Investments in Equity Affiliates

12 Months Ended

Dec. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

We account for all investments in equity affiliates under the equity method. A summary of these investments is as follows (in thousands):


	Investments in Equity Affiliates at				UPB of Loans to Equity Affiliates at December 31, 2024
Equity Affiliates	December 31, 2024		December 31, 2023
Arbor Residential Investor LLC	$	23,868	$	32,743	$	—
AMAC Holdings III LLC	15,413		13,591		35,410
Fifth Wall Ventures	14,490		13,365		—
AWC Real Estate Opportunity Partners I LP	13,562		11,671		108,450
ARSR DPREF I LLC	5,603		5,163		—
Lightstone Value Plus REIT L.P.	1,895		1,895		—
The Park at Via Terrossa	606		—		21,845
Docsumo Pte. Ltd.	450		450		—
JT Prime	425		425		—
West Shore Café	—		—		1,688
Lexford Portfolio	—		—		—
East River Portfolio	—		—		—
Total	$	76,312	$	79,303	$	167,393

Arbor Residential Investor LLC (“ARI”). We invested $9.6 million for a 50% interest in ARI, with our former manager (ACM) holding the remaining 50%. ARI was formed to hold a 50% interest in Wakefield Investment Holdings LLC (“Wakefield”), an entity that was formed with a third party to hold a controlling interest (65%) in a residential mortgage banking business. ARI has no other assets, liabilities or activity other than its investment in Wakefield. At December 31, 2024, our indirect interest in this business was 12.3%. The allocation of income is based on the underlying agreements, which may be different than our indirect interest, and was 9.2% at December 31, 2024. We account for our ownership interest in ARI under the equity method of accounting and ARI accounts for its ownership interest in Wakefield under the equity method of accounting. During 2024, 2023 and 2022, we recorded a loss of $1.2 million, income of $0.6 million and income of $4.9 million, respectively, to income from equity affiliates in the consolidated statements of income. We also received $7.7 million and $15.0 million in cash distributions from this investment during 2024 and 2023, respectively, which were classified as returns of capital.

AMAC III. We committed to a $30.0 million investment for an 18% interest in a multifamily-focused commercial real estate investment fund that is sponsored and managed by our chief executive officer and one of his immediate family members. During 2024, 2023 and 2022, we recorded losses associated with this investment of $2.3 million, $1.9 million and $2.4 million, respectively. During

2024 and 2023, we made contributions of $4.1 million and $0.7 million, respectively, and received cash distributions of $1.1 million in 2023, which were classified as returns of capital, related to this investment.

Fifth Wall. We committed to a $25.0 million investment for a 7.6% interest in two related private equity funds whose investment objective is to invest primarily in technology, technology-enabled or technology-related companies that are relevant or complementary to the build environment, including real estate or real estate-related industries. We have no role in the management of the investment funds. During 2024 and 2023, we made contributions of $1.1 million and $1.0 million, respectively, and recorded income associated with this investment of $0.1 million and a loss of $1.2 million, respectively. Operating results from this investment were de minimis for 2022.

AWC Real Estate Opportunity Partners I LP ("AWC"). In the fourth quarter of 2023, we committed to a $24.0 million investment, of which $11.7 million was initially funded, for an initial 99% noncontrolling interest in a fund whose objective is to make investments in sustainable affordable housing structures, with the intention to bring in additional partners. In addition, we entered into an agreement with the general partner to provide a loan, up to a maximum of $0.9 million, to fund a portion of their 1% general partnership interest, of which $0.3 million was funded at December 31, 2024. In the second quarter of 2024, in accordance with the fund's objectives, AWC brought in an additional capital partner who committed to a $25.0 million investment ($16.3 million was funded at December 31, 2024) in exchange for a 51% non-controlling limited partnership interest and 17.5% of the general partner's interest in the fund. This new equity partner diluted our limited partnership interest in the fund to a 49% non-controlling limited partnership interest. Additionally, AWC invested $9.4 million for a 44% interest in a newly formed entity, which purchased a group of properties in Houston, Texas, that were the collateral for a $100.3 million bridge loan that we foreclosed on simultaneously with the sale. We sold the Houston properties for $101.3 million, which was primarily financed with a new $95.3 million bridge loan we provided at SOFR plus 3%. See Note 3 for details. In the fourth quarter of 2023, this fund also purchased our equity interest in North Vermont Avenue at a discount for $1.3 million, which was recorded as a reduction to our investment in AWC. The remaining $14.3 million of capital invested in the fund was used to purchase four additional qualified investments and to pay for legal and administrative expenses primarily related to the formation of the fund. We provided a $13.0 million Fannie Mae DUS loan and a $13.2 million bridge loan to the owners of the real estate on two of these investments. During 2024, we made contributions of $13.6 million, received distributions of $11.2 million, which were classified as returns of capital, and recorded a loss of $0.5 million related to this investment. Interest income recorded from the $95.3 million and $13.2 million bridge loans was $5.4 million for the year ended December 31, 2024.

ARSR DPREF I LLC. In the fourth quarter of 2023, we entered into a joint venture whose objective is to invest in preferred equity investments in commercial real estate and we contributed 50% of a $10.2 million preferred equity loan originated by us to the joint venture. We hold a 50% interest in the joint venture which is structured to reflect joint control, allocation of profits and losses and capital contributions. The agreement provides for a total joint venture contribution of $70.0 million, which may be upsized to $140.0 million. During 2024, we recorded income associated with this investment of $0.7 million and received distributions of $0.4 million which were classified as returns of capital.

Lightstone Value Plus REIT L.P. / JT Prime. We own a $1.9 million interest in a joint venture that holds common operating partnership units of Lightstone Value Plus REIT L.P. (“Lightstone”). We also own a 50% noncontrolling interest in a joint venture, JT Prime, which holds common operating partnership units of Lightstone at a carrying value of $0.4 million. Operating results from these investments were de minimis for all periods presented.

The Park at Via Terrossa. In the first quarter of 2024, we contributed $0.6 million, for a 5% interest in a multifamily property. Operating results from this investment were de minimis during 2024.

Docsumo Pte. Ltd. (“Docsumo”). We invested $0.5 million for a noncontrolling interest in Docsumo, a startup company that converts unstructured documents, such as bank statements and pay stubs, to accurate structured data and checks documents for fraud, such as photoshopped layers and font changes, using AI. Operating results from this investment were de minimis for all periods presented.

West Shore Café. We own a 50% noncontrolling interest in the West Shore Lake Café, a restaurant/inn lakefront property in Lake Tahoe, California. We provided a $1.7 million first mortgage loan to an affiliated entity to acquire property adjacent to the original property, which matures in September 2025 and bears interest at SOFR plus 4% with a SOFR floor of 0.15%. In 2018, we determined that this investment exhibited indicators of impairment and recorded an other-than-temporary impairment of $2.2 million for the full carrying amount of this investment and fully reserved the $1.7 million first mortgage loan. Operating results from this investment were de minimis for all periods presented.

Lexford Portfolio. We own a less than $0.1 million noncontrolling equity interest in Lexford, a portfolio of multifamily assets. In 2024 and 2023, we received distributions from this investment and recognized income totaling $9.0 million and $12.2 million, respectively.

East River Portfolio. We invested $0.1 million for a 5% interest in a joint venture that owns two multifamily properties. The joint venture is comprised of a consortium of investors (which includes, among other unaffiliated investors, certain of our officers, our chief executive officer and certain other related parties) who together own an interest of 95%. Operating results from this investment were de minimis for all periods presented.

Equity Participation Interest. During 2023, we received $14.5 million from equity participation interests on properties that were sold and which we had loans that previously paid off. These were classified as returns of capital and recognized as income from equity affiliates.

North Vermont Avenue. We invested $2.4 million for an initial 85% noncontrolling interest in a joint venture that acquired three parcels of land with multiple structures, with the intent to tear down the existing structures and construct a new 202-unit multifamily complex with ground floor retail. Operating results from this investment were de minimis for all periods presented. During 2022, we determined that this investment exhibited indicators of impairment and, as a result of an impairment analysis performed; we recorded an other-than-temporary impairment of $2.4 million to income from equity affiliates for the full carrying amount of this investment. In the fourth quarter of 2023, AWC purchased our equity interest in North Vermont Avenue at a discount for $1.3 million (described above).

See Note 19 for details of certain investments described above.