xan-10q_20200630.htm

(Former name, former address and former fiscal year, if changed since last report)

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 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.

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

The number of outstanding shares of the registrant’s common stock on August 7, 2020 was 32,074,187 shares.

	June 30, 2020			December 31, 2019
	(unaudited)
ASSETS ⁽¹⁾
Cash and cash equivalents	$	57,734		$	79,958
Restricted cash		12,924			14,476
Accrued interest receivable		8,276			8,042
CRE loans		1,765,880			1,791,445
Less: allowance for credit losses		(61,091	)		(1,460	)
CRE loans, net		1,704,789			1,789,985
Investment securities available-for-sale		2,245			520,714
Principal paydowns receivable		45,099			19,517
Investments in unconsolidated entities		1,548			1,548
Derivatives, at fair value		—			30
Other assets		10,044			3,290
Assets held for sale		13,466			16,766
Total assets	$	1,856,125		$	2,454,326
LIABILITIES ⁽²⁾
Accounts payable and other liabilities	$	3,444		$	3,408
Management fee payable		446			701
Accrued interest payable		3,314			4,408
Borrowings		1,536,090			1,872,577
Distributions payable		4,313			10,492
Derivatives, at fair value		77			4,558
Accrued tax liability		56			38
Liabilities held for sale		1,740			1,746
Total liabilities		1,549,480			1,897,928
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.001: 10,000,000 shares authorized 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share; 4,800,000 and 4,800,000 shares issued and outstanding		5			5
Common stock, par value $0.001: 125,000,000 shares authorized; 32,058,492 and 31,880,594 shares issued and outstanding (including 331,681 and 420,962 of unvested restricted shares)		32			32
Additional paid-in capital		1,086,254			1,085,041
Accumulated other comprehensive (loss) income		(11,017	)		1,821
Distributions in excess of earnings		(768,629	)		(530,501	)
Total stockholders’ equity		306,645			556,398
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,856,125		$	2,454,326

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
REVENUES
Interest income:
CRE loans	$	26,959		$	30,388		$	54,000		$	57,731
Securities		272			6,591			6,421			12,966
Other		12			159			112			373
Total interest income		27,243			37,138			60,533			71,070
Interest expense		12,547			21,581			30,941			40,976
Net interest income		14,696			15,557			29,592			30,094
Other revenue		20			26			43			52
Total revenues		14,716			15,583			29,635			30,146
OPERATING EXPENSES
Management fees		1,327			2,251			3,444			4,334
Equity compensation		715			412			1,213			1,095
General and administrative		2,875			2,495			6,257			5,072
Depreciation and amortization		7			7			22			31
Provision for credit losses, net		41,472			170			57,621			1,195
Total operating expenses		46,396			5,335			68,557			11,727

		(31,680	)		10,248			(38,922	)		18,419
OTHER INCOME (EXPENSE)
Net realized and unrealized (loss) gain on investment securities available-for-sale and loans and derivatives		(982	)		4			(186,339	)		4
Fair value and other adjustments on asset held for sale		(927	)		(1,300	)		(4,718	)		(1,402	)
Other income		189			51			58			152
Total other expense		(1,720	)		(1,245	)		(190,999	)		(1,246	)

(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAXES		(33,400	)		9,003			(229,921	)		17,173
Income tax benefit		—			—			—			—
NET (LOSS) INCOME FROM CONTINUING OPERATIONS		(33,400	)		9,003			(229,921	)		17,173
NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		—			(112	)		—			(149	)
NET (LOSS) INCOME		(33,400	)		8,891			(229,921	)		17,024
Net income allocated to preferred shares		(2,587	)		(2,587	)		(5,175	)		(5,175	)
NET (LOSS) INCOME ALLOCABLE TO COMMON SHARES	$	(35,987	)	$	6,304		$	(235,096	)	$	11,849
NET (LOSS) INCOME PER COMMON SHARE - BASIC:
CONTINUING OPERATIONS	$	(1.14	)	$	0.20		$	(7.42	)	$	0.38
DISCONTINUED OPERATIONS		—			—			—			—
TOTAL NET (LOSS) INCOME PER COMMON SHARE - BASIC	$	(1.14	)	$	0.20		$	(7.42	)	$	0.38
NET (LOSS) INCOME PER COMMON SHARE - DILUTED:
CONTINUING OPERATIONS	$	(1.14	)	$	0.20		$	(7.42	)	$	0.38
DISCONTINUED OPERATIONS		—			—			—			—
TOTAL NET (LOSS) INCOME PER COMMON SHARE - DILUTED	$	(1.14	)	$	0.20		$	(7.42	)	$	0.38
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		31,705,709			31,438,247			31,665,956			31,409,063
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		31,705,709			31,656,180			31,665,956			31,594,046

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Net (loss) income	$	(33,400	)	$	8,891		$	(229,921	)	$	17,024
Other comprehensive (loss) income:
Reclassification adjustments for realized losses (gains) on investment securities available-for-sale included in net (loss) income		—			(4	)		185,357			(4	)
Unrealized (losses) gains on investment securities available-for-sale, net		—			3,331			(191,283	)		9,196
Reclassification adjustments associated with net unrealized losses from interest rate hedges included in net loss (income)		344			(45	)		321			(68	)
Unrealized losses on derivatives, net		(484	)		(2,697	)		(7,233	)		(4,390	)
Total other comprehensive (loss) income		(140	)		585			(12,838	)		4,734
Comprehensive (loss) income before allocation to preferred shares		(33,540	)		9,476			(242,759	)

Maryland		20-2287134
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value	XAN	New York Stock Exchange
8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock	XANPrC	New York Stock Exchange

		PAGE
PART I		3
Item 1:	Financial Statements	3
	Consolidated Balance Sheets - June 30, 2020 (unaudited) and December 31, 2019	3
	Consolidated Statements of Operations (unaudited) Three and Six Months Ended June 30, 2020 and 2019	5
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) Three and Six Months Ended June 30, 2020 and 2019	6
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) Six Months Ended June 30, 2020 and 2019	7
	Consolidated Statements of Cash Flows (unaudited) Six Months Ended June 30, 2020 and 2019	8
	Notes to Consolidated Financial Statements - June 30, 2020 (unaudited)	9
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	71
Item 4:	Controls and Procedures	73
PART II		74
Item 1:	Legal Proceedings	74
Item 1A:	Risk Factors	74
Item 6:	Exhibits	76
SIGNATURES		79

	June 30, 2020		December 31, 2019
	(unaudited)
(1) Assets of consolidated variable interest entities (“VIEs”) included in total assets above:
Restricted cash	$	12,575	$	532
Accrued interest receivable		6,074		3,780
CRE loans, pledged as collateral		1,360,808		957,045
Principal paydowns receivable		45,099		19,239
Other assets		132		25
Total assets of consolidated VIEs	$	1,424,688	$	980,621
(2) Liabilities of consolidated VIEs included in total liabilities above:
Accounts payable and other liabilities	$	135	$	175
Accrued interest payable		656		897
Borrowings		1,117,391		746,439
Total liabilities of consolidated VIEs	$	1,118,182	$	747,511

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