v3.25.2
LOANS HELD-FOR-INVESTMENT
 6 Months Ended
Jun. 30, 2025
Receivables [Abstract]  
LOANS HELD-FOR-INVESTMENT
NOTE 8 — LOANS HELD-FOR-INVESTMENT
The Company’s loans held-for-investment consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):
As of June 30,As of December 31,
20252024
First mortgage loans (1)
$3,168,597 $3,466,929 
Total CRE loans held-for-investment and related receivables, net3,168,597 3,466,929 
Liquid corporate senior loans29,396 41,467 
Corporate senior loans317,231 254,617 
Loans held-for-investment and related receivables, net$3,515,224 $3,763,013 
Less: Current expected credit losses$(294,748)$(392,136)
Total loans held-for-investment and related receivables, net$3,220,476 $3,370,877 
____________________________________
(1)    As of June 30, 2025 and December 31, 2024, first mortgage loans included $19.0 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan.
The following table details overall statistics for the Company’s loans held-for-investment as of June 30, 2025 and December 31, 2024 (dollar amounts in thousands):
CRE Loans (1) (2)
Liquid Corporate Senior LoansCorporate Senior Loans
June 30, 2025December 31, 2024June 30, 2025December 31, 2024June 30, 2025December 31, 2024
Number of loans34 33 10 15 29 20 
Principal balance$3,183,247 $3,483,454 $29,984 $42,717 $321,730 $258,816 
Net book value$2,881,929 $3,085,104 $26,650 $35,653 $311,897 $250,120 
Weighted-average interest rate (3)
7.4 %7.7 %10.0 %9.9 %10.1 %10.5 %
Weighted-average maximum years to maturity
2.42.33.53.73.33.5
Unfunded loan commitments (4)
$156,859 $217,907 $— $— $34,161 $43,750 
____________________________________
(1)As of June 30, 2025, 90.8% of the Company’s CRE loans by principal balance earned a floating rate of interest primarily indexed to the Secured Overnight Financing Rate (“SOFR”).
(2)Maximum maturity date assumes all extension options are exercised by the borrowers and assumes all relevant conditions are met for such extensions; however, the loans may be repaid prior to such date.
(3)The weighted-average interest rate is based on the relevant fixed rate or floating benchmark plus a spread. Excludes loans on nonaccrual status.
(4)Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying condensed consolidated balance sheets.
Activity relating to the Company’s loans held-for-investment portfolio was as follows for the six months ended June 30, 2025 (in thousands):
CRE Loans
Liquid Corporate Senior LoansCorporate Senior LoansTotal Loan Portfolio
Balance, January 1, 2025
$3,085,104 $35,653 $250,120 $3,370,877 
Loan originations, acquisitions and funding
234,750 1,282 74,683 310,715 
Sale of loans
— (5,275)— (5,275)
Principal repayments received
(304,867)(4,945)(11,844)(321,656)
Transfer to real estate assets (1)
(149,439)— — (149,439)
Capitalized interest7,966 14 75 8,055 
Write-offs charged (2)
(87,475)(3,371)— (90,846)
Deferred fees and other items (3)
(3,906)(30)(1,227)(5,163)
Accretion and amortization of fees and other items4,639 254 927 5,820 
Reversal of (provision for) credit losses (4)
95,157 3,068 (837)97,388 
Balance, June 30, 2025
$2,881,929 $26,650 $311,897 $3,220,476 
____________________________________
(1)During the six months ended June 30, 2025, the Company took control of the assets securing two of its risk-rated 5 first mortgage loans through deeds-in-lieu of foreclosure, as further discussed in Note 4 — Real Estate Assets.
(2)Includes a combined $87.5 million write-off on the two first mortgage loans transferred to real estate assets as noted above and a $3.4 million write-off on three liquid corporate senior loans sold during the six months ended June 30, 2025.
(3)Other items primarily consist of purchase discounts or premiums and deferred origination expenses.
(4)Does not include current expected losses for unfunded or unsettled loan commitments. Such amounts are included in accrued expenses and accounts payable on the accompanying condensed consolidated balance sheets.
As of June 30, 2025, the Company’s CRE loans had the following characteristics based on carrying value (dollar amounts in thousands):
Collateral Property Type
As of June 30, 2025
Office
$1,563,389 49.4 %
Multifamily866,601 27.3 %
Industrial349,687 11.0 %
Hospitality191,965 6.1 %
Mixed Use71,327 2.3 %
Retail64,759 2.0 %
Self-Storage60,869 1.9 %
Total first mortgage loans
$3,168,597 100 %
Less: current expected credit losses
(286,668)
Total first mortgage loans, net
$2,881,929 
Geographic Location
As of June 30, 2025
South
$1,273,129 40.2 %
West
895,336 28.3 %
East
704,304 22.2 %
Various
295,828 9.3 %
Total first mortgage loans
$3,168,597 100 %
Less: current expected credit losses
(286,668)
Total first mortgage loans, net
$2,881,929 
Current Expected Credit Losses – Loans Held-For-Investment
Current expected credit losses reflect the Company’s current estimate of potential credit losses related to loans held-for-investment included in the Company’s condensed consolidated balance sheets. Refer to Note 2 — Summary of Significant Accounting Policies for further discussion of the Company’s current expected credit losses.
The following table presents the activity in the Company’s current expected credit losses related to loans held-for-investment by loan type for the six months ended June 30, 2025 and 2024 (in thousands):
First Mortgage Loans
Unfunded First Mortgage Loans (1)
Liquid Corporate Senior Loans
Unfunded or Unsettled Liquid Corporate Senior Loans (1)
Corporate Senior Loans
Unfunded Corporate Senior Loans (1)
Total
Current expected credit losses as of January 1, 2025
$381,825 $13,917 $5,814 $— $4,497 $677 $406,730 
(Reversal of) provision for credit losses
(11,922)5,486 (2)— 260 (63)(6,241)
Charge-offs of CECL
(87,475)— (3,371)— — — (90,846)
Current expected credit losses as of March 31, 2025
$282,428 $19,403 $2,441 $— $4,757 $614 $309,643 
Provision for (reversal of) credit losses
4,240 (838)305 — 577 (42)4,242 
Current expected credit losses as of June 30, 2025
$286,668 $18,565 $2,746 $— $5,334 $572 $313,885 
Current expected credit losses as of January 1, 2024
$109,240 $10,062 $19,738 $3 $3,620 $495 $143,158 
Provision for (reversal of) credit losses77,564 (6,653)(3,719)(1)249 (78)67,362 
Charge-offs of CECL— — (1,649)— — — (1,649)
Current expected credit losses as of March 31, 2024
$186,804 $3,409 $14,370 $2 $3,869 $417 $208,871 
Provision for (reversal of) credit losses
211,485 7,197 (5,963)(1)(335)(13)212,370 
Charge-offs of CECL— — (480)— — — (480)
Current expected credit losses as of June 30, 2024
$398,289 $10,606 $7,927 $1 $3,534 $404 $420,761 
____________________________________
(1)Current expected losses for unfunded or unsettled loan commitments are included in accrued expenses and accounts payable on the condensed consolidated balance sheets.
Changes to current expected credit losses are recognized through net income (loss) on the Company’s condensed consolidated statements of operations.
During the three months ended June 30, 2025, the Company recorded a net increase of $4.2 million in the current expected credit loss reserve against the loans held-for-investment portfolio, bringing the total current expected credit loss reserve on funded and unfunded commitments to $313.9 million. The current expected credit loss reserve reflects certain loans assessed for impairment as well as macroeconomic and current portfolio conditions.
As of June 30, 2025, the Company did not have any first mortgage loan investments on nonaccrual status. As of June 30, 2025, the Company’s asset-specific credit loss reserve totaled $240.5 million on funded and unfunded commitments, which related to the Company’s risk-rated 5 first mortgage loans and liquid corporate senior loans. The asset-specific credit loss reserve is recorded based on the Company’s estimation of the fair value of each loan’s underlying collateral, less costs to sell the underlying collateral where applicable, as of June 30, 2025.
Risk Ratings
As further described in Note 2 — Summary of Significant Accounting Policies, the Company evaluates its loans held-for-investment portfolio on a quarterly basis. Each quarter, the Company assesses the risk factors of each loan, and assigns a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, loan and credit structure, current LTV ratio, debt yield, collateral performance, and the quality and condition of the sponsor, borrower, and guarantor(s).
Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 — Summary of Significant Accounting Policies.
The Company’s primary credit quality indicator is its risk ratings, which are further discussed above. The following table presents the net book value of the Company’s loans held-for-investment portfolio as of June 30, 2025 by year of origination, loan type, and risk rating (dollar amounts in thousands):
Amortized Cost of Loans Held-For-Investment by Year of Origination (1)
As of June 30, 2025
Number of Loans20252024202320222021
Prior
Total
First mortgage loans by internal risk rating:
1—$— $— $— $— $— $— $— 
2—— — — — — — — 
320181,434 78,825 350,242 593,243 517,051 — 1,720,795 
48— 102,635 — 231,806 220,208 71,059 625,708 
56

— — — 478,382 290,067 53,645 822,094 
Total first mortgage loans34181,434 181,460 350,242 1,303,431 1,027,326 124,704 3,168,597 
Liquid corporate senior loans by internal risk rating: (2)
1—— — — — — — — 
2—— — — — — — — 
34— — 1,715 13,509 2,520 — 17,744 
44— 6,203 — — 3,002 — 9,205 
52— 1,157 — 1,290 — 2,447 
Total liquid corporate senior loans10— 6,203 2,872 13,509 6,812 — 29,396 
Corporate senior loans by internal risk rating:
1—— — — — — — — 
2—— — — — — — — 
32649,467 127,017 73,471 28,607 — — 278,562 
43— — 11,528 27,141 — — 38,669 
5—— — — — — — — 
Total corporate senior loans2949,467 127,017 84,999 55,748 — — 317,231 
Less: Current expected credit losses(294,748)
Total loans held-for-investment and related receivables, net73$3,220,476 
Weighted Average Risk Rating (3)
3.7 
Gross charge-offs (4)
— (155)— — (90,691)— $(90,846)
____________________________________
(1)Date loan was originated or acquired by the Company. Origination dates are subsequently updated to reflect material loan modifications.
(2)As of June 30, 2025, two of the Company’s liquid corporate senior loan investments were on nonaccrual status with an aggregate carrying value of $2.4 million, which represented less than 1.0% of the carrying value of the Company’s loans held-for-investment portfolio.
(3)Weighted average risk rating calculated based on carrying value at period end.
(4)Represents gross charge-offs by year of origination during the six months ended June 30, 2025.
Loan Modifications
The Company may amend or modify a loan depending on the loan’s specific facts and circumstances, which are disclosable under ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). Such modifications generally provide borrowers with additional time to refinance or sell the collateral property, interest payment adjustments, deferral of scheduled principal repayments, and/or adjustments or waivers of performance tests that are prerequisite to the extension of a loan maturity. Loan modifications that allow for the option to pay interest in-kind (“PIK”) result in the interest being capitalized and added to the outstanding principal balance of the respective loan. During the six months ended June 30, 2025, the Company entered into three loan modifications that require disclosure pursuant to ASC 326.
During the six months ended June 30, 2025, the Company modified a first mortgage loan collateralized by an office property into two distinct mortgage loans with a principal balance of $78.0 million (“Note A”) and $52.3 million (“Note B”). As of June 30, 2025, the loans had an aggregate carrying value of $129.9 million, representing approximately 4.1% of the Company’s first mortgage loans and were risk-rated 5. The loan modification extended the initial maturity date from January 7, 2025 to February 7, 2029, with two one-year extension options and allows for future funding advances up to an aggregate amount of $14.5 million. In addition, the variable interest rate on Note A was modified from 2.90% plus Term SOFR (as defined in the applicable loan documents) to a fixed interest rate of 5.0% through February 7, 2026, then 6.0% through the initial maturity date and allows for the accrual of PIK interest for any portion of the interest unable to be paid on a monthly basis due to insufficient cash flow. Note B is not subject to any interest payments, provided no event of default occurs as defined in the loan agreement. The Company received a $12.0 million repayment in connection with the loan modification. During the six months ended June 30, 2025, interest accrual was resumed on Note A, after previously being on nonaccrual status. The borrower elected to PIK $897,000 of interest during the six months ended June 30, 2025.
The Company modified a first mortgage loan collateralized by an office property during the six months ended June 30, 2025. As of June 30, 2025, the loan had a carrying value of $166.5 million, representing approximately 5.3% of the Company’s first mortgage loans and was risk-rated 4. The loan modification extended the initial maturity date from February 7, 2025, with two one-year extension options, to February 7, 2028, with one one-year extension option. The Company received a $10.0 million repayment in connection with the loan modification.
The Company modified a first mortgage loan and a contiguous mezzanine loan with principal balances of $57.2 million and $19.1 million, respectively, collateralized by two multifamily properties during the six months ended June 30, 2025. As of June 30, 2025, the loans had a combined carrying value of $76.0 million, representing approximately 2.4% of the Company’s first mortgage loans and were risk-rated 4. The loan modifications increased the minimum strike rate for the interest rate protection from 3.0% to 4.5% for each respective loan. In addition, during the year ended December 31, 2024, the borrower exercised a one-year extension option with a new maturity date of December 16, 2025 and paid down $4.7 million.
Other Modifications
While not required to be disclosed pursuant to ASU 2022-02 because the financial difficulty criteria was not met, the Company modified and restructured a first mortgage loan collateralized by a multifamily property during the six months ended June 30, 2025. As of June 30, 2025, the loan had a carrying value of $54.6 million, representing approximately 1.7% of the Company’s first mortgage loans and was risk rated 3. The loan modification restructured the loan amount from $72.0 million to $55.0 million, extended the initial maturity date from February 6, 2026 with one one-year extension option to March 6, 2028 with two one-year extension options, and modified the variable interest rate from 3.20% plus Term SOFR to 2.85% plus Term SOFR. The Company received a $15.9 million repayment in connection with the loan modification. The loan modification was accounted for as a new loan for GAAP purposes.