UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-56577

STARWOOD CREDIT REAL ESTATE INCOME TRUST

(Exact name of registrant as specified in its charter)

     Maryland 

     93-6487687

     (State or other jurisdiction of
incorporation or organization) 

     (I.R.S. Employer 
Identification No.)

2340 Collins Avenue

Miami Beach, FL 33139

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code (305) 695-5500

Securities registered pursuant to Section 12(b) of the Act: None

     Title of each class

     Trading Symbol(s)

     Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act:

Title of each class

Class T Common shares of beneficial interest, $0.01 par value per share

Class S Common shares of beneficial interest, $0.01 par value per share

Class D Common shares of beneficial interest, $0.01 par value per share

Class I Common shares of beneficial interest, $0.01 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate net asset value of the common shares held by non-affiliates of the registrant: There is currently no established public market for the registrant’s common shares.

As of March 2023, ~~2025~~2026, the registrant had the following shares outstanding: 57,~~566~~897,~~962~~022 shares of Class S common shares, 1,~~678~~737,~~356~~461 shares of Class E common shares, and 48,~~318~~142,~~317~~483 shares of Class I common shares. There are no outstanding shares of Class T common shares or Class D common shares.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

Form 10-K

Year Ended December 31, ~~2024~~2025

PART I
Item 1. Business	7
Item 1A. Risk Factors	12
Item 1B. Unresolved Staff Comments	56
Item 1C. Cybersecurity	5657
Item 2. Properties	5758
Item 3. Legal Proceedings	5758
Item 4. Mine Safety Disclosures	5758
PART II	5859
Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities	5859
Item 6. [Reserved]	64
Item 6. Reserved	68
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	6569
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	7477
Item 8. Financial Statements and Supplementary Data	7778
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	~~102~~106
Item 9A. Controls and Procedures	~~102~~106
Item 9B. Other Information	~~102~~106
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection	~~103~~106
PART III	~~104~~107
Item 10. Directors, Executive Officers and Corporate Governance	~~104~~107
Item 11. Executive Compensation	~~108~~111
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	~~110~~112
Item 13. Certain Relationships and Related Transactions, and Director Independence	~~110~~112
Item 14. Principal Accountant Fees and Services	~~119~~121
PART IV	~~121~~122
Item 15. Exhibits and Financial Statement Schedules	~~121~~122
Item 16. Form 10-K Summary	~~122~~123
Signatures	~~123~~124

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this Annual Report on Form 10-K constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this Annual Report on Form 10-K may include statements as to:

•

our future operating results;

•

our business prospects and the prospects of the assets in which we may invest;

•

the impact of the investments that we expect to make;

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our ability to raise sufficient capital to execute our investment and lending strategies;

•

our ability to source adequate investment and lending opportunities to efficiently deploy capital;

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our current and expected financing arrangements;

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the effect of global and national economic and market conditions generally upon our operating results, including, but not limited to, changes with respect to inflation, interest rate changes and supply chain disruptions, and changes in government rules, regulations and fiscal policies;

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the adequacy of our cash resources, financing sources and working capital;

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the timing and amount of cash flows and distributions, if any, from our investments;

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our contractual arrangements and relationships with third parties;

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actual and potential conflicts of interest with the Advisor (as defined below) or any of its affiliates;

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the dependence of our future success on the general economy and its effect on the assets in which we may invest;

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our use of financial leverage;

•

the ability of the Advisor to locate suitable investments for us and to monitor and administer our investments;

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the ability of the Advisor or its affiliates to attract and retain highly talented professionals;

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our ability to structure investments in a tax-efficient manner and the effect of changes to tax legislation and our tax position; and

•

the tax status of the assets in which we may invest.

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Annual Report on Form 10-K involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” section of and elsewhere in this Annual Report on Form 10-K. Other factors that could cause actual results to differ materially include:

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changes in the economy, particularly those affecting the real estate industry;

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risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters, epidemics or other events having a broad impact on the economy;

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adverse conditions in the areas where our investments or the properties underlying such investments are located and local real estate conditions;

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our portfolio may be concentrated in certain industries and geographies, and, as a consequence, our aggregate return may be substantially affected by adverse economic or business conditions affecting that particular type of asset or geography;

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limitations on our business and our ability to satisfy requirements to maintain our exclusion from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”), or to maintain our qualification as a REIT (as defined below) for U.S. federal income tax purposes;

•

since there is no public trading market for our common shares, repurchase of common shares by us will likely be the only way to dispose of your shares. Our share repurchase plan provides shareholders with the opportunity to request that we repurchase their shares on a quarterly basis, but we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular quarter in our discretion. In addition, repurchases will be subject to available liquidity and other significant restrictions. Further, our board of trustees may make exceptions to, modify and suspend our share repurchase plan if, in its reasonable judgment, it

deems such action to be in our best interest. As a result, our common shares should be considered as having only limited liquidity and at times may be illiquid;

•

distributions are not guaranteed and may be funded from sources other than cash flow from operations, including, without limitation, borrowings, net offering proceeds, the sale of our assets, and repayments of our real estate debt investments, and we have no limits on the amounts we may fund from such sources;

•

the purchase and repurchase prices for our common shares are generally based on our prior month’s net asset value (“NAV”) and are not based on any public trading market; and

•

future changes in laws or regulations and conditions in our operating areas.

Although we believe the assumptions underlying the forward-looking statements, are reasonable, any of the assumptions could be inaccurate, and, as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of the these and other uncertainties, the inclusion of a projection or forward-looking statement in this Annual Report on Form 10-K should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this Annual Report Form 10-K. Moreover, we assume no duty and do not undertake to update the forward-looking statements.

SUMMARY RISK FACTORS

The following is only a summary of the principal risks that may adversely affect our business, financial condition and results of operations and cash flows. The following should be read in conjunction with the complete discussion of risk factors we face, which are set forth below under “Item 1A. Risk Factors.”

Some of the more significant risks relating to our business, our private offering and investment in our common shares include:

Risks Related to Our Organizational Structure

•

We have a limited operating history and there is no assurance that we will be able to successfully achieve our investment objectives.

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We are dependent on Starwood Capital (as defined below) and its affiliates, including the Advisor (as defined below), and their key personnel who provide services to us through the Advisory Agreement (as defined below), and we may not find a suitable replacement for the Advisor if the Advisory Agreement is terminated, or for these key personnel if they leave Starwood Capital or otherwise become unavailable to us.

•

The Advisor manages our portfolio pursuant to very broad investment guidelines and generally is not required to seek the approval of our board of trustees for each investment, financing or asset allocation decision made by it, which may result in our making riskier investments and, in turn, may materially adversely affect our results of operations and financial condition. There is no public trading market for our common shares; therefore, your ability to dispose of your common shares will likely be limited to repurchase by us. If you do sell your common shares to us, you may receive less than the price you paid.

•

Your ability to have your common shares repurchased through our share repurchase plan is limited. We may choose to repurchase fewer common shares than have been requested to be repurchased, or none at all, in our discretion at any time, and the amount of common shares we may repurchase is subject to caps. Further, our board of trustees may make exceptions to, modify or suspend our share repurchase plan if it deems such action to be in our best interest.

•

We may make changes to our business, investment, leverage and financing strategies without shareholder approval.

•

We may pay distributions from sources other than our cash flow from operations, including, without limitation, borrowings, offering net proceeds and the sale of or repayments under our investments, and we have no limits on the amounts we may fund from such sources.

•

Valuations of our investments may reflect estimates of fair value and may not necessarily correspond to realizable value, which could adversely affect the value of your investment.

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Our shareholders generally have limited voting rights.

Risks Related to Our Investments

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Our loans and other investments expose us to risks associated with debt-oriented real estate investments generally.

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The lack of liquidity in our investments may adversely affect our business.

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Prepayment rates may adversely affect the value of our investment portfolio.

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The mortgage loans in which we may invest and the mortgage loans underlying the mortgage securities in which we may invest are subject to delinquency, foreclosure and loss, which could result in losses to us.

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Interest rate fluctuations could reduce our ability to execute on our investment strategy and generate income on our investments and may cause losses.

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If the Advisor overestimates the yields or incorrectly prices the risks of our investments, we may experience losses.

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Real estate valuation is inherently subjective and uncertain.

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Difficult conditions in the mortgage and commercial real estate (“CRE”) markets may cause us to experience market losses related to our holdings.

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We operate in a highly competitive market for investment opportunities and competition may limit our ability to originate and/or acquire desirable investments in our target assets and could also affect the pricing of these assets.

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The B Notes (as defined below) that we originate or acquire are subject to additional risks related to the privately negotiated structure and terms of the transaction, which may result in losses to us.

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Mezzanine loans involve greater risks of loss than senior loans secured by income-producing properties.

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The commercial mortgage-backed securities (“CMBS”) in which we invest is subject to the risks of the mortgage securities market as a whole and risks of the securitization process.

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We may sponsor, and purchase the more junior securities of, collateralized loan obligations (“CLOs”) and such instruments involve significant risks, including that these securities receive distributions from the CLO only if the CLO generates enough income to first pay all the investors holding senior tranches and all CLO expenses.

Risks Related to Debt Financing

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We may incur significant leverage.

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We use repurchase agreements to finance our investments, which may expose us to risks that could result in losses, including due to cross-defaults and cross-collateralization under warehouse repurchase and credit facilities.

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Changes in interest rates may affect our cost of capital and net investment income.

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We may not be able to access financing sources on attractive terms which could adversely affect our ability to execute our business plan.

Risks Related to our Relationship with the Advisor and the Dealer Manager

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We depend on the Advisor to select our investments and otherwise conduct our business, and any material adverse change in its financial condition or our relationship with the Advisor could have a material adverse effect on our business and ability to achieve our investment objectives.

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We do not own the “Starwood” name, but we may use it as part of our corporate name pursuant to the Advisory Agreement. Use of the name by other parties or the termination of our trademark license agreement may harm our business.

Risks Related to Conflicts of Interest

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Various potential and actual conflicts of interest will arise, and these conflicts may not be identified or resolved in a manner favorable to us.

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The Advisor faces a conflict of interest because the fees it receives for services performed are based in part on our NAV, which the Advisor is ultimately responsible for determining.

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The Management Fee (as defined below) and Performance Fee (as defined below) may not create proper incentives or may induce the Advisor and its affiliates to make certain investments, including speculative investments that increase the risk of our portfolio.

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Certain Other Starwood Accounts (as defined below) have similar or overlapping investment objectives and guidelines, and we will not be allocated certain opportunities and may be allocated only opportunities with lower relative returns.

Risks Related to our REIT Status and Certain Other Tax Items

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Our failure to qualify as a REIT in any taxable year would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of cash available for distribution to our shareholders.

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Failure to make required distributions would subject us to tax, which would reduce the cash available for distribution to our shareholders.

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Complying with REIT requirements may cause us to forego otherwise attractive investment opportunities or financing or hedging strategies.

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Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”).

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Our board of trustees is authorized to revoke our REIT election without shareholder approval, which may cause adverse consequences to our shareholders.

PART I

Item 1. Business.

The following description of our business should be read in conjunction with the financial statements and notes thereto included elsewhere in this Annual Report on Form 10‑K for the year ended December 31, ~~2024~~2025. This discussion contains forward‑looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward‑looking statements due to the factors set forth in “Item 1A.- Risk Factors” and elsewhere in this Annual Report on Form 10‑K.

References in this Annual Report on Form 10‑K to “we,” “our,” “us,” or the “Company” or the “Trust” refer to Starwood Credit Real Estate Income Trust and its subsidiaries.

General Description of Business Operations

We are a Maryland statutory trust formed on June 28, 2023, and we have elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, commencing with our taxable year ended December 31, 2023. We are externally managed by our investment advisor, Starwood Credit Advisors, L.L.C. (“Advisor”), an indirect, wholly-owned subsidiary of Starwood Capital Group Holdings L.P. (“Starwood Holdings” and together with any entity that is controlled by, controls, or is under common control with Starwood Holdings, and any of their respective predecessor entities, “Starwood Capital” or the “Sponsor”). Starwood Capital is a private investment firm with a primary focus on global real estate. Since its inception in 1991, Starwood Capital has raised over $8090 billion of capital and currently has over approximately $~~115~~125 billion of assets under management. Over the past 3334 years, Starwood Capital has invested in excess of $~~245~~265 billion of assets, including properties within every major real estate asset class.

Our investment strategy is to originate, acquire, finance and manage a portfolio of primarily CRE debt investments, focused on senior secured, floating-rate CRE loans diversified across both geography and asset class. To a lesser extent, we may invest in (1) other real asset lending strategies, including infrastructure loans, and (2) other real estate-related debt and equity securities, including CMBS and CLOs.

We are conducting a continuous, blind pool private offering of our common shares in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) to investors that are (i) accredited investors (as defined in Regulation D under the Securities Act) and (ii) in the case of common shares sold outside the United States, to persons that are not “U.S. persons” (as defined in Regulation S under the Securities Act). As of March 2123, ~~2025~~2026, we had received gross proceeds of approximately $~~225~~349.32 million ($~~224~~347.27 million, net of commissions), from the sale of our common shares through our private offering. We have primarily used the net proceeds to make investments in CRE debt investments and real estate-related securities. We intend to continue selling our common shares on a monthly basis through our continuous, blind pool private offering.

As of December 31, ~~2024~~2025, we operated as one reportable business segment.

Our Advisor

We are externally managed by our Advisor. Our board of trustees has atultimate ~~all times had~~ oversight and policy-making authority over us, including responsibility for governance, financial controls, compliance and disclosure. Pursuant to an advisory agreement among the Advisor and us (the “Advisory Agreement”), we have delegated to the Advisor the authority to source, evaluate and monitor our investment opportunities and make decisions related to the acquisition, management, financing and disposition of our assets, in accordance with our investment objectives, guidelines, policies and limitations, subject to oversight by our board of trustees. The Advisor is an affiliate of Starwood Capital. We believe that the Advisor currently has sufficient staff and resources so as to be capable of fulfilling the duties set forth in the Advisory Agreement.

Investment Objectives

Our investment objectives are to invest primarily in debt on high quality assets that will enable us to:

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provide current income in the form of regular, stable cash distributions to achieve an attractive distribution yield;

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preserve and protect invested capital, by focusing on high quality real assets with current cash-flow and/or limited business plan risk;

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reduce downside risk through conservative loan-to-value ratios against high quality real assets with meaningful borrower equity or implied equity; and

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provide an investment alternative for shareholders seeking to allocate a portion of their long-term investment portfolios to CRE debt with lower volatility than publicly -traded securities and compelling risk-adjusted returns compared to fixed income alternatives.

We may not achieve our investment objectives. See “Item 1A. Risk Factors.”

Investment Strategy

Our investment strategy is to originate, acquire, finance and manage a portfolio of primarily CRE debt investments, focused on senior secured, floating-rate CRE loans diversified across both geography and asset class. Our CRE loans are ~~expected to be~~ primarily secured by properties located in U.S., ~~European~~ and ~~Australian~~European markets and include multifamily, industrial and select other CRE asset classes, such as student housing, ~~self-storage~~senior housing, ~~life science~~ and ~~data center assets~~self-storage.

To a lesser extent, we may invest in (1) other real asset lending strategies, including infrastructure loans, and (2) other real estate-related debt and equity securities, including CMBS and CLOs. We believe our real estate-related debt and equity securities will help maintain liquidity to satisfy any share repurchases we choose to make in any particular calendar quarter and manage cash before investing subscription proceeds into investments while also earning attractive current income.

We seek to focus on senior secured floating rate investments, secured by high quality real assets to generate current cash flow. We seek to identify attractive risk-reward investments by financing high quality real assets with substantial borrower equity and partnering with well-known sponsors with real assets in primarily gateway and select secondary markets. We expect to create synergies with Starwood Capital’s existing debt capabilities by leveraging its significant scale and existing relationships to source high quality lending opportunities. Our revenues will primarily be comprised of interest income generated by investments in loans and by securities backed by loans in addition to loan origination fees and gains on sales of loans and securities investments.

Our structure as a perpetual-life REIT allows us to originate, acquire, finance and manage our investment portfolio in an active and flexible manner. We believe the structure is advantageous to shareholders, as we are not limited by a pre-determined operational period and the need to liquidate assets, potentially in an unfavorable market, to satisfy a liquidity event at the end of that period.

Target Assets

CRE Debt Investments

Our target assets include, but are not limited to, the following types of CRE debt investments:

•

Mortgage Loans: We may originate or acquire mortgage loans secured by a first lien on commercial real estate (usually in an amount up to 75% of the underlying value of the collateral), with maturity dates generally ranging from three to five years. In some cases, we may originate and fund a first mortgage loan with the intention of selling the senior tranche (the “A Note”), and retaining the subordinated tranche (the “B Note”) or mezzanine loan tranche. We may receive origination fees, extension fees, modification or similar fees in connection with our whole mortgage loans.

•

B Notes: We may originate or acquire B Notes in negotiated transactions with the originators and in the secondary market. A B Note is typically a privately negotiated loan that is secured by a first mortgage on a single large commercial property or group of related properties and subordinated to an A Note secured by the same first mortgage on the same property or group. The subordination of a B Note typically is evidenced by an inter-creditor agreement with the holder of the related A Note. B Notes are subject to more credit risk with respect to the underlying mortgage collateral than the corresponding A Note. We may receive origination fees, extension fees, modification or similar fees in connection with our B Note investments.

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Mezzanine Loans: We may originate or acquire mezzanine loans, which are loans made to property owners that are secured by pledges of the borrower’s ownership interests in the property and/or the property owner. Mezzanine loans are subordinate to mortgage loans secured by mortgage liens on the property but are senior to the borrower’s equity in the property. Upon default, the mezzanine lender can foreclose on the ownership interests pledged under the loan and thereby succeed to ownership of the property, subject to the mortgage lien on the property. We may receive origination fees, extension fees, modification or similar fees in connection with our mezzanine loans.

•

CLOs and CMBS: CLOs are securities that are collateralized by a pool of debt obligations. CMBS are securities that are collateralized by, or evidence ownership interests in, a mortgage loan secured by a single commercial property, or a partial or entire pool of mortgage loans secured by commercial properties. We may invest in investment grade CLOs and/or CMBS (rated BBB- or Baa3 or higher), sub-investment grade CLOs and/or CMBS and/or unrated CLOs and/or CMBS.

8Infrastructure and Other Real Asset Lending Investments

~~Infrastructure~~We may invest in infrastructure and ~~Other~~other ~~Real~~real ~~Asset~~asset ~~Lending~~lending ~~Investments~~investments, including senior secured project finance loans and senior secured project finance investment securities secured by power generation facilities and midstream and downstream oil and gas assets.

We may invest in infrastructure and other real asset lending investments, including senior secured project finance loans and senior secured project finance investment securities secured by power generation facilities and midstream and downstream oil and gas assets.8

Cash, Cash Equivalents and Other Short-Term Investments

We may hold cash, cash equivalents and other short-term investments. These types of investments may include the following, to the extent consistent with our qualification as a REIT:

•

money market instruments, cash and other cash equivalents (such as high-quality short-term debt instruments, including commercial paper, certificates of deposit, bankers’ acceptances, repurchase agreements, interest-bearing time deposits and credit rated corporate debt securities);

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U.S. government or government agency securities; and

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credit-rated corporate debt or asset-backed securities of U.S. or foreign entities, or credit-rated debt securities of foreign governments or multi-national organizations.

Other Investments

The allocation of our capital among our target assets will depend on prevailing market conditions at the time we invest and may change over time in response to prevailing market conditions, including with respect to interest rates and general economic and credit market conditions. We may, but do not presently intend to, make investments other than as described above. At all times, we intend to make investments in such a manner consistent with maintaining our qualification as a REIT under the Code and maintaining our exclusion from registration under the Investment Company Act. Such other assets may include, among other things, other real estate-related debt investments, such as loans to REITs and real estate operating companies (“REOCs”) and corporate bonds of REITs and REOCs; loans to providers of real estate net lease financing; other real estate-related financial assets and investments, including preferred stock and convertible debt securities of REITs and REOCs, credit default swaps and other derivative securities; collateralized debt obligations; real property investments; and non-real estate-related debt investments.

Financing Strategy

We use financial leverage to provide additional funds to support our investment activities. This allows us to make more investments than would otherwise be possible, resulting in a broader, more diverse portfolio of investments. Subject to maintaining our qualification as a REIT for U.S. federal income tax purposes and our exemption from registering under the Investment Company Act, we may finance the acquisition of our target assets, to the extent available to us, through the following methods:

•

sources of private and government sponsored financing, including long and short-term repurchase agreements as well as warehouse and bank credit facilities;

•

whole loan and loan participation sales, securities sales, syndications, securitizations and/or CLO transactions; and

•

our continuous private offering of common shares.

We may also utilize other sources of financing to the extent available to us.

After we have raised substantial proceeds in our continuous, blind pool private offering and acquired a diversified portfolio of investments (the “Ramp-Up Period”), our target leverage ratio will be 60% to 75% on a portfolio-wide basis. Our leverage ratio is measured by dividing (i) the aggregate principal amount of our outstanding indebtedness (including both entity-level and investment-level debt), by (ii) the gross asset value of our investments (measured using the greater of fair market value and cost). For purposes of calculating our leverage, we exclude any senior portions of investments that are sold to, or held by, third party lenders to achieve “structural leverage,” where we retain a mezzanine or other subordinate investment that is unencumbered and not otherwise pledged as collateral for borrowed money.

During the Ramp-Up Period and/or during times of increased investment and capital market activity, we may employ greater leverage in order to quickly build a broader portfolio of assets. We may leverage our portfolio by assuming or incurring secured or unsecured investment-level or entity-level debt. We may procure financing from the Advisor or its affiliates; provided, that any such financing will be approved by a majority of our trustees, including a majority of our independent trustees, not otherwise interested in the transaction as fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties under the same circumstances. We may decide to reserve borrowing capacity under any future lines of credit to be used to fund repurchases of our shares in the event that repurchase requests exceed our operating cash flows and net proceeds from our continuous private offering, to fund debt investments or for any other corporate purpose.

Our actual leverage level is affected by a number of factors, some of which are outside our control. Significant inflows of proceeds from the sale of our common shares will generally cause our leverage as a percentage of our net assets, to decrease, at least temporarily. Significant outflows of equity as a result of repurchases of our common shares will generally cause our leverage as a percentage of our net assets to increase, at least temporarily. Our leverage as a percentage of our net assets also increases or decreases with decreases or increases, respectively, in the net asset value of our portfolio. If we borrow under a line of credit to fund repurchases of our common shares or for other purposes, our leverage would increase and may exceed our target leverage. In such cases, our leverage may remain at the higher level until we receive additional net proceeds from our continuous private offering or sell some of our assets to repay outstanding indebtedness.

ofThere ~~our~~is ~~common~~no ~~shares~~limit oron ~~for~~the ~~other~~amount ~~purposes~~we may borrow with respect to any individual investment. During the Ramp-Up Period, our leverage ~~would~~ratio ~~increase~~may ~~and~~exceed our target. We may also exceed our target leverage ratio at other times, particularly during a market downturn or in connection with a large acquisition. Our board of trustees will periodically review our aggregate borrowings. In connection with such ~~cases~~review, our ~~leverage~~board of trustees may ~~remain~~determine atto ~~the~~modify ~~higher~~our ~~level~~target ~~until~~leverage weratio ~~receive~~in ~~additional~~light ~~net~~of ~~proceeds~~then-current ~~from~~economic ~~our~~conditions, ~~continuous~~relative ~~private~~costs ~~offering~~of ordebt ~~sell~~and ~~some~~equity capital, fair values of our ~~assets~~investments, togeneral ~~repay~~conditions ~~outstanding~~in ~~indebtedness~~the market for debt and equity securities, growth and investment opportunities or other factors.

~~There~~Governmental is no limit on the amount we may borrow with respect to any individual investment. During the Ramp-Up Period, our leverage ratio may exceed our target. We may also exceed our target leverage ratio at other times, particularly during a market downturn or in connection with a large acquisition. Our board of trustees will periodically review our aggregate borrowings. In connection with such review, our board of trustees may determine to modify our target leverage ratio in light of then-current economic conditions, relative costs of debt and equity capital, fair values of our investments, general conditions in the market for debt and equity securities, growth and investment opportunities or other factors.Regulations

~~Governmental~~Our ~~Regulations~~operations are subject, in certain instances, to supervision and regulation by U.S. and other governmental authorities, and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions, which, among other things: (i) regulate credit-granting activities; (ii) establish maximum interest rates, finance charges and other charges; (iii) require disclosures to customers; (iv) govern secured transactions; and (v) set collection, foreclosure, repossession and claims-handling procedures and other trade practices. We are also required to comply with certain provisions of the Equal Credit Opportunity Act that are applicable to commercial loans. We intend to conduct our business so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act.

~~Our~~In ~~operations~~our ~~are subject~~judgment, inexisting ~~certain~~statutes ~~instances,~~and toregulations ~~supervision~~have ~~and~~not ~~regulation~~had bya ~~U.S.~~material ~~and~~adverse ~~other~~effect ~~governmental~~on ~~authorities,~~our ~~and~~business. ~~may~~In berecent ~~subject~~years, tolegislators ~~various~~in ~~laws~~the ~~and~~United ~~judicial~~States and ~~administrative~~in ~~decisions~~other ~~imposing~~countries ~~various~~have ~~requirements~~said ~~and~~that ~~restrictions,~~greater ~~which,~~regulation ~~among~~of ~~other~~financial ~~things:~~services ~~(i)~~firms ~~regulate~~is ~~credit-granting~~needed, ~~activities;~~particularly ~~(ii)~~in ~~establish~~areas ~~maximum~~such ~~interest~~as ~~rates~~risk management, ~~finance~~leverage, ~~charges~~ and ~~other~~disclosure. ~~charges;~~While ~~(iii)~~we ~~require~~expect ~~disclosures~~that toadditional ~~customers;~~new ~~(iv)~~regulations ~~govern~~in ~~secured~~these ~~transactions;~~areas ~~and~~will ~~(v)~~be ~~set~~adopted ~~collection,~~and ~~foreclosure,~~existing ~~repossession~~ones ~~and~~may ~~claims-handling~~change ~~procedures~~in ~~and~~the ~~other~~future, ~~trade~~it ~~practices.~~is Wenot ~~are~~possible ~~also~~at ~~required~~this time to ~~comply~~forecast ~~with~~the ~~certain~~exact ~~provisions~~nature of ~~the~~any ~~Equal~~future ~~Credit~~legislation, ~~Opportunity~~regulations, ~~Act~~judicial ~~that~~decisions, ~~are~~orders ~~applicable~~or tointerpretations, ~~commercial~~nor ~~loans.~~their Weimpact ~~intend~~upon ~~to conduct~~ our future business, sofinancial ~~that~~condition, ~~neither~~or weresults ~~nor any~~ of ~~our~~operations ~~subsidiaries~~or ~~are required to register as an investment company under the Investment Company Act~~prospects.

In our judgment, existing statutes and regulations have not had a material adverse effect on our business. In recent years, legislators in the United States and in other countries have said that greater regulation of financial services firms is needed, particularly in areas such as risk management, leverage, and disclosure. While we expect that additional new regulations in these areas will be adopted and existing ones may change in the future, it is not possible at this time to forecast the exact nature of any future legislation, regulations, judicial decisions, orders or interpretations, nor their impact upon our future business, financial condition, or results of operations or prospects.Competition

~~Competition~~We face competition from various entities for investment opportunities, including other REITs (both non-traded / private REITs and publicly-traded REITs), pension funds, insurance companies, investment funds and companies, partnerships and developers. In addition to third-party competitors, Other Starwood Accounts, with investment strategies that overlap with ours may be allocated investment opportunities, which the Advisor and its affiliates will seek to manage in a fair and reasonable manner in their sole discretion in accordance with Starwood Capital’s prevailing policies and procedures.

WeIn the face ~~competition~~of ~~from~~this ~~various~~competition, ~~entities~~we ~~for~~have ~~investment~~access ~~opportunities,~~to ~~including~~the ~~other~~Advisor’s ~~REITs,~~professionals ~~pension~~and ~~funds,~~their ~~insurance~~industry ~~companies,~~expertise ~~investment funds~~ and ~~companies~~relationships, ~~partnerships~~which ~~and~~we ~~developers.~~believe Inprovide ~~addition~~us towith ~~third-party~~a ~~competitors,~~competitive ~~Other~~advantage ~~Starwood~~and ~~Accounts~~help us source, ~~with~~evaluate ~~investment~~and ~~strategies~~compete ~~that~~for ~~overlap~~potential ~~with~~investments. ~~ours~~We ~~may~~believe bethese ~~allocated~~relationships ~~investment~~will ~~opportunities,~~enable ~~which~~us ~~the~~to ~~Advisor~~compete ~~and~~more ~~its~~effectively ~~affiliates~~for ~~will~~attractive ~~seek~~investment toopportunities. ~~manage~~However, inwe amay ~~fair~~not ~~and~~be ~~reasonable~~able ~~manner~~to inachieve ~~their~~our ~~sole~~business ~~discretion~~goals inor ~~accordance~~expectations ~~with~~due ~~Starwood~~to ~~Capital’s~~the ~~prevailing~~competitive ~~policies~~risks ~~and~~that ~~procedures~~we face.

InHuman the face of this competition, we have access to the Advisor’s professionals and their industry expertise and relationships, which we believe provide us with a competitive advantage and help us source, evaluate and compete for potential investments. We believe these relationships will enable us to compete more effectively for attractive investment opportunities. However, we may not be able to achieve our business goals or expectations due to the competitive risks that we face.Capital

~~Human~~We ~~Capital~~do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided by individuals who are employees of the Advisor or its affiliates pursuant to the terms of the Advisory Agreement and Declaration of Trust. See “Item 13. Certain Relationships and Related Transactions, and Director Independence.”

WeConflicts ~~do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided by individuals who are employees~~ of ~~the Advisor or its affiliates pursuant to the terms of the Advisory Agreement and Declaration of Trust. See “Item 13. Certain Relationships and Related Transactions, and Director Independence.”~~Interest

We are subject to conflicts of interest arising out of our relationship with Starwood Capital, including the Advisor and its affiliates. See “Item 1A. Risk Factors—Risks Related to Conflicts of Interest ” and “Item 13. Certain Relationships and Related Transactions, and Director Independence.”

WeTaxation ~~are subject to conflicts~~ of ~~interest arising out of our relationship with Starwood Capital, including~~ the ~~Advisor~~Company ~~and its affiliates. See “Item 1A. Risk Factors—Risks Related to Conflicts of Interest” and “Item 13. Certain Relationships and Related Transactions, and Director Independence.”~~

~~Taxation~~The Company has elected to be taxed as a REIT under the Code, for federal income tax purposes, commencing with its taxable year ended December 31, 2023. As long as the Company qualifies for taxation as a REIT, it generally will not be subject to U.S. federal corporate income tax on its net taxable income that is currently distributed to its shareholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its REIT taxable income (subject to certain adjustments) to its shareholders. If the Company fails to qualify as a REIT in a taxable year, without the benefit of certain relief provisions, it will be subject to federal and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, it may also be subject to certain federal, state, local and foreign taxes on its income and assets, including (1) taxes on any undistributed income, (2) taxes related to its taxable REIT subsidiaries (“TRSs”), and (3) certain state or local income taxes. The Company's tax returns for three years from the date filed are subject to examination.

The Company has ~~elected~~formed towholly-owned besubsidiaries ~~taxed~~to function as aTRSs ~~REIT~~and ~~under~~has ~~the~~filed ~~Code~~TRS elections, ~~for~~together ~~federal~~with ~~income~~such ~~tax purposes~~subsidiaries, ~~commencing~~ with ~~its~~the ~~taxable~~Internal ~~year~~Revenue ~~ended~~Service ~~December~~(the ~~31,~~“IRS”) ~~2023.~~during ~~As long as~~ the ~~Company~~year ~~qualifies~~ended ~~for~~December ~~taxation~~31, as2025. aIn ~~REIT~~general, ita ~~generally~~TRS ~~will~~may ~~not~~perform beadditional ~~subject~~services tofor ~~U.S.~~the ~~federal~~Company’s ~~corporate~~tenants ~~income~~and ~~tax~~generally onmay ~~its~~engage ~~net~~in ~~taxable~~any ~~income~~real ~~that~~estate isor ~~currently~~non-real ~~distributed~~estate-related tobusiness ~~its~~other ~~shareholders.~~than Amanagement ~~REIT~~or isoperation ~~subject~~of to a ~~number~~lodging offacility ~~organizational~~or ~~and operational requirements, including~~ a ~~requirement~~health ~~that~~care itfacility. ~~currently~~TRSs ~~distributes~~are ~~at least 90% of its REIT taxable income (~~subject to ~~certain~~taxation ~~adjustments)~~at ~~to its shareholders. If~~ the ~~Company fails to qualify as a REIT in a taxable year~~federal, ~~without the benefit of certain relief provisions~~state, itlocal ~~will be subject to federal~~ and ~~state~~foreign ~~income~~levels, ~~tax~~as onapplicable, ~~its taxable income~~ at the regular corporate tax rates. ~~Even~~The ~~if the~~ Company ~~qualifies~~accounts for ~~taxation~~applicable asincome ataxes ~~REIT,~~by itutilizing ~~may~~the ~~also~~asset beand ~~subject~~liability tomethod. ~~certain~~As ~~federal~~such, ~~state,~~the ~~local~~Company ~~and~~will ~~foreign~~record ~~taxes~~deferred ontax ~~its~~assets ~~income~~ and ~~assets,~~liabilities ~~including~~for ~~(1)~~the ~~taxes~~future ontax ~~any~~consequences ~~undistributed~~resulting ~~income,~~from ~~(2)~~the ~~taxes~~difference ~~related~~between tothe ~~its~~carrying ~~taxable~~value ~~REIT~~of ~~subsidiaries~~existing ~~(“TRSs”),~~assets and ~~(3)~~liabilities ~~certain~~and ~~state~~their orrespective ~~local~~tax ~~income taxes~~basis. ~~The~~A ~~Company's~~valuation ~~tax returns for three years from the date filed are subject to examination.~~

The Company has formed wholly-owned subsidiaries to function as TRSs and has filed TRS elections, together with such subsidiaries, with the Internal Revenue Service (the “IRS”) during the year ended December 31, 2024. In general, a TRS may perform additional services for the Company’s tenants and generally may engage in any real estate or non-real estate-related business other 10

10allowance for deferred tax assets will be provided if the Company believes all or some portion of the deferred tax asset may not be realized.

~~than~~See ~~management~~“Item ~~or operation of a lodging facility or a health care facility~~1A. ~~TRSs~~Risk ~~are~~Factors—Risks ~~subject~~Related to ~~taxation~~our atREIT ~~the~~Status ~~federal, state, local~~ and ~~foreign~~Certain ~~levels,~~Other asTax ~~applicable,~~Items” ~~at the regular corporate tax rates. The Company accounts~~ for ~~applicable~~additional ~~income taxes by utilizing the asset and liability method. As such, the Company will record deferred~~ tax ~~assets~~status ~~and liabilities for the future tax consequences resulting from the difference between the carrying value of existing assets and liabilities and their respective tax basis~~information. ~~A valuation allowance for deferred tax assets will be provided if the Company believes all or some portion of the deferred tax asset may not be realized.~~

~~See~~Available ~~“Item~~Information ~~1A. Risk Factors—Risks Related to our REIT Status and Certain Other Tax Items” for additional tax status information.~~

~~Available~~Shareholders ~~Information~~may obtain copies of our filings with the U.S. Securities and Exchange Commission (the “SEC”), free of charge from the website maintained by the SEC at www.sec.gov or from our website at www.starwoodcredit.com.

~~Shareholders~~We ~~may~~are ~~obtain~~providing ~~copies~~the ofaddress to our ~~filings~~website ~~with~~solely for the Uinformation of investors.S. ~~Securities~~The ~~and~~information ~~Exchange~~on ~~Commission~~our ~~(the~~website ~~“SEC”),~~is ~~free~~not ofa ~~charge~~part ~~from~~of, ~~the~~nor ~~website~~is ~~maintained~~it incorporated by ~~the~~reference ~~SEC~~into atthis ~~www~~report.~~sec.gov~~ orFrom ~~from~~time to time, we may use our website atas ~~www~~a distribution channel for information about our Company.~~starwoodcredit~~ The information we post through this channel may be deemed material.~~com~~ Accordingly, investors should monitor this channel, in addition to following our press releases and SEC filings.

We are providing the address to our website solely for the information of investors. The information on our website is not a part of, nor is it incorporated by reference into this report. From time to time, we may use our website as a distribution channel for information about our Company. The information we post through this channel may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases and SEC filings.11

11Item 1A. Risk Factors

ItemYou 1Ashould specifically consider the following material risks in addition to the other information contained in this Annual Report on Form 10‑K. RiskThe Factorsoccurrence of any of the following risks might have a material adverse effect on our business and financial condition. The risks and uncertainties discussed below are not the only ones we face, but do represent those risks and uncertainties that we believe are most significant to our business, operating results, financial condition, prospects and forward-looking statements. As used herein, the term “you” refers to our current shareholders or potential investors in our common shares, as applicable.

~~You~~Risks ~~should~~Related ~~specifically consider the following material risks in addition~~ to ~~the~~Our ~~other~~Organizational information contained in this Annual Report on Form 10‑K. The occurrence of any of the following risks might have a material adverse effect on our business and financial condition. The risks and uncertainties discussed below are not the only ones we face, but do represent those risks and uncertainties that we believe are most significant to our business, operating results, financial condition, prospects and forward-looking statements. As used herein, the term “you” refers to our current shareholders or potential investors in our common shares, as applicable.Structure

~~Risks~~We ~~Related~~have a limited operating history and there is no assurance that we will be able to ~~Our~~successfully ~~Organizational~~achieve ~~Structure~~our investment objectives.

We have a limited operating history and ~~there~~we ismay nonot ~~assurance~~be able to achieve our investment objectives. We cannot assure you that wethe past experiences of the Advisor or its affiliates will be ~~able~~sufficient to allow us to successfully achieve our investment objectives. As a result, an investment in our common shares may entail more risk than an investment in a REIT with a substantial operating history.

We are adependent ~~newly~~on ~~formed~~Starwood ~~entity~~Capital ~~with a limited operating history~~ and weits ~~may~~affiliates, ~~not~~including bethe ~~able~~Advisor, toand ~~achieve~~their ~~our~~key ~~investment~~personnel ~~objectives.~~who Weprovide ~~cannot~~services ~~assure~~to ~~you~~us ~~that~~through the ~~past~~Advisory ~~experiences~~Agreement, ofand ~~the~~we ~~Advisor~~may ornot ~~its~~find ~~affiliates~~a ~~will~~suitable bereplacement ~~sufficient~~for tothe ~~allow~~Advisor usif tothe ~~successfully~~Advisory ~~achieve~~Agreement ~~our~~is ~~investment objectives. As a result~~terminated, anor ~~investment~~for inthese ~~our~~key ~~common~~personnel ~~shares~~if ~~may~~they ~~entail~~leave ~~more~~Starwood ~~risk~~Capital ~~than~~or anotherwise ~~investment~~become inunavailable ato ~~REIT with a substantial operating history~~us.

We have no employees and are ~~dependent~~completely reliant on the Advisor. Some of our officers are executive officers of Starwood Capital. ~~and~~The ~~its~~Advisor ~~affiliates,~~has ~~including~~significant discretion as to the ~~Advisor,~~implementation of our investment and ~~their~~operating ~~key~~policies ~~personnel~~and ~~who~~strategies. ~~provide~~Accordingly, ~~services~~we believe that our success depends to usa ~~through~~significant extent upon the ~~Advisory~~efforts, ~~Agreement~~experience, diligence, skill and wenetwork ~~may~~of ~~not~~business ~~find~~contacts aof ~~suitable~~the ~~replacement~~officers ~~for~~and key personnel of the Advisor. ifThe officers and key personnel of the ~~Advisory~~Advisor ~~Agreement~~evaluate, isnegotiate, ~~terminated~~originate and monitor our investments; therefore, orour ~~for~~success ~~these~~depends on their continued service. The departure of any of the officers or key personnel ifof ~~they~~the ~~leave~~Advisor ~~Starwood~~could ~~Capital~~have ora ~~otherwise~~material ~~become~~adverse ~~unavailable~~effect toon usour performance.

WeThe ~~have~~Advisor nois ~~employees~~not ~~and~~obligated ~~are~~to ~~completely~~dedicate ~~reliant~~any onspecific ~~the~~personnel ~~Advisor~~exclusively to us. ~~Some~~In addition, none of our officers ~~are~~or ~~executive~~the officers of ~~Starwood~~the ~~Capital.~~Advisor ~~The~~are ~~Advisor~~obligated ~~has~~to ~~significant~~dedicate ~~discretion~~any asspecific portion of their time to ~~the~~our ~~implementation~~business. Some of our officers have significant responsibilities for Other Starwood Accounts, defined as investment funds, REITs, vehicles, accounts, products and/or ~~operating~~other ~~policies~~similar arrangements sponsored, advised and/or ~~strategies.~~managed ~~Accordingly~~by Starwood Capital, wewhether ~~believe~~currently ~~that~~in ~~our~~existence ~~success~~or ~~depends~~subsequently toestablished a(in ~~significant~~each ~~extent~~case, ~~upon~~including ~~the~~any ~~efforts~~related successor funds, ~~experience~~alternative vehicles, ~~diligence~~separately managed accounts, ~~skill~~supplemental capital vehicles, surge funds, over-flow funds, vehicles and ~~network~~other ofentities ~~business~~formed ~~contacts~~in ofconnection ~~the~~with ~~officers~~Starwood ~~and~~Capital ~~key~~side-by-side ~~personnel~~or ofadditional ~~the~~general ~~Advisor~~partner investments with respect thereto). ~~The~~Although ~~officers~~these ~~and~~individuals ~~key~~will ~~personnel~~be able to allocate an adequate amount of their time to the ~~Advisor~~management ~~evaluate,~~of ~~negotiate~~our business, ~~originate~~they ~~and~~may ~~monitor~~not always be able to devote significant time to the management of our ~~investments;~~business. ~~therefore~~Further, ~~our~~when ~~success~~there ~~depends~~are onturbulent ~~their~~conditions ~~continued~~or ~~service.~~distress ~~The~~in ~~departure~~the ofreal ~~any~~estate credit markets or more generally the CRE market, the attention of the Advisor’s personnel and our executive officers orand ~~key~~the ~~personnel~~resources of Starwood Capital will also be required by Other Starwood Accounts. In such situations, we may not receive the ~~Advisor~~level ~~could~~of ~~have~~support aand ~~material~~assistance ~~adverse~~that ~~effect~~we onmay ~~our~~have ~~performance~~received if we were internally managed.

The Advisor ismay ~~not~~suffer ~~obligated to dedicate any specific personnel exclusively to us. In addition, none of our officers~~ or ~~the~~become ~~officers~~distracted of the Advisor are obligated to dedicate any specific portion of their time to our business. Some of our officers have significant responsibilities for Other Starwood Accounts, defined as investment funds, REITs, vehicles, accounts, products and/or other similar arrangements sponsored, advised and/or managed by ~~Starwood~~adverse ~~Capital,~~financial ~~whether currently in existence~~ or ~~subsequently~~operational ~~established~~problems (in ~~each case, including any related successor funds, alternative vehicles, separately managed accounts, supplemental capital vehicles, surge funds, over-flow funds, vehicles and other entities formed in~~ connection with Starwood Capital’s ~~side-by-side or additional general partner investments with respect thereto). Although these individuals will be able to allocate an adequate amount of their time to the management of our~~ business, ~~they~~and ~~may~~activities ~~not~~unrelated ~~always be able~~ to ~~devote~~us ~~significant~~and ~~time~~over towhich ~~the~~we ~~management~~have ofno ~~our business~~control. ~~Further,~~Should ~~when there are turbulent conditions or distress in~~ the ~~real estate credit markets or more generally the CRE market, the attention of the~~ Advisor’s ~~personnel~~fail ~~and~~to ~~our~~allocate ~~executive~~sufficient ~~officers and the~~ resources ofto ~~Starwood~~perform ~~Capital~~its ~~will~~responsibilities ~~also~~to beus ~~required~~for byany ~~Other Starwood Accounts. In such situations~~reason, we may ~~not~~be ~~receive~~unable ~~the~~to ~~level~~achieve ofour ~~support~~investment ~~and assistance that we may have received if we were internally managed~~objectives.

~~The~~In ~~Advisor~~addition, ~~may~~we ~~suffer~~offer orno ~~become~~assurance ~~distracted~~that byStarwood ~~adverse~~Credit ~~financial~~Advisors, L.L.C. will remain the Advisor or ~~operational~~that ~~problems~~we inwill ~~connection~~continue ~~with~~to have access to Starwood Capital’s ~~business~~officers and ~~activities~~key ~~unrelated~~personnel. toIn usparticular, ~~and~~the ~~over~~loss ~~which~~of wethe ~~have~~services noof ~~control~~Mr. ~~Should~~Barry ~~the~~S. ~~Advisor~~Sternlicht, ~~fail~~Starwood toCapital’s ~~allocate~~founder, ~~sufficient~~could ~~resources~~adversely toaffect ~~perform~~our ~~its~~performance. ~~responsibilities~~If tothe usAdvisory ~~for~~Agreement ~~any~~is ~~reason~~terminated and no suitable replacement is found, we may not be ~~unable~~able to ~~achieve~~execute our ~~investment~~business ~~objectives~~plan.

WeFinally, ~~offer~~there is no ~~assurance~~guarantee (i) that ~~Starwood Credit Advisors, L.L.C. will remain~~ the Advisor ~~or that we~~ will ~~continue~~succeed toin ~~have~~implementing ~~access~~our toinvestment ~~Starwood~~objectives ~~Capital’s~~or ~~officers~~strategy ~~and~~or ~~key~~in ~~personnel.~~identifying Ininvestments ~~particular,~~that ~~the~~are ~~loss~~in ofaccordance ~~the~~with ~~services of Mr. Barry S. Sternlicht,~~ Starwood Capital’s ~~founder,~~investment ~~could~~philosophy ~~adversely~~or ~~affect~~(ii) ~~our~~that ~~performance.~~historical Iftrends ~~the~~of ~~Advisory~~prior ~~Agreement~~programs issponsored ~~terminated~~by ~~and~~Starwood noCapital ~~suitable~~will ~~replacement~~continue isduring ~~found,~~the welife ~~may~~of ~~not be able to execute~~ our ~~business plan~~operations.

~~Finally,~~The ~~there~~Advisor ismanages noour ~~guarantee~~portfolio ~~(i)~~pursuant ~~that~~to ~~the~~very ~~Advisor~~broad ~~will~~investment ~~succeed~~guidelines inand ~~implementing~~generally ~~our~~is ~~investment~~not ~~objectives~~required orto ~~strategy~~seek orthe inapproval ~~identifying~~of ~~investments~~our ~~that~~board ~~are~~of intrustees ~~accordance~~for ~~with~~each ~~Starwood Capital’s~~ investment, ~~philosophy~~financing or ~~(ii)~~asset ~~that~~allocation ~~historical~~decision ~~trends~~made ofby ~~prior~~it, ~~programs~~which ~~sponsored~~may byresult ~~Starwood~~in ~~Capital~~our ~~will~~making ~~continue~~riskier ~~during~~investments ~~the~~and, ~~life~~in ofturn, may materially adversely affect our results of operations and financial condition.

~~The~~Our board of trustees approved very broad investment guidelines that delegate to the Advisor ~~manages~~the authority to execute and implement our ~~portfolio~~investment ~~pursuant~~strategy toon ~~very~~our ~~broad~~behalf, so long as such investments are consistent with the investment guidelines and ~~generally~~our isDeclaration ~~not~~of ~~required~~Trust. The Advisor will implement on our behalf the strategies and discretionary approaches it believes from time to ~~seek~~time may be best suited to prevailing market conditions in furtherance of that purpose, subject to the ~~approval~~limitations under our investment guidelines and our Declaration of Trust. There can be no assurance that the Advisor will be successful in implementing any particular strategy or discretionary approach to our investment activities. Our board of trustees ~~for~~will ~~each~~review our investment, ~~financing~~guidelines and investment portfolio periodically. The prior approval of our board of trustees or ~~asset~~a ~~allocation~~committee ~~decision~~of ~~made~~independent bytrustees ~~it,~~will ~~which~~be ~~may~~required ~~result~~only as set forth in our ~~making~~Declaration ~~riskier~~of ~~investments~~Trust (including for transactions with the Advisor and, inits ~~turn,~~affiliates) ~~may~~or ~~materially~~for ~~adversely~~the ~~affect~~acquisition ~~our~~or ~~results~~disposition of ~~operations~~assets ~~and~~that ~~financial~~are ~~condition~~not in accordance with our investment guidelines. In addition, in conducting periodic reviews, our trustees

Our board of trustees approved very broad investment guidelines that delegate to the Advisor the authority to execute and implement our investment strategy on our behalf, so long as such investments are consistent with the investment guidelines and our Declaration of Trust. The Advisor will implement on our behalf the strategies and discretionary approaches it believes from time to time may be best suited to prevailing market conditions in furtherance of that purpose, subject to the limitations under our investment guidelines and our Declaration of Trust. There can be no assurance that the Advisor will be successful in implementing any particular strategy or discretionary approach to our investment activities. Our board of trustees will review our investment guidelines and investment portfolio periodically. The prior approval of our board of trustees or a committee of independent trustees will be required only as set forth in our Declaration of Trust (including for transactions with the Advisor and its affiliates) or for the acquisition or disposition of assets that are not in accordance with our investment guidelines. In addition, in conducting periodic reviews, our trustees 12

12will rely primarily on information provided to them by the Advisor. Furthermore, transactions entered into on our behalf by the Advisor may be costly, difficult or impossible to unwind when they are subsequently reviewed by our board of trustees.

~~will~~We ~~rely~~may ~~primarily~~make onchanges ~~information provided~~ to ~~them~~our ~~by the Advisor. Furthermore~~business, ~~transactions entered into on our behalf by the Advisor may be costly~~investment, ~~difficult~~leverage orand ~~impossible~~financing tostrategies ~~unwind~~without ~~when~~shareholder ~~they are subsequently reviewed by our board of trustees~~approval.

WeOur board of trustees has approved very broad investment guidelines with which we must comply, but these investment guidelines provide the Advisor with broad discretion and can be changed by the approval of a majority of our board of trustees. As the market evolves, we may, ~~make~~with ~~changes~~the toapproval of a majority of our board of trustees, change our business, investment, leverage and financing strategies without a vote of, or notice to, our shareholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this filing. In particular, a change in our investment strategy, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to interest rate risk, default risk and real estate market fluctuations. In addition, we use leverage at times and in amounts deemed prudent by our management in its discretion, subject to the oversight of our board of trustees, and the decision of what amount of leverage is prudent is not subject to shareholder approval. Changes to our strategies with regards to the foregoing could materially and adversely affect our financial condition and results of operations.

~~Our~~There ~~board~~is ofno ~~trustees~~public ~~has~~trading approved very broad investment guidelines with which we must comply, but these investment guidelines provide the Advisor with broad discretion and can be changed by the approval of a majority of our board of trustees. As the market ~~evolves,~~for ~~we may, with the approval of a majority of~~ our ~~board~~common ofshares; ~~trustees~~therefore, ~~change~~your ~~our~~ability ~~business, investment, leverage and financing strategies without a vote of, or notice~~ to, ~~our~~dispose shareholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this filing. In particular, a change in our investment strategy, including the manner in which we allocate our resources across our portfolio or the types of ~~assets~~your incommon ~~which~~shares wewill ~~seek~~likely tobe ~~invest,~~limited ~~may increase our exposure~~ to ~~interest~~repurchase ~~rate~~by ~~risk, default risk and real estate market fluctuations~~us. InIf ~~addition,~~you wedo ~~intend~~sell toyour ~~use~~common ~~leverage~~shares ~~at times and in amounts deemed prudent by our management in its discretion, subject~~ to ~~the oversight of our board of trustees~~us, ~~and~~you ~~the~~may ~~decision~~receive ofless ~~what~~than ~~amount of leverage is prudent is not subject to shareholder approval. Changes to our strategies with regards to~~ the ~~foregoing~~price ~~could~~you ~~materially and adversely affect our financial condition and results of operations~~paid.

There is no current public trading market for our common shares;, ~~therefore~~and we do not expect that such a market will ever develop in the future. Therefore, ~~your~~the ~~ability~~repurchase of common shares by us will likely be the only way for you to dispose of your common shares. We will ~~likely~~repurchase becommon ~~limited~~shares at a price equal to the transaction price of the class of common shares being repurchased on the date of repurchase by(which ~~us.~~will Ifgenerally be equal to our prior month’s NAV per share) and not based on the price at which you doinitially ~~sell~~purchased your common shares. Subject to uslimited exceptions, common shares repurchased within one year of the date of issuance will be repurchased at 95% of the transaction price (an “Early Repurchase Deduction”). As a result, you may receive less than the price you paid for your common shares when you sell them to us pursuant to our share repurchase plan. See “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities—Share Repurchase Plan.”

~~There~~Your isability noto ~~current~~have ~~public~~your ~~trading market for our~~ common shares, ~~and~~repurchased wethrough doour ~~not~~share ~~expect~~repurchase ~~that~~plan ~~such~~is alimited. ~~market~~We ~~will~~may ~~ever~~choose ~~develop~~to ~~in the future. Therefore, the~~ repurchase offewer common shares bythan ushave ~~will~~been ~~likely~~requested ~~be the only way for you~~ to ~~dispose~~be ofrepurchased, ~~your~~or ~~common~~none ~~shares.~~at Weall, ~~will~~in ~~repurchase~~our ~~common~~discretion ~~shares~~ at aany ~~price~~time, ~~equal~~and to the ~~transaction~~amount ~~price~~ of ~~the class of~~ common shares ~~being~~we ~~repurchased~~may ~~on the date of~~ repurchase ~~(which~~is ~~will~~subject ~~generally be equal~~ to ~~our prior month’s NAV per share) and not based on the price at which you initially purchased your common shares~~caps. ~~Subject to limited exceptions~~Further, ~~common~~our ~~shares~~board ~~repurchased within one year~~ of ~~the~~trustees ~~date of issuance will be repurchased at 95% of the transaction price (an “Early Repurchase Deduction”). As a result, you~~ may ~~receive~~make ~~less~~exceptions ~~than the price you paid for your common shares when you sell them~~ to, usmodify ~~pursuant~~or tosuspend our share repurchase plan. ~~See~~if ~~“Item~~it 5.deems ~~Market~~such ~~for~~action ~~Registrant’s~~to ~~Common~~be ~~Equity,~~in ~~Related~~our ~~Shareholder~~best ~~Matters, and Issuer Purchases of Equity Securities—Share Repurchase Plan~~interest.”

~~Your~~We ~~ability~~may choose to ~~have~~repurchase ~~your~~fewer common shares than have been requested in any particular calendar quarter to be repurchased ~~through~~under our share repurchase plan, isor ~~limited~~none at all, in our discretion at any time. We may ~~choose to~~ repurchase fewer common shares than have been requested to be repurchased due to, oramong ~~none~~other atreasons, ~~all~~in the discretion of our board of trustees, lack of readily available funds because of adverse market conditions beyond our control, the need to maintain liquidity for our operations or because we have determined that investing in additional assets is a better use of our ~~discretion~~capital than repurchasing our common shares. In addition, the aggregate NAV of total repurchases (including repurchases at certain non-U.S. investor access funds primarily created to hold our common shares but excluding any ~~time,~~Early ~~and~~Repurchase Deduction applicable to the ~~amount~~repurchased ofcommon shares) is limited, in any calendar quarter, to common shares wewhose aggregate value is no more than 5% of our aggregate NAV (measured using the aggregate NAV as of the end of the immediately preceding month). Starwood Capital is the sponsor of other investment programs that include similar limitations on share repurchases, which have in the past been, and may in the future be, exceeded, resulting in such program’s repurchase isof ~~subject~~shares toon ~~caps~~a pro rata basis. ~~Further~~For example, ~~our~~in ~~board~~accordance with the terms of ~~trustees~~its ~~may~~share ~~make~~repurchase ~~exceptions~~plan, toStarwood Real Estate Income Trust, ~~modify~~Inc. or(“SREIT”), ~~suspend~~a ~~our~~non-traded equity REIT sponsored by Starwood Capital, began pro rating repurchase requests in November 2022. In addition, in June 2025, SREIT amended its share repurchase plan ifto itlimit ~~deems~~share repurchases to 0.5% of NAV per month and 1.5% of NAV per quarter. In such ~~action~~case, SREIT accepted repurchase requests from each investor up to bethe repurchase limitations included in ~~our~~its ~~best~~share ~~interest~~repurchase plan, as amended from time to time. Additionally, SREIT has been fully repurchasing shares from any account with less than $500 remaining so many investors have received all of their money back.

WeFurther, ~~may~~our ~~choose~~board toof ~~repurchase~~trustees ~~fewer~~may ~~common~~make ~~shares~~exceptions ~~than have been requested in any particular calendar quarter~~ to, bemodify ~~repurchased~~or ~~under~~suspend our share repurchase plan, orif ~~none at all,~~ in ~~our~~its ~~discretion~~reasonable atdetermination ~~any~~it ~~time.~~deems Wesuch ~~may~~action ~~repurchase fewer common shares than have been requested~~ to be ~~repurchased due to, among other reasons,~~ in ~~the~~our ~~discretion~~best ofinterest. ~~our~~Our board of trustees, ~~lack~~cannot ofterminate ~~readily available funds because of adverse market conditions beyond~~ our ~~control,~~share ~~the~~repurchase ~~need~~plan toabsent ~~maintain~~a liquidity ~~for~~event ~~our operations or because we have determined~~ that ~~investing~~results in ~~additional assets is a better use of~~ our ~~capital~~shareholders ~~than~~receiving ~~repurchasing~~cash ~~our~~or ~~common~~securities ~~shares.~~listed Inon ~~addition,~~a ~~the~~national ~~aggregate~~securities ~~NAV~~exchange ofor ~~total~~where ~~repurchases~~otherwise ~~(including~~required ~~repurchases~~by atlaw. ~~certain~~If ~~non-U.S.~~we ~~investor~~do ~~access~~not ~~funds~~repurchase ~~primarily~~the ~~created~~full toamount ~~hold~~of ~~our~~all common shares ~~but~~requested ~~excluding any Early Repurchase Deduction applicable~~ to ~~the~~be repurchased ~~common shares) is limited,~~ in any given calendar quarter, tofunds ~~common~~will ~~shares~~be ~~whose~~allocated ~~aggregate~~pro ~~value~~rata isbased noon ~~more than 5% of our aggregate NAV (measured using~~ the ~~aggregate~~total ~~NAV~~number as of ~~the~~common ~~end~~shares ofbeing ~~the~~repurchased ~~immediately~~without ~~preceding~~regard ~~month).~~to ~~Starwood~~class ~~Capital~~after iswe ~~the~~have ~~sponsor~~repurchased ofall ~~other~~common ~~investment~~shares ~~programs~~for ~~that include similar limitations on share repurchases,~~ which ~~have~~repurchase inhas ~~the past~~ been, ~~and~~requested ~~may~~due into ~~the future be~~death, ~~exceeded,~~disability ~~resulting~~or indivorce ~~such~~and ~~program’s~~other ~~repurchase~~limited ~~of shares on a pro rata basis~~exceptions. ~~For~~All ~~example,~~unsatisfied ~~in accordance with the terms of its share~~ repurchase ~~plan, Starwood Real Estate Income Trust, Inc. (“SREIT”), a non-traded equity REIT sponsored by Starwood Capital, began pro rating repurchase~~ requests inmust ~~November~~be ~~2022. In~~resubmitted ~~addition,~~after inthe ~~May~~start ~~2024, SREIT amended its share repurchase plan to limit share repurchases to 0.33%~~ of ~~NAV~~the ~~per~~next ~~month~~calendar ~~and 1% of NAV per~~ quarter~~. In such case~~, ~~SREIT~~or ~~accepted~~upon ~~repurchase~~the ~~requests~~recommencement ~~from~~of ~~each investor up to~~ the ~~repurchase limitations included in its~~ share repurchase plan, as ~~amended from time to time~~applicable. ~~Additionally, SREIT has been fully repurchasing shares from any account with less than $500 remaining so many investors have received all of their money back.~~

~~Further,~~The ~~our~~vast ~~board~~majority of ~~trustees may make exceptions to, modify or suspend~~ our ~~share~~assets ~~repurchase~~will ~~plan~~consist ifof ininvestments ~~its~~that ~~reasonable~~cannot ~~determination~~generally ~~it deems such action to~~ be inreadily ~~our~~liquidated ~~best~~without ~~interest.~~impacting ~~Our board of trustees cannot terminate~~ our ~~share~~ability ~~repurchase~~to ~~plan~~realize ~~absent~~full avalue ~~liquidity~~upon ~~event~~their ~~that results in our shareholders receiving cash or securities listed on a national securities exchange or where otherwise required by law~~disposition. IfTherefore, we domay not ~~repurchase~~always ~~the~~have ~~full~~a sufficient amount of ~~all~~cash ~~common shares requested~~ to beimmediately ~~repurchased~~satisfy inrepurchase ~~any~~requests. ~~given~~Should ~~calendar~~repurchase ~~quarter~~requests, ~~funds~~in ~~will~~the bejudgment ~~allocated~~of ~~pro~~our ~~rata~~board ~~based on the total number~~ of ~~common~~trustees, ~~shares~~place ~~being~~an ~~repurchased~~undue ~~without~~burden ~~regard~~on toour ~~class~~liquidity, ~~after~~adversely weaffect ~~have~~our ~~repurchased~~operations ~~all~~or ~~common~~risk ~~shares~~having ~~for~~an ~~which~~adverse ~~repurchase~~impact ~~has~~on ~~been~~the ~~requested~~Company ~~due~~as toa ~~death~~whole, ~~disability~~ or ~~divorce~~should ~~and~~we ~~other~~otherwise ~~limited~~determine ~~exceptions.~~that ~~All~~investing ~~unsatisfied~~our ~~repurchase~~liquid ~~requests~~assets ~~must~~in beCRE ~~resubmitted~~debt ~~after~~or ~~the~~other ~~start~~illiquid ofinvestments ~~the~~rather ~~next~~than ~~calendar~~repurchasing ~~quarter,~~our orcommon ~~upon~~shares ~~the~~is ~~recommencement~~in ~~of the share repurchase plan, as applicable.~~

The vast majority of our assets will consist of investments that cannot generally be readily liquidated without impacting our ability to realize full value upon their disposition. Therefore, we may not always have a sufficient amount of cash to immediately satisfy repurchase requests. Should repurchase requests, in the judgment of our board of trustees judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the Company as a whole, or should we otherwise determine that investing our liquid assets in CRE debt or other illiquid investments rather than repurchasing our common shares is in 13

13the best interests of the Company as a whole, then we may choose to repurchase fewer common shares than have been requested to be repurchased, or none at all. As a result, your ability to have your common shares repurchased by us may be limited and at times you may not be able to liquidate your investment. See “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities—Share Repurchase Plan.”

~~the~~Economic ~~best~~events ~~interests~~may ofhave ~~the~~an ~~Company~~adverse aseffect aon ~~whole,~~our ~~then~~investments weand may ~~choose~~cause toour ~~repurchase~~shareholders ~~fewer common shares than have been requested~~ to berequest ~~repurchased,~~that orwe ~~none~~repurchase attheir ~~all. As a result, your ability to have your~~ common shares, ~~repurchased~~which ~~by us~~ may bematerially ~~limited~~adversely ~~and~~affect atour ~~times~~cash ~~you~~flow ~~may not be able to liquidate your investment. See “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters,~~ and ~~Issuer~~our ~~Purchases~~results of ~~Equity~~operations ~~Securities—Share~~and ~~Repurchase~~financial ~~Plan~~condition.”

Economic events ~~may~~affecting the U.S. economy, such as the general negative performance of the CRE markets (including as a result of inflation or higher interest rates), actual or perceived instability in the U.S. banking system, disruptions in the labor market (including labor shortages and unemployment), stock market volatility (including volatility as a result of geopolitical events and military conflicts and other hostilities), trade barriers, availability of credit, national and international security events and inflation could have an adverse effect on our investments and ~~may~~ cause our shareholders to ~~request~~seek ~~that we~~ repurchase of their common shares, ~~which~~pursuant ~~may~~to ~~materially~~our share repurchase plan at a time when such events are adversely ~~affect~~affecting the performance of our ~~cash~~assets. ~~flow~~These ~~and~~events could impair our ~~results~~profitability ofor result in losses to us. Terrorist attacks, political and military instability, and the military operations of the United States and ~~financial~~its ~~condition~~allies could have significant adverse effects on the global economy. Furthermore, epidemics that spread quickly have the potential to significantly affect the global economy, if not contained. The potential impact on the Company or the likelihood of such events cannot be predicted by the Advisor. If the Advisor fails to react appropriately to difficult market, economic and geopolitical conditions, we could incur material losses.

~~Economic~~Various ~~events~~social ~~affecting~~and political tensions around the ~~U.S.~~world ~~economy~~have contributed, ~~such~~and asmay in the ~~general~~future ~~negative~~continue ~~performance~~to ofcontribute, ~~the~~to ~~CRE~~increased ~~markets~~market ~~(including~~volatility, asmay ahave ~~result~~significant, ofadverse ~~inflation~~long-term oreffects ~~higher~~on ~~interest~~the ~~rates),~~worldwide ~~actual~~financial ormarkets ~~perceived~~and ~~instability~~may incause ~~the~~further ~~U.S.~~economic ~~banking~~uncertainties ~~system,~~worldwide. Market disruptions and the dramatic increase in the ~~labor~~capital ~~market~~allocated ~~(including~~to ~~labor~~alternative ~~shortages~~investment ~~and~~strategies ~~unemployment),~~during ~~stock~~recent ~~market~~years ~~volatility~~have ~~(including~~led ~~volatility~~to increased governmental as awell ~~result~~as self-regulatory scrutiny of ~~geopolitical~~the ~~events~~private ~~and~~investment ~~military~~fund ~~conflicts~~industry ~~and~~in ~~other~~general. ~~hostilities),~~Certain ~~trade~~legislation ~~barriers,~~proposing ~~availability~~greater regulation of ~~credit,~~the ~~national~~industry ~~and~~periodically ~~international~~is ~~security~~considered ~~events~~by ~~and~~various ~~inflation~~jurisdictions. ~~could~~For ~~have~~example, anin ~~adverse~~U.S., ~~effect~~the oncurrent ~~our~~presidential ~~investments~~administration has made, and ~~cause~~has ~~our~~stated ~~shareholders~~its intention to ~~seek~~continue ~~repurchase~~to ofmake, ~~their~~governmental ~~common~~policy ~~shares~~and ~~pursuant~~regulatory tochanges ~~our~~in ~~share~~a ~~repurchase~~variety ~~plan~~of atareas, aincluding ~~time~~the ~~when~~imposition ~~such~~of ~~events~~tariffs ~~are~~or ~~adversely~~other ~~affecting~~trade ~~the~~barriers, ~~performance~~and ofcertain ~~our~~countries ~~assets.~~subject ~~These~~to ~~events~~those ~~could~~changes ~~impair~~have ~~our~~imposed ~~profitability~~ or ~~result~~expressed inan ~~losses~~intent to ~~us. Terrorist attacks~~impose, ~~political~~similar ~~and~~measures ~~military~~in ~~instability,~~return. ~~and~~Outside the ~~military~~U.S., ~~operations~~ongoing ofwars in the ~~United~~Middle ~~States~~East and ~~its~~Ukraine ~~allies~~have ~~could~~further ~~have~~contributed ~~significant~~to ~~adverse~~global ~~effects~~economic onuncertainty and volatility in the global ~~economy~~financial markets. ~~Furthermore,~~It ~~epidemics~~is ~~that~~impossible ~~spread~~to ~~quickly~~predict ~~have~~what, if any, changes in the ~~potential~~regulations applicable to ~~significantly~~the ~~affect~~Company, the ~~global~~Advisor ~~economy,~~or ifthe ~~not~~Sponsor, ~~contained.~~the ~~The~~markets ~~potential~~in ~~impact~~which onthey ~~the~~trade ~~Company~~and invest, or the ~~likelihood~~counterparties ofwith ~~such~~which ~~events~~they ~~cannot~~do business, may be ~~predicted~~instituted byin the ~~Advisor~~future. IfAny ~~the~~such ~~Advisor~~regulation ~~fails~~could tohave ~~react~~a ~~appropriately~~material toadverse ~~difficult~~impact ~~market,~~on ~~economic~~the ~~and~~profit ~~geopolitical~~potential ~~conditions,~~of wethe ~~could incur material losses~~Company.

~~Various~~Unpredictable ~~social~~or ~~and~~unstable ~~political tensions around the world may contribute to increased~~ market ~~volatility,~~conditions may ~~have~~result ~~long-term effects on the worldwide financial markets and may cause further economic uncertainties worldwide. Market disruptions and the dramatic increase~~ in ~~the~~reduced ~~capital~~opportunities ~~allocated~~ to ~~alternative~~find ~~investment~~suitable ~~strategies~~investments ~~during recent years have led~~ to ~~increased~~deploy ~~governmental~~capital asor ~~well~~make asit ~~self-regulatory~~more ~~scrutiny~~difficult of the private investment fund industry in general. Certain legislation proposing greater regulation of the industry periodically is considered by various jurisdictions. For example, in U.S., the current presidential administration has stated its intention to ~~make~~exit ~~governmental policy~~ and ~~regulatory~~realize ~~changes~~value infrom ~~a variety of areas, including~~ the imposition of tariffs or other trade barriers, and certain countries subject to those changes have expressed an intent to impose similar measures in return. Outside the U.S., ongoing wars in the Middle East and Ukraine, as well as concern as to whether ChinaCompany’s ~~stimulus measures will effectively stabilize slowing economic growth in the country, have further contributed to global economic uncertainty and volatility in the global financial markets~~investments. It is ~~impossible~~important to ~~predict~~understand ~~what,~~that ~~if any, changes in~~ the ~~regulations~~Company ~~applicable~~can toincur ~~the~~material ~~Company,~~losses ~~the~~even ~~Advisor~~if orit ~~the~~reacts ~~Sponsor,~~quickly ~~the~~to ~~markets~~difficult inmarket ~~which~~conditions ~~they trade~~ and ~~invest,~~there orcan ~~the counterparties with which they do business, may~~ be ~~instituted~~no inassurance that the ~~future.~~Company ~~Any~~will ~~such~~not ~~regulation~~suffer ~~could have a~~ material adverse ~~impact~~effects onfrom ~~the~~broad ~~profit~~and ~~potential~~rapid ofchanges ~~the~~in ~~Company~~market conditions.

~~Unpredictable~~Even orif ~~unstable~~we ~~market~~decide ~~conditions~~to ~~may~~satisfy ~~result~~repurchase requests from shareholders in ~~reduced~~respect ~~opportunities~~of toan ~~find~~economic ~~suitable~~event, ~~investments~~our tocash ~~deploy~~flow ~~capital~~could orbe ~~make~~materially itadversely ~~more~~affected. ~~difficult~~In addition, if we determine to ~~exit~~sell ~~and~~assets ~~realize~~to ~~value~~satisfy ~~from~~repurchase ~~the~~requests, ~~Company’s~~we ~~investments.~~may Itnot isbe ~~important~~able to ~~understand~~realize ~~that~~ the ~~Company~~return ~~can~~on ~~incur~~such ~~material~~assets ~~losses~~that ~~even~~we ifmay ithave ~~reacts~~been ~~quickly~~able to ~~difficult~~achieve ~~market~~had ~~conditions~~we ~~and~~sold ~~there~~at ~~can~~a bemore nofavorable ~~assurance~~time, ~~that~~and ~~the~~our ~~Company~~results ~~will~~of ~~not~~operations ~~suffer~~and ~~material~~financial ~~adverse~~condition, ~~effects~~including, ~~from~~without ~~broad~~limitation, breadth and ~~rapid~~diversification ~~changes~~of inour ~~market~~portfolio, ~~conditions~~could be materially adversely affected.

~~Even~~We ifface werisks ~~decide~~associated towith satisfy repurchase requests from shareholders in respect of an economic event, our cash flow could be materially adversely affected. In addition, if we determine to sell assets to satisfy repurchase requests, we may not be able to realize the ~~return~~deployment ~~on such assets that we may have been able to achieve had we sold at a more favorable time, and our results~~ of ~~operations and financial condition, including, without limitation, breadth and diversification of~~ our ~~portfolio, could be materially adversely affected~~capital.

WeIn ~~face~~light ~~risks~~of ~~associated~~the ~~with~~nature of our continuous, blind pool private offering in relation to our investment strategy and the ~~deployment~~need to be able to deploy potentially large amounts of capital quickly to capitalize on potential investment opportunities, we may have difficulty identifying, originating and/or purchasing suitable CRE debt and other investments on attractive terms, and there could be a delay between the time we receive net proceeds from the sale of our ~~capital~~common shares and the time we invest such net proceeds. We may also from time to time hold cash pending deployment into investments or have less than our targeted leverage, which cash or shortfall in targeted leverage may at times be significant, particularly at times when we are receiving high amounts of offering net proceeds, during the Ramp-Up Period and/or times when there are few attractive investment opportunities. Such cash may be held in an account that may be invested in money market accounts or other similar temporary investments, each of which are subject to the management fees payable to the Advisor.

In ~~light of~~ the ~~nature~~event ofwe ~~our~~are ~~continuous,~~unable ~~blind~~to ~~pool~~find ~~private~~suitable ~~offering~~investments, insuch ~~relation~~cash tomay ~~our~~be ~~investment~~maintained ~~strategy~~for ~~and~~longer ~~the~~periods, ~~need~~which towould be ~~able~~dilutive to ~~deploy~~overall ~~potentially~~investment ~~large~~returns. ~~amounts~~This ofcould ~~capital~~cause ~~quickly~~a tosubstantial ~~capitalize~~delay onin ~~potential~~the ~~investment~~time ~~opportunities,~~it wetakes ~~may~~for ~~have~~a ~~difficulty~~shareholder’s ~~identifying,~~investment ~~originating~~to ~~and/or~~realize ~~purchasing~~its ~~suitable~~full ~~CRE~~potential ~~debt~~return and ~~other investments on attractive terms, and there~~ could beadversely aaffect ~~delay~~our ~~between~~ability ~~the~~to ~~time~~pay weregular ~~receive~~distributions ~~net~~of ~~proceeds~~cash flow from ~~the~~operations. ~~sale~~It ofis ~~our~~not ~~common~~anticipated ~~shares~~that ~~and~~ the ~~time~~temporary weinvestment ~~invest~~of such ~~net~~cash ~~proceeds.~~into Wemoney ~~may~~market ~~also~~accounts ~~from~~or ~~time~~other tosimilar ~~time~~temporary ~~hold~~investments ~~cash~~ pending deployment into investments orwill ~~have~~generate ~~less~~significant ~~than our targeted leverage~~interest, ~~which~~and ~~cash~~investors orshould ~~shortfall~~understand inthat ~~targeted~~such ~~leverage~~low ~~may~~interest atpayments ~~times~~on bethe ~~significant,~~temporarily ~~particularly~~invested atcash ~~times~~may ~~when~~materially weadversely ~~are~~affect ~~receiving~~overall ~~high~~returns. ~~amounts~~In ~~of offering net proceeds, during~~ the ~~Ramp-Up~~event ~~Period~~we ~~and/or~~fail ~~times~~to ~~when~~timely ~~there~~invest ~~are~~the ~~few~~net ~~attractive~~proceeds ~~investment~~from ~~opportunities.~~sales ~~Such~~of ~~cash~~our ~~may~~common beshares ~~held~~or indo annot ~~account~~deploy ~~that~~sufficient ~~may~~capital beto ~~invested~~meet inour ~~money~~targeted ~~market accounts or other similar temporary investments~~leverage, ~~each~~our results of ~~which~~operations ~~are~~and ~~subject~~financial tocondition ~~the~~may ~~management~~be ~~fees~~materially ~~payable~~adversely ~~to the Advisor~~affected.

In the event we are unable to find suitable investments, such cash may be maintained for longer periods, which would be dilutive to overall investment returns. This could cause a substantial delay in the time it takes for a shareholder’s investment to realize its full potential return and could adversely affect our ability to pay regular distributions of cash flow from operations. It is not anticipated that the temporary investment of such cash into money market accounts or other similar temporary investments pending deployment into investments will generate significant interest, and investors should understand that such low interest payments on the temporarily invested cash may materially adversely affect overall returns. In the event we fail to timely invest the net proceeds from sales of our common shares or do not deploy sufficient capital to meet our targeted leverage, our results of operations and financial condition may be materially adversely affected.14

14The amount and source of distributions, if any, we may make to our shareholders is uncertain, and we may be unable to generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the future.

~~The~~We ~~amount~~commenced paying distributions in December 2023 and ~~source~~have ofpaid distributions each month since such date. Any distributions we make will be at the discretion of our board of trustees, ifconsidering ~~any~~factors such as our earnings, wecash flow, capital needs and general financial condition. As a result, our distribution rates and payment frequency may ~~make~~vary from time to ~~our~~time. ~~shareholders~~We ~~are~~have ~~uncertain~~not established a minimum distribution payment level, and weour ability to make distributions to our shareholders may be ~~unable~~materially adversely affected by a number of factors, including, but not limited to, ~~generate~~the ~~sufficient~~risk ~~cash~~factors ~~flows~~described ~~from~~in ~~our~~this ~~operations~~Annual Report on Form 10-K. Our investments may not generate sufficient income to make distributions to our shareholders. atOur ~~any~~board ~~time~~of trustees (or a committee of our board of trustees) will make determinations regarding distributions based upon, among other factors, our financial performance (which in a large part will depend on our borrowers’ ability to continue to pay principal and interest payments to us under the ~~future~~terms of our loans), debt service obligations, debt covenants, REIT qualification and tax requirements and capital expenditure requirements. Among the factors that could impair our ability to make distributions to our shareholders are:

•

Wethe ~~have not established a minimum distribution payment level, and our ability to make distributions to our shareholders may be materially adversely affected by a number of factors, including, but not~~ limited ~~to,~~size ~~the risk factors described in this Annual Report on Form 10-K. Our investments may not generate sufficient income to make distributions to our shareholders. Our board~~ of ~~trustees (or a committee of~~ our ~~board~~portfolio ofduring trustees) will make determinations regarding distributions based upon, among other factors, our financial performance (which in a large part will depend on our borrowers’ ability to continue to pay principal and interest payments to us under the ~~terms~~Ramp-Up of our loans), debt service obligations, debt covenants, REIT qualification and tax requirements and capital expenditure requirements. Among the factors that could impair our ability to make distributions to our shareholders are:Period;

•

our inability to invest the ~~limited~~net ~~size~~proceeds from sales of our ~~portfolio~~common ~~during~~shares ~~the~~on ~~Ramp~~a timely basis in income-Upproducing ~~Period~~investments;

•

our inability to ~~invest~~realize ~~the~~attractive ~~net~~risk-adjusted ~~proceeds~~returns ~~from~~on ~~sales of~~ our ~~common shares on a timely basis in income-producing~~ investments;

•

~~our~~high ~~inability~~levels toof ~~realize~~expenses ~~attractive~~or ~~risk-adjusted~~reduced ~~returns~~revenues onthat reduce our ~~investments~~cash flow or non-cash earnings; and

•

~~high~~defaults ~~levels~~in ofour ~~expenses~~investment portfolio or ~~reduced~~decreases ~~revenues~~in ~~that~~the ~~reduce~~value of our ~~cash flow or non-cash earnings; and~~investments.

~~defaults~~As a result, we may not be able to make distributions to our shareholders at any time in the future, and the level of any distributions, if any, we do make to our ~~investment~~shareholders ~~portfolio~~is unknown and may not increase or ~~decreases~~even inbe maintained over time, any of which could materially and adversely affect the value of ~~our~~your ~~investments~~investment.

AsWe ~~a result, we~~ may ~~not~~pay bedistributions ~~able~~from tosources ~~make~~other ~~distributions~~than to our ~~shareholders~~cash atflow ~~any~~from ~~time~~operations, ~~in the future~~including, ~~and~~without ~~the level of any distributions~~limitation, ~~if any~~borrowings, weoffering donet ~~make~~proceeds ~~to our shareholders is unknown~~ and ~~may~~the ~~not~~sale ~~increase~~of or ~~even~~repayments beunder ~~maintained~~our ~~over time~~investments, ~~any~~and ofwe ~~which~~have ~~could~~no ~~materially~~limits ~~and~~on ~~adversely~~the ~~affect~~amounts ~~the~~we ~~value~~may offund ~~your~~from ~~investment~~such sources.

We may ~~pay~~not generate sufficient cash flow from operations to fully fund distributions to shareholders, particularly during the Ramp-Up Period. Therefore, particularly during the Ramp-Up Period, we may fund distributions to our shareholders from sources other than ~~our~~ cash flow from operations, including, without limitation, borrowings, offering net proceeds (including from sales of our common shares to Starwood Capital or its affiliates) and the sale of or repayments under our investments. The extent to which we fund distributions from sources other than cash flow from operations will depend on various factors, ~~and~~including, but not limited to, the level of participation in our distribution reinvestment plan, the extent to which the Advisor elects to receive its management fee (the “Management Fee”) or performance fee (the “Performance Fee”) in our common shares (in lieu of cash), how quickly we ~~have~~invest nothe ~~limits~~proceeds from our continuous private offering and any future offering and the performance of our CRE debt portfolio and other assets. Funding distributions from borrowings, offering net proceeds (including from sales of our common shares to Starwood Capital or its affiliates) and the sale of or repayments under our investments will result in us having less funds available to originate or acquire CRE loans or other assets. As a result, the return you realize on your investment may be reduced. Doing so may also negatively impact our ability to generate cash flows. Likewise, funding distributions from the ~~amounts~~sale of additional common shares (or other securities convertible into our common shares) will dilute your interest in us on a percentage basis and may impact the value of your investment especially if we sell these securities at prices less than the price you paid for your common shares. We may be required to continue to fund distributions from a combination of some of these sources if our investments fail to perform, if expenses are greater than our revenues or due to numerous other factors. We cannot predict when, if ever, distribution payments sourced from borrowings and from offering net proceeds may occur, and an extended period of such payments would likely be unsustainable. We have not established a limit on the amount of our distributions that may be funded from any of these sources.

WeTo ~~may~~the ~~not~~extent ~~generate~~we ~~sufficient~~borrow ~~cash~~funds ~~flow from operations~~ to ~~fully~~pay ~~fund~~ distributions ~~to shareholders~~, ~~particularly during the Ramp-Up Period. Therefore, particularly during the Ramp-Up Period,~~ we ~~may~~would ~~fund~~incur ~~distributions~~borrowing tocosts ~~our shareholders from sources other than cash flow from operations, including, without limitation, borrowings, offering net proceeds~~ (including ~~from sales of our common shares to Starwood Capital or its affiliates~~interest) and ~~the~~these ~~sale~~borrowings ofwould orrequire ~~repayments~~a ~~under~~future ~~our investments~~repayment. The ~~extent~~use toof ~~which~~these wesources ~~fund~~for distributions ~~from~~and ~~sources other than cash flow from operations will depend on various factors, including, but not limited to,~~ the ~~level~~ultimate ofrepayment participation in our distribution reinvestment plan, the extent to which the Advisor elects to receive its management fee (the “Management Fee”) or performance fee (the “Performance Fee”) in our common shares (in lieu of ~~cash), how quickly we invest the proceeds from our continuous private offering and~~ any ~~future~~liabilities ~~offering~~incurred ~~and~~could ~~the~~adversely ~~performance~~impact of our ~~CRE~~ability ~~debt~~to ~~portfolio~~pay ~~and other assets. Funding~~ distributions ~~from borrowings, offering net proceeds (including from sales of our common shares to Starwood Capital or its affiliates) and the sale of or repayments under our investments will result~~ in usfuture ~~having less funds available to originate or acquire CRE loans or other assets. As a result~~periods, ~~the~~decrease ~~return you realize on your investment may be reduced. Doing so may also negatively impact~~ our ~~ability to generate cash flows. Likewise~~NAV, ~~funding~~decrease ~~distributions from~~ the ~~sale~~amount of ~~additional~~cash ~~common~~we ~~shares~~have ~~(or~~available ~~other~~for ~~securities~~operations ~~convertible~~and ~~into~~new ~~our~~investments ~~common shares) will dilute your interest in us on a percentage basis~~ and ~~may~~materially adversely impact the value of your investment ~~especially if we sell these securities at prices less than the price you paid for your common shares~~. We may be required to continue to fund distributions from a combination of some of these sources if our investments fail to perform, if expenses are greater than our revenues or due to numerous other factors. We cannot predict when, if ever, distribution payments sourced from borrowings and from offering net proceeds may occur, and an extended period of such payments would likely be unsustainable. We have not established a limit on the amount of our distributions that may be funded from any of these sources.

ToWe ~~the~~may ~~extent~~also wedefer ~~borrow~~operating ~~funds~~expenses toor pay ~~distributions,~~expenses we(including ~~would~~Management ~~incur~~Fees ~~borrowing~~or ~~costs~~Performance ~~(including~~Fees ~~interest~~payable to the Advisor) ~~and~~with ~~these~~our ~~borrowings~~common ~~would~~shares ~~require~~to apreserve ~~future~~cash ~~repayment~~flow for the payment of distributions. The ~~use~~ultimate repayment of these ~~sources~~deferred ~~for~~expenses ~~distributions~~could materially adversely affect our operations and reduce the ~~ultimate~~future ~~repayment~~return ofon ~~any~~your ~~liabilities~~investment. ~~incurred~~We ~~could~~may ~~adversely~~repurchase ~~impact~~common shares from the Advisor shortly after issuing such common shares as compensation or reimbursement for certain expenses. The payment of expenses in our ~~ability~~common toshares ~~pay~~will ~~distributions~~dilute your ownership interest in ~~future~~us. ~~periods,~~There ~~decrease~~is no guarantee any of our ~~NAV,~~operating ~~decrease~~expenses will be deferred and the ~~amount~~Advisor ofis ~~cash~~under weno ~~have~~obligation ~~available~~to ~~for~~receive ~~operations~~fees ~~and~~or ~~new~~distributions ~~investments~~in our common shares and ~~materially~~may ~~adversely~~elect ~~impact~~to ~~the~~receive ~~value~~such ofamounts ~~your~~in ~~investment~~cash.

We may also defer operating expenses or pay expenses (including Management Fees or Performance Fees payable to the Advisor) with our common shares to preserve cash flow for the payment of distributions. The ultimate repayment of these deferred expenses could materially adversely affect our operations and reduce the future return on your investment. We may repurchase common shares from the Advisor shortly after issuing such common shares as compensation or reimbursement for certain expenses. The payment of expenses in our common shares will dilute your ownership interest in us. There is no guarantee any of our operating expenses will be deferred and the Advisor is under no obligation to receive fees or distributions in our common shares and may elect to receive such amounts in cash.15

15Payments to the Advisor in the form of common shares, which the Advisor may elect to receive in lieu of cash in respect of Management Fees or Performance Fees or certain expense reimbursements, will dilute future cash available for distribution to our shareholders.

~~Payments~~The Advisor may elect to ~~the~~receive, ~~Advisor~~and has in the ~~form~~past received, our common shares in lieu of cash in respect of Management Fees or Performance Fees or certain expense reimbursements. The amount of common shares, ~~which~~issued to the Advisor may ~~elect~~be tosignificant, ~~receive~~particularly during periods in ~~lieu~~which the value of ~~cash~~our investment portfolio appreciates, resulting in ~~respect~~higher Performance Fees. Repurchases of our common shares paid to the Advisor as a Management ~~Fees~~Fee or Performance ~~Fees~~Fee or ~~certain~~ expense reimbursements are not subject to our share repurchase plan, ~~will~~including ~~dilute~~the ~~future~~quarterly ~~cash~~volume ~~available~~limitation and the Early Repurchase Deduction, and, therefore, any such repurchases may receive priority over other requests for ~~distribution~~repurchase of our common shares subject to our ~~shareholders~~share repurchase plan for any period.

~~The~~Purchases ~~Advisor may elect to receive,~~ and ~~has~~repurchases inof ~~the past received,~~ our common shares inwill ~~lieu~~not ofbe ~~cash~~made inbased ~~respect~~on ofthe ~~Management~~current ~~Fees~~NAV orper ~~Performance~~share ~~Fees~~as ~~or certain expense reimbursements. The amount~~ of ~~common shares issued to~~ the ~~Advisor~~date ~~may be significant, particularly during periods in which the value~~ of ~~our investment portfolio appreciates, resulting in higher Performance Fees. Repurchases of our common shares paid to~~ the ~~Advisor~~purchase ~~as a Management Fee~~ or ~~Performance Fee or expense reimbursements are not subject to our share~~ repurchase plan, including the quarterly volume limitation and the Early Repurchase Deduction, and, therefore, any such repurchases may receive priority over other requests for repurchase of our common shares subject to our share repurchase plan for any period.

~~Purchases~~Generally, our offering price per common share and the price at which we make repurchases of our common shares will ~~not~~equal bethe ~~made~~NAV ~~based~~per onshare of the ~~current~~applicable class as of the last calendar day of the prior month, plus, in the case of our offering price, applicable upfront selling commissions and dealer manager fees. The NAV per share, if calculated as of the date on which you make your subscription request or repurchase request, may be significantly different than the transaction price you pay or the repurchase price you receive. Certain of our investments or liabilities may be subject to high levels of volatility from time to time and could change in value significantly between the ~~purchase~~end of the prior month as of which our NAV is determined and the date that you acquire or repurchase our common shares; however, the prior month’s NAV per share will generally continue to be used as the transaction price per share and repurchase price per share. In exceptional circumstances, we may, in our sole discretion, but are not obligated to, offer and repurchase common shares at a different price that we believe reflects the NAV per share more appropriately than the prior month’s NAV per share, including by updating a previously disclosed transaction price, in cases where we believe there has been a material change (positive or negative) to our NAV per share since the end of the prior month and we believe an updated price is appropriate. In such exceptional cases, the transaction price and the repurchase price will not equal our NAV per share as of any time.

~~Generally,~~Valuations ~~our offering price per common share and the price at which we make repurchases~~ of our common shares will equal the NAV per share of the applicable class as of the last calendar day of the prior month, plus, in the case of our offering price, applicable upfront selling commissions and dealer manager fees. The NAV per share, if calculated as of the date on which you make your subscription request or repurchase request, may be significantly different than the transaction price you pay or the repurchase price you receive. Certain of our investments ~~or liabilities~~ may bereflect ~~subject~~estimates ~~to high levels~~ of ~~volatility~~fair ~~from time to time and could change in~~ value ~~significantly between the end of the prior month as of which our NAV is determined~~ and the date that you acquire or repurchase our common shares; however, the prior month’s NAV per share will generally continue to be used as the transaction price per share and repurchase price per share. In exceptional circumstances, we may, ~~in our sole discretion, but are~~ not ~~obligated~~necessarily ~~to,~~correspond offer and repurchase common shares at a different price that we believe reflects the NAV per share more appropriately than the prior month’s NAV per share, including by updating a previously disclosed transaction price, in cases where we believe there has been a material change (positive or negative) to ~~our~~realizable ~~NAV per share since the end of the prior month and we believe an updated price is appropriate. In such exceptional cases~~value, ~~the~~which ~~transaction~~could ~~price~~adversely ~~and~~affect the ~~repurchase~~value ~~price will not equal our NAV per share as~~ of ~~any~~your ~~time~~investment.

~~Valuations~~Newly oforiginated ~~our~~or acquired loan investments ~~may~~will ~~reflect~~initially ~~estimates~~be valued at par in the month that they are closed, which is expected to represent fair value at that time. For each month after the initial month in which a loan investment is closed, the Advisor will value each such loan at fair market value, subject to the review and confirmation of reasonableness by the independent valuation advisor (the “Independent Valuation Advisor”). In the event we pursue ownership interest in the underlying collateral on a defaulted loan, then the asset will become real estate owned (“REO”) and such REO properties will initially be valued at fair value less closing costs, at the time of acquisition. Thereafter, the REO properties will be valued by the Advisor, subject to the review and ~~may~~confirmation of the reasonableness by the Independent Valuation Advisor. Our publicly-traded real estate-related assets that are not ~~necessarily~~restricted ~~correspond~~as to ~~realizable~~salability or transferability will generally be valued by the Advisor monthly on the basis of publicly available market quotations or at fair value determined in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). Our investments in privately placed debt instruments and securities of real estate-related operating businesses (other than joint ventures), ~~which~~such ~~could~~as ~~adversely~~real ~~affect~~estate development or management companies, will initially be valued by the Advisor at the acquisition price and thereafter will be revalued monthly at fair value, subject to the review and confirmation of ~~your~~reasonableness ~~investment~~by the Independent Valuation Advisor. We will also report our derivative assets and liabilities at fair value based on price quotes from at least one independent pricing service. Our liquid non-real estate-related assets, including credit rated government debt securities, corporate debt securities, cash and cash equivalents, will be valued monthly by the Advisor based on market quotations or at fair value determined in accordance with U.S. GAAP.

~~Newly~~Within ~~originated~~the orparameters ~~acquired~~of ~~loan~~our ~~investments~~valuation ~~will~~guidelines, ~~initially~~the bevaluation ~~valued~~methodologies atused ~~par~~to value our investments in ~~the~~real ~~month~~estate ~~that~~debt ~~they~~and ~~are~~real ~~closed,~~estate-related ~~which~~securities iswill ~~expected~~involve tosubjective ~~represent~~judgments ~~fair~~and ~~value~~projections atand ~~that~~may ~~time~~not be accurate. ~~For~~Valuation ~~each~~methodologies ~~month~~will ~~after~~also ~~the~~involve ~~initial~~assumptions ~~month~~and inopinions ~~which~~about afuture ~~loan~~events, ~~investment~~which ismay ~~closed,~~or ~~the~~may ~~Advisor~~not ~~will~~turn ~~value~~out ~~each~~to ~~such~~be ~~loan~~correct. atUltimate ~~fair~~realization ~~market~~of the value, ~~subject~~of an asset depends to ~~the~~a ~~review~~great extent on economic, market and ~~confirmation~~other ofconditions ~~reasonableness~~beyond byour control and the ~~independent~~control ~~valuation~~of ~~advisor~~the (Advisor and the “Independent Valuation Advisor”). InFurther, ~~the~~valuations ~~event~~do wenot ~~pursue~~necessarily ~~ownership~~represent ~~interest in~~ the ~~underlying~~price ~~collateral~~at onwhich aan ~~defaulted~~asset ~~loan~~would sell, ~~then~~since ~~the~~market ~~asset~~prices ~~will~~of ~~become~~assets ~~real~~can ~~estate~~only ~~owned~~be ~~(“REO”)~~determined ~~and~~by ~~such~~negotiation ~~REO~~between ~~properties~~a ~~will~~willing ~~initially~~buyer beand ~~valued~~seller. atAs such, the estimated fair value ~~less~~of ~~closing~~an ~~costs,~~asset atmay ~~the~~not ~~time~~reflect ofthe ~~acquisition.~~price ~~Thereafter,~~at which the ~~REO~~asset ~~properties~~could ~~will~~ be ~~valued~~sold byin the ~~Advisor~~market, ~~subject~~and to the ~~review~~difference ~~and~~between ~~confirmation~~the ofestimated ~~the~~fair ~~reasonableness~~value byand the ~~Independent~~ultimate ~~Valuation~~sales ~~Advisor.~~price ~~Our~~could ~~publicly~~be ~~traded~~material. ~~real~~In ~~estate-related~~addition, ~~assets~~accurate ~~that~~valuations are ~~not~~more ~~restricted~~difficult aswith respect to ~~salability~~illiquid assets and/or ~~transferability~~during ~~will~~times ~~generally~~of below ~~valued~~transaction byvolume ~~the~~because ~~Advisor~~there ~~monthly~~are onfewer ~~the basis of publicly available~~ market ~~quotations~~transactions orthat atcan ~~fair~~be ~~value~~considered ~~determined~~ in ~~accordance~~the ~~with~~context ~~U.S.~~of ~~Generally~~the ~~Accepted~~valuation ~~Accounting Principles (“U~~analysis.S. ~~GAAP”).~~However, ~~Our~~there ~~investments~~will inbe ~~privately~~no ~~placed~~retroactive ~~debt~~adjustment ~~instruments~~in ~~and~~the ~~securities~~valuation of ~~real~~such ~~estate-related~~assets, ~~operating~~the ~~businesses~~offering ~~(other~~price ~~than~~of ~~joint~~our ~~ventures)~~common shares, ~~such~~the asprice ~~real~~we ~~estate~~paid ~~development~~to orrepurchase ~~management~~our ~~companies,~~common ~~will~~shares ~~initially~~or beNAV-based ~~valued~~fees bywe paid to the Advisor atand ~~the~~to ~~acquisition~~our ~~price~~dealer ~~and~~manager ~~thereafter~~(the ~~will~~“Dealer beManager”) ~~revalued~~to ~~monthly~~the atextent ~~fair~~such ~~value,~~valuations ~~subject~~prove to ~~the~~not ~~review~~accurately ~~and~~reflect ~~confirmation~~the ofrealizable ~~reasonableness~~value byof ~~the~~our ~~Independent~~assets. ~~Valuation~~Because ~~Advisor.~~the Weprice you will ~~also~~pay ~~report~~for our ~~derivative~~common ~~assets~~shares ~~and~~in ~~liabilities~~our atcontinuous ~~fair~~private ~~value~~offering, ~~based~~and onthe price ~~quotes from~~ at ~~least~~which ~~one~~your ~~independent~~shares ~~pricing~~may ~~service.~~be ~~Our~~repurchased ~~liquid~~by ~~non-real~~us ~~estate-related~~pursuant ~~assets,~~to ~~including~~our ~~credit~~share ~~rated~~repurchase ~~government~~plan ~~debt~~are ~~securities,~~generally ~~corporate~~based ~~debt~~on ~~securities,~~our ~~cash~~prior ~~and~~month’s ~~cash~~NAV ~~equivalents~~per share, ~~will~~you bemay ~~valued~~pay ~~monthly~~more bythan ~~the~~realizable ~~Advisor~~value ~~based~~or onreceive ~~market~~less ~~quotations~~than orrealizable ~~at fair~~ value ~~determined~~for inyour ~~accordance with U~~investment.~~S. GAAP.~~

Within the parameters of our valuation guidelines, the valuation methodologies used to value our investments in real estate debt and real estate-related securities will involve subjective judgments and projections and may not be accurate. Valuation methodologies will also involve assumptions and opinions about future events, which may or may not turn out to be correct. Ultimate realization of the value of an asset depends to a great extent on economic, market and other conditions beyond our control and the control of the Advisor and the Independent Valuation Advisor. Further, valuations do not necessarily represent the price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller. As such, the estimated fair value of an asset may not reflect the price at which the asset could be sold in the market, and the difference between the estimated fair value and the ultimate sales price could be material. In addition, accurate valuations are more difficult with respect to illiquid assets and/or during times of low transaction volume because there are fewer market transactions that can be considered in the context of the valuation analysis. However, there will be no retroactive adjustment in the valuation of such assets, the offering price of our common shares, the price we paid to repurchase our common shares or NAV-based fees we paid to the Advisor and to our dealer manager (the “Dealer Manager”) to the extent such valuations prove to not accurately reflect the realizable value of our assets. Because the price you will pay for our common shares in our continuous private offering, and the price at which your shares may be repurchased by us pursuant to our share repurchase plan are generally based on our prior month’s NAV per share, you may pay more than realizable value or receive less than realizable value for your investment.16

16Our NAV per share may change materially if the values of our investments materially change, if the actual operating results for a particular month differ from what we originally budgeted for that month or if there are fluctuations in interest rates.

Our investments are valued on a monthly basis in accordance with our valuation guidelines. As such, when these new valuations are reflected in our NAV ~~per~~calculation, ~~share~~there may be a sudden change ~~materially~~in ifour ~~the~~NAV ~~values~~per share for each class of our ~~investments~~common ~~materially~~shares. ~~change~~These changes in an investment’s value may be as a result of investment-specific events or as a result of more general changes to real estate values resulting from local, ifnational ~~the~~or global economic changes. In addition, actual operating results for a ~~particular~~given month may differ from what we originally budgeted for that month, which may cause a sudden increase or ifdecrease ~~there~~in the NAV per share amounts. We accrue estimated income and expenses on a daily basis based on our budgets. As soon as practicable after the end of each month, we adjust the income and expenses we estimated for that month to reflect the income and expenses actually earned and incurred. In addition, because we are focused on senior floating-rate mortgage loans, interest rate fluctuations may also cause a sudden increase or decrease in ~~interest~~our ~~rates~~NAV per share. We do not retroactively adjust the NAV per share of each class.

~~Our~~The ~~investments are valued on a monthly basis in accordance with our valuation guidelines. As such, when these new valuations are reflected in our~~ NAV ~~calculation, there may be a sudden change in our NAV~~ per share ~~for~~that ~~each~~we ~~class~~publish ~~of our common shares. These changes in an investment’s value~~ may benot asnecessarily areflect ~~result of investment-specific events or as a result of more general~~ changes to real estate values resulting from local, national or global economic changes. In addition, actual operating results for a given month may differ from what we originally budgeted for that month, which may cause a sudden increase or decrease in ~~the~~our NAV ~~per share amounts. We accrue estimated income and expenses on a daily basis based on our budgets. As soon as practicable after the end of each month, we adjust the income and expenses we estimated for~~ that ~~month to reflect the income and expenses actually earned and incurred. In addition, because we~~ are ~~focused on senior floating-rate mortgage loans, interest rate fluctuations may also cause a sudden increase or decrease in our NAV per share. We do~~ not ~~retroactively~~immediately ~~adjust the NAV per share of each class~~quantifiable.

From time to time, we may experience events with respect to our investments that may have a material impact on our NAV. For example, it may be difficult to reflect fully and accurately rapidly changing market conditions or material events that may impact the value of our investments or to obtain quickly complete information regarding such events. The NAV per share ~~that~~of weeach ~~publish~~class of our common shares may not ~~necessarily~~ reflect ~~changes~~such inextraordinary ~~our~~events ~~NAV~~to the extent that ~~are~~their financial impact is not immediately quantifiable. As a result, the NAV per share of each class, as determined monthly, after the announcement of a material event may differ significantly from our actual NAV per share for such class until such time as the financial impact is quantified and our NAV is appropriately adjusted in a subsequent month and in accordance with our valuation guidelines. The resulting potential disparity in our NAV may inure to the benefit of shareholders whose common shares are repurchased or new shareholders, depending on whether our published NAV per share for such class is overstated or understated.

~~From time to time, we may experience events with respect to our investments that may have a material impact on our~~ NAV. ~~For~~calculations ~~example,~~are itnot ~~may~~governed beby ~~difficult~~governmental ~~to reflect fully and accurately rapidly changing market conditions~~ or ~~material~~independent events that may impact the value of our investments or to obtain quickly complete information regarding such events. The NAV per share of each class of our common shares may not reflect such extraordinary events to the extent that their financial impact is not immediately quantifiable. As a resultsecurities, ~~the NAV per share of each class, as determined monthly, after the announcement of a material event may differ significantly from our actual NAV per share for such class until such time as the~~ financial impact is quantified and our NAV is appropriately adjusted in a subsequent month and in accordance with our valuation guidelines. The resulting potential disparity in our NAV may inure to the benefit of shareholders whose common shares are repurchased or ~~new~~accounting ~~shareholders,~~rules ~~depending on whether our published NAV per share for such class is overstated~~ or ~~understated~~standards.

The methods for calculating our NAV, ~~calculations~~including the components used in calculating our NAV, are not ~~governed~~prescribed by ~~governmental~~rules of the SEC or ~~independent~~any ~~securities~~other regulatory agency. Further, ~~financial~~there orare no accounting rules or standards that prescribe which components should be used in calculating NAV, and our NAV is not audited by our independent registered public accounting firm. We calculate and publish NAV solely for purposes of establishing the price at which we sell and repurchase our common shares and to calculate certain fees and distributions payable to the Advisor and the Dealer Manager and you should not view our NAV as a measure of our historical or future financial condition or performance. The components and methodology used in calculating our NAV may differ from those used by other companies now or in the future.

~~The~~In ~~methods~~addition, ~~for~~calculations ~~calculating~~of our NAV, ~~including~~to the ~~components~~extent ~~used~~that inthey ~~calculating~~incorporate valuations of our ~~NAV~~assets and liabilities, are not ~~prescribed~~prepared byin ~~rules~~accordance ofwith ~~the~~U.S. ~~SEC or any other regulatory agency~~GAAP. ~~Further,~~These ~~there~~valuations ~~are~~may nodiffer ~~accounting~~from ~~rules~~liquidation orvalues ~~standards~~ that ~~prescribe~~could ~~which components should~~ be ~~used~~realized in ~~calculating NAV, and our NAV is not audited by our independent registered public accounting firm. We calculate and publish NAV solely for purposes of establishing~~ the ~~price~~event atthat ~~which~~ we ~~sell~~were ~~and~~forced ~~repurchase our common shares and~~ to ~~calculate~~sell ~~certain fees and distributions payable to the Advisor and the Dealer Manager and you should not view our NAV as a measure of our historical or future financial condition or performance~~assets. ~~The components and methodology used in calculating our NAV may differ from those used by other companies now or in the future.~~

~~In addition~~Additionally, ~~calculations~~errors ofmay occur in calculating our NAV, towhich could impact the ~~extent~~price ~~that~~at ~~they~~which ~~incorporate~~we ~~valuations~~sell ofand repurchase our ~~assets~~common shares and ~~liabilities,~~the ~~are~~amount ~~not~~of ~~prepared~~the inAdvisor’s ~~accordance~~Management ~~with U~~Fee.S. ~~GAAP~~The Advisor has implemented certain policies and procedures to address such errors in NAV calculations. ~~These~~If ~~valuations~~such errors were to occur, the Advisor, depending on the circumstances surrounding each error and the extent of any impact the error has on the price at which our common shares were sold or repurchased or on the amount of the Advisor’s Management Fee, may ~~differ~~determine ~~from~~in ~~liquidation~~its ~~values~~sole ~~that~~discretion ~~could~~to betake ~~realized~~certain corrective actions in response to such errors, including, subject to the ~~event~~Advisor’s ~~that~~policies weand ~~were~~procedures, ~~forced~~making adjustments to ~~sell~~prior ~~assets~~NAV calculations. You should carefully review the disclosure of our valuation policies and how NAV will be calculated under “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities—Net Asset Value Calculation and Valuation Guidelines.”

~~Additionally,~~Our ~~errors~~shareholders ~~may~~generally ~~occur~~have inlimited ~~calculating~~voting ~~our NAV, which could impact the price at which we sell and repurchase our common shares and the amount of the Advisor’s Management Fee~~rights. The Advisor has implemented certain policies and procedures to address such errors in NAV calculations. If such errors were to occur, the Advisor, depending on the circumstances surrounding each error and the extent of any impact the error has on the price at which our common shares were sold or repurchased or on the amount of the Advisor’s Management Fee, may determine in its sole discretion to take certain corrective actions in response to such errors, including, subject to the Advisor’s policies and procedures, making adjustments to prior NAV calculations. You should carefully review the disclosure of our valuation policies and how NAV will be calculated under “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities—Net Asset Value Calculation and Valuation Guidelines.”

~~Our~~As ~~shareholders~~permitted ~~generally~~by ~~have~~Maryland law, our Declaration of Trust provides limited voting rights to our shareholders. Under our Declaration of Trust, subject to certain exceptions, shareholders generally are only entitled to vote at a duly held meeting at which a quorum is present only on (1) amendments to our Declaration of Trust that would materially and adversely affect the contract rights of outstanding shares subject to certain exceptions provided in our Declaration of Trust, (2) other than in connection with the Trust conducting a public offering as a non-listed real estate investment trust, a merger, consolidation, conversion (other than a Conversion Event), statutory exchange or transfer of all or substantially all of our assets as provided in our Declaration of Trust, (3) removal of a trustee for cause and the election of a successor trustee to the extent provided in our Declaration of Trust, (4) the dissolution of the Company to the extent specifically provided by the terms of any class or series of common shares or preferred shares as set forth in our Declaration of Trust, (5) in the event that there are no trustees, the election of trustees and (6) such other matters that our board of trustees has submitted to our shareholders for approval or ratification.

AsThe ~~permitted~~affirmative byvote ~~Maryland~~of ~~law,~~a ~~our~~plurality ~~Declaration~~ of ~~Trust~~the ~~provides~~votes ~~limited~~cast ~~voting~~in ~~rights~~the toelection ~~our shareholders. Under our Declaration~~ of ~~Trust, subject to certain exceptions, shareholders generally are only entitled to vote at~~ a ~~duly~~trustee ~~held meeting at which a quorum~~ is ~~present~~generally ~~only~~required ~~on (1) amendments~~ to ~~our~~elect ~~Declaration~~any oftrustee, ~~Trust that would materially~~ and ~~adversely affect~~ the ~~contract~~affirmative ~~rights~~vote of ~~outstanding~~a ~~shares~~majority ~~subject to certain exceptions provided in our Declaration~~ of ~~Trust, (2) other than in connection with~~ the ~~Trust~~votes ~~conducting~~cast aat ~~public offering as~~ a ~~non-listed~~meeting ~~real estate investment trust, a merger, consolidation, conversion or transfer~~ of ~~all~~shareholders orduly ~~substantially~~called ~~all of our assets as provided in our Declaration of Trust, (3) removal of a trustee for cause~~ and ~~the~~at ~~election~~which of a ~~successor~~quorum ~~trustee~~is topresent ~~the~~is ~~extent~~generally ~~provided~~sufficient ~~in our Declaration of Trust, (4) the dissolution of the Company~~ to ~~the~~approve ~~extent specifically provided by the terms of~~ any ~~class~~other ormatter ~~series of common shares or preferred shares as set forth in our Declaration of Trust, (5) in the event~~ that ~~there~~may ~~are~~properly nocome ~~trustees,~~before the ~~election~~shareholders ofat ~~trustees~~such ~~and~~meeting (~~6) such~~ other ~~matters~~than ~~that~~the ~~our board of trustees has submitted to our shareholders for approval or ratification.~~

The affirmative vote of a plurality of the votes cast in the election of a trustee is generally required to elect any trustee, and the affirmative vote of a majority of the votes cast at a meeting of shareholders duly called and at which a quorum is present is generally sufficient to approve any other matter that may properly come before the shareholders at such meeting (other than the 17

17removal of a trustee, which requires the affirmative vote of shareholders entitled to cast at least two-thirds of all the votes entitled to be cast generally in the election of trustees).

~~removal~~All ofother amatters ~~trustee,~~are ~~which~~subject ~~requires~~to the ~~affirmative~~discretion ~~vote~~of our board of ~~shareholders~~trustees. ~~entitled~~Thus, toexcept ~~cast~~as atset ~~least~~forth ~~two-thirds~~above or in any class or series of ~~all~~our ~~the~~shares ~~votes~~and ~~entitled~~subject to bethe ~~cast~~restrictions ~~generally~~on transfer and ownership of our shares contained in ~~the~~our ~~election~~Declaration of ~~trustees)~~Trust, holders of common shares do not have the right to vote on any matter.

~~All~~Our ~~other~~Declaration ~~matters~~of ~~are~~Trust ~~subject~~does tonot ~~the~~provide ~~discretion~~for ofthe ~~our~~annual ~~board~~election of trustees. ~~Thus,~~by ~~except as set forth above or in any class or series of~~ our ~~shares~~shareholders, and ~~subject~~contains toprovisions ~~the~~that ~~restrictions~~could onmake ~~transfer~~removal ~~and ownership~~ of our ~~shares~~trustees ~~contained in our Declaration of Trust~~difficult, ~~holders~~which ofcould ~~common~~make ~~shares~~it dodifficult ~~not~~for ~~have~~our ~~the~~shareholders ~~right~~ to ~~vote~~effect onchanges ~~any~~to ~~matter~~our management.

Our Declaration of Trust ~~does~~provides ~~not~~that ~~provide~~shareholders ~~for~~are entitled to elect trustees only upon the ~~annual~~removal ~~election~~of a trustee by shareholders (unless the trustee so removed was designated by Starwood Capital pursuant to the Declaration of Trust) or in the event there are no trustees. A trustee may be removed by our shareholders only for “cause” (as defined in our Declaration of Trust), and ~~contains~~then ~~provisions~~only ~~that~~upon ~~could~~the ~~make~~affirmative ~~removal~~vote of ~~our~~shareholders ~~trustees~~entitled ~~difficult,~~to ~~which~~cast ~~could~~at ~~make~~least ittwo-thirds ~~difficult~~of ~~for~~all ~~our~~the ~~shareholders~~votes entitled to ~~effect~~be ~~changes~~cast toon the matter in accordance with our ~~management~~Declaration of Trust.

Our Declaration of Trust provides that ~~shareholders~~any ~~are~~vacancy ~~entitled~~on toour ~~elect~~board of trustees ~~only~~(other ~~upon~~than ~~the~~vacancies resulting from shareholder removal of a trustee for cause or vacancies among the independent trustees) may be filled only by ~~shareholders~~a ~~(unless~~vote of a majority of the remaining trustees, even if the remaining trustees do not constitute a quorum. Independent trustee sovacancies shall be filled by a majority of the remaining independent trustees, except where an independent trustee is removed ~~was~~for ~~designated~~cause by the shareholders. For so long as Starwood Capital ~~pursuant~~or any of its affiliates acts as investment advisor to us, Starwood Capital has the ~~Declaration~~right ofto ~~Trust~~designate two (2) ortrustees infor ~~the~~election ~~event~~to ~~there~~our ~~are~~board noof trustees. AOur ~~trustee~~board ~~may~~of betrustees ~~removed~~must also consult with Starwood Capital in connection with filling any vacancies created by ~~our~~the ~~shareholders~~removal, ~~only~~resignation, retirement or death of any trustee (other than in connection with a removal of a trustee for “cause” ~~(as~~by ~~defined~~shareholders in accordance with our Declaration of Trust),. ~~and~~If ~~then~~a ~~only~~trustee ~~upon~~designated ~~the~~by ~~affirmative~~Starwood ~~vote~~Capital ofis ~~shareholders~~removed ~~entitled~~by tothe ~~cast~~shareholders atfor ~~least~~cause, ~~two-thirds~~Starwood ofCapital ~~all~~has the ~~votes~~exclusive ~~entitled~~right to bedesignate ~~cast~~a onsuccessor ~~the~~trustee ~~matter~~for inelection ~~accordance~~to ~~with~~fill the resulting vacancy on our ~~Declaration~~board of ~~Trust~~trustees.

~~Our~~These ~~Declaration~~requirements ofmake ~~Trust~~it ~~provides~~more ~~that~~difficult ~~any~~to ~~vacancy~~change on our ~~board~~management ~~of trustees (other than vacancies resulting from shareholder removal of a trustee for cause or vacancies among the independent trustees) may be filled only~~ by aremoving ~~vote~~and ofreplacing ~~a majority of the remaining~~ trustees, ~~even~~and ifmay ~~the~~prevent ~~remaining trustees do not constitute~~ a ~~quorum.~~change Independent trustee vacancies shall be filled by a majority of the remaining independent trustees, except where an independent trustee is removed for cause by the shareholders. For so long as Starwood Capital or any of its affiliates acts as investment advisor to us, Starwood Capital has the right to designate two (2) trustees for election to our board of trustees. Our board of trustees must also consult with Starwood Capital in connection with filling any vacancies created by the removal, resignation, retirement or death of any trustee (other than in connection with a removal of a trustee for cause by shareholders in accordance with our ~~Declaration of Trust)~~control. If a trustee designated by Starwood Capital is removed by the shareholders for cause, Starwood Capital has the exclusive right to designate a successor trustee for election to fill the resulting vacancy on our board of trustees.

~~These~~Our ~~requirements~~Declaration ~~make~~of itTrust ~~more~~permits ~~difficult~~our board of trustees to ~~change~~authorize ~~our~~us ~~management~~to byissue ~~removing~~preferred ~~and~~shares ~~replacing~~on ~~trustees~~terms ~~and~~that may ~~prevent~~be asenior ~~change~~to inthe rights of the holders of our ~~control~~current common shares or discourage a third party from acquiring us.

Our board of trustees is permitted, subject to certain restrictions set forth in our Declaration of Trust, ~~permits~~to authorize the issuance of preferred shares without shareholder approval. Further, our board of trustees may classify or reclassify any unissued common shares or preferred shares from time to time into one or more classes or series by setting or changing the number, par value, designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any new class or series of common shares or preferred shares. Thus, our board of trustees could authorize us to issue preferred shares onwith terms and conditions that ~~may~~could be senior to the rights of the holders of our ~~current~~ common shares or ~~discourage~~have the effect of delaying, deferring or preventing a ~~third~~change ~~party~~in ~~from~~control ~~acquiring~~of us, including an extraordinary transaction such as a merger, tender offer or sale of all or substantially all of our assets, that might provide a premium price for holders of our common shares.

~~Our~~Your ~~board~~interest ~~of trustees is permitted, subject to certain restrictions set forth~~ in our Declaration of Trust, to authorize the issuance of preferred shares without shareholder approval. Further, our board of trustees may classify or reclassify any unissued common shares or preferred shares from time to time into one or more classes or series by setting or changing the number, par value, designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any new class or series of common shares or preferred shares. Thus, our board of trustees could authorize us towill ~~issue preferred shares with terms and conditions that could~~ be ~~senior~~diluted toif ~~the~~we ~~rights~~issue ofadditional ~~the holders of our common~~ shares or have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction such as a merger, tender offer or sale of all or substantially all of our assets, that might provide a premium price for holders of our common shares.

~~Your~~Holders of our common shares do not have preemptive rights to any shares we issue in the future. Our Declaration of Trust authorizes us to issue an unlimited number of common shares of beneficial interest, par value $0.01 per share, including an unlimited number of shares classified as Class T shares, an unlimited number of shares classified as Class S shares, an unlimited number of shares classified as Class D shares, an unlimited number of shares classified as Class I shares, and an unlimited number of shares classified as Class E shares, and an unlimited number of shares classified as preferred shares of beneficial interest, par value $0.01 per share. Our board of trustees may elect, without shareholder approval, to, among other things,: (1) sell additional common shares in our private offering or any future offering; (2) issue common shares upon the exercise of the options we may grant to our independent trustees or future employees; (3) issue common shares to the Advisor, or its successor or assign, in payment of an outstanding obligation to pay fees for services rendered to us ~~will~~or befor ~~diluted~~the ifManagement Fee or Performance Fee or expense reimbursements; or (4) issue equity incentive compensation to certain employees of affiliated service providers or to third parties as satisfaction of obligations under incentive compensation arrangements. To the extent we issue additional common shares in the future, your percentage ownership interest in us will be diluted. Because of these and other reasons, our shareholders may experience substantial dilution in their percentage ownership of our common shares.

~~Holders~~Maryland oflaw and our ~~common shares will not have preemptive rights to any shares we issue in the future. Our~~ Declaration of Trust ~~authorizes~~limit usour torights issue an unlimited number of common shares of beneficial interest, par value $0.01 per share, including an unlimited number of shares classified as Class T shares, an unlimited number of shares classified as Class S shares, an unlimited number of shares classified as Class D shares, an unlimited number of shares classified as Class I shares, and an unlimited number of shares classified as Class E shares, and an unlimited number of shares classified as preferred shares of beneficial interest, par value $0.01 per share. Our board of trustees may elect, without shareholder approval, to, among other things,: (1) sell additional common shares in our private offering or any future offering; (2) issue common shares upon the ~~exercise~~rights of ~~the options we may grant to~~ our ~~independent~~shareholders ~~trustees or future employees; (3) issue common shares~~ to ~~the~~recover ~~Advisor,~~claims oragainst ~~its~~Covered ~~successor~~Persons ~~or assign, in payment of an outstanding obligation to pay fees for services rendered to us or for the Management Fee or Performance Fee or expense reimbursements; or~~ (~~4) issue equity incentive compensation to certain employees of affiliated service providers or to third parties~~ as ~~satisfaction~~defined ofbelow), ~~obligations~~which ~~under~~could ~~incentive~~reduce ~~compensation arrangements. To the extent we issue additional common shares in the future,~~ your ~~percentage ownership interest in us will be diluted. Because of these~~ and ~~other reasons,~~ our ~~shareholders~~recovery ~~may~~against ~~experience~~them ~~substantial~~if ~~dilution~~they incause ~~their~~us ~~percentage~~to ~~ownership~~incur ~~of our common shares~~losses.

Maryland law ~~and~~provides ~~our~~that ~~Declaration~~a trustee will not have any liability as a trustee so long as he or she performs his or her duties in accordance with the applicable standard of ~~Trust~~conduct. ~~limit~~In addition, our ~~rights~~Declaration ~~and~~of Trust limits the ~~rights~~personal liability of our ~~shareholders~~trustees toand ~~recover~~officers ~~claims~~for ~~against~~monetary ~~Covered~~damages ~~Persons~~to ~~(as~~the ~~defined~~maximum ~~below),~~extent ~~which~~permitted ~~could~~by ~~reduce~~Maryland ~~your~~law. ~~and~~Maryland ~~our~~law ~~recovery~~permits ~~against~~us ~~them~~and ifour ~~they~~Declaration ~~cause~~of Trust requires us to ~~incur~~indemnify ~~losses.~~each trustee, each officer, the Advisor, Starwood Holdings and each equity holder, member,

Maryland law provides that a trustee will not have any liability as a trustee so long as he or she performs his or her duties in accordance with the applicable standard of conduct. In addition, our Declaration of Trust limits the personal liability of our trustees and officers for monetary damages to the maximum extent permitted by Maryland law. Maryland law permits us and our Declaration of Trust requires us to indemnify each trustee, each officer, the Advisor, Starwood Holdings and each equity holder, member, 18

18manager, director, officer, employee or agent of any trustee or our board of trustees (each a “Covered Person”), including any individual or entity who, while serving as the Covered Person and, at our request, serves or has served any other enterprise in any management or agency capacity, against any claim or liability to which the Covered Person may become subject by reason of such status, except for liability for the Covered Person’s gross negligence or intentional misconduct. In addition, the Company shall, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse, in advance of final disposition of a proceeding, reasonable expenses incurred by a present or former Covered Person or shareholder made a party to or witness in a proceeding by reason of such status. The Company is not required to indemnify or advance funds to any person entitled to indemnification under our Declaration of Trust (x) with respect to any action initiated or brought voluntarily by such indemnified person (and not by way of defense) unless (I) approved or authorized by our board of trustees or (II) incurred to establish or enforce such person’s right to indemnification under the Declaration of Trust, or (y) in connection with any claim with respect to which such person is found to be liable to the Company. As a result, you and we may have more limited rights against Covered Persons than might otherwise exist under common law, which could reduce your and our recovery from these persons if they act in a manner that causes us to incur losses.

~~manager,~~We ~~director,~~will ~~officer,~~not ~~employee~~be orrequired ~~agent~~to ofcomply ~~any~~with ~~trustee~~certain orreporting ~~our board of trustees (each a “Covered Person”)~~requirements, including ~~any~~those ~~individual~~relating ~~or entity who, while serving as the Covered Person and, at our request, serves or has served any other enterprise in any management or agency capacity, against any claim or liability~~ to ~~which the Covered Person may become subject by reason of such status, except for liability for the Covered Person~~auditor’s ~~gross~~attestation ~~negligence~~reports oron ~~intentional misconduct. In addition,~~ the ~~Company~~effectiveness ~~shall, without requiring a preliminary determination~~ of ~~the~~our ~~ultimate~~system ~~entitlement to indemnification, pay or reimburse, in advance~~ of ~~final~~internal ~~disposition~~control ofover afinancial ~~proceeding~~reporting, ~~reasonable~~accounting ~~expenses~~standards incurred by a present or former Covered Person or shareholder made a party to or witness in a proceeding by reason of such status. The Company is not required to indemnify or advance funds to any person entitled to indemnification under our Declaration of Trust (x) with respect to any action initiated or brought voluntarily by such indemnified person (and ~~not~~disclosure byabout ~~way of defense) unless (I) approved or authorized by~~ our ~~board~~executive ~~of trustees or (II) incurred to establish or enforce such person’s right to indemnification under the Declaration of Trust~~compensation, orthat ~~(y)~~apply ~~in connection with any claim with respect~~ to ~~which~~other ~~such~~public ~~person is found to be liable to the Company~~companies. As a result, you and we may have more limited rights against Covered Persons than might otherwise exist under common law, which could reduce your and our recovery from these persons if they act in a manner that causes us to incur losses.

WeThe ~~will~~JOBS ~~not~~Act becontains ~~required~~provisions tothat, ~~comply~~among ~~with~~other things, relax certain reporting requirements for emerging growth companies, including ~~those~~certain requirements relating to accounting standards and compensation disclosure. We are classified as an emerging growth company. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to (1) provide an auditor’s attestation ~~reports~~report on the effectiveness of our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (2) comply with any new or revised financial accounting standards ~~and~~applicable ~~disclosure~~to ~~about~~public ~~our~~companies ~~executive~~until ~~compensation~~such standards are also applicable to private companies under Section 102(b)(1) of the JOBS Act, ~~that~~(3) ~~apply~~comply with any new requirements adopted by the Public Company Accounting Oversight Board (“PCAOB”) requiring mandatory audit firm rotation or a supplement to ~~other~~the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (4) comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, (5) provide certain disclosure regarding executive compensation required of larger public companies or (6) hold shareholder advisory votes on executive compensation.

~~The~~Once ~~JOBS~~we Act contains provisions that, among other things, relax certain reporting requirements for emerging growth companies, including certain requirements relating to accounting standards and compensation disclosure. We are ~~classified~~no aslonger an emerging growth company., ~~For~~so as long as weour ~~are~~common anshares ~~emerging~~are ~~growth~~not ~~company,~~traded ~~which~~on ~~may~~a besecurities ~~up to five full fiscal years~~exchange, ~~unlike other public companies,~~ we will ~~not~~ be ~~required~~deemed to ~~(1)~~be ~~provide~~a an“non-accelerated ~~auditor’s~~filer” ~~attestation~~under ~~report on~~ the ~~effectiveness~~Securities ofExchange ~~our~~Act ~~system~~ of ~~internal~~1934, ~~control~~as ~~over~~amended ~~financial reporting pursuant to Section 404 of~~ (the ~~Sarbanes-Oxley~~“Exchange Act”), ~~(2)~~and ~~comply~~as ~~with~~a ~~any~~non-accelerated ~~new~~filer, orwe ~~revised~~will ~~financial~~be ~~accounting~~exempt ~~standards~~from ~~applicable~~compliance towith ~~public~~the ~~companies~~auditor ~~until~~attestation ~~such~~requirements ~~standards~~of ~~are also applicable to private companies under~~ Section ~~102(b)(1)~~404 of the ~~JOBS~~Sarbanes-Oxley Act. In addition, ~~(3)~~so ~~comply~~long ~~with~~as ~~any~~we ~~new~~are ~~requirements~~externally ~~adopted~~managed by the ~~Public~~Advisor ~~Company~~and ~~Accounting~~we ~~Oversight~~do ~~Board~~not ~~(“PCAOB”)~~directly ~~requiring~~compensate ~~mandatory~~our ~~audit~~executive ~~firm~~officers, ~~rotation~~ or areimburse ~~supplement to~~ the ~~auditor’s~~Advisor ~~report~~or inits ~~which~~affiliates ~~the~~for ~~auditor~~salaries, ~~would~~bonuses, bebenefits ~~required~~and toseverance ~~provide~~payments ~~additional~~for ~~information~~persons ~~about~~who ~~the~~also ~~audit~~serve ~~and~~as ~~the~~one ~~financial~~of ~~statements~~our ofexecutive ~~the~~officers ~~issuer,~~or ~~(4)~~as ~~comply~~an ~~with~~executive ~~any~~officer ~~new~~of ~~audit~~the ~~rules~~Advisor, ~~adopted~~we bydo ~~the~~not ~~PCAOB~~have ~~after~~any ~~April~~executive 5compensation, ~~2012~~making ~~unless~~ the ~~SEC~~exemptions ~~determines~~listed ~~otherwise,~~in (5) ~~provide~~and ~~certain disclosure regarding executive compensation required of larger public companies or~~ (6) ~~hold~~above ~~shareholder~~generally ~~advisory votes on executive compensation~~inapplicable.

~~Once~~We wecannot ~~are~~predict noif ~~longer~~investors anwill ~~emerging~~find ~~growth company, so long as~~ our common shares ~~are~~less ~~not~~attractive ~~traded~~because ~~on a securities exchange,~~ we ~~will~~choose ~~be deemed~~ to berely aon ~~“non-accelerated~~any ~~filer” under the Securities Exchange Act~~ of ~~1934, as amended (~~the “Exchange Act”), and as a non-accelerated filer, we will be exempt from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. In addition, so long as we are externally managed by the Advisor and we do not directly compensate our executive officers, or reimburse the Advisor or its affiliates for salaries, bonuses, benefits and severance payments for persons who also serve as one of our executive officers or as an executive officer of the Advisor, we do not have any executive compensation, making the exemptions ~~listed~~discussed ~~in (5) and (6)~~ above ~~generally inapplicable~~.

As noted above, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. We ~~cannot~~have ~~predict~~elected ifto ~~investors~~opt out of this transition period, and will ~~find~~therefore ~~our~~comply ~~common~~with ~~shares~~new ~~less~~or ~~attractive~~revised ~~because~~accounting westandards ~~choose~~on tothe ~~rely~~applicable dates on ~~any~~which the adoption of ~~the~~these ~~exemptions~~standards ~~discussed~~is ~~above~~required for non-emerging growth companies. This election is irrevocable.

~~As noted above~~Additionally, ~~under~~deficiencies in the ~~JOBS~~effectiveness ~~Act,~~and ~~emerging~~accuracy ~~growth~~of ~~companies~~information ~~can~~systems ~~delay~~or ~~adopting~~internal ~~new~~controls orthat ~~revised~~the ~~accounting~~Company ~~standards~~maintains ~~that~~may ~~have~~result ~~different~~in ~~effective~~a ~~dates~~material ~~for~~loss. ~~public~~This ~~and~~risk ~~private~~arises ~~companies~~from, ~~until~~inter ~~such~~alia, ~~time~~human aserror, ~~those~~system ~~standards~~failures, ~~apply~~inadequate toprocedures ~~private~~or ~~companies~~internal management controls. WeOperational ~~have~~risk ~~elected~~such as human error or system failures may lead to ~~opt~~incorrect ~~out~~or ofinaccurate ~~this~~valuations ~~transition~~of ~~period,~~the investments and ~~will~~may ~~therefore~~impact ~~comply~~the ~~with~~ability ~~new~~of orthe ~~revised~~Advisor ~~accounting~~to ~~standards~~make such calculations or valuations on ~~the~~relevant ~~applicable~~determination dates. onWhere ~~which~~there are deficiencies in the ~~adoption~~effectiveness and accuracy of ~~these~~information ~~standards~~systems isor ~~required~~system ~~for~~failures, ~~non-emerging~~this ~~growth~~may ~~companies.~~lead ~~This~~to ~~election~~a isdelay ~~irrevocable~~in providing investors with required reporting information.

~~Additionally,~~Your ~~deficiencies~~investment inreturn ~~the effectiveness and accuracy of information systems or internal controls that the Company maintains~~ may ~~result~~be inreduced ~~a material loss. This risk arises from, inter alia, human error, system failures, inadequate procedures or internal management controls. Operational risk such~~ as ~~human~~a ~~error~~consequence ~~or system failures may lead to incorrect or inaccurate valuations~~ of the ~~investments~~actions ~~and~~we ~~may~~intend ~~impact~~to ~~the~~take ~~ability of the Advisor~~ to ~~make~~avoid ~~such~~registering ~~calculations~~as oran ~~valuations~~investment oncompany ~~relevant~~under ~~determination dates. Where there are deficiencies in~~ the ~~effectiveness~~Investment ~~and~~Company ~~accuracy~~Act ~~of information systems~~ or ~~system~~if ~~failures,~~we ~~this~~are ~~may~~required ~~lead~~ to aregister ~~delay~~as inan ~~providing~~investment ~~investors~~company ~~with~~under ~~required~~the ~~reporting~~Investment ~~information~~Company Act.

~~Your~~We ~~investment~~currently ~~return~~conduct, ~~may~~and beintend ~~reduced~~to ascontinue ato ~~consequence~~conduct, ofour ~~the~~operations ~~actions~~so wethat ~~intend~~neither towe ~~take~~nor toour ~~avoid~~subsidiaries ~~registering~~would asbe an investment ~~company~~companies under the Investment Company Act. orHowever, ifthere can be no assurance that we ~~are~~and ~~required~~our tosubsidiaries ~~register~~will asbe anable ~~investment~~to ~~company~~successfully ~~under~~avoid ~~the~~registering ~~Investment~~as ~~Company~~an ~~Act~~investment company.

We ~~currently~~presently ~~conduct, and~~ intend to ~~continue~~conduct toour ~~conduct,~~business primarily through our ~~operations~~wholly soowned ~~that~~subsidiaries. ~~neither~~Thus, we ~~nor~~believe ~~our~~we ~~subsidiaries~~are ~~would~~not bean investment ~~companies~~company under Section 3(a)(1)(A) of the Investment Company Act. ~~However~~because we do not engage primarily or hold our self out as being engaged primarily in the business of investing, ~~there~~reinvesting ~~can~~or betrading noin ~~assurance~~securities; ~~that~~rather, we will be primarily engaged in the business of owning and operating our subsidiaries. ~~will~~Similarly, bewe ~~able~~intend to ~~successfully~~conduct ~~avoid~~our ~~registering~~operations asso that we do not come within the definition of an investment company. under Section 3(a) (1)(C) of the Investment Company Act because more than 60% of our

We presently intend to conduct our business primarily through our wholly owned subsidiaries. Thus, we believe we are not an investment company under Section 3(a)(1)(A) of the Investment Company Act because we do not engage primarily or hold our self out as being engaged primarily in the business of investing, reinvesting or trading in securities; rather, we will be primarily engaged in the business of owning and operating our subsidiaries. Similarly, we intend to conduct our operations so that we do not come within the definition of an investment company under Section 3(a) (1)(C) of the Investment Company Act because more than 60% of our 19

19assets, exclusive of cash and U.S. government securities, will consist of ownership interests in wholly owned subsidiaries that are not themselves investment companies and are not relying on the exceptions from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.

~~assets,~~We ~~exclusive~~expect that the majority of ~~cash~~our ~~and~~business ~~U.S.~~will ~~government~~be ~~securities~~conducted through our primary subsidiary, ~~will~~SCREDIT ~~consist~~Real ofEstate ~~ownership~~Capital, ~~interests~~LLC in(“Real ~~wholly~~Estate ~~owned~~Capital”). ~~subsidiaries~~We believe that ~~are~~Real Estate Capital will not ~~themselves~~be deemed an investment ~~companies~~company ~~and~~because ~~are~~it ~~not~~will ~~relying~~be able to rely on Section 3(c)(6) of the ~~exceptions~~Investment ~~from~~Company Act. Real Estate Capital will in turn primarily engage in the ~~definition~~origination, acquisition, financing of a portfolio of primarily commercial real estate debt investments through subsidiaries of its own, the majority of which will be able to individually rely upon Section 3(c)(5)(C). Accordingly, because we will own 100% of the outstanding voting securities of Real Estate Capital, we believe that we will not be deemed an investment company under Section 3(ca)(1)(A) or 3(a)(1)(C) of the Investment Company Act so long as Real Estate Capital is able to maintain its exemption under Section 3(c)(76). Additionally, if the Company in the future directly invests in real estate-related debt securities rather than indirectly through our subsidiaries, we may also rely on Section 3(c)(6) of the Investment Company Act.

WeSection ~~expect~~3(c)(6) ~~that~~of the ~~majority~~Investment ofCompany ~~our~~Act ~~business~~excepts ~~will~~from bethe ~~conducted~~definition ~~through~~of ~~our~~investment ~~primary~~company ~~subsidiary,~~any ~~SCREDIT~~company ~~Real~~primarily ~~Estate Capital~~engaged, ~~LLC~~directly ~~(“Real~~or ~~Estate~~through ~~Capital”).~~majority-owned Wesubsidiaries, ~~believe~~in ~~that~~one ~~Real~~or ~~Estate~~more ~~Capital~~of ~~will~~the ~~not~~businesses bedescribed ~~deemed~~in anparagraphs ~~investment~~(3), ~~company~~(4) ~~because~~and it(5) ~~will~~of ~~be able to rely on~~ Section 3(c)~~(6)~~, ofor ~~the Investment Company Act. Real Estate Capital will~~ in ~~turn~~one ~~primarily~~or ~~engage~~more insuch ~~the~~businesses ~~origination,~~(from ~~acquisition,~~which ~~financing~~not ofless athan ~~portfolio~~25% of ~~primarily~~such ~~commercial~~company’s ~~real~~gross ~~estate~~income ~~debt~~during ~~investments~~its ~~through~~last ~~subsidiaries~~fiscal ofyear ~~its~~was ~~own,~~derived) ~~the~~together ~~majority~~with ofan ~~which~~additional ~~will~~business beor ~~able~~businesses toother ~~individually~~than ~~rely~~investing, ~~upon~~reinvesting, ~~Section 3(c)(5)(C). Accordingly~~owning, ~~because~~holding weor ~~will~~trading ~~own~~in ~~100%~~securities. ofIn the ~~outstanding~~context ~~voting securities~~ of ~~Real~~a ~~Estate~~parent ~~Capital,~~company weconducting ~~believe~~its ~~that~~business wethrough ~~will~~its ~~not~~majority beowned ~~deemed~~subsidiaries anrelying ~~investment~~upon ~~company~~the ~~under~~ Section 3(ac)(15)(AC) orexclusion, ~~3(a)(1)(C)~~we ofinterpret the ~~Investment~~“primarily ~~Company~~engaged” ~~Act~~element soof ~~long~~the ~~as Real Estate Capital is able to maintain its exemption under Section~~ 3(c)(6). ~~Additionally,~~exclusion ifto ~~the~~generally ~~Company~~depend inon where the ~~future~~parent ~~directly~~deploys ~~invests~~its inassets ~~real~~and ~~estate-related debt securities rather than indirectly through our subsidiaries, we may also rely~~ on ~~Section~~where ~~3(c)(6) of~~ the ~~Investment~~parent ~~Company~~derives ~~Act~~its income.

Section 3(c)(65)(C) ofis ~~the~~available ~~Investment~~for ~~Company~~entities ~~Act~~“primarily ~~excepts~~engaged ~~from~~in the ~~definition~~business of ~~investment~~purchasing ~~company~~or ~~any~~otherwise ~~company~~acquiring ~~primarily~~mortgages ~~engaged,~~and ~~directly~~other orliens ~~through~~on ~~majority-owned~~and ~~subsidiaries,~~interests in ~~one~~real orestate.” ~~more~~This ofexception ~~the~~generally ~~businesses~~requires ~~described in paragraphs (3)~~that, ~~(4)~~for ~~and~~purposes ~~(5)~~ of Section 3(c)(5)(C), orat inleast ~~one or more such businesses (from which not less than 25~~55% of ~~such~~a ~~company’s~~portfolio ~~gross~~must ~~income~~be ~~during~~comprised ~~its~~of ~~last~~“Qualifying ~~fiscal~~Interests” ~~year~~and ~~was~~at ~~derived)~~least ~~together~~80% ~~with an additional business or businesses other than investing, reinvesting, owning, holding or trading in securities. In the context~~ of ~~a parent company conducting~~ its ~~business~~portfolio ~~through~~must ~~its~~be ~~majority~~comprised ~~owned~~of ~~subsidiaries~~Qualifying ~~relying~~Interests ~~upon~~and ~~the Section 3(c)(5)(C) exclusion, we interpret the~~ “~~primarily~~Real ~~engaged~~Estate-related Interests” ~~element of the 3~~(~~c)(6)~~and ~~exclusion~~no tomore ~~generally~~than ~~depend~~20% oncomprised ~~where~~of ~~the~~non-qualifying ~~parent~~or ~~deploys~~non-real ~~its~~estate-related assets ~~and on where the parent derives its income~~).

As a consequence of our subsidiaries seeking to maintain compliance with Sections 3(c)(6) or Section 3(c)(5)(C) isof ~~available~~the ~~for~~Investment ~~entities~~Company ~~“primarily~~Act ~~engaged~~on inan ~~the~~ongoing ~~business~~basis, ofour ~~purchasing~~subsidiaries ormay ~~otherwise~~be ~~acquiring~~restricted ~~mortgages~~from ~~and~~making ~~other~~certain ~~liens~~investments onor ~~and~~may ~~interests~~structure investments in ~~real~~a ~~estate.”~~manner ~~This~~that ~~exception~~would ~~generally~~be ~~requires~~less ~~that,~~advantageous ~~for~~to ~~purposes~~us ofthan ~~Section~~would ~~3(c)(5)(C),~~be atthe ~~least~~case ~~55%~~in the absence of such requirements. In particular, a ~~portfolio~~change ~~must~~in bethe ~~comprised~~value of ~~“Qualifying~~any ~~Interests”~~of ~~and~~our atassets ~~least~~could ~~80%~~negatively ofaffect ~~its~~our ~~portfolio~~ability ~~must~~to bemaintain ~~comprised~~an ofexclusion ~~Qualifying~~from ~~Interests~~registration ~~and~~under ~~“Real~~the ~~Estate-related~~Investment ~~Interests”~~Company (Act and nocause ~~more~~the ~~than~~need ~~20%~~for ~~comprised~~a restructuring of ~~non-qualifying~~our orinvestment ~~non-real estate-related assets)~~portfolio.

AsFor aexample, ~~consequence~~these ofrestrictions may limit our subsidiaries’ ~~seeking~~ability to ~~maintain~~invest ~~compliance~~directly ~~with~~in ~~Sections~~mortgage-backed ~~3(c)(6)~~securities orthat ~~Section~~represent ~~3(c)(5)(C)~~less ofthan the ~~Investment~~entire ~~Company~~ownership ~~Act~~in ona anpool ~~ongoing~~of ~~basis~~senior loans, ~~our~~debt ~~subsidiaries~~and ~~may~~equity betranches ~~restricted~~of ~~from~~securitizations ~~making~~and certain ~~investments~~asset-backed orsecurities, ~~may~~non-controlling ~~structure~~equity ~~investments~~interests in areal ~~manner~~estate ~~that~~companies ~~would~~or bein ~~less~~assets ~~advantageous~~not related to usreal ~~than~~estate. ~~would~~We beand ~~the~~our ~~case~~subsidiaries inmay, ~~the~~however, ~~absence~~invest ofin such ~~requirements.~~securities Into ~~particular,~~ a ~~change~~certain inextent ~~the~~so ~~value~~long ofas ~~any~~we ~~of our assets could negatively affect our ability to~~ maintain ancompliance ~~exclusion~~with ~~from registration under~~ the ~~Investment~~applicable ~~Company Act and cause the need for a restructuring of our investment portfolio~~tests.

~~For~~In ~~example~~addition, ~~these~~seeking ~~restrictions~~to maintain an exclusion from registration under the Investment Company Act may ~~limit~~cause us and/or our subsidiaries’ ~~ability~~ to ~~invest~~acquire ~~directly~~or inhold ~~mortgage-backed~~additional ~~securities~~assets that ~~represent~~we ~~less~~might ~~than~~not ~~the~~otherwise ~~entire~~have ~~ownership~~acquired inor aheld ~~pool~~or dispose of ~~senior~~investments ~~loans,~~that ~~debt~~we and/or ~~equity~~our ~~tranches~~subsidiaries ofmight ~~securitizations~~not ~~and~~have ~~certain~~otherwise ~~asset-backed~~disposed ~~securities~~of, ~~non-controlling~~which ~~equity~~could ~~interests~~result in ~~real~~higher ~~estate~~costs ~~companies~~or lower proceeds to us than we would have paid or inreceived ~~assets~~if we were not ~~related~~seeking to ~~real~~comply ~~estate.~~with Wesuch ~~and~~requirements. ~~our~~Thus, ~~subsidiaries~~maintaining ~~may,~~an ~~however,~~exclusion ~~invest~~from inregistration ~~such~~under ~~securities~~the toInvestment aCompany ~~certain~~Act ~~extent~~may sohinder ~~long~~our asability weto ~~maintain~~operate ~~compliance~~solely ~~with~~on the ~~applicable~~basis ~~tests~~of maximizing profits.

InWe ~~addition,~~assess ~~seeking~~our subsidiaries’ compliance with Section 3(c)(5)(C) by reference to ~~maintain~~SEC anstaff ~~exclusion~~no-action ~~from~~positions ~~registration~~and ~~under~~other ~~the~~guidance. ~~Investment~~No-action ~~Company~~positions ~~Act~~are based on specific factual situations that may ~~cause~~be ussubstantially ~~and/or~~different from the factual situations our subsidiaries may face, and a number of the no-action positions relevant to ~~acquire~~our orbusiness ~~hold~~were ~~additional~~issued ~~assets~~more than twenty years ago. There may be no guidance from the SEC staff that weapplies ~~might~~directly ~~not~~to ~~otherwise~~our factual situations and as a result we may have ~~acquired~~to orapply ~~held~~SEC orstaff ~~dispose~~guidance ofthat ~~investments~~relates to other factual situations by analogy. No assurance can be given that wethe ~~and/~~SEC or ~~our~~its ~~subsidiaries~~staff ~~might~~will ~~not~~concur ~~have~~with ~~otherwise~~our ~~disposed~~classification of our assets. In addition, ~~which~~the ~~could~~SEC ~~result~~or its staff may, in ~~higher~~the ~~costs~~future, orissue ~~lower~~further ~~proceeds~~guidance tothat may require us ~~than~~to were-classify ~~would~~our ~~have~~assets ~~paid~~for orpurposes ~~received~~of ifthe weInvestment ~~were~~Company ~~not~~Act, ~~seeking~~including tofor ~~comply~~purposes of our subsidiaries’ compliance with ~~such~~the ~~requirements~~exclusion provided in Section 3(c)(5)(C) of the Investment Company Act. ~~Thus,~~There ~~maintaining~~is no guarantee that we will be able to adjust our assets in the manner required to maintain an exclusion from registration under the Investment Company Act ~~may~~and ~~hinder~~any adjustment in our ~~ability~~strategy toor ~~operate~~assets ~~solely~~could onhave ~~the~~a ~~basis~~material ofadverse ~~maximizing~~effect ~~profits~~on us.

WeTo assess our subsidiaries’ compliance with Section 3(c)(5)(C) by reference to SEC staff no-action positions and other guidance. No-action positions are based on specific factual situations that may be substantially different from the ~~factual~~extent ~~situations our subsidiaries may face, and a number of the no-action positions relevant to our business were issued more than twenty years ago. There may be no guidance from the SEC staff~~ that ~~applies directly to our factual situations and as a result we may have to apply SEC staff guidance that relates to other factual situations by analogy. No assurance can be given that~~ the SEC or its staff ~~will~~provide ~~concur~~new ~~with~~specific ~~our classification of our assets. In addition, the SEC or its staff may, in the future, issue further~~ guidance ~~that may require us to re-classify our assets for purposes of~~ the ~~Investment~~exemptions ~~Company~~under ~~Act, including for purposes of our subsidiaries’ compliance with the exclusion provided in~~ Section 3(c)(5)(C) or 3(c)(6) of the Investment Company Act., ~~There is no guarantee that~~ we ~~will~~may be ~~able~~required to adjust our ~~assets~~strategy inaccordingly. ~~the~~Any ~~manner~~additional ~~required~~guidance tofrom ~~maintain~~the anSEC ~~exclusion~~or ~~from~~its ~~registration~~staff ~~under~~could ~~the~~provide ~~Investment~~additional ~~Company~~flexibility ~~Act~~to ~~and~~us, ~~any~~or ~~adjustment~~it incould ~~our~~further ~~strategy~~inhibit orour ~~assets~~ability ~~could~~to ~~have~~pursue athe ~~material~~strategies ~~adverse~~we ~~effect~~have ~~on us~~chosen.

ToWe ~~the~~depend ~~extent~~on ~~that~~ the ~~SEC~~Advisor ~~or its staff provide new specific guidance the exemptions under Section 3(c)(5)(C) or 3(c)(6) of the Investment Company Act, we may be required~~ to ~~adjust~~develop ~~our~~appropriate ~~strategy~~systems ~~accordingly.~~and ~~Any~~procedures ~~additional guidance from the SEC or its staff could provide additional flexibility~~ to ~~us,~~control oroperational ~~it could further inhibit our ability to pursue the strategies we have chosen~~risk.

Operational risks arising from mistakes made in the confirmation or settlement of transactions, from transactions not being properly booked, evaluated or accounted for or other similar disruption in our operations may cause us to suffer financial losses, the disruption of our business, liability to third parties, regulatory intervention or damage to our reputation. We depend on the Advisor and its affiliates to develop the appropriate systems and procedures to control operational risk. We rely heavily on the Advisor’s financial, accounting and other data processing systems. The ability of our systems to accommodate transactions could also constrain our ability

20to properly manage our portfolio. Generally, the Advisor will not be liable for losses incurred due to the occurrence of any such errors. The personnel of the Advisor are engaged in other business activities, which could distract them, divert their time and attention such that they could no longer dedicate a significant portion of their time to our businesses or otherwise slow our rate of investment. Any failure to manage our business and our future growth effectively could have a material adverse effect on our business, financial condition, results of operations and cash flows.

toOperational ~~properly manage our portfolio. Generally~~risks, ~~the~~including ~~Advisor will not be liable for losses incurred due to~~ the ~~occurrence~~risk of ~~any such errors. The personnel of the Advisor are engaged in other business activities~~cyberattacks, ~~which~~may ~~could~~disrupt ~~distract~~our ~~them~~businesses, ~~divert~~result ~~their~~in ~~time~~losses ~~and attention such that they could no longer dedicate a significant portion of their time to our businesses~~ or ~~otherwise~~limit ~~slow~~ our ~~rate of investment. Any failure to manage our business and our future~~ growth ~~effectively could have a material adverse effect on our business, financial condition, results of operations and cash flows~~.

~~Operational~~We ~~risks~~rely heavily on our and Starwood Capital’s financial, ~~including~~accounting, treasury, communications and other data processing systems. Such systems may fail to operate properly or become disabled as a result of tampering or a breach of the network security systems or otherwise. In addition, such systems are from time to time subject to cyberattacks which may continue to increase in sophistication and frequency in the future. The risk of ~~cyberattacks,~~cybersecurity incidents may ~~disrupt~~additionally ~~our~~be ~~businesses~~heightened by the increased prevalence and use of artificial intelligence and machine-learning technology. Attacks on Starwood Capital and its affiliates and their portfolio entities and service providers’ systems could involve and, ~~result~~in some instances, have in ~~losses~~the past involved attempted attacks that are intended to obtain unauthorized access to our proprietary information or ~~limit~~personal identifying information of our ~~growth~~stockholders, destroy data or disable, degrade or sabotage our systems, through the introduction of computer viruses or other malicious code.

WeCyber ~~rely~~security ~~heavily~~incidents onand ~~our~~cyber-attacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future. Our information and technology systems as well as those of Starwood Capital~~’s financial~~, ~~accounting,~~its ~~treasury,~~portfolio ~~communications~~entities and other ~~data~~related ~~processing~~parties, ~~systems.~~such ~~Such~~as ~~systems~~service providers, may ~~fail~~be vulnerable to ~~operate~~damage ~~properly~~ or ~~become~~interruptions ~~disabled~~from ascyber asecurity ~~result~~breaches, ofcomputer ~~tampering~~viruses, ornetwork afailures, ~~breach~~computer ofand ~~the~~telecommunication ~~network~~failures, infiltration by unauthorized persons and other security ~~systems~~breaches, usage errors by their respective professionals or ~~otherwise.~~service Inproviders, ~~addition~~power, communications or other service outages and catastrophic events such ~~systems~~as ~~are~~fires, tornadoes, floods, hurricanes and earthquakes. Cyberattacks and other security threats could originate from ~~time~~a towide ~~time~~variety ~~subject~~of tosources, ~~cyberattacks~~including cyber criminals, ~~which~~nation ~~continue~~state tohackers, ~~evolve~~hacktivists and ~~may~~other outside parties. There has been an increase in ~~sophistication~~the frequency and ~~frequency~~sophistication inof the ~~future.~~cybersecurity ~~Attacks~~threats on Starwood Capital ~~and~~faces, ~~its~~with ~~affiliates~~attacks ranging from those common to businesses generally to those that are more advanced and ~~their~~persistent, ~~portfolio~~which ~~companies’~~may target Starwood Capital because Starwood Capital holds a significant amount of confidential and ~~service~~sensitive ~~providers’~~information ~~systems~~about ~~could~~its ~~involve~~investors, its portfolio entities and inpotential ~~some~~investments. ~~instances~~As a result, ~~have~~Starwood inCapital ~~the~~may ~~past~~face ~~involved~~a ~~attempted~~heightened ~~attacks~~risk ~~that~~of ~~are~~a ~~intended~~cybersecurity tobreach ~~obtain~~or ~~unauthorized~~disruption ~~access~~with respect to ~~our~~this ~~proprietary~~ information. orIf ~~personal~~successful, ~~identifying~~these ~~information~~types of attacks on Starwood Capital’s network or other systems could have a material adverse effect on our ~~shareholders~~business and results of operations, ~~destroy~~due ~~data~~to, among other things, the loss of investor or ~~disable~~proprietary data, ~~degrade~~interruptions or ~~sabotage~~delays in the operation of our ~~systems,~~business ~~through~~and damage to our reputation. There can be no assurance that measures Starwood Capital takes to ensure the ~~introduction~~integrity of ~~computer~~its ~~viruses~~systems will provide protection, especially because cyberattack techniques used change frequently or ~~other~~are ~~malicious~~not ~~code~~recognized until successful.

~~Cyber~~If ~~security~~unauthorized ~~incidents~~parties ~~and~~gain ~~cyber-attacks~~access ~~have~~to ~~been~~such ~~occurring~~information ~~globally~~and attechnology asystems, ~~more~~they ~~frequent~~may ~~and~~be ~~severe~~able ~~level~~to ~~and~~steal, ~~will~~publish, ~~likely~~delete ~~continue~~or tomodify ~~increase~~private inand ~~frequency~~sensitive ininformation ~~the~~including ~~future.~~nonpublic ~~Our~~personal information related to stockholders (and ~~technology~~their ~~systems~~beneficial asowners) ~~well~~and asmaterial ~~those~~nonpublic ofinformation. Although Starwood Capital has implemented, and its portfolio entities and ~~other related parties, such as~~ service providers, may beimplement, ~~vulnerable~~various measures to ~~damage~~manage orrisks ~~interruptions~~relating ~~from~~to ~~cyber~~these ~~security~~types ~~breaches~~of events, ~~computer~~such ~~viruses,~~systems ~~network~~could ~~failures,~~prove ~~computer~~to be inadequate and, ~~telecommunication~~if ~~failures~~compromised, ~~infiltration~~could bybecome ~~unauthorized~~inoperable ~~persons~~for ~~and~~extended ~~other~~periods ~~security~~of ~~breaches~~time, ~~usage~~cease ~~errors~~to byfunction ~~their~~properly ~~respective~~or ~~professionals~~fail orto ~~service~~adequately ~~providers,~~secure ~~power,~~private ~~communications~~information. orStarwood ~~other~~Capital ~~service~~does ~~outages~~not ~~and~~control ~~catastrophic~~cyber ~~events~~security ~~such~~plans asand ~~fires,~~systems ~~tornadoes,~~put ~~floods,~~in ~~hurricanes~~place ~~and~~by ~~earthquakes.~~third ~~Cyberattacks,~~party ~~ransomware~~service providers, and ~~other~~such ~~security~~third ~~threats~~party ~~could~~service ~~originate~~providers ~~from~~may ahave ~~wide~~limited ~~variety~~indemnification ofobligations ~~sources~~to Starwood Capital, ~~including~~its ~~cyber~~portfolio ~~criminals~~entities and us, ~~nation~~each ~~state~~of ~~hackers,~~which ~~hacktivists~~could ~~and~~be ~~other~~negatively ~~outside~~impacted ~~parties.~~as ~~There~~a ~~has~~result. ~~been~~Breaches ansuch ~~increase~~as inthose ~~the~~involving ~~frequency~~covertly ~~and~~introduced ~~sophistication~~malware, impersonation of ~~the~~authorized ~~cyber~~users and ~~security~~industrial ~~threats~~or ~~Starwood~~other ~~Capital~~espionage ~~faces,~~may ~~with~~not ~~attacks~~be ~~ranging~~identified ~~from~~even ~~those~~with ~~common~~sophisticated toprevention ~~businesses~~and ~~generally~~detection tosystems, ~~those~~potentially ~~that~~resulting ~~are~~in ~~more~~further ~~advanced~~harm and ~~persistent,~~preventing ~~which~~them ~~may~~from ~~target~~being ~~Starwood~~addressed ~~Capital~~appropriately. ~~because~~The ~~Starwood~~failure ~~Capital~~of ~~holds~~these asystems ~~significant~~or ~~amount~~ of ~~confidential~~disaster ~~and~~recovery ~~sensitive~~plans ~~information~~for ~~about~~any ~~its~~reason ~~investors,~~could ~~its~~cause ~~portfolio~~significant ~~companies~~interruptions ~~and~~in ~~potential~~Starwood ~~investments.~~Capital’s, Asits ~~a result~~affiliates’, ~~Starwood~~their ~~Capital~~portfolio ~~may~~entities’ ~~face~~or aour ~~heightened~~operations ~~risk~~and ofresult in a failure to maintain the security, ~~breach~~confidentiality or ~~disruption~~privacy ~~with~~of ~~respect~~sensitive todata, ~~this~~including personal information. Ifrelating ~~successful~~to stockholders, ~~these~~material ~~types~~nonpublic ofinformation ~~attacks~~and onthe ~~Starwood~~intellectual ~~Capital’s~~property ~~network~~and ortrade ~~other~~secrets ~~systems~~and ~~could~~other ~~have~~sensitive ainformation ~~material~~in ~~adverse~~the ~~effect~~possession onof ~~our~~Starwood ~~business~~Capital and ~~results~~portfolio ofentities. ~~operations~~We, ~~due~~Starwood ~~to,~~Capital ~~among~~or ~~other~~a ~~things,~~portfolio ~~the~~entity ~~loss~~could ofbe ~~investor~~required orto ~~proprietary~~make ~~data,~~a ~~interruptions~~significant orinvestment ~~delays~~to inremedy the ~~operation~~effects of ~~our~~any ~~business~~such ~~and~~failures, ~~damage~~harm to ~~our~~their ~~reputation.~~reputations, ~~There~~legal ~~can~~claims bethat nothey ~~assurance~~and ~~that~~their ~~measures~~respective ~~Starwood~~affiliates ~~Capital~~may ~~takes~~be subjected to, ~~ensure~~regulatory ~~the~~action ~~integrity~~or enforcement arising out of ~~its~~applicable ~~systems~~privacy ~~will~~and ~~provide~~other ~~protection~~laws, ~~especially~~adverse ~~because~~publicity ~~cyberattack~~and ~~techniques~~other ~~used~~events ~~change~~that ~~frequently~~may oraffect ~~are~~their ~~not~~business ~~recognized~~and ~~until~~financial ~~successful~~performance.

IfIn ~~unauthorized parties gain access to such information and technology systems~~addition, ~~they~~Starwood ~~may~~Capital beoperates ~~able~~in tobusinesses ~~steal,~~that ~~publish,~~are ~~delete~~highly ordependent ~~modify~~on ~~private and sensitive~~ information ~~including~~systems ~~nonpublic personal information related to shareholders (~~and ~~their beneficial owners) and material nonpublic information~~technology. ~~Although~~The ~~Starwood~~costs ~~Capital~~related ~~has~~to ~~implemented,~~cyber ~~and~~or ~~its~~other ~~portfolio~~security ~~entities~~threats ~~and~~or ~~service~~disruptions ~~providers~~ may ~~implement~~not ~~various~~be ~~measures~~fully toinsured ~~manage~~or ~~risks~~indemnified ~~relating~~by toother ~~these~~means. ~~types~~In ~~of events~~addition, ~~such~~cybersecurity ~~systems~~has ~~could~~become ~~prove~~a totop bepriority ~~inadequate and, if compromised, could become inoperable~~ for ~~extended~~regulators ~~periods~~around ofthe ~~time,~~world. ~~cease~~Many tojurisdictions ~~function~~in ~~properly~~which ~~or fail to adequately secure private information.~~ Starwood Capital ~~does~~operates ~~not~~have ~~control~~laws ~~cyber security plans~~ and ~~systems~~regulations ~~put~~relating ~~in place by third party service providers, and such third party service providers may have limited indemnification obligations~~ to ~~Starwood~~data ~~Capital~~privacy, ~~its~~cybersecurity ~~portfolio entities~~ and ~~us,~~protection ~~each~~ of ~~which~~personal ~~could~~information, beincluding ~~negatively~~the ~~impacted~~General asData aProtection ~~result.~~Regulation ~~Breaches~~in ~~such~~the asEuropean ~~those~~Union ~~involving covertly introduced malware, impersonation of authorized users~~ and ~~industrial~~the orCalifornia ~~other~~Consumer ~~espionage~~Privacy ~~may~~Act ~~not~~in bethe ~~identified~~State ~~even~~of ~~with~~California. ~~sophisticated~~Some ~~prevention~~jurisdictions ~~and~~have ~~detection~~also ~~systems,~~enacted ~~potentially~~laws ~~resulting~~requiring incompanies ~~further~~to ~~harm~~notify ~~and~~individuals ~~preventing~~of ~~them~~data ~~from~~security ~~being~~breaches ~~addressed~~involving ~~appropriately.~~certain ~~The~~types ~~failure~~ of ~~these~~personal ~~systems~~data. orBreaches ofin ~~disaster~~security ~~recovery plans for any reason~~ could ~~cause~~potentially ~~significant~~jeopardize ~~interruptions in~~ Starwood Capital’s, its ~~affiliates~~employees’, ~~their~~or ~~portfolio~~our ~~entities~~investors’ or ~~our~~counterparties’ ~~operations~~confidential and ~~result~~other ininformation aprocessed ~~failure~~and tostored ~~maintain the security~~in, ~~confidentiality~~and ortransmitted ~~privacy~~through ofStarwood ~~sensitive~~Capital’s ~~data,~~computer ~~including~~systems ~~personal~~and ~~information relating to shareholders~~networks, ~~material~~or ~~nonpublic~~otherwise ~~information~~cause ~~and~~interruptions ~~the~~or ~~intellectual~~malfunctions ~~property and trade secrets and other sensitive information~~ in ~~the~~its, ~~possession~~its ofemployees’, ~~Starwood~~our ~~Capital and portfolio entities. We~~investors’, ~~Starwood~~our ~~Capital~~counterparties’ or athird ~~portfolio~~parties’ ~~entity~~operations, which could beresult ~~required~~in ~~to make a~~ significant ~~investment~~losses, toincreased ~~remedy~~costs, ~~the~~disruption ~~effects~~ of ~~any~~Starwood ~~such~~Capital’s ~~failures~~business, ~~harm~~liability to ~~their~~our ~~reputations,~~investors ~~legal claims that they~~ and ~~their~~other ~~respective affiliates may be subjected to~~counterparties, regulatory ~~action~~intervention or ~~enforcement~~reputational ~~arising out of applicable privacy and other laws, adverse publicity and other events that may affect their business and financial performance~~damage.

In addition, Starwood Capital operates in businesses that are highly dependent on information systems and technology. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. In addition, cybersecurity has become a top priority for regulators around the world. Many jurisdictions in which Starwood Capital operates have laws and regulations relating to data privacy, cybersecurity and protection of personal information, including the General Data Protection Regulation in the European Union and the California Consumer Privacy Act in the State of California. Some jurisdictions have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data. Breaches in security could potentially jeopardize Starwood Capital, its employees’ or our investors’ or counterparties’ confidential and other information processed and stored in, and transmitted through Starwood Capital’s computer systems and networks, or otherwise cause interruptions or malfunctions in its, its employees’, our investors’, our counterparties’ or third parties’ operations, which could result in significant losses, increased costs, disruption of Starwood Capital’s business, liability to our investors and other counterparties, regulatory intervention or reputational damage.21

21If Starwood Capital fails to comply with the relevant laws and regulations, it could result in regulatory investigations and penalties, which could lead to negative publicity and may cause our investors or Starwood Capital fund investors and clients to lose confidence in the effectiveness of our or Starwood Capital’s security measures.

IfAdditionally, ~~Starwood~~there ~~Capital~~continues ~~fails~~ to ~~comply~~be ~~with~~significant evolution and developments in the ~~relevant~~use ~~laws~~of ~~and~~artificial ~~regulations~~intelligence, itincluding ~~could~~machine ~~result~~learning inand ~~regulatory~~similar ~~investigations~~tools and ~~penalties~~technologies that collect, ~~which~~aggregate, ~~could~~analyze ~~lead~~or generate data or other materials (collectively “AI”). Starwood Capital has taken meaningful steps to ~~negative~~integrate ~~publicity~~AI into its business operations and ~~may~~continues ~~cause~~to ~~our~~expand ~~investors~~its oruse across the firm. The Company has deployed enterprise-scale large language model platforms firm-wide, enabling employees to leverage AI for research, analysis, drafting, and operational workflows. While Starwood Capital ~~fund~~has ~~investors~~made and ~~clients~~expects to ~~lose~~continue ~~confidence~~making investments in AI capabilities, the ~~effectiveness~~full impact of these evolving technologies on our industry or ~~Starwood~~business ~~Capital’s~~cannot ~~security~~be ~~measures~~fully determined at this time, and there can be no assurance that such investments will yield expected efficiencies or competitive advantages.

Finally, we depend on Starwood Capital’s headquarters in Miami Beach, Florida and its offices in Greenwich, Connecticut, ~~as well as its other offices around the world,~~ for the continued operation of our business. A disaster or a disruption in the infrastructure that supports our business, including a disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business without interruption. Starwood Capital’s disaster recovery programs may not be sufficient to mitigate the harm that may result from such a disaster or disruption. In addition, insurance and other safeguards might only partially reimburse us for our losses, if at all.

~~While~~We weare ~~have~~subject ~~taken various measures and made significant efforts and investment~~ to ~~ensure~~risks ~~that~~associated ~~our policies, processes and systems are both robust and compliant~~ with ~~these~~artificial ~~obligations,~~intelligence ~~our potential liability remains a concern, particularly given the continued~~ and ~~rapid~~machine ~~development~~learning of privacy laws and regulations around the world, the lack of harmonization of such laws and regulations, and increased criminal and civil enforcement actions and private litigation. We cannot assure you that our data protection efforts and our investment in information technology will prevent significant breakdowns, data leakages, breaches in our systems, or those of our third-party vendors and other contractors and consultants, or other cyber incidents that could have a material adverse effect upon our reputation, business, operations, or financial condition. The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources. Any inability, or perceived inability, by us to adequately address privacy concerns, or comply with applicable laws, regulations, policies, industry standards and guidance, contractual obligations, or other legal obligations, even if unfounded, could result in significant regulatory and third party liability, increased costs, disruption of our business and operations, and a loss of client (including investor) confidence and other reputational damage. Furthermore, as new privacy-related laws and regulations are implemented, the time and resources needed for us to comply with such laws and regulations continues to increase and become a significant compliance workstream.

WeAI ~~are~~and ~~subject~~its tocurrent ~~risks~~and ~~associated~~potential ~~with~~future ~~artificial~~applications ~~intelligence~~including in the private investment and ~~machine~~financial ~~learning~~industries, ~~technology~~as well as the legal and regulatory frameworks within which AI operates, continue to rapidly evolve.

Recent technological advances in AI pose risks to us, the Advisor, and ~~its~~our ~~current~~borrowers. We and ~~potential~~our ~~future~~borrowers ~~applications~~could ~~including~~also inbe exposed to the ~~private~~risks ~~investment~~of ~~and~~AI ~~financial~~if ~~industries~~third-party service providers or any counterparties, aswhether ~~well~~or asnot ~~the~~known ~~legal~~to us, also use AI in their business activities. We and ~~regulatory~~our ~~frameworks~~borrowers ~~within~~may ~~which~~not AIbe ~~operates,~~in ~~continue~~a position to ~~rapidly~~control ~~evolve~~the use of AI technology in third-party products or services.

~~Recent~~Use ~~technological~~of ~~advances~~AI could include the input of confidential information in AIcontravention ~~pose~~of ~~risks~~applicable topolicies, uscontractual or other obligations or restrictions, resulting in such confidential information becoming accessible by other third-party AI applications and users. While the Advisor does not currently use AI to make investment recommendations, the use of AI could also exacerbate or create new and unpredictable risks to our ~~borrowers.~~business, Wethe Advisor’s business, and the business of our borrowers, ~~could~~including ~~also~~by bepotentially ~~exposed~~significantly todisrupting the ~~risks~~markets ofin AIwhich ifwe ~~third-party~~and ~~service~~our ~~providers~~borrowers operate or ~~any~~subjecting ~~counterparties~~us, ~~whether~~our orborrowers ~~not~~and ~~known~~the Advisor to usincreased competition and regulation, ~~also~~which ~~use~~could AImaterially inand ~~their~~adversely affect the business, ~~activities.~~financial Wecondition ~~and~~or ~~our~~results ~~borrowers~~of ~~may~~operations ~~not~~of beus, inour aborrowers ~~position~~and tothe ~~control~~Advisor. In addition, the use of AI ~~technology~~by inbad ~~third-party~~actors ~~products~~could orheighten ~~services~~the sophistication and effectiveness of cyber and security attacks experienced by our borrowers and the Advisor.

~~Use~~Independent of AIits ~~could~~context ~~include the input~~ of ~~confidential information in contravention of applicable policies~~use, ~~contractual~~AI ortechnology ~~other~~is ~~obligations~~generally orhighly ~~restrictions,~~reliant ~~resulting~~on inthe ~~such~~collection ~~confidential~~and ~~information~~analysis ~~becoming~~of ~~accessible~~large byamounts ~~other~~of ~~third-party~~data, ~~AI applications~~ and ~~users.~~it ~~While~~is ~~the Advisor does~~ not ~~currently~~possible ~~use~~or AIpracticable to ~~make~~incorporate ~~investment~~all ~~recommendations,~~relevant data into the ~~use~~model ofthat AI ~~could~~technology ~~also~~utilizes ~~exacerbate~~to oroperate. ~~create~~Certain ~~new~~data ~~and~~in ~~unpredictable~~such ~~risks~~models towill ~~our~~inevitably ~~business,~~contain ~~the~~a ~~Advisor’s~~degree ~~business, and the business~~ of ~~our~~inaccuracy ~~borrowers,~~and ~~including by~~ error—potentially ~~significantly~~materially ~~disrupting the markets in which we~~ so—and ~~our~~could ~~borrowers~~otherwise ~~operate~~be inadequate or ~~subjecting us~~flawed, ~~our~~which ~~borrowers~~would ~~and~~be ~~the~~likely ~~Advisor~~ to ~~increased~~degrade ~~competition~~the ~~and~~effectiveness ~~regulation,~~of ~~which~~AI ~~could~~technology. ~~materially~~To ~~and adversely affect~~ the ~~business,~~extent ~~financial~~that ~~condition~~we or ~~results of operations of us,~~ our borrowers ~~and~~are ~~the~~exposed ~~Advisor.~~to ~~In addition,~~ the ~~use~~risks of AI byuse, ~~bad~~any ~~actors~~such ~~could~~inaccuracies ~~heighten~~or ~~the~~errors ~~sophistication~~could ~~and~~have ~~effectiveness~~adverse ofimpacts ~~cyber~~on ~~and~~us ~~security~~or ~~attacks experienced by~~ our ~~borrowers and the Advisor~~investments.

~~Independent of its context of use,~~ AI technology isand ~~generally~~its ~~highly~~applications, ~~reliant~~including onin the ~~collection~~private investment and ~~analysis~~financial ofsectors, ~~large~~continue ~~amounts~~to ofdevelop ~~data~~rapidly, and it is ~~not~~impossible ~~possible or practicable~~ to ~~incorporate~~predict ~~all relevant data into~~ the ~~model~~future ~~that~~risks AI technology utilizes to operate. Certain data in such models will inevitably contain a degree of inaccuracy and error—potentially materially so—and could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness of AI technology. To the extent that wemay orarise ~~our~~from ~~borrowers are exposed to the risks of AI use, any~~ such ~~inaccuracies or errors could have adverse impacts on us or our investments~~developments.

AIUncertainty ~~technology~~with ~~and~~respect ~~its~~to ~~applications,~~the ~~including~~financial instability of the ~~private~~United ~~investment~~States and ~~financial~~several ~~sectors,~~countries ~~continue~~in tothe ~~develop~~EU ~~rapidly,~~could ~~and~~have ita issignificant ~~impossible~~adverse toeffect ~~predict~~on ~~the~~our ~~future~~business, ~~risks~~financial ~~that~~condition ~~may~~and ~~arise~~results ~~from~~of ~~such developments~~operations.

~~Uncertainty~~Our ~~with~~investment ~~respect~~strategy depends on the CRE industry generally, which in turn depends on broad economic conditions in the United States and, to the ~~financial~~extent ~~stability~~our ofinvestments are secured by real estate outside the United States, elsewhere. Recently, concerns over global economic conditions, energy and ~~several~~commodity ~~countries~~prices, geopolitical issues and military conflicts, inflation, Federal Reserve short term rate decisions, actual or perceived instability in the EUU.S. ~~could~~banking ~~have~~system, foreign exchange rates, the availability and cost of credit, the sovereign debt crisis, the U.S. mortgage market and a ~~significant~~potentially ~~adverse~~weakening ~~effect~~real onestate ~~our~~market in the United States have contributed to increased economic uncertainty and diminished expectations for the global economy. These factors, combined with volatile prices of oil and the potential for declining business and consumer confidence, ~~financial~~may ~~condition~~precipitate an economic slowdown, as well as cause extreme volatility in security prices. Global economic and ~~results~~political headwinds, along with global market instability and the risk of ~~operations~~maturing debt that may have difficulties being refinanced, may continue to cause periodic volatility in the CRE market for some time. Adverse conditions in the CRE industry negatively impact our returns by, among other factors, the tightening of the credit markets, decline in the value of underlying real estate assets, and continuing credit and liquidity concerns, among other potential risks.

~~Our~~Misconduct investment strategy depends on the CRE industry generally, which in turn depends on broad economic conditions in the United States and, to the extent our investments are secured by real estate outside the United States, elsewhere. Recently, concerns over global economic conditions, energy and commodity prices, geopolitical issues and military conflicts, inflation, Federal Reserve short term rate decisions, actual or perceived instability in the U.S. banking system, foreign exchange rates, the availability and cost of ~~credit,~~employees the sovereign debt crisis, the U.S. mortgage market and a potentially weakening real estate market in the United States have contributed to increased economic uncertainty and diminished expectations for the global economy. These factors, combined with volatile prices of ~~oil and~~ the ~~potential for declining business and consumer confidence~~Advisor, ~~may~~its ~~precipitate~~affiliates anor ~~economic~~third-party ~~slowdown,~~service asproviders ~~well~~could as cause ~~extreme~~significant ~~volatility~~losses ~~in security prices. Global economic and political headwinds, along with global market instability and the risk of maturing debt that may have difficulties being refinanced, may continue~~ to ~~cause periodic volatility in the CRE market for~~ us.

22Misconduct or misrepresentations by employees of the Advisor, its affiliates or third-party service providers could cause significant losses to the Company. Employee misconduct may include binding the Company to transactions that exceed authorized limits or present unacceptable risks and unauthorized trading activities, concealing unsuccessful trading activities (which, in any case,

some time. Adverse conditions in the CRE industry negatively impact our returns by, among other factors, the tightening of the credit markets, decline in the value of underlying real estate assets, and continuing credit and liquidity concerns, among other potential risks.22

~~Misconduct~~may ofresult ~~employees~~in unknown and unmanaged risks or losses) or making misrepresentations regarding any of the ~~Advisor~~foregoing. Losses could also result from actions by third-party service providers, ~~its~~including, ~~affiliates~~without orlimitation, failing to recognize trades and misappropriating assets. In addition, employees and third-party service providers may improperly use or disclose confidential information, which could ~~cause~~result ~~significant~~in ~~losses~~litigation toor usserious financial harm, including limiting the Company’s business prospects or future marketing activities.

~~Misconduct~~Despite ordue ~~misrepresentations~~diligence byefforts, ~~employees~~misconduct ofand ~~the~~intentional ~~Advisor,~~misrepresentations ~~its~~may ~~affiliates~~be undetected or ~~third-party~~not ~~service~~fully ~~providers~~comprehended, ~~could~~thereby ~~cause~~potentially ~~significant~~undermining ~~losses~~the toAdvisor’s ~~the~~due ~~Company~~diligence efforts. ~~Employee~~No ~~misconduct~~assurance ~~may~~can ~~include~~be ~~binding~~given that the ~~Company~~due todiligence ~~transactions~~performed ~~that~~by ~~exceed~~the ~~authorized~~Advisor ~~limits~~will identify or ~~present~~prevent ~~unacceptable~~any ~~risks~~such ~~and~~misconduct. ~~unauthorized~~Investors ~~trading~~generally ~~activities,~~do ~~concealing~~not ~~unsuccessful~~have ~~trading~~a ~~activities~~direct ~~(which,~~ability into ~~any~~enforce ~~case,~~provisions ~~may~~of ~~result~~the inagreements ~~unknown~~negotiated ~~and~~with ~~unmanaged~~the ~~risks~~Company’s orservice ~~losses)~~providers, orincluding, ~~making~~without ~~misrepresentations~~limitation, ~~regarding~~the ~~any~~Advisor, ofthe independent valuation advisor or the ~~foregoing~~independent auditor. ~~Losses~~In ~~could~~the ~~also~~event ~~result~~that ~~from~~the actions byor ~~third-party~~omissions ~~service~~of ~~providers,~~any ~~including,~~of ~~without~~the ~~limitation,~~Company’s ~~failing~~service providers were to ~~recognize~~result ~~trades~~in ~~and~~an ~~misappropriating~~adverse ~~assets.~~impact Inon ~~addition~~shareholders, ~~employees~~this ~~and~~may ~~third-party~~give ~~service~~rise ~~providers~~to ~~may~~contractual ~~improperly~~rights ~~use~~for orthe ~~disclose~~Company, ~~confidential information~~however, ~~which~~any ~~could~~such ~~result~~rights inwould ~~litigation~~need orto ~~serious~~be ~~financial~~exercised ~~harm,~~by ~~including limiting~~ the Company’s ~~business~~on ~~prospects~~behalf orits ~~future~~shareholders ~~marketing~~as ~~activities~~a whole.

~~Despite~~We ~~due diligence efforts, misconduct and intentional misrepresentations~~ may beface ~~undetected~~limits oron ~~not~~our fully comprehended, thereby potentially undermining the Advisor’s due diligence efforts. No assurance can be given that the due diligence performed by the Advisor will identify or prevent any such misconduct. Investors generally do not have a direct ability to ~~enforce~~leverage ~~provisions of~~ the ~~agreements negotiated with the Company’s service providers, including, without limitation, the~~ Advisor~~, the independent valuation advisor or the independent auditor. In the event that the actions or omissions of any of the Company~~’s ~~service~~knowledge providers were to result in an adverse impact on shareholders, this may give rise to contractual rights for the Company, however, any such rights would need to be exercised by the Company on behalf its shareholders as a wholebase.

We ~~may~~leverage ~~face~~the ~~limits~~diverse onstrength ~~our~~of ~~ability~~the Advisor’s knowledge-base in enhancing its investment expertise across regions, sectors and individual companies and believes that this information advantage is a key competitive strength. However, the sharing of information is subject to ~~leverage~~law and Starwood Capital’s policies regarding access to and the ~~Advisor~~sharing of confidential information, and the perceived benefit to the Company of such information sharing might be reduced and/or eliminated if, as a result of Starwood Capital’s ~~knowledge~~policies ~~base~~or any applicable legal, tax, regulatory, commercial, contractual, operational or other considerations, the sharing of information is restricted and/or prevented.

WeRisks ~~intend~~Related to ~~leverage~~Our the diverse strength of the Advisor’s knowledge-base in enhancing its investment expertise across regions, sectors and individual companies and believes that this information advantage is a key competitive strength. However, the sharing of information is subject to law and Starwood Capital’s policies regarding access to and the sharing of confidential information, and the perceived benefit to the Company of such information sharing might be reduced and/or eliminated if, as a result of Starwood Capital’s policies or any applicable legal, tax, regulatory, commercial, contractual, operational or other considerations, the sharing of information is restricted and/or prevented. Investments

~~Risks~~Our ~~Related~~loans and other investments expose us to ~~Our~~risks ~~Investments~~associated with debt-oriented real estate investments generally.

~~Our~~We ~~loans~~seek to invest primarily in debt instruments relating to CRE assets. As such, we are subject to, among other things, risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and investments. ~~expose~~Any deterioration of real estate fundamentals generally, and in North America and Europe in particular, could negatively impact our performance by making it more difficult for borrowers of our mortgage loans, or borrower entities, to satisfy their debt payment obligations, increasing the default risk applicable to borrower entities, and/or making it more difficult for us to generate attractive risk-adjusted returns. Changes in general economic conditions will affect the creditworthiness of borrower entities and/or the value of underlying real estate collateral relating to our investments and may include economic and/or market fluctuations, changes in environmental, zoning and other laws, casualty or condemnation losses, regulatory limitations on rents, decreases in property values, changes in the appeal of properties to tenants, changes in supply and demand of real estate products, fluctuations in real estate fundamentals, the financial resources of borrower entities, energy supply shortages, various uninsured or uninsurable risks, ~~associated~~natural ~~with~~disasters, ~~debt~~climate-~~oriented~~related risks, pandemics or outbreaks of contagious disease, political events, terrorism and acts of war, outbreak of wars and military conflicts, changes in government regulations, changes in monetary policy, changes in real property tax rates and/or tax credits, changes in operating expenses, changes in interest rates, changes in inflation rates, changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases in borrowing rates, changes in consumer spending, negative developments in the economy and/or adverse changes in real estate ~~investments~~values generally and other factors that are beyond our control. This risk may be magnified in the case of the more recent conflicts (including ongoing conflicts in the Middle East and Ukraine). In addition, recent concerns about the real estate market, rising interest rates, inflation, energy costs and geopolitical issues have contributed to increased volatility and diminished expectations for the economy and markets going forward.

We ~~seek~~cannot topredict invest primarily in debt instruments relating to CRE assets. As such, we are subject to, among other things, risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and investments. Any deterioration of real estate fundamentals generally, and in North America, Europe and Australia in particular, could negatively impact our performance by making it more difficult for borrowers of our mortgage loans, or borrower entities, to satisfy their debt payment obligations, increasing the ~~default~~degree ~~risk applicable~~ to ~~borrower~~which ~~entities, and/or making it more difficult for us to generate attractive risk-adjusted returns. Changes in general~~ economic conditions ~~will affect the creditworthiness of borrower entities and/or the value of underlying real estate collateral relating to our investments and may include economic and/or market fluctuations~~generally, ~~changes in environmental, zoning~~ and ~~other laws, casualty or condemnation losses, regulatory limitations on rents, decreases in property values, changes in~~ the ~~appeal~~conditions offor ~~properties to tenants, changes in supply and demand of~~ real estate products, fluctuations in real estate fundamentals, the financial resources of borrower entities, energy supply shortages, various uninsured or uninsurable risks, natural disasters, climate-related risks, pandemics or outbreaks of contagious disease, political events, terrorism and acts of war, outbreak of wars and military conflicts, changes in government regulations, changes in monetary policy, changes in real property tax rates and/or tax credits, changes in operating expenses, changes in interest rates, changes in inflation rates, changes in the availability of debt ~~financing~~investing ~~and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases~~ in ~~borrowing rates~~particular, ~~changes~~will inimprove ~~consumer spending, negative developments in the economy and/~~or ~~adverse changes in real estate values generally and other factors that are beyond our control~~decline. ~~This~~Any ~~risk~~declines ~~may be magnified~~ in the ~~case~~performance of the ~~more recent conflicts between Israel and Hamas, and the ongoing conflict between Russia and Ukraine, due to the significant sanctions and other restrictive actions taken against Russia by the~~ U.S. and ~~other~~global ~~countries,~~economies asor ~~well as the cessation of all business~~ in ~~Russia by many global companies. In addition, recent concerns about~~ the real estate ~~market,~~debt ~~rising~~markets ~~interest~~could ~~rates, inflation, energy costs and geopolitical issues~~ have ~~contributed~~a tomaterial ~~increased~~adverse ~~volatility~~effect ~~and~~on ~~diminished~~our ~~expectations~~business, ~~for~~financial ~~the~~condition, ~~economy~~ and ~~markets~~results ~~going~~of ~~forward~~operations.

WeThe ~~cannot~~lack ~~predict the degree to which economic conditions generally, and the conditions for real estate debt investing in particular, will improve or decline. Any declines in the performance~~ of ~~the~~liquidity ~~U.S. and global economies or~~ in ~~the~~our ~~real~~investments ~~estate~~may ~~debt~~adversely ~~markets~~affect ~~could have a material adverse effect on~~ our business~~, financial condition, and results of operations~~.

The lack of liquidity of our investments in CRE debt and other illiquid investments, other than certain of our investments in CMBS, may make it difficult for us to sell such investments if the need or desire arises. Many of the securities we purchase are not registered under the relevant securities laws, resulting in a prohibition against their transfer, sale, pledge or their disposition, except in a transaction that is exempt from the registration requirements of, or otherwise in accordance with, those laws. In addition, certain investments such as B Notes, mezzanine loans and bridge and other loans are also particularly illiquid investments due to their short life, their potential unsuitability for securitization and/or the greater difficulty of recovery in the event of a borrower default. In addition, certain of our investments may become less liquid after our investment as a result of periods of delinquencies or defaults or turbulent market conditions, including due to current market conditions and exacerbated market volatility, which may make it more difficult for us to dispose of such assets at advantageous times or in a timely manner. As a result, many of our current investments are, and our future investments will be, illiquid and if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. Further, we may face other restrictions on our ability to liquidate an investment in a business entity to the extent that we or our Advisor has or could be attributed with material non-public information regarding such business entity. As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be relatively limited, which could adversely affect our ~~business~~results of operations and financial condition.

23Furthermore the market values of our assets are subject to fluctuations arising from a variety of factors that are inherently unpredictable, including, among others, changes in interest rates, shifts in credit spreads, prevailing economic conditions, developments in the real estate and financial markets, and domestic or international economic and political events. Market disruptions of this nature can result in significantly reduced transaction volumes across all or large portions of the asset classes in which we operate, and may simultaneously constrain the availability of both short-term and long-term debt and equity financing. Reduced liquidity in real estate or real estate-related investments and a lack of observable market data may impede our ability to sell assets or to determine their fair values. Consequently, we may be unable to dispose of certain investments, or may only be able to sell them at prices materially below their previously recorded fair values. In addition, during such market conditions, we cannot assure that our borrowing facilities or other sources of leverage will remain available or, if available, will remain on terms acceptable to us. Further, declines in the market value of our assets could require us to post additional collateral to lenders or to liquidate assets at times that are not advantageous. In periods of severe market disruption, a lack of market for specific assets may occur, restricting our ability to sell investments for an indefinite period. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~addition,~~Prepayment ~~certain~~rates ~~of our investments~~ may ~~become~~adversely ~~less~~affect liquid after our investment as a result of periods of delinquencies or defaults or turbulent market conditions, including due to current market conditions and exacerbated market volatility, which may make it more difficult for us to dispose of such assets at advantageous times or in a timely manner. As a result, many of our current investments are, and our future investments will be, illiquid and if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value atof ~~which we have previously recorded~~ our ~~investments. Further, we may face other restrictions on our ability to liquidate an~~ investment ~~in a business entity to the extent that we or our Advisor has or could be attributed with material non-public information regarding such business entity. As a result, our ability to vary our~~ portfolio ~~in response to changes in economic and other conditions may be relatively limited, which could adversely affect our results of operations and financial condition~~.

~~Prepayment~~We ~~rates~~are subject to the risk that the issuer of a security or borrower under a loan may ~~adversely~~exercise ~~affect~~its option to prepay principal earlier than scheduled, forcing us to reinvest the ~~value~~proceeds from such prepayment in lower yielding securities or loans, which may result in a decline in our return. Debt investments frequently have call features that allow the issuer to redeem the security at dates prior to its stated maturity at a specified price (typically greater than par) only if certain prescribed conditions are met. An issuer may choose to redeem a debt security if, for example, the issuer can refinance the debt at a lower cost due to declining interest rates or an improvement in the credit standing of the issuer. Any such prepayments of our ~~investment~~securities ~~portfolio~~or loans could adversely impact our results of operations and financial condition.

WeDifficulty ~~are~~in ~~subject~~redeploying to the ~~risk that the issuer of a security or borrower under a loan may exercise its option to prepay principal earlier than scheduled, forcing us to reinvest the~~ proceeds from ~~such~~repayments ~~prepayment~~of inour ~~lower yielding securities or~~ loans, ~~which~~and investments may ~~result~~cause ~~in a decline in~~ our ~~return.~~financial ~~Debt~~performance ~~investments~~and ~~frequently~~returns ~~have call features that allow the issuer~~ to ~~redeem~~investors ~~the security at dates prior~~ to ~~its stated maturity at a specified price (typically greater than par) only if certain prescribed conditions are met~~suffer. An issuer may choose to redeem a debt security if, for example, the issuer can refinance the debt at a lower cost due to declining interest rates or an improvement in the credit standing of the issuer. Any such prepayments of our securities or loans could adversely impact our results of operations and financial condition.

~~Difficulty~~As inour ~~redeploying~~loans and investments are repaid, we will have to redeploy the proceeds ~~from~~we ~~repayments~~receive ofinto ~~our~~new loans and investments. ~~may~~It ~~cause~~is possible that we will fail to identify reinvestment options that would provide returns or a risk profile that is comparable to the asset that was repaid. If we fail to redeploy the proceeds we receive from repayment of a loan in equivalent or better alternatives, our financial performance and returns to investors tocould suffer.

AsThe ~~our~~mortgage loans ~~and~~in ~~investments~~which ~~are repaid,~~ we ~~will~~may ~~have~~invest toand ~~redeploy~~ the ~~proceeds~~mortgage ~~we receive into new~~ loans ~~and~~underlying ~~investments.~~the Itmortgage issecurities ~~possible~~in ~~that~~which we ~~will~~may ~~fail~~invest toare ~~identify~~subject ~~reinvestment options that would provide returns or a risk profile that is comparable~~ to ~~the~~delinquency, ~~asset~~foreclosure ~~that~~and ~~was~~loss, ~~repaid.~~which Ifcould weresult ~~fail to redeploy the proceeds we receive from repayment of a loan~~ in ~~equivalent~~losses ~~or better alternatives, our financial performance and returns~~ to ~~investors could suffer~~us.

~~The~~CRE ~~mortgage~~ loans inare ~~which~~secured weby ~~may~~commercial ~~invest~~properties and are subject to risks of delinquency and foreclosure. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the ~~mortgage~~successful ~~loans~~operation ~~underlying~~of such property rather than upon the ~~mortgage~~existence ~~securities~~of inindependent ~~which~~income weor assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may ~~invest~~be ~~are~~impaired. ~~subject~~Net operating income of an income-producing property can be affected by, among other things: tenant mix, property management decisions, including with respect to ~~delinquency~~capital improvement, ~~foreclosure~~particularly in older building structures, property location and ~~loss~~condition, ~~which~~competition ~~could~~from ~~result~~comparable types of properties offering the same or similar services, tenant bankruptcies, success of tenant businesses, changes in ~~losses~~laws that increase operating expenses or limit rents that may be charged, changes in interest rates, foreign exchange rates, and in the state of the credit and securitization markets and the debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate, any need to usaddress environmental contamination at the property, the occurrence of any uninsured casualty at the property, changes in national, regional or local economic conditions or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in real estate tax rates, tax credits and other operating expenses, changes in governmental rules, regulations and fiscal policies, including environmental legislation, natural disasters, terrorism, social unrest and civil disturbances, and adverse changes in zoning laws.

~~CRE~~In ~~loans~~the ~~are~~event ~~secured by commercial properties and are subject to risks~~ of ~~delinquency~~any ~~and~~default ~~foreclosure.~~under ~~The ability of~~ a ~~borrower~~mortgage ~~to repay a~~ loan ~~secured~~held directly by anus, ~~income-producing~~we ~~property~~will ~~typically~~bear isa ~~dependent~~risk ~~primarily~~of ~~upon~~loss ~~the successful operation~~ of ~~such~~principal ~~property~~to ~~rather than upon~~ the ~~existence~~extent of ~~independent~~any ~~income~~deficiency orbetween ~~assets of~~ the ~~borrower.~~value ~~If the net operating income~~ of the ~~property~~collateral isand ~~reduced,~~ the ~~borrower’s~~principal ~~ability~~and toaccrued ~~repay~~interest ~~the loan may be impaired. Net operating income~~ of anthe ~~income-producing~~mortgage ~~property can be affected by~~loan, ~~among~~which ~~other~~could ~~things:~~have ~~tenant~~a ~~mix,~~material ~~property~~adverse ~~management~~effect ~~decisions,~~on ~~including~~our ~~with~~cash ~~respect~~flow tofrom ~~capital~~operations ~~improvement,~~and ~~particularly~~limit inamounts ~~older~~available ~~building~~for ~~structures,~~distribution ~~property~~to ~~location~~our ~~and~~shareholders. ~~condition,~~In ~~competition~~the ~~from~~event ~~comparable types~~ of ~~properties offering~~ the ~~same~~bankruptcy orof ~~similar~~a ~~services,~~mortgage ~~tenant~~loan ~~bankruptcies~~borrower, ~~success~~the ofmortgage ~~tenant~~loan ~~businesses,~~to ~~changes~~such inborrower ~~laws~~will ~~that~~be ~~increase~~deemed ~~operating~~to ~~expenses or limit rents that may~~ be ~~charged,~~secured ~~changes~~only into ~~interest~~the ~~rates,~~extent ~~foreign~~of ~~exchange rates, and in~~ the ~~state~~value of the ~~credit~~underlying ~~and~~collateral ~~securitization~~at ~~markets and~~ the ~~debt~~time ~~and~~of ~~equity~~bankruptcy ~~capital~~(as ~~markets,~~determined ~~including~~by ~~diminished~~the ~~availability~~bankruptcy orcourt), ~~lack~~and ofthe ~~debt~~lien ~~financing~~securing ~~for~~the ~~commercial~~mortgage ~~real~~loan ~~estate,~~will ~~any~~be ~~need~~subject to ~~address environmental contamination at~~ the ~~property,~~avoidance ~~the~~powers ~~occurrence~~ of ~~any uninsured casualty at~~ the ~~property,~~bankruptcy ~~changes~~trustee ~~in national, regional~~ or ~~local economic conditions or specific industry segments, declines~~ debtor-in-possession ~~regional~~to orthe ~~local~~extent ~~real~~the ~~estate~~lien ~~values,~~is ~~declines~~unenforceable inunder ~~regional~~state orlaw. ~~local~~Foreclosure ~~rental~~of ora ~~occupancy~~mortgage ~~rates,~~loan ~~increases~~can inbe ~~real~~an ~~estate~~expensive ~~tax rates, tax credits~~ and ~~other~~lengthy ~~operating expenses~~process, ~~changes~~which incould ~~governmental~~have ~~rules,~~a ~~regulations~~substantial ~~and~~negative ~~fiscal~~effect ~~policies,~~on ~~including~~our ~~environmental~~anticipated ~~legislation,~~return ~~natural~~on ~~disasters,~~the ~~terrorism,~~foreclosed ~~social~~mortgage ~~unrest and civil disturbances, and adverse changes in zoning laws~~loan.

In ~~the event of any default under a mortgage loan held directly by us~~addition, we ~~will~~are ~~bear~~exposed ~~a risk of loss of principal~~ to the ~~extent~~risk of ~~any~~judicial ~~deficiency~~proceedings ~~between~~with ~~the~~our ~~value~~borrowers ~~of the collateral~~ and ~~the~~entities ~~principal~~we ~~and~~invest ~~accrued~~in, ~~interest~~including ofbankruptcy ~~the~~or ~~mortgage~~other ~~loan~~litigation, ~~which~~as ~~could have~~ a ~~material~~strategy ~~adverse~~to ~~effect~~avoid onforeclosure ~~our~~or ~~cash~~enforcement ~~flow~~of ~~from~~other ~~operations~~rights ~~and~~by ~~limit~~us ~~amounts~~as ~~available~~a ~~for~~lender ~~distribution~~or ~~to our shareholders~~investor. In the event ofthat ~~the~~any ~~bankruptcy~~ of ~~a mortgage loan borrower,~~ the ~~mortgage~~properties ~~loan~~or toentities ~~such~~underlying ~~borrower~~or ~~will~~collateralizing beour ~~deemed~~loans toor beinvestments ~~secured~~experiences ~~only~~or continues to ~~the~~experience ~~extent~~any of the ~~value~~other offoregoing ~~the~~events ~~underlying~~or ~~collateral~~occurrences, at the ~~time~~value of ~~bankruptcy (as determined by the bankruptcy court)~~, and ~~the~~return ~~lien~~on, ~~securing~~such ~~the~~investments ~~mortgage~~could ~~loan will~~ be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Foreclosure of a mortgage loan can be an expensive and lengthy processreduced, which ~~could~~would ~~have~~adversely aaffect ~~substantial negative effect on~~ our ~~anticipated~~results ~~return~~of onoperations ~~the~~and ~~foreclosed~~financial ~~mortgage loan~~condition.

In addition, we are exposed to the risk of judicial proceedings with our borrowers and entities we invest in, including bankruptcy or other litigation, as a strategy to avoid foreclosure or enforcement of other rights by us as a lender or investor. In the event that any of the properties or entities underlying or collateralizing our loans or investments experiences or continues to experience any of the other foregoing events or occurrences, the value of, and return on, such investments could be reduced, which would adversely affect our results of operations and financial condition.24

We may need to foreclose on certain of the loans we originate or acquire, which could result in losses that harm our results of operations and financial condition.

We may find it necessary or desirable to foreclose on certain of the loans we originate or acquire, and the foreclosure process may be lengthy and expensive. If we foreclose on an asset, we may take title to the property securing that asset, and if we do not or cannot sell the property, we would then come to own and operate it as “real estate owned.” Owning and operating real property involves risks that are different (and in many ways more significant) than the risks faced in owning an asset secured by that property. The costs associated with operating and redeveloping a property, including any operating shortfalls and significant capital expenditures, could materially and adversely affect our results of operations, financial conditions and liquidity. In addition, we may end up owning a property that we would not otherwise have decided to acquire directly at the price of our original investment or at all, and the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us.

24Whether or not we have participated in the negotiation of the terms of any such loans, we cannot assure you as to the adequacy of the protection of the terms of the applicable loan, including the validity or enforceability of the loan and the maintenance of the anticipated priority and perfection of the applicable security interests. Furthermore, claims may be asserted by lenders or borrowers that might interfere with enforcement of our rights. Borrowers may resist foreclosure actions by asserting numerous claims, counterclaims and defenses against us, including, without limitation, lender liability claims and defenses, even when the assertions may have no basis in fact, in an effort to prolong the foreclosure action and seek to force the lender into a modification of the loan or a favorable buy-out of the borrower’s position in the loan. Foreclosure actions in some U.S. states can take several years or more to litigate and may also be time consuming and expensive to complete in other U.S. states and foreign jurisdictions in which we do business. At any time prior to or during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure actions and further delaying the foreclosure process, and could potentially result in a reduction or discharge of a borrower’s debt. Foreclosure may create a negative public perception of the related property, resulting in a diminution of its value. Even if we are successful in foreclosing on a loan, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us. Furthermore, any costs or delays involved in the foreclosure of the loan or a liquidation of the underlying property will further reduce the net sale proceeds and, therefore, increase any such losses to us.

~~involves~~Delays ~~risks that are different (and~~ in ~~many~~liquidating ~~ways~~defaulted ~~more~~CRE ~~significant)~~debt ~~than~~investments ~~the risks faced in owning an asset secured by that property. The costs associated with operating and redeveloping a property, including any operating shortfalls and significant capital expenditures,~~ could ~~materially~~reduce ~~and adversely affect~~ our ~~results of operations, financial conditions and liquidity. In addition, we may end up owning a property that we would not otherwise have decided to acquire directly at the price of our original~~ investment ~~or at all, and the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us~~returns.

~~Whether~~The oroccurrence ~~not~~of wea ~~have~~default ~~participated~~on ina ~~the~~CRE ~~negotiation~~debt ofinvestment ~~the~~could ~~terms~~result ofin ~~any~~our ~~such~~taking ~~loans~~title to collateral. However, we ~~cannot~~may ~~assure~~not ~~you~~be asable to ~~the~~take ~~adequacy~~title ofto ~~the~~and ~~protection~~sell of the ~~terms~~collateral ofsecuring the ~~applicable~~ loan, ~~including~~quickly. ~~the~~Taking ~~validity~~title orto ~~enforceability~~collateral ofcan ~~the~~be ~~loan~~an expensive and ~~the~~lengthy ~~maintenance~~process ofthat ~~the~~could ~~anticipated~~have ~~priority~~a ~~and~~negative ~~perfection~~effect ofon the ~~applicable~~return ~~security~~on ~~interests~~our investment. ~~Furthermore,~~Borrowers ~~claims~~often ~~may~~resist bewhen ~~asserted by~~ lenders, orsuch ~~borrowers~~as ~~that~~us, ~~might~~seek ~~interfere~~to ~~with~~take ~~enforcement~~title ofto ~~our~~collateral ~~rights. Borrowers may resist foreclosure actions~~ by asserting numerous claims, counterclaims and defenses ~~against us~~, including, ~~without~~but ~~limitation,~~not limited to lender liability claims ~~and defenses~~, ~~even when the assertions may have no basis~~ in ~~fact, in~~ an effort to prolong the foreclosure action. ~~and~~In ~~seek~~some states, taking title to ~~force~~collateral ~~the~~can ~~lender~~take ~~into~~several ayears ~~modification~~or ofmore ~~the~~to ~~loan~~resolve. orAt aany ~~favorable~~time ~~buy-out~~during ofa ~~the~~foreclosure ~~borrower’s~~proceeding, ~~position~~for ininstance, the ~~loan.~~borrower ~~Foreclosure~~may ~~actions~~file infor ~~some~~bankruptcy, ~~U.S.~~which ~~states~~would ~~can~~have ~~take~~the ~~several~~effect ~~years~~of orstaying ~~more~~the toforeclosure ~~litigate~~action and ~~may~~further ~~also~~delaying bethe ~~time~~foreclosure ~~consuming~~process. ~~and~~The ~~expensive~~resulting totime ~~complete~~delay incould ~~other~~reduce ~~U.S.~~the ~~states~~value ~~and~~of ~~foreign~~our ~~jurisdictions~~investment in ~~which~~the wedefaulted ~~do business~~loans. AtFurthermore, ~~any~~an ~~time~~action ~~prior~~ to ortake ~~during~~title ~~the~~to ~~foreclosure~~collateral ~~proceedings,~~securing ~~the~~a ~~borrower~~loan ~~may~~is ~~file~~regulated ~~for~~by ~~bankruptcy,~~state ~~which~~statutes ~~would~~and ~~have~~regulations ~~the~~and ~~effect~~is ofsubject ~~staying~~to the ~~foreclosure~~delays ~~actions~~ and ~~further~~expenses ~~delaying~~associated with lawsuits if the ~~foreclosure~~borrower ~~process~~raises defenses, ~~and~~counterclaims ~~could~~or ~~potentially~~files ~~result~~for inbankruptcy. aIn ~~reduction~~the orevent ~~discharge~~ of default by a borrower’s, ~~debt.~~these ~~Foreclosure~~restrictions, ~~may~~among ~~create~~other athings, ~~negative~~may ~~public~~impede ~~perception~~our ofability ~~the~~to ~~related~~take ~~property,~~title ~~resulting~~to inand asell ~~diminution~~the ofcollateral ~~its~~securing ~~value.~~the ~~Even~~loan ifor weto ~~are~~obtain ~~successful~~proceeds insufficient ~~foreclosing~~to onrepay aall ~~loan,~~amounts ~~the~~due ~~liquidation~~to ~~proceeds~~us ~~upon~~on ~~sale of~~ the ~~underlying~~loan. ~~real~~In ~~estate~~addition, we may ~~not~~ be ~~sufficient~~forced to ~~recover~~operate ~~our~~any ~~cost~~collateral ~~basis~~for inwhich ~~the~~we ~~loan,~~take ~~resulting~~title infor a ~~loss~~substantial toperiod ~~us.~~of ~~Furthermore~~time, ~~any~~which ~~costs~~could orbe ~~delays~~a ~~involved~~distraction infor the ~~foreclosure~~Advisor ofand ~~the~~may ~~loan~~require orus ato ~~liquidation~~pay ofsignificant ~~the~~costs ~~underlying~~associated ~~property~~with ~~will~~such ~~further~~collateral. ~~reduce~~We ~~the~~may ~~net~~not ~~sale~~recover ~~proceeds~~any ~~and,~~of ~~therefore,~~our ~~increase~~investment ~~any~~even ~~such~~if ~~losses~~we take title to uscollateral.

~~Delays~~Interest inrate ~~liquidating~~fluctuations ~~defaulted~~could ~~CRE~~reduce ~~debt~~our ~~investments~~ability ~~could~~to ~~reduce~~generate income on our ~~investment~~investments ~~returns~~and may cause losses.

~~The~~Changes ~~occurrence~~in ofinterest arates ~~default~~will onaffect ~~a CRE debt investment could result in~~ our ~~taking~~net ~~title~~interest ~~to collateral. However~~income, wewhich ~~may~~is ~~not be able to take title to and sell~~ the ~~collateral~~difference ~~securing~~between the ~~loan~~interest ~~quickly.~~income ~~Taking~~we ~~title~~earn ~~to collateral can be an expensive and lengthy process that could have a negative effect~~ on ~~the return on~~ our ~~investment.~~interest-earning ~~Borrowers~~investments ~~often resist when lenders, such as us, seek to take title to collateral by asserting numerous claims, counterclaims~~ and ~~defenses,~~the ~~including~~interest ~~but~~expense ~~not~~we ~~limited~~incur ~~to lender liability claims,~~ in anfinancing ~~effort~~these ~~to prolong the foreclosure action~~investments. InChanges ~~some~~in ~~states,~~the ~~taking~~level ~~title~~of tointerest ~~collateral~~rates ~~can~~also ~~take~~may ~~several~~affect ~~years~~our orability ~~more~~ to ~~resolve.~~originate Atand ~~any~~acquire ~~time during a foreclosure proceeding~~assets, ~~for instance,~~ the ~~borrower~~value ~~may file for bankruptcy, which would have the effect~~ of ~~staying~~our ~~the~~assets ~~foreclosure action~~ and ~~further~~our ~~delaying~~ability ~~the~~to ~~foreclosure~~realize ~~process.~~gains ~~The~~from ~~resulting time delay could reduce~~ the ~~value~~disposition of ~~our~~assets. ~~investment~~Changes in ~~the~~interest ~~defaulted~~rates ~~loans.~~may ~~Furthermore,~~also anaffect ~~action~~borrower todefault ~~take~~rates. ~~title~~In ~~to collateral securing~~ a ~~loan~~period isof ~~regulated~~rising byinterest ~~state~~rates, ~~statutes~~our ~~and~~interest ~~regulations~~expense ~~and~~could isincrease, ~~subject~~while to the ~~delays~~interest ~~and~~we ~~expenses~~earn ~~associated~~on ~~with~~our ~~lawsuits~~fixed-rate ifdebt ~~the~~investments ~~borrower~~would ~~raises~~not ~~defenses~~change, ~~counterclaims~~adversely oraffecting ~~files~~our ~~for bankruptcy~~profitability. InOur ~~the~~operating ~~event~~results ofdepend ~~default~~in bylarge apart ~~borrower,~~on ~~these~~differences ~~restrictions,~~between ~~among~~the ~~other~~income ~~things,~~from ~~may impede~~ our ~~ability~~assets, tonet ~~take~~of ~~title~~credit tolosses, and ~~sell~~our ~~the~~financing ~~collateral~~costs. ~~securing~~We ~~the~~anticipate ~~loan~~that orfor toany ~~obtain~~period ~~proceeds~~during ~~sufficient~~which toour ~~repay~~assets ~~all~~are ~~amounts~~not ~~due~~match-funded, ~~to us on~~ the ~~loan.~~income Infrom ~~addition,~~such weassets ~~may~~will berespond ~~forced~~more slowly to ~~operate~~interest ~~any~~rate ~~collateral~~fluctuations ~~for~~than ~~which~~the wecost ~~take~~of ~~title~~our ~~for~~borrowings. ~~a substantial period of time~~Consequently, ~~which~~changes ~~could~~in beinterest arates ~~distraction for the Advisor and~~ may ~~require~~significantly usinfluence toour ~~pay~~net ~~significant~~income. ~~costs~~Interest ~~associated~~rate ~~with~~fluctuations ~~such~~resulting ~~collateral.~~in Weour ~~may~~interest ~~not~~expense ~~recover~~exceeding ~~any~~interest ofincome ~~our~~would ~~investment~~result ~~even~~in ifoperating welosses ~~take~~for ~~title to collateral~~us.

~~Interest~~The ~~rate~~due ~~fluctuations~~diligence ~~could~~process ~~reduce~~that ~~our~~the ~~ability~~Advisor undertakes in regard to ~~generate~~investment ~~income~~opportunities onmay not reveal all facts that may be relevant in connection with an investment and if the Advisor incorrectly evaluates the risks of our investments ~~and~~we may ~~cause~~experience losses.

~~Changes~~Before inmaking ~~interest~~investments ~~rates~~for ~~will affect our net interest income~~us, ~~which is~~ the ~~difference~~Advisor ~~between~~conducts ~~the~~due ~~interest~~diligence ~~income~~that weit ~~earn~~deems onreasonable ~~our~~and ~~interest-earning~~appropriate ~~investments~~based ~~and~~on the ~~interest~~facts ~~expense~~and wecircumstances ~~incur~~relevant into ~~financing~~each ~~these~~potential ~~investments~~investment. ~~Changes~~When inconducting ~~the~~due ~~level~~diligence, ofthe ~~interest~~Advisor ~~rates also~~ may ~~affect~~be ~~our~~required ~~ability~~ to ~~originate~~evaluate important and ~~acquire~~complex ~~assets~~issues, ~~the~~including ~~value~~but ofnot ~~our~~limited ~~assets~~to ~~and~~those ~~our~~related ~~ability~~ to ~~realize~~business, ~~gains from the disposition of assets. Changes in interest rates may also affect borrower default rates. In a period of rising interest rates~~financial, ~~our interest expense could increase~~tax, ~~while the interest we earn on our fixed-rate debt investments would not change~~accounting, ~~adversely affecting our profitability. Our operating results depend in large part on differences between the income from our assets~~sustainability, ~~net of credit losses~~legal, and ~~our~~regulatory ~~financing~~and ~~costs~~macroeconomic trends. WeWith ~~anticipate~~respect ~~that~~to ~~for any period during which our assets are not match-funded~~sustainability, the ~~income~~nature ~~from~~and ~~such~~scope ~~assets~~of ~~will respond more slowly to interest rate fluctuations than~~ the ~~cost~~Advisor’s ofdiligence ~~our~~will borrowings. Consequently, changes in interest rates may significantly influence our net income. Interest rate fluctuations resulting in our interest expense exceeding interest income would result in operating losses for us.

The due diligence process that the Advisor undertakes in regard to investment opportunities may not reveal all facts that may be relevant in connection with an investment and if the Advisor incorrectly evaluates the risks of our investments we may experience losses.25

Before making investments for us, the Advisor conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances relevant to each potential investment. When conducting due diligence, the Advisor may be required to evaluate important and complex issues, including but not limited to those related to business, financial, tax, accounting, environmental, social and governance (“ESG”), legal, and regulatory and macroeconomic trends. With respect to ESG, the nature and scope of the Advisor’s diligence will vary based on the investment, but may include a review of, among other things: energy management, air and water pollution, land contamination, diversity, human rights, employee health and safety, accounting standards and bribery and corruption. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of potential investment. Selecting and evaluating material ~~ESG~~sustainability factors is subjective by nature, and there is no guarantee that the criteria utilized or judgment exercised by the Advisor or a third-party ~~ESG~~sustainability specialist (if any) will reflect the beliefs, values, internal policies or preferred practices of any particular investor or align with the beliefs or values or preferred practices of other asset managers or with market trends. The materiality of sustainability risks and impacts on an individual potential investment or portfolio as a whole are dependent on many factors, including the relevant industry, country, asset class and investment style. The Advisor’s loss estimates may not prove accurate, as actual results may vary from estimates. If the Advisor underestimates the asset-level losses relative to the price we pay for a particular investment, we may experience losses with respect to such investment.

25Moreover, investment analyses and decisions by the Advisor may frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities. In such cases, the information available to the Advisor at the time of making an investment decision may be limited, and they may not have access to detailed information regarding such investment. Further, some matters covered by the Advisor’s diligence, such as sustainability, are continuously evolving and the Advisor may not accurately or fully anticipate such evolution. For instance, the Advisor’s sustainability framework does not represent a universally recognized standard for assessing sustainability considerations as there are different frameworks and methodologies being implemented by other asset managers, in addition to numerous international initiatives on the subject. There has also been recent regulatory focus on the marketing of socially conscious investment strategies and the methodology used to evaluate sustainability, which has resulted in fines and penalties related to insufficient assessment processes around the marketing of investments marketed as sustainability. Therefore, it may be the case that the Advisor may not possess complete knowledge of all circumstances that may adversely affect such investment.

~~preferred practices of other asset managers or with market trends.~~ The ~~materiality~~properties ofsecuring ~~sustainability~~our ~~risks~~investments ~~and~~may ~~impacts~~be onsubject anto ~~individual~~unknown ~~potential investment or portfolio as a whole are dependent on many factors~~liabilities, including ~~the~~liabilities ~~relevant~~resulting ~~industry,~~from ~~country,~~environmental ~~asset class and investment style. The Advisor’s loss estimates may not prove accurate~~hazards, asthat ~~actual~~could ~~results~~affect ~~may vary from estimates. If~~ the ~~Advisor~~value ~~underestimates~~of ~~the~~these ~~asset-level~~properties ~~losses~~and ~~relative~~as ~~to the price we pay for~~ a ~~particular investment~~result, weour ~~may experience losses with respect to such investment~~investments.

~~Moreover,~~Collateral ~~investment~~properties ~~analyses~~securing ~~and~~our ~~decisions~~investments ~~by the Advisor~~ may ~~frequently~~ be ~~required~~subject to beunknown ~~undertaken~~or onunquantifiable anliabilities ~~expedited~~that ~~basis~~may toadversely ~~take~~affect ~~advantage of investment opportunities. In such cases,~~ the ~~information~~value ~~available to the Advisor at the time~~ of ~~making~~our aninvestments. ~~investment~~Such ~~decision~~defects ~~may~~or bedeficiencies ~~limited, and they~~ may ~~not~~include ~~have~~title ~~access to detailed information regarding such investment. Further~~defects, ~~some~~title ~~matters covered by the Advisor’s diligence~~disputes, ~~such as ESG~~liens, ~~are~~servitudes ~~continuously~~or ~~evolving~~other ~~and~~encumbrances on the ~~Advisor~~mortgaged ~~may~~properties. ~~not~~The ~~accurately~~discovery orof ~~fully anticipate~~ such ~~evolution.~~unknown ~~For instance~~defects, ~~the~~deficiencies ~~Advisor’s ESG framework does not represent a universally recognized standard for assessing ESG considerations as there are different frameworks~~ and ~~methodologies~~liabilities ~~being~~could ~~implemented~~affect ~~by other asset managers, in addition to numerous international initiatives on~~ the ~~subject.~~ability ~~There has also been recent regulatory focus on the marketing~~ of ~~socially~~our ~~conscious~~borrowers ~~investment~~to ~~strategies~~make ~~and~~payments ~~the methodology used~~ to ~~evaluate~~us ~~ESG,~~or ~~which~~could ~~has~~affect ~~resulted~~our inability ~~fines and penalties related~~ to ~~insufficient~~foreclose ~~assessment~~and ~~processes~~sell ~~around~~ the ~~marketing~~underlying ~~of investments marketed as ESG. Therefore~~properties, itwhich ~~may~~could beadversely ~~the~~affect ~~case~~our ~~that~~results ~~the Advisor may not possess complete knowledge~~ of ~~all~~operations ~~circumstances~~and ~~that~~financial ~~may adversely affect such investment~~condition.

~~The~~Furthermore, to the extent we foreclose on properties ~~securing~~with ~~our~~respect ~~investments~~to which we have extended loans, we may be subject to ~~unknown~~environmental liabilities, ~~including~~arising ~~liabilities~~from ~~resulting~~such ~~from~~foreclosed ~~environmental~~properties. ~~hazards~~Under various U.S. federal, ~~that~~state ~~could~~and ~~affect~~local laws, an owner or operator of real property may become liable for the ~~value~~costs of ~~these~~removal ~~properties~~of ~~and~~certain ashazardous asubstances ~~result~~released on its property. These laws often impose liability without regard to whether the owner or operator knew of, ~~our~~or ~~investments~~was responsible for, the release of such hazardous substances. In addition, we could be subject to similar liabilities in applicable foreign jurisdictions.

~~Collateral~~If we foreclose on any properties ~~securing~~underlying our investments, ~~may~~the bepresence ~~subject~~of tohazardous ~~unknown~~substances oron ~~unquantifiable~~a ~~liabilities~~property ~~that~~ may adversely affect ~~the~~our ~~value~~ability ofto ~~our~~sell ~~investments.~~the ~~Such~~property ~~defects~~and orwe ~~deficiencies~~ may ~~include~~incur ~~title~~substantial ~~defects,~~remediation ~~title disputes~~costs, ~~liens,~~therefore ~~servitudes or other encumbrances on~~ the ~~mortgaged properties. The~~ discovery of ~~such~~material ~~unknown~~environmental ~~defects, deficiencies and~~ liabilities ~~could~~attached ~~affect the ability of our borrowers~~ to ~~make~~such ~~payments to us or could affect our ability to foreclose and sell the underlying~~ properties, ~~which~~ could adversely affect our results of operations and financial condition.

~~Furthermore,~~If to the ~~extent~~Advisor weoverestimates foreclose on properties with respect to which we have extended loans, we may be subject to environmental liabilities arising from such foreclosed properties. Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the ~~costs~~yields ~~of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner~~ or ~~operator~~incorrectly ~~knew~~prices ~~of, or was responsible for,~~ the ~~release~~risks of ~~such~~our ~~hazardous substances. In addition~~investments, we ~~could~~may beexperience ~~subject to similar liabilities in applicable foreign jurisdictions~~losses.

IfThe weAdvisor ~~foreclose~~values our potential investments based on ~~any~~yields ~~properties~~and risks, taking into account estimated future losses on the mortgage loans and the underlying ~~our~~collateral ~~investments~~included in the securitization’s pools, and the ~~presence~~estimated impact of ~~hazardous~~these ~~substances~~losses on aexpected ~~property~~future ~~may~~cash ~~adversely~~flows ~~affect~~and ~~our~~returns. ~~ability~~The toAdvisor’s ~~sell~~loss ~~the~~estimates ~~property~~may ~~and~~not weprove accurate, as actual results may ~~incur~~vary ~~substantial~~from ~~remediation~~estimates. ~~costs,~~In ~~therefore~~the event that the ~~discovery~~Advisor ofunderestimates ~~material~~the ~~environmental~~asset ~~liabilities~~level ~~attached~~losses relative to ~~such~~the ~~properties~~price ~~could~~we ~~adversely~~pay ~~affect~~for ~~our~~a ~~results~~particular ofinvestment, ~~operations~~we ~~and~~may ~~financial~~experience ~~condition~~losses with respect to such investment.

IfInflation ~~the~~risks ~~Advisor~~may ~~overestimates~~have ~~the~~an ~~yields~~adverse orimpact ~~incorrectly~~on ~~prices the risks of~~ our ~~investments, we may experience losses~~returns.

~~The~~Inflation ~~Advisor~~and ~~values~~rapid ~~our~~fluctuations ~~potential~~in ~~investments~~inflation ~~based~~rates onhave ~~yields~~had ~~and~~in ~~risks~~the past, ~~taking~~and ~~into~~may ~~account~~in ~~estimated~~the future ~~losses~~have, negative effects on the ~~mortgage~~economies ~~loans~~ and financial markets, which may in turn affect the ~~underlying~~markets ~~collateral~~in ~~included~~which we invest. Inflation in the ~~securitization’s~~United ~~pools,~~States remained elevated throughout 2025 and may continue to remain high in the ~~estimated~~future. ~~impact~~While inflation has shown signs of ~~these~~moderating, ~~losses~~it remains uncertain whether substantial inflation in the United States will be sustained over an extended period of time or have a significant effect on ~~expected~~the ~~future~~United ~~cash~~Sates ~~flows~~or ~~and~~other ~~returns~~economies. ~~The~~For ~~Advisor’s~~example, ~~loss~~wages ~~estimates~~and ~~may~~prices ~~not~~of ~~prove~~inputs ~~accurate~~increase during periods of inflation, aswhich ~~actual~~can ~~results~~negatively ~~may~~impact ~~vary~~returns ~~from~~on ~~estimates~~investments. InGovernmental ~~the~~efforts ~~event~~to ~~that~~curb ~~the~~inflation ~~Advisor~~often ~~underestimates~~have ~~the~~negative ~~asset~~effects on the level ~~losses~~of ~~relative~~economic activity. Depending on the inflation assumptions relating to the ~~price~~cash weflows ~~pay~~anticipated ~~for~~from athe ~~particular~~assets ~~investment~~underlying our investments, weas ~~may~~well ~~experience~~as ~~losses~~the manner in which asset revenue is determined with respect to such ~~investment~~asset, returns from assets may vary as a result of changes in the rate of inflation. There can be no assurance that inflation will not become a serious problem in the future and have an adverse impact on our returns.

~~Inflation~~Real ~~risks~~estate ~~may~~valuation ~~have~~is aninherently ~~adverse~~subjective ~~impact~~and ~~on our returns~~uncertain.

~~Inflation~~The ~~and~~valuation ~~rapid~~of ~~fluctuations~~real inestate ~~inflation rates have had in the past,~~ and ~~may~~therefore in the ~~future~~valuation ~~have,~~of ~~negative~~any ~~effects~~underlying onsecurity ~~the~~relating ~~economies and financial markets, which may in turn affect the markets in which we invest. Inflation in the United States remained elevated throughout 2024 and may continue~~ to ~~remain~~loans ~~high~~made inby ~~the~~us ~~future.~~is ~~While~~inherently ~~inflation~~subjective ~~has~~due ~~shown signs of moderating~~to, itamong ~~remains uncertain whether substantial inflation in the United States will be sustained over an extended period of time or have a significant effect on the United Sates or~~ other ~~economies. For example~~factors, ~~wages~~the ~~and~~individual ~~prices~~nature of ~~inputs~~each ~~increase during periods of inflation~~property, ~~which~~its can negatively impact returns on investments. Governmental efforts to curb inflation often have negative effects on the level of economic activity. Depending on the inflation assumptions relating to the cash flows anticipated from the assets underlying our investmentslocation, ~~as well as~~ the ~~manner~~expected infuture ~~which~~rental ~~asset~~revenues ~~revenue is determined with respect to such asset, returns~~ from ~~assets may vary as a result of changes in the rate of inflation. There can be no assurance that inflation will not become a serious problem in the future and have an adverse impact on our returns.~~

~~Real estate valuation is inherently subjective and uncertain.~~26

The valuation of real estate and therefore the valuation of any underlying security relating to loans made by us is inherently subjective due to, among other factors, the individual nature of each property, its location, the expected future rental revenues from that particular property, the effectiveness of the owner of the underlying real estate to execute its business plan and the valuation methodology adopted. As a result, the valuations of the real estate assets against which we make loans are subject to a degree of uncertainty and are made on the basis of assumptions and methodologies that may not prove to be accurate, particularly in periods of volatility, low transaction flow or restricted debt availability in the commercial or residential real estate markets.

26Loans on properties in transition will involve a greater risk of loss than conventional mortgage loans.

~~Loans~~We onmay ~~properties~~invest in ~~transition~~transitional ~~will~~loans ~~involve~~to borrowers who are typically seeking relatively short-term capital to be used in an acquisition or rehabilitation of a ~~greater~~property ~~risk~~or to provide a newly-constructed property sufficient time to achieve stabilization. The typical borrower in a transitional loan has usually identified an undervalued asset that has been under-managed and/or is located in a recovering market. If the market in which the asset is located fails to improve according to the borrower’s projections, or if the borrower fails to improve the quality of ~~loss~~the ~~than~~asset’s ~~conventional~~management ~~mortgage~~and/or ~~loans~~the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the transitional loan, and we bear the risk that we may not recover all or a portion of our investment.

WeIn ~~may~~addition, ~~invest~~borrowers inusually ~~transitional~~use ~~loans~~the toproceeds ~~borrowers~~of ~~who~~a ~~are~~conventional ~~typically~~mortgage ~~seeking~~to ~~relatively~~repay ~~short-term~~a ~~capital~~transitional toloan. beTransitional ~~used~~loans intherefore anare ~~acquisition~~subject orto ~~rehabilitation~~the risk of a ~~property~~borrower’s orinability to ~~provide~~obtain apermanent ~~newly-constructed~~financing ~~property~~or sufficient ~~time~~proceeds tovia ~~achieve~~property ~~stabilization.~~sale ~~The~~to ~~typical~~repay ~~borrower~~the ~~in a~~ transitional loan ~~has~~and ~~usually~~to ~~identified~~the anbroader ~~undervalued~~availability ~~asset~~of ~~that~~conventional ~~has~~mortgages ~~been~~at ~~under-managed~~amenable ~~and/or~~rates. isIn ~~located~~the inevent aof ~~recovering~~any ~~market.~~default Ifunder ~~the~~transitional ~~market~~loans inthat ~~which~~may ~~the~~be ~~asset~~held isby ~~located~~us, ~~fails~~we tobear ~~improve~~the ~~according~~risk toof ~~the~~loss ~~borrower’s~~of ~~projections,~~principal orand ifnon-payment ~~the~~of ~~borrower~~interest ~~fails~~and fees to ~~improve~~ the ~~quality~~extent of ~~the~~any ~~asset’s~~deficiency ~~management~~between ~~and/or~~ the value of the ~~asset,~~mortgage ~~the~~collateral ~~borrower~~and ~~may~~the ~~not~~principal ~~receive~~amount aand ~~sufficient~~unpaid ~~return~~interest onof the ~~asset~~transitional toloan. ~~satisfy~~To the ~~transitional~~extent ~~loan,~~we ~~and~~suffer wesuch ~~bear~~losses ~~the~~with ~~risk~~respect ~~that~~to wethese ~~may~~transitional ~~not~~loans, ~~recover~~it ~~all~~could oradversely aaffect ~~portion~~our results of ~~our~~operations ~~investment~~and financial condition.

InRisks ~~addition, borrowers usually use the proceeds~~ of acost ~~conventional~~overruns mortgage to repay a transitional loan. Transitional loans therefore are subject to the risk of a borrower’s inability to obtain permanent financing or sufficient proceeds via property sale to repay the transitional loan and tononcompletion ~~the broader availability~~ of ~~conventional~~renovations ~~mortgages at amenable rates. In the event~~ of ~~any~~properties ~~default~~in ~~under~~transition ~~transitional loans that~~ may beresult ~~held~~in bysignificant us, we bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount and unpaid interest of the transitional loan. To the extent we suffer such losses ~~with respect to these transitional loans, it could adversely affect our results of operations and financial condition~~.

~~Risks~~The renovation, refurbishment or expansion of a property by a borrower involves risks of cost overruns and noncompletion. Estimates of ~~renovations~~the costs of ~~properties~~improvements to bring an acquired property up to standards established for the market position intended for that property may prove inaccurate. Other risks may include rehabilitation costs exceeding original estimates, possibly making a project uneconomical, environmental risks, delays in ~~transition~~legal and other approvals (e.g., for condominiums) and rehabilitation and subsequent leasing of the property not being completed on schedule. If such renovation is not completed in a timely manner, or if it costs more than expected, the borrower may experience a prolonged reduction of net operating income and may not be able to make payments on our investment on a timely basis or at all, which could result in significant losses.

~~The~~Investment ~~renovation,~~ratings refurbishment or expansion of a property by a borrower involves risks of cost overruns and noncompletion. Estimates of the costs of improvements to bring an acquired property up to standards established for the market position intended for that ~~property~~we may ~~prove~~use ~~inaccurate.~~are ~~Other~~relative ~~risks may include rehabilitation costs exceeding original estimates, possibly making a project uneconomical, environmental risks, delays in legal~~ and ~~other approvals (e~~subjective.g., for condominiums) and rehabilitation and subsequent leasing of the property not being completed on schedule. If such renovation is not completed in a timely manner, or if it costs more than expected, the borrower may experience a prolonged reduction of net operating income and may not be able to make payments on our investment on a timely basis or at all, which could result in significant losses.

~~Investment~~In general, the ratings of nationally recognized rating organizations represent the opinions of these agencies as to the credit quality of securities that wethey rate. These ratings may ~~use~~be used by us as initial criteria for the selection of investments. Such ratings, however, are relative and subjective; they are not absolute standards of quality and do not evaluate the market value risk of the securities. It is also possible that a rating agency might not change its rating of a particular issue on a timely basis to reflect subsequent events.

InInvestments ~~general,~~in ~~the~~non-conforming ~~ratings~~and ofnon-investment ~~nationally~~grade ~~recognized~~rated ~~rating~~loans ~~organizations~~or ~~represent the opinions of these agencies as to the credit quality of~~ securities ~~that~~involve ~~they~~increased rate. These ratings may be used by us as initial criteria for the selection of investments. Such ratings, however, are relative and subjective; they are not absolute standards of quality and do not evaluate the market value risk of ~~the securities~~loss. ~~It is also possible that a rating agency might not change its rating of a particular issue on a timely basis to reflect subsequent events.~~

~~Investments~~We inmay originate and/or acquire investments that do not conform to conventional loan standards applied by traditional lenders and either are not rated or rated as non-~~conforming~~investment ~~and~~grade by the rating agencies. The non-investment grade ~~rated~~credit ratings for these assets typically result from the overall leverage of the loans, the lack of a strong operating history for the properties underlying the loans, the borrowers’ credit history, the properties’ underlying cash flow or ~~securities~~other ~~involve~~factors. ~~increased~~As a result, these investments have a higher risk of default and loss than investment grade rated assets. Any loss we incur may be significant and may reduce distributions to our shareholders and adversely affect the value of our common shares. There are no limits on the percentage of unrated or non-investment grade rated assets we may hold in our investment portfolio.

WeAny may originate and/or acquire investments that do not conform to conventional loan standards applied by traditional lenders and either are not rated or rated as non-investment grade by the rating agencies. The non-investment grade credit ratings ~~for~~assigned ~~these~~to ~~assets~~our typically result from the overall leverage of the loans, the lack of a strong operating history for the properties underlying the loans, the borrowers’ credit history, the properties’ underlying cash flow or other factors. As a result, these investments ~~have~~are asubject ~~higher~~to ~~risk~~ongoing ofevaluations ~~default~~ and ~~loss~~revisions ~~than~~and ~~investment~~we ~~grade~~cannot ~~rated~~assure ~~assets.~~you ~~Any~~that ~~loss~~those weratings ~~incur~~will ~~may~~not be ~~significant and may reduce distributions to our shareholders and adversely affect the value of our common shares~~downgraded. ~~There are no limits on the percentage of unrated or non-investment grade rated assets we may hold in our investment portfolio.~~

Some of our investments may be rated by Moody’s Investors Service, Inc., Fitch Ratings, Inc., S&P Global Ratings, DBRS, Inc. or Kroll Bond Rating Agency, Inc. Any credit ratings ~~assigned~~on to our investments are subject to ongoing ~~evaluations~~evaluation ~~and~~by ~~revisions~~credit rating agencies, and we cannot assure you that ~~those~~any such ratings will not be ~~downgraded~~changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our investments in the future, the value of these investments could significantly decline, which would adversely affect the value of our investment portfolio and could result in losses upon disposition or the failure of borrowers to satisfy their debt service obligations to us.

~~Some~~Our ~~of our~~ investments may be ~~rated~~concentrated byand ~~Moody’s Investors Service, Inc., Fitch Ratings, Inc., S&P Global Ratings, DBRS, Inc. or Kroll Bond Rating Agency, Inc. Any credit ratings on our investments~~ are subject to ~~ongoing~~risk evaluation by credit rating agencies, and we cannot assure you that any such ratings will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our investments in the future, the value of these investments could significantly decline, which would adversely affect the value of our investment portfolio and could result in losses upon disposition or the failure of borrowers to satisfy their debt service obligations to usdefault.

~~Our~~While we seek to diversify our portfolio of investments, we are not required to observe specific diversification criteria, except as may be set forth in the investment guidelines adopted by our board of trustees. Therefore, our investments in our target assets may at times be concentrated ~~and~~in certain property types that are subject to higher risk of ~~default~~foreclosure or secured by properties concentrated in a limited number of geographic locations. To the extent that our portfolio is concentrated, including concentration in any one region or type of asset, downturns relating generally to such region or type of asset may result in defaults on a number of our investments within

While we seek to diversify our portfolio of investments, we are not required to observe specific diversification criteria, except as may be set forth in the investment guidelines adopted by our board of trustees. Therefore, our investments in our target assets may at times be concentrated in certain property types that are subject to higher risk of foreclosure or secured by properties concentrated in a limited number of geographic locations. To the extent that our portfolio is concentrated, including concentration in any one region or type of asset, downturns relating generally to such region or type of asset may result in defaults on a number of our investments within a short time period, which may reduce our net income and the value of our common shares and accordingly reduce our ability to make distributions to our shareholders.27

27a short time period, which may reduce our net income and the value of our common shares and accordingly reduce our ability to make distributions to our shareholders.

Difficult conditions in the mortgage and CRE markets may cause us to experience market losses related to our holdings.

Our results of operations are materially affected by conditions in the real estate markets, the financial markets and the economy generally. Concerns about the real estate market, inflation, energy costs, geopolitical issues and the availability and cost of credit, have contributed to increased volatility and diminished expectations for the economy and markets going forward. Deterioration in the real estate market may cause us to experience losses related to our assets and to sell assets at a loss. Declines in the market values of our investments may adversely affect our results of operations and credit availability, which may reduce earnings and, in turn, cash available for distribution to our shareholders.

We operate in a highly competitive market for lending and investment opportunities. Our profitability depends, in large part, on our ability to originate and/or acquire our target assets at attractive prices. In originating or acquiring our target assets, we compete with a variety of institutional investors, including other REITs, commercial and investment banks, specialty finance companies, public and private funds, commercial finance and insurance companies and other financial institutions. Many of our competitors are substantially larger and have considerably greater financial, technical, marketing and other resources than we do. Several other REITs have recently raised significant amounts of capital, and may have investment objectives that overlap with ours, which may create additional competition for investment opportunities. Some competitors may have a lower cost of funds and access to funding sources that may not be available to us, such as funding from the U.S. government, if we are not eligible to participate in programs established by the U.S. government. Many of our competitors are not subject to the operating constraints associated with REIT tax compliance or maintenance of an exception from the definition of an investment company under the Investment Company Act. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, competition for originations of and investments in our target assets may lead to decreasing yields, which may further limit our ability to generate desired returns. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, desirable investments in our target assets may be limited in the future and we may not be able to take advantage of attractive investment opportunities from time to time, as we can provide no assurance that we will be able to identify and make investments that are consistent with our investment objectives.

If we are unable to successfully integrate new assets or businesses and manage our growth, our results of operations and financial condition may suffer.

We may significantly increase the size and/or change the mix of our portfolio of assets. We may be unable to successfully and efficiently integrate newly-acquired or originated assets into our existing portfolio or otherwise effectively manage our assets or our growth effectively. In addition, increases in our portfolio of assets and/or changes in the mix of our assets may place significant demands on our Advisor’s administrative, operational, asset management, financial and other resources. Any failure to manage increases in size effectively could adversely affect our results of operations and financial condition.

The B Notes that we originate or acquire are subject to additional risks related to the privately negotiated structure and terms of the transaction, which may result in losses to us.

We may originate or acquire B Notes. A B Note is a mortgage loan typically (i) secured by a first mortgage on a single large commercial property or group of related properties and (ii) subordinated to an A Note secured by the same first mortgage on the same collateral. As a result, if a borrower defaults, there may not be sufficient funds remaining for a B Note holder after payment to the A Note holder. However, because each transaction is privately negotiated, B Notes can vary in their structural characteristics and risks. For example, the rights of holders of B Notes to control the process following a borrower default may vary from transaction to transaction. Further, B Notes typically are secured by a single property and so reflect the risks associated with significant concentration. Significant losses related to our B Notes would result in operating losses for us and may limit our ability to make distributions to our shareholders.

We may not be able to sell the B Notes that we originate or acquire, which may result in losses to us.

We may originate and fund a first mortgage loan with the intention of selling the A Note and retaining the B Note or mezzanine loan interest. We may elect to reduce our position in the whole loans through co-origination or A Note sales, which will eliminate our exposure or liability associated with the senior interest of the loan. This structure allows for matched-term and generally non-recourse financing, without cross-collateralization. However, we may not be able to sell these A Notes, and as a result, we may exceed our desired concentration in a specific borrower, region or sector, and may incur losses as a result.

Mezzanine loans involve greater risks of loss than senior loans secured by income-producing properties.

We may invest in mezzanine loans, which sometimes take the form of subordinated loans secured by second mortgages on the underlying property or more commonly take the form of loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. These types of assets involve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property because the loan may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of

types of assets involve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property because the loan may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some or all of our investment. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal. Significant losses related to our mezzanine loans would result in operating losses for us and may limit our ability to make distributions to our shareholders.

Some of our portfolio investments are recorded at fair value and, as a result, there is uncertainty as to the value of these investments.

Some of our portfolio investments are in the form of positions or securities that are not publicly -traded. The fair value of securities and other investments that are not publicly -traded may not be readily determinable. In accordance with our valuation guidelines, some of our portfolio investments for which no secondary market exists will be valued based on, among other factors, consideration of unobservable inputs. Because such valuations are subjective, the fair value of certain of our assets may fluctuate over short periods of time and our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. The value of our common shares could be adversely affected if our determinations regarding the fair value of these investments were materially higher than the values that we ultimately realize upon their disposal.

We may experience a decline in the fair value of our assets.

A decline in the fair value of our assets would require us to recognize an unrealized loss against earnings for those assets that are recorded at fair value through earnings, or may trigger an impairment, credit loss or other charge against earnings under applicable U.S. GAAP for those assets that are not recorded at fair value through earnings if we expect that the carrying value of those assets will not be recoverable. Subsequent disposition or sale of such assets could further affect our future losses or gains depending on the actual proceeds received.

Any loans and investments that we make that later become distressed may subject us to losses and other risks relating to bankruptcy proceedings.

It is possible that certain of our investments may become “non-performing” following our origination or acquisition thereof. In certain limited cases (e.g., in connection with a workout, restructuring and/or foreclosing proceedings involving one or more of our debt investments), the success of our investment strategy with respect thereto will depend, in part, on our ability to effectuate loan modifications and/or restructures and improve the operations of our borrower entities. The activity of identifying and implementing any such restructuring programs entails a high degree of uncertainty. There can be no assurance that we will be able to successfully identify and implement such restructuring programs. Further, such modifications and/or restructuring may entail, among other things, a substantial reduction in the interest rate and substantial write-offs of the principal of such loan, debt securities or other interests. However, even if a restructuring were successfully accomplished, a risk exists that, upon maturity of such real estate loan, debt securities or other interests replacement “takeout” financing will not be available.

These financial difficulties may never be overcome and may cause borrowers to become subject to bankruptcy or other similar administrative and operating proceedings. There is a possibility that we may incur substantial or total losses on our investments and in certain circumstances, become subject to certain additional potential liabilities that may exceed the value of our original investment therein. For example, under certain circumstances, a lender who has inappropriately exercised control over the management and policies of a debtor may have its claims subordinated or disallowed or may be found liable for damages suffered by parties as a result of such actions. In any reorganization or liquidation proceeding relating to our investments, we may lose our entire investment, may be required to accept cash or securities with a value less than our original investment and/or may be required to accept payment over an extended period of time. In addition, under certain circumstances, payments to us and distributions by us to the shareholders may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, preferential payment or similar transaction under applicable bankruptcy and insolvency laws. Furthermore, bankruptcy laws and similar laws applicable to administrative proceedings may delay our ability to realize value on collateral for loan positions held by us or may adversely affect the priority of such loans through doctrines such as equitable subordination or may result in a restructure of the debt through principles such as the “cramdown” provisions of the bankruptcy laws.

Investments outside the U.S. that are denominated in foreign currencies subject us to foreign currency risks and to the uncertainty of foreign laws and markets, which may adversely affect our distributions and our REIT status.

Our investments outside the U.S. denominated in foreign currencies subject us to foreign currency risk due to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar. As a result, changes in exchange rates of any such foreign currency to U.S. dollars may affect our income and distributions and may also affect the book value of our assets and the amount of shareholders’ equity. In addition, these investments subject us to risks of multiple and conflicting tax laws and regulations, and other laws and regulations that may make foreclosure and the exercise of other remedies in the case of default more difficult or costly compared to U.S. assets, and political and economic instability abroad, any of which factors could adversely affect our receipt of returns on and distributions from these investments.

Changes in foreign currency exchange rates used to value a REIT’s foreign assets may be considered changes in the value of the REIT’s assets. These changes may adversely affect our status as a REIT. Further, bank accounts in foreign currency which are not considered cash or cash equivalents may adversely affect our status as a REIT.29

29Changes in foreign currency exchange rates used to value a REIT’s foreign assets may be considered changes in the value of the REIT’s assets. These changes may adversely affect our status as a REIT. Further, bank accounts in foreign currency which are not considered cash or cash equivalents may adversely affect our status as a REIT.

We are subject to the risks of investing in project finance investments, many of which are outside our control, and that may negatively impact our business and financial results.

We are subject to the risks of investing in project finance investments. Infrastructure loans are subject to the risk of default, foreclosure and loss, and the risk of loss may be greater than similar risks associated with loans made on other types of assets. The loan structure for project finance relies primarily on the underlying project’s cash flows for repayment, with the project’s assets, rights and interests, together with the equity in the project company, typically pledged as collateral. Accordingly, the ability of the project company to repay a project finance loan is dependent upon the successful development, construction and/or operation of such project rather than upon the existence of independent income or assets of the project company. Moreover, the loans are typically non-recourse or limited recourse to the project sponsor, and the project company, as a special purpose entity, typically has no assets other than the project. Accordingly, if the project’s cash flows are reduced or are otherwise less than projected, the project company may be unable to repay the loan. In connection with any infrastructure lending, the Advisor will make certain estimates regarding project cash flows during the underwriting of the investment. These estimates may not prove accurate, as actual results may vary from estimates. A project’s cash flows can be adversely affected by, among other things:

•

if the project involves new construction;

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cost overruns;

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delays in completion;

•

availability of land, building materials, energy, raw materials and transportation;

•

availability of work force, management personnel and reliable contractors;

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natural disasters (fire, drought, flood, earthquake, ~~pandemics,~~and ~~including the COVID-19 pandemic~~pandemics);

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global climate change, war, civil unrest and strikes affecting contractors, suppliers or markets;

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shortfalls in expected capacity, output or efficiency;

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the terms of the power purchase or other offtake agreements used in the project;

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the creditworthiness of the project company and the project sponsor;

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competition;

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volatility in commodity prices;

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technology deployed, and the failure or degradation of equipment;

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inflation and fluctuations in exchange rates or interest rates;

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operation and maintenance costs;

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unforeseen capital expenditures;

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sufficiency of gas and electric transmission capabilities;

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licensing and permit requirements;

•

increased environmental or other applicable regulations;

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increased regulatory scrutiny and enforcement; and

•

changes in national, international, regional, state or local policies, economic conditions, laws and regulations.

In the event of any default under a project finance loan, we bear the risk of loss of principal to the extent of any deficiency between the value of the collateral, if any, and the principal and accrued interest of the loan, which could have a material adverse effect on our business, financial condition and results of operations. In the event of the bankruptcy of a project company, our investment will be deemed to be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession and our contractual rights may be unenforceable under state or other applicable law. Foreclosure proceedings against a project can be an expensive and lengthy process, which could have a substantial negative effect on our anticipated return on the foreclosed investment.

We may have difficulty meeting our obligations on the unfunded commitments of the infrastructure loans, which could have a material adverse effect on us.

Under certain circumstances, we may find it difficult to meet our remaining funding obligations respect to infrastructure loans from our ordinary operations. In such situations, in order to meet our then-existing funding obligations, we may be required to: (i) sell assets in adverse market conditions; (ii) borrow on unfavorable terms; or (iii) fund the infrastructure loans with amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. These alternatives could increase our costs or reduce our equity. Thus, compliance with the funding obligations with respect to the infrastructure loans may hinder our ability to grow, which could have a material adverse effect on our business, financial condition and results of operations. In the event that we are

assets in adverse market conditions; (ii) borrow on unfavorable terms; or (iii) fund the infrastructure loans with amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. These alternatives could increase our costs or reduce our equity. Thus, compliance with the funding obligations with respect to the infrastructure loans may hinder our ability to grow, which could have a material adverse effect on our business, financial condition and results of operations. In the event that we are unable to meet our funding obligations with respect to one or more infrastructure loans, we would be in breach of such loan(s), which could damage our reputation and could result in a lawsuit being brought by the project company or others, which could result in substantial costs and divert our attention and resources.

The power and oil and gas industries are subject to extensive regulation, which could adversely impact the business and financial performance of the projects to which our infrastructure loans relate.

The projects to which our infrastructure loans relate, which we expect will be focused in the power industry and oil and gas industry, are subject to significant and extensive federal, international, state and local governmental regulation, including how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for the products and services they provide. Various governmental authorities have the power to enforce compliance with these regulations and the permits issued under them, and violators are subject to administrative, civil and criminal penalties, including civil fines, injunctions or both. Stricter laws, regulations or enforcement policies could be enacted in the future that likely would increase compliance costs, which could adversely affect the business and financial performance of the projects. The operations of our borrowers may often rely on governmental licenses, concessions, leases or contracts that are highly complex and may result in disputes over interpretation or enforceability. Such borrowers may also be affected by rate regulations, which could change over time. Any adverse outcome on such regulatory matters could affect the relevant borrower’s ability to make payments of principal and interest on loans owed to us, and could impair the value of our collateral in the event of a foreclosure. Any of the foregoing could result in a default on one or more of our investments, which could have a material adverse effect on our business, financial condition and results of operations.

We generally are not able to control the operations of the borrowers underlying our infrastructure loans.

Certain assets securing an infrastructure loan will be dependent on efficient operation and maintenance to produce income to the relevant borrowers and to maintain value of the underlying collateral. The failure of the relevant borrowers to properly maintain such assets could affect such borrowers’ ability to make payments of principal and interest on loans owed to us, and could impair the value of our collateral in the event of a foreclosure. Where possible and appropriate under market circumstances, the covenants in the financing documentation relating to the infrastructure loans generally restrict certain actions that may be taken by the borrowers (including restrictions on making equity distributions and incurring additional indebtedness), to mitigate the risk, but there can be no assurance that such covenants can be obtained or that the relevant borrowers would comply with the same. As a result, we are subject to the risk that the relevant borrower may make business decisions with which we disagree or that the relevant borrower may take risks or otherwise act in ways that do not serve our interests.

Operation of a project underlying an infrastructure loan involves significant risks and hazards that may impair the project company’s ability to repay the loan, resulting in its default, which could have a material adverse effect on our business and financial results.

The ongoing operation of a project underlying any of our infrastructure loans involves risks that include, among other things, the breakdown or failure of equipment or processes or performance below expected levels of output or efficiency due to wear and tear, latent defect, design error or operator error or other events outside of our control, including force majeure events. In addition to natural risks such as earthquakes, floods, droughts, lightning, wildfires, hurricanes, wind, global climate change and pandemics, ~~including the COVID-19 pandemic,~~ other hazards, such as fire, explosion, structural collapse and machinery failure, acts of terrorism or related acts of war, hostile cyber intrusions or other catastrophic events are inherent risks in the operation of a project. These and other hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment and contamination of, or damage to, the environment and suspension of operations. Operation of a project also involves risks that the operator will be unable to transport its product to its customers in an efficient manner due to a lack of transmission capacity. Unplanned outages of a project, including extensions of scheduled outages due to mechanical failures or other problems, occur from time to time. Unplanned outages typically increase operation and maintenance expenses and may reduce revenues. These such events may not be insurable by us or by the applicable borrowers, on reasonable term or at all. To the extent there is insurance, warranties from vendors and obligations of contractors to meet certain performance levels, the proceeds of such insurance, warranties or performance guarantees may not cover the lost revenues, increased expenses or liquidated damages payments should the project experience equipment breakdown or non-performance by contractors or vendors. A project’s inability to operate its assets efficiently, manage capital expenditures and costs and generate earnings and cash flow could have a material adverse effect on the project company’s ability to repay the loan, which could result in its default. A default on one or more of the infrastructure loans could have a material adverse effect on our business, financial condition and results of operations.

Loans to companies engaged in energy or power exploration and production may be exposed to production risk and to commodity price risk.

Certain assets securing one or more loans in our portfolio may be related to energy or power generation or transmission. Such assets may be subject to energy commodity risks including price, volumetric and spread risk. While the Advisor will make efforts to manage these risks, the revenue from which our loans are expected to be repaid will be generated from a combination of (i) sales of commodities under contracts pursuant to which third parties – rather than our borrowers – bear most of the risk of commodity price fluctuation and (ii) sales of commodities in the open commodity markets at then-prevailing prices. To the extent production of the applicable commodity is lower than forecasted, there is non-performance by (or a bankruptcy or insolvency of) the counterparty under

commodities under contracts pursuant to which third parties – rather than our borrowers – bear most of the risk of commodity price fluctuation and (ii) sales of commodities in the open commodity markets at then-prevailing prices. To the extent production of the applicable commodity is lower than forecasted, there is non-performance by (or a bankruptcy or insolvency of) the counterparty under a commodity contract, or the spot market price for the commodities decreases, the borrowers’ revenues, and ability to repay our loan, may be negatively affected.

Our investments in CMBS are generally subject to losses.

Our investments in CMBS are subject to losses. In general, losses on a mortgaged property securing a mortgage loan included in a securitization will be borne first by the equity holder of the property, then by a cash reserve fund or letter of credit, if any, then by the holder of a mezzanine loan or B Note, if any, then by the “first loss” subordinated security holder (generally, the “B-Piece” buyer) and then by the holder of a higher-rated security. In the event of default and the exhaustion of any equity support, reserve fund, letter of credit, mezzanine loans or B Notes, and any classes of securities junior to those in which we invest, we will not be able to recover all of our investment in the securities we purchase. In addition, if the underlying mortgage portfolio has been overvalued by the originator, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related CMBS, there would be an increased risk of loss. The prices of lower credit quality securities are generally less sensitive to interest rate changes than more highly rated investments, but more sensitive to adverse economic downturns or individual issuer developments.

We may not control the special servicing of the mortgage loans included in the CMBS in which we invest, and, in such cases, the special servicer may take actions that could adversely affect our interests.

With respect to each series of CMBS in which we invest, overall control over the special servicing of the related underlying mortgage loans may be held by a directing certificate-holder, which is appointed by the holders of the most subordinate class of CMBS in such series. We may acquire classes of existing series of CMBS where we will not have the right to appoint the directing certificate-holder. In connection with the servicing of the specially serviced mortgage loans, the related special servicer may, at the direction of the directing certificate-holder, take actions that could adversely affect our interests.

With respect to certain mortgage loans included in our CMBS investments, the properties that secure the mortgage loans backing the securitized pool may also secure one or more related mortgage loans that are not in the CMBS, which may conflict with our interests.

Certain mortgage loans included in our CMBS investments may be part of a loan combination or split loan structure that includes one or more additional mortgaged loans (senior, subordinate or pari passu and not included in the CMBS investments) that are secured by the same mortgage instrument(s) encumbering the same mortgaged property or properties, as applicable, as is the subject mortgage loan. Pursuant to one or more co-lender or similar agreements, a holder, or a group of holders, of a mortgage loan in a subject loan combination may be granted various rights and powers that affect the mortgage loan in that loan combination, including: (i) cure rights; (ii) a purchase option; (iii) the right to advise, direct or consult with the applicable servicer regarding various servicing matters affecting that loan combination; or (iv) the right to replace the directing certificate-holder (without cause).

The Company’s claims may be subordinated to those of other creditors, which may have an adverse effect on the Company’s performance.

Although it is intended that the Company’s investments will generally be secured, the claims of the Company against a borrower in respect of an investment may in some instances be subordinated or subject to claims of other prior ranking creditors. In addition, certain creditors may be entitled to have their claims against the borrower satisfied out of the proceeds of enforcement of security over the assets of the borrower before payments of the claims of the Company out of such proceeds.

In the event a borrower defaults on a loan and the proceeds of enforcement are insufficient to satisfy the Company’s loan, the Company may suffer a loss of principal and/or interest. In the event a borrower declares bankruptcy or becomes insolvent, the Company may not have full recourse to the assets of the borrower, or such assets may not be sufficient to satisfy the loan. In addition, certain of the Company’s loans may not be protected by financial covenants or limitations upon additional indebtedness and/or may permit other pari passu or prior ranking debt or financial indebtedness of the borrower. If a borrower defaults on the Company’s loan or on debt or other financial indebtedness that ranks in priority to the Company’s loan, or in the event of a borrower bankruptcy or other insolvency, the Company’s loan will be satisfied only after such prior ranking debt is paid in full.

Some first lien loans may not necessarily have priority over all other debt of an issuer. For example, some first lien loans may permit other secured obligations (such as overdrafts, swaps or other derivatives made available by members of the syndicate to the company), or involve first liens only on specified assets of an issuer (e.g., excluding real estate). Issuers of first lien loans may have two tranches of first lien debt outstanding, each with first liens on separate collateral. Furthermore, any secured debt is secured only to the extent of its lien and only to the extent of underlying assets or incremental proceeds on already secured assets. Moreover, underlying assets are subject to credit, liquidity, and interest rate changes. Although the amount and characteristics of the underlying assets selected as collateral may allow the Company to withstand certain assumed deficiencies in payments occasioned by the borrower’s default, if any deficiencies exceed such assumed levels or if underlying assets are sold it is possible that the proceeds of such sale or disposition will not be equal to the amount of principal and interest owing to the Company in respect to its investment.

Where other financial indebtedness ranks pari passu or ahead of the Company’s loans, the ability of the Company to influence the borrower’s and/or a portfolio company’s affairs, especially during periods of financial distress or following an insolvency, may be substantially reduced. For example, under the terms of an intercreditor agreement, creditors that rank in priority are typically able to block or delay the acceleration of the debt that ranks behind those creditors or other exercises of a creditor’s rights 32

32Where other financial indebtedness ranks pari passu or ahead of the Company’s loans, the ability of the Company to influence the borrower’s and/or a portfolio company’s affairs, especially during periods of financial distress or following an insolvency, may be substantially reduced. For example, under the terms of an intercreditor agreement, creditors that rank in priority are typically able to block or delay the acceleration of the debt that ranks behind those creditors or other exercises of a creditor’s rights until such time as that debt has been satisfied in full. In addition, the presence of intercreditor arrangements may limit the Company’s ability to amend its loan documents, assign the Company’s loans, accept repayments of principal or interest or prepayments, exercise its remedies (through “standstill periods”) and control decisions made in bankruptcy or insolvency proceedings relating to borrowers. Accordingly, the Company may not be able to take the steps necessary to protect its investments in a timely manner or at all and/or may not be able to recover some or all of its investment in which it obtains interests until the prior ranking creditors have been fully repaid.

~~until such time as that debt has been satisfied in full.~~ In addition, the ~~presence~~debt ofinstruments ~~intercreditor~~in ~~arrangements~~which ~~may limit~~ the Company’s ~~ability~~may toinvest ~~amend~~may ~~its~~not ~~loan~~be ~~documents,~~protected ~~assign~~by ~~the~~financial ~~Company’s~~covenants ~~loans,~~or ~~accept~~limitations ~~repayments~~upon ofadditional ~~principal~~indebtedness, ormay ~~interest~~have orlimited ~~prepayments~~liquidity, ~~exercise~~and ~~its~~may ~~remedies~~not ~~(through~~be ~~“standstill~~rated ~~periods”)~~by ~~and~~a ~~control~~credit ~~decisions~~rating ~~made~~agency. inDebt ~~bankruptcy~~securities orare ~~insolvency~~also ~~proceedings~~subject ~~relating~~ to ~~borrowers.~~other ~~Accordingly~~creditor risks, ~~the~~including ~~Company~~but ~~may~~ not belimited ~~able~~ to ~~take~~(i) the ~~steps~~possible ~~necessary~~invalidation toof ~~protect~~an ~~its~~investment ~~investments~~transaction inas a ~~timely~~‘fraudulent ~~manner~~conveyance’ orunder atrelevant ~~all~~creditors’ ~~and/or~~rights ~~may~~laws, ~~not~~(ii) beso-called ~~able~~lender toliability ~~recover~~claims ~~some~~by orthe ~~all~~issuer of ~~its~~the ~~investment~~obligations, inand ~~which~~(iii) itenvironmental ~~obtains~~liabilities ~~interests~~that ~~until~~may ~~the~~arise ~~prior~~with ~~ranking~~respect ~~creditors~~to ~~have~~collateral ~~been~~securing ~~fully~~the ~~repaid~~obligations.

In addition, the ~~debt instruments in which the~~ Company may ~~invest may~~ not behave ~~protected~~the byability ~~financial covenants~~ or ~~limitations~~the ~~upon~~financial ~~additional~~resources ~~indebtedness, may have limited liquidity, and may not be rated by a credit rating agency. Debt securities are also subject~~ to ~~other~~acquire ~~creditor~~or ~~risks,~~discharge ~~including~~prior ~~but~~ranking ~~not limited to (i) the possible invalidation of an investment transaction as a ‘fraudulent conveyance’ under relevant creditors’ rights laws, (ii) so-called lender liability~~ claims byin ~~the~~order ~~issuer of the obligations, and (iii) environmental liabilities that may arise with respect~~ to ~~collateral~~protect ~~securing~~ the ~~obligations.~~Company’s investment.

~~In addition~~Dislocations, illiquidity and volatility in the ~~Company~~market ~~may~~for ~~not~~commercial ~~have~~real ~~the~~estate ~~ability~~as orwell as the broader financial ~~resources~~markets tocould ~~acquire~~adversely oraffect ~~discharge~~the ~~prior~~performance ~~ranking~~and ~~claims~~value inof ~~order~~commercial tomortgage ~~protect~~loans, the ~~Company’s~~demand ~~investment~~for CMBS and the value of CMBS investments.

~~Dislocations~~Any significant dislocations, illiquidity ~~and~~or volatility in the ~~market~~real ~~for~~estate ~~commercial~~and ~~real~~securitization ~~estate~~markets, including the market for CMBS, as well as ~~the~~global ~~broader~~ financial markets and the economy generally, could adversely affect ~~the~~our ~~performance~~business and ~~value~~financial ofresults. ~~commercial~~We ~~mortgage~~cannot ~~loans,~~assure you that dislocations in the ~~demand~~commercial ~~for~~mortgage ~~CMBS~~loan ~~and~~market ~~the~~will ~~value~~not ofoccur ~~CMBS~~in ~~investments~~the future.

~~Any~~Challenging ~~significant~~economic ~~dislocations,~~conditions ~~illiquidity~~affect ~~or volatility in~~ the ~~real~~financial ~~estate~~strength ~~and~~of ~~securitization~~many ~~markets~~commercial, ~~including~~multifamily ~~the~~and ~~market~~other ~~for~~tenants ~~CMBS,~~and asresult ~~well~~in asincreased ~~global~~rent ~~financial~~delinquencies ~~markets~~ and ~~the~~decreased ~~economy~~occupancy. ~~generally,~~Economic ~~could~~challenges ~~adversely~~may ~~affect~~lead ~~our~~to ~~business~~decreased ~~and~~occupancy, ~~financial~~decreased ~~results.~~rents Weor ~~cannot~~other ~~assure~~declines ~~you~~in ~~that~~income ~~dislocations~~from, inor the ~~commercial~~value ~~mortgage~~of, ~~loan~~commercial, ~~market~~multifamily ~~will~~and ~~not~~manufactured ~~occur~~housing incommunity ~~the~~real ~~future~~estate.

~~Challenging~~Declining ~~economic~~commercial ~~conditions~~real ~~affect~~estate ~~the~~values, ~~financial~~coupled ~~strength~~with oftighter ~~many~~underwriting standards for commercial real estate loans, may prevent commercial borrowers from refinancing their mortgages, which results in increased delinquencies and defaults on commercial, multifamily and other ~~tenants~~mortgage ~~and~~loans. Declines in commercial real estate values also result in ~~increased~~reduced ~~rent~~borrower equity, further hindering borrowers’ ability to refinance in an environment of increasingly restrictive lending standards and giving them less incentive to cure delinquencies and ~~decreased~~avoid ~~occupancy~~foreclosure. ~~Economic~~The ~~challenges~~lack ~~may~~of ~~lead~~refinancing toopportunities ~~decreased~~has ~~occupancy,~~impacted ~~decreased~~and ~~rents~~could orimpact ~~other~~in ~~declines~~the future, in ~~income~~particular, ~~from~~mortgage loans that do not fully amortize and on which there is a substantial balloon payment due at maturity, because borrowers generally expect to refinance these types of loans on or prior to their maturity date. Finally, declining commercial real estate values and the associated increases in loan-to-value ofratios would result in lower recoveries on foreclosure and an increase in losses above those that would have been realized had commercial property values remained the same or increased. Continuing defaults, delinquencies and losses would further decrease property values, thereby resulting in additional defaults by commercial mortgage borrowers, ~~multifamily~~further credit constraints and ~~manufactured~~further ~~housing~~declines ~~community~~in ~~real~~property ~~estate~~values.

~~Declining~~The ~~commercial~~CMBS ~~real~~in ~~estate values, coupled with tighter underwriting standards for commercial real estate loans, may prevent commercial borrowers from refinancing their mortgages,~~ which ~~results~~we ininvest ~~increased~~is ~~delinquencies~~subject ~~and defaults on commercial, multifamily and other mortgage loans. Declines in commercial real estate values also result in reduced borrower equity, further hindering borrowers’ ability~~ to ~~refinance~~the inrisks ~~an environment~~ of ~~increasingly restrictive lending standards and giving them less incentive to cure delinquencies and avoid foreclosure. The lack of refinancing opportunities has impacted and could impact in~~ the ~~future, in particular,~~ mortgage ~~loans~~securities ~~that~~market doas ~~not~~a ~~fully~~whole ~~amortize~~ and onrisks ~~which there is a substantial balloon payment due at maturity, because borrowers generally expect to refinance these types~~ of ~~loans on or prior to their maturity date. Finally, declining commercial real estate values and~~ the ~~associated~~securitization increases in loan-to-value ratios would result in lower recoveries on foreclosure and an increase in losses above those that would have been realized had commercial property values remained the same or increasedprocess. Continuing defaults, delinquencies and losses would further decrease property values, thereby resulting in additional defaults by commercial mortgage borrowers, further credit constraints and further declines in property values.

The ~~CMBS~~value inof ~~which~~CMBS wemay ~~invest~~change isdue ~~subject~~ to shifts in the ~~risks~~market’s perception of issuers and regulatory or tax changes adversely affecting the mortgage securities market as a whole. ~~and~~CMBS is also subject to several risks ofcreated through the securitization process. Subordinate tranches of CMBS is paid interest only to the extent that there are funds available to make payments. To the extent the collateral pool includes delinquent loans, there is a risk that the interest payment on subordinate CMBS will not be fully paid. Subordinate CMBS is also subject to greater credit risk than those CMBS that is more highly rated.

~~The~~We ~~value~~are ofsubject ~~CMBS may change due~~ to ~~shifts in~~ the ~~market’s~~risks ~~perception~~relating ~~of issuers and regulatory or tax changes adversely affecting the mortgage securities market as a whole. CMBS is also subject~~ to ~~several~~increases ~~risks~~in ~~created~~prepayment ~~through~~rates ~~the securitization process. Subordinate tranches~~ of ~~CMBS~~debt isunderlying ~~paid interest only to the extent that there are funds available to make payments. To the extent the collateral pool includes delinquent loans, there is a risk that the interest payment on subordinate~~ CMBS ~~will not be fully paid~~. ~~Subordinate CMBS is also subject to greater credit risk than those CMBS that is more highly rated.~~

WeCMBS are indirectly subject to the risks ~~relating~~associated towith ~~increases~~prepayments in(including ~~prepayment~~both ~~rates~~voluntary ofprepayments ~~debt~~by ~~underlying~~the ~~CMBS~~borrowers and liquidations due to defaults and foreclosures) on mortgage loans.

~~CMBS~~In ~~are~~general, ~~indirectly~~“premium” ~~subject~~securities to(securities ~~the~~whose ~~risks~~market ~~associated~~values ~~with~~exceed their principal or par amounts) are adversely affected by faster than anticipated prepayments, and “discount” securities (~~including~~securities ~~both~~whose ~~voluntary~~principal ~~prepayments~~or par amounts exceed their market values) are adversely affected by ~~the~~slower ~~borrowers~~than ~~and~~anticipated ~~liquidations~~prepayments. ~~due~~Since tomany ~~defaults~~CMBS will be discount securities when interest rates are high, and ~~foreclosures)~~will onbe ~~mortgage~~premium ~~loans~~securities when interest rates are low, these CMBS may be adversely affected by changes in prepayments in any interest rate environment.

InThe ~~general,~~adverse ~~“premium”~~effects ~~securities~~of ~~(securities~~prepayments ~~whose~~may ~~market~~impact ~~values~~investments ~~exceed~~in ~~their~~at ~~principal~~least ortwo ~~par~~ways. ~~amounts)~~First, ~~are~~particular ~~adversely~~investments ~~affected~~may byexperience ~~faster~~outright ~~than anticipated prepayments~~losses, ~~and~~as ~~“discount”~~in ~~securities~~the ~~(securities~~case ~~whose~~of ~~principal~~interest-only orsecurities ~~par~~in ~~amounts~~an ~~exceed~~environment ~~their~~of ~~market~~faster ~~values)~~actual ~~are~~or ~~adversely affected by slower than~~ anticipated prepayments. ~~Since many CMBS will be discount securities when interest rates are high~~Second, ~~and~~particular ~~will~~investments bemay ~~premium~~under-perform ~~securities~~relative ~~when~~to ~~interest~~hedges ~~rates~~that ~~are low, these CMBS~~ may behave ~~adversely~~been ~~affected~~constructed byfor ~~changes~~these ininvestments, ~~prepayments~~resulting ~~in any interest rate environment.~~

The adverse effects of prepayments may impact investments in at least two ways. First, particular investments may experience outright losses, as in the case of interest-only securities in an environment of faster actual or anticipated prepayments. Second, particular investments may under-perform relative to hedges that may have been constructed for these investments, resulting in a loss to us. In particular, prepayments (at par) may limit the potential upside of many CMBS to their principal or par amounts, whereas their corresponding hedges often have the potential for unlimited loss. In addition, in the case of “premium” securities, prepayments at par may result in losses.33

33in a loss to us. In particular, prepayments (at par) may limit the potential upside of many CMBS to their principal or par amounts, whereas their corresponding hedges often have the potential for unlimited loss. In addition, in the case of “premium” securities, prepayments at par may result in losses.

We may sponsor, and purchase the more junior securities of, CLOs and such instruments involve significant risks, including that these securities receive distributions from the CLO only if the CLO generates enough income to first pay all the investors holding senior tranches and all CLO expenses.

We may sponsor, and purchase the junior securities of, CLOs. In CLOs, investors purchase specific tranches, or slices, of debt instruments that are secured or backed by a pool of loans. The CLO debt classes have a specific seniority structure and priority of payments. The most junior securities along with the preferred shares of a CLO are generally retained by the sponsor of the CLO and are usually entitled to all of the income generated by the pool of loans after the payment of debt service on all the more senior classes of debt and the payment of all expenses. Defaults on the pool of loans therefore first affect the most junior tranches. The subordinate tranches of CLO debt may also experience a lower recovery and greater risk of loss, including risk of deferral or non-payment of interest than more senior tranches of the CLO debt because they bear the bulk of defaults from the loans held in the CLO and serve to protect the other, more senior tranches from default in all but the most severe circumstances. Despite the protection provided by the subordinate tranches, even more senior CLO tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, decline in market value due to market anticipation of defaults and aversion to CLO securities as a class. Further, the transaction documents relating to the issuance of CLO securities may impose eligibility criteria on the assets of the CLO, restrict the ability of the CLO’s sponsor to trade investments and impose certain portfolio-wide asset quality requirements. Finally, the credit risk retention rules of the SEC impose a retention requirement of 5% of the issued debt classes by the sponsor of the CLO. These criteria, restrictions and requirements may limit the ability of the CLO’s sponsor (or collateral manager) to maximize returns on the CLO securities.

In addition, CLOs are not actively traded and are relatively illiquid investments and volatility in CLO trading markets may cause the value of these investments to decline. The market value of CLO securities may be affected by, among other things, changes in the market value of the underlying loans held by the CLO, changes in the distributions on the underlying loans, defaults and recoveries on the underlying loans, capital gains and losses on the underlying losses (or foreclosure assets), prepayments on the underlying loans and the availability, prices and interest rate of underlying loans. Furthermore, the leveraged nature of each subordinated tranche may magnify the adverse impact on such class of changes in the value of the loans, changes in the distributions on the loans, defaults and recoveries on the loans, capital gains and losses on the loans (or foreclosure assets), prepayment on loans and availability, price and interest rates of the loans.

Our CLOs include certain interest coverage tests, overcollateralization coverage tests or other tests that, if not met, may result in a change in the priority of distributions, which may result in the reduction or elimination of distributions to the subordinate debt and equity tranches until the tests have been met or certain senior classes of securities have been paid in full. For example, even if no loan in the pool experiences a default, an appraisal reduction of a loan in the pool may cause the pool of loans in the applicable CLO not to meet certain of these tests. Accordingly, if such tests are not satisfied, we, as holders of the subordinate debt and equity interests in the applicable CLO, may experience a significant reduction in our cash flow from those interests.

Moreover, the reinvestment and replenishment period in one or more of our CLOs may be nearing the end of its term. Once the reinvestment and replenishment period has ended any repayments of a loan in the applicable CLO will require us to pay down the most senior debt in such CLO resulting in an increase in our cost of funds.

Furthermore, if any CLO that we sponsor or in which we hold interests fails to meet certain tests relevant to the most senior debt issued and outstanding by the CLO issuer, an event of default may occur under that CLO. If that occurs, (i) if we were serving as manager of such CLO, our ability to manage the CLO may be terminated and (ii) our ability to attempt to cure any defaults in such CLO may be limited, which would increase the likelihood of a reduction or elimination of cash flow and returns to us in such CLO for an indefinite time.

Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on joint venture partners’ financial condition and liquidity and disputes between us and our joint venture partners.

We may make investments through joint ventures. Such joint venture investments may involve risks not otherwise present when we make investments without partners, including the following:

•

we may not have exclusive control over the investment or the joint venture, which may prevent us from taking actions that are in our best interest and could create the potential risk of creating impasses on decisions, such as with respect to acquisitions or dispositions;

•

joint venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms;

•

joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner’s interest or selling its interest to that partner;

~~a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals;~~34

•

34a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals;

•

a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT and our exemption from registration under the Investment Company Act;

•

a partner may fail to fund its share of required capital contributions or may become bankrupt, which may mean that we and any other remaining partners generally would remain liable for the joint venture’s liabilities;

•

our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or investments underlying such relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership;

•

disputes between us and a partner may result in litigation or arbitration that could increase our expenses and prevent our Advisor and our officers and trustees from focusing their time and efforts on our business and could result in subjecting the investments owned by the joint venture to additional risk; or

•

we may, in certain circumstances, be liable for the actions of a partner, and the activities of a partner could adversely affect our ability to qualify as a REIT or maintain our exclusion from registration under the Investment Company Act, even though we do not control the joint venture.

Any of the above may subject us to liabilities in excess of those contemplated and adversely affect the value of our joint venture investments.

We ~~may~~will beface ~~subject~~risks toassociated ~~contingent~~with ~~liabilities~~hedging transactions.

~~Investors~~Subject ~~that~~to ~~invest~~limitations inrequired ~~the~~to ~~Company~~maintain atour aqualification ~~time~~as ~~during~~a ~~which~~REIT, ~~contingent~~we ~~liabilities~~may ~~are~~utilize ~~not accrued (or for which there is not~~ a ~~sufficient~~wide ~~accrual)~~variety ~~will~~of ~~invest~~derivative inand ~~the~~other ~~Company~~hedging atinstruments afor ~~higher~~risk ~~NAV~~management ~~than~~purposes, ~~had such liabilities been accrued at~~ the ~~time~~use of ~~the~~which ~~applicable~~is ~~investment.~~a Inhighly ~~addition,~~specialized ~~shareholders~~activity that ~~request~~may ~~repurchase~~entail ofgreater ~~their~~than ~~shares~~ordinary byinvestment ~~the~~risks. ~~Company~~Any atsuch aderivative ~~time~~and ~~during~~other ~~which~~hedging ~~contingent~~transactions ~~liabilities~~may ~~are~~not ~~accrued~~be ~~will~~effective ~~receive~~in ~~from~~mitigating ~~the~~risk ~~Company~~in ~~repurchase~~all ~~proceeds~~market atconditions aor ~~lower~~against ~~NAV~~all ~~than~~types ifof ~~such~~risk ~~liabilities~~(including ~~had~~unidentified ~~not~~or ~~been~~unanticipated ~~accrued~~risks), atthereby ~~the~~resulting ~~time~~in oflosses ~~the~~to ~~applicable repurchase~~us. InEngaging ~~the~~in ~~event~~derivative ~~that~~and ~~amounts~~other ~~associated~~hedging ~~with~~transactions ~~accrued~~may ~~contingent~~result ~~liabilities~~in doa ~~not~~poorer ~~subsequently~~overall ~~become~~performance ~~payable~~for ~~and~~us ~~the~~than ~~amounts~~if ofwe ~~the~~had ~~liabilities~~not ~~are~~engaged ~~reduced,~~in ~~causing~~any ~~the~~such ~~NAV~~hedging ~~of the Company to increase~~transaction, and the ~~benefits~~Advisor ofmay ~~such~~not ~~increased~~be ~~NAV~~able ~~will accrue~~ to ~~shareholders~~effectively ~~who~~hedge ~~remain in the Company~~against, ~~and shareholders who previously had their shares repurchased will not receive additional compensation~~ or ~~otherwise~~accurately ~~share the benefit of such increase. Similarly~~anticipate, ~~investors~~certain inrisks ~~the~~that ~~Company~~may atadversely ~~the~~affect ~~time~~our ~~when~~investment aportfolio. ~~non-accrued~~In ~~liability~~addition, ~~becomes~~our ~~payable~~investment portfolio will ~~bear~~always ~~the~~be ~~entire~~exposed ~~amount~~to ofcertain ~~such~~risks ~~liability,~~that ~~and~~cannot ~~the Company may~~ be ~~unable~~fully toor ~~recover~~effectively ~~amounts~~hedged, ~~from~~such ~~shareholders~~as ~~who~~credit ~~had~~risk ~~their~~relating ~~shares~~both ~~repurchased by the Company prior~~ to ~~the~~particular ~~contingent~~securities ~~liability~~and ~~becoming~~counterparties ~~payable~~as bywell ~~the Company. Similar consequences~~ as ~~those~~interest ~~described~~rate ~~above~~risks. ~~may~~See ~~also~~“—We ~~occur~~invest ~~when~~in ~~the~~derivatives, ~~Company~~which ~~under-accrues~~involve ornumerous ~~over-accrues~~risks” ~~for such contingent liabilities~~below.

~~Various~~We ~~jurisdictional~~invest ~~licensing~~in ~~requirements~~derivatives, ~~will~~which ~~cause~~involve usnumerous ~~to incur expenses and our failure to be properly licensed may have a material adverse effect on us and our operations~~risks.

WeSubject ~~will~~to beany ~~subject~~limitations required to ~~the~~maintain ~~laws~~our qualification as a REIT, ~~rules~~we ~~and~~may ~~regulations~~enter ofinto ~~various~~derivatives ~~federal~~transactions including, ~~state~~but not limited to, ~~local~~options ~~and~~contracts, iffutures ~~applicable~~contracts, ~~foreign~~options ~~government~~on ~~agencies~~futures ~~regarding~~contracts, ~~the~~forward ~~origination~~contracts, ~~processing~~interest rate swaps, ~~underwriting~~total return swaps, ~~sale~~credit default swaps and ~~servicing~~other ofswap ~~mortgage~~agreements ~~loans.~~for ~~Non-bank~~investment, ~~companies~~hedging ~~are~~or ~~generally~~leverage ~~required~~purposes. toOur ~~hold~~use ~~licenses~~of inderivative ainstruments ~~number~~may ofbe ~~U.S.~~particularly ~~states~~speculative and ~~foreign~~involves ~~jurisdictions~~investment risks and transaction costs to ~~conduct~~which ~~lending~~we ~~activities.~~would ~~These~~not ~~licensing~~be ~~statutes~~subject ~~vary~~absent ~~from~~the ~~jurisdiction~~use toof ~~jurisdiction~~these instruments, and ~~prescribe~~use orof ~~impose~~derivatives ~~various~~generally ~~recordkeeping~~involves ~~requirements;~~leverage ~~restrictions~~in onthe ~~loan~~sense ~~origination~~that ~~and~~the ~~servicing~~investment ~~practices,~~exposure ~~including~~created ~~limits~~by onthe ~~interest~~derivatives ~~rates,~~may ~~finance~~be ~~charges~~significantly ~~and~~greater than our initial investment in the ~~type~~derivative. Leverage magnifies investment, ~~amount~~market and ~~manner~~certain other risks. Thus, the use of ~~charging~~derivatives ~~fees~~may result in losses in excess of principal and ~~prohibiting~~greater ~~discrimination;~~than ~~disclosure~~if ~~requirements;~~they ~~requirements~~had ~~that~~not ~~licensees~~been ~~submit~~used. The ability to ~~periodic~~successfully ~~examination;~~use ~~surety~~derivative ~~bond~~investments ~~and~~depends ~~minimum~~on ~~specified~~the ~~net~~ability ~~worth~~of ~~requirements;~~the ~~periodic~~Advisor. ~~financial~~The ~~reporting~~skills ~~requirements;~~needed ~~notification~~to ~~requirements~~employ ~~for~~derivatives ~~changes~~strategies are different from those needed to select portfolio investments and, in ~~principal~~connection ~~officers~~with such strategies, ~~stock~~the ~~ownership~~Advisor ormust ~~corporate~~make ~~control;~~predictions ~~restrictions~~with onrespect ~~advertising;~~to ~~and~~market ~~requirements~~conditions, ~~that~~liquidity, ~~loan~~market ~~forms~~values, beinterest ~~submitted~~rates ~~for~~or ~~review~~other applicable factors, which may be inaccurate. ~~Obtaining~~The ~~and~~use ~~maintaining~~of ~~licenses~~derivative ~~will~~investments ~~cause~~may require us to ~~incur~~sell ~~expenses~~or ~~and~~purchase ~~failure~~portfolio toinvestments beat ~~properly~~inopportune ~~licensed~~times ~~under~~or ~~such~~for ~~laws~~prices below or ~~otherwise~~above the current market values may ~~have~~limit athe ~~material~~amount ~~adverse~~of ~~effect~~appreciation we can realize on an investment or may cause us ~~and~~to ~~our~~hold ~~operations,~~a ~~including~~security bythat ~~foregoing~~we might otherwise ~~advantageous~~want ~~investment~~to ~~opportunities~~sell. InWe ~~addition,~~will ~~mortgage~~also ~~originators~~be ~~are~~ subject to ~~inspection~~credit byrisk ~~government~~with ~~agencies. A~~respect ~~mortgage~~to ~~originator’s~~the ~~failure~~counterparties to ~~comply~~our ~~with~~derivatives ~~these~~contracts ~~requirements~~(whether ~~could~~a ~~lead~~clearing ~~to,~~corporation ~~among~~in ~~other~~the ~~things,~~case of exchange-traded instruments or another third party in the ~~loss~~case of ~~approved~~over-the-counter ~~status~~instruments). In addition, ~~termination~~the use of ~~contractual~~derivatives ~~rights~~is ~~without~~subject ~~compensation~~to additional unique risks associated with such instruments including a lack of sufficient asset correlation, ~~demands~~heightened ~~for~~volatility ~~indemnification~~in reference to interest rates or ~~mortgage~~prices ~~loan~~of ~~repurchases~~reference instruments and duration/term mismatch, ~~class~~each ~~action~~of ~~lawsuits~~which ~~and~~may ~~administrative~~create ~~enforcement~~additional ~~actions.~~risk of loss.

~~The~~We ~~Company~~ may be ~~liable~~subject to ~~meet~~contingent ~~the future funding commitments to certain of its borrowers, and as a result, the Company will need to manage its liquidity in anticipation of funding such future funding commitments~~liabilities.

~~The~~Investors ~~Company~~that ~~may~~invest ~~make~~in ~~commitments~~the toCompany ~~fund~~at ~~future~~a ~~monies~~time toduring ~~certain~~which ofcontingent ~~its~~liabilities ~~borrowers.~~are Ifnot ~~the~~accrued ~~Company~~(or ~~makes~~for ~~such~~which ~~investments,~~there ~~the~~is ~~Advisor~~not ~~will~~a ~~endeavor~~sufficient toaccrual) ~~manage~~will invest in the Company’s ~~assets~~at in a ~~manner~~higher ~~intended~~NAV tothan ~~provide~~had ~~sufficient~~such ~~liquidity~~liabilities tobeen ~~meet~~accrued ~~future~~at ~~funding~~the ~~commitments~~time ~~by, among other means, holding a portion~~ of the ~~Company’s~~applicable ~~assets in more liquid assets~~investment. In addition, ~~the~~shareholders ~~Company~~that ~~may~~request berepurchase ~~required~~of totheir ~~liquidate~~shares ~~certain~~by ofthe ~~its~~Company ~~investments~~at ~~more~~a ~~rapidly~~time ~~than~~during ~~otherwise~~which ~~desirable~~contingent inliabilities ~~order~~are toaccrued ~~raise~~will ~~cash~~receive tofrom ~~fund~~the ~~future~~Company ~~funding~~repurchase ~~commitments,~~proceeds ifat ~~any. The~~a ~~Company~~lower ~~may~~NAV ~~also~~than ~~borrow~~if ~~money~~such toliabilities ~~meet~~had ~~any~~not ~~such~~been ~~future~~accrued ~~funding~~at ~~needs.~~the ~~Any~~time of the ~~foregoing~~applicable ~~could~~repurchase. ~~have~~In anthe ~~adverse~~event ~~effect~~that onamounts ~~the~~associated ~~Company’s~~with ~~investment~~accrued ~~program~~contingent ~~and/or~~liabilities ~~performance.~~do not subsequently

~~Once~~become ~~future~~payable ~~funding~~and ~~is committed,~~ the ~~Company~~amounts ~~will~~of bethe ~~legally~~liabilities ~~required~~are toreduced, ~~satisfy~~causing ~~such~~the ~~future~~NAV ~~funding~~of ~~and~~the ~~may~~Company ~~have~~to aincrease, ~~limited~~the ~~period~~benefits of ~~time~~such toincreased ~~pay~~NAV ~~amounts~~will ~~due.~~accrue ~~Given~~to ~~the~~shareholders ~~limited~~who ~~liquidity~~remain ofin the Company’s, ~~investments~~ and ~~other~~shareholders ~~factors,~~who itpreviously ishad ~~possible~~their ~~that~~shares ~~the~~repurchased ~~Company~~will ~~may~~ not ~~have~~receive ~~sufficient~~additional ~~cash~~compensation ~~available~~or tootherwise ~~fund~~share athe ~~future~~benefit ~~funding~~of ~~commitment~~such ~~within~~increase. ~~the~~Similarly, ~~prescribed~~investors ~~period~~in ofthe ~~time.~~Company Ifat the ~~Company~~time ~~fails~~when toa ~~make~~non-accrued aliability ~~timely~~becomes ~~payment~~payable ofwill ~~amounts~~bear ~~called~~the byentire amount of such ~~investment~~liability, and the Company may be ~~deemed~~unable to berecover inamounts ~~default~~from ~~under~~shareholders ~~such~~who ~~the~~had ~~terms~~their ofshares ~~such~~repurchased ~~commitment.~~by ~~Upon any such default,~~ the Company ~~generally~~prior ~~would continue~~ to ~~remain liable for~~ the ~~full~~contingent ~~unpaid~~liability ~~portion~~becoming ofpayable ~~its~~by ~~future~~the ~~funding~~Company. ~~commitment,~~Similar ~~and~~consequences ~~generally~~as ~~would~~those bedescribed ~~liable~~above ~~for~~may ~~costs~~also ~~incurred~~occur bywhen the ~~investment~~Company inunder-accrues ~~collecting~~ or ~~attempting~~over-accrues tofor ~~collect~~ such ~~late~~contingent ~~payment~~liabilities. ~~The Company may also lose any entitlement to make further future funding commitments.~~

~~Risks~~Various ~~Related~~jurisdictional licensing requirements will cause us to ~~Debt~~incur ~~Financing~~expenses and our failure to be properly licensed may have a material adverse effect on us and our operations.

We ~~may~~will be subject to the laws, rules and regulations of various federal, state, local and, if applicable, foreign government agencies regarding the origination, processing, underwriting, sale and servicing of mortgage loans. Non-bank companies are generally required to hold licenses in a number of U.S. states and foreign jurisdictions to conduct lending activities. These licensing statutes vary from jurisdiction to jurisdiction and prescribe or impose various recordkeeping requirements; restrictions on loan origination and servicing practices, including limits on interest rates, finance charges and the type, amount and manner of charging fees and prohibiting discrimination; disclosure requirements; requirements that licensees submit to periodic examination; surety bond and minimum specified net worth requirements; periodic financial reporting requirements; notification requirements for changes in principal officers, stock ownership or corporate control; restrictions on advertising; and requirements that loan forms be submitted for review. Obtaining and maintaining licenses will cause us to incur ~~significant~~expenses ~~leverage~~and failure to be properly licensed under such laws or otherwise may have a material adverse effect on us and our operations, including by foregoing otherwise advantageous investment opportunities. In addition, mortgage originators are subject to inspection by government agencies. A mortgage originator’s failure to comply with these requirements could lead to, among other things, the loss of approved status, termination of contractual rights without compensation, demands for indemnification or mortgage loan repurchases, class action lawsuits and administrative enforcement actions.

~~Our~~The ~~investments~~Company ~~will~~may ~~involve~~be ~~significant~~liable ~~amounts of indebtedness. While we intend~~ to ~~target~~meet ~~a leverage ratio of approximately 60% to 75%, during~~ the ~~Ramp-Up~~future ~~Period~~funding ~~and/or~~commitments ~~times of increased investment and capital market activity, we may employ greater leverage~~ to ~~quickly~~certain ~~build a broader portfolio~~ of ~~assets. We may leverage our portfolio by assuming or incurring secured or unsecured investment-level or entity-level debt. We may in the future procure financing from the Advisor or~~ its ~~affiliates; provided~~borrowers, ~~that~~and ~~any~~as ~~such financing will be approved by~~ a ~~majority our trustees~~result, ~~including a majority of our independent trustees, not otherwise interested in~~ the ~~transaction~~Company aswill ~~fair,~~need ~~competitive and commercially reasonable and no less favorable~~ to usmanage ~~than~~its ~~comparable~~liquidity ~~loans~~in ~~between~~anticipation ~~unaffiliated~~of ~~parties~~funding ~~under~~such ~~the same circumstances. We may decide to reserve borrowing capacity under any~~ future ~~lines~~funding of credit to be used to fund repurchases of our common shares in the event that repurchase requests exceed our operating cash flows and net proceeds from our continuous private offering, to fund debt investments or for any other corporate purposecommitments.

~~Our~~The ~~actual~~Company ~~leverage~~may ~~level~~make ~~will~~commitments beto ~~affected~~fund byfuture amonies ~~number~~to ofcertain ~~factors, some~~ of ~~which~~its ~~are outside our control~~borrowers. ~~Significant~~If ~~inflows of proceeds from~~ the ~~sale~~Company ofmakes ~~our~~such ~~common~~investments, ~~shares~~the ~~generally~~Advisor will ~~cause~~endeavor ~~our~~to ~~leverage~~manage asthe aCompany’s ~~percentage~~assets ofin ~~our~~a ~~net~~manner ~~assets~~intended to ~~decrease,~~provide atsufficient ~~least~~liquidity ~~temporarily.~~to ~~Significant~~meet ~~outflows~~future offunding ~~equity~~commitments asby, aamong ~~result~~other ofmeans, ~~repurchases~~holding ~~of our common shares generally will cause our leverage as~~ a ~~percentage~~portion of ~~our~~the ~~net~~Company’s assets toin ~~increase,~~more atliquid ~~least temporarily~~assets. ~~Our~~In ~~leverage~~addition, asthe aCompany ~~percentage~~may ofbe ~~our~~required ~~net~~to ~~assets~~liquidate ~~will~~certain ~~also~~of ~~increase~~its orinvestments ~~decrease~~more ~~with~~rapidly ~~decreases~~than orotherwise ~~increases,~~desirable ~~respectively,~~ in ~~the~~order ~~NAV~~to ofraise ~~our~~cash ~~portfolio. If we borrow under a line of credit~~ to fund ~~repurchases~~future offunding ~~our common shares or for other purposes~~commitments, ~~our~~if ~~leverage~~any. The ~~may~~Company ~~increase and~~ may ~~exceed~~also ~~our~~borrow ~~target~~money ~~leverage.~~to Inmeet any such ~~cases,~~future ~~our~~funding ~~leverage~~needs. ~~may~~Any ~~remain~~of at the ~~higher~~foregoing ~~level~~could ~~until~~have wean ~~receive~~adverse ~~additional~~effect ~~net~~on ~~proceeds~~the ~~from~~Company’s ~~our~~investment ~~continuous~~program ~~private offering~~ and/or ~~sell some of our assets to repay outstanding indebtedness~~performance.

~~There~~Once future funding is, ~~however~~committed, nothe ~~limit~~Company onwill ~~the~~be ~~amount~~legally werequired to satisfy such future funding and may ~~borrow~~have ~~with~~a ~~respect~~limited period of time to ~~any~~pay ~~individual~~amounts ~~investment~~due. ~~Our~~Given ~~board~~the limited liquidity of ~~trustees~~the ~~will~~Company’s ~~periodically~~investments ~~review~~and ~~our~~other ~~aggregate~~factors, ~~borrowings.~~it Inis ~~connection~~possible ~~with~~that ~~such~~the ~~review,~~Company ~~our~~may ~~board~~not ofhave ~~trustees~~sufficient ~~may~~cash ~~determine~~available to ~~modify~~fund ~~our~~a ~~target~~future ~~leverage~~funding ~~ratio~~commitment inwithin ~~light~~the prescribed period of ~~then-current~~time. ~~economic~~If ~~conditions,~~the ~~relative~~Company ~~costs~~fails to make a timely payment of ~~debt~~amounts ~~and~~called ~~equity~~by ~~capital~~such investment, ~~fair~~the ~~values~~Company ofmay ~~our~~be ~~investments,~~deemed ~~general~~to ~~conditions~~be in default under such the ~~market~~terms ~~for~~of ~~debt~~such ~~and~~commitment. ~~equity~~Upon ~~securities~~any such default, ~~growth~~the Company generally would continue to remain liable for the full unpaid portion of its future funding commitment, and generally would be liable for costs incurred by the investment ~~opportunities~~in collecting or ~~other~~attempting ~~factors~~to collect such late payment. The Company may also lose any entitlement to make further future funding commitments.

~~Debt~~Risks ~~service~~Related ~~requirements may deplete cash flows and relatively small changes in the overall value of investments will have a magnified impact on us. If an investment were unable~~ to ~~generate~~Debt ~~sufficient cash flow to meet principal and interest payments on its indebtedness, the value of our investment in such investment would be significantly reduced or even eliminated.~~Financing

~~The~~We ~~amount~~have ofincurred ~~debt~~significant ~~financing may restrict the amount of funds available for distribution to investors~~leverage. ~~In addition, the terms of any debt financing may contain covenants that, among other things, might restrict our operations or activities or our investments.~~

WeOur ~~use~~investments ~~repurchase~~involve ~~agreements~~significant amounts of indebtedness. While we intend to ~~finance~~target ~~our~~a ~~investments~~leverage ratio of approximately 60% to 75%, ~~which~~during the Ramp-Up Period and/or times of increased investment and capital market activity, we may ~~expose~~employ usgreater leverage to ~~risks~~quickly ~~that~~build ~~could~~a ~~result~~broader portfolio of assets. We may leverage our portfolio by assuming or incurring secured or unsecured investment-level or entity-level debt. We may in ~~losses~~the future procure financing from the Advisor or its affiliates; provided, that any such financing will be approved by a majority our trustees, including ~~due~~a tomajority ~~cross-defaults~~of our independent trustees, not otherwise interested in the transaction as fair, competitive and ~~cross-collateralization~~commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties under ~~warehouse~~the same circumstances. We may decide to reserve borrowing capacity under any future lines of credit to be used to fund repurchases of our common shares in the event that repurchase requests exceed our operating cash flows and ~~credit~~net ~~facilities~~proceeds from our continuous private offering, to fund debt investments or for any other corporate purpose.

WeOur ~~finance~~actual ~~our~~leverage ~~acquisition~~level ~~and~~will ~~origination~~be ofaffected ~~mortgage~~by ~~loans,~~a ~~mezzanine~~number ~~loans~~of ~~and~~factors, ~~other~~some ~~portfolio~~of ~~assets~~which ~~under~~are ~~warehouse~~outside ~~repurchase~~our ~~and credit facilities with various lenders~~control. ~~Such~~Significant ~~repurchase~~inflows ~~and~~of ~~credit~~proceeds ~~facilities~~from ~~are~~the ~~entered~~sale ~~into~~of byour ~~special~~common ~~purpose~~shares ~~vehicles~~generally ~~directly~~will orcause ~~indirectly owned and controlled by us (or us and one or more Other Starwood Accounts). Although each transaction under~~ our ~~repurchase~~leverage ~~agreements has its own specific terms, such~~ as ~~identification~~a percentage of ~~the~~our net assets ~~subject~~ to ~~the transaction~~decrease, ~~sale~~at ~~price,~~least ~~repurchase~~temporarily. ~~price~~Significant ~~and~~outflows ~~rate,~~of ~~our~~equity ~~financing~~as ~~subsidiaries~~a ~~remain~~result ~~exposed~~of torepurchases ~~the credit risk~~ of ~~each~~our ~~asset~~common ~~because~~shares ~~they~~generally ~~must~~will ~~purchase~~cause ~~the~~our ~~asset~~leverage ~~from~~as ~~the~~a ~~applicable~~percentage ~~counterparty~~of onour anet ~~specified~~assets ~~date.~~to ~~In addition~~increase, ~~repurchase~~at ~~agreements~~least ~~involve~~temporarily. ~~the~~Our ~~risk~~leverage ~~that~~as ~~the~~a ~~counterparty~~percentage ~~may~~of ~~liquidate~~our ~~the~~net assets ~~underlying~~will ~~the~~also ~~repurchase~~increase ~~agreements~~or ~~following~~decrease ~~the~~with ~~occurrence~~decreases ofor anincreases, ~~event~~respectively, ofin ~~default under~~ the ~~applicable~~NAV ~~repurchase~~of ~~agreement~~our ~~by us~~portfolio. ~~Furthermore,~~If ~~the~~we ~~counterparty~~borrow ~~may~~under ~~require~~a usline toof ~~provide~~credit ~~additional~~to ~~margin~~fund inrepurchases ~~the~~of ~~form~~our ofcommon ~~cash~~shares or for other ~~forms~~purposes, ofour ~~collateral~~leverage ~~under~~may ~~the~~increase ~~terms~~and ofmay ~~the~~exceed ~~applicable~~our ~~repurchase~~target ~~agreement~~leverage. In ~~addition~~such cases, ~~the~~our ~~interest~~leverage ~~costs~~may ~~and~~remain ~~other~~at ~~fees~~the ~~associated~~higher ~~with~~level ~~repurchase~~until ~~agreement~~we ~~transactions~~receive ~~may~~additional ~~adversely~~net ~~affect~~proceeds from our ~~results~~continuous ofprivate ~~operations~~offering ~~and~~or ~~financial~~sell ~~condition, and, in~~ some ~~cases,~~of weour ~~may~~assets beto ~~worse~~repay ~~off~~outstanding ~~than if we had not used such instruments~~indebtedness.

We also expect to provide guaranties to the lenders under which we expect to guarantee amounts of the balance outstanding from time to time under such repurchase and credit facilities by the special purpose vehicle sellers or borrowers. We expect to also be liable under such guaranties for customary “bad-boy” events. Other Starwood Accounts are expected to receive the benefit of such guarantees, although as such funds, vehicles or accounts are not expected to agree to participate in guarantee arrangements in negotiating to participate in a transaction, such funds, vehicles or accounts are not expected to bear a commensurate percentage of potential liability under such guarantees. The repurchase and credit facilities include customary cross-default provisions pursuant to which the occurrence of an event of default under any such facility (including breach of a financial covenant applicable to us under a guaranty) will trigger an event of default under all of the repurchase and credit facilities and allow the lenders to accelerate payment of 36

36There is, however, no limit on the amount we may borrow with respect to any individual investment. Our board of trustees will periodically review our aggregate borrowings. In connection with such review, our board of trustees may determine to modify our target leverage ratio in light of then-current economic conditions, relative costs of debt and equity capital, fair values of our investments, general conditions in the market for debt and equity securities, growth and investment opportunities or other factors.

~~all~~Debt ~~obligations~~service ~~due~~requirements ~~under~~may ~~such~~deplete ~~facilities.~~cash Inflows ~~addition, all loans~~ and ~~assets~~relatively ~~subject~~small tochanges ~~repurchase~~in ~~transactions~~the oroverall ~~pledged~~value ~~under~~of aninvestments ~~individual~~will ~~repurchase~~have ora ~~credit~~magnified ~~facility~~impact ~~are~~on ~~cross-collateralized as security for such facility~~us. ~~Thus,~~If ~~the~~an ~~poor~~investment ~~performance~~were orunable ~~non-performance~~to ofgenerate ansufficient ~~individual~~cash ~~loan~~flow orto ~~asset~~meet ~~included~~principal asand ~~collateral~~interest ~~for~~payments aon ~~repurchase~~its orindebtedness, ~~credit~~the ~~facility~~value ~~could~~of ~~result in us losing~~ our ~~interests~~investment in ~~all~~such ~~loans~~investment ~~and~~would ~~assets~~be insignificantly ~~the~~reduced ~~collateral~~or ~~pool~~even ~~for such facility~~eliminated.

~~For~~The ~~our~~amount ~~borrowed~~of ~~money,~~debt financing may restrict the ~~potential~~amount ~~for~~of ~~gain~~funds oravailable ~~loss~~for ondistribution ~~amounts~~to ~~invested~~investors. inIn usaddition, ~~will~~the beterms ~~magnified~~of ~~and~~any debt financing may ~~increase~~contain ~~the~~covenants ~~risk~~that, ofamong ~~investing~~other inthings, usmight restrict our operations or activities or our investments.

We use ~~leverage~~repurchase toagreements finance the acquisition of a portion of our investments with credit facilities and other borrowings. The use of leverage increases the volatility of investments by magnifying the potential for gain or loss on invested equity capital. If we use leverage to ~~partially~~ finance our investments, ~~through~~which ~~borrowing~~expose ~~from~~us ~~banks~~to ~~and other lenders, you will experience increased~~ risks ofthat investing in our common shares. If the value of our assets increases, leverage would cause the NAV attributable to each of the classes of our common shares to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leverage would cause NAV to decline more sharply than it otherwise would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could ~~negatively~~result affect our ability to make common share distribution payments. Leverage is generally considered a speculative investment technique. Our ability to execute our strategy using leverage depends on various conditions in ~~the financing markets that are beyond our control~~losses, including ~~liquidity~~due ~~and credit spreads. In addition, the decision~~ to ~~utilize~~cross-defaults ~~leverage~~and ~~will~~cross-collateralization ~~increase~~under ~~our~~warehouse ~~assets~~repurchase and, ascredit ~~a result, will increase the amount of advisory fees payable to the Advisor~~facilities.

~~Changes~~We finance our acquisition and origination of mortgage loans, mezzanine loans and other portfolio assets under warehouse repurchase and credit facilities with various lenders. Such repurchase and credit facilities are entered into by special purpose vehicles directly or indirectly owned and controlled by us (or us and one or more Other Starwood Accounts). Although each transaction under our repurchase agreements has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate, our financing subsidiaries remain exposed to the credit risk of each asset because they must purchase the asset from the applicable counterparty on a specified date. In addition, repurchase agreements involve the risk that the counterparty may liquidate the assets underlying the repurchase agreements following the occurrence of an event of default under the applicable repurchase agreement by us. Furthermore, the counterparty may require us to provide additional margin in the form of cash or other forms of collateral under the terms of the applicable repurchase agreement. In addition, the interest ~~rates~~costs and other fees associated with repurchase agreement transactions may adversely affect our ~~cost~~results of ~~capital~~operations and ~~net~~financial ~~investment~~condition, ~~income~~and, in some cases, we may be worse off than if we had not used such instruments.

~~Since~~We wealso ~~use~~expect ~~debt~~to provide guaranties to ~~finance~~the alenders ~~portion~~under which we expect to guarantee amounts of ~~our~~the ~~investments,~~balance ~~our~~outstanding ~~net~~from ~~investment~~time ~~income~~to ~~depends,~~time inunder ~~part,~~such ~~upon~~repurchase ~~the~~and ~~difference~~credit ~~between~~facilities by the ~~rate~~special atpurpose ~~which~~vehicle wesellers ~~borrow~~or ~~funds~~borrowers. ~~and~~We ~~the~~expect ~~rate~~to atalso ~~which~~be weliable ~~invest~~under ~~those~~such ~~funds~~guaranties for customary “bad-boy” events. AsOther aStarwood ~~result~~Accounts are expected to receive the benefit of such guarantees, wealthough ~~can~~as ~~offer~~such nofunds, ~~assurance~~vehicles ~~that~~or aaccounts ~~significant~~are ~~change~~not expected to agree to participate in ~~market~~guarantee ~~interest~~arrangements ~~rates~~in ~~will~~negotiating ~~not~~to ~~have~~participate in a ~~material~~transaction, ~~adverse~~such ~~effect~~funds, onvehicles ~~our~~or ~~net~~accounts ~~investment~~are ~~income.~~not Inexpected ~~periods~~to bear a commensurate percentage of ~~rising~~potential ~~interest~~liability ~~rates~~under ~~when~~such weguarantees. ~~have~~The ~~debt~~repurchase ~~outstanding,~~and ~~our~~credit ~~cost~~facilities ofinclude ~~funds~~customary ~~will~~cross-default ~~increase,~~provisions pursuant to which ~~could~~the ~~reduce~~occurrence ~~our~~of ~~net~~an ~~investment~~event ~~income.~~of Wedefault ~~expect~~under ~~that~~any ~~our~~such ~~long-term~~facility ~~fixed-rate~~(including ~~investments~~breach ~~will~~of bea ~~financed~~financial ~~primarily~~covenant ~~with~~applicable ~~equity~~to ~~and~~us ~~long-term~~under ~~debt.~~a Weguaranty) ~~may~~will ~~use~~trigger ~~interest~~an ~~rate~~event ~~risk~~of ~~management~~default ~~techniques~~under inall anof ~~effort~~the torepurchase ~~limit~~and ~~our~~credit ~~exposure~~facilities toand ~~interest~~allow ~~rate~~the ~~fluctuations.~~lenders ~~These~~to ~~techniques~~accelerate ~~may~~payment ~~include~~of ~~various~~all ~~interest~~obligations ~~rate~~due ~~hedging~~under ~~activities~~such facilities. ~~These~~In ~~activities~~addition, ~~may~~all ~~limit~~loans ~~our~~and ~~ability~~assets subject to ~~participate~~repurchase intransactions ~~the~~or ~~benefits~~pledged ofunder ~~lower~~an ~~interest~~individual ~~rates~~repurchase ~~with~~or ~~respect~~credit tofacility ~~the~~are ~~hedged~~cross-collateralized ~~portfolio~~as security for such facility. ~~Adverse~~Thus, ~~developments~~the ~~resulting~~poor ~~from~~performance ~~changes~~or innon-performance ~~interest~~of ~~rates~~an individual loan or ~~hedging~~asset ~~transactions~~included ~~could~~as ~~have~~collateral for a ~~material~~repurchase ~~adverse~~or ~~effect~~credit onfacility could result in us losing our ~~business,~~interests ~~financial~~in ~~condition~~all loans and ~~results~~assets ofin ~~operations~~the collateral pool for such facility.

AFor ~~rise in the general level of interest rates can be expected to lead to higher interest rates applicable to~~ our ~~debt~~borrowed ~~investments. Accordingly~~money, anthe ~~increase~~potential ~~in interest rates would make it easier~~ for usgain ~~to meet~~ or ~~exceed~~loss ~~the~~on ~~Performance~~amounts ~~Fee~~invested ~~hurdle~~in ~~rate~~us ~~which~~will isbe ~~used~~magnified ~~for purposes of calculating the Performance Fees payable to the Advisor~~ and may ~~result in a substantial~~ increase of the ~~amount~~risk of ~~such~~investing ~~Performance~~in ~~Fees~~us.

We ~~may~~use leverage to finance the acquisition of a portion of our investments with credit facilities and other borrowings. The use of leverage increases the volatility of investments by magnifying the potential for gain or loss on invested equity capital. If we use leverage to partially finance our investments, through borrowing from banks and other lenders, you will experience increased risks of investing in our common shares. If the value of our assets increases, leverage would cause the NAV attributable to each of the classes of our common shares to increase more sharply than it would have had we not beleveraged. ~~able~~Conversely, if the value of our assets decreases, leverage would cause NAV to ~~access~~decline ~~financing~~more ~~sources~~sharply than it otherwise would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on ~~attractive~~the ~~terms~~borrowed ~~which~~funds would cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could ~~adversely~~negatively affect our ability to make common share distribution payments. Leverage is generally considered a speculative investment technique. Our ability to execute our ~~business~~strategy ~~plan~~using leverage depends on various conditions in the financing markets that are beyond our control, including liquidity and credit spreads. In addition, the decision to utilize leverage will increase our assets and, as a result, will increase the amount of advisory fees payable to the Advisor.

WeChanges ~~require~~in ~~significant~~interest ~~outside~~rates ~~capital~~may toaffect ~~fund and grow~~ our ~~business.~~cost ~~Our business may be adversely affected by disruptions in the debt and equity capital markets and institutional lending market, including the lack~~ of ~~access to~~ capital ~~or prohibitively high costs of obtaining or replacing capital. A primary source of liquidity for companies in the real estate industry has been the debt~~ and ~~equity~~net ~~capital~~investment ~~markets~~income. Access to the capital markets and other sources of liquidity was severely disrupted during the relatively recent global credit crisis and, despite some recent improvements, the markets could suffer another severe downturn and another liquidity crisis could emerge. Based on the current conditions, we do not know whether any sources of capital, other than those currently utilized by us, will be available to us in the future on terms that are acceptable to us. If we cannot obtain sufficient debt and equity capital on acceptable terms, our business and our ability to operate could be severely impacted.

37Since we use debt to finance a portion of our investments, our net investment income depends, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates when we have debt outstanding, our cost of funds will increase, which could reduce our net investment income. We expect that our long-term fixed-rate investments will be financed primarily with equity and long-term debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities. These activities may limit our ability to participate in the benefits of lower interest rates with respect to

~~We may not successfully align the maturities of our liabilities with the maturities on our assets, which could harm our operating results and financial condition.~~37

~~Our general financing strategy is focused on~~ the ~~use~~hedged ~~of “match-funded” structures~~portfolio. ~~This~~Adverse ~~means~~developments ~~that~~resulting wefrom ~~seek~~changes ~~to align the maturities of our liabilities with the maturities on our assets~~ in ~~order to manage the risks of being forced to refinance our liabilities prior to the maturities of our assets. In addition, we plan to match~~ interest rates ~~on our assets with like-kind borrowings, so fixed-rate investments are financed with fixed-rate borrowings and floating-rate assets are financed with floating-rate borrowings, directly~~ or ~~indirectly~~hedging ~~through~~transactions ~~the~~could ~~use~~have ~~of interest rate swaps, caps and other financial instruments or through~~ a ~~combination~~material ofadverse ~~these~~effect ~~strategies. We may fail to appropriately employ match-funded structures~~ on ~~favorable terms, or at all. We may also determine not to pursue a fully match-funded strategy with respect to a portion of~~ our ~~financings for a variety of reasons. If we fail to appropriately employ match-funded strategies or determine not to pursue such a strategy~~business, ~~our~~financial ~~exposure~~condition ~~to interest rate volatility~~ and ~~exposure~~results ~~to matching liabilities prior to the maturity~~ of ~~the corresponding asset may increase substantially which could harm our operating results, liquidity and financial condition~~operations.

WeA ~~may~~rise ~~utilize~~in ~~non-recourse~~the ~~securitizations~~general level of interest rates can be expected to ~~finance~~lead to higher interest rates applicable to our debt investments. Accordingly, ~~which~~an ~~may~~increase ~~expose~~in interest rates would make it easier for us to ~~risks~~meet ~~that~~or ~~could~~exceed the Performance Fee hurdle rate which is used for purposes of calculating the Performance Fees payable to the Advisor and may result in ~~losses~~a substantial increase of the amount of such Performance Fees.

We may ~~utilize~~not ~~non-recourse~~be ~~securitizations~~able ~~of certain of our investments~~ to ~~generate~~access ~~cash for funding new investments and for other purposes. Such~~ financing ~~generally~~sources ~~involves creating a special purpose vehicle, contributing a pool of our investments to the entity, and selling interests in the entity~~ on a non-recourse basis to purchasers (whom we would expect to be willing to accept a lower interest rate to invest in investment-grade loan pools). We would expect to retain all or a portion of the equity and potentially other tranches in the securitized pool of portfolio investments. Prior to any such financings, we may use other financing facilities to finance the acquisition of investments until a sufficient quantity of investments had been accumulated, at which time we would refinance these facilities through a securitization, such as a CLO. The inability to consummate securitizations to finance our investments could require us to seek other forms of less attractive ~~financing,~~terms which could adversely affect our ~~performance and our~~ ability to ~~grow~~execute our business. Moreover, conditions in the capital markets, including volatility and disruption in the capital and credit markets, may not permit a securitization at any particular time or may make the issuance of any such securitization less attractive to us even when we do have sufficient eligible assetsplan. We may also suffer losses if the value of the mortgage loans we acquire declines prior to securitization. In addition, we may suffer a loss due to the incurrence of transaction costs related to executing these transactions. To the extent that we incur a loss executing or participating in future securitizations for the reasons described above or for other reasons, it could materially and adversely impact our business and financial condition. The inability to securitize our portfolio may hurt our performance and our ability to grow our business.

~~Restrictive~~We ~~covenants~~require ~~relating~~significant outside capital to fund and grow our ~~operations~~business. Our business may ~~have~~be ~~adverse~~adversely ~~effects~~affected by disruptions in the debt and equity capital markets and institutional lending market, including the lack of access to capital or prohibitively high costs of obtaining or replacing capital. A primary source of liquidity for companies in the real estate industry has been the debt and equity capital markets. Access to the capital markets and other sources of liquidity was severely disrupted during the relatively recent global credit crisis and, despite some recent improvements, the markets could suffer another severe downturn and another liquidity crisis could emerge. Based on the current conditions, we do not know whether any sources of capital, other than those currently utilized by us, will be available to us in the future on terms that are acceptable to us. If we cannot obtain sufficient debt and equity capital on acceptable terms, our business and our ability to operate could be severely impacted.

AWe ~~credit facility lender~~ may ~~impose~~not ~~restrictions~~successfully onalign usthe ~~that~~maturities would affect our ability to incur additional debt, originate loans, reduce liquidity below certain levels, make distributions to our shareholders and impact our flexibility to determine our operating policies and investment strategies. For example, our loan agreements may contain negative covenants that limit, among other things, our ability to distribute more than a certain amount of our ~~net~~liabilities ~~cash flow to our shareholders, dispose of or refinance loans and enter into transactions~~ with ~~affiliates.~~the Inmaturities ~~addition,~~on our ~~loan agreements may contain negative covenants that limit leverage beyond certain amounts contrary to our leverage ratio goals. If we fail to meet or satisfy any of these covenants~~assets, wewhich ~~would be in default under such agreements, and a lender~~ could ~~elect~~harm toour ~~declare~~operating ~~outstanding~~results ~~amounts due~~ and ~~payable,~~financial ~~terminate its commitment, require the posting of additional collateral and/or enforce its interests against existing collateral~~condition.

~~Risks~~Our ~~Related~~general financing strategy is focused on the use of “match-funded” structures. This means that we seek to align the maturities of our ~~Relationship~~liabilities with the ~~Advisor~~maturities on our assets in order to manage the risks of being forced to refinance our liabilities prior to the maturities of our assets. In addition, we plan to match interest rates on our assets with like-kind borrowings, so fixed-rate investments are financed with fixed-rate borrowings and floating-rate assets are financed with floating-rate borrowings, directly or indirectly through the ~~Dealer~~use ~~Manager~~of interest rate swaps, caps and other financial instruments or through a combination of these strategies. We may fail to appropriately employ match-funded structures on favorable terms, or at all. We may also determine not to pursue a fully match-funded strategy with respect to a portion of our financings for a variety of reasons. If we fail to appropriately employ match-funded strategies or determine not to pursue such a strategy, our exposure to interest rate volatility and exposure to matching liabilities prior to the maturity of the corresponding asset may increase substantially which could harm our operating results, liquidity and financial condition.

We ~~depend~~may onutilize ~~the~~non-recourse ~~Advisor~~securitizations to ~~select~~finance our investments ~~and otherwise conduct our business~~, ~~and~~which ~~any~~may ~~material~~expose ~~adverse~~us ~~change~~to inrisks ~~its~~that ~~financial condition or our relationship with the Advisor~~ could ~~have~~result ain ~~material adverse effect on our business and ability to achieve our investment objectives~~losses.

~~Our~~We ~~success~~may isutilize ~~dependent~~non-recourse ~~upon~~securitizations of certain of our ~~relationship~~investments ~~with~~to generate cash for funding new investments and for other purposes. Such financing generally involves creating a special purpose vehicle, contributing a pool of our investments to the entity, and selling interests in the ~~performance~~entity on a non-recourse basis to purchasers (whom we would expect to be willing to accept a lower interest rate to invest in investment-grade loan pools). We would expect to retain all or a portion of, the ~~Advisor~~equity and potentially other tranches in the securitized pool of portfolio investments. Prior to any such financings, we may use other financing facilities to finance the acquisition ~~and~~of ~~management~~investments until a sufficient quantity of investments had been accumulated, at which time we would refinance these facilities through a securitization, such as a CLO. The inability to consummate securitizations to finance our ~~real~~investments ~~estate~~could ~~portfolio~~require us to seek other forms of less attractive financing, which could adversely affect our performance and our ~~corporate~~ability ~~operations~~to grow our business. ~~The~~Moreover, ~~Advisor~~conditions in the capital markets, including volatility and disruption in the capital and credit markets, may ~~suffer~~not orpermit ~~become~~a ~~distracted~~securitization byat ~~adverse~~any ~~financial~~particular time or ~~operational~~may ~~problems~~make inthe ~~connection~~issuance ~~with~~of ~~Starwood~~any ~~Capital’s~~such ~~business~~securitization ~~and~~less ~~activities~~attractive ~~unrelated~~ to us ~~and~~even ~~over~~when ~~which~~ we do have nosufficient ~~control~~eligible assets. ~~Should~~We may also suffer losses if the ~~Advisor~~value ~~fail~~of the mortgage loans we acquire declines prior to ~~allocate~~securitization. ~~sufficient~~In ~~resources~~addition, we may suffer a loss due to ~~perform~~the ~~its~~incurrence ~~responsibilities~~of transaction costs related to usexecuting these transactions. To the extent that we incur a loss executing or participating in future securitizations for ~~any~~the ~~reason~~reasons described above or for other reasons, weit ~~may~~could bematerially ~~unable~~and toadversely ~~achieve~~impact our ~~investment~~business ~~objectives~~and orfinancial condition. The inability to ~~pay~~securitize ~~distributions~~our portfolio may hurt our performance and our ability to grow our ~~shareholders~~business.

~~The~~Restrictive ~~termination~~covenants orrelating ~~replacement~~to ofour ~~the~~operations ~~Advisor~~may ~~could~~have ~~trigger~~adverse aeffects ~~repayment~~on ~~event under the terms of any future indebtedness~~us.

~~The~~A ~~termination~~credit orfacility ~~replacement~~lender ofmay ~~the~~impose ~~Advisor~~restrictions ~~may~~on ~~trigger~~us ~~repayment~~that ofwould ~~outstanding~~affect ~~amounts~~our ~~under~~ability ~~any~~to ~~future~~incur ~~indebtedness~~additional debt, originate loans, reduce liquidity below certain levels, make distributions to our shareholders and impact our flexibility to determine our operating policies and investment strategies. IfFor example, our loan agreements may contain negative covenants that limit, among other things, our ability to distribute more than a ~~repayment~~certain ~~event~~amount ~~occurs~~of our net cash flow to our shareholders, dispose of or refinance loans and enter into transactions with ~~respect~~affiliates. In addition, our loan agreements may contain negative covenants that limit leverage beyond certain amounts contrary to our leverage ratio goals. If we fail to meet or satisfy any of these covenants, we would be in default under such ~~indebtedness~~agreements, ~~our~~and ~~results~~a lender could elect to declare outstanding amounts due and payable, terminate its commitment, require the posting of ~~operations~~additional collateral and/or ~~financial~~enforce ~~condition~~its ~~may~~interests beagainst ~~adversely~~existing ~~affected~~collateral.

~~The Advisor’s inability to retain the services of key real estate professionals, including Mr. Sternlicht who serves on the Advisor’s Investment Committee, could hurt our performance.~~38

~~Our~~Risks ~~success~~Related ~~depends~~ to aour ~~significant~~Relationship ~~degree~~with ~~upon~~ the ~~contributions of certain key real estate professionals employed by the~~ Advisor, ~~including~~and ~~Mr. Sternlicht who serves on~~ the ~~Advisor’s~~Dealer ~~Investment Committee, each of whom would be difficult to replace. There is ever increasing competition among alternative asset firms, financial institutions, private equity firms, investment advisors,~~ Manager

38We depend on the Advisor to select our investments and otherwise conduct our business, and any material adverse change in its financial condition or our relationship with the Advisor could have a material adverse effect on our business and ability to achieve our investment objectives.

~~investment~~Our ~~managers,~~success ~~real~~is ~~estate~~dependent ~~investment~~upon ~~companies,~~our ~~REITs~~relationship ~~and~~with, ~~other industry participants for hiring~~ and ~~retaining~~the ~~qualified~~performance ~~investment~~of, ~~professionals~~the ~~and~~Advisor ~~there~~in ~~can be no assurance that such professionals will continue to be associated with us or~~ the ~~Advisor,~~acquisition ~~particularly~~and inmanagement ~~light~~ of our ~~perpetual-life~~real ~~nature,~~estate orportfolio ~~that~~and ~~replacements~~our ~~will~~corporate ~~perform well~~operations. ~~Neither~~The ~~we nor the~~ Advisor ~~have~~may ~~employment~~suffer ~~agreements~~or ~~with~~become ~~these~~distracted ~~individuals~~by ~~and~~adverse ~~they~~financial ~~may~~or ~~not~~operational ~~remain~~problems ~~associated~~in connection with ~~us.~~Starwood IfCapital’s ~~any~~business ofand ~~these~~activities ~~persons~~unrelated ~~were~~ to ~~cease~~us ~~their~~and ~~association~~over ~~with~~which ~~us,~~we ~~our~~have ~~operating~~no ~~results could suffer~~control. ~~Our~~Should ~~future success depends, in large part, upon~~ the Advisor’s ~~ability~~fail to ~~attract~~allocate ~~and~~sufficient ~~retain~~resources ~~highly~~to ~~skilled~~perform ~~managerial,~~its ~~operational~~responsibilities ~~and~~to ~~marketing~~us ~~professionals.~~for Ifany ~~the~~reason, ~~Advisor~~we ~~loses~~may orbe is unable to ~~obtain~~achieve ~~the~~our ~~services~~investment ofobjectives ~~highly~~or ~~skilled~~to ~~professionals,~~pay ~~our~~distributions ~~ability~~ to ~~implement~~ our ~~investment strategies could be delayed or hindered~~shareholders.

WeThe dotermination ~~not~~or ~~own~~replacement ~~the “Starwood” name, but we may use it as part~~ of ~~our corporate name pursuant to~~ the ~~Advisory~~Advisor ~~Agreement.~~could ~~Use~~trigger ofa ~~the~~repayment ~~name~~event byunder ~~other parties or~~ the ~~termination~~terms of ~~our~~any ~~trademark~~future ~~license agreement may harm our business~~indebtedness.

The ~~Advisor~~termination has permitted us a fully paid-up, royalty-free, non-exclusive, non-transferable license to use the name “Starwood Credit Real Estate Income Trust.” Accordingly, we have a right to use this name for so long as the Advisor (or ~~another~~replacement ~~affiliate~~ of the ~~license-holder of the Starwood name (the “Licensor”)) serves as our advisor (or another advisory entity) and the~~ Advisor ~~remains~~may antrigger ~~affiliate~~repayment of ~~the~~outstanding ~~Licensor.~~amounts ~~The~~under ~~Licensor~~any ~~and~~future ~~its affiliates, such as Starwood Capital, will retain the right to continue using the “Starwood” name~~indebtedness. WeIf ~~will~~a ~~further~~repayment beevent ~~unable~~occurs ~~to preclude the Licensor from licensing or transferring the ownership of the “Starwood” name to third parties, some of whom may compete~~ with ~~us.~~respect ~~Consequently, we will be unable~~ to ~~prevent~~ any ~~damage~~such ~~to goodwill that may occur as a result of the activities of the Licensor~~indebtedness, ~~Starwood Capital or others. We may also be required to, among other things, change~~ our ~~name.~~results ~~Any~~ of ~~these~~operations ~~events~~and ~~could~~financial ~~disrupt~~condition ~~our recognition in the market place, damage any goodwill we~~ may ~~have~~be ~~generated~~adversely ~~and otherwise harm our business~~affected.

WeThe ~~may~~Advisor’s ~~face~~inability ~~risks~~to ~~arising~~retain ~~from~~the aservices ~~certain~~of ~~claims~~key ~~against~~real ~~Starwood~~estate ~~Capital~~professionals, ~~and/or~~including ~~certain~~Mr. ~~regulatory~~Sternlicht ~~investigations.~~who serves on the Advisor’s Investment Committee, could hurt our performance.

~~Starwood~~Our ~~Capital~~success ~~acts~~depends asto ana ~~asset~~significant ~~manager~~degree ~~and~~upon ~~manages~~the ~~multiple~~contributions ~~investment~~of ~~funds~~certain key real estate professionals employed by the Advisor, including Mr. ~~Given~~Sternlicht who serves on the ~~broad~~Advisor’s ~~spectrum~~Investment ofCommittee, ~~operations~~each of ~~Starwood~~whom ~~Capital~~would ~~and~~be ~~their~~difficult ~~respective~~to ~~affiliates~~replace. There is ever increasing competition among alternative asset firms, ~~claims~~financial ~~(or~~institutions, ~~threats~~private ofequity ~~claims)~~firms, ~~and~~investment ~~governmental~~advisors, ~~investigations~~investment managers, ~~audits~~real ~~and~~estate ~~inquires~~investment companies, ~~can~~REITs and doother ~~occur~~industry inparticipants ~~the~~for ~~course~~hiring ofand ~~its~~retaining qualified investment professionals and ~~its~~there ~~affiliates’~~can ~~(including~~be ~~the~~no ~~Advisor’s)~~assurance ~~business.~~that ~~Such~~such ~~claims~~professionals ~~and~~will ~~governmental~~continue ~~investigations,~~to ~~inquiries~~be ~~and~~associated ~~audits~~with ~~may~~us ~~impact~~or the ~~Company~~Advisor, ~~including~~particularly byin ~~virtue~~light of ~~reputational~~our ~~damage~~perpetual-life tonature, ~~Starwood~~or ~~Capital~~that replacements will perform well. ~~The~~Neither ~~unfavorable~~we ~~resolution~~nor ofthe ~~such~~Advisor ~~items~~have ~~could~~employment ~~result~~agreements inwith ~~criminal~~these orindividuals ~~civil~~and ~~liability,~~they ~~fines,~~may ~~penalties~~not orremain ~~other~~associated ~~monetary~~with orus. ~~non-monetary~~If ~~remedies~~any ~~that~~of ~~could~~these ~~negatively~~persons ~~impact~~were ~~Starwood~~to ~~Capital~~cease their association with us, our operating results could suffer. ~~While~~Our ~~Starwood~~future ~~Capital~~success ~~has~~depends, ~~implemented~~in ~~policies~~large ~~and~~part, ~~procedures~~upon the Advisor’s ability to ~~protect~~attract ~~against~~and ~~non-compliance~~retain ~~with~~highly ~~applicable~~skilled ~~rules~~managerial, operational and ~~regulations,~~marketing ~~there~~professionals. If the Advisor loses or is nounable ~~guarantee~~to ~~that~~obtain ~~such~~the ~~policies~~services ~~and~~of ~~procedures~~highly ~~will~~skilled beprofessionals, ~~adequate~~our inability ~~all~~to ~~instances~~implement orour ~~will~~investment ~~protect~~strategies ~~Starwood~~could ~~Capital~~be indelayed ~~all~~or ~~instances~~hindered.

~~Certain~~We ~~investors~~do ~~may~~not ~~enter~~own ~~into~~the ~~side~~“Starwood” ~~letters with us~~name, ~~which~~but we may ~~provide~~use ~~for~~it ~~different~~as ~~terms~~part ~~for~~of ~~their~~our ~~investment~~corporate inname pursuant to the ~~Company~~Advisory Agreement. Use of the name by other parties or the termination of our trademark license agreement may harm our business.

~~Side~~The ~~letters~~Advisor ~~may~~has permitted us a fully paid-up, royalty-free, non-exclusive, non-transferable license to use the name “Starwood Credit Real Estate Income Trust.” Accordingly, we have a right to use this name for so long as the Advisor (or another affiliate of the license-holder of the Starwood name (the “Licensor”)) serves as our advisor (or another advisory entity) and the Advisor remains an affiliate of the Licensor. The Licensor and its affiliates, such as Starwood Capital, will retain the right to continue using the “Starwood” name. We will further be ~~entered~~unable ~~into~~to preclude the Licensor from licensing or transferring the ownership of the “Starwood” name to third parties, some of whom may compete with ~~shareholders~~us. Consequently, we will be unable to prevent any damage to goodwill that ~~have~~may occur as a result of the ~~effect~~activities of ~~establishing~~the ~~different~~Licensor, ~~terms~~Starwood ~~than~~Capital ~~those~~or ~~applicable~~others. We may also be required to, among other ~~shareholders~~things, change our name. Any of these events could disrupt our recognition in the market place, damage any goodwill we may have generated and otherwise harm our business.

AsWe ~~such, the terms and conditions of one shareholder’s investments in the Company~~ may ~~differ~~face torisks ~~those~~arising offrom ~~another~~a ~~shareholder.~~certain ~~For~~claims ~~example,~~against ~~the~~Starwood ~~terms~~Capital ~~of side letters may deal with: arrangements with respect to waivers, rebates, reductions or other modifications of the management fee~~ and/or performance fee; minimum and additional subscription amounts; “most favored nation” rights (i.e., the right to receive favorable rights or economic arrangements that may be afforded to other shareholders); notice periods; consent rights; modifications to the applicable shareholder’s subscription agreement; and certain ~~other~~regulatory ~~rights and privileges~~investigations.

~~Such~~Starwood ~~arrangements~~Capital ~~generally~~acts ~~will~~as bean ~~based~~asset onmanager ~~factors~~and ~~such~~manages asmultiple investment funds. Given the ~~size~~broad spectrum of aoperations ~~shareholder’s~~of ~~subscription~~Starwood Capital and their respective affiliates, ~~the~~claims ~~timing~~(or threats of aclaims), ~~shareholder’s~~and ~~subscription~~governmental investigations, aaudits ~~shareholder’s~~and ~~existing~~inquires, ~~relationship~~can ~~with~~and do occur in the ~~Advisor~~course orof ~~any~~its ~~particular~~and ~~regulatory~~its oraffiliates’ ~~legal~~(including ~~considerations~~the ~~applicable~~Advisor’s) tobusiness. aSuch ~~shareholder;~~claims ~~provided~~and governmental investigations, ~~that~~inquiries ~~the~~and ~~Advisor~~audits may ~~enter~~impact ~~into~~the ~~such~~Company, ~~arrangements~~including ~~for~~by ~~any~~virtue ~~reason~~of itreputational ~~deems~~damage ~~necessary~~to ~~advisable,~~Starwood ~~desirable~~Capital. orThe ~~convenient.~~unfavorable Asresolution aof ~~result,~~such ~~returns~~items ~~may~~could ~~vary~~result ~~from~~in ~~shareholder~~criminal toor ~~shareholder~~civil ~~depending~~liability, onfines, ~~any~~penalties ~~arrangements~~or ~~applicable~~other tomonetary aor ~~given~~non-monetary aremedies ~~shareholder’s~~that ~~investment~~could innegatively ~~the~~impact ~~Company~~Starwood Capital. InWhile ~~addition,~~Starwood ~~but~~Capital ~~without~~has ~~limitation,~~implemented ~~some~~policies ~~shareholders~~and ~~that~~procedures ~~demonstrate~~to aprotect ~~relevant~~against ~~regulatory~~non-compliance ~~requirement,~~with ~~may~~applicable ~~receive~~rules ~~preferential~~and ~~terms~~regulations, ~~pertaining~~there tois ~~that~~no ~~requirement,~~guarantee that such aspolicies ~~receipt~~and ofprocedures ~~certain~~will ~~Company~~be ~~information~~adequate onin anall ~~accelerated~~instances ~~basis.~~or will protect Starwood Capital in all instances.

~~Risks~~Certain ~~Related~~investors tomay ~~Conflicts~~enter ofinto ~~Interest~~side letters with us or the Advisor, which may provide for different terms for their investment in the Company.

~~Various~~Side ~~potential~~letters ~~and~~may ~~actual~~be ~~conflicts~~entered ofinto ~~interest~~with ~~will~~shareholders ~~arise,~~that ~~and~~have ~~these~~the ~~conflicts~~effect ~~may~~of ~~not~~establishing bedifferent ~~identified~~terms orthan ~~resolved~~those inapplicable ~~a manner favorable~~ to usother shareholders.

~~Various~~As ~~potential and actual conflicts of interest will arise as a result of our overall investment activities and the overall investment activities of Starwood Capital~~such, the ~~Dealer~~terms ~~Manager, the Advisor~~ and ~~their~~conditions ~~affiliates. The following risk factors enumerate certain but not all potential conflicts~~ of ~~interest~~one ~~that~~shareholder’s ~~should~~investments ~~be carefully evaluated before making an investment~~ in ~~us. Starwood Capital and Starwood Capital personnel may in~~ the ~~future~~Company ~~engage in further activities that~~ may ~~result~~differ into ~~additional~~those ~~conflicts~~ of ~~interest~~another ~~not addressed below~~shareholder. IfFor ~~any~~example, ~~matter arises that we and our affiliates (including~~ the ~~Advisor)~~terms ~~determine in our good faith judgment constitutes an actual conflict~~ of ~~interest,~~side weletters ~~and our affiliates (including the Advisor)~~ may ~~take~~deal ~~such~~with: ~~action~~arrangements aswith werespect ~~determine~~to inwaivers, ~~good~~rebates, ~~faith~~reductions ~~may be necessary~~ or ~~appropriate~~other tomodifications ~~ameliorate~~of the ~~conflict.~~management ~~Transactions~~fee ~~between us~~ and/or ~~Starwood~~performance ~~Capital~~fee; orminimum ~~its~~and ~~affiliates~~additional ~~will~~subscription ~~require~~amounts; ~~approval~~“most byfavored ~~our~~nation” ~~board~~rights ~~of trustees~~(i.e., ~~including~~the aright ~~majority~~to ofreceive ~~our~~favorable ~~independent~~rights ~~trustees~~or ineconomic ~~accordance~~arrangements ~~with~~that ~~our~~may ~~Declaration of Trust. There can~~ be noafforded ~~assurance~~to ~~that~~other ~~our~~shareholders); ~~board~~notice ofperiods; ~~trustees~~consent orrights; ~~Starwood~~modifications ~~Capital~~to ~~will~~the ~~identify~~applicable orshareholder’s ~~resolve~~subscription ~~all~~agreement; ~~conflicts~~and ofcertain ~~interest~~other inrights aand ~~manner that is favorable to us~~privileges.

~~The~~Such ~~Advisor~~arrangements ~~faces~~generally will be based on factors such as the size of a ~~conflict~~shareholder’s subscription, the timing of ~~interest~~a ~~because~~shareholder’s subscription, a shareholder’s existing relationship with the ~~fees~~Advisor itor ~~receives~~any ~~for~~particular ~~services~~regulatory ~~performed~~or ~~are~~legal ~~based~~considerations inapplicable ~~part~~to ona ~~our~~shareholder; ~~NAV~~provided, ~~which~~that the Advisor ismay ~~ultimately~~enter ~~responsible~~into such arrangements for ~~determining~~any reason it deems necessary advisable, desirable or convenient. As a result, returns may vary from shareholder to shareholder depending on any arrangements applicable to a given a shareholder’s investment in the Company. In addition, but without limitation, some shareholders that demonstrate a relevant regulatory requirement, may receive preferential terms pertaining to that requirement, such as receipt of certain Company information on an accelerated basis.

~~The~~Risks ~~Advisor~~Related is paid the Management Fee for its services that are based on the value of our portfolio of investments as determined in connection with our determination of NAV, which is calculated by the Advisor in accordance with our valuation guidelines. The calculation of our NAV includes certain subjective judgments with respect to ~~estimating,~~Conflicts ~~for example, our accrued expenses, net portfolio income and liabilities, and therefore, our NAV may not correspond to realizable value upon a sale~~ of those assets. The Advisor may benefit by us retaining ownership of our assets at times when our shareholders may be better served by the sale or disposition of our assets in order to avoid a reduction in our NAV. If our NAV is calculated in a way that is not reflective of our actual NAV, then the then-current transaction price of common shares on a given date may not accurately reflect the value of our portfolio, and common shares may be worth less than the then-current transaction price.Interest

~~The~~Various ~~Management~~potential ~~Fee~~ and ~~Performance~~actual ~~Fee~~conflicts ~~may~~of ~~not~~interest ~~create~~will ~~proper~~arise, ~~incentives or may induce the Advisor~~ and ~~its~~these ~~affiliates~~conflicts tomay ~~make~~not ~~certain~~be ~~investments,~~identified ~~including~~or ~~speculative~~resolved ~~investments~~in ~~that~~a ~~increase~~manner ~~the~~favorable ~~risk~~to ~~of our portfolio~~us.

WeVarious potential and actual conflicts of interest will ~~pay~~arise ~~the~~as ~~Advisor~~a result of our overall investment activities and the ~~Management~~overall ~~Fee~~investment ~~regardless~~activities of Starwood Capital, the ~~performance~~Dealer ofManager, ~~our~~the ~~portfolio~~Advisor and their affiliates. The ~~Advisor’s~~following ~~entitlement~~risk tofactors ~~the~~enumerate ~~Management~~certain ~~Fee,~~but ~~which~~not isall ~~not~~potential ~~based~~conflicts ~~upon~~of ~~performance~~interest ~~metrics~~that orshould ~~goals,~~be ~~might~~carefully ~~reduce~~evaluated ~~its~~before ~~incentive~~making toan ~~devote~~investment ~~its~~in ~~time~~us. Starwood Capital and ~~effort~~Starwood toCapital ~~seeking~~personnel ~~investments~~may in the future engage in further activities that ~~provide~~may ~~attractive~~result ~~risk-adjusted~~in ~~returns~~additional ~~for~~conflicts ~~our~~of ~~portfolio~~interest not addressed below. WeIf ~~may~~any bematter ~~required~~arises tothat ~~pay~~we and our affiliates (including the Advisor) determine in our good faith judgment constitutes an actual conflict of interest, we and our affiliates (including the ~~Management~~Advisor) ~~Fee~~may take such action as we determine in agood ~~particular~~faith ~~period~~may ~~despite~~be ~~experiencing~~necessary aor ~~net~~appropriate ~~loss~~to ameliorate the conflict. Transactions between us and Starwood Capital or its affiliates will require approval by our board of trustees, including a ~~decline~~majority of our independent trustees in ~~the~~accordance ~~value~~with our Declaration of Trust. There can be no assurance that our ~~portfolio~~board ~~during~~of trustees or Starwood Capital will identify or resolve all conflicts of interest in a manner that ~~period~~is favorable to us.

The ~~Performance~~Advisor ~~Fee~~faces ~~may~~a ~~create~~conflict anof ~~incentive~~interest ~~for~~because the ~~Advisor~~fees toit ~~make~~receives ~~riskier~~for orservices ~~more~~performed ~~speculative~~are ~~investments~~based in part on our ~~behalf~~NAV, ~~than~~which ~~it would otherwise make in~~ the ~~absence~~Advisor ofis ~~such~~ultimately ~~performance-based~~responsible ~~compensation~~for determining.

~~Because~~The Advisor is paid the Management Fee isfor its services that are based on the value of our portfolio of investments as determined in connection with our determination of NAV, which is calculated by the Advisor ~~may~~in ~~also~~accordance bewith ~~motivated~~our tovaluation ~~accelerate~~guidelines. ~~acquisitions~~The incalculation ~~order~~of our NAV includes certain subjective judgments with respect to ~~increase~~estimating, ~~NAV~~for orexample, ~~similarly~~our accrued expenses, ~~delay~~net portfolio income and liabilities, and therefore, our NAV may not correspond to realizable value upon a sale of those assets. The Advisor may benefit by us retaining ownership of our assets at times when our shareholders may be better served by the sale or ~~curtail~~disposition ~~repurchases~~of our assets in order to ~~maintain~~avoid a ~~higher~~reduction in our NAV,. ~~which~~If ~~would,~~our NAV is calculated in ~~each~~a ~~case~~way that is not reflective of our actual NAV, ~~increase~~then ~~amounts~~the ~~payable~~then-current totransaction price of common shares on a given date may not accurately reflect the ~~Advisor~~value of our portfolio, and common shares may be worth less than the then-current transaction price.

~~Starwood~~The ~~Capital~~Management ~~personnel~~Fee ~~work~~and onPerformance ~~other~~Fee ~~projects~~may ~~and~~not ~~conflicts~~create ~~may~~proper ~~arise~~incentives inor may induce the ~~allocation~~Advisor ofand ~~personnel~~its ~~between~~affiliates usto ~~and~~make ~~other~~certain ~~projects~~investments, including speculative investments that increase the risk of our portfolio.

~~The~~We ~~Advisor~~will ~~and~~pay ~~its~~the ~~affiliates~~Advisor ~~will~~the ~~devote~~Management ~~such~~Fee ~~time~~regardless asof ~~shall~~the beperformance ~~necessary~~of ~~to conduct~~ our ~~business affairs in an appropriate manner~~portfolio. ~~However,~~The aAdvisor’s ~~core~~entitlement ~~group~~to ofthe ~~professionals~~Management ~~will~~Fee, ~~devote~~which ~~substantially~~is ~~all~~not ofbased ~~their~~upon ~~business~~performance ~~time~~metrics ~~not~~or ~~only~~goals, tomight ~~our~~reduce ~~activities~~its ~~but~~incentive ~~also~~ to ~~the~~devote ~~activities~~its oftime ~~several other investment vehicles~~ and ~~any~~effort ~~successor~~to ~~funds~~seeking ~~thereto (and their respective~~ investments) ~~and~~that ~~their~~provide ~~related~~attractive ~~entities~~risk-adjusted ~~(which~~returns ~~may include separate accounts, dedicated managed accounts and investment funds formed~~ for ~~specific~~our ~~geographical areas or investments)~~portfolio. ~~Consequently,~~We ~~conflicts~~may ~~are~~be ~~expected~~required to ~~arise~~pay in the ~~allocation~~Advisor ~~of personnel, and we may not receive~~ the ~~level~~Management ofFee ~~support~~in ~~and~~a ~~assistance~~particular ~~that~~period wedespite ~~otherwise~~experiencing ~~might~~a ~~receive~~net ifloss weor ~~were~~a ~~internally~~decline ~~managed.~~in ~~The~~the ~~Advisor~~value ~~and~~of ~~its~~our ~~affiliates~~portfolio ~~are~~during ~~not~~that ~~restricted from entering into other investment advisory relationships or from engaging in other business activities~~period.

~~Starwood~~The ~~Capital~~Performance isFee ~~subject~~may tocreate aan ~~number~~incentive offor ~~conflicts~~the ofAdvisor ~~interest, regulatory oversight and legal and contractual restrictions due~~ to ~~its~~make ~~multiple~~riskier ~~business~~or ~~lines,~~more ~~which~~speculative ~~may~~investments ~~reduce~~on ~~the~~our ~~synergies~~behalf ~~that~~than weit ~~expect~~would ~~to draw on or~~ otherwise ~~reduce~~make in the ~~opportunities~~absence ~~available~~of tosuch usperformance-based compensation.

~~Starwood~~Because Capital and its affiliates are involved in a number of other businesses and activities, which may result in conflicts of interest or other obligations that are disadvantageous to us. Specified policies and procedures implemented by Starwood Capital to mitigate potential conflicts of interest and address certain regulatory requirements and contractual restrictions will from time to time reduce the ~~synergies~~Management ~~across~~Fee ~~Starwood~~is ~~Capital’s~~based ~~various businesses that we expect to draw~~ on ~~for~~our ~~purposes of pursuing attractive investment opportunities. Because Starwood Capital has many different asset management businesses~~NAV, including a capital markets group, it is subject to a number of actual and potential conflicts of interest, greater regulatory oversight and subject to more legal and contractual restrictions than that to which it would otherwise be subject if it had just one line of business. In addressing these conflicts and regulatory, legal and contractual requirements across its various businesses, Starwood has implemented certain policies and procedures (e.g., information walls) that reduce the ~~positive~~Advisor synergies that we expect to utilize for purposes of finding attractive investments. For example, Starwood Capital will from time to time come into possession of material, non-public information with respect to companies in which its private equity business may bealso ~~considering making an investment or companies that are clients of Starwood Capital. As a consequence, that information, which could~~ be ofmotivated ~~benefit~~ to ~~us,~~accelerate ~~might~~acquisitions ~~become~~in ~~restricted~~order to ~~those~~increase ~~respective~~NAV ~~businesses and otherwise be unavailable to us. In addition, to the extent that Starwood Capital is in possession of material, non-public information~~ or ~~is otherwise restricted from trading in certain securities~~, ~~we and the Advisor~~similarly, asdelay ~~part of Starwood Capital, generally also are deemed to be in possession of such information~~ or ~~otherwise~~curtail ~~restricted.~~repurchases ~~This could reduce the investment opportunities available~~ to ~~us,~~maintain ~~prevent~~a ushigher ~~from exiting an investment or otherwise limit our investment flexibility. Additionally~~NAV, ~~the terms of confidentiality or other agreements with or related to companies in~~ which any Starwood Capital fund has or has considered making an investment or which is otherwise a client of Starwood Capital will from time to time restrict or otherwise limit our ability to make investments in or otherwise engage in businesses or activities competitive with such companies. Starwood Capital may enter into one or more strategic relationshipswould, in ~~certain~~each ~~regions or with respect to certain types of investments that~~case, ~~although~~increase ~~intended~~amounts topayable ~~provide greater opportunities for us, may require us~~ to ~~share such opportunities or otherwise limit~~ the ~~amount of an opportunity we can otherwise take~~Advisor.

Starwood Capital ~~and~~personnel ~~its~~work ~~affiliates~~on ~~engage~~other inprojects aand ~~broad~~conflicts ~~spectrum~~may ofarise ~~activities, including a broad range of activities relating to investments~~ in the ~~real~~allocation ~~estate industry, and have invested or committed billions~~ of ~~dollars~~personnel inbetween ~~capital~~us ~~through~~and ~~various~~other ~~investment funds,~~ projects.

40The Advisor and its affiliates will devote such time as shall be necessary to conduct our business affairs in an appropriate manner. However, a core group of professionals will devote substantially all of their business time not only to our activities but also to the activities of several other investment vehicles and any successor funds thereto (and their respective investments) and their related entities (which may include separate accounts, dedicated managed accounts and investment funds formed for specific geographical areas or investments). Consequently, conflicts are expected to arise in the allocation of personnel, and we may not receive the level of support and assistance that we otherwise might receive if we were internally managed. The Advisor and its affiliates are not restricted from entering into other investment advisory relationships or from engaging in other business activities.

~~managed accounts and other vehicles affiliated with~~ Starwood Capital. Inis ~~the~~subject ~~ordinary~~to ~~course~~a number of ~~their~~conflicts ~~business~~of ~~activities~~interest, ~~Starwood~~regulatory ~~Capital~~oversight and ~~its~~legal ~~affiliates~~and ~~may~~contractual ~~engage~~restrictions indue ~~activities~~to ~~where the interests of certain divisions of Starwood Capital and~~ its ~~affiliates,~~multiple ~~including~~business ~~the Advisor~~lines, orwhich ~~the interests of their clients~~ may ~~conflict~~reduce ~~with~~ the ~~interests~~synergies ofthat ~~our~~we ~~shareholders.~~expect ~~Certain~~to ofdraw ~~these~~on ~~divisions~~or ~~and~~otherwise ~~entities~~reduce ~~affiliated with~~ the ~~Advisor~~opportunities ~~have~~available ~~or may have an investment strategy similar~~ to ~~ours and therefore may engage in competing activities with~~ us. ~~In particular, various Starwood Capital opportunistic and substantially stabilized real estate funds and other investment vehicles seek to invest in a broad range of real estate investments.~~

Starwood ~~engages~~Capital ~~various~~and ~~advisors~~its ~~and~~affiliates ~~operating~~are ~~partners~~involved ~~who~~in ~~may~~a ~~co-invest~~number ~~alongside~~of ~~us,~~other businesses and ~~there~~activities, ~~can~~which bemay noresult ~~assurance~~in ~~that~~conflicts ~~such~~of ~~advisors~~interest ~~and~~or ~~operating~~other ~~partners~~obligations ~~will~~that ~~continue~~are disadvantageous to ~~serve~~us. inSpecified ~~such~~policies ~~roles.~~and procedures implemented by Starwood Capital to

Starwood Capital engages and retains strategic advisors, consultants, senior advisors, executive advisors and other similar professionals who are not employees or affiliates of Starwood Capital and who may, from time to time, receive payments from, or allocations with respect to, portfolio entities (as well as from Starwood Capital or us). In such circumstances, such payments from, or allocations with respect to, us and our underlying assets will not, even if they have the effect of reducing any retainers or minimum amounts otherwise payable by Starwood Capital, be deemed paid to or received by Starwood Capital. These strategic advisors, senior advisors, consultants, executive advisors or other professionals may have the right or may be offered the ability to co-invest alongside us, including in those investments in which they are involved, or otherwise participate in equity plans for management of any such portfolio entity, which may have the effect of reducing the amount invested by us in any property. Additionally, and notwithstanding the foregoing, these senior advisors, consultants and other professionals as well as current and former chief executive officers of Starwood Capital portfolio entities, may be (or have the preferred right to be) investors in various Starwood Capital portfolio entities or Other Starwood Accounts. The nature of the relationship with each of the strategic advisors, consultants, executive advisors and other professionals and the amount of time devoted or required to be devoted by them varies considerably. In certain cases, they provide the Dealer Manager and the Advisor with industry-specific insights and feedback on investment themes, assist in transaction due diligence, make introductions to and provide reference checks on management teams. In other cases, they may take on more extensive roles and serve as executives or trustees on the boards of various entities or contribute to the origination of new investment opportunities. In certain instances, Starwood Capital may have formal arrangements with these senior advisors, executive advisors, consultants, management teams for operating platforms or other professionals (which may or may not be terminable upon notice by any party), and in other cases the relationships may be more informal. They may be compensated (including pursuant to retainers and expense reimbursement) from Starwood Capital, us or portfolio properties or otherwise uncompensated unless and until an engagement with a portfolio property develops. In certain cases, they have certain attributes of Starwood Capital “employees” (e.g., they may have dedicated offices at Starwood Capital, have a Starwood Capital email address, participate in general meetings and events for Starwood Capital personnel, work on Starwood Capital matters as their primary or sole business activity) even though they are not considered Starwood Capital employees, affiliates or personnel for purposes of the Dealer Manager Agreement or Advisory Agreement. There can be no assurance that any of the senior advisors, consultants and other professionals will continue to serve in such roles or continue their arrangements with Starwood Capital, us and any portfolio properties.40

Wemitigate ~~may~~potential ~~purchase~~conflicts ~~assets~~of ~~from~~interest orand ~~sell~~address ~~assets~~certain regulatory requirements and contractual restrictions will from time to time reduce the ~~Advisor~~synergies across Starwood Capital’s various businesses that we expect to draw on for purposes of pursuing attractive investment opportunities. Because Starwood Capital has many different asset management businesses, including a capital markets group, it is subject to a number of actual and potential conflicts of interest, greater regulatory oversight and subject to more legal and contractual restrictions than that to which it would otherwise be subject if it had just one line of business. In addressing these conflicts and regulatory, legal and contractual requirements across its ~~affiliates~~various businesses, Starwood has implemented certain policies and procedures (e.g., information walls) that reduce the positive synergies that we expect to utilize for purposes of finding attractive investments. For example, Starwood Capital will from time to time come into possession of material, non-public information with respect to companies in which its private equity business may be considering making an investment or companies that are clients of Starwood Capital. As a consequence, that information, which could be of benefit to us, might become restricted to those respective businesses and otherwise be unavailable to us. In addition, to the extent that Starwood Capital is in possession of material, non-public information or is otherwise restricted from trading in certain securities, we and the Advisor, as part of Starwood Capital, generally also are deemed to be in possession of such ~~transactions~~information or otherwise restricted. This could reduce the investment opportunities available to us, prevent us from exiting an investment or otherwise limit our investment flexibility. Additionally, the terms of confidentiality or other agreements with or related to companies in which any Starwood Capital fund has or has considered making an investment or which is otherwise a client of Starwood Capital will from time to time restrict or otherwise limit our ability to make investments in or otherwise engage in businesses or activities competitive with such companies. Starwood Capital may ~~cause~~enter ~~conflicts~~into one or more strategic relationships, in certain regions or with respect to certain types of ~~interest~~investments that, although intended to provide greater opportunities for us, may require us to share such opportunities or otherwise limit the amount of an opportunity we can otherwise take.

WeStarwood ~~may~~Capital ~~purchase~~and ~~assets~~its ~~from~~affiliates orengage ~~sell~~in ~~assets~~a broad spectrum of activities, including a broad range of activities relating to investments in the ~~Advisor~~real estate industry, and ~~its~~have ~~affiliates~~invested or ~~their~~committed ~~respective~~billions ~~related~~of ~~parties~~dollars in capital through various investment funds, managed accounts and other vehicles affiliated with Starwood Capital. ~~These~~In ~~transactions~~the ~~involve~~ordinary ~~conflicts~~course of ~~interest,~~their asbusiness activities, Starwood Capital and its affiliates may ~~receive~~engage ~~fees~~in activities where the interests of certain divisions of Starwood Capital and ~~other~~its ~~benefits~~affiliates, ~~directly~~including orthe ~~indirectly~~Advisor, ~~from~~ or ~~otherwise~~the ~~have~~ interests inof ~~both~~their ~~parties~~clients tomay conflict with the ~~transaction~~interests of our shareholders. ~~The~~Certain ~~purchases~~of these divisions and ~~sales~~entities ~~referred~~affiliated towith inthe ~~this~~Advisor ~~paragraph~~have ~~are~~or ~~subject~~may have an investment strategy similar to ~~the~~ours ~~approval~~and oftherefore amay ~~majority~~engage ofin ~~trustees~~competing ~~(including~~activities awith ~~majority~~us. ofIn ~~our~~particular, ~~independent~~various ~~trustees)~~Starwood ~~not~~Capital ~~otherwise~~opportunistic ~~interested~~and insubstantially ~~the~~stabilized ~~transaction~~real inestate ~~accordance~~funds ~~with~~and ~~our~~other ~~Declaration~~investment vehicles seek to invest in a broad range of ~~Trust~~real estate investments.

~~Certain~~Starwood ~~Other~~engages ~~Starwood~~various ~~Accounts~~advisors ~~have~~and ~~similar~~operating orpartners ~~overlapping~~who ~~investment~~may ~~objectives~~co-invest ~~and~~alongside ~~guidelines~~us, and wethere ~~will~~can ~~not~~ be ~~allocated~~no ~~certain~~assurance ~~opportunities~~that such advisors and ~~may~~operating bepartners ~~allocated~~will ~~only~~continue ~~opportunities~~to ~~with~~serve ~~lower~~in ~~relative~~such ~~returns~~roles.

~~Through~~Starwood ~~Other~~Capital engages and retains strategic advisors, consultants, senior advisors, executive advisors and other similar professionals who are not employees or affiliates of Starwood ~~Accounts~~Capital and who may, from time to time, receive payments from, or allocations with respect to, portfolio entities (as well as from Starwood Capital ~~currently~~or ~~invests~~us). In such circumstances, such payments from, or allocations with respect to, us and ~~plans~~our underlying assets will not, even if they have the effect of reducing any retainers or minimum amounts otherwise payable by Starwood Capital, be deemed paid to ~~continue~~or received by Starwood Capital. These strategic advisors, senior advisors, consultants, executive advisors or other professionals may have the right or may be offered the ability to co-invest ~~third-party~~alongside ~~capital~~us, including in athose ~~wide~~investments ~~variety~~in ofwhich ~~investment~~they ~~opportunities~~are involved, or otherwise participate in equity plans for management of any such portfolio entity, which may have the ~~United~~effect ~~States~~of ~~and~~reducing ~~globally~~the amount invested by us in any property. ~~There~~Additionally, ~~will~~and benotwithstanding ~~overlap~~the offoregoing, ~~CRE~~these ~~debt~~senior advisors, consultants and other ~~investment~~professionals ~~opportunities~~as ~~with~~well ~~certain~~as ~~Other~~current and former chief executive officers of Starwood ~~Accounts~~Capital ~~that~~portfolio ~~are~~entities, ~~actively~~may ~~investing~~be ~~and~~(or ~~similar~~have ~~overlap~~the ~~with~~preferred ~~future~~right ~~Other~~to ~~Starwood~~be) ~~Accounts.~~investors ~~See~~in “—various Starwood Capital ~~may~~portfolio ~~raise~~entities or ~~manage~~ Other Starwood Accounts. ~~which~~The ~~could~~nature ~~result~~of in the ~~reallocation~~relationship with each of ~~Starwood~~the ~~Capital~~strategic ~~personnel~~advisors, consultants, executive advisors and other professionals and the ~~direction~~amount of ~~potential~~time ~~investments~~devoted or required to ~~such~~be ~~Other~~devoted ~~Starwood~~by ~~Accounts”~~them ~~below~~varies considerably. ~~This~~In ~~overlap~~certain ~~will~~cases, ~~from~~they ~~time~~provide the Dealer Manager and the Advisor with industry-specific insights and feedback on investment themes, assist in transaction due diligence, make introductions to ~~time~~and ~~create~~provide ~~conflicts~~reference ofchecks ~~interest~~on management teams. ~~Additionally~~In other cases, inthey ~~certain~~may ~~circumstances~~take on more extensive roles and serve as executives or trustees on the boards of various entities or contribute to the origination of new investment opportunities. ~~suitable~~In certain instances, Starwood Capital may have formal arrangements with these senior advisors, executive advisors, consultants, management teams for usoperating ~~will~~platforms or other professionals (which may or may not be ~~presented~~terminable upon notice by any party), and in other cases the relationships may be more informal. They may be compensated (including pursuant to retainers and expense reimbursement) from Starwood Capital, us or portfolio properties or otherwise uncompensated unless and ~~there~~until ~~will~~an engagement with a portfolio property develops. In certain cases, they have certain attributes of Starwood Capital “employees” (e.g., they may have dedicated offices at Starwood Capital, have a Starwood Capital email address, participate in general meetings and events for Starwood Capital personnel, work on Starwood Capital matters as their primary or sole business activity) even though they are not considered Starwood Capital employees, affiliates or personnel for purposes of the Dealer Manager Agreement or Advisory Agreement. There can be ~~one~~no assurance that any of the senior advisors, consultants and other professionals will continue to serve in such roles or ~~more~~continue ~~investment~~their ~~opportunities~~arrangements ~~where~~with ~~our~~Starwood ~~participation~~Capital, isus ~~restricted~~and any portfolio properties.

~~With~~We ~~respect~~may topurchase ~~Other~~assets ~~Starwood~~from ~~Accounts with investment objectives~~ or ~~guidelines~~sell ~~that~~assets ~~overlap~~to with ours but that do not have priority over us, investment opportunities are allocated among us and one or more Other Starwood Accounts in accordance with Starwood Capital’s prevailing policies and procedures on a basis that the Advisor and its affiliates, ~~believe to be fair~~ and ~~reasonable in their sole discretion, which may be on an alternating or co-invest basis. In addition, certain Other Starwood Accounts,~~ such astransactions ~~SEREDF II and SREDS, have a partial or full priority with respect to certain investment opportunities that~~ may ~~overlap~~cause ~~ours.~~conflicts ~~For additional information, see “Item 13. Certain Relationships And Related Transactions, And Director Independence—Potential Conflicts~~ of ~~Interest—Allocation of Investment Opportunities~~interest.”

~~While~~We may purchase assets from or sell assets to the Advisor ~~will~~and ~~seek~~its toaffiliates ~~manage~~or ~~potential~~their respective related parties. These transactions involve conflicts of interest, inas aStarwood ~~fair~~Capital ~~and~~may ~~reasonable~~receive ~~manner~~fees asand ~~required~~other ~~the~~benefits, ~~Advisory~~directly ~~Agreement~~or indirectly, ~~the~~from ~~portfolio~~or ~~strategies~~otherwise ~~employed~~have byinterests in both parties to the ~~Advisor,~~transaction. ~~Starwood~~The ~~Capital~~purchases orand ~~their~~sales ~~affiliates~~referred to in ~~managing~~this ~~the~~paragraph ~~Other~~are ~~Starwood~~subject to the

~~Accounts~~approval ~~could~~of ~~conflict~~a ~~with~~majority ~~the~~of ~~strategies~~trustees ~~employed~~(including bya ~~the~~majority ~~Advisor~~of ~~in managing~~ our ~~business~~independent ~~and~~trustees) ~~may~~not ~~adversely~~otherwise ~~affect~~interested ~~the~~in ~~marketability, exit strategy, prices and availability of~~ the ~~properties,~~transaction ~~securities and instruments~~ in ~~which~~accordance wewith ~~invest.~~our ~~The~~Declaration ~~Advisor,~~of Starwood Capital or their affiliates may also give advice to the Other Starwood Accounts that may differ from advice given to us even though their investment objectives or guidelines may be the same or similar to oursTrust.

~~The~~Certain ~~amount of performance-based compensation charged and management fees paid by us may be less than or exceed the amount of performance-based compensation charged or management fees paid by~~ Other Starwood Accounts. ~~Such~~have ~~variation~~similar ~~may~~or ~~create~~overlapping aninvestment ~~incentive~~objectives ~~for~~and ~~Starwood~~guidelines, ~~Capital~~and towe ~~allocate~~will anot ~~greater~~be ~~percentage~~allocated ofcertain anopportunities ~~investment~~and ~~opportunity~~may tobe usallocated oronly ~~such~~opportunities ~~Other~~with ~~Starwood~~lower ~~Accounts,~~relative ~~as the case may be~~returns.

~~Under~~Through ~~certain~~Other ~~circumstances~~Starwood Accounts, ~~the~~Starwood ~~Advisor~~Capital ~~may~~currently ~~determine~~invests ~~not~~and plans to ~~pursue~~continue ~~some~~to orinvest ~~all~~third-party ofcapital anin a wide variety of investment ~~opportunity~~opportunities ~~within~~in ~~our~~the United States and globally. There will be overlap of CRE debt and other investment ~~objectives~~opportunities with certain Other Starwood Accounts that are actively investing and ~~guidelines,~~similar ~~including~~overlap ~~without~~with ~~limitation,~~future asOther aStarwood Accounts. See “—Starwood Capital may raise or manage Other Starwood Accounts which could result in the reallocation of ~~our~~Starwood ~~prior~~Capital ~~investments,~~personnel ~~business~~and orthe ~~other~~direction ~~reasons~~of ~~applicable~~potential investments to ~~us,~~such Other Starwood Accounts” below. This overlap will from time to time create conflicts of interest. Additionally, ~~Starwood~~in ~~Capital~~certain circumstances investment opportunities suitable for us will not be presented to us and there will be one or ~~its~~more ~~affiliates~~investment opportunities where our participation is restricted.

~~Under~~With ~~certain~~respect ~~circumstances, the Advisor may determine not~~ to ~~pursue~~Other ~~some~~Starwood orAccounts ~~all~~with ~~of an~~ investment ~~opportunity within our investment~~ objectives ~~and~~or guidelines, ~~including~~that ~~without~~overlap ~~limitation,~~with asours abut ~~result~~that ofdo ~~business,~~not ~~reputational~~have orpriority ~~other~~over ~~reasons applicable to~~ us, ~~Other~~investment ~~Starwood~~opportunities ~~Accounts,~~are ~~Starwood~~allocated ~~Capital~~among orus ~~its~~and ~~affiliates.~~one Inor ~~addition,~~more ~~the~~Other ~~Advisor~~Starwood ~~may~~Accounts ~~determine~~in ~~that~~accordance wewith ~~should~~Starwood ~~not~~Capital’s ~~pursue~~prevailing ~~some~~policies orand ~~all~~procedures ofon ana ~~investment~~basis ~~opportunity,~~that ~~including,~~the byAdvisor ~~way of example~~ and ~~without~~its ~~limitation,~~affiliates ~~because~~believe weto ~~have~~be ~~already~~fair ~~invested~~and ~~sufficient~~reasonable ~~capital~~ in ~~the~~their ~~investment,~~sole ~~sector~~discretion, ~~industry,~~which ~~geographic~~may ~~region~~be oron ~~markets~~an inalternating ~~question, as determined by the Advisor,~~ or ~~the~~co-invest ~~investment is not appropriate for us for other reasons as determined by the Advisor~~basis. In ~~any such case Starwood Capital could~~addition, ~~thereafter,~~certain ~~offer such opportunity to other parties, including~~ Other Starwood Accounts, ~~portfolio entities, joint venture partners, related parties or third parties. Any~~ such ~~Other~~as ~~Starwood~~SEREDF ~~Accounts~~II ~~may~~and beSREDS, ~~advised~~have by a ~~different~~partial ~~Starwood~~or ~~Capital~~full ~~business~~priority ~~group~~ with arespect ~~different investment committee, which could determine an investment opportunity~~ to becertain more attractive than the Advisor believes to be the case. In any event, there can be no assurance that the Advisor’s assessment will prove correct or that the performance of any investments actually pursued by us will be comparable to any investment opportunities that ~~are~~may ~~not~~overlap ~~pursued by us~~ours. ~~Starwood~~For ~~Capital,~~additional ~~including its personnel~~information, ~~may~~see ~~receive~~“Item ~~compensation~~13. ~~from~~Certain ~~any~~Relationships ~~such~~And ~~party~~Related ~~that makes the investment~~Transactions, ~~including~~And anDirector ~~allocation~~Independence—Potential Conflicts of ~~carried~~Interest—Allocation interest or referral fees, and any such compensation could be greater than amounts paid by us to the Advisor. In some cases, Starwood Capital earns greater fees when Other Starwood Accounts participate alongside or instead of usInvestment ~~in an investment~~Opportunities.”

~~The~~While the Advisor ~~makes~~will ~~good~~seek ~~faith~~to ~~determinations~~manage ~~for~~potential ~~allocation~~conflicts ~~decisions~~of ~~based~~interest onin ~~expectations~~a ~~that~~fair ~~may~~and ~~prove~~reasonable ~~inaccurate.~~manner ~~Information~~as ~~unavailable~~required to the ~~Advisor~~Advisory Agreement, orthe ~~circumstances~~portfolio ~~not~~strategies ~~foreseen~~employed by the Advisor, atStarwood Capital or their affiliates in managing the ~~time~~Other ofStarwood ~~allocation,~~Accounts ~~may~~could ~~cause~~conflict anwith ~~investment~~the ~~opportunity~~strategies toemployed ~~yield~~by athe ~~different~~Advisor ~~return~~in ~~than~~managing ~~expected.~~our ~~There~~business isand nomay ~~assurance~~adversely ~~that~~affect ~~any~~the ~~conflicts~~marketability, ~~arising~~exit ~~out~~strategy, prices and availability of the ~~foregoing~~properties, ~~will~~securities beand ~~resolved~~instruments in ~~our~~which ~~favor~~we invest. The Advisor, Starwood Capital isor ~~entitled~~their affiliates may also give advice to ~~amend~~the ~~its~~Other ~~policies~~Starwood ~~and~~Accounts ~~procedures~~that atmay ~~any~~differ ~~time~~from ~~without~~advice ~~prior~~given ~~notice~~to us even though their investment objectives or ~~our~~guidelines ~~consent~~may be the same or similar to ours.

ToThe ~~the~~amount ~~extent~~of weperformance-based ~~acquire~~compensation ~~investments~~charged ~~through~~and ~~joint~~management ~~ventures~~fees ~~with~~paid ~~Other~~by ~~Starwood~~us ~~Accounts, such investments will be allocated as described above, and we~~ may be ~~allocated~~less ~~interests~~than inor ~~such~~exceed ~~joint~~the ~~ventures~~amount ~~that~~of ~~are~~performance-based ~~smaller~~compensation ~~than~~charged ~~the~~or ~~interests~~management offees ~~the~~paid by Other Starwood Accounts. ~~Generally,~~Such wevariation ~~expect~~may ~~the~~create ~~level~~an ofincentive ~~control~~for weStarwood ~~have~~Capital ~~with respect~~ to ~~any~~allocate ~~joint~~a ~~venture~~greater ~~will~~percentage ~~correspond~~of toan ~~our~~investment ~~economic~~opportunity ~~interest~~to inus ~~such joint venture. We will not participate in joint ventures in which we do not have~~ or ~~share control to the extent that we believe~~ such ~~participation~~Other ~~would~~Starwood ~~potentially~~Accounts, ~~threaten our status~~ as ~~a non-investment company exempt from~~ the ~~Investment~~case ~~Company Act. This~~ may ~~prevent us from receiving an allocation with respect to certain investment opportunities that are suitable for both us and one or more Other Starwood Accounts~~be.

~~Starwood~~Under ~~Capital~~certain ~~may have an opportunity to acquire a portfolio or pool of assets~~circumstances, securities and instruments that it determines in its sole discretion should be divided and allocated among us and Other Starwood Accounts. Such allocations generally would be based on its assessment of the ~~expected~~Advisor ~~returns and risk profile of the portfolio and the assets therein. For example, some of the assets in a pool~~ may ~~have~~determine ~~an opportunistic return profile~~ not ~~appropriate for us. Also, a pool may contain both debt and equity instruments that Starwood Capital determines should be allocated~~ to ~~different~~pursue ~~funds.~~some Inor all of ~~these~~an ~~situations,~~investment ~~the~~opportunity ~~combined~~within ~~purchase~~our ~~price~~investment ~~paid~~objectives ~~to a seller would be allocated among the multiple assets, securities~~ and ~~instruments in the pool and therefore among Other Starwood Accounts and us acquiring any of the assets~~guidelines, ~~securities~~including ~~and~~without ~~instruments. Similarly~~limitation, ~~there~~as ~~will likely be circumstances in which we and Other Starwood Accounts will sell assets in~~ a ~~single~~result ~~or related transactions to a buyer. In some cases a counterparty will require an allocation~~ of ~~value in the purchase or sale contract, though Starwood Capital could determine such allocation of value is not accurate and should not be relied upon. Unless an appraisal is required by~~ our ~~Declaration~~prior ~~of Trust~~investments, ~~Starwood~~business ~~Capital~~or ~~will~~other ~~generally~~reasons ~~rely~~applicable ~~upon internal analysis~~ to ~~determine the ultimate allocation of value~~us, ~~though it could also obtain third party valuation reports. Regardless of the methodology for allocating value, Starwood Capital will have conflicting duties to us and~~ Other Starwood Accounts ~~when they buy or sell assets together in a portfolio~~, ~~including as a result of different financial incentives~~ Starwood Capital has with respect to different vehicles, most clearly when the fees and compensation, including performance-based compensation, earned from the different vehicles differ. There can be no assurance that our investment will not be valued or ~~allocated~~its a purchase price that is higher or lower than it might otherwise have been allocated if such investment were acquired or sold independently rather than as a component of a portfolio shared with Other Starwood Accountsaffiliates.

42Under certain circumstances, the Advisor may determine not to pursue some or all of an investment opportunity within our investment objectives and guidelines, including without limitation, as a result of business, reputational or other reasons applicable to us, Other Starwood Accounts, Starwood Capital or its affiliates. In addition, the Advisor may determine that we should not pursue some or all of an investment opportunity, including, by way of example and without limitation, because we have already invested sufficient capital in the investment, sector, industry, geographic region or markets in question, as determined by the Advisor, or the investment is not appropriate for us for other reasons as determined by the Advisor. In any such case Starwood Capital could, thereafter, offer such opportunity to other parties, including Other Starwood Accounts, portfolio entities, joint venture partners, related parties or third parties. Any such Other Starwood Accounts may be advised by a different Starwood Capital business group with a different investment committee, which could determine an investment opportunity to be more attractive than the Advisor believes to be the case. In any event, there can be no assurance that the Advisor’s assessment will prove correct or that the performance of any investments actually pursued by us will be comparable to any investment opportunities that are not pursued by us. Starwood Capital, including its personnel, may receive compensation from any such party that makes the investment, including an allocation of carried interest or referral fees, and any such compensation could be greater than amounts paid by us to the Advisor. In some cases, Starwood Capital earns greater fees when Other Starwood Accounts participate alongside or instead of us in an investment.

~~Our~~The ~~Declaration~~Advisor makes good faith determinations for allocation decisions based on expectations that may prove inaccurate. Information unavailable to the Advisor, or circumstances not foreseen by the Advisor at the time of ~~Trust~~allocation, ~~renounces~~may cause an investment opportunity to yield a different return than expected. There is no assurance that any conflicts arising out of the foregoing will be resolved in our ~~interest~~favor. orStarwood ~~expectancy~~Capital ~~with~~is ~~respect~~entitled to ~~business~~amend ~~opportunities~~its policies and ~~competitive~~procedures ~~activities~~at any time without prior notice or our consent.

~~Our~~To ~~Declaration of Trust provides that, to~~ the ~~maximum~~ extent ~~permitted~~we ~~from~~acquire ~~time~~investments tothrough ~~time~~joint byventures ~~Maryland~~with ~~law,~~Other ~~(a)~~Starwood ~~none of our trustees~~Accounts, ~~officers~~such orinvestments ~~agents~~will ~~who~~be isallocated ~~also~~as andescribed ~~officer~~above, ~~employee~~and orwe ~~agent~~may ofbe ~~Starwood~~allocated ~~Holdings~~interests orin ~~any~~such ofjoint ~~its~~ventures ~~affiliates~~that isare ~~required~~smaller tothan ~~present,~~the ~~communicate~~interests orof ~~offer~~the ~~any~~Other ~~business~~Starwood ~~opportunity~~Accounts. toGenerally, uswe orexpect ~~any~~the level of ~~our~~control ~~subsidiaries~~we ~~and (b) any such person shall~~ have ~~the~~with ~~right~~respect to ~~hold and exploit~~ any ~~business~~joint ~~opportunities~~venture orwill correspond to ~~direct,~~our ~~recommend,~~economic ~~offer,~~interest ~~sell,~~in ~~assign or otherwise transfer~~ such ~~business~~joint ~~opportunity to any person or entity other than us and our subsidiaries~~venture. InWe ~~addition,~~will ~~our~~not ~~Declaration~~participate ofin ~~Trust~~joint ~~provides~~ventures ~~that~~in which we ~~renounce~~do ~~our~~not ~~interest~~have or ~~expectancy~~share ~~in,~~control orto inthe ~~being~~extent ~~offered~~that anwe ~~opportunity~~believe tosuch ~~participate~~participation ~~in,~~would ~~any~~potentially ~~such~~threaten ~~business~~our ~~opportunity~~status toas ~~the~~a ~~maximum~~non-investment ~~extent~~company ~~permitted~~exempt from ~~time~~the toInvestment ~~time by Maryland law.~~

~~Our Declaration of Trust also provides that any Covered Person may have business interests and engage in business activities similar, in addition to or in competition with those of or relating to us.~~42

WeCompany ~~may~~Act. ~~co-invest~~This ~~with Starwood Capital affiliates in CRE debt or other investments and such investments~~ may beprevent inus ~~different~~from ~~parts~~receiving ~~of the capital structure of~~ an ~~issuer~~allocation ~~and~~with ~~may~~respect ~~otherwise~~to ~~involve~~certain ~~conflicts of interest. When we hold investments in which Other Starwood Accounts have a different principal~~ investment, ~~conflicts~~opportunities ofthat ~~interest~~are ~~may~~suitable ~~arise~~for ~~between~~both us and ~~Other~~one ~~Starwood~~or ~~Accounts,~~more ~~and~~Other ~~the~~Starwood ~~Advisor may take actions that are adverse to us~~Accounts.

WeStarwood Capital may ~~co-invest~~have ~~with~~an ~~Other~~opportunity ~~Starwood~~to ~~Accounts~~acquire ina ~~investments~~portfolio or pool of assets, securities and instruments that ~~are~~it ~~suitable~~determines ~~for~~in ~~both~~its ussole discretion should be divided and ~~such~~allocated among us and Other Starwood Accounts. WeSuch ~~and~~allocations generally would be based on its assessment of the ~~Other~~expected ~~Starwood~~returns ~~Accounts~~and ~~may~~risk ~~make~~profile orof ~~hold~~the ~~investments~~portfolio atand ~~different~~the ~~levels~~assets therein. For example, some of the assets in a pool may have an ~~issuer’s~~opportunistic ~~capital~~return ~~structure~~profile not appropriate for us. Also, ~~which~~a pool may ~~include~~contain usboth ~~making~~debt ~~one~~and orequity ~~more~~instruments ~~investments~~that ~~directly~~Starwood orCapital ~~indirectly~~determines ~~relating~~should be allocated to ~~portfolio~~different ~~entities~~funds. In all of these situations, the combined purchase price paid to a seller would be allocated among the multiple assets, securities and instruments in the pool and therefore among Other Starwood Accounts and ~~vice~~us ~~versa.~~acquiring Toany of the ~~extent~~assets, securities and instruments. Similarly, there will likely be circumstances in which we ~~hold~~and ~~interests~~Other ~~that~~Starwood ~~are~~Accounts ~~different~~will ~~(including~~sell ~~with~~assets ~~respect~~in a single or related transactions to ~~their~~a ~~relative~~buyer. ~~seniority)~~In ~~than~~some ~~those~~cases ~~held~~a bycounterparty ~~such~~will ~~Other~~require ~~Starwood~~an ~~Accounts,~~allocation of value in the ~~Advisor~~purchase ~~and~~or ~~its~~sale ~~affiliates~~contract, ~~may~~though beStarwood ~~presented~~Capital ~~with~~could ~~decisions~~determine ~~when~~such ~~our~~allocation ~~interests~~of value is not accurate and ~~the~~should ~~interests~~not ofbe ~~the~~relied ~~Other~~upon. Unless an appraisal is required by our Declaration of Trust, Starwood ~~Accounts~~Capital ~~are~~will ingenerally ~~conflict.~~rely Inupon ~~order~~internal analysis to ~~mitigate~~determine ~~any~~the ~~such~~ultimate ~~conflicts~~allocation of ~~interest~~value, wethough ~~may~~it ~~recuse~~could ~~ourselves~~also ~~from~~obtain ~~participating~~third inparty ~~any~~valuation ~~decisions~~reports. ~~relating~~Regardless orof ~~with~~the ~~respect~~methodology tofor ~~such~~allocating ~~securities~~value, ~~held~~Starwood byCapital ~~such~~will have conflicting duties to us and Other Starwood Accounts ~~(notwithstanding~~when ~~that~~they ifbuy ~~such~~or ~~Other~~sell ~~Starwood~~assets ~~Accounts~~together ~~maintain~~in ~~voting~~a ~~rights~~portfolio, including as a result of different financial incentives Starwood Capital has with respect to different vehicles, most clearly when the ~~securities~~fees ~~they~~and ~~hold)~~compensation, orincluding performance-based compensation, ifearned wefrom dothe ~~not~~different ~~recuse~~vehicles ~~ourselves,~~differ. ~~Starwood~~There ~~Capital~~can ~~may~~be no assurance that our investment will not be ~~required~~valued toor ~~take~~allocated ~~action~~a ~~where~~purchase price that is higher or lower than it ~~will~~might otherwise have ~~conflicting~~been ~~loyalties~~allocated ~~between~~if ~~its~~such ~~duties~~investment towere usacquired ~~and~~or tosold ~~such~~independently ~~Other~~rather ~~Starwood~~than ~~Accounts,~~as ~~which~~a ~~may~~component ~~adversely~~of ~~impact~~a usportfolio shared with Other Starwood Accounts.

~~Other~~Our ~~Starwood~~Declaration ~~Accounts may also participate in a separate tranche~~ of aTrust ~~financing~~renounces ~~with respect to an issuer/ borrower in which we have an interest or otherwise in different classes of such issuer’s securities. In connection with negotiating loans and bank financings in respect of~~ our real estate-related transactions, from time to time Starwood Capital will obtain the right to participate on its own behalf in a portion of the financings with respect to such transactions. If an Other Starwood Account has a mezzanine debt investment with respect to the same issuer to whom we have made a mortgage loan, Starwood Capital may have conflicting loyalties between its duties to us and to other affiliates. Such investments may inherently give rise to conflicts of interest or ~~perceived~~expectancy conflicts of interest between or among the various classes of securities that may be held by such entities. To the extent we hold an equity interest or an interest in a loan or debt security that is different (including with respect to ~~their~~business ~~relative~~opportunities ~~seniority) than those held by such Other Starwood Accounts, the Advisor~~ and ~~its~~competitive affiliates may have limited or no rights with respect to decisions when our interests and the interests of the Other Starwood Accounts are in conflict, and Starwood Capital may have conflicting loyalties between its duties to us and to other affiliatesactivities. In that regard, actions may be taken for the Other Starwood Accounts that are adverse to us. There can be no assurance that any such conflict will be resolved in our favor and Starwood Capital may be required to take action where it will have conflicting loyalties between its duties to us and to Other Starwood Accounts, which may adversely impact us.

InOur ~~addition,~~Declaration ~~conflicts~~of ~~may~~Trust ~~arise~~provides inthat, ~~determining~~to the ~~amount~~maximum extent permitted from time to time by Maryland law, (a) none of our trustees, officers or agents who is also an ~~investment~~officer, ifemployee or agent of Starwood Holdings or any, of its affiliates is required to bepresent, ~~allocated~~communicate ~~among~~or ~~potential~~offer ~~investors~~any ~~and~~business ~~the~~opportunity ~~respective~~to ~~terms~~us ~~thereof.~~or ~~There~~any ~~can~~of beour nosubsidiaries ~~assurance~~and ~~that~~(b) any such person shall have the ~~return~~right onto ~~our~~hold ~~investment~~and ~~will~~exploit beany ~~equivalent~~business opportunities or to direct, recommend, offer, sell, assign or ~~better~~otherwise ~~than~~transfer ~~the~~such ~~returns~~business ~~obtained~~opportunity byto ~~the~~any person or entity other ~~affiliates~~than ~~participating~~us inand ~~the~~our ~~transaction~~subsidiaries. In addition, itour isDeclaration ~~possible~~of ~~that~~Trust inprovides athat ~~bankruptcy~~we ~~proceeding~~renounce our interest ~~may~~or beexpectancy ~~subordinated~~in, or ~~otherwise~~in ~~adversely~~being ~~affected~~offered byan ~~virtue~~opportunity ofto participate in, any such ~~Other~~business ~~Starwood~~opportunity ~~Accounts’~~to ~~involvement~~the ~~and~~maximum ~~actions~~extent ~~relating~~permitted from time to ~~its~~time ~~investment~~by Maryland law.

~~Starwood~~Our ~~Capital~~Declaration ~~may~~of ~~raise~~Trust oralso ~~manage~~provides ~~Other~~that ~~Starwood~~any ~~Accounts~~Covered ~~which~~Person ~~could~~may ~~result~~have inbusiness ~~the~~interests ~~reallocation~~and ofengage ~~Starwood~~in ~~Capital~~business ~~personnel~~activities ~~and~~similar, ~~the~~in ~~direction~~addition ofto ~~potential~~or ~~investments~~in tocompetition ~~such~~with ~~Other~~those ~~Starwood~~of ~~Accounts~~or relating to us.

~~Starwood~~We ~~Capital~~may ~~reserves~~co-invest ~~the~~with ~~right to raise and/or manage Other~~ Starwood ~~Accounts,~~Capital ~~including~~affiliates ~~opportunistic~~in ~~and~~CRE ~~stabilized~~debt ~~and substantially stabilized real estate funds~~ or ~~separate~~other ~~accounts, dedicated managed accounts,~~ investments ~~suitable for lower risk, lower return funds or higher risk, higher return funds, real estate debt obligation~~ and ~~trading~~such ~~investment~~investments ~~vehicles,~~may ~~real~~be ~~estate funds primarily making investments~~ in adifferent ~~single~~parts ~~sector~~ of the ~~real~~capital ~~estate~~structure ~~investment~~of ~~space~~an ~~(e.g.,~~issuer ~~office, industrial, retail or multifamily) or making non-controlling investments in public~~ and ~~private debt and equity securities or investment funds that~~ may ~~have~~otherwise ~~the~~involve ~~same~~conflicts orof ~~similar~~interest. ~~investment~~When ~~objectives~~we orhold ~~guidelines as us, investment funds formed for specific geographical areas or~~ investments, ~~including~~in ~~those raised by us and one or more managed accounts (or other similar arrangements structured through an entity) for the benefit of one or more specific investors (or related group of investors)~~ which, ~~in each case, may have investment objectives or guidelines that overlap with ours. See “—Certain~~ Other Starwood Accounts have ~~similar~~a ordifferent ~~overlapping~~principal investment ~~objectives and guidelines~~, ~~and~~conflicts weof ~~will~~interest ~~not be allocated certain opportunities and~~ may bearise ~~allocated~~between ~~only~~us ~~opportunities with lower relative returns.” In particular, we expect that there will be overlap of real estate debt~~ and ~~real estate-related debt and equity securities investment opportunities with certain~~ Other Starwood Accounts, ~~that are actively investing~~ and ~~similar overlap with future Other Starwood Accounts. The closing of an Other Starwood Account could result in~~ the ~~reallocation~~Advisor ofmay ~~Starwood~~take ~~Capital~~actions ~~personnel,~~that ~~including~~are ~~reallocation~~adverse ofto ~~existing real estate~~ us.

43We may co-invest with Other Starwood Accounts in investments that are suitable for both us and such Other Starwood Accounts. We and the Other Starwood Accounts may make or hold investments at different levels of an issuer’s capital structure, which may include us making one or more investments directly or indirectly relating to portfolio entities of Other Starwood Accounts and vice versa. To the extent we hold interests that are different (including with respect to their relative seniority) than those held by such Other Starwood Accounts, the Advisor and its affiliates may be presented with decisions when our interests and the interests of the Other Starwood Accounts are in conflict. In order to mitigate any such conflicts of interest, we may recuse ourselves from participating in any decisions relating or with respect to such securities held by such Other Starwood Accounts (notwithstanding that if such Other Starwood Accounts maintain voting rights with respect to the securities they hold) or, if we do not recuse ourselves, Starwood Capital may be required to take action where it will have conflicting loyalties between its duties to us and to such Other Starwood Accounts, which may adversely impact us.

~~professionals~~Other Starwood Accounts may also participate in a separate tranche of a financing with respect to an issuer/ borrower in which we have an interest or otherwise in different classes of such issuer’s securities. In connection with negotiating loans and bank financings in respect of our real estate-related transactions, from time to time Starwood Capital will obtain the right to participate on its own behalf in a portion of the financings with respect to such transactions. If an Other Starwood Account. Inhas ~~addition~~a mezzanine debt investment with respect to the same issuer to whom we have made a mortgage loan, ~~potential~~Starwood Capital may have conflicting loyalties between its duties to us and to other affiliates. Such investments may inherently give rise to conflicts of interest or perceived conflicts of interest between or among the various classes of securities that may be ~~suitable~~held ~~for~~by such entities. To the extent we hold an equity interest or an interest in a loan or debt security that is different (including with respect to their relative seniority) than those held by such Other Starwood Accounts, the Advisor and its affiliates may have limited or no rights with respect to decisions when our interests and the interests of the Other Starwood Accounts are in conflict, and Starwood Capital may have conflicting loyalties between its duties to us and to other affiliates. In that regard, actions may be ~~directed~~taken ~~toward~~for the Other Starwood Accounts that are adverse to us. There can be no assurance that any such conflict will be resolved in our favor and Starwood Capital may be required to take action where it will have conflicting loyalties between its duties to us and to Other Starwood ~~Account~~Accounts, which may adversely impact us.

~~Starwood Capital’s potential involvement in financing a third party’s purchase of assets from us could lead to potential or actual conflicts of interest.~~43

WeIn ~~may~~addition, ~~from~~conflicts ~~time~~may toarise ~~time~~in ~~dispose~~determining ofthe ~~all~~amount ~~or a portion~~ of an investment, byif ~~way~~any, ofto abe ~~third-party~~allocated ~~purchaser’s~~among ~~bid~~potential ~~where~~investors ~~Starwood~~and ~~Capital~~the orrespective ~~one~~terms orthereof. ~~more~~There ~~Other~~can ~~Starwood~~be ~~Accounts~~no isassurance ~~providing~~that ~~financing~~the asreturn ~~part~~on ofour ~~such~~investment ~~bid~~will orbe ~~acquisition~~equivalent ofto ~~the investment~~ or ~~underlying~~better ~~assets~~than ~~thereof.~~the ~~This~~returns ~~may~~obtained ~~include~~by the ~~circumstance~~other ~~where~~affiliates ~~Starwood~~participating ~~Capital~~in orthe ~~one~~transaction. orIn ~~more~~addition, ~~Other~~it ~~Starwood Accounts~~ is ~~making~~possible ~~commitments~~that toin ~~provide~~a ~~financing~~bankruptcy atproceeding orour ~~prior~~interest tomay ~~the~~be ~~time~~subordinated ~~such third-party purchaser commits to purchase such investments~~ or ~~assets~~otherwise ~~from~~adversely ~~us.~~affected ~~Such~~by ~~involvement~~virtue of ~~Starwood~~such ~~Capital or one or more~~ Other Starwood Accounts’ asinvolvement ~~such~~and aactions ~~provider~~relating ~~of debt financing in connection with the potential acquisition of portfolio investments by third parties from us may give rise~~ to ~~potential~~its ~~or actual conflicts of interest~~investment.

~~Certain~~Starwood ~~principals~~Capital ~~and employees~~ may beraise ~~involved~~or inmanage ~~and~~Other ~~have~~Starwood aAccounts ~~greater~~which ~~financial~~could ~~interest~~result in the ~~performance~~reallocation of ~~other~~ Starwood Capital ~~funds~~personnel ~~or accounts,~~ and ~~such~~the ~~activities~~direction ~~may create conflicts~~ of ~~interest~~potential ininvestments ~~making~~to ~~investment~~such ~~decisions~~Other onStarwood ~~our behalf~~Accounts.

~~Certain~~Starwood ofCapital reserves the ~~principals~~right to raise and/or ~~employees~~manage ofOther ~~the~~Starwood ~~Advisor~~Accounts, including opportunistic and ~~the~~stabilized ~~Dealer~~and ~~Manager~~substantially ~~may~~stabilized bereal ~~subject~~estate tofunds aor ~~variety~~separate ofaccounts, ~~conflicts~~dedicated ofmanaged ~~interest~~accounts, ~~relating~~investments tosuitable ~~their~~for ~~responsibilities~~lower torisk, uslower return funds or higher risk, higher return funds, real estate debt obligation and ~~the~~trading ~~management~~investment ofvehicles, ~~our~~real ~~portfolio.~~estate ~~Such~~funds ~~individuals~~primarily ~~may~~making ~~serve~~investments in ana ~~advisory~~single ~~capacity~~sector toof ~~other~~the ~~managed~~real ~~accounts~~estate or investment ~~vehicles~~space (e.g., asoffice, ~~members~~industrial, ofretail anor ~~investment~~multifamily) or ~~advisory~~making ~~committee~~non-controlling investments in public and private debt and equity securities or ainvestment ~~board~~funds ofthat ~~trustees~~may (have the same or similar ~~such~~investment ~~capacity)~~objectives ~~for~~or ~~one~~guidelines oras ~~more~~us, investment funds, ~~corporations,~~formed ~~foundations~~for specific geographical areas or ~~other~~investments, ~~organizations.~~including ~~Such~~those ~~positions~~raised ~~may~~by ~~create~~us aand ~~conflict~~one ~~between~~or ~~the~~more ~~services~~managed ~~and~~accounts ~~advice~~(or ~~provided~~other tosimilar ~~such~~arrangements ~~entities~~structured ~~and~~through ~~the~~an ~~responsibilities~~entity) ~~owed~~for tothe ~~us.~~benefit ~~The~~of ~~other~~one ~~managed~~or ~~accounts~~more ~~and~~specific ~~investment~~investors ~~funds~~(or inrelated ~~which~~group ~~such~~of ~~individuals~~investors) ~~may~~which, ~~become~~in ~~involved~~each case, may have investment objectives or guidelines that overlap with ours. ~~Furthermore~~See “—Certain Other Starwood Accounts have similar or overlapping investment objectives and guidelines, and we will not be allocated certain ~~principals~~opportunities and ~~employees~~may ofbe ~~the~~allocated ~~Advisor~~only ~~may~~opportunities ~~have~~with alower ~~greater~~relative ~~financial~~returns.” ~~interest~~In inparticular, ~~the~~we ~~performance~~expect that there will be overlap of ~~such~~real ~~other~~estate ~~funds~~debt orand ~~accounts~~real ~~than~~estate-related ~~our~~debt ~~performance.~~and ~~Such~~equity ~~involvement~~securities ~~may~~investment ~~create~~opportunities ~~conflicts~~with ofcertain ~~interest~~Other inStarwood ~~making~~Accounts ~~investments~~that onare ~~our~~actively ~~behalf~~investing and ~~such~~similar ~~other~~overlap ~~funds~~with ~~and~~future ~~accounts.~~Other ~~Such~~Starwood ~~principals~~Accounts. ~~and~~The ~~employees~~closing ~~will~~of ~~seek~~an toOther ~~limit~~Starwood ~~any~~Account ~~such~~could ~~conflicts~~result in athe ~~manner~~reallocation ~~that~~of isStarwood inCapital ~~accordance~~personnel, ~~with~~including ~~their~~reallocation ~~fiduciary~~of ~~duties~~existing real estate professionals, to such Other Starwood Account. In addition, potential investments that may be suitable for us ~~and~~may be directed toward such ~~organizations~~Other Starwood Account.

~~The~~Starwood ~~Advisor~~Capital’s ~~may~~potential ~~face~~involvement ~~conflicts of interests~~ in ~~choosing~~financing ~~our~~a ~~service~~third ~~providers~~party’s ~~and~~purchase ~~certain~~of ~~service~~assets ~~providers~~from ~~may~~us ~~provide~~could ~~services~~lead to ~~the~~potential ~~Dealer Manager, the Advisor~~ or ~~Starwood~~actual ~~Capital~~conflicts onof ~~more favorable terms than those payable by us~~interest.

~~Certain~~We ~~advisors~~may ~~and~~from ~~other~~time ~~service~~to ~~providers~~time ordispose ~~their~~of ~~affiliates~~all ~~(including~~or ~~accountants,~~a ~~administrators,~~portion ~~lenders,~~of ~~bankers,~~an ~~brokers, attorneys, consultants, title agents and~~ investment orby ~~commercial~~way ~~banking~~of ~~firms)~~a ~~that~~third-party ~~provide~~purchaser’s ~~goods~~bid orwhere ~~services to us,~~ Starwood Capital or ~~certain~~one ~~entities~~or inmore ~~which~~Other weStarwood ~~have~~Accounts anis ~~investment~~providing ~~may~~financing ~~also~~as ~~provide~~part ~~goods~~of orsuch ~~services~~bid to or ~~have~~acquisition ~~business,~~of ~~personal,~~the ~~financial~~investment or ~~other~~underlying ~~relationships~~assets ~~with Starwood Capital and its other businesses~~thereof. ~~Such~~This ~~advisors and service providers~~ may beinclude ~~investors in us, affiliates of~~ the ~~Dealer~~circumstance ~~Manager~~where orStarwood ~~the~~Capital ~~Advisor, sources of investment opportunities~~ or ~~co-investors~~one or ~~commercial~~more ~~counterparties or entities in which Starwood Capital or~~ Other Starwood Accounts ~~have~~is anmaking ~~investment,~~commitments ~~and~~to ~~payments~~provide byfinancing usat ~~may indirectly benefit Starwood Capital~~ or ~~such~~prior ~~Other~~to ~~Starwood Accounts. Additionally, certain employees of~~ the ~~Advisor~~time ~~may~~such ~~have~~third-party ~~family~~purchaser ~~members~~commits orto ~~relatives~~purchase ~~employed by~~ such ~~advisors~~investments ~~and service providers. The Advisor~~ or ~~its~~assets ~~affiliates~~from ~~may also provide administrative services to~~ us. ~~These~~Such ~~relationships~~involvement ~~may~~of ~~influence us,~~ Starwood Capital ~~and~~or ~~the~~one ~~Advisor~~or inmore ~~deciding~~Other ~~whether~~Starwood toAccounts ~~select~~as ~~or recommend~~ such a ~~service~~ provider toof ~~perform~~debt ~~services~~financing ~~for~~in usconnection orwith athe ~~portfolio~~potential ~~property~~acquisition ~~(the~~of ~~cost~~portfolio ofinvestments ~~which~~by ~~will~~third ~~generally~~parties befrom ~~borne~~us ~~directly~~may orgive ~~indirectly~~rise byto uspotential or ~~such~~actual ~~portfolio~~conflicts ~~property,~~of ~~as applicable)~~interest.

ItCertain isprincipals ~~expected~~and ~~that~~employees ~~certain~~may ~~Starwood~~be ~~Capital~~involved ~~affiliates will also provide other services~~ in ~~respect of our investments from time to time, including, but not limited to administrative corporate services. Employees of these affiliates may also act as our executive officers~~ and ~~may~~have ~~also~~a ~~receive~~greater ~~performance-based~~financial ~~compensation~~interest in ~~respect~~the ofperformance ~~our investments. The fees and expenses~~ of ~~such~~other Starwood Capital~~-affiliated~~ ~~service~~funds ~~providers~~or ~~(and~~accounts, ~~if applicable, their employees) are borne by our investments~~ and ~~there is no related offset to the Management Fee we pay to the Advisor. While Starwood Capital believes that any~~ such ~~affiliated~~activities ~~service~~may ~~providers,~~create ~~when~~conflicts engaged, generally provide (or will provide) services at rates equal to or better than those provided by third parties (even in jurisdictions where insurance rates are statutorily determined), there is an inherent conflict of interest ~~that~~

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