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Senior Secured Term Loan, Net
 6 Months Ended
Jun. 30, 2021
Debt Instrument [Line Items]  
Secured Debt Arrangement, Net and Senior Secured Term Loans and Notes, Net Senior Secured Notes, Net
In June 2021, we issued $500.0 million of 4.625% Senior Secured Notes due 2029 (the "2029 Notes"), for which we received net proceeds of $495.0 million, after offering expenses. The 2029 Notes will mature on June 15, 2029, unless earlier repurchased or redeemed. The 2029 Notes are secured by a first-priority lien, and rank pari passu in right of payment with all of our existing and future first lien obligations, including indebtedness under the Term Loans. The 2029 Notes were issued at par and contain covenants relating to liens, indebtedness, and investments in non-wholly owned entities. As of June 30, 2021, the 2029 Notes had a carrying value of $493.7 million net of deferred financing costs of $6.3 million.
Covenants
The 2029 Notes include certain covenants including a requirement that we maintain a ratio of total unencumbered assets to total pari-passu indebtedness of at least 1.20:1. As of June 30, 2021, we were in compliance with all covenants.
Participations Sold
Participations sold represents the subordinate interests in loans we originated and subsequently partially sold. We account for participations sold as secured borrowings on our condensed consolidated balance sheet with both assets and non-recourse liabilities because the participations do not qualify as a sale under ASC 860, "Transfers and Servicing." The income earned on the participations sold is recorded as interest income and an identical amount is recorded as interest expense on our condensed consolidated statements of operations.
In October 2020, we sold a $25.0 million interest, at par, in a mezzanine loan collateralized by a ground-up condominium development in New York City that we originated in December 2017. The participation interest sold accrued payment-in-kind interest, was accounted for as a secured borrowing on our condensed consolidated balance sheet, and was subordinate to our remaining mezzanine loan. The mezzanine loan was repaid at par in June 2021, and therefore, we de-recognized the related participating interest of $27.7 million, which included $2.7 million in payment-in-kind interest.
In December 2020, we sold a £6.7 million ($8.9 million assuming conversion into USD) interest, at par, in a first mortgage loan collateralized by an office building located in London, United Kingdom that was originated by us in December 2017. In connection with this sale, we transferred our remaining unfunded commitment of £19.1 million ($25.3 million assuming conversion into USD). The participation interest sold is subordinate to our remaining £70.7 million ($97.7 million assuming conversion into USD) first mortgage loan and is accounted for as a secured borrowing on our condensed consolidated balance sheet.
The table below details participations sold included in our condensed consolidated balance sheet ($ in thousands):
June 30, 2021December 31, 2020
Participation sold on Commercial mortgage loans$27,662 $9,217 
Participation sold on Subordinate loans and other lending assets (1)
— 25,757 
Total Participations sold$27,662 $34,974 
———————
(1)Includes $0 and $0.8 million of PIK interest in 2021 and 2020, respectively.
Senior Debt  
Debt Instrument [Line Items]  
Secured Debt Arrangement, Net and Senior Secured Term Loans and Notes, Net Senior Secured Term Loans, Net
In May 2019, we entered into a $500.0 million senior secured term loan (the "2026 Term Loan"), which matures in May 2026 and contains restrictions relating to liens, asset sales, indebtedness, and investments in non-wholly owned entities. The 2026 Term Loan bears interest at LIBOR plus 2.75% and was issued at a price of 99.5%.
In March 2021, we entered into an additional $300.0 million in senior secured term loan with substantially the same terms as the 2026 Term Loan (the "2028 Term Loan" and, together with the 2026 Term Loan, the "Term Loans"), which matures in March 2028 and contains restrictions relating to liens, asset sales, indebtedness, and investments in non-wholly owned entities. The 2028 Term Loan bears interest at LIBOR (with a floor of 0.50%) plus 3.50% and was issued at a price of 99.0%.
During the three and six months ended June 30, 2021 and 2020, we repaid $1.3 million and $2.5 million of principal related to the 2026 Term Loan, respectively. During the three and six months ended June 30, 2021, we repaid $0.8 million of principal related to the 2028 Term Loan.
The following table summarizes the terms of our Term Loans as of June 30, 2021 ($ in thousands):

Principal AmountUnamortized Issuance DiscountDeferred Financing CostsCarrying ValueSpreadMaturity Date
2026 Term Loan$490,000 $(1,726)$(6,280)$481,994 2.75 %5/15/2026
2028 Term Loan299,250 (2,857)(3,818)292,575 3.50 %3/11/2028
Total$789,250 $(4,583)$(10,098)$774,569 

The following table summarizes the terms of our Term Loans as of December 31, 2020 ($ in thousands):
Principal AmountUnamortized Issuance DiscountDeferred Financing CostsCarrying ValueSpreadMaturity Date
2026 Term Loan$492,500 $(1,905)$(7,130)$483,465 2.75 %5/15/2026

Covenants
The Term Loans include the following financial covenants: (i) our ratio of total recourse debt to tangible net worth cannot be greater than 3:1; and (ii) our ratio of total unencumbered assets to total pari-passu indebtedness must be at least 1.25:1.
We were in compliance with the covenants under the Term Loans at June 30, 2021 and December 31, 2020.
Interest Rate Swap
In connection with the 2026 Term Loan, we previously entered into an interest rate swap to fix LIBOR at 2.12% effectively fixing our all-in coupon on the senior secured term loan at 4.87%. During the year ended December 31, 2020 we terminated the interest rate swap and recognized a realized loss of $53.9 million.
Interest Rate Cap
During the second quarter of 2020, we entered into a three-year interest rate cap to cap LIBOR at 0.75%. This effectively limits the maximum all-in coupon on our 2026 Term Loan to 3.50%. In connection with the interest rate cap, we incurred up-front fees of $1.1 million for the year ended December 31, 2020, which we recorded as a deferred financing cost on our condensed consolidated balance sheet and interest expense will be recognized over the duration of the interest rate cap in our condensed consolidated statement of operations