v3.26.3
Loan Portfolio
 9 Months Ended
Sep. 30, 2026
Receivables [Abstract]  
Loan Portfolio

Note 3. Loan Portfolio

Loans Receivable

Our loan receivable held-for-investment portfolio as of September 30, 2026 was comprised of the following loans ($ in thousands):

 

 

 

Number
of
Loans

 

Loan
Commitment(1)

 

 

Unpaid Principal Balance

 

 

Carrying
Value (2)

 

 

Weighted Average Spread(3)

 

 

Weighted Average Interest Rate(4)

 

Loans receivable held-for-investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior loans(5)

 

21

 

$

3,099,672

 

 

$

2,928,655

 

 

$

2,412,919

 

 

 

+ 2.58%

 

 

 

4.43

%

 

21

 

 

3,099,672

 

 

 

2,928,655

 

 

 

2,412,919

 

 

 

+ 2.58%

 

 

 

4.43

%

Fixed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior loans(5)

 

1

 

$

1,527

 

 

$

1,527

 

 

$

1,527

 

 

N/A

 

 

 

0.00

%

Subordinate loans

 

1

 

 

125,000

 

 

 

125,000

 

 

 

124,985

 

 

N/A

 

 

 

8.50

%

 

2

 

 

126,527

 

 

 

126,527

 

 

 

126,512

 

 

 

 

 

 

8.40

%

Total/Weighted Average

 

23

 

$

3,226,199

 

 

$

3,055,182

 

 

$

2,539,431

 

 

N/A

 

 

 

4.59

%

General CECL reserve

 

 

 

 

 

 

 

 

 

 

(48,808

)

 

 

 

 

 

 

Loans receivable held-for-investment, net

 

 

 

 

 

 

 

 

$

2,490,623

 

 

 

 

 

 

 

 

(1)
Loan commitment represents principal outstanding plus remaining unfunded loan commitments.
(2)
Net of specific CECL reserves of $515.6 million.
(3)
The weighted average spread is expressed as a spread over the relevant floating benchmark interest rates. One-month term Secured Overnight Financing Rate (“SOFR”) as of September 30, 2026 was 3.91%. Weighted average is based on unpaid principal balance as of September 30, 2026. For loans placed on non-accrual, the spread used in calculating the weighted average spread is 0%.
(4)
Reflects the weighted average interest rate based on the applicable floating benchmark interest rate (if applicable), including SOFR floors (if applicable). Weighted average is based on unpaid principal balance as of September 30, 2026 and includes loans on non-accrual status. For loans placed on non-accrual, the interest rate used in calculating the weighted average interest rate is 0%.
(5)
Senior loans include senior mortgages and similar credit quality loans, including related contiguous subordinate loans (if any), and pari passu participations in senior mortgage loans.

Our loans receivable held-for-investment portfolio as of December 31, 2025 was comprised of the following loans ($ in thousands):

 

 

Number
of
Loans

 

Loan
Commitment(1)

 

 

Unpaid Principal Balance

 

 

Carrying
Value (2)

 

 

Weighted Average Spread(3)

 

 

Weighted Average Interest Rate(4)

 

Loans receivable held-for-investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior loans(5)

 

31

 

$

4,202,628

 

 

$

3,930,750

 

 

$

3,562,183

 

 

 

+ 3.17%

 

 

 

5.46

%

 

31

 

 

4,202,628

 

 

 

3,930,750

 

 

 

3,562,183

 

 

 

+ 3.17%

 

 

 

5.46

%

Fixed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior loans(5)

 

1

 

$

1,607

 

 

$

1,607

 

 

$

1,607

 

 

N/A

 

 

 

0.00

%

Subordinate loans

 

1

 

 

125,000

 

 

 

125,000

 

 

 

124,939

 

 

N/A

 

 

 

8.50

%

 

2

 

 

126,607

 

 

 

126,607

 

 

 

126,546

 

 

 

 

 

 

8.39

%

Total/Weighted Average

 

33

 

$

4,329,235

 

 

$

4,057,357

 

 

$

3,688,729

 

 

N/A

 

 

 

5.55

%

General CECL reserve

 

 

 

 

 

 

 

 

 

 

(73,328

)

 

 

 

 

 

 

Loans receivable held-for-investment, net

 

 

 

 

 

 

 

 

 

$

3,615,401

 

 

 

 

 

 

 

 

(1)
Loan commitment represents principal outstanding plus remaining unfunded loan commitments.
(2)
Net of specific CECL reserves of $365.4 million.
(3)
The weighted average spread is expressed as a spread over the relevant floating benchmark interest rates. SOFR as of December 31, 2025 was 3.69%. Weighted average is based on unpaid principal balance as of December 31, 2025. For loans placed on non-accrual, the spread used in calculating the weighted average spread is 0%.
(4)
Reflects the weighted average interest rate based on the applicable floating benchmark interest rate (if applicable), including SOFR floors (if applicable). Weighted average is based on unpaid principal balance as of December 31, 2025 and includes loans on non-accrual status. For loans placed on non-accrual, the interest rate used in calculating the weighted average interest rate is 0%.
(5)
Senior loans include senior mortgages and similar credit quality loans, including related contiguous subordinate loans (if any), and pari passu participations in senior mortgage loans.

Activity relating to our loans receivable held-for-investment portfolio for the nine months ended September 30, 2026 ($ in thousands):

 

 

 

Unpaid Principal Balance

 

 

Deferred Fees and Discounts

 

 

Specific CECL Reserve

 

 

Carrying
Value (1)

 

Balance at December 31, 2025

 

$

4,057,357

 

 

$

(3,204

)

 

$

(365,424

)

 

$

3,688,729

 

Advances on existing loans

 

 

34,022

 

 

 

-

 

 

 

-

 

 

 

34,022

 

Non-cash advances in lieu of interest

 

 

1,064

 

 

 

-

 

 

 

-

 

 

 

1,064

 

Origination fees, discounts, extension fees and exit fees

 

 

-

 

 

 

(683

)

 

 

-

 

 

 

(683

)

Repayments of loans receivable

 

 

(534,896

)

 

 

-

 

 

 

-

 

 

 

(534,896

)

Assignment of loan receivable to lender

 

 

(71,356

)

 

 

-

 

 

 

17,784

 

 

 

(53,572

)

Repayments of non-cash advances in lieu of interest

 

 

(31,845

)

 

 

-

 

 

 

-

 

 

 

(31,845

)

Accretion of fees and discounts

 

 

-

 

 

 

3,841

 

 

 

-

 

 

 

3,841

 

Sales of loans receivable

 

 

(220,000

)

 

 

(326

)

 

 

29,855

 

 

 

(190,471

)

Transfer to real estate owned held-for-investment (See Note 5)

 

 

(62,837

)

 

 

61

 

 

 

3,522

 

 

 

(59,254

)

Transfer to loans receivable held-for-sale

 

 

(111,542

)

 

 

279

 

 

 

41,409

 

 

 

(69,854

)

Provision for specific CECL reserve

 

 

-

 

 

 

-

 

 

 

(247,650

)

 

 

(247,650

)

Charge-offs (2)

 

 

(4,785

)

 

 

(99

)

 

 

4,884

 

 

 

-

 

Balance at September 30, 2026

 

$

3,055,182

 

 

$

(131

)

 

$

(515,620

)

 

$

2,539,431

 

General CECL reserve

 

 

 

 

 

 

 

 

 

 

 

(48,808

)

Carrying Value

 

 

 

 

 

 

 

 

 

 

$

2,490,623

 

 

(1)
Balance at December 31, 2025 does not include general CECL reserve.
(2)
Amount relates to the discounted payoff of a risk rated 5 multifamily loan receivable in July 2026.

Sales of Loans Receivable

The following table summarizes our loans receivable sold during the nine months ended September 30, 2026 ($ in thousands):

 

Property Type

 

Location

 

Loan Commitment

 

 

Unpaid Principal Balance Before Principal Charge-Off

 

 

Carrying Value Before Principal Charge-Off and Specific CECL Reserves

 

 

Principal Charge-Off

 

 

Net Sale Proceeds

 

 

Risk
Rating (1)

Hospitality (2)

 

CA

 

$

235,000

 

 

$

220,000

 

 

$

220,326

 

 

$

(29,855

)

 

$

190,471

 

 

4

Office (3)

 

CA

 

 

123,910

 

 

 

111,542

 

 

 

111,263

 

 

 

(41,409

)

 

 

69,854

 

 

5

Total sold, nine months ended
  September 30, 2026 (4)

 

$

358,910

 

 

$

331,542

 

 

$

331,589

 

 

$

(71,264

)

 

$

260,325

 

 

 

 

(1)
Reflects risk rating of the loan receivable prior to the loan sale or reclassification to held-for-sale.
(2)
In March 2026, this loan was sold for a gross sales price of $197.5 million. Pursuant to the terms of the sale, a reconciliation of the collateral asset’s working capital was completed in May 2026, resulting in a $6.75 million purchase price adjustment. Such amount is included within the principal charge-off.
(3)
In July 2026, this loan was sold for a gross sales price of $70.7 million. Prior to the sale, this loan was on non-accrual status, in maturity default, and had a held-for-sale carrying value of $69.9 million.
(4)
For each loan receivable sold, the financial asset was legally isolated, control of the financial asset was transferred to the transferee, the transfer imposed no condition that would constrain the transferee from pledging the financial asset received, and we have no continuing involvement with the transferred financial asset. As such, we have determined each transaction constituted a sale.

During the year ended December 31, 2023, we sold a senior loan collateralized by a portfolio of multifamily properties located in San Francisco, CA. We obtained a true-sale-at-law opinion and determined the transaction constituted a sale. Concurrent with the sale, our TRS, as defined in Note 13 - Income Taxes, entered into an agreement with the transferee which provides for a share of cash flows upon the transferee achieving certain financial metrics. In May 2026, the transferee achieved the necessary financial metrics. During the three and nine months ended September 30, 2026, our TRS received $0.2 million and $2.2 million, respectively, under the terms of such agreement, which is included within recovery of principal charge-offs on our consolidated statement of operations. As of September 30, 2026, we have not recognized any further value to this interest on our consolidated financial statements. See Note 13 - Income Taxes for further detail of our TRS.

During the year ended December 31, 2025, we sold a senior loan collateralized by a hospitality property located in California and retained our rights to receive certain payments under the associated guarantee of the loan. During the three and nine months ended September 30, 2026, we received $0.5 million and $0.5 million, respectively, from the guarantor of the loan receivable, which is included within recovery of principal charge-offs on our consolidated statement of operations.

Loan Modifications

In June 2026, we agreed to a discounted payoff of a multifamily loan receivable with a then unpaid principal balance of $75.6 million at a discounted payoff amount of $70.0 million. Subsequently, we received a $0.7 million paydown bringing the remaining discounted payoff amount to $69.3 million. In July 2026, this loan was repaid in accordance with the terms of the agreement and we received $0.8 million of reserves held by the loan servicer, resulting in a principal charge-off of $4.9 million.

Concentration of Risk

The following table presents our loans receivable held-for-investment by loan type, as well as property type and geographic location of the properties collateralizing these loans as of September 30, 2026 and December 31, 2025 ($ in thousands):

 

 

 

September 30, 2026

 

 

December 31, 2025

 

Loan Type

 

Carrying Value (1)

 

 

Percentage

 

 

Carrying Value (2)

 

 

Percentage

 

Senior loans (3)

 

$

2,414,446

 

 

 

95

%

 

$

3,563,790

 

 

 

97

%

Subordinate loans

 

 

124,985

 

 

 

5

%

 

 

124,939

 

 

 

3

%

 

$

2,539,431

 

 

 

100

%

 

$

3,688,729

 

 

 

100

%

General CECL reserve

 

 

(48,808

)

 

 

 

 

 

(73,328

)

 

 

 

 

$

2,490,623

 

 

 

 

 

$

3,615,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property Type

 

Carrying Value (1)

 

 

Percentage

 

 

Carrying Value (2)

 

 

Percentage

 

Multifamily

 

$

927,410

 

 

 

36

%

 

$

1,603,610

 

 

 

44

%

Hospitality

 

 

573,134

 

 

 

23

%

 

 

806,913

 

 

 

22

%

Office

 

 

411,485

 

 

 

16

%

 

 

589,152

 

 

 

16

%

Mixed-use (4)

 

 

322,138

 

 

 

13

%

 

 

312,467

 

 

 

8

%

Retail

 

 

152,292

 

 

 

6

%

 

 

151,535

 

 

 

4

%

Land

 

 

120,100

 

 

 

5

%

 

 

187,100

 

 

 

5

%

Other

 

 

32,872

 

 

 

1

%

 

 

37,952

 

 

 

1

%

 

$

2,539,431

 

 

 

100

%

 

$

3,688,729

 

 

 

100

%

General CECL reserve

 

 

(48,808

)

 

 

 

 

 

(73,328

)

 

 

 

 

$

2,490,623

 

 

 

 

 

$

3,615,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Location

 

Carrying Value (1)

 

 

Percentage

 

 

Carrying Value (2)

 

 

Percentage

 

United States

 

 

 

 

 

 

 

 

 

 

 

 

West

 

$

735,548

 

 

 

29

%

 

$

1,583,143

 

 

 

43

%

Northeast

 

 

668,280

 

 

 

26

%

 

 

744,852

 

 

 

20

%

Southeast

 

 

370,036

 

 

 

15

%

 

 

378,169

 

 

 

10

%

Midwest

 

 

301,754

 

 

 

12

%

 

 

418,503

 

 

 

11

%

Mid Atlantic

 

 

250,041

 

 

 

10

%

 

 

249,775

 

 

 

7

%

Southwest

 

 

180,900

 

 

 

7

%

 

 

276,335

 

 

 

8

%

Other

 

 

32,872

 

 

 

1

%

 

 

37,952

 

 

 

1

%

 

$

2,539,431

 

 

 

100

%

 

$

3,688,729

 

 

 

100

%

General CECL reserve

 

 

(48,808

)

 

 

 

 

 

(73,328

)

 

 

 

 

$

2,490,623

 

 

 

 

 

$

3,615,401

 

 

 

 

 

(1)
Net of specific CECL reserves of $515.6 million at September 30, 2026.
(2)
Net of specific CECL reserves of $365.4 million at December 31, 2025.
(3)
Senior loans include senior mortgages and similar credit quality loans, including related contiguous subordinate loans and pari passu participations in senior mortgage loans.
(4)
At September 30, 2026, mixed-use consists of 3% office, 3% life science, 3% hospitality, 2% multifamily, and 2% retail. At December 31, 2025, mixed-use consists of 2% office, 2% life science, 2% hospitality, 1% multifamily, and 1% retail.

Interest Income and Accretion

The following table summarizes our interest and accretion income from our loan portfolio and interest on cash balances for the three and nine months ended September 30, 2026 and 2025, respectively ($ in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Coupon interest

 

$

39,348

 

 

$

83,353

 

 

$

139,911

 

 

$

301,229

 

Accretion of fees and discounts

 

 

1,105

 

 

 

2,749

 

 

 

3,841

 

 

 

8,454

 

Interest on cash, cash equivalents, and other income

 

 

1,083

 

 

 

2,802

 

 

 

3,034

 

 

 

5,397

 

Total interest and related income (1)

 

$

41,536

 

 

$

88,904

 

 

$

146,786

 

 

$

315,080

 

 

(1)
For the three months ended September 30, 2026 and 2025, we recognized $0.1 million and $0.6 million, respectively, of default interest, late fees, pre-payment penalties, and/or accelerated fees following repayments prior to maturity. For the nine months ended September 30, 2026 and 2025, we recognized $0.6 million and $0.7 million, respectively, of default interest, late fees, pre-payment penalties, and/or accelerated fees following repayments prior to maturity.

Loan Risk Ratings

As further described in Note 2 – Summary of Significant Accounting Policies, we evaluate the credit quality of our loan portfolio on a quarterly basis. In conjunction with our quarterly loan portfolio review, we assess the risk factors of each loan and assign a risk rating based on several factors including, but not limited to, as-is or as-stabilized debt yield, term of loan, property type, property or collateral location, loan type, structure, collateral cash flow volatility and other more subjective variables that include, but are not limited to, as-is or as-stabilized collateral value, market conditions, industry conditions, borrower/sponsor financial stability, and borrower/sponsor exit plan. While evaluating the credit quality of each loan within our portfolio, we assess these quantitative and qualitative factors as a whole and with no pre-prescribed weight on their impact to our determination of a loan’s risk rating. However, based upon the facts and circumstances for each loan and the current market conditions, we may consider certain previously mentioned factors more or less relevant than others. Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 – Summary of Significant Accounting Policies.

The following tables allocate the principal balance and carrying value of our loans receivable held-for-investment based on our internal risk ratings as of September 30, 2026 and December 31, 2025 ($ in thousands):

 

September 30, 2026

Risk Rating

 

Number of Loans

 

Unpaid Principal Balance

 

 

Carrying Value (1)

 

 

% of Total of
Carrying Value

1

 

-

 

$

-

 

 

$

-

 

 

0%

2

 

1

 

 

130,000

 

 

 

129,941

 

 

5%

3

 

11

 

 

1,300,817

 

 

 

1,302,163

 

 

51%

4

 

1

 

 

78,500

 

 

 

78,500

 

 

3%

5

 

10

 

 

1,545,865

 

 

 

1,028,827

 

 

41%

 

23

 

$

3,055,182

 

 

$

2,539,431

 

 

100%

General CECL reserve

 

 

 

 

 

(48,808

)

 

 

 

 

 

 

 

 

$

2,490,623

 

 

 

 

(1)
Net of specific CECL reserves of $515.6 million.

 

December 31, 2025

Risk Rating

 

Number of Loans

 

Unpaid Principal Balance

 

 

Carrying Value (1)

 

 

% of Total of
Carrying Value

1

 

-

 

$

-

 

 

$

-

 

 

0%

2

 

2

 

 

303,779

 

 

 

302,914

 

 

8%

3

 

15

 

 

1,732,088

 

 

 

1,731,270

 

 

47%

4

 

5

 

 

613,714

 

 

 

613,652

 

 

17%

5

 

11

 

 

1,407,776

 

 

 

1,040,893

 

 

28%

 

33

 

$

4,057,357

 

 

$

3,688,729

 

 

100%

General CECL reserve

 

 

 

 

(73,328

)

 

 

 

 

 

 

 

 

$

3,615,401

 

 

 

 

(1)
Net of specific CECL reserves of $365.4 million.

As of September 30, 2026 and December 31, 2025, the average risk rating of our loans receivable held-for-investment portfolio was 3.8 and 3.6, respectively, weighted by carrying value net of specific CECL reserves.

The following table presents the carrying value and significant characteristics of our loans receivable held-for-investment on non-accrual status as of September 30, 2026 ($ in thousands):

 

Property Type

 

Location

 

Risk Rating

 

Unpaid Principal Balance

 

 

Carrying
Value Before
Specific CECL
Reserve

 

 

Specific
CECL Reserve

 

 

Net Carrying Value

 

 

Interest Recognition Method /
as of Date

Multifamily (1)

 

CA

 

5

 

$

402,341

 

 

$

402,223

 

 

$

(152,223

)

 

$

250,000

 

 

Cash Basis/ 6/30/2025

Office

 

GA

 

5

 

 

230,722

 

 

 

230,722

 

 

 

(39,922

)

 

 

190,800

 

 

Cost Recovery/ 12/31/2025

Multifamily

 

CO

 

5

 

 

170,000

 

 

 

170,000

 

 

 

(81,100

)

 

 

88,900

 

 

Cash Basis/ 9/30/2025

Land

 

VA

 

5

 

 

160,393

 

 

 

160,393

 

 

 

(40,293

)

 

 

120,100

 

 

Cost Recovery/ 1/1/2023

Multifamily

 

AZ

 

5

 

 

155,000

 

 

 

155,000

 

 

 

(54,100

)

 

 

100,900

 

 

Cash Basis/ 3/31/2026

Multifamily

 

TX

 

5

 

 

142,291

 

 

 

141,776

 

 

 

(51,776

)

 

 

90,000

 

 

Cash Basis/ 7/1/2024

Multifamily

 

TX

 

5

 

 

126,535

 

 

 

126,535

 

 

 

(35,635

)

 

 

90,900

 

 

Cash Basis/ 6/30/2026

Office (2)

 

CA

 

5

 

 

90,414

 

 

 

90,027

 

 

 

(18,927

)

 

 

71,100

 

 

Cost Recovery/ 9/1/2023

Office

 

GA

 

5

 

 

66,642

 

 

 

66,244

 

 

 

(41,644

)

 

 

24,600

 

 

Cost Recovery/ 9/1/2023

Other (3)

 

Other

 

5

 

 

1,527

 

 

 

1,527

 

 

 

-

 

 

 

1,527

 

 

Cost Recovery/ 7/1/2020

Total non-accrual

 

$

1,545,865

 

 

$

1,544,447

 

 

$

(515,620

)

 

$

1,028,827

 

 

 

 

 

(1)
In October 2026, an unaffiliated purchaser’s deposit became nonrefundable under an agreement to sell this loan receivable for a gross sales price of $245.0 million. The sale is expected to close in the fourth quarter of 2026, subject to customary closing conditions. We did not reduce this loan’s carrying value, which was based upon the estimated fair value of the underlying collateral, to the anticipated sale proceeds as of September 30, 2026. If completed, the sale is expected to result in an incremental loss of approximately $5.0 million, reflecting a discount accepted in consideration of resolving the loan within this timeframe.
(2)
In October 2026, an unaffiliated purchaser’s deposit became nonrefundable under an agreement to sell this loan receivable for a gross sales price of $65.7 million. The sale is expected to close in the fourth quarter of 2026, subject to customary closing conditions. We did not reduce this loan’s carrying value, which was based upon the estimated fair value of the underlying collateral, to the anticipated sale proceeds as of September 30, 2026. If completed, the sale is expected to result in an incremental loss of approximately $5.4 million, reflecting a discount accepted in consideration of resolving the loan within this timeframe.
(3)
Amounts deemed uncollectible have been charged-off as of September 30, 2026.

As of September 30, 2026, loans receivable classified as non-accrual represented 40.5% of our total loans receivable held-for-investment, based on carrying value net of specific CECL reserves. During the nine months ended September 30, 2026, we (i) recognized $5.3 million of interest income on a cash basis for loans on non-accrual status, of which $3.0 million was recognized upon the repayment of a non-accrual loan in January 2026 and $2.3 million was recognized related to loans which remain in our portfolio as of quarter-end, (ii) received $4.1 million of cost recovery proceeds for loans on non-accrual status which reduced such loan’s unpaid principal balance, and (iii) received $7.2 million of proceeds for loans on non-accrual status which were applied against past due interest and reduced the related CECL reserves. Further, the above table excludes one loan with an aggregate carrying value of $78.5 million that is in maturity default but remains on accrual status as interest is deemed collectible based on the collateral property’s value.

The following table presents the carrying value and significant characteristics of our loans receivable held-for-investment on non-accrual status as of December 31, 2025 ($ in thousands):

 

Property Type

 

Location

 

Risk Rating

 

Unpaid Principal Balance

 

 

Carrying
Value Before
Specific CECL
Reserve

 

 

Specific
CECL Reserve

 

 

Net Carrying Value

 

 

Interest Recognition Method /
as of Date

Multifamily

 

CA

 

5

 

$

402,341

 

 

$

402,223

 

 

$

(102,223

)

 

$

300,000

 

 

Cash Basis/ 6/30/2025

Office

 

GA

 

5

 

 

225,497

 

 

 

225,497

 

 

 

(34,697

)

 

 

190,800

 

 

Cost Recovery/ 12/31/2025

Multifamily

 

CO

 

5

 

 

170,000

 

 

 

170,000

 

 

 

(72,000

)

 

 

98,000

 

 

Cash Basis/ 9/30/2025

Land

 

VA

 

5

 

 

157,129

 

 

 

157,129

 

 

 

(37,029

)

 

 

120,100

 

 

Cost Recovery/ 1/1/2023

Multifamily

 

TX

 

5

 

 

137,696

 

 

 

137,181

 

 

 

(47,181

)

 

 

90,000

 

 

Cash Basis/ 7/1/2024

Office (1)

 

CA

 

5

 

 

111,542

 

 

 

111,263

 

 

 

(23,363

)

 

 

87,900

 

 

Cost Recovery/ 4/1/2023

Office

 

GA

 

5

 

 

67,892

 

 

 

67,494

 

 

 

(28,294

)

 

 

39,200

 

 

Cost Recovery/ 9/1/2023

Multifamily (2)(3)

 

TX

 

5

 

 

37,400

 

 

 

37,400

 

 

 

-

 

 

 

37,400

 

 

Cash Basis/ 6/30/2025

Multifamily (4)

 

TX

 

5

 

 

25,373

 

 

 

25,312

 

 

 

(2,912

)

 

 

22,400

 

 

Cash Basis/ 7/1/2024

Other (3)

 

Other

 

5

 

 

1,607

 

 

 

1,607

 

 

 

-

 

 

 

1,607

 

 

Cost Recovery/ 7/1/2020

Total risk rated 5 loans (5)

 

 

1,336,477

 

 

 

1,335,106

 

 

 

(347,699

)

 

 

987,407

 

 

 

Office

 

CA

 

4

 

 

93,214

 

 

 

92,827

 

 

 

-

 

 

 

92,827

 

 

Cost Recovery/ 9/1/2023

Land (6)

 

NY

 

4

 

 

67,000

 

 

 

67,000

 

 

 

-

 

 

 

67,000

 

 

Cash Basis/ 11/1/2021

Total risk rated 4 loans

 

 

160,214

 

 

 

159,827

 

 

 

-

 

 

 

159,827

 

 

 

Total non-accrual

 

 

 

$

1,496,691

 

 

$

1,494,933

 

 

$

(347,699

)

 

$

1,147,234

 

 

 

 

(1)
In July 2026, this loan was sold.
(2)
In January 2026, we acquired legal title to the collateral property through a mortgage foreclosure. In anticipation of such foreclosure, we recognized a principal charge-off of $39.1 million as of December 31, 2025.
(3)
Amounts deemed uncollectible have been charged-off as of December 31, 2025.
(4)
In May 2026, we acquired legal title to the collateral property through a mortgage foreclosure.
(5)
Amount excludes one risk rated 5 loan with an unpaid principal balance of $71.3 million and a carrying value net of specific CECL reserves of $53.5 million that remained on accrual status as monthly debt service was satisfied through borrower funded reserves. In February 2026, we assigned our right, title, and interest in this loan receivable and the collateral property to our financing counterparty in exchange for the full extinguishment of amounts due under the related financing. Upon assignment, we recognized a principal charge-off of $17.8 million which includes $2.6 million paid to our financing counterparty under the terms of our guarantee. See Note 6 - Debt Obligations - Notes Payable for further detail.
(6)
In January 2026, this loan was repaid in full. During the year ended December 31, 2025, we recognized $3.0 million of interest income on a cash basis from this loan, which is included in the $6.0 million of interest income recognized on a cash basis as discussed below for the year ended December 31, 2025. Upon repayment in January 2026, we recognized an additional $3.0 million of interest income on a cash basis from this loan, which is included in cash basis interest income discussed above for the nine months ended September 30, 2026.

As of December 31, 2025, loans receivable classified as non-accrual represented 31.1% of our total loans receivable held-for-investment, based on carrying value net of specific CECL reserves. During the year ended December 31, 2025, we (i) recognized $6.0 million of interest income on a cash basis for loans on non-accrual status, (ii) received $13.6 million of cost recovery proceeds for loans on non-accrual status which reduced such loan’s unpaid principal balance, and (iii) received $2.6 million of proceeds for loans on non-accrual status which were applied against past due interest and reduced the related CECL reserve. Further, the above table excludes three loans with an aggregate carrying value of $453.8 million that are in maturity default but remain on accrual status as the borrower is current on interest payments and/or interest is deemed collectible based on the collateral property’s value.

Current Expected Credit Losses

The current expected credit loss reserve required under GAAP reflects our current estimate of potential credit losses related to our loan commitments. See Note 2 for further detail of our current expected credit loss reserve methodology.

The following table illustrates the changes in the current expected credit loss reserve for our loans receivable held-for-investment for the nine months ended September 30, 2026 and 2025, respectively ($ in thousands):

 

 

 

 

General CECL Reserve

 

 

 

 

 

 

 

 

 

Specific CECL Reserve

 

 

Loans Receivable
Held-for-
Investment

 

 

Unfunded Loan
Commitments(1)

 

 

Total General
CECL Reserve

 

 

Accrued
Interest
Receivable(2)

 

 

Total CECL
Reserve

 

Total reserve, December 31, 2024

 

$

120,920

 

 

$

122,110

 

 

$

5,546

 

 

$

127,656

 

 

$

17,794

 

 

$

266,370

 

Provision (reversal)

 

 

41,458

 

 

 

(3,975

)

 

 

100

 

 

 

(3,875

)

 

 

3,540

 

 

 

41,123

 

Charge-offs

 

 

(43,113

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,540

)

 

 

(46,653

)

Total reserve, March 31, 2025

 

$

119,265

 

 

$

118,135

 

 

$

5,646

 

 

$

123,781

 

 

$

17,794

 

 

$

260,840

 

Provision

 

 

143,121

 

 

 

14,460

 

 

 

958

 

 

 

15,418

 

 

 

30,950

 

 

 

189,489

 

Charge-offs

 

 

(68,909

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,915

)

 

 

(71,824

)

Total reserve, June 30, 2025

 

$

193,477

 

 

$

132,595

 

 

$

6,604

 

 

$

139,199

 

 

$

45,829

 

 

$

378,505

 

Provision (reversal)

 

 

16,720

 

 

 

1,533

 

 

 

(930

)

 

 

603

 

 

 

6,911

 

 

 

24,234

 

Charge-offs

 

 

(42,325

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(42,325

)

Total reserve, September 30, 2025

 

$

167,872

 

 

$

134,128

 

 

$

5,674

 

 

$

139,802

 

 

$

52,740

 

 

$

360,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total reserve, December 31, 2025

 

$

365,424

 

 

$

73,328

 

 

$

4,340

 

 

$

77,668

 

 

$

26,782

 

 

$

469,874

 

Provision (reversal)

 

 

32,368

 

 

 

(25,710

)

 

 

(1,864

)

 

 

(27,574

)

 

 

26,578

 

 

 

31,372

 

Charge-offs

 

 

(48,977

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(12,884

)

 

 

(61,861

)

Total reserve, March 31, 2026

 

$

348,815

 

 

$

47,618

 

 

$

2,476

 

 

$

50,094

 

 

$

40,476

 

 

$

439,385

 

Provision (reversal)

 

 

211,581

 

 

 

1,133

 

 

 

(642

)

 

 

491

 

 

 

(3,233

)

 

 

208,839

 

Charge-offs

 

 

(43,593

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(390

)

 

 

(43,983

)

Total reserve, June 30, 2026

 

$

516,803

 

 

$

48,751

 

 

$

1,834

 

 

$

50,585

 

 

$

36,853

 

 

$

604,241

 

Provision (reversal)

 

 

3,701

 

 

 

57

 

 

 

(24

)

 

 

33

 

 

 

(3,347

)

 

 

387

 

Charge-offs

 

 

(4,884

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,884

)

Total reserve, September 30, 2026

 

$

515,620

 

 

$

48,808

 

 

$

1,810

 

 

$

50,618

 

 

$

33,506

 

 

$

599,744

 

 

(1)
CECL reserve for unfunded commitments is included in other liabilities on our consolidated balance sheets.
(2)
CECL reserves for accrued interest receivable are included in other assets on our consolidated balance sheets.

The following table illustrates our specific and general CECL reserves as a percentage of total unpaid principal balance of loans receivable held-for-investment as of September 30, 2026, December 31, 2025, September 30, 2025, and December 31, 2024:

 

 

Specific CECL
Reserve (1)

 

General CECL
Reserve (2)

 

Total CECL
Reserve (3)

 

Reserve at December 31, 2024

 

18.2

%

 

2.3

%

 

4.0

%

Reserve at September 30, 2025

 

17.2

%

 

3.9

%

 

6.8

%

Reserve at December 31, 2025

 

26.0

%

 

2.9

%

 

10.9

%

Reserve at September 30, 2026

 

33.4

%

 

3.4

%

 

18.5

%

 

(1)
Represents specific CECL reserves on loans receivable held-for-investment as a percentage of unpaid principal balance of risk rated 5 loans.
(2)
Represents general CECL reserves on loans receivable held-for-investment and related unfunded loan commitments as a percentage of unpaid principal balance of loans subject to the general CECL reserve.
(3)
Represents total CECL reserves on loans receivable held-for-investment and related unfunded loan commitments as a percentage of total unpaid principal balance of loans receivable held-for-investment.

During the nine months ended September 30, 2026, we recorded a provision for current expected credit losses of $240.6 million, which consisted of $247.7 million of additional provision for our specific CECL reserves and $20.0 million of additional net provision for our CECL reserves on accrued interest receivable, offset in part by a $27.1 million net reversal of our general CECL reserves. The additional provision for our specific CECL reserves is primarily attributable to specific reserves determined on loans now classified as risk rated 5, changes to collateral values, protective advances made on certain loans, and incremental specific reserves determined on loans that were sold below our carrying value. The additional net provision for our CECL reserves on accrued interest receivable is attributable to reserving against outstanding interest due to us upon loans being placed on non-accrual status during the nine months ended September 30, 2026, offset in part by a reduction in reserves upon the receipt of past due interest. The net reversal of our general CECL reserves is primarily attributable to a reduction in the size of our loan portfolio subject to determination of the general CECL reserve, seasoning of our loan portfolio, and changes in the historical loss rate of the analogous data set, offset in part by changes in expected remaining duration within our loan portfolio. During the nine months ended September 30, 2026, we recognized principal and exit fee charge-offs of $97.5 million, which reduced our specific CECL reserves, and recognized charge-offs of accrued interest

receivable of $13.3 million, which reduced reserves on such amounts. As of September 30, 2026, our total current expected credit loss reserve was $599.7 million.

During the nine months ended September 30, 2025, we recorded a provision for current expected credit losses of $254.8 million, which consisted of $12.1 million of additional net provision for our general CECL reserves, $201.3 million of additional provision for our specific CECL reserves, and $41.4 million of additional provision for our CECL reserves on accrued interest receivable. The additional net provision for our general CECL reserves was primarily attributable to changes in the historical loss rate of the analogous data set and changes in risk ratings, non-accrual status, and expected remaining duration within our loan portfolio, offset in part by the seasoning of our loan portfolio and a reduction in the size of our loan portfolio subject to determination of the general CECL reserve. The additional provision for our specific CECL reserves was primarily attributable to specific reserves determined on loans then newly classified as risk rated 5, changes to collateral values, and protective advances made. The additional provision for our CECL reserves on accrued interest receivable was attributable to reserving against interest income previously recognized on loans placed on non-accrual status during such period. During the nine months ended September 30, 2025, we recognized principal charge-offs of $154.3 million, which reduced our specific CECL reserves, and recognized charge-offs of accrued interest receivable of $6.5 million, which reduced reserves on such amounts. As of September 30, 2025, our total current expected credit loss reserve was $360.4 million.

Specific CECL Reserves

In certain circumstances, we may determine that a borrower is experiencing financial difficulty, and, if the repayment of the loan’s principal is collateral dependent, the loan is no longer suited for the WARM method. In these instances, there have been diminutions in the fair value and performance of the collateral property primarily as a result of reduced tenant and/or capital markets demand for such property types in the markets in which these assets and borrowers operate. For such loans, we seek resolutions through a variety of means including, but not limited to, foreclosures on the collateral asset, sales of our loan receivable, and discounted loan payoffs. If we anticipate assuming legal title and/or physical possession of the collateral property and the fair value of the collateral asset is determined to be below the carrying value of our loan, we may recognize a specific CECL reserve. Furthermore, in certain circumstances, we may recognize a specific CECL reserve based upon anticipated proceeds from the disposition of our loan. The following table presents a summary of our risk rated 5 loans receivable held-for-investment as of September 30, 2026 ($ in thousands):

 

Property Type

 

Location

 

Unpaid
Principal
Balance

 

 

Carrying Value Before Specific CECL Reserve

 

 

Specific
CECL Reserve

 

 

Net
Carrying Value

 

Multifamily (1)

 

CA

 

$

402,341

 

 

$

402,223

 

 

$

(152,223

)

 

$

250,000

 

Multifamily

 

CO

 

 

170,000

 

 

 

170,000

 

 

 

(81,100

)

 

 

88,900

 

Multifamily

 

AZ

 

 

155,000

 

 

 

155,000

 

 

 

(54,100

)

 

 

100,900

 

Multifamily

 

TX

 

 

142,291

 

 

 

141,776

 

 

 

(51,776

)

 

 

90,000

 

Multifamily

 

TX

 

 

126,535

 

 

 

126,535

 

 

 

(35,635

)

 

 

90,900

 

Total Multifamily

 

996,167

 

 

 

995,534

 

 

 

(374,834

)

 

 

620,700

 

Land

 

VA

 

 

160,393

 

 

 

160,393

 

 

 

(40,293

)

 

 

120,100

 

Total Land

 

 

160,393

 

 

 

160,393

 

 

 

(40,293

)

 

 

120,100

 

Office

 

GA

 

 

230,722

 

 

 

230,722

 

 

 

(39,922

)

 

 

190,800

 

Office (2)

 

CA

 

 

90,414

 

 

 

90,027

 

 

 

(18,927

)

 

 

71,100

 

Office

 

GA

 

 

66,642

 

 

 

66,244

 

 

 

(41,644

)

 

 

24,600

 

Total Office

 

387,778

 

 

 

386,993

 

 

 

(100,493

)

 

 

286,500

 

Other (3)

 

Other

 

 

1,527

 

 

 

1,527

 

 

 

-

 

 

 

1,527

 

Total Other

 

1,527

 

 

 

1,527

 

 

 

-

 

 

 

1,527

 

Total

 

 

 

$

1,545,865

 

 

$

1,544,447

 

 

$

(515,620

)

 

$

1,028,827

 

 

(1)
In October 2026, an unaffiliated purchaser’s deposit became nonrefundable under an agreement to sell this loan receivable for a gross sales price of $245.0 million. The sale is expected to close in the fourth quarter of 2026, subject to customary closing conditions. We did not reduce this loan’s carrying value, which was based upon the estimated fair value of the underlying collateral, to the anticipated sale proceeds as of September 30, 2026. If completed, the sale is expected to result in an incremental loss of approximately $5.0 million, reflecting a discount accepted in consideration of resolving the loan within this timeframe.
(2)
In October 2026, an unaffiliated purchaser’s deposit became nonrefundable under an agreement to sell this loan receivable for a gross sales price of $65.7 million. The sale is expected to close in the fourth quarter of 2026, subject to customary closing conditions. We did not reduce this loan’s carrying value, which was based upon the estimated fair value of the underlying collateral, to the anticipated sale proceeds as of September 30, 2026. If completed, the sale is expected to result in an incremental loss of approximately $5.4 million, reflecting a discount accepted in consideration of resolving the loan within this timeframe.
(3)
Amounts deemed uncollectible have been charged-off as of September 30, 2026.

Fair values of collateral assets used to determine specific CECL reserves are calculated using a discounted cash flow model, a sales comparison approach, or a market capitalization approach. Estimates of fair values used to determine specific CECL reserves may include, among others, assumptions of property specific cash flows over estimated holding periods, assumptions of property redevelopment costs, assumptions of leasing activities, discount rates, market and terminal capitalization rates, and, with respect to land, value per buildable square foot. These assumptions are based upon the nature of the properties, recent and projected property cash flows, recent sales and lease comparables, and anticipated real estate and capital market conditions, among other factors which we may deem relevant. Estimates of fair values used to determine specific CECL reserves as of September 30, 2026 include discount rates ranging from 6.0% to 20.0%, market and terminal capitalization rates ranging from 4.61% to 8.75%, and, with respect to the land loan, value per buildable square foot of $140 based on current entitlements.

Our primary credit quality indicator is our internal risk rating, which is further discussed above. The following table presents the carrying value of our loans receivable held-for-investment as of September 30, 2026 by year of origination and risk rating, and principal charge-offs and recovery of principal charge-offs recognized during the nine months ended September 30, 2026 ($ in thousands):

 

 

 

 

 

 

 

Carrying Value by Origination Year as of September 30, 2026

 

Risk Rating

 

Number of Loans

 

Carrying
Value (1)

 

2026

 

2025

 

2024 (2)

 

2023

 

2022

 

2021

 

2020 and Prior

 

1

 

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

2

 

1

 

 

129,941

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

129,941

 

 

-

 

3

 

11

 

 

1,302,163

 

 

-

 

 

-

 

 

102,292

 

 

-

 

 

590,722

 

 

210,985

 

 

398,164

 

4

 

1

 

 

78,500

 

 

-

 

 

-

 

 

-

 

 

-

 

 

78,500

 

 

-

 

 

-

 

5

 

10

 

 

1,028,827

 

 

-

 

 

-

 

 

-

 

 

-

 

 

370,700

 

 

345,700

 

 

312,427

 

 

23

 

$

2,539,431

 

$

-

 

$

-

 

$

102,292

 

$

-

 

$

1,039,922

 

$

686,626

 

$

710,591

 

Principal Charge-offs (3)

 

$

-

 

$

-

 

$

-

 

$

-

 

$

55,198

 

$

847

 

$

41,409

 

Recovery of principal charge-offs (4)

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

(2,682

)

 

(1)
Net of specific CECL reserves of $515.6 million.
(2)
Reflects a loan receivable acquired in connection with a full loan repayment in 2024.
(3)
Principal charge-offs pertain to loans receivable previously included in our loan receivable held-for-investment portfolio and were resolved or sold during the nine months ended September 30, 2026.
(4)
During the nine months ended September 30, 2026, we received (i) $2.2 million of proceeds related to a loan receivable originated in 2019 and subsequently sold in 2023 and (ii) $0.5 million of proceeds related to a loan receivable originated in 2018 and subsequently sold in 2025. Such amounts are included in recovery of principal charge-offs on our consolidated statement of operations.

The following table details overall statistics for our loans receivable held-for-investment:

 

 

 

September 30, 2026

 

 

December 31, 2025

 

Weighted average yield to maturity(1)

 

 

5.7

%

 

 

6.2

%

Weighted average term to initial maturity

 

0.3 years

 

 

0.5 years

 

Weighted average term to fully extended maturity(2)

 

0.4 years

 

 

1.1 years

 

 

(1)
Represents the weighted average annualized yield to initial maturity of each loan, inclusive of coupon and contractual fees, based on the applicable floating benchmark interest rate/floors (if applicable), in place as of September 30, 2026 and December 31, 2025. For loans placed on non-accrual, the annualized yield to initial maturity used in calculating the weighted average annualized yield to initial maturity is 0%.
(2)
Term to fully extended maturity is determined based on the maximum maturity of each of the corresponding loans, assuming all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date.