v3.26.1
Business Combination
 3 Months Ended
Mar. 31, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combination
23. Business Combination

On July 15, 2025, (the "Acquisition Date"), the Company, through a wholly owned subsidiary, acquired the outstanding ownership interests in Constructive that were not previously owned by the Company through the consummation of a membership interest purchase agreement, thereby increasing the Company's ownership of Constructive to 100%. Constructive is a business purpose loan lender specializing in rental and transitional loans for real estate investors. In increasing the Company's ownership of Constructive to 100%, the Company bolstered its access to Constructive's proprietary origination channels and third-party distribution network. The results of Constructive's operations have been included in the condensed consolidated financial statements since the Acquisition Date.

The estimated Acquisition Date fair value of the consideration transferred totaled approximately $67.8 million, which consisted of the following (dollar amounts in thousands):

Cash (1)
$31,525 
Holdback for representations and warranties (2)
2,500 
Fair value of previously held membership interests
33,759 
Total consideration transferred
$67,784 

(1)Includes initial cash consideration of approximately $31.5 million and a post-closing working capital adjustment of approximately $15.1 thousand which was delivered to the sellers of Constructive on September 24, 2025.
(2)The holdback for representations and warranties in the amount of $2.5 million is to be released to the sellers, net of losses incurred or sustained by the Company related to representation or warranties made by the sellers for conditions that existed as of the Acquisition Date, if any, on January 15, 2027. The holdback is included in other assets on the Company's condensed consolidated balance sheets (see Note 11).

Prior to the Acquisition Date, the Company owned 50% of the outstanding ownership interests in Constructive which it accounted for as an equity method investment, utilizing the fair value election (see Note 6). The Acquisition Date fair value of the Company's previously held ownership interest in Constructive was approximately $33.8 million and is included in the measurement of consideration transferred. The Company determined the estimated fair value of its previously held ownership interests in Constructive using weighted multiples of origination volume and earnings before taxes, depreciation and amortization and NAV of the entity. Also prior to the Acquisition Date, the Company purchased business purpose loans from Constructive (see Note 6).

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed by the Company at the Acquisition Date (dollar amounts in thousands). The membership interest purchase agreement included a post-closing working capital adjustment that was calculated as approximately $15.1 thousand and was settled with the sellers of Constructive on September 24, 2025. The holdback for representations and warranties described above will be settled with the sellers of Constructive after the Acquisition Date. The Company has also engaged a third party specialist for valuations of certain intangible assets. Thus, the provisional measurements of assets and liabilities are subject to change.
Cash
$10,670 
Residential loans
580 
Residential loans held for sale
145,748 
Restricted cash (1)
4,122 
Other assets
8,982 
Intangible assets (1)
18,000 
Total identifiable assets acquired
$188,102 
Repurchase agreements and warehouse facilities
$135,817 
Other liabilities
6,897 
Total liabilities assumed
$142,714 
Net identifiable assets acquired
$45,388 
Goodwill
$22,396 
Net assets acquired
$67,784 

(1)Included in other assets on the condensed consolidated balance sheets.

The approximately $18.0 million of identified intangible assets were recognized at estimated fair value on the Acquisition Date. Intangible assets haven been provisionally assigned as shown in the following table (dollar amounts in thousands). As noted earlier, the fair values of the acquired identifiable intangible assets are provisional pending final valuations for these assets.

Intangible asset
Acquisition Date Fair Value
Accumulated Amortization
Carrying Value at March 31, 2026
Amortization Period (Years)
Customer relationships
$17,000 $(1,204)$15,796 10
Trade name
1,000 (64)936 11
Total identified intangible assets (weighted average amortization period)
$18,000 $(1,268)$16,732 10.06

During the three months ended March 31, 2026, the Company recognized $0.4 million of amortization expense related to these intangible assets, which is included in general and administrative expenses on the Company's condensed consolidated statements of operations. The estimated amortization expense related to the acquired identifiable intangible assets is as follows (dollar amounts in thousands):

Amortization expense for
Year Ending December 31,
Customer relationships
Trade name
2026$1,700 $91 
2027$1,700 $91 
2028$1,700 $91 
2029$1,700 $91 
2030$1,700 $91 
The $22.4 million of goodwill recognized is attributable primarily to the expected benefits arising from synergies with the Company's existing operations, the assembled workforce of Constructive and the anticipated growth opportunities from expanding the Company's business purpose lending platform and is assigned to the Constructive reporting unit (see Note 24) for the Company's ongoing evaluation of goodwill for impairment in accordance with ASC 350, Intangibles - Goodwill and Other. As of March 31, 2026, there was a change in the recognized amount of goodwill as a result of payment of the post-closing working capital adjustment of approximately $15.1 thousand. As noted earlier, the goodwill recorded is provisional pending final valuations of assets and losses incurred or sustained by the Company related to representation or warranties made by the sellers as of the Acquisition Date.

The amount of revenue of Constructive included in the Company's consolidated statements of operations for the period from the Acquisition Date through December 31, 2025 was $30.0 million. The amount of net loss of Constructive included in the Company's consolidated statements of operations for the period from the Acquisition Date through December 31, 2025 was $8.5 million. The Company recognized acquisition-related costs of approximately $1.3 million during the year ended December 31, 2025.

The following table presents the pro forma consolidated revenue and net income attributable to the Company's common stockholders as if Constructive had been included in the consolidated results of the Company for the three months ended March 31, 2025 (dollar amounts in thousands):

For the Three Months Ended March 31, 2025
Revenue
$106,461 
Net income attributable to Company's common stockholders
$37,166 
Basic proforma earnings per common share
$0.41 
Diluted pro forma earnings per common share
$0.41 

These amounts have been calculated after applying the Company's accounting policies and adjustments for consolidation and amortization that would have been recorded assuming the estimated fair value adjustments to intangible assets had been applied on January 1, 2024. Nonrecurring pro forma adjustments directly attributable to the business combination have been included in the pro forma revenue and net income attributable to the Company's common stockholders shown above as if the transaction occurred on January 1, 2024. These adjustments include acquisition expenses and estimated income tax expense.