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Senior Secured Term Loan, Net | 12 Months Ended
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Dec. 31, 2024
Debt Disclosure [Abstract] |
Senior Secured Term Loan, Net | Note 7 – Secured Debt Arrangements, Net We utilize secured debt arrangements to finance the origination activity in our loan portfolio. Our secured debt arrangements are comprised of secured credit facilities, a private securitization, and a revolving credit facility. During the year ended December 31, 2024, we entered into one new credit facility, which provided £366.6 million ($458.8 million converted into USD) of additional capacity. Additionally, during the year ended December 31, 2024, we upsized the Barclays facility by $300.0 million and the Atlas Facility by $113.5 million. The amendment to upsize the Atlas Facility also included conversion of the facility's term from a six month "evergreen" feature to two-years, with a one-year extension option, reduction to recourse percentages, and an additional pledge of a commercial mortgage loan, among other changes. Furthermore, we have repaid the full amount of borrowings outstanding on both the Goldman Sachs - USD and Santander - EUR facilities. Our borrowings under secured debt arrangements as of December 31, 2024 and December 31, 2023 are detailed in the following table ($ in thousands):
|  | December 31, 2024 |  | December 31, 2023
|  | Maximum Amount of Borrowings(1) |  |  | Borrowings Outstanding(1) |  |  | Maturity (2) |  | Maximum Amount of Borrowings(1) |  |  | Borrowings Outstanding(1) |  |  | Maturity (2)
JPMorgan Facility - USD(3) |  | $ | 1,500,000 |  |  | $ | 1,033,504 |  |  | September 2026 |  | $ | 1,482,584 |  |  | $ | 1,043,964 |  |  | September 2026
JPMorgan Facility - GBP(3) |  |  | — |  |  |  | — |  |  | N/A |  |  | 17,416 |  |  |  | 17,416 |  |  | September 2026
Deutsche Bank Facility - USD(3) |  |  | 700,000 |  |  |  | 123,434 |  |  | March 2026 |  |  | 700,000 |  |  |  | 275,815 |  |  | March 2026
Atlas Facility - USD(4) |  |  | 800,000 |  |  |  | 462,886 |  |  | March 2027(5) |  |  | 686,527 |  |  |  | 669,302 |  |  | April 2027(6)(7)
HSBC Facility - GBP |  |  | 377,483 |  |  |  | 377,483 |  |  | May 2025 |  |  | 383,967 |  |  |  | 383,967 |  |  | May 2025
HSBC Facility - EUR |  |  | 250,162 |  |  |  | 250,162 |  |  | January 2026(7) |  |  | 281,401 |  |  |  | 281,401 |  |  | January 2026
Goldman Sachs Facility - USD(8) |  |  | — |  |  |  | — |  |  | N/A |  |  | 13,437 |  |  |  | 13,437 |  |  | November 2025
Goldman Sachs Facility - GBP |  |  | 458,804 |  |  |  | 373,706 |  |  | May 2029 |  |  | — |  |  |  | — |  |  | N/A
Barclays Facility - USD |  |  | 500,000 |  |  |  | 321,546 |  |  | March 2027(6) |  |  | 200,000 |  |  |  | 107,929 |  |  | June 2027(6)
MUFG Securities Facility - GBP |  |  | 171,972 |  |  |  | 171,972 |  |  | November 2025(6) |  |  | 204,690 |  |  |  | 204,690 |  |  | June 2025(6)
Churchill Facility - USD |  |  | 130,000 |  |  |  | 121,289 |  |  | April 2026 |  |  | 130,000 |  |  |  | 126,515 |  |  | March 2026
Santander Facility - USD |  |  | 300,000 |  |  |  | — |  |  | February 2026 |  |  | 300,000 |  |  |  | 67,500 |  |  | February 2026(6)
Santander Facility - EUR(9) |  |  | — |  |  |  | — |  |  | N/A |  |  | 59,611 |  |  |  | 55,716 |  |  | August 2024
Total Secured Credit Facilities |  |  | 5,188,421 |  |  |  | 3,235,982 |  |  |  |  |  | 4,459,633 |  |  |  | 3,247,652 |  |  |
Barclays Private Securitization - GBP, EUR, SEK |  |  | 1,587,780 |  |  |  | 1,587,780 |  |  | May 2027(7) |  |  | 2,369,125 |  |  |  | 2,157,157 |  |  | June 2026(7)
Revolving Credit Facility - USD(10)(11) |  |  | 160,000 |  |  |  | — |  |  | March 2026 |  |  | 170,000 |  |  |  | 147,000 |  |  | March 2026
Total Secured Debt Arrangements |  |  | 6,936,201 |  |  |  | 4,823,762 |  |  |  |  |  | 6,998,758 |  |  |  | 5,551,809 |  |  |
Less: deferred financing costs |  |  | N/A |  |  |  | (8,789 | ) |  |  |  |  | N/A |  |  |  | (13,333 | ) |  |
Total Secured Debt Arrangements, net(12)(13)(14) |  | $ | 6,936,201 |  |  | $ | 4,814,973 |  |  |  |  | $ | 6,998,758 |  |  | $ | 5,538,476 |  |  |
(1) As of December 31, 2024, British Pound Sterling("GBP"), Euro ("EUR"), and Swedish Krona ("SEK") borrowings were converted to USD at a rate of 1.25, 1.04, and 0.09, respectively. As of December 31, 2023, GBP, EUR and SEK borrowings were converted to USD at a rate of 1.27, 1.10 and 0.10, respectively. (2) Maturity date assumes extensions at our option are exercised with consent of financing providers, where applicable. (3) The JPMorgan Facility and Deutsche Bank Facility enable us to elect to receive advances in USD, GBP, or EUR. (4) The Atlas Facility (as defined below) was formerly the Credit Suisse Facility. See "Atlas Facility" below for additional discussion. (5) The Atlas Facility was amended during March 2024 to convert the facility's maturity from a six month "evergreen" feature to a two-year initial term, with an additional one-year extension option. (6) Assumes financings are extended in line with the underlying loans. (7) Represents weighted-average maturity across various financings with the counterparty. See below for additional details. (8) Facility entered the two-year amortization period during the fourth quarter of 2023. During the amortization period, the maturity date for current outstanding transactions are extended for a period of up to two years from the November 2023 maturity. The facility was terminated during the year ended December 31, 2024, in conjunction with repayment of the underlying loan securing the facility. (9) The facility was terminated during the second quarter of 2024 in conjunction with repayment of the underlying loan securing the facility. (10) The current stated maturity of the Revolving Credit Facility (as defined below) is March 2026. Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to the sum of (i) a floating rate index and (ii) a fixed margin. Borrowings under the Revolving Credit Facility are full recourse to certain guarantor wholly-owned subsidiaries of the Company. See "Revolving Credit Facility" below for additional discussion. (11) Effective September 30, 2024, the capacity on our Revolving Credit Facility was reduced to $160.0 million from $170.0 million. (12) Weighted-average borrowing costs as of December 31, 2024 and December 31, 2023 were applicable benchmark rates and credit spread adjustments, plus spreads of USD: +2.47% / GBP: +2.43% / EUR: +2.11% / SEK: +1.50% and USD: +2.49% / GBP: +2.21% / EUR: +1.86% / SEK: +1.50%, respectively. (13) Weighted-average advance rates based on cost as of December 31, 2024 and December 31, 2023 were 68.6% (62.2% (USD) / 75.3% (GBP) / 70.8% (EUR) / 80.2% (SEK)) and 68.4% (62.9% (USD) / 72.5% (GBP) / 72.1% (EUR) / 80.4% (SEK)), respectively. (14) As of December 31, 2024 and December 31, 2023, approximately 46% and 58%, respectively, is the outstanding balance under these secured borrowings were recourse to us. Terms of our secured credit facilities are designed to keep each lender's credit exposure generally constant as a percentage of the underlying value of the assets pledged as security to the facility. If the credit of the underlying collateral value decreases, the amount of leverage to us may be reduced. As of December 31, 2024 and December 31, 2023, the weighted-average haircut under our secured debt arrangements was approximately 31.4% and 31.6%, respectively. Our secured credit facilities do not contain capital markets-based mark-to-market provisions. Atlas Facility In February 2023, in connection with the acquisition by certain subsidiaries of Atlas, which is a wholly-owned investment of a fund managed by an affiliate of the Manager, the Credit Suisse Facility was acquired by Atlas ("Atlas Facility"). For full discussion of this transaction, refer to "Note 15 – Related Party Transactions." Revolving Credit Facility In March 2023, we entered into the revolving credit facility (the "Revolving Credit Facility") administered by Bank of America, N.A. The Revolving Credit Facility provides up to $160.0 million of borrowings secured by qualifying commercial mortgage loans and real property owned assets. As of December 31, 2024, our interest coverage ratio was a minimum of 1.3:1. See "Debt Covenants" below for additional discussion. The Revolving Credit Facility has a term of three years, maturing in March 2026. The Revolving Credit Facility enables us to borrow on qualifying commercial mortgage loans for up to two years and real property owned assets for up to six months. As of December 31, 2024 we had no outstanding balance and as of December 31, 2023, we had $147.0 million outstanding on the Revolving Credit Facility. During the years ended December 31, 2024 and 2023, we recorded $281.4 thousand and $282.8 thousand in unused fees and $2.4 million and $168.3 thousand in contractual interest expense, respectively. Barclays Private Securitization We are party to a private securitization with Barclays Bank plc ("Barclays") (such securitization, the "Barclays Private Securitization"). Commercial mortgage loans currently financed under the Barclays Securitization are denominated in GBP, EUR and SEK. The Barclays Private Securitization does not include daily margining provisions and grants us significant discretion to modify certain terms of the underlying collateral including waiving certain loan-level covenant breaches and deferring or waiving of debt service payments for up to 18 months. The securitization includes loan-to-value based covenants with deleveraging requirements that are based on significant declines in the value of the collateral as determined by an annual third-party (engaged by us) appraisal process tied to the provisions of the underlying loan agreements. We believe this provides us with both cushion and predictability to avoid sudden unexpected outcomes and material repayment requirements. The table below provides principal balances and the carrying value for commercial mortgage loans pledged to the Barclays Private Securitization as of December 31, 2024 and December 31, 2023 ($ in thousands):
|  | December 31, 2024 |
Local Currency |  | Count |  | Outstanding Principal |  |  | Carrying Value |
GBP |  | 5 |  | $ | 1,251,205 |  |  | $ | 1,236,691 |
EUR |  | 3 |  |  | 720,126 |  |  |  | 711,859 |
SEK |  | 1 |  |  | 223,992 |  |  |  | 222,727 |
Total |  | 9 |  | $ | 2,195,324 |  |  | $ | 2,171,277 |
|  | December 31, 2023 |
Local Currency |  | Count |  | Outstanding Principal |  |  | Carrying Value |
GBP |  | 7 |  | $ | 1,662,457 |  |  | $ | 1,643,979 |
EUR |  | 6 |  |  | 1,021,272 |  |  |  | 1,012,987 |
SEK |  | 1 |  |  | 248,088 |  |  |  | 246,220 |
Total |  | 14 |  | $ | 2,931,817 |  |  | $ | 2,903,186 |
The table below provides the borrowings outstanding (on an as converted basis) and weighted-average fully-extended maturities by currency for the assets financed under the Barclays Private Securitization as of December 31, 2024 ($ in thousands):
|  | Borrowings Outstanding(1) |  |  | Fully-Extended Maturity(2)
Total/Weighted-Average GBP |  | $ | 897,199 |  |  | April 2027
Total/Weighted-Average EUR |  |  | 511,387 |  |  | October 2027(3)
Total/Weighted-Average SEK |  |  | 179,194 |  |  | May 2026
Total/Weighted-Average Securitization |  | $ | 1,587,780 |  |  | May 2027
(1) As of December 31, 2024, we had £716.8 million, €493.9 million, and kr 2.0 billion of borrowings outstanding under the Barclays Private Securitization secured by certain of our commercial mortgage loans. (2) Assumes underlying loans extend to fully extended maturity and extensions at our option are exercised. (3) The EUR portion of the Barclays Private Securitization has an "evergreen" feature such that the facility continues for one year and can be terminated by either party on certain dates with, depending on the date of notice, a minimum of nine to twelve months' notice. The table below provides the borrowings outstanding (on an as converted basis) and weighted-average fully-extended maturities by currency for the assets financed under the Barclays Private Securitization as of December 31, 2023 ($ in thousands):
|  | Borrowings Outstanding(1) |  |  | Fully-Extended Maturity(2)
Total/Weighted-Average GBP |  |  | 1,234,740 |  |  | June 2026
Total/Weighted-Average EUR |  |  | 723,947 |  |  | May 2026(3)
Total/Weighted-Average SEK |  |  | 198,470 |  |  | May 2026
Total/Weighted-Average Securitization |  | $ | 2,157,157 |  |  | June 2026
(1) As of December 31, 2023, we had £969.9 million, €655.8 million, and kr$2.0 billion of borrowings outstanding under the Barclays Private Securitization secured by certain of our commercial mortgage loans. (2) Assumes underlying loans extend to fully extended maturity and extensions at our option are exercised. (3) The EUR portion of the Barclays Private Securitization has an "evergreen" feature such that the facility continues for one year and can be terminated by either party on certain dates with, depending on the date of notice, a minimum of nine to twelve months' notice. The table below provides the assets and liabilities of the Barclays Private Securitization VIE included in our consolidated balance sheets ($ in thousands):
|  | December 31, 2024 |  |  | December 31, 2023 |
Assets: |  |  |  |  |  |
Cash |  | $ | 150 |  |  | $ | 924 |
Commercial mortgage loans, net(1) |  |  | 2,171,277 |  |  |  | 2,903,186 |
Other Assets(2) |  |  | 29,179 |  |  |  | 41,180 |
Total Assets |  | $ | 2,200,606 |  |  | $ | 2,945,290 |
Liabilities: |  |  |  |  |  |
Secured debt arrangements, net (net of deferred financing costs of $1.1 million and $2.0 million in 2024 and 2023, respectively) |  | $ | 1,586,680 |  |  | $ | 2,155,197 |
Accounts payable, accrued expenses and other liabilities(3)(4) |  |  | 10,519 |  |  |  | 9,083 |
Total Liabilities |  | $ | 1,597,199 |  |  | $ | 2,164,280 |
(1) Net of the General CECL Allowance of $10.8 million and $8.3 million as of December 31, 2024 and December 31, 2023, respectively. (2) Includes loan principal, interest, and other fees held by our third-party servicers as of the balance sheet date and remitted during subsequent remittance cycle. (3) Includes General CECL Allowance related to unfunded commitments on commercial mortgage loans, net of $2.1 million and $2.5 million as of December 31, 2024 and December 31, 2023, respectively. (4) Includes pending transfers from our third party loan servicers that were remitted to our secured credit facility counterparties during the subsequent remittance cycle. The table below provides the net income of the Barclays Private Securitization VIE included in our consolidated statement of operations ($ in thousands):
|  | Year ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Net interest income: |  |  |  |  |  |  |  |  |
Interest income from commercial mortgage loans |  | $ | 252,391 |  |  | $ | 217,132 |  |  | $ | 126,847 |
Interest expense |  |  | (141,010 | ) |  |  | (113,910 | ) |  |  | (51,487 | )
Net interest income |  | $ | 111,381 |  |  | $ | 103,222 |  |  | $ | 75,360 |
General and administrative expense |  | $ | (6 | ) |  | $ | (16 | ) |  | $ | — |
Decrease (increase) in current expected credit loss allowance, net |  |  | (2,131 | ) |  |  | 277 |  |  |  | 1,101 |
Foreign currency translation gain (loss) |  |  | (22,802 | ) |  |  | 29,425 |  |  |  | (62,058 | )
Net income |  | $ | 86,442 |  |  | $ | 132,908 |  |  | $ | 14,403 |
At December 31, 2024, our borrowings had the following remaining maturities ($ in thousands):
|  | Less than 1 year |  |  | 1 to 3 years |  |  | 3 to 5 years |  |  | More than 5 years |  |  | Total |
JPMorgan Facility |  | $ | 197,798 |  |  | $ | 835,706 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,033,504 |
Deutsche Bank Facility |  |  | 27,300 |  |  |  | 96,134 |  |  |  | — |  |  |  | — |  |  |  | 123,434 |
Atlas Facility |  |  | — |  |  |  | 462,886 |  |  |  | — |  |  |  | — |  |  |  | 462,886 |
HSBC Facility |  |  | 493,041 |  |  |  | 134,604 |  |  |  | — |  |  |  | — |  |  |  | 627,645 |
Goldman Sachs Facility - GBP |  |  | — |  |  |  | — |  |  |  | 373,706 |  |  |  | — |  |  |  | 373,706 |
Barclays Facility |  |  | — |  |  |  | 321,546 |  |  |  | — |  |  |  | — |  |  |  | 321,546 |
MUFG Securities Facility |  |  | 171,972 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 171,972 |
Churchill Facility |  |  | — |  |  |  | 121,289 |  |  |  | — |  |  |  | — |  |  |  | 121,289 |
Barclays Private Securitization |  |  | 114,077 |  |  |  | 958,165 |  |  |  | 515,537 |  |  |  | — |  |  |  | 1,587,780 |
Total |  | $ | 1,004,188 |  |  | $ | 2,930,330 |  |  | $ | 889,243 |  |  | $ | — |  |  | $ | 4,823,762 |
The table above reflects the fully extended maturity date of the facility and assumes facilities with an "evergreen" feature continue to extend through the fully-extended maturity of the underlying asset and assumes underlying loans are extended with consent of financing providers. The table below summarizes the outstanding balances at December 31, 2024, as well as the maximum and average month-end balances for the year ended December 31, 2024 for our borrowings under secured debt arrangements ($ in thousands).
|  | As of December 31, 2024 |  |  | For the twelve months ended December 31, 2024 |
|  | Balance |  |  | Collateral(1) |  |  | Maximum Month-End Balance |  |  | Average Month-End Balance |
JPMorgan Facility |  | $ | 1,033,504 |  |  |  | 1,832,859 |  |  |  | 1,063,261 |  |  | $ | 969,759 |
Deutsche Bank Facility |  |  | 123,434 |  |  |  | 199,217 |  |  |  | 278,703 |  |  |  | 201,020 |
Goldman Sachs Facility - USD |  |  | — |  |  |  | — |  |  |  | 11,620 |  |  |  | 2,903 |
Goldman Sachs Facility - GBP |  |  | 373,706 |  |  |  | 485,054 |  |  |  | 390,163 |  |  |  | 251,571 |
Atlas Facility |  |  | 462,886 |  |  |  | 702,927 |  |  |  | 758,201 |  |  |  | 640,453 |
HSBC Facility |  |  | 627,646 |  |  |  | 839,123 |  |  |  | 672,422 |  |  |  | 653,182 |
Barclays Facility |  |  | 321,546 |  |  |  | 420,774 |  |  |  | 353,153 |  |  |  | 242,792 |
MUFG Securities Facility |  |  | 171,972 |  |  |  | 209,493 |  |  |  | 211,057 |  |  |  | 197,420 |
Churchill Facility |  |  | 121,289 |  |  |  | 161,264 |  |  |  | 126,080 |  |  |  | 123,684 |
Santander Facility - USD |  |  | — |  |  |  | — |  |  |  | 67,500 |  |  |  | 56,250 |
Santander Facility - EUR |  |  | — |  |  |  | — |  |  |  | 54,677 |  |  |  | 22,684 |
Barclays Private Securitization |  |  | 1,587,779 |  |  |  | 2,182,088 |  |  |  | 2,249,538 |  |  |  | 2,041,421 |
Revolving Credit Facility |  |  | — |  |  |  | — |  |  |  | 150,000 |  |  |  | 38,796 |
Total |  | $ | 4,823,762 |  |  | $ | 7,032,800 |  |  |  |  |  |  |
(1) Represents the amortized cost balance of commercial loan collateral assets and the value of net real estate assets of real property owned collateral assets. The table below summarizes the outstanding balances at December 31, 2023, as well as the maximum and average month-end balances for the year ended December 31, 2023 for our borrowings under secured debt arrangements ($ in thousands).
|  | As of December 31, 2023 |  |  | For the year ended December 31, 2023 |
|  | Balance |  |  | Collateral(1) |  |  | Maximum Month-End Balance |  |  | Average Month-End Balance |
JPMorgan Facility |  | $ | 1,061,380 |  |  | $ | 1,871,854 |  |  | $ | 1,324,226 |  |  | $ | 1,190,651 |
Deutsche Bank Facility |  |  | 275,815 |  |  |  | 419,170 |  |  |  | 385,818 |  |  |  | 322,676 |
Goldman Sachs Facility |  |  | 13,437 |  |  |  | 28,533 |  |  |  | 70,249 |  |  |  | 30,482 |
Atlas Facility |  |  | 669,302 |  |  |  | 933,085 |  |  |  | 688,126 |  |  |  | 667,794 |
HSBC Facility |  |  | 665,368 |  |  |  | 860,134 |  |  |  | 667,430 |  |  |  | 651,758 |
Barclays Facility |  |  | 107,929 |  |  |  | 129,439 |  |  |  | 111,909 |  |  |  | 110,729 |
MUFG Securities Facility |  |  | 204,690 |  |  |  | 278,223 |  |  |  | 206,362 |  |  |  | 200,447 |
Churchill Facility |  |  | 126,515 |  |  |  | 168,138 |  |  |  | 130,000 |  |  |  | 128,094 |
Santander Facility - USD |  |  | 67,500 |  |  |  | 99,648 |  |  |  | 75,000 |  |  |  | 68,125 |
Santander Facility - EUR |  |  | 55,716 |  |  |  | 74,288 |  |  |  | 55,716 |  |  |  | 54,347 |
Barclays Private Securitization |  |  | 2,157,157 |  |  |  | 2,911,470 |  |  |  | 2,157,157 |  |  |  | 1,896,144 |
Revolving Credit Facility |  |  | 147,000 |  |  |  | 319,048 |  |  |  | 147,000 |  |  |  | 93,500 |
Total |  | $ | 5,551,809 |  |  | $ | 8,093,030 |  |  |  |  |  |  |
(1) Represents the amortized cost balance of commercial loan collateral assets and the value of net real estate assets of real property owned collateral assets. Debt Covenants The guarantees related to our secured debt arrangements contain the following financial covenants: (i) tangible net worth must be greater than $1.25 billion plus 75% of the net cash proceeds of any equity issuance after March 31, 2017; (ii) our ratio of total indebtedness to tangible net worth cannot be greate r than 3.75:1, an d (iii) our liquidity cannot be less than an amount equal to the greater of 5% of total recourse indebtedness or $30.0 million. Under these covenants, our General CECL Allowance is added back to our tangible net worth calculation. The Revolving Credit Facility contains an additional financial covenant to maintain a minimum interest coverage ratio. As of September 30, 2024, the interest coverage ratio shall be not less than 1.3:1, and shall be not less than 1.4:1 effective June 30, 2025. We were in compliance with the covenants under each of our secured debt arrangements at December 31, 2024 and December 31, 2023. The impact of macroeconomic conditions on the commercial real estate markets and global capital markets, including increased interest rates, foreign currency fluctuations, changes to fiscal and monetary policy, slower economic growth or recession, labor shortages, and recent distress in the banking sector, may make it more difficult to meet or satisfy these covenants in the future. In May 2019, we entered into a $500.0 million 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 was issued at a price of 99.5%. During the second quarter of 2023, the 2026 Term Loan transitioned from LIBOR to SOFR and currently bears interest at SOFR plus 2.86%. In March 2021, we entered into an additional $300.0 million 2028 Term Loan, with substantially the same terms as the 2026 Term Loan, 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 was issued at a price of 99.0%. During the second quarter of 2023, the 2028 Term Loan transitioned from LIBOR to SOFR and currently bears interest at SOFR (with a floor of 0.50%) plus 3.61%. The Term Loans are amortizing with repayments of 0.25% per quarter of the total committed principal. During both the years ended December 31, 2024 and 2023, we repaid $5.0 million of principal related to the 2026 Term Loan. During both the years ended December 31, 2024 and 2023, we repaid $3.0 million of principal related to the 2028 Term Loan. The following table summarizes the terms of the Term Loans as of December 31, 2024 ($ in thousands):
|  | Principal Amount |  |  | Unamortized Issuance Discount(1) |  |  | Deferred Financing Costs(1) |  |  | Carrying Value |  |  | Rate |  |  | Maturity Date
2026 Term Loan |  | $ | 472,500 |  |  | $ | (476 | ) |  | $ | (2,778 | ) |  | $ | 469,246 |  |  |  | 2.86 | % |  | 5/15/2026
2028 Term Loan |  |  | 288,750 |  |  |  | (1,357 | ) |  |  | (2,429 | ) |  |  | 284,964 |  |  |  | 3.61 | % |  | 3/11/2028
Total |  | $ | 761,250 |  |  | $ | (1,833 | ) |  | $ | (5,207 | ) |  | $ | 754,210 |  |  |  |  |  |
(1) Unamortized issuance discount and deferred financing costs will be amortized to interest expense over remaining life of respective Term Loans. The following table summarizes the terms of the Term Loans as of December 31, 2023 ($ in thousands):
|  | Principal Amount |  |  | Unamortized Issuance Discount(1) |  |  | Deferred Financing Costs(1) |  |  | Carrying Value |  |  | Rate |  |  | Maturity Date
2026 Term Loan |  | $ | 477,500 |  |  | $ | (833 | ) |  | $ | (4,302 | ) |  | $ | 472,365 |  |  |  | 2.86 | % |  | 5/15/2026
2028 Term Loan |  |  | 291,750 |  |  |  | (1,786 | ) |  |  | (3,179 | ) |  |  | 286,785 |  |  |  | 3.61 | % |  | 3/11/2028
Total |  | $ | 769,250 |  |  | $ | (2,619 | ) |  | $ | (7,481 | ) |  | $ | 759,150 |  |  |  |  |  |
(1) Unamortized issuance discount and deferred financing costs will be amortized to interest expense over remaining life of respective Term Loans. Covenants The financial covenants of the Term Loans include the requirements that we maintain: (i) a maximum ratio of total recourse debt to tangible net worth of 4:1; and (ii) a ratio of total unencumbered assets to total pari-passu indebtedness of at least 2.50:1. We were in compliance with the covenants under the Term Loans at December 31, 2024 and December 31, 2023. Interest Rate Cap In June 2020, we entered into an interest rate cap to manage our exposure to variable cash flows on our borrowings under our 2026 senior secured term loan by effectively limiting LIBOR from exceeding 0.75%. This limited the maximum all-in coupon on our 2026 senior secured term loan to 3.50%. Subsequent to the interest rate cap maturity in June 2023, the effective all-in coupon on our 2026 Term Loan increased to one month SOFR plus the spread of 2.86%. Refer to "Note 11 – Derivatives" for further detail. Participations sold represented the subordinate interests in loans we originated and subsequently partially sold. We account for participations sold as secured borrowings on our consolidated balance sheet with both assets and non-recourse liabilities because the participations do not qualify as a sale under ASC 860. The income earned on the participations sold is recorded as interest income and an identical amount is recorded as interest expense in our consolidated statements of operations. In December 2020, we sold a £6.7 million ($8.9 million assuming conversion into USD at time of transfer) 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 at time of transfer). The participation interest sold was subordinate to our first mortgage loan and was accounted for as a secured borrowing on our consolidated balance sheet. In January 2023, the first mortgage loan, including participations sold, was fully satisfied, including all contractual and default interest accrued to date. We had no participations sold as of December 31, 2024 or December 31, 2023.

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