v3.25.2
CURRENT EXPECTED CREDIT LOSSES
 6 Months Ended
Jun. 30, 2025
Credit Loss [Abstract]  
CURRENT EXPECTED CREDIT LOSSES CURRENT EXPECTED CREDIT LOSSES
As of June 30, 2025 and December 31, 2024, the Company’s CECL Reserve for its loans held at carrying value was approximately $0.6 million and $40.2 thousand, respectively, or 0.25%, and 0.03%, respectively, of the Company’s total loans held at carrying value of approximately $248.3 million and $130.7 million, respectively, and is bifurcated between the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value of approximately $0.4 million and $21.8 thousand, respectively, and a liability for unfunded commitments of approximately $0.2 million and $18.4 thousand, respectively. The liability was based on the unfunded portion of the loan commitment over the full contractual period over which the Company is exposed to credit risk through a current obligation to extend credit. Management considered the likelihood that funding will occur and, if funded, the expected credit loss on the funded portion when determining the amount to allocate to its CECL Reserve.
Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value as of and for the three and six months ended June 30, 2025 was as follows:
Outstanding(1)
Unfunded(2)
Total
Balance at March 31, 2025$13,713 $144,115 $157,828 
Provision for (reversal of) current expected credit losses370,147 98,346 468,493 
Write-offs— — — 
Recoveries— — — 
Balance at June 30, 2025$383,860 $242,461 $626,321 
Outstanding(1)
Unfunded(2)
Total
Balance at December 31, 2024$21,782 $18,398 $40,180 
Provision for (reversal of) current expected credit losses362,078 224,063 586,141 
Write-offs— — — 
Recoveries— — — 
Balance at June 30, 2025$383,860 $242,461 $626,321 
(1)As of June 30, 2025 and December 31, 2024, the CECL Reserve related to outstanding balances on loans held at carrying value is recorded within current expected credit loss reserve in the Company’s consolidated balance sheets.
(2)As of June 30, 2025 and December 31, 2024, the CECL Reserve related to unfunded commitments on loans held at carrying value is recorded within current expected credit loss reserve as a liability in the Company’s consolidated balance sheets.
The Company continuously evaluates the credit quality of each loan by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors. Such factors may include property type, geographic and local market dynamics, physical condition, projected cash flow, loan structure and exit plan, loan-to-value ratio, fixed charge coverage ratio, project sponsorship, and other factors deemed necessary by the Company. Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:
RatingDefinition
1Very Low Risk — Investment exceeds performance expectations. Trends and risk factors since time of investment are favorable.
2Low Risk — Investment performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable.
3Medium Risk — Performing investments requiring closer monitoring. Trends and risk factors show some deterioration.
4High Risk/ Potential for Loss — Investment underperforming with the potential of some interest loss. Trends and risk factors are negative.
5Impaired/ Loss Likely — Investment underperforming with expected loss of interest, and full recovery of principal is unlikely.
The risk ratings are primarily based on historical data as well as taking into account future economic conditions.
As of June 30, 2025, the carrying value, excluding the CECL Reserve, of the Company’s loans held at carrying value within each risk rating by year of origination is as follows:
Risk Rating:20252024
Total
1$— $— $— 
278,908,742 142,824,032 221,732,774 
3— 26,604,238 26,604,238 
4— — — 
5— — — 
Total$78,908,742 $169,428,270 $248,337,012