v3.26.1
Commercial Mortgage Loans Held for Investment (Tables)
 6 Months Ended
Jun. 30, 2026
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract]  
Schedule of Commercial Mortgage Loans Held for Investment

The following tables show a summary of the Company’s commercial mortgage loans held for investment as of June 30, 2026 and December 31, 2025:

June 30, 2026

Loan Type (1)

Number
of Loans

 

 

Principal
Balance

 

 

Unamortized (fees)/costs, net

 

 

Allowance for credit losses

 

 

Carrying
Value

 

 

Weighted Average
Interest Rate (2)

 

 

Weighted Average
Years to Maturity (3)

 

First mortgage loans

 

13

 

 

$

305,829

 

 

$

1,641

 

 

$

(9,618

)

 

$

297,852

 

 

 

7.8

%

 

 

0.6

 

Credit loans

 

1

 

 

 

7,500

 

 

 

—

 

 

 

—

 

 

 

7,500

 

 

 

9.2

%

 

 

1.3

 

Total and average

 

14

 

 

$

313,329

 

 

$

1,641

 

 

$

(9,618

)

 

$

305,352

 

 

 

7.9

%

 

 

0.6

 

December 31, 2025

Loan Type (1)

Number
of Loans

 

Principal
Balance

 

Unamortized (fees)/costs, net

 

Allowance for credit losses

 

Carrying
Value

 

Weighted Average
Interest Rate (2)

 

Weighted Average
Years to Maturity (3)

 

First mortgage loans

 

14

 

$

343,175

 

$

1,148

 

$

(3,930

)

$

340,393

 

 

7.3

%

 

0.4

 

Credit loans

 

1

 

 

7,500

 

 

—

 

 

—

 

 

7,500

 

 

9.2

%

 

1.8

 

Total and average

 

15

 

$

350,675

 

$

1,148

 

$

(3,930

)

$

347,893

 

 

7.3

%

 

0.4

 

 

 

(1)
First mortgage loans are first position mortgage loans and credit loans are mezzanine and subordinated loans.
(2)
Weighted average interest rate is based on the loan spreads plus the applicable indices as of the last interest reset date, which is typically the 15th of each month. On June 15, 2026, the one-month term USD Secured Overnight Financing Rate (“SOFR”) rate reset to 3.63%. On December 15, 2025, the SOFR rate reset to 3.75%. Weighted average interest rate excludes maturity default interest and interest on loans placed on nonaccrual status.
(3)
Weighted average years to maturity excludes allowable extensions on the loans.
Schedule of Commercial Mortgage Loans held for Investment Portfolio

For the six months ended June 30, 2026, the activity in the Company’s commercial mortgage loans, held-for-investment portfolio was as follows:

 

 

Commercial mortgage loans at cost

 

 

Allowance for credit losses

 

 

Carrying Value

 

Balance at Beginning of Year

 

$

351,823

 

 

$

(3,930

)

 

$

347,893

 

Loan originations/advances

 

 

47,550

 

 

 

—

 

 

 

47,550

 

Principal repayments

 

 

(84,932

)

 

 

—

 

 

 

(84,932

)

Amortization of loan origination and deferred exit fees

 

 

726

 

 

 

—

 

 

 

726

 

Origination fees and extension fees received on commercial loans

 

 

(197

)

 

 

—

 

 

 

(197

)

Provision for credit losses

 

 

—

 

 

 

(5,688

)

 

 

(5,688

)

Balance at End of Period

 

$

314,970

 

 

$

(9,618

)

 

$

305,352

 

 
Schedule of Allowance for Credit Losses

The following table presents the activity in the Company’s allowance for credit losses for the six months ended June 30, 2026:

 

 

Commercial Mortgage Loans

 

 

Unfunded Loan Commitments (1)

 

 

Total

 

Balance at beginning of period

 

$

(3,930

)

 

$

(22

)

 

$

(3,952

)

Provision for credit losses

 

 

(5,688

)

 

 

(40

)

 

 

(5,728

)

Ending allowance for credit losses

 

$

(9,618

)

 

$

(62

)

 

$

(9,680

)

 

(1)
The reserve for expected credit losses related to unfunded loan commitments is recorded in “accrued expenses and other liabilities” on the consolidated balance sheets.

The following table presents the activity in the Company’s allowance for credit losses for the six months ended June 30, 2025:

 

 

Commercial Mortgage Loans

 

 

Unfunded Loan Commitments (1)

 

 

Total

 

Balance at beginning of period

 

$

(13,898

)

 

$

(96

)

 

$

(13,994

)

Reversal of (provision for) credit losses

 

2,521

 

 

 

(9

)

 

 

2,512

 

Charge-offs (2)

 

68

 

 

 

—

 

 

 

68

 

Ending allowance for credit losses

$

(11,309

)

 

$

(105

)

 

$

(11,414

)

 

(1)
The reserve for expected credit losses related to unfunded loan commitments is recorded in “accrued expenses and other liabilities” on the consolidated balance sheets.
(2)
Relates to the acquisition of a property secured by a senior loan in May 2025. See Note 14 – “Real Estate Owned” for additional information.
Summary of Investment Grade of Loans Loss

As part of the Company’s process for monitoring the credit quality of its investments, it performs a quarterly asset review of the investment portfolio and assigns risk ratings to each of its loans and CMBS. Risk factors include payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location, as well as national and regional economic factors. To determine the likelihood of loss, the loans are rated on a 5-point scale as follows:

 

Investment

Grade

Investment Grade Definition

1

Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable.

2

Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable.

3

Performing investment requiring closer monitoring. Trends and risk factors show some deterioration. Collection of principal and interest is still expected.

4

Underperforming investment with the potential of some interest loss but still expecting a positive return on investment. Trends and risk factors are negative.

5

Underperforming investment with expected loss of interest and some principal.
Schedule of asset specific Cecl reserve

The table below provides the components of the asset-specific CECL reserve as of June 30, 2026 and December 31, 2025:

Loan Type

Collateral Type

June 30, 2026

 

December 31, 2025

 

 

Senior

 Multifamily

$

—

 

$

942

 

(1)

Senior

 Office

 

1,505

 

 

—

 

(2)

Total

 

$

1,505

 

$

942

 

 

____________

 

 

 

 

 

 
(1)
The loan is secured by a multifamily property in Converse, TX with an outstanding balance of $24,946 and no unfunded commitment as of June 30, 2026. The loan matured on May 9, 2026. During the quarter ended June 30, 2026, the Company obtained an updated appraisal that exceeded the loan balance and the asset-specific CECL reserve of $3,615, which included additional asset-specific CECL reserve of $2,673 recorded during the three months ended March 31, 2026, was reversed. The loan has a risk rating of 4 as of June 30, 2026. The Company is negotiating an extension with the borrower that the Company expects to complete in the third quarter of 2026.
(2)
The loan is secured by an office property in Honolulu, HI with an outstanding balance of $12,700 and no unfunded commitment as of June 30, 2026. The loan matured on February 9, 2026 and was not repaid or extended. The Company sent the borrower a maturity default notice and began the foreclosure process. The Company has recorded an asset-specific CECL reserve of $1,505 for the loan as of June 30, 2026 as the estimated value of the property securing the loan was below the loan balance. The loan has a risk rating of 5 as of June 30, 2026.