v3.26.3
Debt Obligations
 9 Months Ended
Sep. 30, 2026
Debt Disclosure [Abstract]  
Debt Obligations

Note 6. Debt Obligations

As of September 30, 2026 and December 31, 2025, we financed certain of our loans receivable using repurchase agreements, a term participation facility, and/or notes payable. Further, we have debt related to real estate owned hotel portfolio and a secured term loan. Our financings bear interest at a rate equal to SOFR plus a credit spread.

The following table summarizes our financings as of September 30, 2026 and December 31, 2025 ($ in thousands):

 

 

 

September 30, 2026

 

 

December 31, 2025

 

 

 

Capacity

 

 

Borrowings
 Outstanding

 

 

Weighted
Average
Spread (1)

 

 

Capacity

 

 

Borrowings
Outstanding

 

 

Weighted
Average
Spread(1)

 

Repurchase agreements and term
  participation facility (2)

 

$

3,159,630

 

 

$

1,535,889

 

 

 

+ 2.85%

 

 

$

4,180,546

 

 

$

2,187,066

 

 

 

+ 2.92%

 

Notes payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

195,830

 

 

 

177,999

 

 

 

+ 3.22%

 

Secured term loan

 

 

500,000

 

 

 

500,000

 

 

 

+ 6.75%

 

 

 

556,188

 

 

 

556,188

 

 

 

+ 4.50%

 

Debt related to real estate owned
  hotel portfolio

 

 

235,000

 

 

 

235,000

 

 

 

+ 3.18%

 

 

 

235,000

 

 

 

235,000

 

 

 

+ 3.18%

 

Total/Weighted Average

 

$

3,894,630

 

 

$

2,270,889

 

 

 

+ 3.74%

 

 

$

5,167,564

 

 

$

3,156,253

 

 

 

+ 3.23%

 

 

 

(1)
Weighted average spread over the applicable benchmark interest rate is based on unpaid principal balance. SOFR as of September 30, 2026 and December 31, 2025 was 3.91% and 3.69%, respectively.
(2)
The repurchase agreements and term participation facility are partially recourse to us. As of September 30, 2026 and December 31, 2025, the weighted average recourse on our repurchase agreements and term participation facility was 30% and 30%, respectively.

Repurchase Agreements and Term Participation Facility

Repurchase Agreements

The following table summarizes our repurchase agreements by lender as of September 30, 2026 ($ in thousands):

 

Lender

 

Initial Maturity

 

Fully
Extended
Maturity(1)

 

Maximum Capacity

 

 

Borrowings
Outstanding and Carrying Value

 

 

Undrawn
Capacity

 

 

Carrying
Value of
Collateral(2)

 

JP Morgan Chase Bank, N.A.

 

7/28/2027

 

7/28/2030

 

$

1,882,487

 

 

$

531,589

 

 

$

1,350,898

 

 

$

980,354

 

JP Morgan Chase Bank, N.A. (3)

 

3/31/2028

 

3/31/2030

 

 

808,636

 

 

 

792,332

 

 

 

16,304

 

 

 

1,069,813

 

Morgan Stanley Bank, N.A.

 

1/26/2027

 

1/26/2028

 

 

250,000

 

 

 

-

 

 

 

250,000

 

 

 

-

 

Total

 

 

 

 

 

$

2,941,123

 

 

$

1,323,921

 

 

$

1,617,202

 

 

$

2,050,167

 

 

 

(1)
Facility maturity dates may be extended, subject to meeting prescribed conditions.
(2)
Net of specific CECL reserves, if any.
(3)
Repurchase agreement specifically provides for the ability to finance (i) loans receivable, including those which may be delinquent or in default, and (ii) real estate owned assets subsequent to assuming legal title and/or physical possession of the collateral property. As of September 30, 2026, (i) $178.6 million of borrowings outstanding on this repurchase agreement relate to our multifamily real estate owned assets, and (ii) the carrying value of collateral for this repurchase agreement includes our multifamily real estate owned assets, related lease intangibles included in other assets, and related below market lease values included in other liabilities on our consolidated balance sheets.

The Wells Fargo Bank, N.A. repurchase agreement was terminated in July 2026 upon reaching maturity in accordance with its terms.

The following table summarizes our repurchase agreements by lender as of December 31, 2025 ($ in thousands):

 

Lender

 

Initial Maturity

 

Fully
Extended
Maturity (1)

 

Maximum Capacity

 

 

Borrowings
Outstanding and Carrying Value

 

 

Undrawn
Capacity

 

 

Carrying Value of Collateral (2)

 

JP Morgan Chase Bank, N.A.

 

7/28/2026

 

7/28/2028

 

$

1,882,487

 

 

$

880,675

 

 

$

1,001,812

 

 

$

1,479,384

 

JP Morgan Chase Bank, N.A.(3)

 

3/31/2028

 

3/31/2030

 

 

948,253

 

 

 

926,939

 

 

 

21,314

 

 

 

1,193,842

 

Morgan Stanley Bank, N.A.

 

1/26/2026

 

1/26/2028

 

 

750,000

 

 

 

50,000

 

 

 

700,000

 

 

 

113,809

 

Wells Fargo Bank, N.A.(4)

 

4/30/2026

 

4/30/2028

 

 

250,000

 

 

 

-

 

 

 

250,000

 

 

 

-

 

Total

 

 

 

 

 

$

3,830,740

 

 

$

1,857,614

 

 

$

1,973,126

 

 

$

2,787,035

 

 

(1)
Facility maturity dates may be extended, subject to meeting prescribed conditions.
(2)
Net of specific CECL reserves, if any.
(3)
Repurchase agreement specifically provides for the ability to finance (i) loans receivable, including those which may be delinquent or in default, and (ii) real estate owned assets subsequent to assuming legal title and/or physical possession of the collateral property. As of December 31, 2025, (i) $195.3 million of borrowings outstanding on this repurchase agreement relate to our multifamily real estate owned assets, and (ii) the carrying value of collateral for this repurchase agreement includes our multifamily real estate owned assets, related lease intangibles included in other assets, and below market lease values included in other liabilities on our consolidated balance sheets.
(4)
In April 2026, we extended the initial maturity of this repurchase agreement to July 29, 2026.

Term Participation Facility

On November 4, 2022, we entered into a master participation and administration agreement to finance certain of our loans receivable.

Our term participation facility as of September 30, 2026 is summarized as follows ($ in thousands):

 

Contractual
Maturity Date

 

Total
Commitments

 

 

Borrowings
Outstanding and Carrying Value (1)

 

 

Carrying Value
of Collateral (1)

 

12/23/2029

 

$

218,507

 

 

$

211,968

 

 

$

422,919

 

 

(1)
In October 2026, $200.0 million of borrowings outstanding were repaid from proceeds received upon the repayment of an associated loan receivable.

Our term participation facility as of December 31, 2025 is summarized as follows ($ in thousands):

 

Contractual
Maturity Date

 

Total
Commitments

 

 

Borrowings
Outstanding and Carrying Value

 

 

Carrying Value
of Collateral

 

12/23/2029

 

$

349,806

 

 

$

329,452

 

 

$

590,237

 

Notes Payable

As of September 30, 2026, none of our loans receivable were financed with notes payable. Our notes payable as of December 31, 2025 are summarized as follows ($ in thousands):

 

Contractual
Maturity Date

 

Maximum
Extension Date

 

Borrowing Outstanding

 

 

Carrying
Value

 

 

Carrying Value
of Collateral

 

9/2/2026 (1)

 

9/2/2027

 

$

121,833

 

 

$

121,454

 

 

$

173,239

 

2/2/2026 (2)

 

2/2/2027

 

 

56,166

 

 

 

56,068

 

 

 

53,487

 

Total

 

$

177,999

 

 

$

177,522

 

 

$

226,726

 

 

(1)
In January 2026, this note payable was repaid in full upon the repayment of the associated loan receivable.
(2)
In February 2026, we assigned our right, title, and interest in the loan receivable and collateral property to our financing counterparty in exchange for the full extinguishment of amounts due under the related note payable.

Secured Term Loan

On August 9, 2019, we entered into a secured term loan which accrued interest at the greater of (i) SOFR plus a 0.10% credit spread adjustment and (ii) 0.50%, plus a credit spread of 4.50%. In January 2026, we refinanced our secured term loan with a new secured term loan which provides for an aggregate principal amount of $500.0 million, a maturity date of January 30, 2030, and incurs interest at a rate of SOFR plus 6.75%, subject to a SOFR floor of 2.50%. In connection with the repayment of our prior secured term loan, we recognized a loss on extinguishment of debt of $5.9 million, representing unamortized deferred financing costs at the time of repayment. Our new secured term loan is collateralized by a pledge of equity in certain subsidiaries and their related assets. As consideration for and in connection with entering into our new secured term loan, we issued detachable warrants exercisable until January 2037. In accordance with ASC 470, Debt, based on relative fair values at January 30, 2026 and prior to original issue discount and deferred financing costs, we allocated $486.5 million of value to the secured term loan using a discounted cash flow model, incorporating Level 3 assumptions of an implied yield on the value of the warrants. Value allocated to the detachable warrants is classified as equity and creates a corresponding discount on our secured term loan in the same amount which is amortized to interest expense using the effective interest method. Furthermore, we incurred $23.2 million of transaction costs which were allocated proportionately between deferred financing costs and equity issuance costs in the same manner. See Note 9 - Equity - Warrants for further detail.

Our secured term loan as of September 30, 2026 is summarized as follows ($ in thousands):

 

Contractual Maturity Date

 

Stated Rate (1)

 

Interest Rate

 

Borrowing Outstanding

 

 

Carrying Value

 

1/30/2030

 

S + 6.75%

 

10.66%

 

$

500,000

 

 

$

469,947

 

 

(1)
SOFR at September 30, 2026 was 3.91%.

Our prior secured term loan as of December 31, 2025 is summarized as follows ($ in thousands):

 

Contractual Maturity Date

 

Stated Rate (1)

 

Interest Rate

 

Borrowing Outstanding

 

 

Carrying Value

 

8/9/2026

 

S + 4.50%

 

8.29%

 

$

556,188

 

 

$

549,447

 

 

(1)
SOFR at December 31, 2025 was 3.69%.

Debt Related to Real Estate Owned Hotel Portfolio

On February 8, 2021, we assumed a $300.0 million securitized senior mortgage in connection with a foreclosure on a hotel portfolio which, subsequent thereto, was modified to provide for, among other things, total principal payments of $25.0 million, an extension of the contractual maturity date to February 9, 2025, and the designation of a portion of the loan becoming partial recourse to us. Concurrent with each modification, we acquired interest rate caps with notional amounts equal to the borrowing outstanding, strike rates ranging from 3.0% to 5.0%, and maturity dates matching the associated financing. Upon maturity in February 2025, we entered into forbearance agreements with our lender through September 9, 2025 and concurrently repaid $5.0 million of the principal balance. During the forbearance period, interest accrued at additional rates ranging from 3.0% to 5.0% per annum. On June 9, 2025, we refinanced our debt related to real estate owned hotel portfolio with a non-recourse senior mortgage in the amount of $235.0 million. Such financing matures on June 9, 2027, and we may extend the maturity to June 9, 2030 pursuant to three one-year extension options, subject to meeting prescribed conditions.

Our debt related to real estate owned hotel portfolio as of September 30, 2026 is summarized as follows ($ in thousands):

 

Contractual Maturity Date

 

Stated Rate (1)

 

Net Interest Rate (1)

 

Borrowing Outstanding

 

 

Carrying Value

 

6/9/2027

 

S + 3.18%

 

7.09%

 

$

235,000

 

 

$

233,114

 

 

(1)
SOFR at September 30, 2026 was 3.91%, which was below the 6.79% strike rate provided by our interest rate cap. See Note 7 – Derivatives for further detail.

Our debt related to real estate owned hotel portfolio as of December 31, 2025 is summarized as follows ($ in thousands):

 

Contractual Maturity Date

 

Stated Rate (1)

 

Net Interest Rate (1)

 

Borrowing Outstanding

 

 

Carrying Value

 

6/9/2027

 

S + 3.18%

 

6.87%

 

$

235,000

 

 

$

230,992

 

 

(1)
SOFR at December 31, 2025 was 3.69%, which was below the 6.79% strike rate provided by our interest rate cap. See Note 7 – Derivatives for further detail.

Interest Expense and Amortization

The following table summarizes our interest and amortization expense on our secured financings, debt related to real estate owned hotel portfolio, and secured term loan 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

 

Interest expense on secured financings

 

$

22,821

 

 

$

49,442

 

 

$

81,313

 

 

$

177,667

 

Interest expense on secured term loan

 

 

13,364

 

 

 

16,320

 

 

 

39,118

 

 

 

48,543

 

Amortization of deferred financing costs

 

 

3,263

 

 

 

6,077

 

 

 

15,102

 

 

 

16,851

 

Amortization of discount on secured term loan

 

 

843

 

 

 

-

 

 

 

2,255

 

 

 

-

 

Interest and related expense

 

 

40,291

 

 

 

71,839

 

 

 

137,788

 

 

 

243,061

 

Interest expense on debt related to
  real estate owned hotel portfolio (1)

 

 

4,825

 

 

 

5,203

 

 

 

14,320

 

 

 

19,388

 

Interest expense on multifamily real estate owned properties (2)

 

 

3,863

 

 

 

4,213

 

 

 

12,491

 

 

 

4,746

 

Total interest and related expense

 

$

48,979

 

 

$

81,255

 

 

$

164,599

 

 

$

267,195

 

 

(1)
For the three months ended September 30, 2026 and 2025, interest expense on debt related to real estate owned hotel portfolio includes $0.7 million and $0.7 million, respectively, of amortization of deferred financing costs. For the nine months ended September 30, 2026 and 2025, interest expense on debt related to real estate owned hotel portfolio includes $2.1 million and $1.6 million, respectively, of amortization of deferred financing costs.
(2)
Our multifamily real estate owned assets are pledged to certain of our repurchase agreements. Thus, amount excludes any allocation of amortization of deferred financing costs related to such repurchase agreement.

Financial Covenants

Our financing agreements generally contain certain financial covenants. As of September 30, 2026, we are in compliance with all financial covenants under our financing agreements.

Future compliance with our financial covenants is dependent upon the results of our operating activities, our financial condition, and the overall market conditions in which we and our borrowers operate. The impact of macroeconomic conditions on the commercial real estate and capital markets, including elevated benchmark interest rates compared to recent historical levels and the effects thereof on our and our borrowers’ operating performance, may make it more difficult for us to satisfy these financial covenants in the future. Non-compliance with financial covenants may result in our lenders exercising their rights and remedies as provided for in the respective agreements. As the results of our operating activities, our financial condition, and the overall market conditions in which we and our borrowers operate evolve, we may continue to work with our counterparties on modifying financial covenants as needed; however, there is no assurance that our counterparties will agree to such modifications.

Repurchase Agreements and Term Participation Facility

As calculated in accordance with our repurchase agreements and our term participation facility and as of September 30, 2026, (i) our tangible net worth shall not be less than $1.0 billion plus 75% of the aggregate cash proceeds received by us after January 30, 2026 from any equity issuances, capital contributions, and/or subscriptions (net of any related costs), (ii) our total debt-to-equity ratio shall not exceed 3.50 to 1.00, and (iii) our cash liquidity shall not be less than the greater of (x) $20.0 million or (y) 5% of total recourse indebtedness (which includes our secured term loan). For the quarters ending September 30, 2026 to June 30, 2027, there is no measurement of our ratio of earnings before interest, taxes, depreciation, and amortization to interest charges (our “Interest Coverage Ratio”). Commencing with the quarters ending September 30, 2027 and December 31, 2027, our Interest Coverage Ratio shall not be less than 1.10 to 1.00. Subsequent thereto, our Interest Coverage Ratio shall not be less than (i) 1.20 to 1.00 for the quarters ending March 31, 2028 and June 30, 2028 and (ii) 1.30 to 1.00 for the quarters ending September 30, 2028 and thereafter.

Secured Term Loan

As calculated in accordance with our new secured term loan agreement and effective upon its closing, (i) our tangible net worth shall not be less than $1.0 billion plus 75% of the aggregate cash proceeds received by us after January 30, 2026 from any equity issuances, capital contributions, and/or subscriptions (net of any related costs) and (ii) our total debt-to-equity ratio shall not exceed 3.50 to 1.00. For the quarters ending September 30, 2026 to June 30, 2027, there is no measurement of our Interest Coverage Ratio. Commencing with the quarters ending September 30, 2027 and December 31, 2027, our Interest Coverage Ratio shall not be less than 1.10 to 1.00. Subsequent thereto, our Interest Coverage Ratio shall not be less than (i) 1.20 to 1.00 for the quarters ending March 31, 2028 and June 30, 2028 and (ii) 1.30 to 1.00 for the quarters ending September 30, 2028 and thereafter.