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Beneficial Interests | 6 Months Ended
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Jun. 30, 2025
Beneficial Interests [Abstract] |
Beneficial Interests | Beneficial Interests The Company’s beneficial interests are associated with committed capital and other co-investment arrangements with a number of third-party institutional investors and lending partners, in which the Company puts certain amounts of assets at risk. The risk is subject to a dollar cap, which represents the Company’s maximum exposure to losses in each particular arrangement. In certain arrangements, the Company is obligated to make payments to these third-parties or is entitled to receive payments from them if credit performance of the loans sold or originated under the arrangements deviates from initial expectations set at the time of loan sale or origination. These arrangements meet the definition of derivatives under ASC 815 and can produce an asset or a liability depending on the credit performance of the underlying loan portfolio as of the reporting date, which are settled periodically in cash based on contractual terms. Under other arrangements, the Company makes an initial investment and is entitled to a portion of cash flows from repayments received over time on the underlying loan portfolios sold under these arrangements. These cash flows vary depending on the demonstrated credit performance relative to our expectations. These arrangements are debt-like financial instruments with embedded derivatives related to the variability of demonstrated credit performance of underlying loan portfolios against initial expectations. The Company accounts for these derivatives and hybrid instruments at fair value under ASC 815 and ASC 825, respectively. Refer to “Note 5. Fair Value Measurement” for additional information. Beneficial interests represent the value of the future cash flows as part of these arrangements, discounted to the present value based on expected performance. The following table presents the aggregate outstanding principal balance of the underlying loan portfolios as well as the fair value of beneficial interest assets, by type, which collectively are presented as a separate asset line item on the condensed consolidated balance sheets, and beneficial interest liabilities, which are presented in other liabilities on the condensed consolidated balance sheets.
|  | December 31, 2024 |  | June 30, 2025 |  |
|  | Outstanding Principal Balance |  | Fair Value |  | Outstanding Principal Balance |  | Fair Value |  |
Beneficial interest assets (hybrid instruments) |  | $ | 2,214,535 |  |  | $ | 168,091 |  |  | $ | 2,876,992 |  |  | $ | 254,230 |  |  |
Beneficial interest assets (derivatives) |  | 1,943,215 |  |  | 8,757 |  |  | 2,232,577 |  |  | 12,531 |  |  |
Total beneficial interest assets |  | $ | 4,157,750 |  |  | $ | 176,848 |  |  | $ | 5,109,569 |  |  | $ | 266,761 |  |  |
Beneficial interest liabilities (derivatives) |  | $ | 1,091,538 |  |  | $ | 10,089 |  |  | $ | 2,155,391 |  |  | $ | 10,532 |  |  |
The Company recognizes beneficial interests at fair value with changes reported as part of the fair value and other adjustments on the condensed consolidated statements of operations and comprehensive income (loss). The table below presents gains (losses) recognized on beneficial interests during the following periods:
|  | Three Months Ended June 30, |  |  |  | Six Months Ended June 30,
|  | 2024 |  | 2025 |  |  |  | 2024 |  | 2025
Fair value adjustments and realized gains (losses) on beneficial interests, net |  | $ | (8,176) |  |  | $ | (6,288) |  |  |  |  | $ | (22,210) |  |  | $ | 11,377 |
The Company’s beneficial interests are associated with entities that meet the definition of a VIE or are evaluated under the voting interest model. The Company has variable interests in certain entities established in relation to its committed capital and co-investment arrangements, including purchaser trusts, which are unconsolidated VIEs. While the Company holds variable interests in these unconsolidated VIEs through committed capital and co-investment arrangements and as the servicer of the loans sold, the Company does not have the power to direct the activities that most significantly impact the VIE’s economic performance and has determined that it is not the primary beneficiary of these entities. The Company additionally holds loans as collateral in connection with committed capital and other co-investment arrangements in a consolidated VIE. Refer to “Note 3. Variable Interest Entities” for additional information. While held as collateral, these loans are ineligible to be sold and are classified as held-for-investment on the Company’s condensed consolidated balance sheets. The contractual terms of committed capital and other co-investment arrangements also determine the Company’s maximum exposure to losses and dictate types of assets the Company puts at risk. The Company’s maximum exposure to loss from its involvement with these arrangements estimates the loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is remote. The following table presents the Company’s aggregate maximum exposure to losses by asset type under these arrangements:
|  | December 31, |  | June 30,
|  | 2024 |  | 2025
Cash and cash equivalents |  | $ | 85,105 |  |  | $ | 97,598 |
Restricted cash |  | 84,065 |  |  | 134,058 |
Beneficial interests |  | 204,814 |  |  | 269,512 |
Other assets - Line of credit receivable(1) |  | 54,780 |  |  | 104,618 |
Loans(1) |  | 30,579 |  |  | 54,432 |
Total |  | $ | 459,343 |  |  | $ | 660,218 |
__________ (1) Represents the unpaid principal balance As of December 31, 2024 and June 30, 2025, $137.4 million and $187.2 million, respectively, of the Company’s cash was held by one of our institutional investors in the form of the line of credit receivable and part of the beneficial interest asset balance. We mitigate our risk exposure through corporate guarantees provided by the investor.

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