v3.25.2
FAIR VALUE OF FINANCIAL INSTRUMENTS
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company had no financial instruments carried at fair value on a recurring basis at either June 30, 2025 or December 31, 2024.

The Company measures the fair value of certain assets on a non-recurring basis when events or changes in circumstances indicate that the carrying value of the assets may be impaired. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for sale or write-downs of an asset's value due to impairment.

During the three months ended June 30, 2025, the Company reclassified a portion of one loan from CRE whole loans to Loan held for sale. The loan held for sale had an outstanding par balance and a carrying value of $45.8 million. The valuation of the loan fell under Level 3 of the fair value hierarchy.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair values of the Company’s short-term financial instruments such as cash and cash equivalents, restricted cash, accrued interest receivable, accounts payable and other liabilities, accrued interest payable and distributions payable approximate their carrying values on the consolidated balance sheets. The fair values of the Company’s other financial assets and liabilities are estimated as follows:

CRE whole loans. The fair values of the Company’s loans held for investment are measured by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Par values of loans with variable interest rates are expected to approximate fair value unless evidence of credit deterioration exists, in which case the fair value approximates the par value less the loan’s allowance estimated through individual evaluation. The Company’s floating-rate CRE loans had interest rates from 6.13% to 11.38% and 7.13% to 11.63% at June 30, 2025 and December 31, 2024, respectively.

CRE mezzanine loans. The fair value of the Company's mezzanine loans are measured by discounting the expected remaining cash flows using the current interest rates at which similar instruments would be originated for the same remaining maturity. One of the Company's mezzanine loans was fully reserved and had no carrying or fair value at June 30, 2025 or December 31, 2024. Additionally, during the six months ended June 30, 2025, the Company originated a mezzanine loan that had a fixed interest rate of 15.00% at June 30, 2025.

Loan receivable- due from Manager. Fair value is estimated using a discounted cash flow model.

Senior notes in CRE securitizations, 5.75% Senior Unsecured Notes and junior subordinated notes. Fair values are estimated using a discounted cash flow model with implied yields based on trades for similar securities.

CRE term reinvestment financing facility, Senior secured financing facility, warehouse financing facilities and mortgages payable. These are variable-rate debt instruments that are indexed to one-month Term SOFR that reset periodically and as a result, their carrying value approximates their fair value, excluding deferred debt issuance costs.

The fair values of the Company’s financial and non-financial assets that are not reported at fair value on the consolidated balance sheets are reported in the following table (in thousands):

 

 

 

 

 

 

Fair Value Measurements

 

 

 

Carrying Value

 

 

Fair Value(1)

 

 

Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)

 

 

Significant Other Observable Inputs
(Level 2)

 

 

Significant Unobservable Inputs
(Level 3)

 

At June 30, 2025:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRE whole loans

 

$

1,347,264

 

 

$

1,375,075

 

 

$

—

 

 

$

—

 

 

$

1,375,075

 

CRE mezzanine loans

 

 

14,384

 

 

 

15,000

 

 

 

—

 

 

 

—

 

 

 

15,000

 

Loan receivable - due from Manager

 

 

10,550

 

 

 

9,146

 

 

 

—

 

 

 

—

 

 

 

9,146

 

Loan held for sale

 

 

45,800

 

 

 

45,800

 

 

 

—

 

 

 

—

 

 

 

45,800

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRE term reinvestment facility

 

 

885,664

 

 

 

888,838

 

 

 

—

 

 

 

—

 

 

 

888,838

 

Senior secured financing facility

 

 

61,275

 

 

 

63,099

 

 

 

—

 

 

 

—

 

 

 

63,099

 

Warehouse financing facilities

 

 

82,067

 

 

 

82,961

 

 

 

—

 

 

 

—

 

 

 

82,961

 

Mortgages payable

 

 

79,576

 

 

 

80,113

 

 

 

—

 

 

 

—

 

 

 

80,113

 

5.75% Senior Unsecured Notes

 

 

149,166

 

 

 

147,600

 

 

 

—

 

 

 

—

 

 

 

147,600

 

Junior subordinated notes

 

 

51,548

 

 

 

42,104

 

 

 

—

 

 

 

—

 

 

 

42,104

 

At December 31, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRE whole loans

 

$

1,454,545

 

 

$

1,484,997

 

 

$

—

 

 

$

—

 

 

$

1,484,997

 

Loan receivable - due from Manager

 

 

10,675

 

 

 

8,969

 

 

 

—

 

 

 

—

 

 

 

8,969

 

Loan held for sale

 

 

11,100

 

 

 

11,100

 

 

 

—

 

 

 

—

 

 

 

11,100

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior notes in CRE securitizations

 

 

862,804

 

 

 

857,437

 

 

 

—

 

 

 

—

 

 

 

857,437

 

Senior secured financing facility

 

 

60,910

 

 

 

63,099

 

 

 

—

 

 

 

—

 

 

 

63,099

 

Warehouse financing facilities

 

 

156,739

 

 

 

158,266

 

 

 

—

 

 

 

—

 

 

 

158,266

 

Mortgages payable

 

 

79,556

 

 

 

80,113

 

 

 

—

 

 

 

—

 

 

 

80,113

 

5.75% Senior Unsecured Notes

 

 

148,814

 

 

 

145,485

 

 

 

—

 

 

 

—

 

 

 

145,485

 

Junior subordinated notes

 

 

51,548

 

 

 

40,852

 

 

 

—

 

 

 

—

 

 

 

40,852

 

 

(1)
The fair values reflected in the table above represent management's best estimate of the fair value of the financial instruments and have no impact on the Company's performance or cash flows.