XML 26 R20.htm IDEA: XBRL DOCUMENT v3.25.1
Participations Sold
 3 Months Ended
Mar. 31, 2025
Debt Disclosure [Abstract]  
Secured Debt Arrangement, Net/Participations Sold

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 three months ended March 31, 2025, we upsized our secured credit facility with JPMorgan by $500.0 million and extended the facility’s final maturity by 3.5 years to March 2030.

Our borrowings under secured debt arrangements as of March 31, 2025 and December 31, 2024 are detailed in the following table ($ in thousands):

 

 

March 31, 2025

 

December 31, 2024

 

Maximum
Amount of
Borrowings(1)

 

 

Borrowings
Outstanding(1)

 

 

Maturity (2)

 

Maximum
Amount of
Borrowings(1)

 

 

Borrowings
Outstanding(1)

 

 

Maturity (2)

JPMorgan Facility - USD(3)

 

$

2,000,000

 

 

$

1,330,734

 

 

March 2030(4)

 

$

1,500,000

 

 

$

1,033,504

 

 

September 2026

Deutsche Bank Facility - USD(3)(5)

 

 

200,000

 

 

 

120,033

 

 

March 2028(6)

 

 

700,000

 

 

 

123,434

 

 

March 2026

Atlas Facility - USD(7)

 

 

800,000

 

 

 

540,413

 

 

March 2027

 

 

800,000

 

 

 

462,886

 

 

March 2027(8)

HSBC Facility - GBP

 

 

389,607

 

 

 

389,607

 

 

May 2025

 

 

377,483

 

 

 

377,483

 

 

May 2025

HSBC Facility - EUR

 

 

261,322

 

 

 

261,322

 

 

January 2026(10)

 

 

250,162

 

 

 

250,162

 

 

January 2026(10)

Goldman Sachs Facility - GBP

 

 

473,350

 

 

 

399,499

 

 

May 2029

 

 

458,804

 

 

 

373,706

 

 

May 2029

Barclays Facility - USD

 

 

500,000

 

 

 

321,546

 

 

March 2027(9)

 

 

500,000

 

 

 

321,546

 

 

March 2027(9)

MUFG Securities Facility - GBP

 

 

79,345

 

 

 

79,345

 

 

November 2025(9)

 

 

171,972

 

 

 

171,972

 

 

November 2025(9)

Churchill Facility - USD

 

 

130,000

 

 

 

119,982

 

 

April 2026

 

 

130,000

 

 

 

121,289

 

 

April 2026

Santander Facility - USD(11)

 

 

—

 

 

 

—

 

 

N/A

 

 

300,000

 

 

 

—

 

 

February 2026

Total Secured Credit Facilities

 

 

4,833,624

 

 

 

3,562,481

 

 

 

 

 

5,188,421

 

 

 

3,235,982

 

 

 

Barclays Private Securitization - GBP, EUR, SEK

 

 

1,667,312

 

 

 

1,667,312

 

 

August 2027(10)

 

 

1,587,780

 

 

 

1,587,780

 

 

May 2027(10)

Revolving Credit Facility - USD(12)

 

 

160,000

 

 

 

—

 

 

March 2026

 

 

160,000

 

 

 

—

 

 

March 2026

Total Secured Debt Arrangements

 

 

6,660,936

 

 

 

5,229,793

 

 

 

 

 

6,936,201

 

 

 

4,823,762

 

 

 

Less: deferred financing costs

 

 

N/A

 

 

 

(10,016

)

 

 

 

 

N/A

 

 

 

(8,789

)

 

 

Total Secured Debt Arrangements, net(13)(14)(15)

 

$

6,660,936

 

 

$

5,219,777

 

 

 

 

$

6,936,201

 

 

$

4,814,973

 

 

 

 

(1)
As of March 31, 2025, British Pound Sterling ("GBP"), Euro ("EUR"), and Swedish Krona ("SEK") borrowings were converted to USD at a rate of 1.29, 1.08, and 0.10, respectively. As of December 31, 2024, GBP, EUR and SEK borrowings were converted to USD at a rate of 1.25, 1.04 and 0.09, 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 JPMorgan Facility final maturity was extended to March 31, 2030 during the first quarter of 2025.
(5)
Effective March 31, 2025, the capacity on the Deutsche Bank Facility was reduced to $200.0 million from $700.0 million.
(6)
The Deutsche Bank Facility final maturity was extended to March 31, 2028 during the first quarter 2025.
(7)
The Atlas Facility (as defined below) was formerly the Credit Suisse Facility. See "Atlas Facility" below for additional discussion.
(8)
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.
(9)
Assumes financings are extended in line with the underlying loans.
(10)
Represents weighted-average maturity across various financings with the counterparty. See below for additional details.
(11)
The Santander Facility was terminated during the first quarter of 2025.
(12)
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.
(13)
Weighted-average borrowing costs as of March 31, 2025 and December 31, 2024 were applicable benchmark rates and credit spread adjustments, plus spreads of USD: +2.41% / GBP: +2.40% / EUR: +2.11% / SEK: +1.50% and USD: +2.47% / GBP: +2.43% / EUR: +2.11% / SEK: +1.50%, respectively.
(14)
Weighted-average advance rates based on cost as of March 31, 2025 and December 31, 2024 were 68.64% (64.6% (USD) / 72.7% (GBP) / 70.7% (EUR) / 80.2% (SEK)) and 68.6% (62.2% (USD) / 75.3% (GBP) / 70.8% (EUR) / 80.2% (SEK)), respectively.
(15)
As of March 31, 2025 and December 31, 2024, approximately 45% and 46%, 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 both March 31, 2025 and December 31, 2024, the weighted-average haircut under our secured debt arrangements was approximately 31.4%. Our secured credit facilities do not contain capital markets-based mark-to-market provisions.

Revolving Credit Facility

We are party to a 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 March 31, 2025, 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 March 31, 2025 and December 31, 2024, we had no outstanding balance on the Revolving Credit Facility. During the three months ended March 31, 2025, we recorded $80.0 thousand in unused fees. During the three months ended March 31, 2024, we recorded $33.6 thousand in unused fees and $1.9 million in contractual interest expense.

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 March 31, 2025 and December 31, 2024 ($ in thousands):

 

 

March 31, 2025

 

Local Currency

 

Count

 

Outstanding
Principal

 

 

Carrying Value

 

GBP

 

5

 

$

1,309,001

 

 

$

1,296,020

 

EUR

 

3

 

 

752,691

 

 

 

744,904

 

SEK

 

1

 

 

247,013

 

 

 

245,618

 

Total

 

9

 

$

2,308,705

 

 

$

2,286,542

 

 

 

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

 

 

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 March 31, 2025 ($ in thousands):

 

 

Borrowings
Outstanding(1)

 

 

Fully-Extended
Maturity(2)

Total/Weighted-Average GBP

 

$

936,211

 

 

October 2027

Total/Weighted-Average EUR

 

 

533,490

 

 

October 2027(3)

Total/Weighted-Average SEK

 

 

197,611

 

 

May 2026

Total/Weighted-Average Securitization

 

$

1,667,312

 

 

August 2027

 

(1)
As of March 31, 2025, we had £724.7 million, €493.2 million, and kr2.0 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, 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 kr2.0 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 condensed consolidated balance sheets ($ in thousands):

 

 

March 31, 2025

 

 

December 31, 2024

 

Assets:

 

 

 

 

 

 

Cash

 

$

346

 

 

$

150

 

Commercial mortgage loans, net(1)

 

 

2,286,542

 

 

 

2,171,277

 

Other Assets(2)

 

 

26,845

 

 

 

29,179

 

Total Assets

 

$

2,313,733

 

 

$

2,200,606

 

Liabilities:

 

 

 

 

 

 

Secured debt arrangements, net (net of deferred financing costs of $0.8 million and $1.1 million in 2025 and 2024, respectively)

 

$

1,666,484

 

 

$

1,586,680

 

Accounts payable, accrued expenses and other liabilities(3)(4)

 

 

7,207

 

 

 

10,519

 

Total Liabilities

 

$

1,673,691

 

 

$

1,597,199

 

 

(1)
Net of the General CECL Allowance of $10.1 million and $10.8 million as of March 31, 2025 and December 31, 2024, 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 $1.4 million and $2.1 million as of March 31, 2025 and December 31, 2024, 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 condensed consolidated statement of operations ($ in thousands):

 

 

Three months ended March 31,

 

 

2025

 

 

2024

 

Net interest income:

 

 

 

 

 

 

Interest income from commercial mortgage loans

 

$

46,390

 

 

$

64,523

 

Interest expense

 

 

(25,196

)

 

 

(36,083

)

Net interest income

 

$

21,194

 

 

$

28,440

 

General and administrative expense:

 

 

 

 

 

 

Decrease (increase) in current expected credit loss allowance, net

 

 

1,346

 

 

 

(2,565

)

Foreign currency translation gain (loss)

 

 

25,633

 

 

 

(12,923

)

Net income

 

$

48,173

 

 

$

12,952

 

 

 

At March 31, 2025, 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

 

$

274,854

 

 

$

464,196

 

 

$

591,684

 

 

$

—

 

 

$

1,330,734

 

Deutsche Bank Facility

 

 

27,300

 

 

 

—

 

 

 

92,733

 

 

 

—

 

 

 

120,033

 

Atlas Facility

 

 

93,100

 

 

 

447,313

 

 

 

—

 

 

 

—

 

 

 

540,413

 

HSBC Facility

 

 

650,929

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

650,929

 

Goldman Sachs Facility - GBP

 

 

—

 

 

 

—

 

 

 

399,499

 

 

 

—

 

 

 

399,499

 

Barclays Facility

 

 

—

 

 

 

321,546

 

 

 

—

 

 

 

—

 

 

 

321,546

 

MUFG Securities Facility

 

 

79,345

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

79,345

 

Churchill Facility

 

 

—

 

 

 

119,982

 

 

 

—

 

 

 

—

 

 

 

119,982

 

Barclays Private Securitization

 

 

117,741

 

 

 

1,549,571

 

 

 

—

 

 

 

—

 

 

 

1,667,312

 

Total

 

$

1,243,269

 

 

$

2,902,608

 

 

$

1,083,916

 

 

$

—

 

 

$

5,229,793

 

 

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 March 31, 2025, as well as the maximum and average month-end balances for the three months ended March 31, 2025 for our borrowings under secured debt arrangements ($ in thousands).

 

 

As of March 31, 2025

 

 

For the three months ended March 31, 2025

 

 

Balance

 

 

Collateral(1)

 

 

Maximum
Month-End
Balance

 

 

Average
Month-End
Balance

 

JPMorgan Facility

 

$

1,330,734

 

 

 

1,886,169

 

 

 

1,330,734

 

 

$

1,152,849

 

Deutsche Bank Facility

 

 

120,033

 

 

 

195,669

 

 

 

123,434

 

 

 

122,301

 

Goldman Sachs Facility - GBP

 

 

399,499

 

 

 

517,703

 

 

 

399,499

 

 

 

387,209

 

Atlas Facility

 

 

540,413

 

 

 

800,512

 

 

 

540,413

 

 

 

513,653

 

HSBC Facility

 

 

650,929

 

 

 

872,168

 

 

 

650,929

 

 

 

635,035

 

Barclays Facility

 

 

321,546

 

 

 

422,548

 

 

 

321,546

 

 

 

321,546

 

MUFG Securities Facility

 

 

79,345

 

 

 

166,934

 

 

 

110,772

 

 

 

92,179

 

Churchill Facility

 

 

119,982

 

 

 

160,278

 

 

 

120,853

 

 

 

120,417

 

Barclays Private Securitization

 

 

1,667,312

 

 

 

2,296,668

 

 

 

1,667,312

 

 

 

1,614,412

 

Revolving Credit Facility

 

 

—

 

 

 

69,031

 

 

 

—

 

 

 

—

 

Total

 

$

5,229,793

 

 

$

7,387,680

 

 

 

 

 

 

 

 

(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, 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 year 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.

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 exceed 4.0:1, reducing to 3.75:1 effective March 31, 2026; and (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. Our interest coverage ratio shall be not less than 1.3:1, increasing to 1.4:1 effective July 1, 2025.

We were in compliance with the covenants under each of our secured debt arrangements at March 31, 2025 and December 31, 2024. 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 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 was issued at a price of 99.5%. The 2026 Term Loan currently bears interest at SOFR plus 2.86%.

In March 2021, we entered into an additional $300.0 million 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 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 the three months ended March 31, 2025 and 2024, we repaid $1.3 million of principal, respectively, related to the 2026 Term Loan. During the three months ended March 31, 2025 and 2024, we repaid $0.7 million of principal, respectively, related to the 2028 Term Loan.

The following table summarizes the terms of the Term Loans as of March 31, 2025 ($ in thousands):

 

 

Principal Amount

 

 

Unamortized Issuance Discount(1)

 

 

Deferred Financing Costs(1)

 

 

Carrying Value

 

 

Rate

 

 

Maturity Date

2026 Term Loan

 

$

471,250

 

 

$

(387

)

 

$

(2,403

)

 

$

468,460

 

 

 

2.86

%

 

5/15/2026

2028 Term Loan

 

 

288,000

 

 

 

(1,250

)

 

 

(2,245

)

 

 

284,505

 

 

 

3.61

%

 

3/11/2028

Total

 

$

759,250

 

 

$

(1,637

)

 

$

(4,648

)

 

$

752,965

 

 

 

 

 

 

 

(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, 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.

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 March 31, 2025 and December 31, 2024.