Financial Data and Key Metrics Changes - The company reported a GAAP net loss attributable to common stockholders of $17 million or negative $0.35 per basic common share, which includes a provision for credit losses of $11 million or negative $0.23 per basic common share [19] - Distributable loss for the quarter was $45.3 million or negative $0.94 per basic common share, including write-offs of $36.1 million or negative $0.75 per basic common share [19] - Book value at June 30 was $7.99 per common share, a decline of about $0.25 from Q1, primarily due to the GAAP net loss [20] Business Line Data and Key Metrics Changes - The total loan commitments at the end of the second quarter were $1.9 billion, with an outstanding principal balance of $1.8 billion and about $78 million in future fundings [12] - The loan portfolio yield for the second quarter was 7.1%, which would be 8.2% excluding nonaccrual loans, showing an improvement from the prior quarter's yield of 6.8% [12][13] - The weighted average risk rating of the portfolio improved slightly to 2.8 due to ongoing loan resolutions and no negative credit migration during the quarter [12] Market Data and Key Metrics Changes - The commercial real estate market saw continued improvement in sentiment and liquidity, with increased refinancing activity and sales transaction volume [7][8] - The transitional floating rate lending market has strengthened across most property types, indicating a recovery in the lending market [8] Company Strategy and Development Direction - The company plans to focus on loan and REO resolutions while maintaining higher levels of liquidity, expecting to return to core lending and restart origination efforts by the end of the year [17] - The company aims to regrow its portfolio in 2026, with expected originations between $750 million and $1 billion [38] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery in the commercial real estate market, noting that while there are challenges, there is also a slow but steady improvement in office leasing [41][43] - The company anticipates that run rate profitability will improve as it continues to resolve non-earning assets and repay high-cost debt [22] Other Important Information - The company successfully resolved two nonaccrual loans totaling about $132 million in UPB during the second quarter [13] - The aggregate CECL reserve at June 30 was about $155 million, down from $180 million in the previous quarter [20] Q&A Session Summary Question: Outlook on the resolution of remaining assets in the four-rated bucket - Management indicated that they are actively monitoring and working with sponsors on the four-rated loans, but timing for resolution is hard to predict [28] Question: Reason for the general reserve increase - The general reserve increased by approximately $11 million due to an update in the economic forecast used in the CECL model, which was less favorable than the previous quarter [30][31] Question: Outlook for originations and timing - Management expects to restart origination efforts by the end of the year or early next year, with a focus on attractive investment opportunities [36][38] Question: Trends in the office portfolio - Management noted slow but steady improvement in office leasing across many markets, with capital slowly returning to the sector [41][43] Question: Rebuilding the lending pipeline - The company is in touch with borrowers and brokers and expects to begin quoting later this year, with a short process to get the lending engine back up and running [46] Question: Distributable EPS expectations - It is expected that distributable EPS will be below the dividend until the company starts rebuilding its loan book [48]