v3.25.2
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
A three-level valuation hierarchy exists for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The three levels are defined as follows:
Level 1 — quoted prices are available in active markets for identical investments as of the measurement date. We do not adjust the quoted price for these investments.
Level 2 — quoted prices are available in markets that are not active or model inputs are based on inputs that are either directly or indirectly observable as of the measurement date.
Level 3 — pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the investment. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.
Valuation of Financial Instruments Measured at Fair Value
The following tables detail our financial instruments measured at fair value on a recurring basis:
June 30, 2025
Fair Value Measurements Using:
$ in thousandsLevel 1Level 2Level 3Total at Fair Value
Assets:
Commercial real estate loan investments$— $1,220,104 $2,330,274 $3,550,378 
Real estate-related securities— 9,763 — 9,763 
Total assets$— $1,229,867 $2,330,274 $3,560,141 
Liabilities:
Secured lending agreements$— $— $1,679,778 $1,679,778 
Term lending agreements— — 147,732 147,732 
Collateralized loan obligations— 1,001,129 — 1,001,129 
Derivative liabilities— 3,590 — 3,590 
Total liabilities$— $1,004,719 $1,827,510 $2,832,229 
December 31, 2024
Fair Value Measurements Using:
$ in thousandsLevel 1Level 2Level 3Total at Fair Value
Assets:
Commercial real estate loan investments$— $— $2,391,078 $2,391,078 
Derivative assets— 4,064 — 4,064 
Total assets$— $4,064 $2,391,078 $2,395,142 
Liabilities:
Secured lending agreements$— $— $1,720,350 $1,720,350 
Term lending agreements— — 134,518 134,518 
Total liabilities$— $— $1,854,868 $1,854,868 
Valuation of Commercial Real Estate Loan Investments
The following table shows a reconciliation of the beginning and ending fair value measurements of our commercial real estate loan investments classified as Level 3:
$ in thousandsThree Months Ended June 30, 2025Six Months Ended June 30, 2025
Beginning Balance$2,788,480 $2,391,078 
Transfers from Level 3 into Level 2(1,220,104)(1,220,104)
Loan originations and fundings735,453 1,120,159 
Net unrealized gain (loss)935 2,791 
Foreign currency adjustments25,510 36,350 
Ending Balance$2,330,274 $2,330,274 
Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company’s best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. Transfers out of Level 3 at the end of the period for the three and six months ended June 30, 2025 include the fair value of the outstanding principal balance for loan assets held by the CLO and primarily relates to the availability of observable inputs. The fair value of collateralized financing assets are measured using the more observable fair value of the collateralized liabilities. See Note 2, “Summary of Significant Accounting Policies.”
The following tables summarize the significant unobservable inputs supporting the fair value measurement of our investments in commercial loans:
$ in thousandsJune 30, 2025
TypeFair ValueValuation TechniqueUnobservable InputWeighted Average RateRange
Weighted Average Life (years)(1)
Commercial loans$2,330,274 Discounted cash flowDiscount rate6.25%
5.04% - 11.96%
0.48

December 31, 2024
TypeValuation TechniqueUnobservable InputWeighted Average RateRange
Weighted Average Life (years)(1)
Commercial loansDiscounted cash flowDiscount rate7.16%
5.90% - 12.12%
0.56
(1) Based on expected cash flows and potential prepayments.
(2) Weighted average rate and life are not applicable for loans held by the consolidated CLO, as they were not valued using a discounted cash flow approach. Loans held by the CLO are valued using the more observable fair value of the notes issued by the CLO.
The discount rate above is subject to change based on changes in economic and market conditions, in addition to changes in the underlying economics of the arrangement, such as changes in the underlying property valuation and debt service. These rates are also based on the location, type and nature of each underlying property and related industry publications. Changes in discount rates result in increases or decreases in the fair values of these investments. The discount rate encompasses, among other things, uncertainties in the valuation models with respect to the amount and timing of cash flows. It is not possible for us to predict the effect of future economic or market conditions based on our estimated fair values.
Valuation of Revolving Credit Facility
Given the uncertainty of future cash flows and our ability to prepay without penalty, we determined the fair value of our revolving credit facility to approximate par.
The following table shows a reconciliation of the beginning and ending fair value measurements of our revolving credit facility:
$ in thousandsThree Months Ended June 30, 2025Six Months Ended June 30, 2025
Beginning Balance$— $— 
Proceeds from revolving credit facility— 135,000 
Repayment of revolving credit facility— (135,000)
Net unrealized (gain) loss— — 
Ending Balance$— $— 
Valuation of Secured Financing Facilities
We have entered into secured financing facilities to provide floating rate financing for our commercial real estate loan investments. Our secured financing facilities are carried at fair value based on significant unobservable inputs and are classified as Level 3. The following tables show a reconciliation of the beginning and ending fair value measurements of our secured financing facilities:
Three Months Ended June 30, 2025
$ in thousandsSecured Lending AgreementsTerm Lending AgreementTotal
Beginning Balance$2,015,125 $134,518 $2,149,643 
Proceeds from secured financing facilities522,592 13,155 535,747 
Repayments of secured financing facilities(878,561)— (878,561)
Net unrealized (gain) loss218 59 277 
Unrealized foreign currency (gain) loss20,404 — 20,404 
Ending Balance$1,679,778 $147,732 $1,827,510 
Six Months Ended June 30, 2025
$ in thousandsSecured Lending AgreementsTerm Lending AgreementTotal
Beginning Balance$1,720,350 $134,518 $1,854,868 
Proceeds from secured financing facilities808,893 13,155 822,048 
Repayments of secured financing facilities(878,561)— (878,561)
Net unrealized (gain) loss23 59 82 
Unrealized foreign currency (gain) loss$29,073 $— $29,073 
Ending Balance$1,679,778 $147,732 $1,827,510 
The following tables summarize the significant unobservable inputs used in the fair value measurement of our secured financing facilities:
June 30, 2025
TypeValuation TechniqueUnobservable InputWeighted Average RateRange
Weighted Average Life (years)(1)
Secured financing facilitiesDiscounted cash flowDiscount rate5.85%
4.02% - 6.56%
0.46
December 31, 2024
TypeValuation TechniqueUnobservable InputWeighted Average RateRangeWeighted Average Life (years)
Secured financing facilitiesDiscounted cash flowDiscount rate6.20%
4.88% - 6.72%
0.56
                                                                    
(1) Based on expected cash flows and potential prepayments.
The discount rate above is subject to change based on changes in economic and market conditions, in addition to changes in the underlying economics of the pledged commercial real estate loan, such as changes in the loan-to-value ratio, credit profile and debt service. These rates are also based on the location, type and nature of each pledged property underlying the commercial real estate loan and related industry publications. Changes in discount rates result in increases or decreases in the fair values of these investments. The discount rate encompasses, among other things, uncertainties in the valuation models with respect to the amount and timing of cash flows. It is not possible for us to predict the effect of future economic or market conditions based on our estimated fair values.