Note 5. Fair Value Measurements

Our board of trustees, including a majority of our independent trustees, has adopted valuation guidelines that contain a comprehensive set of methodologies to be used by the Advisors and the Independent Valuation Advisor (as defined herein) in connection with estimating the values of our assets and liabilities. These guidelines are designed to seek to produce a fair and accurate estimate of the price that would be received for our investments in an arm’s-length transaction between a willing buyer and a willing seller in possession of all material information about our investments. Periodically, our board of trustees, including a majority of our independent trustees, and the Valuation Committee (as defined herein) will review the appropriateness of our valuation procedures.

The Company has engaged an Independent Valuation Advisor (the "Independent Valuation Advisor"), which was approved by our board of trustees, including a majority of our independent trustees. Valuations of the Company’s real estate loan investments and the Company’s debt obligations are determined by the Advisors (through the Valuation Committee) based on valuations prepared by the Independent Valuation Advisor.

The Company’s Advisors have formed a Valuation Committee (the "Valuation Committee"), which approves the proposed estimates of fair value of the Company’s real estate loan investments and the Company’s debt obligations. Each Advisor has designated two voting representatives on the Valuation Committee, and these representatives serve as the four voting members of the Valuation Committee, which includes other non-voting members agreed upon by the Advisors.

The fair values of our real estate loan investments are determined by the Advisors (through the Valuation Committee), based on valuations prepared by the Independent Valuation Advisor, on a monthly basis. Newly originated or acquired real estate loan investment are initially valued at cost in the month that they are closed, which represents fair value at that time. For each month after the initial month in which a loan investment is closed, the fair value of such investment is determined by the Advisors (through the Valuation Committee), based on valuations prepared by the Independent Valuation Advisor. Valuations of the Company’s real estate loan investments reflect changes in interest rates, spreads, collateral value, loan tests (including loan impairment testing) and metrics, risk ratings, and anticipated liquidation timing and proceeds, among others. The fair values are determined by discounting the future contractual cash flows to the present value using a current market interest rate or spread. The market rate is determined through consideration of the interest rates for debt of comparable quality and maturity, and, where applicable, the value of the underlying real estate investment.

The fair values of our debt obligations are determined by the Advisors (through the Valuation Committee), based on valuations prepared by the Independent Valuation Advisor, on a monthly basis. New debt obligations are valued at par in the month that they are closed, which represents fair value at that time. Each month thereafter, the Advisors (through the Valuation Committee), based on valuations prepared by the Independent Valuation Advisor, determine the valuation of debt obligations. Any changes to the fair value of debt obligations reflect changes in interest rates, spreads, and key loan metrics and tests utilizing the collateral value and cash flows, including the estimated liquidation timing and proceeds.

U.S. GAAP establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair value. U.S. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:

Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Fair Value Disclosure: The following table presents the Company’s financial assets and liabilities carried at fair value on a recurring basis in the Condensed Consolidated Balance Sheets by their level in the fair value hierarchy ($ in thousands):

For the three and six months ended June 30, 2025, there were no changes in fair value for our real estate loan investments or debt obligations, nor were there any transfers into or out of level 3 classification.

No financial assets or liabilities were held by the Company as of December 31, 2024.