v3.26.1
FAIR VALUE MEASUREMENTS
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS
NOTE 3 — FAIR VALUE MEASUREMENTS
GAAP defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows:
Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs).
Level 3 — Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability.
The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities:
Investments in Managed Funds — at Fair Value — Investments in managed funds — at fair value accounted for under the equity-method of accounting consist of the Company’s interests in certain Funds, which are not redeemable or are subject to redemption restrictions.
For investments in managed Funds that do not have readily determinable fair values, the Company uses NAV per share, or its equivalent, as a practical expedient to estimate fair value. The practical expedient is used when the underlying Fund calculates NAV in a manner consistent with the measurement principles applicable to investment companies under ASC Topic 946 as of the Company’s measurement date. NAV generally represents the Company’s proportionate interest in the net assets of the underlying Fund, which are measured principally at fair value under the Fund’s valuation policies. The Company evaluates the reported NAV, the underlying Fund’s valuation process and any relevant restrictions on redemption or transfer in determining whether NAV is an appropriate estimate of fair value. Investments measured using the NAV practical expedient are not categorized within the fair value hierarchy and are presented separately in the recurring fair value table.
Investments in Unconsolidated Joint Ventures — at Fair Value — Investments in unconsolidated joint ventures at fair value that were classified within Level 3 of the fair value hierarchy were valued using a discounted cash flow methodology. As of both June 30, 2026 and December 31, 2025, these investments had an aggregate fair value of $14.7 million, based on a 30.0% discount rate and a 10.0x multiple of earnings before interest, taxes, depreciation and amortization.
Credit Investments — Credit investments measured at fair value consist primarily of CMBS, a CLO subordinated note, first mortgage loans, corporate senior loans and liquid corporate senior loans. The Company values these investments using available market quotations, pricing-service information, broker-dealer indications and discounted cash flow analyses, as applicable.
CMBS and liquid corporate senior loans are generally classified within Level 2 when valuation inputs are observable and sufficient market activity exists. These investments are classified within Level 3 when observable market information is limited or significant unobservable inputs are required.
The Company’s CLO subordinated note, first mortgage loans and corporate senior loans are generally classified within Level 3. Their fair values are determined using discounted cash flow models and other valuation techniques that consider applicable market yields, credit risk, expected cash flows, collateral performance, prepayment, default and recovery assumptions, and other investment-specific factors.
Equity Securities — The Company’s equity securities are valued using Level 1, Level 2 or Level 3 inputs depending upon the availability of the fair value inputs used in determining the respective fair values. The estimated fair value of the Company’s equity securities is based on quoted market prices when readily and regularly available in an active market.
A breakout of the Company’s CMBS, CLO subordinated note, and equity securities’ levels of the fair value hierarchy as of June 30, 2026 and December 31, 2025 can be found in the tables under Items Measured at Fair Value on a Recurring Basis below.
Credit Facilities, Notes Payable and Repurchase Facilities, Net — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. These financial instruments are valued using Level 2 inputs. As of June 30, 2026, the estimated fair value of the Company’s debt was $3.0 billion, compared to a carrying value of $3.0 billion. The estimated fair value of the Company’s debt as of December 31, 2025 was $336.6 million, compared to a carrying value of $335.7 million.
Earnout Liability — The earnout liability is measured at fair value using a Monte Carlo simulation model that considers management’s projections of cumulative fee-related revenues during the earnout period, the probability of achieving the applicable revenue thresholds, the resulting ownership interest that may be issued and the expected timing of settlement. Because the valuation utilizes significant unobservable inputs, the earnout liability is classified within Level 3 of the fair value hierarchy.
Other Financial Instruments — The Company considers the carrying values of its cash and cash equivalents, receivables, accrued expense and other short-term assets and liabilities to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature.
Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liable for, upon disposition of the financial assets and liabilities. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. The Company does not expect that changes in classifications between levels will be frequent.
Fair Value Option
The fair value option provides an option to elect fair value for selected financial assets, financial liabilities, unrecognized firm commitments, and written loan commitments.
The Company has elected to measure certain instruments at fair value for several reasons including to mitigate income statement volatility caused by the differences between the measurement basis of elected instruments (e.g., certain instruments that otherwise would be accounted for on an accrual basis) and the associated risk management arrangements that are accounted for on a fair value basis, as well as to better reflect those instruments that are managed on a fair value basis.
The Company has elected the fair value option for the following instruments:
•CMBS
•CLO subordinated note
•First mortgage loans
•Corporate senior loans
•Liquid corporate senior loans
•Investments in unconsolidated joint ventures — at fair value
Interest income continues to be recognized in accordance with the contractual terms of the underlying instruments, and changes in the fair value of these investments are recognized in earnings in the period in which they occur and are recorded in net realized and unrealized losses and impairments on the condensed combined and consolidated statements of operations. Gains and losses related to investment funds are recorded in income from equity-method investments on the condensed combined and consolidated statements of operations. Gains and losses related to investments of consolidated VIEs are recorded in revenues from consolidated investments on the condensed combined and consolidated statements of operations. Additional information regarding debt investments for which the fair value option has been elected, including principal balances and fair values, is included in Note 4 — Investments.
Items Measured at Fair Value on a Recurring Basis
In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025 (in thousands):
Balance as of June 30, 2026
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Net Asset Value (NAV)
Assets:
Investments in managed funds — at fair value
$
397,323 
$
— 
$
— 
$
— 
$
397,323 
Investments in unconsolidated joint ventures — at fair value
196,861 
— 
41,857 
14,694 
140,310 
First mortgage loans
2,646,427 
— 
— 
2,646,427 
— 
Corporate senior loans and liquid corporate senior loans
440,746 
— 
12,247 
428,499 
— 
CMBS and CLO subordinated note
114,474 
— 
62,554 
51,920 
— 
Equity securities
39,510 
28,485 
10,273 
752 
— 
Total assets
$
3,835,341 
$
28,485 
$
126,931 
$
3,142,292 
$
537,633 
Liabilities:
Earnout liability(1)
$
407,500 
$
— 
$
— 
$
407,500 
$
— 
Total liabilities
$
407,500 
$
— 
$
— 
$
407,500 
$
— 

Balance as of December 31, 2025
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Net Asset Value (NAV)
Assets:
Investments in managed funds — at fair value
$
447,262 
$
— 
$
— 
$
— 
$
447,262 
Investments in unconsolidated joint ventures — at fair value
56,556 
— 
41,856 
14,700 
— 
Equity securities
5,078 
— 
5,078 
— 
— 
Total assets
$
508,896 
$
— 
$
46,934 
$
14,700 
$
447,262 
The following table summarizes the valuation techniques and significant unobservable inputs used for the Company’s financial assets and liabilities that are categorized within Level 3 of the fair value hierarchy as of June 30, 2026:
Investment
Fair Value as of June 30, 2026
(in thousands)
Valuation
Techniques
Unobservable
Input
Range/Amount
(Weighted Average)
First mortgage loans
$
2,646,427 
Discounted cash flow
Market yield / discount rate
6.17% - 11.50%
(7.76%)
Credit spread
2.55% - 12.00%
(4.38%)
Corporate senior loans and liquid corporate senior loans
$
428,499 
Discounted cash flow
Discount rate
3.50% - 19.15%
(9.19%)
CMBS
$
36,134 
Discounted cash flow; market comparable transactions
Discount margin (discount rate)
8.03% - 35.15%
(14.96%)
Yield assumption
12.00% - 40.00%
(19.55%)
CLO subordinated note
$
15,786 
Discounted cash flow
Discount rate
16.50% - 22.50%
Constant default rate
2.00%
Recovery rate
65.00%
The fair value of the Earnout liability was estimated using a Monte Carlo simulation model that incorporated significant unobservable inputs, including projected fee-related revenues, revenue volatility of 15.1%, CMFH equity volatility of 47.0%, a 15.0% correlation between projected revenues and equity value, a risk-free discount rate of 4.14%, and an expected term of approximately 2.5 years.
The following are reconciliations of the changes in assets and liabilities measured at fair value with Level 3 inputs in the fair value hierarchy for the six months ended June 30, 2026 (in thousands):
Level 3
Assets
Liabilities
Beginning balance, January 1, 2026
$
14,700 
$
— 
Assets acquired in the Transactions
3,127,592 
— 
Initial recognition of earnout liability in connection with the Transactions
— 
407,500 
Ending balance June 30, 2026
$
3,142,292 
$
407,500 
Items Measured at Fair Value on a Non-Recurring Basis
Certain financial and nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The Company’s process for identifying and recording impairment related to credit investments, real estate assets and intangible assets is discussed in Note 2 — Summary of Significant Accounting Policies. During the six months ended June 30, 2026, real estate assets acquired and debt assumed from the Transactions were measured at fair value as further described in Note 2 — Summary of Significant Accounting Policies.
The following table summarizes the valuation techniques and significant unobservable inputs used for the Company’s real estate assets and debt that are categorized within Level 3 of the fair value hierarchy as of June 30, 2026.
Investment
Fair Value as of June 30, 2026
(in thousands)
Valuation
Techniques
Unobservable
Input
Range/Amount
(Weighted Average)
Real Estate
$
1,389,588 
Discounted cash flow;
direct capitalization
Discount rate
6.75% - 12.00%
(10.10%)
Terminal capitalization rate
5.75% - 10.50%
(8.60%)
Market capitalization rate
4.50% - 8.50%
(6.50%)
Credit facilities, notes payable and repurchase facilities
$
2,645,081 
Discounted cash flow
Market borrowing rate
4.67% - 7.92%
(6.21%)
Credit spread
1.05% - 7.21%
(3.56%)