Eagle Point's Strategic Overhaul Amidst GAAP Loss and NAV Decline

GREENWICH, Conn. – February 26, 2026 – Eagle Point Income Company Inc. (NYSE: EIC) presented a complex picture to investors today, reporting a GAAP net loss and a declining Net Asset Value (NAV) for the fourth quarter of 2025, while simultaneously executing an aggressive overhaul of its balance sheet designed to slash financing costs and boost shareholder returns.

The closed-end fund, which specializes in Collateralized Loan Obligation (CLO) debt, announced it will redeem all outstanding shares of its highest-cost preferred stock. This move, coupled with significant common stock repurchases, signals a strategic pivot to optimize its capital structure in a shifting interest rate environment, even as its headline financial figures show signs of strain.

A Tale of Two Metrics: Loss on Paper, Strength in Cash

For the fourth quarter ending December 31, 2025, Eagle Point reported a GAAP net loss of $14.6 million, or $0.60 per weighted average common share. This contributed to a full-year GAAP net loss of $1.2 million. The company's NAV per common share also saw a decline, falling to $13.31 from $14.21 at the end of the prior quarter. These figures reflect a challenging period marked by unrealized mark-to-market losses on investments and the impact of lower base interest rates.

However, beneath the GAAP-reported losses, the company's cash-generating capabilities painted a starkly different, more robust picture. Eagle Point received $19.3 million in recurring cash distributions from its investment portfolio, equivalent to $0.79 per weighted average common share. This represents an 18% increase in cash flow from the previous quarter. Crucially, this cash income comfortably exceeded the company's aggregate common stock distributions and total operating costs for the period.

This divergence highlights the difference between accounting measures, which include non-cash unrealized losses, and the actual cash being generated by the company's underlying CLO investments. “Eagle Point Income Company finished the year with strong cash flows, which increased in the fourth quarter by approximately 18% from the previous quarter,” said Thomas P. Majewski, Chairman and Chief Executive Officer, in the company’s press release.

Aggressive Balance Sheet Overhaul

The centerpiece of Eagle Point's latest announcement is a decisive move to streamline its capital structure. The company declared its intention to fully redeem all outstanding shares of its 8.00% Series C Term Preferred Stock (NYSE: EICC) on April 6, 2026. This action follows the full redemption of its 7.75% Series B Term Preferred Stock, which was completed during the fourth quarter.

By eliminating these two series of preferred stock, Eagle Point is systematically shedding its most expensive forms of capital. These strategic redemptions are being supported by a new revolving credit facility with a three-year maturity, secured during the fourth quarter, which offers more favorable financing terms.

“We remain focused on optimizing our balance sheet and capital structure to enhance shareholder returns,” Mr. Majewski stated. He noted that the Series C redemption removes "the Company’s highest cost of capital." This proactive liability management is designed to reduce ongoing financing expenses, increase financial flexibility, and ultimately improve the net investment income available to common shareholders over the long term.

Navigating a Shifting CLO Landscape

The company’s performance is intrinsically linked to the dynamics of the CLO market. Mr. Majewski acknowledged that "lower base rates have weighed on returns in the second half of 2025." As floating-rate instruments, the income from EIC's CLO debt portfolio is directly tied to benchmark rates like SOFR, which declined during the period. The weighted average effective yield of the company's CLO portfolio subsequently dipped to 10.6% as of year-end, down from 11.0% in the prior quarter.

Despite this pressure on yields, management emphasized the resilience of the underlying assets. “Credit fundamentals across the loan market remain broadly resilient,” Mr. Majewski commented. He highlighted the company's strategic focus on BB-rated CLO debt, "an asset class that has historically demonstrated low long-term default rates and have strong structural protections." This focus is intended to provide a stable income stream and compelling relative value, even within a declining interest rate environment.

The company is not standing still, having deployed $44.8 million in gross capital during the quarter, including investments in other credit assets outside of traditional CLOs which reportedly offer a high weighted average effective yield. This suggests a tactical diversification to capture value across the broader credit spectrum.

A Focus on Shareholder Returns

Amidst the financial headwinds, Eagle Point has doubled down on actions aimed directly at boosting shareholder value. The company was an active buyer of its own stock, repurchasing approximately 1.6 million shares of common stock for $18.7 million in the fourth quarter. These shares were bought at a significant average discount to NAV, resulting in an estimated NAV accretion of $0.14 per share for the remaining shareholders. This move underscores management's belief, as stated by Mr. Majewski, that the company’s common stock is "currently undervalued by the market."

Looking ahead, the company declared monthly distributions of $0.11 per share for the second quarter of 2026. While this represents a reduction from prior levels, it appears to be a pragmatic adjustment to the current earnings environment, aligning payouts with the company's near-term cash flow projections in a lower-rate world.

By deleveraging its preferred equity and actively buying back discounted common shares, Eagle Point is positioning itself with what Mr. Majewski describes as "meaningful liquidity to capitalize on attractive investment opportunities." The company's aggressive financial re-engineering aims to create a leaner, more resilient structure poised to weather market volatility and enhance long-term returns for its common stockholders.