) authorized and approved the continued use of the Company’s existing share repurchase program in order to repurchase up to $20 million of the currently outstanding shares of the Company’s common stock over the next two quarters. 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 of the Securities Exchange Act of 1934 (the “Exchange Act”). The Board also authorized the Company to enter into written trading plans under Rule 10b5-1 of the Exchange Act. The Company cannot predict when or if it will repurchase any shares of common stock and the timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors.

•

GAAP net income allocable to common shares was $5.6 million, or $0.17 per share-diluted, for the three months ended September 30, 2020, as compared to GAAP net income allocable to common shares of $10.0 million, or $0.31 per share-diluted, for the three months ended September 30, 2019. GAAP net income allocable to common shares for the third quarter of 2020 included:

•

$3.4 million, or (0.10) per share-diluted, related to a net write down to fair value on the Company’s remaining CRE asset held for sale; and

•

$2.6 million, or $(0.08) per share-diluted, of nonrecurring transaction costs in connection with the ACRES acquisition.

•

Core Earnings were $3.1 million, or $0.09 per common share-diluted. Core Earnings, adjusted were $5.7 million, or $0.17 per common share-diluted, after adjustment for the nonrecurring transaction costs (see Schedule I).

•

GAAP book value was $6.03 per common share at September 30, 2020, as compared to $6.01 per common share at June 30, 2020.

•

GAAP net loss allocable to common shares was $229.5 million, or $(7.16) per share-diluted, for the nine months ended September 30, 2020, as compared to GAAP net income allocable to common shares of $21.8 million, or $0.69 per share-diluted, for the nine months ended September 30, 2019. GAAP net loss allocable to common shares for the nine months ended September 30, 2020 included:

•

$180.3 million, or $(5.62) per share-diluted, of losses on the disposition of the Company’s commercial mortgage-backed securities (“CMBS”) portfolio financed with repurchase agreements and $5.8 million, or $(0.18) per share-diluted, of fair value adjustments on two CMBS investments that were not financed;

•

$48.5 million, or $(1.51) per share-diluted, of net non-cash provisions for credit losses; and

•

$8.1 million, or $(0.25) per share-diluted, related to net write down to fair value on the Company’s remaining CRE asset held for sale.

•

Core Earnings were $(162.3) million, or $(5.06) per common share-diluted. Core Earnings, adjusted were $20.6 million, or $0.64 per common share-diluted, after adjustments of $180.3 million, or $(5.62) per common share-diluted, for the realized losses incurred on the disposition of the Company’s CMBS portfolio and settlements of the repurchase agreements that financed that portfolio, and $2.6 million, or $(0.08) per common share-diluted, of nonrecurring transaction costs (see Schedule I).

•

Substantially all of Exantas’s $1.7 billion CRE loan portfolio comprises floating-rate senior whole loans at September 30, 2020.

•

Exantas’s CRE floating-rate whole loan portfolio had a weighted average spread of 3.41% over the weighted average one-month LIBOR floor of 1.92% at September 30, 2020.

•

All but two of the Company’s 105 CRE loans were current on debt service due through October 2020, including eight loans that are performing in accordance with forbearance agreements.

•

The Company executed short-term forbearance agreements and modifications that became effective during the three and nine months ended September 30, 2020 on six and 18 CRE loans, respectively, which provided payment relief to borrowers.

•

The Company had CRE loans with principal of $124.4 million and $350.4 million payoff, paydown or sell for the three and nine months ended September 30, 2020, respectively.

•

Non-recourse, non-mark-to-market collateralized loan obligation financings comprised approximately $1.2 billion, or 92%, of the approximately $1.3 billion of outstanding asset-specific borrowings at October 31, 2020.

•

Exantas liquidated XAN 2018-RSO6 on September 17, 2020 by repaying the $131.3 million of remaining notes with proceeds from the refinance of the securitization’s loans on the senior secured financing facility with MassMutual.

•

Exantas closed Exantas Capital Corp. 2020-RSO9, Ltd. (“XAN 2020-RSO9”) on September 23, 2020, which financed CRE loan commitments of $297.0 million and issued $275.1 million of non-recourse, floating-rate notes, of which $245.8 million were sold to third parties at a weighted average cost of one-month LIBOR plus 3.13%. The Company retained the Class E and Class F subordinated notes and the preferred shares in this securitization.

Three Months Ended September 30, 2020

Allowance for credit losses at June 30, 2020

$

61,091

Non-cash reversal of expected credit losses at September 30, 2020 ⁽¹⁾

(8,148

)

Allowance for credit losses at September 30, 2020 ⁽²⁾

$

52,943

(1)

Excludes a $25,000 recovery of credit losses in connection with an interest receipt on a CRE loan that sold in the second quarter of 2020.

(2)

Represents the total non-cash reserves currently on Exantas’s consolidated balance sheet pursuant to CECL.

Total

Amount

Per Share

Amount

Common stock book value at June 30, 2020 ⁽¹⁾

$

190,689

$

6.01

Net income allocable to common shares ⁽²⁾

5,571

0.17

Change in other comprehensive income:

Available-for-sale securities

106

—

Derivatives

466

0.01

Non-cash GAAP discount on Senior Unsecured Notes issuance ⁽³⁾

3,108

0.09

Issuance of unexercised warrants ⁽³⁾

—

(0.25

)

Impact to equity of share-based compensation ⁽⁴⁾

1,905

—

Total net increase

11,156

0.02

Common stock book value at September 30, 2020 ⁽¹⁾⁽⁵⁾

$

201,845

$

6.03

Reconciling items in arriving at economic book value at September 30, 2020:

Non-cash 4.50% Convertible Senior Notes’ unamortized discounts

(5,968

)

(0.18

)

Non-cash GAAP discount on Senior Unsecured Notes issuance ⁽³⁾

(3,108

)

(0.09

)

Series C Preferred Stock redemption value in excess of carrying value

(4,045

)

(0.12

)

Economic book value at September 30, 2020

$

188,724

$

5.64

(1)

Per share calculations exclude unvested restricted stock, as disclosed on the consolidated balance sheets, of 34,833 and 331,681 shares at September 30, 2020 and June 30, 2020, respectively, and include warrants to purchase up to 1,400,000 shares of common stock at September 30, 2020, see footnote (3) below. The denominators for the calculations are 33,458,492 and 31,726,811 at September 30, 2020 and June 30, 2020, respectively.

(2)

The per share amount is calculated with the denominator referenced in footnote (1) at September 30, 2020. Net income per common share-diluted of $0.17 is calculated using the weighted average diluted shares outstanding during the three months ended September 30, 2020.

(3)

Exantas issued warrants to purchase an aggregate of 1,400,000 shares of common stock to Oaktree and MassMutual in connection with the issuance of the Senior Unsecured Notes due 2027. Upon issuance, the warrants were fair valued and recorded as a discount to the outstanding borrowings, offset in additional paid-in capital.

(4)

Per share amount calculations include 331,681 of additional shares of restricted stock that vested during the period.

(5)

Common stock book value is calculated as total stockholders’ equity of $317.8 million less preferred stock equity of $116.0 million at September 30, 2020.

At September 30, 2020

Amortized Cost

Net Carrying Amount

Percent of Portfolio

Weighted Average Coupon

Core Assets:

CRE whole loans, floating-rate ⁽¹⁾⁽²⁾

$

1,608,695

$

1,560,200

96.50

%

5.33%

CRE mezzanine loan and preferred equity investments ⁽¹⁾⁽²⁾

32,010

27,562

1.70

%

11.18%

CMBS, fixed-rate ⁽³⁾

2,447

2,447

0.15

%

4.33%

CRE whole loans, fixed-rate ⁽⁴⁾

4,820

4,820

0.30

%

4.44%

Total Core Assets

1,647,972

1,595,029

98.65

%

Non-Core Assets:

Legacy CRE assets ⁽⁵⁾⁽⁶⁾

37,449

21,801

1.35

%

1.42%

Total Core and Non-Core Assets

$

1,685,421

$

1,616,830

100.00

%

(1)

Net carrying amount includes a non-cash allowance for credit losses pursuant to CECL of $52.9 million at September 30, 2020.

(2)

Classified as CRE loans on the consolidated balance sheet.

(3)

Classified as investment securities available-for-sale on the consolidated balance sheet.

(4)

Classified as other assets on the consolidated balance sheet.

(5)

Includes one legacy CRE loan reported at its amortized cost of $11.5 million classified as a CRE loan on the consolidated balance sheet that entered technical default in June 2020. The Company intends to hold this loan until payoff.

(6)

Net carrying amount includes a lower of cost or market value adjustment at September 30, 2020.

•

Schedule I - Reconciliation of GAAP Net Income (Loss) to Core Earnings;

•

Schedule II - Summary of Securitization Performance Statistics;

•

Schedule III - Economic Book Value Per Share; and

•

Schedule IV - Supplemental Information.

•

the economic impact of the COVID-19 pandemic, including but not limited to:

•

the availability of debt and equity capital to acquire and finance investments;

•

defaults or bankruptcies by borrowers on the Company’s loans or on loans underlying its investments;

•

adverse market trends that have affected and may continue to affect the value of real estate and other assets underlying the Company’s investments;

•

fluctuations in interest rates and related hedging activities;

•

increases in financing or administrative costs; and

•

general business and economic conditions that have in the past impaired and may in the future impair the credit quality of borrowers and the Company’s ability to originate loans.

September 30, 2020

December 31, 2019

(unaudited)

ASSETS ⁽¹⁾

Cash and cash equivalents

$

122,105

$

79,958

Restricted cash

33,776

14,476

Accrued interest receivable

8,506

8,042

CRE loans

1,652,221

1,791,445

Less: allowance for credit losses

(52,943

)

(1,460

)

CRE loans, net

1,599,278

1,789,985

Investment securities available-for-sale

2,447

520,714

Principal paydowns receivable

11,005

19,517

Loan receivable - related party

11,975

—

Investments in unconsolidated entities

1,548

1,548

Derivatives, at fair value

—

30

Other assets

9,371

3,290

Assets held for sale

10,346

16,766

Total assets

$

1,810,357

$

2,454,326

LIABILITIES ⁽²⁾

Accounts payable and other liabilities

$

3,765

$

3,408

Management fee payable - related party

442

701

Accrued interest payable

2,871

4,408

Borrowings

1,476,924

1,872,577

Distributions payable

6,900

10,492

Derivatives, at fair value

60

4,558

Accrued tax liability

56

38

Liabilities held for sale

1,538

1,746

Total liabilities

1,492,556

1,897,928

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

Common stock, par value $0.001:  125,000,000 shares authorized; 32,093,325 and 31,880,594 shares issued and outstanding (including 34,833 and 420,962 of unvested restricted shares)

32

32

Additional paid-in capital

1,091,266

1,085,041

Accumulated other comprehensive (loss) income

(10,444

)

1,821

Distributions in excess of earnings

(763,058

)

(530,501

)

Total stockholders’ equity

317,801

556,398

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,810,357

$

2,454,326

September 30, 2020

December 31, 2019

(unaudited)

(1) Assets of consolidated variable interest entities (“VIEs”) included in total assets above:

Restricted cash

$

33,426

$

532

Accrued interest receivable

4,925

3,780

CRE loans, pledged as collateral

1,321,890

957,045

Principal paydowns receivable

11,005

19,239

Other assets

44

25

Total assets of consolidated VIEs

$

1,371,290

$

980,621

(2) Liabilities of consolidated VIEs included in total liabilities above:

Accounts payable and other liabilities

$

61

$

175

Accrued interest payable

661

897

Borrowings

1,120,137

746,439

Total liabilities of consolidated VIEs

$

1,120,859

$

747,511

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

REVENUES

Interest income:

CRE loans

$

24,482

$

32,558

$

78,482

$

90,289

Securities

100

6,596

6,521

19,562

Other

56

138

168

511

Total interest income

24,638

39,292

85,171

110,362

Interest expense

13,033

22,712

43,974

63,688

Net interest income

11,605

16,580

41,197

46,674

Other revenue

19

25

62

77

Total revenues

11,624

16,605

41,259

46,751

OPERATING EXPENSES

Management fees - related party

1,284

2,528

4,728

6,862

Equity compensation - related party

1,905

552

3,118

1,647

General and administrative

5,295

2,086

11,552

7,158

Depreciation and amortization

12

8

34

39

(Reversal of) provision for credit losses, net

(8,172

)

(1,137

)

49,449

58

Total operating expenses

324

4,037

68,881

15,764

11,300

12,568

(27,622

)

30,987

OTHER INCOME (EXPENSE)

Net realized and unrealized gain (loss) on investment securities available-for-sale and loans and derivatives

96

—

(186,243

)

4

Fair value and other adjustments on asset held for sale

(3,371

)

(55

)

(8,089

)

(1,457

)

Other income

134

107

192

259

Total other (expense) income

(3,141

)

52

(194,140

)

(1,194

)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES

8,159

12,620

(221,762

)

29,793

Income tax benefit

—

—

—

—

NET INCOME (LOSS) FROM CONTINUING OPERATIONS

8,159

12,620

(221,762

)

29,793

NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX

—

(63

)

—

(212

)

NET INCOME (LOSS)

8,159

12,557

(221,762

)

29,581

Net income allocated to preferred shares

(2,588

)

(2,588

)

(7,763

)

(7,763

)

NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES

$

5,571

$

9,969

$

(229,525

)

$

21,818

NET INCOME (LOSS) PER COMMON SHARE - BASIC:

CONTINUING OPERATIONS

$

0.17

$

0.32

$

(7.16

)

$

0.70

DISCONTINUED OPERATIONS

—

—

—

(0.01

)

TOTAL NET INCOME (LOSS) PER COMMON SHARE - BASIC

$

0.17

$

0.32

$

(7.16

)

$

0.69

NET INCOME (LOSS) PER COMMON SHARE - DILUTED:

CONTINUING OPERATIONS

$

0.17

$

0.31

$

(7.16

)

$

0.70

DISCONTINUED OPERATIONS

—

—

—

(0.01

)

TOTAL NET INCOME (LOSS) PER COMMON SHARE - DILUTED

$

0.17

$

0.31

$

(7.16

)

$

0.69

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC

32,893,816

31,445,492

32,078,230

31,421,294

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED

32,898,862

31,714,755

32,078,230

31,634,371

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income (loss) allocable to common shares - GAAP

$

5,571

$

9,969

$

(229,525

)

$

21,818

Reconciling items from continuing operations:

Non-cash equity compensation expense

1,905

552

3,118

1,647

Non-cash (reversal of) provision for CRE credit losses

(8,172

)

(1,137

)

48,427

58

Unrealized (gain) loss on core activities ⁽³⁾

(220

)

—

5,816

—

Non-cash amortization of discounts or premiums associated with borrowings

740

722

2,170

2,107

Net realized gain on non-core assets ⁽¹⁾⁽²⁾

—

(108

)

—

(123

)

Net loss (income) from non-core assets ⁽²⁾

3

(2

)

(30

)

24

Reconciling items from discontinued operations and CRE assets:

Net interest income on legacy CRE assets

(157

)

(170

)

(475

)

(586

)

Fair value and other adjustments on legacy CRE assets

3,371

55

8,089

1,457

Loss from discontinued operations, net of taxes

22

63

80

212

Core Earnings allocable to common shares

3,063

9,944

(162,330

)

26,614

Reconciling items in arriving at Core Earnings allocable to common shares, adjusted:

Loss on disposition of CMBS

—

—

180,315

—

Non-recurring transaction costs

2,637

—

2,637

—

Core Earnings allocable to common shares, adjusted

$

5,700

$

9,944

$

20,622

$

26,614

Weighted average common shares - diluted on Core Earnings allocable to common shares

32,899

31,715

32,078

31,634

Weighted average common shares - diluted on Core Earnings allocable to common shares, adjusted

32,899

31,715

32,121

31,634

Core Earnings per common share - diluted

$

0.09

$

0.31

$

(5.06

)

$

0.84

Core Earnings per common share, adjusted - diluted

$

0.17

$

0.31

$

0.64

$

0.84

(1)

Net realized gain on non-core assets is a component of net income or loss from non-core assets.

(2)

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

(3)

Substantially comprises the change in unrealized losses on two unencumbered CMBS investments that had an unrealized loss of $5.8 million at September 30, 2020.

Cash Distributions

Overcollateralization Cushion ⁽¹⁾

Name

For the Nine Months Ended

September 30, 2020

For the Year Ended

December 31, 2019

At September 30, 2020

At the Initial Measurement Date

End of Designated Principal Reinvestment Period

XAN 2019-RSO7 ⁽²⁾

$

16,950

$

10,672

$

49,777

$

34,341

April 2022

XAN 2020-RSO8 ⁽²⁾

$

8,796

$

—

$

26,146

$

26,146

March 2023

XAN 2020-RSO9 ⁽³⁾

$

—

$

—

$

11,887

$

11,887

N/A

(1)

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

(2)

The designated principal reinvestment period for Exantas Capital Corp. 2019-RSO7, Ltd. and Exantas Capital Corp. 2020-RSO8, Ltd.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. Additionally, the indenture for each securitization does not contain any interest coverage test provisions.

(3)

XAN 2020-RSO9 includes a future advances reserve account, which had a balance of $21.3 million at September 30, 2020, to fund commitments that were not funded as of the closing date. Additionally, the indenture does not contain any interest coverage test provisions.

Cash Distributions

Liquidation Details

Name

For the Nine Months Ended

September 30, 2020

For the Year Ended

December 31, 2019

Liquidation Date

Remaining Assets at the Liquidation

Date ⁽¹⁾

RCC 2017-CRE5

$

—

$

12,551

July 2019

$

112,753

XAN 2018-RSO6

$

6,748

$

17,959

September 2020

$

201,327

Whitney CLO I, Ltd. ⁽²⁾

$

—

$

68

January 2019

$

—

Apidos CDO I, Ltd. ⁽³⁾

$

—

$

708

October 2014

$

—

(1)

The remaining assets at the liquidation date were distributed to the Company in exchange for its notes owned and preference shares in the securitization.

(2)

Whitney CLO I, Ltd. was substantially liquidated in September 2013.

(3)

Apidos CDO I, Ltd. was substantially liquidated in October 2014.

At September 30,

2020

At June 30,

2020

At March 31,

2020

At December 31,

2019

At September 30,

2019

Common stock book value

$

6.03

$

6.01

$

7.13

$

14.00

$

14.12

Non-cash 4.50% Convertible Senior Notes’ unamortized discount

(0.18

)

(0.21

)

(0.23

)

(0.26

)

(0.28

)

Non-cash GAAP discount on Senior Unsecured Notes issuance

(0.09

)

—

—

—

—

Preferred stock redemption value in excess of carrying value

(0.12

)

(0.13

)

(0.13

)

(0.13

)

(0.13

)

Economic book value

$

5.64

$

5.67

$

6.77

$

13.61

$

13.71

September 30, 2020

December 31, 2019

(unaudited)

Allowance for credit losses:

CRE whole loans

$

48,495

$

1,460

CRE mezzanine loan

351

—

CRE preferred equity investments

4,097

—

Total allowance for credit losses ⁽¹⁾

$

52,943

$

1,460

Allowance as a percentage of total loans

3.2

%

0.1

%

(1)

Represents the total non-cash reserves currently on the Company’s consolidated balance sheet pursuant to CECL at September 30, 2020.

Loan type:

Whole loans

98.3

%

Preferred equity investments

1.4

%

Mezzanine loan

0.3

%

Total

100.0

%

Collateral type:

Multifamily

56.2

%

Office

13.8

%

Hotel

10.7

%

Self-Storage

8.0

%

Retail

7.3

%

Manufactured Housing

3.3

%

Industrial

0.7

%

Total

100.0

%

Collateral by NCREIF U.S. region:

Southeast ⁽¹⁾

18.0

%

Southwest ⁽²⁾

17.9

%

Mountain ⁽³⁾

17.5

%

Pacific ⁽⁴⁾

15.0

%

Mid Atlantic ⁽⁵⁾

13.0

%

Northeast ⁽⁶⁾

12.8

%

East North Central

5.4

%

West North Central

0.4

%

Total

100.0

%

(1)

CRE loans in Florida and Georgia represent 9.4% and 7.9%, respectively, of the total loan portfolio.

(2)

CRE loans in Texas represent 17.7% of the total loan portfolio.

(3)

CRE loans in Nevada and Arizona represent 7.3% and 6.8%, respectively, of the total loan portfolio.

(4)

CRE loans in California represent 13.5% of the total loan portfolio.

(5)

CRE loans in South Carolina represent 6.1% of the total loan portfolio.

(6)

CRE loans in New York represent 7.4% of the total loan portfolio.