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

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

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•	the factors described in this report, including those set forth under the sections captioned "Risk Factors", "Business" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations";

•	changes in our industry, interest rates, the debt securities markets, real estate markets or the general economy;

•	increased rates of default and/or decreased recovery rates on our investments;

•	availability, terms and deployment of capital;

•	availability of qualified personnel;

•	changes in governmental regulations, tax rates and similar matters;

•	changes in our business strategy;

•	availability of investment opportunities in commercial real estate-related and commercial finance assets;

•	the degree and nature of our competition;

•	the adequacy of our cash reserves and working capital; and

•	the timing of cash flows, if any, from our investments.

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ITEM I .	BUSINESS

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(1)	Reflects adjustments as a result of the designation as assets held for sale or discontinued operations, which occurred during the third and fourth quarters of 2016 except as noted in (2) below.

(2)	The impairment adjustment to middle market loans includes $5.4 million of fair value adjustments that occurred prior to the inception of the Plan.

(3)	Investments in unconsolidated entities include a pro forma adjustment for a $5.1 million distribution from Pelium Capital, L.P. received in January 2018.

(4)	Legacy CRE Loans includes $118.2 million par value of loans at the inception of the Plan that were not reflected on the consolidated balance sheets until our investment in Resource Real Estate Funding CDO 2007-1, Ltd. was liquidated in November 2016.

(5)	Includes $1.1 million of cash and cash equivalents not classified as assets held for sale in the Residential Mortgage Lending segment at December 31, 2017.

(6)	Commercial Finance assets decreased by $2.3 million related to the reclassification of certain assets to other assets on the consolidated balance sheets.

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(1)	Outstanding borrowings includes accrued interest payable and deferred debt issuance costs.

(2)	Equity at risk includes interest receivable net of accrued interest expense.

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(1)	Net carrying amount includes an allowance for loan losses of $5.3 million at December 31, 2017.

(2)	Classified as investment securities available-for-sale on the consolidated balance sheets.

(3)	Classified as investment securities, trading on the consolidated balance sheets.

(4)	The fair value option was elected for syndicated corporate loans held for sale.

(5)	Classified as investments in unconsolidated entities on the consolidated balance sheets.

(6)	Net carrying amount includes an allowance for lease losses of $735,000 at December 31, 2017.

(7)	Classified as assets held for sale on the consolidated balance sheets.

(8)	Net carrying amount includes the lower of cost or market value adjustments of $11.9 million at December 31, 2017.

(9)	Net carrying amount includes a lower of cost or market value adjustment of $1.9 million at December 31, 2017.

(10)	There are no stated rates associated with these investments.

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A monthly base management fee equal to 1/12th of the amount of our equity multiplied by 1.50%; provided, however that the base management fee is fixed at $937,500 per month for each of the 15 successive months beginning on October 1, 2017. Under the management agreement, ''equity'' is equal to the net proceeds from issuances of shares of capital stock (or the value of common shares upon the conversion of convertible securities), less offering-related costs, plus or minus our retained earnings (excluding non-cash equity compensation incurred in current or prior periods) less all amounts we have paid for common stock and preferred stock repurchases. The calculation is adjusted for one-time events due to changes in GAAP as well as other non-cash charges, upon approval of our independent directors.

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Incentive compensation, calculated quarterly as follows: (A) 20% of the amount by which our Core Earnings (as defined in the management agreement) for a quarter exceeds the product of (i) the weighted average of (x) the per share book value of our common shares at September 30, 2017 (subject to adjustments for certain items of income or loss from operations or gain or loss on resolutions of the Plan assets from October 1, 2017 through December 31, 2018) and (y) the per share price (including the conversion price, if applicable) paid for our common shares in each offering (or issuance upon the conversion of convertible securities) by us subsequent to September 30, 2017, multiplied by (ii) the greater of (x) 1.75% and (y) 0.4375% plus one-fourth of the Ten Year Treasury Rate for such quarter; multiplied by (B) the weighted average number of common shares outstanding during such quarter; subject to adjustment (a) to exclude events pursuant to changes in GAAP or the application of GAAP as well as non-recurring or unusual transactions or events, after discussion between our Manager and the independent directors and approval by a majority of the independent directors in the case of non-recurring or unusual transactions or events, and (b) to deduct an amount equal to any fees paid directly by a taxable REIT subsidiary, or TRS, (or any subsidiary thereof) to employees, agents and/or affiliates of the Manager with respect to profits of such TRS (or subsidiary thereof) generated from the services of such employees, agents and/or affiliates, the fee structure of which shall have been approved by a majority of the independent directors and which fees may not exceed 20% of the net income (before such fees) of such TRS (or subsidiary thereof).

•	Per loan underwriting and review fees in connection with valuations of and potential investments in certain subordinate commercial mortgage pass-through certificates, in amounts approved by a majority of the independent directors.

•	Reimbursement of out-of-pocket expenses and certain other costs incurred by our Manager that relate directly to us and our operations.

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•	Reimbursement of our Manager's expenses for the wages, salaries and benefits of (A) our Chief Financial Officer and accounting, finance, tax and investor relations professionals, and (B) employees of our ancillary operating subsidiaries, in proportion to such personnel's percentage of time dedicated to our or our subsidiaries' operations.

•	if such shares are traded on a securities exchange, at the average of the closing prices of the shares on such exchange over the 30-day period ending three days prior to the issuance of such shares;

•	if such shares are actively traded over-the-counter, at the average of the closing bid or sales price as applicable over the 30-day period ending three days prior to the issuance of such shares; and

•	if there is no active market for such shares, at the fair market value as reasonably determined in good faith by our board of directors.

•	our Manager's continued material breach of any provision of the management agreement following a period of 30 days after written notice thereof;

•	our Manager's fraud, misappropriation of funds, or embezzlement against us;

•	our Manager's gross negligence in the performance of its duties under the management agreement;

•	the dissolution, bankruptcy or insolvency, or the filing of a voluntary bankruptcy petition by our Manager; or

•	a change of control (as defined in the management agreement) of our Manager if a majority of our independent directors determines, at any point during the 18 months following the change of control, that the change of control was detrimental to the ability of our Manager to perform its duties in substantially the same manner conducted before the change of control.

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ITEM IA.	RISK FACTORS

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•	the cash provided by our operating activities will not be sufficient to meet required payments of principal and interest,

•	the cost of financing may increase relative to the income from the assets financed, reducing the income we have available to pay distributions, and

•	our investments may have maturities that differ from the maturities of the related financing and, consequently, the risk that the terms of any refinancing we obtain will not be as favorable as the terms of existing financing.

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•	An event of default under one short-term facility may constitute a default under other credit facilities we may have, potentially resulting in asset sales and losses to us, as well as increasing our financing costs or reducing the amount of investable funds available to us.

•	We may be unable to acquire a sufficient amount of eligible assets to maximize the efficiency of a CDO or CLO issuance, which would require us to seek other forms of term financing or liquidate the assets. We may not be able to obtain term financing on acceptable terms, or at all, and liquidation of the assets may be at prices less than those we paid, resulting in losses to us.

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Using short-term financing to accumulate assets for a CDO or CLO issuance may require us to obtain new financing as the short-term financing matures. Residual financing may not be available on acceptable terms, or at all. Moreover, an increase in short-term interest rates at the time that we seek to enter into new borrowings would reduce the spread between the income on our assets and the cost of our borrowings. This would reduce returns on our assets, which would reduce earnings and, in turn, cash available for distribution to our stockholders.

•	Available interest rate hedges may not correspond directly with the interest rate risk against which we seek protection.

•	The duration of the hedge may not match the duration of the related liability.

•	Interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates. Hedging costs may include structuring and legal fees and fees payable to hedge counterparties to execute the hedge transaction.

•	Losses on a hedge position may reduce the cash available to make distributions to stockholders, and may exceed the amounts invested in the hedge position.

•	The amount of income that a REIT may earn from hedging transactions, other than through a TRS, is limited by federal tax provisions governing REITs.

•	The credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction.

•	The party owing money in the hedging transaction may default on its obligation to pay.

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•	acquire investments subject to rights of senior classes and servicers under inter-creditor or servicing agreements;

•	acquire only a minority and/or non-controlling participation in an underlying investment;

•	co-invest with third parties through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or

•	rely on independent third-party management or strategic partners with respect to the management of an asset.

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•	tenant mix, success of tenant businesses, tenant bankruptcies and property management decisions;

•	property location and condition;

•	competition from comparable types of properties;

•	changes in laws that increase operating expenses or limit rents that may be charged;

•	any need to address environmental contamination at the property;

•	the occurrence of any uninsured casualty at the property;

•	changes in national, regional or local economic conditions and/or the conditions of specific industry segments in which the lessees may operate;

•	declines in regional or local real estate values;

•	declines in regional or local rental or occupancy rates;

•	increases in interest rates, real estate tax rates and other operating expenses;

•	the availability of debt or equity financing;

•	increases in costs of construction material;

•	changes in governmental rules, regulations and fiscal policies, including environmental legislation and zoning laws; and

•	acts of God, terrorism, social unrest and civil disturbances.

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There are ownership limits and restrictions on transferability and ownership in our charter.  For purposes of assisting us in maintaining our REIT qualification under the Internal Revenue Code, our charter generally prohibits any person from beneficially or constructively owning more than 9.8% in value or number of shares, whichever is more restrictive, of any class or series of our outstanding capital stock. This restriction may:

•	discourage a tender offer or other transactions or a change in the composition of our board of directors or control that might involve a premium price for our shares or otherwise be in the best interests of our stockholders; or

•	result in shares issued or transferred in violation of such restrictions being automatically transferred to a trust for a charitable beneficiary, resulting in the forfeiture of those shares.

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Our charter permits our board of directors to issue stock with terms that may discourage a third-party from acquiring us.  Our board of directors may amend our charter without stockholder approval to increase the total number of authorized shares of stock or the number of shares of any class or series and issue common or preferred stock having preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption as determined by our board. Thus, our board could authorize the issuance of stock with terms and conditions that could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our shares might receive a premium for their shares over the then-prevailing market price.

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Our charter and bylaws contain other possible anti-takeover provisions.  Our charter and bylaws contain other provisions, including advance notice procedures for the introduction of business and the nomination of directors, that may have the effect of delaying or preventing a change in control of us or the removal of existing directors and, as a result, could prevent our stockholders from being paid a premium for their common stock over the then-prevailing market price.

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•	any person who beneficially owns ten percent or more of the voting power of the corporation's shares; or

•	an affiliate or associate of the corporation who, at any time within the two-year period before the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding voting stock of the corporation.

•	80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

•	two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.

•	actual receipt of an improper benefit or profit in money, property or services; or

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•	a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated.

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•	85% of our ordinary income for that year;

•	95% of our capital gain net income for that year; and

•	100% our undistributed taxable income from prior years.

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ITEM 2.	PROPERTIES

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ITEM 3.	LEGAL PROCEEDINGS

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ITEM 4.	MINE SAFETY DISCLOSURES

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ITEM 5 .	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(1)	We distributed a regular dividend of $0.05 on January 26, 2018 to stockholders of record as of December 29, 2017.

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ITEM 6 .	SELECTED FINANCIAL DATA

(1)	All per share amounts stated take into account the one-for-four reverse stock split effective on August 31, 2015 as though it were in full effect for all periods presented for comparison purposes.

ITEM 7 .	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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(1)	Reflects adjustments as a result of the designation as assets held for sale or discontinued operations, which occurred during the third and fourth quarters of 2016 except as noted in (2) below.

(2)	The impairment adjustment to middle market loans includes $5.4 million of fair value adjustments that occurred prior to the inception of the Plan.

(3)	Investments in unconsolidated entities include a pro forma adjustment for a $5.1 million distribution from Pelium Capital, L.P. ("Pelium Capital") received in January 2018.

(4)	Legacy CRE Loans includes $118.2 million par value of loans at the inception of the Plan that were not reflected on the consolidated balance sheets until our investment in Resource Real Estate Funding CDO 2007-1, Ltd. ("RREF CDO 2007-1") was liquidated in November 2016.

(5)	Includes $1.1 million of cash and cash equivalents not classified as assets held for sale in the Residential Mortgage Lending segment at December 31, 2017.

(6)	Commercial Finance assets decreased by $2.3 million related to the reclassification of certain assets to other assets on the consolidated balance sheets.

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(1)	The weighted average yield includes net amortization/accretion and fee income in the calculation.

(2)	Includes $158.2 million of loans classified as assets held for sale on our consolidated balance sheets held during the year ended December 31, 2016.

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(1)	Fee income recognized as a component of interest income primarily comprises loan origination fees, loan exit fees and loan extension fees.

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(1)	Professional services for the year ended December 31, 2016 include $563,000 of expenses related to the restructuring of our taxable REIT subsidiaries ("TRS") and related tax preparation work performed.

(2)	Professional services for the year ended December 31, 2016 include $850,000 of legal expenses related to the modification of one of our Legacy CRE loans. This loan is classified as held for sale December 31, 2016 and paid off in June 2017.

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(1)	For the year ended December 31, 2016, professional services include $563,000 of expenses related to the restructuring of our TRSs and related tax preparation work performed.

(2)	Professional services for the year ended December 31, 2016 and 2015 include $850,000 and $539,000, respectively, of legal expenses related to the modification of one of our Legacy CRE loans. This loan was classified as held for sale at December 31, 2016 and paid off in June 2017.

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(1)	Net carrying amount includes an allowance for loan losses of $5.3 million and $3.8 million at December 31, 2017 and 2016, respectively.

(2)	The fair value option was elected for syndicated corporate loans held for sale.

(3)	Net carrying amount includes allowance for lease losses of $735,000 and $465,000 at December 31, 2017 and 2016, respectively.

(4)	Net carrying amount includes lower of cost or market value adjustments of $11.9 million and $11.9 million at December 31, 2017 and 2016, respectively.

(5)	Net carrying amount includes lower of cost or market value adjustments of $1.9 million and $14,000 at December 31, 2017 and 2016, respectively.

(6)	There are no stated rates associated with these investments.

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(1)	During the year ended December 31, 2017, we acquired $98.0 million of CMBS, at a cost of $58.8 million, with a weighted average spread, based on cost, of 7.35% over the interpolated interest rate swap curve and $114.0 million of CMBS, at a cost of $113.1 million, with a weighted average spread, based on face value, of 3.34% over LIBOR.

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(1)	Amounts include unamortized loan origination fees of $6.7 million and $5.8 million and deferred amendment fees of $268,000 and $4,000 being amortized over the life of the loans at December 31, 2017 and 2016, respectively.

(2)	Substantially all loans are pledged as collateral under various borrowings at December 31, 2017 and 2016.

(3)	Maturity dates exclude contracted extension options, subject to the satisfaction of certain terms, that may be available to the borrowers.

(4)	CRE whole loans had $84.1 million and $55.5 million in unfunded loan commitments at December 31, 2017 and 2016, respectively.  These unfunded loan commitments are advanced as the borrowers formally request additional funding as permitted under the loan agreement and any necessary approvals have been obtained.

(5)	Maturity dates exclude one whole loan with an amortized cost of $7.0 million which is in default at December 31, 2017.

(6)	All syndicated corporate loans are second lien loans and accounted for under the fair value option.

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(1)	The investment in RRE VIP Borrower, LLC was sold in 2014. Earnings for the years ended December 31, 2017, 2016 and 2015 are related to insurance premium and property tax refunds with respect to the underlying sold properties of the portfolio.

(2)	Our investment in LCC liquidated in July 2017 as a result of the sale of LCC. The $41.1 million gain recognized on the sale is included in equity in earnings of unconsolidated entities on our consolidated statement of operations.

(3)	In December 2015, we redeemed our investment in the fund.

(4)	Pursuant to the new consolidation guidance adopted in January 2016, these previously consolidated VIEs are now accounted for under the equity method.

(5)	We had no carrying value in our investment in RCM Global at December 31, 2017 due to accumulated other comprehensive income in excess of the investment's cost basis.

(6)	During the year ended December 31, 2017, we received proceeds of $13.6 million related to the partial liquidation of our investment.

(7)	We sold our investment in Pearlmark Mezz in May 2017.

(8)	Our investment in School Lane House was sold in March 2014.

(9)	For the years ended December 31, 2017, 2016 and 2015, these amounts are recorded in interest expense on our consolidated statements of operations as the investment is accounted for under the cost method.

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(1)	Legacy CRE whole loans are carried at the lower of cost or fair value.

(2)	Includes one CRE whole loan, with an amortized cost of $7.0 million, that was in default at December 31, 2017.

(3)	Includes two loans, with a total carrying value of $22.5 million, that were in default at December 31, 2017.

(4)	Rating category 5 was not applicable for December 31, 2016.

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Two CRE whole loans cross-collateralized by a hotel and adjacent land in southern California with an initial par value of $67.5 million. These loans were written down to their total appraised value of $61.4 million and had a maturity date of February 2017. In June 2017, the borrower sold the collateral underlying these loans. Proceeds of $67.0 million were received by us in July 2017. As a result of this transaction, we realized a gain of $5.6 million in net realized and unrealized gain on investment securities available-for-sale and loans and derivatives on our consolidated statements of operations during the year ended December 31, 2017;

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One CRE whole loan collateralized by a hotel in southern Arizona with an initial par value of $32.5 million. This loan was written down to its appraised value of $14.3 million. In February 2017, we entered into a discounted payoff agreement with the borrower and received proceeds of $21.3 million in satisfaction of this loan. This transaction resulted in the recognition of a realized gain of $7.0 million in net realized and unrealized gain on investment securities available-for-sale and loans and derivatives our consolidated statements of operations as;

•	One CRE whole loan collateralized by an office property in central Arizona with an initial par value of $17.7 million. This loan was written down to its appraised value of $11.0 million. The loan matured in May 2017 and is currently in default;

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One CRE whole loan collateralized by a hotel in southern California with an initial par value of $29.5 million. This loan was written down to its appraised value of $24.0 million at December 31, 2016. During the year ended December 31, 2017, an additional charge of $1.9 million, which included protective advances made of $442,000, was taken to write the loan down to its adjusted appraised value of $22.5 million. The loan has a maturity date in January 2019.

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(1)	Excludes direct financing leases of $151,000, net of reserves, at December 31, 2017.

(2)	Includes one CRE whole loan with an amortized cost of $7.0 million that was in default at December 31, 2017, on which we recorded a $2.5 million specific provision during the year ended December 31, 2016.

(3)	Includes two loans with a total carrying value of $22.5 million that were in default at December 31, 2017.

(4)	Includes two loans with total carrying value of $61.4 million that were in default at December 31, 2016.

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(1)

Includes MSRs with a fair value of $14.4 million at December 31, 2016. There were no MSRs remaining at December 31, 2017. MSRs are recorded at fair value using a discounted cash flow approach to estimate the fair value utilizing the valuation services of an independent third party. The key assumptions used in the estimation of fair value include prepayment speeds, discount rates, default rates, cost to service, contractual servicing fees and escrow earnings.

(2)	Includes our investment in life settlement contracts of $5.1 million and $5.8 million at December 31, 2017 and 2016, respectively, which were transferred to held for sale in the fourth quarter of 2016.

(3)	Borrowings at December 31, 2016 are entirely related to Primary Capital Mortgage, LLC ("PCM"). There were no borrowings at December 31, 2017.

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(1)	Interest rate swap contracts are accounted for as cash flow hedges.

(2)	Foreign currency forward contracts are accounted for as fair value hedges.

(3)	Notional amount is presented on a currency converted basis. The base currency notional amount of our foreign currency hedging forward contracts in a liability position was €3.0 million at December 31, 2017.

(1)	Foreign currency forward contracts are accounted for as fair value hedges.

(2)	Notional amount is presented on a currency converted basis. The base currency notional amount of our foreign currency hedging forward contracts in an asset position was €11.9 million at December 31, 2016. The base currency notional amount of our foreign currency hedging forward contracts in a liability position was €11.1 million at December 31, 2016.

(1)	Negative values indicate a decrease to the associated consolidated statements of operations line items.

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(1)	Negative values indicate a decrease to the associated consolidated statements of operations line items.

(1)	Negative values indicate a decrease to the associated consolidated statements of operations line items.

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(1)	Outstanding borrowings includes accrued interest expense.

(2)	The Wells Fargo Bank CRE term repurchase facility includes $565,000 and $1.6 million of deferred debt issuance costs at December 31, 2017 and 2016, respectively.

(3)	The Morgan Stanley Bank CRE term repurchase facility includes $448,000 and $1.1 million of deferred debt issuance costs at December 31, 2017 and 2016, respectively.

(4)	The Deutsche Bank CMBS term repurchase facility includes no deferred debt issuance costs at December 31, 2017 and $16,000 of deferred debt issuance costs at December 31, 2016.

(5)	The RSO Repo SPE Trust 2015 term repurchase facility includes $133,000 and $282,000 of deferred debt issuance costs at December 31, 2017 and 2016, respectively.

(6)	The RSO Repo SPE Trust 2017 term repurchase facility includes $320,000 of deferred debt issuance costs at December 31, 2017 and no deferred debt issuance costs at December 31, 2016.

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(1)	The designated principal reinvestment period is the period where principal payments received by each respective securitization may be designated by us to purchase funding participations of existing collateral originally underwritten at the close of each securitization, which was funded outside of the deal structure.

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(1)	Per share calculations exclude unvested restricted stock, as disclosed on the consolidated balance sheet, of 483,073 and 400,050 shares at December 31, 2017 and 2016, respectively. The denominator for the calculation is 30,946,819 and 30,649,970 at December 31, 2017 and 2016, respectively.

(2)	Per share amount calculation includes the impact of 296,849 additional shares.

(3)	Common stock book value is calculated as total stockholders' equity of $671.5 million less preferred stock equity of $223.8 million at December 31, 2017.

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(1)	Initial measurement date is December 31, 2016.

(2)	Income tax expense from non-core investments and net realized gain (loss) on non-core assets are components of net income or loss from non-core assets.

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

(4)	Upon making the decision to dispose of the non-core asset classes, we re-evaluated our net deferred tax asset, which resulted in a net $10.4 million write down of our valuation allowance for the year ended December 31, 2016.

(5)	Core Earnings for the year ended December 31, 2017 include a non-recurring charge of $8.5 million, or $(0.28) per common share-diluted, in connection with the extinguishment of the 6.00% Convertible Senior Notes and 8.00% Convertible Senior Notes, and $3.8 million, or $(0.12) per common share-diluted, in connection with the redemptions of Series A Preferred Stock and Series B Preferred Stock.

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(1)	Reflects adjustments as a result of the designation as assets held for sale or discontinued operations, which occurred during the third and fourth quarters of 2016 except as noted in (2) below.

(2)	The impairment adjustment to middle market loans includes $5.4 million of fair value adjustments that occurred prior to the inception of the Plan.

(3)	Investments in unconsolidated entities include a pro forma adjustment for a $5.1 million distribution from Pelium Capital received in January 2018.

(4)	Legacy CRE Loans includes $118.2 million par value of loans at the inception of the Plan that were not reflected on the consolidated balance sheets until our investment in RREF CDO 2007-1 was liquidated in November 2016.

(5)	Includes $1.1 million of cash and cash equivalents not classified as assets held for sale in the Residential Mortgage Lending segment at December 31, 2017.

(6)	Commercial Finance assets decreased by $2.3 million related to the reclassification of certain assets to other assets on the consolidated balance sheets.

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1.

Repurchase Agreements: Repurchase agreements effectively allow us to borrow against loans and securities that we own. Under these agreements, we sell our loans and securities to a counterparty and agree to repurchase the same loans and securities from the counterparty at a price equal to the original sales price plus interest. The counterparty retains the sole discretion over whether to purchase the loan and security from us and, subject to certain conditions, the market value of such loan or security for purposes of determining whether we are required to pay margin to the counterparty. Generally, if the lender determines (subject to certain conditions) that the market value of the collateral in a repurchase transaction has decreased by more than a defined minimum amount, we would be required to repay any amounts borrowed in excess of the product of (i) the revised market value multiplied by (ii) the applicable advance rate. During the term of a repurchase agreement, we receive the principal and interest on the related loans and securities and pay interest to the counterparty. At December 31, 2017, we have various repurchase agreements, as described below.

2.

Loan Sales, Syndications and Securitizations: We seek non-recourse long-term financing from loan sales, syndications and/or securitizations of our investments in CRE loans. The sales, syndications or securitizations generally involve a senior portion of our loan, but may involve the entire loan. Loan sales and syndications generally involve the sale of a senior note component or participation interest to a third party lender. Securitization generally involves transferring notes to a special purpose vehicle (or the issuing entity), which then issues one or more classes of non-recourse notes pursuant to the terms of an indenture. The notes are secured by the pool of assets. In exchange for the transfer of assets to the issuing entity, we receive cash proceeds from the sale of non-recourse notes. Sales, syndications or securitizations of our portfolio investments might magnify our exposure to losses on those portfolio investments because the retained subordinate interest in any particular overall loan would be subordinate to the loan components sold and we would, therefore, absorb all losses sustained with respect to the overall loan before the owners of the senior notes experience any losses with respect to the loan in question.

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(1)	Overcollateralization cushion represents the amount by which the collateral held by the securitization issuer exceeds the maximum amount required.

(2)

The designated principal reinvestment period for RCC 2015-CRE3, RCC 2015-CRE4 and RCC 2017-CRE5 is the period in which principal repayments can be utilized to purchase loans held outside of the respective securitization that represent the funded commitments of existing collateral in the respective securitization that were not funded as of the date the respective securitization was closed. Additionally, the indenture for each securitization does not contain any interest coverage test provisions.

(3)	Apidos Cinco was substantially liquidated in November 2016. As a result of the liquidation, we received $20.4 million of cash and consolidated the remaining assets.

(1)	The remaining assets at the liquidation date were measured at fair value and returned to us in exchange for our preference share and equity notes in the respective securitization.

(2)	Cash distributions for the year ended December 31, 2017 includes preference share and equity notes distributions at liquidation of $25.6 million for RCC 2014-CRE2. Cash distributions for the year ended December 31, 2016 includes preference share and equity notes distributions at liquidation of $33.4 million for RCC CRE Notes 2013.

(3)	Moselle CLO S.A. completed the sale of all of its remaining assets by January 2015.

•	unrestricted cash and cash equivalents of $200.4 million; and

•	$160.7 million and $95.3 million available under two term financing facilities to finance originations of CRE loans.

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(1)	Contractual commitments on borrowings are presented net of deferred debt issuance costs and discounts.

(2)	Contractual commitments exclude $31.4 million and $32.3 million of estimated interest expense payable through maturity, in June 2036 and October 2036, respectively, on our trust preferred securities.

(3)	Contractual commitments exclude $30.3 million of interest expense payable through maturity, in August 2022, on our 4.50% Convertible Senior Notes.

(4)	Contractual commitments exclude $4.3 million of interest expense payable through maturity, in December 2018, on our 6.00% Convertible Senior Notes.

(5)	Contractual commitments exclude $3.5 million of interest expense payable through maturity, in January 2020, on our 8.00% Convertible Senior Notes.

(6)	Contractual commitments include $1.1 million of accrued interest expense at December 31, 2017 on our repurchase facilities.

(7)

Unfunded commitments on our originated CRE whole loans generally fall into two categories: (i) pre-approved capital improvement projects and (ii) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, we would receive additional interest income on the advanced amount. At December 31, 2017, we had unfunded commitments on 38 CRE whole loans.

(8)	Calculated only for the next 12 months based on a fixed amount as defined in our Third Amended and Restated Management Agreement. Our management agreement also provides for an incentive fee arrangement that is based on operating performance.  Because the incentive fee is not a fixed and determinable amount, it is not included in this table.

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ITEM 7A .	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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•	monitoring and adjusting, if necessary, the reset index and interest rate related to our borrowings;

•	attempting to structure our borrowing agreements for our CMBS to have a range of different maturities, terms, amortizations and interest rate adjustment periods; and

•	using derivatives to adjust the interest rate-sensitivity of our variable rate borrowings which we discuss in "Financial Condition - Hedging Instruments."

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(1)	Cash and cash equivalents as of January 1, 2016 decreased by $472,000 due to the adoption of the amendments to the consolidation accounting guidance resulting in the deconsolidation of five VIEs.

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•	RCC Real Estate, Inc. ("RCC Real Estate"), a wholly-owned subsidiary, holds CRE loans, CRE-related securities and historically has held direct investments in real estate.  RCC Real Estate owns 100% of the equity of the following VIEs:

◦

Resource Real Estate Funding CDO 2006-1, Ltd. ("RREF CDO 2006-1") and Resource Real Estate Funding CDO 2007-1, Ltd. ("RREF CDO 2007-1") were established to complete a collateralized debt obligation ("CDO") issuance secured by a portfolio of CRE loans and commercial mortgage-backed securities ("CMBS"). These entities were deconsolidated in January 2016, and the retained investments were accounted for as an investment securities available-for-sale in the Company's consolidated financial statements. In April 2016 and November 2016, RREF CDO 2006-1 and RREF CDO 2007-1, respectively, were liquidated in exchange for the Company's interests. The remaining assets of the CDOs were distributed to the Company, comprised of investment securities available-for-sale and CRE loans held for investment that were recorded at fair value.

◦

Resource Capital Corp. CRE Notes 2013, Ltd. ("RCC CRE Notes 2013") and Resource Capital Corp. 2014-CRE2, Ltd. ("RCC 2014-CRE2") were established to complete CRE securitization issuances secured by a portfolio of CRE loans. In December 2016 and August 2017, RCC CRE Notes 2013 and RCC 2014-CRE2, respectively, were liquidated and, as a result, the remaining assets were returned to the Company in exchange for the Company's preference shares and equity notes in the securitizations.

◦	Resource Capital Corp. 2015-CRE3, Ltd. ("RCC 2015-CRE3"), Resource Capital Corp. 2015-CRE4, Ltd. ("RCC 2015-CRE4") and Resource Capital Corp. 2017-CRE5, Ltd. ("RCC 2017-CRE5") were each established to complete CRE securitization issuances secured by a separate portfolio of loans.

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•

RCC Commercial, Inc. ("RCC Commercial"), a wholly-owned subsidiary, holds a 29.6% investment in NEW NP, LLC, which holds syndicated corporate loan investments and one directly originated middle market loan. NEW NP, LLC owned 100% of Northport TRS, LLC which held middle market loans. NEW NP, LLC sold its interest in Northport TRS, LLC in August 2016. In November 2016, NEW NP, LLC's operations were reclassified to discontinued operations. See Note 24 for further discussion. RCC Commercial also owns 100% of Apidos CDO III, Ltd. ("Apidos CDO III"). Apidos CDO III, a TRS, was established to complete a CDO issuance secured by a portfolio of syndicated corporate loan and asset-backed securities ("ABS"). In June 2015, the Company liquidated Apidos CDO III and, as a result, all of the assets were sold.

•	RCC Commercial II, Inc. ("Commercial II"), a wholly-owned subsidiary, invests in structured notes and subordinated notes of foreign, syndicated corporate loan collateralized loan obligation ("CLO") vehicles. Commercial II also owns equity in the following VIEs:

◦

Commercial II owns 100% of the equity of Apidos Cinco CDO ("Apidos Cinco"), a TRS that was established to complete a CDO issuance secured by a portfolio of syndicated corporate loans, ABS and corporate bonds. This entity was deconsolidated in January 2016, and the retained investment was accounted for as an investment security, available-for-sale. In November 2016, the Company liquidated and sold substantially all of Apidos Cinco's assets. The remaining assets were consolidated by the Company upon liquidation and are marked at fair value.

◦	Commercial II owns 68.3% of the equity of Whitney CLO I, Ltd. ("Whitney CLO I"), a TRS that holds residual assets following a September 2013 liquidation.

•

RCC Commercial III, Inc. ("Commercial III"), a wholly-owned subsidiary, holds investments in syndicated corporate loan investments.  Commercial III owns 90% of the equity of Apidos CDO I, LTD. ("Apidos CDO I"). Apidos CDO I, a TRS, was established to complete a CDO issuance secured by a portfolio of syndicated corporate loans and ABS. In October 2014, the Company liquidated Apidos CDO I and as a result substantially all of the assets were sold.

•	RSO EquityCo, LLC, a wholly-owned subsidiary, owns 10% of the equity of Apidos CDO I.

•	RCC Residential Portfolio, Inc. ("RCC Resi Portfolio"), a wholly-owned subsidiary, historically invested in residential mortgage-backed securities ("RMBS"). The remaining securities were sold in September 2017.

•	RCC Residential Portfolio TRS, Inc. ("RCC Resi TRS"), a wholly-owned TRS, was formed to hold strategic residential mortgage positions which could not be held by RCC Resi Portfolio. RCC Resi TRS also owns 100% of the equity, unless otherwise stated, in the following:

◦

Primary Capital Mortgage, LLC ("PCM"), (formerly known as Primary Capital Advisors, LLC), originates and services residential mortgage loans. In November 2016, PCM's operations were reclassified to discontinued operations. In 2017, PCM sold its residential mortgage loan pipeline, its mortgage servicing rights ("MSR") and substantially all of its remaining loans held for sale. See Note 24 for further discussion.

◦	RCM Global Manager, LLC ("RCM Global Manager") owns 63.2% of RCM Global LLC ("RCM Global"). RCM Global holds a portfolio of investment securities available-for-sale. RCM Global was deconsolidated in January 2016 and the retained investment is now accounted for as an equity method investment.

◦	RCC Residential Depositor, LLC ("RCC Resi Depositor") owns 100% of RCC Residential Acquisition, LLC ("RCC Resi Acquisition"). RCC Resi Acquisition purchased residential mortgage loans from PCM and transferred the assets to RCC Residential Opportunities Trust ("RCC Opp Trust"). RCC Opp Trust, a wholly owned statutory trust, held a portfolio of residential mortgage loans available-for-sale.

◦	Long Term Care Conversion Funding, LLC ("LTCC Funding") provides a financing facility to fund the acquisition of life settlement contracts.

◦	Life Care Funding, LLC ("LCF") was established for the purpose of acquiring life settlement contracts. In July 2017, the Company purchased the balance of the outstanding membership interests of LCF, therefore, becoming a single member LLC.

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◦	RCC TRS, LLC ("RCC TRS") holds investments in direct financing leases and investment securities, trading. RCC TRS also owns equity in the following:

•	RCC TRS owns 100% of the equity of Resource TRS, LLC, which in turn holds a 25.8% investment in NEW NP, LLC, which is reported in discontinued operations.

▪	RCC TRS owns 44.6% of the equity in NEW NP, LLC, which is reported in discontinued operations.

▪	RCC TRS owns 80.2% of the equity in Pelium Capital, L.P. ("Pelium Capital"). Pelium Capital holds investment securities, trading and was deconsolidated in January 2016. The retained investment is now accounted for as an equity method investment.

◦

Resource Capital Asset Management, LLC ("RCAM") was entitled to collect senior, subordinated and incentive fees related to CLO issuers to which it provided management services through CVC Credit Partners, L.P. ("CVC Credit Partners"), formerly Apidos Capital Management ("ACM"), a subsidiary of CVC Capital Partners SICAV-FIS, S.A., ("CVC"). C-III sold its 24.0% interest in CVC Credit Partners in August 2017.

1.	The equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including the equity holders.

2.	The equity investors lack one or more of the following essential characteristics of a controlling financial interest.

a.	The direct ability to make decisions about the entity's activities through voting rights or similar rights.

b.	The obligation to absorb the expected losses of the entity.

c.	The right to receive the expected residual returns of the entity.The equity investors have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.

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•	management, having the authority to approve the action, commits to a plan to sell the asset or the disposal group;

•	the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;

•	an active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated;

•	the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the Company's control extend the period of time required to sell the asset or disposal group beyond one year;

•	the asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

•	actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

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(1)	Assets of each of the Consolidated VIEs may only be used to settle the obligations of each respective VIE.

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(1)	As a result of an accounting standards update adopted on January 1, 2015 (see Note 2), the Company unlinked its previously linked transactions, resulting in non-cash increases in both its investment securities available-for-sale, pledged as collateral, at fair value and related repurchase agreements borrowings balances.

(2)	In August 2016, the Company completed the sale of Northport TRS, LLC. The Purchaser assumed $122.0 million and paid down $22.0 million of principal and $107,000 of interest expense on the Company's behalf of the senior secured revolving credit agreement. The Purchaser assumed $192,000 of accounts payable and accrued legal fees recorded to complete the sale.

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(1)	Amounts include unamortized loan origination fees of $6.7 million and $5.8 million and deferred amendment fees of $268,000 and $4,000 being amortized over the life of the loans at December 31, 2017 and 2016, respectively.

(2)	Substantially all loans are pledged as collateral under various borrowings at December 31, 2017 and 2016, respectively.

(3)	LIBOR refers to the London Interbank Offered Rate.

(4)	Maturity dates exclude contracted extension options, subject to the satisfaction of certain terms, that may be available to the borrowers.

(5)	CRE whole loans had $84.1 million and $55.5 million in unfunded loan commitments at December 31, 2017 and 2016, respectively. These unfunded loan commitments are advanced as the borrowers formally request additional funding as permitted under the loan agreement and any necessary approvals have been obtained.

(6)	Maturity dates exclude one CRE whole loan, with an amortized cost of $7.0 million, in default at December 31, 2017.

(7)	All syndicated corporate loans are second lien loans and are accounted for under the fair value option.

(1)	Excludes one CRE whole loan, with an amortized cost of $7.0 million, in default at December 31, 2017.

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(1)	Legacy CRE whole loans are carried at the lower of cost or fair value.

(2)	Includes one CRE whole loan, with an amortized cost of $7.0 million that was in default at December 31, 2017.

(3)	Includes two loans, with a total carrying value of $22.5 million, that were in default at December 31, 2017.

(4)	Rating category 5 was not applicable for December 31, 2016.

•

Two CRE whole loans cross-collateralized by a hotel and adjacent land in southern California with an initial par value of $67.5 million. These loans were written down to their estimated fair value of $61.4 million upon reclassification to held for sale and had a maturity date of February 2017. In June 2017, the borrower sold the collateral underlying these loans. Proceeds of $67.0 million were received by the Company in July 2017. As a result of this transaction, the Company realized a gain of $5.6 million in net realized and unrealized gain on investment securities available-for-sale and loans and derivatives on the Company's consolidated statements of operations during the year ended December 31, 2017;

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•

One CRE whole loan collateralized by a hotel in southern Arizona with an initial par value of $32.5 million. This loan was written down to its estimated fair value of $14.3 million upon reclassification to held for sale. In February 2017, the Company entered into a discounted payoff agreement with the borrower and received proceeds of $21.3 million in satisfaction of this loan. This transaction resulted in the recognition of a realized gain of $7.0 million in net realized and unrealized gain on investment securities available-for-sale and loans and derivatives on the Company's consolidated statements of operations;

•	One CRE whole loan collateralized by an office property in central Arizona with an initial par value of $17.7 million. This loan was written down to its estimated fair value of $11.0 million. The loan matured in May 2017 and is currently in default;

•

One CRE whole loan collateralized by a hotel in southern California with an initial par value of $29.5 million. This loan was written down to its estimated fair value of $24.0 million upon reclassification to held for sale. During the year ended December 31, 2017, an additional charge of $1.9 million, which included the write down of a protective advance of $442,000 made during the period, was taken to write the loan down to its estimated fair value of $22.5 million. The loan has a maturity date in January 2019.

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(1)	Excludes direct financing leases of $151,000, net of reserves, at December 31, 2017.

(2)	Includes one CRE whole loan, with an amortized cost of $7.0 million, that was in default at December 31, 2017, on which the Company recorded a $2.5 million specific provision during the year ended December 31, 2016.

(3)	Includes two loans with a total carrying value of $22.5 million that were in default at December 31, 2017.

(4)	Includes two loans with a total carrying value of $61.4 million that were in default at December 31, 2016.

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(1)	At December 31, 2017 and 2016, $169.6 million and $97.5 million, respectively, of investment securities available-for-sale were pledged as collateral under related financings.

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(1)	The Company expects that the payoff dates of these CMBS and ABS will either be extended or that they will be paid in full.

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(1)	Realized gain (loss) includes the recognition of the fair values of the retained collateral management fee rebate of $2.3 million.

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(1)	The investment in RRE VIP Borrower, LLC ("RRE VIP Borrower") was sold in 2014. Earnings for the years ended December 31, 2017, 2016 and 2015 are related to insurance premium and property tax refunds with respect to the underlying sold properties in the portfolio.

(2)	The Company's investment in LCC liquidated in July 2017 as a result of the sale of LCC. The $41.1 million gain recognized on the sale is included in equity in earnings of unconsolidated entities on the Company's consolidated statements of operations.

(3)	In December 2015, the Company redeemed its investment in the fund.

(4)	Pursuant to the new consolidation guidance adopted in January 2016, these previously consolidated VIEs are now accounted for under the equity method.

(5)	The Company had no carrying value on its investment in RCM Global at December 31, 2017 due to accumulated losses in excess of the investment's cost basis.

(6)	During the year ended December 31, 2017, the Company received proceeds of $13.6 million related to the partial liquidation of its investment.

(7)	The Company sold its investment in Pearlmark Mezz in May 2017.

(8)	The Company's investment in School Lane House was sold in March 2014.

(9)	For the years ended December 31, 2017, 2016 and 2015, distributions from the trusts are recorded in interest expense on the Company's consolidated statements of operations as the investment is accounted for under the cost method.

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(1)	Amounts also include accrued interest expense of $534,000 and $468,000 related to CRE term repurchase facilities at December 31, 2017 and 2016, respectively.

(2)	Amounts also include accrued interest expense of $46,000 and $157,000 related to CMBS term repurchase facilities at December 31, 2017 and 2016, respectively.

(3)	Amount also includes accrued interest expense of $203,000 and $69,000 related to trust certificate repurchase facilities at December 31, 2017 and 2016, respectively.

(4)	Amounts also include accrued interest expense of $279,000 and $0 related to CMBS short term repurchase facilities at December 31, 2017 and 2016, respectively.

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(1)	The designated principal reinvestment period is the period where principal payments received by each respective securitization may be designated by the Company to purchase funding participations of existing collateral originally underwritten at the close of each securitization, which was funded outside of the deal structure.

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(1)	Outstanding borrowings includes accrued interest expense.

(2)	The Wells Fargo Bank, N.A. ("Wells Fargo") CRE term repurchase facility includes $565,000 and $1.6 million of deferred debt issuance costs at December 31, 2017 and 2016, respectively.

(3)	The Morgan Stanley Bank, N.A. ("Morgan Stanley") CRE term repurchase facility includes $448,000 and $1.1 million of deferred debt issuance costs at December 31, 2017 and 2016, respectively.

(4)	The Deutsche Bank Securities, Inc. ("Deutsche Bank") CMBS term repurchase facility includes no deferred debt issuance costs at December 31, 2017 and $16,000 of deferred debt issuance costs at December 31, 2016.

(5)	The RSO Repo SPE Trust 2015 term repurchase facility includes $133,000 and $282,000 of deferred debt issuance costs at December 31, 2017 and 2016, respectively.

(6)	The RSO Repo SPE Trust 2017 term repurchase facility includes $320,000 of deferred debt issuance costs at December 31, 2017 and no deferred debt issuance costs at December 31, 2016.

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(1)	Equal to the estimated fair value of securities or loans sold, plus interest receivable, minus the sum of repurchase agreement liabilities plus accrued interest expense.

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(1)	Non-employees are employees of C-III and Resource America.

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(1)	Non-employees are employees of C-III and Resource America.

(2)	Amounts include $691,000 of equity compensation expense, for the year ended December 31, 2016, associated with the accelerated stock vesting of former executives of the Company.

(3)	Amounts exclude equity compensation expense for employees of the Company's subsidiary PCM, which is included in net income (loss) from discontinued operations, net of tax.

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(1)	Potentially dilutive shares issuable in connection with the potential conversion of the Company's 4.50% Convertible Senior Notes, 6.00% Convertible Senior Notes and 8.00% Convertible Senior Notes (see Note 11) were not included in the calculation of diluted net income (loss) per share because the effect would be anti-dilutive.

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(1)	Amounts reclassified from accumulated other comprehensive income are reclassified to net realized an unrealized gain on investment securities available-for-sale and loans and derivatives on the Company's consolidated statements of operations.

•

A monthly base management fee equal to 1/12th of the amount of the Company's equity multiplied by 1.5%; provided, however that the base management fee is fixed at $937,500 per month for each of the 15 successive months beginning on October 1, 2017. Under the management agreement, ''equity'' is equal to the net proceeds from issuances of shares of capital stock (or the value of common shares upon the conversion of convertible securities), less offering-related costs, plus or minus the Company's retained earnings (excluding non-cash equity compensation incurred in current or prior periods) less all amounts the Company has paid for common stock and preferred stock repurchases. The calculation is adjusted for one-time events due to changes in GAAP, as well as other non-cash charges, upon approval of the Company's independent directors.

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Incentive compensation, calculated quarterly as follows: (A) 20% of the amount by which the Company's core earnings (as defined in the management agreement) for a quarter exceeds the product of (i) the weighted average of (x) the per share book value of the Company's common shares at September 30, 2017 (subject to adjustments for certain items of income or loss on operations or gain or loss on resolutions under the Plan from October 1, 2017 through December 31, 2018) and (y) the per share price (including the conversion price, if applicable) paid for the Company's common shares in each offering (or issuance, upon the conversion of convertible securities) by it subsequent to September 30, 2017, multiplied by (ii) the greater of (x) 1.75% and (y) 0.4375% plus one-fourth of the Ten Year Treasury Rate for such quarter; multiplied by (B) the weighted average number of common shares outstanding during such quarter; subject to adjustment (a) to exclude events pursuant to changes in GAAP or the application of GAAP as well as non-recurring or unusual transactions or events, after discussion between the Manager and the independent directors and approval by a majority of the independent directors in the case of non-recurring or unusual transactions or events, and (b) to deduct an amount equal to any fees paid directly by a TRS (or any subsidiary thereof) to employees, agents and/or affiliates of the Manager with respect to profits of such TRS (or subsidiary thereof) generated from the services of such employees, agents and/or affiliates, the fee structure of which shall have been approved by a majority of the independent directors and which fees may not exceed 20% of the net income (before such fees) of such TRS (or subsidiary thereof).

•	Per loan underwriting and review fees in connection with valuations of and potential investments in certain subordinate commercial mortgage pass-through certificates, in amounts approved by a majority of the independent directors.

•	Reimbursement of out-of-pocket expenses and certain other costs incurred by the Manager that relate directly to the Company and its operations.

•	Reimbursement of the Manager's expenses for the wages, salaries and benefits of (A) the Company's Chief Financial Officer and accounting, finance, tax and investor relations professionals, and (B) employees of its ancillary operating subsidiaries, in proportion to such personnel's percentage of time dedicated to the Company or its subsidiaries' operations.

•	if such shares are traded on a securities exchange, at the average of the closing prices of the shares on such exchange over the 30-day period ending three days prior to the issuance of such shares;

•	if such shares are actively traded over-the-counter, at the average of the closing bid or sales price as applicable over the 30-day period ending three days prior to the issuance of such shares; and

•	if there is no active market for such shares, at the fair market value as reasonably determined in good faith by the board of directors of the Company.

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•	the Manager's continued material breach of any provision of the management agreement following a period of 30 days after written notice thereof;

•	the Manager's fraud, misappropriation of funds, or embezzlement against the Company;

•	the Manager's gross negligence in the performance of its duties under the management agreement;

•	the dissolution, bankruptcy or insolvency, or the filing of a voluntary bankruptcy petition, by the Manager; or

•	a change of control (as defined in the management agreement) of the Manager if a majority of the Company's independent directors determines, at any point during the 18 months following the change of control, that the change of control was detrimental to the ability of the Manager to perform its duties in substantially the same manner conducted before the change of control.

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(1)

For structured notes classified as Level 3 at December 31, 2017, the Company recorded changes in unrealized losses of $963,000 for the year ended December 31, 2017, in net realized and unrealized (loss) gain on investment securities, trading on the consolidated statements of operations. For loans held for sale classified as Level 3 at December 31, 2017, the Company recorded changes in unrealized gains of $111,000 for the year ended December 31, 2017, in fair value adjustments on assets held for sale on the consolidated statements of operations.

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(1)	Interest rate swap contracts are accounted for as cash flow hedges.

(2)	Foreign currency forward contracts are accounted for as fair value hedges.

(3)	Notional amount presented is translated on a currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts in a liability position was €3.0 million at December 31, 2017.

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(1)	Foreign currency forward contracts are accounted for as fair value hedges.

(2)	Notional amount presented is translated on a currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts in an asset position was €11.9 million at December 31, 2016. The base currency notional amount of the Company's foreign currency hedging forward contracts in a liability position was €11.1 million at December 31, 2016.

(1)	Negative values indicate a decrease to the associated consolidated statements of operations line items.

(1)	Negative values indicate a decrease to the associated consolidated statements of operations line items.

(1)	Negative values indicate a decrease to the associated consolidated statements of operations line items.

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(1)	The Company posted cash margin of $1.9 million related to interest rate swap contracts entered into at December 31, 2017.

(1)	Amounts represent financial instruments pledged that are available to be offset against liability balances associated with term facilities, repurchase agreements and derivative transactions.

(2)	The combined fair value of securities and loans pledged against the Company's various repurchase agreements and term facilities was $816.1 million and $724.8 million at December 31, 2017 and 2016, respectively.

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(1)	Certain reclassifications have been made to the 2017 and 2016 consolidated financial statements, including the impact of discontinued operations.

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(1)

Includes MSRs with a fair value of $14.4 million at December 31, 2016. There were no MSRs remaining at December 31, 2017. MSRs are recorded at fair value using a discounted cash flow model, calculated by an independent third party. The key assumptions used in the estimation of fair value include prepayment speeds, discount rates, default rates, cost to service, contractual servicing fees and escrow earnings.

(2)	Includes the Company's investment in life settlement contracts of $5.1 million and $5.8 million at December 31, 2017 and 2016, respectively, which were transferred to held for sale in the fourth quarter of 2016.

(3)	Borrowings at December 31, 2016 are entirely related to PCM. There were no borrowings at December 31, 2017.

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(1)

Third party appraisals were obtained on six of the Legacy CRE whole loans at December 31, 2016 and, as a result, specific provisions of $8.1 million were recorded during the year ended December 31, 2016 prior to the loans being reclassified to held for sale status. Additional provisions in the amount of $7.7 million were recorded during the year ended December 31, 2016 after the transfer of loans to held for sale to adjust the loans to the lower of cost or market.

(2)	Includes a mezzanine loan with a par value of $38.1 million that was acquired at a fair value of zero as a result of the liquidation of RREF CDO 2006-1 in April 2016 and RREF CDO 2007-1 in November 2016. The mezzanine loan is comprised of two trances, with maturity dates of November 2018 and September 2021.

(3)

Includes a directly originated middle market loan with fair values of $2.0 million and $1.9 million at December 31, 2017 and 2016, respectively. In May 2017, the loan experienced payment default. In July 2017, the loan was amended to allow an extension for the borrower to seek a sale of its business. The loan's fair value was supported by a third party valuation market prepared at December 31, 2017.

(4)	At December 31, 2016, 24.4%, 17.2%, 17.1%, 14.2%, 12.5%, 9.8% and 4.8% of the Company's middle market loans are concentrated in the healthcare, education and childcare, diversified/conglomerate service, insurance, beverage, food and tobacco, buildings and real estate and hotels, motels, inns and gaming industry groupings, respectively.

(5)	The fair value option was elected for residential mortgage loans held for sale.

(6)

The Company's residential mortgage loan portfolio is comprised of both agency loans and non-agency jumbo loans. The fair values of the agency loan portfolio are generally classified as Level 2 in the fair value hierarchy, as those values are determined based on quoted market prices for similar assets or upon other observable inputs. The fair values of the jumbo loan portfolio are generally classified as Level 3 in the fair value hierarchy, as those values are generally based upon valuation techniques that utilize unobservable inputs that reflect the assumptions that a market participant would use in pricing those assets.

(7)	At December 31, 2016, approximately 39.2%, 16.2%, 14.6%, 5.9% and 5.9% of the Company's residential mortgage loans were originated in Georgia, California, Utah, Virginia and Florida, respectively, based on amortized cost.

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ITEM 9.	CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.	CONTROLS AND PROCEDURES

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ITEM 9B.	OTHER INFORMATION

ITEM 11.	EXECUTIVE COMPENSATION

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

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(a)	The following documents are filed as part of this Annual Report on Form 10-K:

1.	Financial Statements

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(1)	Maturity dates exclude extension options which may be available to borrower.

(2)	I/O = interest only

(3)	The net carrying amount of loans includes an allowance for loan loss of $5.3 million at December 31, 2017, all allocated to CRE whole loans.

(4)	Includes one loan in default at December 31, 2017.

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