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 and loan receivable held at carrying value was approximately $44.0 million and $30.6 million, respectively, or 14.61% and 10.36%, respectively, of the Company’s total loans held at carrying value and loan receivable held at carrying value of approximately $300.9 million and $295.2 million, respectively, and is bifurcated between the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value and loan receivable held at carrying value of approximately $43.8 million and $30.4 million, respectively, and a liability for unfunded commitments of approximately $0.1 million and $0.2 million, 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 and loan receivable 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$29,744,212 $142,743 $29,886,955 
Provision for (reversal of) current expected credit losses15,867,183 (15,617)15,851,566 
Write-offs(1,777,246)— (1,777,246)
Recoveries— — — 
Balance at June 30, 2025$43,834,149 $127,126 $43,961,275 
Outstanding (1)
Unfunded (2)
Total
Balance at December 31, 2024$30,419,677 $166,702 $30,586,379 
Provision for (reversal of) current expected credit losses15,191,718 (39,576)15,152,142 
Write-offs(1,777,246)— (1,777,246)
Recoveries— — — 
Balance at June 30, 2025$43,834,149 $127,126 $43,961,275 
(1)As of June 30, 2025 and December 31, 2024, the CECL Reserve related to outstanding balances on loans held at carrying value and loan receivable 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 — Materially exceeds performance metrics included in original or current credit underwriting and business plan
2Low Risk — Collateral and business performance exceeds substantially all performance metrics included in original or current credit underwriting and business plan
3Medium Risk — Collateral and business performance meets, or is on track to meet underwriting expectations; business plan is met or can reasonably be achieved
4High Risk/ Potential for Loss — Collateral performance falls short of underwriting, material differences from business plans, defaults may exist, or may soon exist absent material improvement. Risk of recovery of interest exists
5Impaired/ Loss Likely — Performance is significantly worse than underwriting with major variances from business plan observed. Loan covenants or financial milestones have been breached; exit from loan or refinancing is uncertain. 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 and loan receivable held at carrying value within each risk rating by year of origination is as follows:
Risk Rating:202520242023202220212020Total
1$— $— $— $— $— $— $— 
2— — — — — — — 
326,558,630 91,843,994 24,870,326 30,099,620 23,326,435 — 196,699,005 
4— 15,298,742 — — — — 15,298,742 
5— — — 11,513,143 77,435,318 — 88,948,461 
Total$26,558,630 $107,142,736 $24,870,326 $41,612,763 $100,761,753 $— $300,946,208 
Gross write-offs$— $— $— $— $— $(1,777,246)$(1,777,246)
During the three months ended June 30, 2025, the Company deemed its equipment loan receivable with Public Company A uncollectible and wrote off the remaining balance. At the time of write-off, the equipment loan with Public Company A had an outstanding principal balance of approximately $1.8 million and amortized cost of approximately $1.8 million. Prior to the write-off, the loan receivable had a risk rating of “5” and was fully reserved for. In the second quarter of 2025, the Company wrote off $1.8 million, which was equal to the carrying value of the loan receivable, excluding the CECL Reserve at the time the loan was written off. Refer to Note 5 for more information.