v3.26.1
Fair Value of Financial Instruments
 3 Months Ended
Mar. 31, 2026
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:
As of March 31, 2026
Fair Value Measurements Using:
$ in thousandsLevel 1Level 2Level 3Total at Fair Value
Assets:
Commercial real estate loan investments$— $— $5,200,218 $5,200,218 
Real estate-related securities— 17,222 — 17,222 
Derivative assets— 3,134 — 3,134 
Total assets$— $20,356 $5,200,218 $5,220,574 
Liabilities:
Secured lending agreements$— $— $2,820,938 $2,820,938 
Term lending agreements— — 223,397 223,397 
Revolving credit facility— — 16,000 16,000 
Collateralized loan obligations— 1,004,858 — 1,004,858 
Derivative liabilities— 838 — 838 
Total liabilities$— $1,005,696 $3,060,335 $4,066,031 
As of December 31, 2025
Fair Value Measurements Using:
$ in thousandsLevel 1Level 2Level 3Total at Fair Value
Assets:
Commercial real estate loan investments$— $— $4,702,728 $4,702,728 
Real estate-related securities— 14,818 — 14,818 
Derivative assets— 615 — 615 
Total assets$— $15,433 $4,702,728 $4,718,161 
Liabilities:
Secured lending agreements$— $— $2,359,543 $2,359,543 
Term lending agreements— — 223,033 223,033 
Revolving credit facility— — 55,000 55,000 
Collateralized loan obligations— 1,005,157 — 1,005,157 
Derivative liabilities— 1,992 — 1,992 
Total liabilities$— $1,007,149 $2,637,576 $3,644,725 
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 March 31, 2026
Beginning Balance$4,702,728 
Loan originations and fundings595,601 
Loan principal payments(81,880)
Net unrealized gain (loss)(602)
Foreign currency adjustments(15,629)
Ending Balance$5,200,218 
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 thousandsMarch 31, 2026
Type
Fair Value(2)
Valuation TechniqueUnobservable Input
Weighted Average Rate(2)
Range
Weighted Average Life (years)(1)(2)
Commercial loans$4,093,348 Discounted cash flowDiscount rate6.23%
5.15% - 11.32%
0.25
(1)Based on expected cash flows and potential prepayments.
(2)Includes $4.0 billion of loans held outside of the CLO and $80.7 million of loans held by the consolidated CLO. Loans of $1.1 billion held by the CLO are valued using the more observable fair value of the notes issued by the CLO. However, because the Company’s $80.7 million of retained income notes issued by the CLO are valued using a discounted cash flow model, we are required to classify all loans held by the CLO as Level 3 based on the lowest-level input used in the valuation. Weighted average rate and weighted average life include the Company’s loans held outside the CLO and retained income notes issued by the CLO.
$ in thousandsDecember 31, 2025
Type
Fair Value(2)
Valuation TechniqueUnobservable Input
Weighted Average Rate(2)
Range
Weighted Average Life (years)(1)(2)
Commercial loans$3,558,722 Discounted cash flowDiscount rate6.36%
5.14% - 11.44%
0.31
(1)Based on expected cash flows and potential prepayments.
(2)Includes $3.5 billion of loans held outside of the CLO and $80.7 million of loans held by the consolidated CLO. Loans of $1.1 billion held by the CLO are valued using the more observable fair value of the notes issued by the CLO. However, because the Company’s $80.7 million of retained income notes issued by the CLO are valued using a discounted cash flow model, we are required to classify all loans held by the CLO as Level 3 based on the lowest-level input used in the valuation. Weighted average rate and weighted average life include the Company’s loans held outside the CLO and retained income 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 March 31, 2026
Beginning Balance$55,000 
Proceeds from revolving credit facility220,000 
Repayment of revolving credit facility(259,000)
Net unrealized (gain) loss— 
Ending Balance$16,000 
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 table shows a reconciliation of the beginning and ending fair value measurements of our secured financing facilities:
Three Months Ended March 31, 2026
$ in thousandsSecured Lending AgreementsTerm Lending AgreementsTotal
Beginning Balance$2,359,543 $223,033 $2,582,576 
Proceeds from secured financing facilities506,127 370 506,497 
Repayments of secured financing facilities(34,596)— (34,596)
Net unrealized (gain) loss(237)(6)(243)
Unrealized foreign currency (gain) loss(9,899)— (9,899)
Ending Balance$2,820,938 $223,397 $3,044,335 
The following tables summarize the significant unobservable inputs used in the fair value measurement of our secured financing facilities:
March 31, 2026
TypeValuation TechniqueUnobservable InputWeighted Average RateRange
Weighted Average Life (years)(1)
Secured financing facilitiesDiscounted cash flowDiscount rate5.18%
4.13% - 5.92%
0.22
December 31, 2025
TypeValuation TechniqueUnobservable InputWeighted Average RateRange
Weighted Average Life (years)(1)
Secured financing facilitiesDiscounted cash flowDiscount rate5.29%
4.12% - 6.04%
0.28
                                                                    
(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.