Receivables, Loans, Notes Receivable, and Others

9 Months Ended

Sep. 30, 2025

Investment in Mortgage Notes and Notes Receivable

The Company measures expected credit losses on its mortgage notes and notes receivable on an individual basis because its financial instruments do not have similar risk characteristics. The Company uses a forward-looking commercial real estate loss forecasting tool to estimate its current expected credit losses (CECL) for each of its mortgage notes and notes receivable on a loan-by-loan basis. As of September 30, 2025, the Company did not anticipate any prepayments. Therefore, the contractual terms of its mortgage notes and notes receivable were used for the calculation of the expected credit losses. The Company updates the CECL model inputs at each reporting period to reflect, if applicable, any newly originated loans, changes to specific loan information on existing loans and current macroeconomic conditions. The CECL allowance is a valuation account that is deducted from the related mortgage note or note receivable.

Certain of the Company’s mortgage notes and notes receivable include commitments to fund future incremental amounts to its borrowers. These future funding commitments are also subject to the CECL model. The CECL allowance related to future funding is recorded as a liability and is included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.

Investment in mortgage notes, including related accrued interest receivable, was $696.4 million and $665.8 million at September 30, 2025 and December 31, 2024, respectively. Investment in notes receivable, including related accrued interest receivable, was $2.9 million and $3.3 million at September 30, 2025 and December 31, 2024, respectively, and is included in "Other assets" in the accompanying consolidated balance sheets.

During the nine months ended September 30, 2025, the Company received $8.1 million in net proceeds representing prepayment in full on two mortgage note receivables that were secured by two early childhood education center properties in Florida.

During the year ended December 31, 2024, the Company decided to exit its unconsolidated equity investment in an operating RV property located in Breaux Bridge, Louisiana. The Company had previously provided an $11.3 million subordinated mortgage note receivable to the unconsolidated real estate joint venture holding the property. During the year ended December 31, 2024, the Company recorded an allowance for credit loss totaling $10.3 million for this mortgage note receivable. On February 4, 2025, the Company received $1.0 million in exchange for the sale of its remaining subordinated mortgage note receivable and, accordingly, reduced the allowance for credit loss by the $10.3 million of principal that was forgiven.

At September 30, 2025, two of the Company's mortgage notes receivable are considered collateral-dependent and expected credit losses are based on the fair value of the underlying collateral with the credit allowance being the difference between the outstanding principal balance of the notes and the estimated fair value at the reporting date. The Company assessed the fair value of the collateral as of September 30, 2025 on the mortgage notes receivable. One of the Company's mortgage notes receivable is fully reserved with an allowance for credit loss totaling $6.4 million, which represents the outstanding principal balance of the note as of September 30, 2025. The other collateral-dependent mortgage note receivable has a carrying amount at September 30, 2025 of approximately $10.4 million net of an allowance for credit loss totaling $0.4 million. Income from these borrowers is recognized on a cash basis. During the nine months ended September 30, 2025 and 2024, the Company received cash basis interest payments of $0.9 million and $0.7 million, respectively, from these mortgage note receivable borrowers.

At September 30, 2025, one of the Company's notes receivable is considered collateral-dependent. The Company assessed the fair value of the collateral as of September 30, 2025 on the note receivable. The note receivable is fully reserved with an allowance for credit loss totaling $6.0 million, which represents the outstanding principal balance of the note as of September 30, 2025. At September 30, 2025, the Company's investment in this note receivable was a variable interest investment and the underlying entity is a VIE. The Company is not the primary beneficiary of this VIE because the Company does not individually have the power to direct the activities that are most significant to the entity and, accordingly, this investment is not consolidated. The Company's maximum exposure to loss associated with this VIE is limited to the Company's outstanding note receivable in the amount of $6.0 million, which is fully reserved in the allowance for credit losses at September 30, 2025. The Company's income received from this borrower is recognized on a cash basis. During the nine months ended September 30, 2025 and 2024, the Company received cash basis interest payments of $0.6 million and $0.7 million, respectively. During the nine months ended September 30, 2025 and 2024, the Company received principal payments totaling $0.8 million for each period from this borrower. Additionally, during the nine months ended September 30, 2025, the Company wrote-off $1.9 million of principal for a note receivable that was fully reserved.

The following summarizes the activity within the allowance for credit losses related to mortgage notes, unfunded commitments and notes receivable for the nine months ended September 30, 2025 (in thousands):


	Mortgage notes receivable		Unfunded commitments - mortgage notes receivable		Notes receivable		Unfunded commitments - notes receivable		Total
Allowance for credit losses at December 31, 2024	$	17,111	$	740	$	8,811	$	—	$	26,662
Provision (benefit) for credit losses, net	10,119		170		(827)		—		9,462
Charge-offs	(10,420)		—		(1,916)		—		(12,336)
Recoveries	—		—		—		—		—
Allowance for credit losses at September 30, 2025	$	16,810	$	910	$	6,068	$	—	$	23,788