v3.21.2

Investments in Unconsolidated Entities | 9 Months Ended
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Sep. 30, 2021
Equity Method Investments and Joint Ventures [Abstract] |
Investments in Unconsolidated Entities | Investments in Unconsolidated Entities The Company has various equity investments in entities where it has the ability to exert significant influence over such entity, but does not control such entity. In these cases the criteria for consolidation have not been met and the Company is required to account for such investments under ASC 323-10; the Company has elected the FVO for its investments in unconsolidated entities. As of September 30, 2021 and December 31, 2020, the Company's investments in unconsolidated entities had an aggregate fair value of $142.0 million and $141.6 million, respectively, which is included on the Condensed Consolidated Balance Sheet in Investments in unconsolidated entities, at fair value. For the three-month periods ended September 30, 2021 and 2020, the Company recognized $2.5 million and $11.4 million, respectively, in Earnings (losses) from investments in unconsolidated entities, on its Condensed Consolidated Statement of Operations. For the nine-month periods ended September 30, 2021 and 2020, the Company recognized $27.8 million and $10.6 million, respectively, in Earnings (losses) from investments in unconsolidated entities, on its Condensed Consolidated Statement of Operations. As of September 30, 2021 and December 31, 2020, the Company had non-controlling equity interests in various loan originators with an aggregate fair value of $103.4 million and $79.5 million, respectively. Certain of the entities that the Company accounts for under ASC 323-10 are deemed to be VIEs, and the maximum amount at risk is generally limited to the Company's investment in the VIE. As of September 30, 2021 and December 31, 2020, the fair value of the Company's investments in unconsolidated entities that have been deemed to be VIEs was $26.8 million and $13.6 million, respectively. The following table provides details about the Company's investments in unconsolidated entities as of September 30, 2021 and December 31, 2020:
|  |  |  | Percentage Ownership of Unconsolidated Entity
Investment in Unconsolidated Entity |  | Form of Investment |  | September 30, 2021 |  | December 31, 2020
Longbridge Financial, LLC(1) |  | Preferred shares |  | 49.7% |  | 49.7%
LendSure Mortgage Corp.(1)(2) |  | Common shares |  | 49.9% |  | 49.9%
Jepson Holdings Limited(1) |  | Membership Interest |  | 30.1% |  | 30.1%
Elizon DB 2015-1 LLC(1)(3)(4) |  | Membership Interest |  | 3.1% |  | 8.9%
Elizon NM CRE 2020-1 LLC(1)(3)(5) |  | Membership Interest |  | 54.6% |  | —%
Elizon CH CRE 2021-1 LLC(1)(3)(6) |  | Membership Interest |  | 13.6% |  | —%
Elizon TCG SBC 2017-1(1) |  | Membership Interest |  | —% |  | 36.0%
Other(1)(7)(8)(9) |  | Various |  | 8.0%–80.0% |  | 7.4%–56.3%
(1)See Note 13 for additional details on the Company's related party transactions. (2)Excludes investment in warrants convertible into non-voting common shares; including such warrants the Company's additional non-voting stake in the entity was 15.0% as of both September 30, 2021 and December 31, 2020. See Note 13 Related Party Transactions—Transactions Involving Certain Loan Originators for additional information. (3)The Company has evaluated this entity and determined that it meets the definition of a VIE. The Company evaluated its interest in the VIE and determined that the Company does not have the power to direct the activities of the VIE and does not have control of the underlying assets, where applicable. As a result, the Company determined that it is not the primary beneficiary of this VIE and therefore has not consolidated the VIE. (4)As discussed in Note 13 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 13) each consolidate their segregated silos of the Joint Entity (as defined in Note 13). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 53.7% and 58.2% as of September 30, 2021 and December 31, 2020, respectively. (5)As discussed in Note 13 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 13) each consolidate their segregated silos of the Joint Entity (as defined in Note 13). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 32.6% as of September 30, 2021. (6)As discussed in Note 13 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 13) each consolidate their segregated silos of the Joint Entity (as defined in Note 13). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 44.0% as of September 30, 2021. (7)Includes interest in Consumer Risk Retention Vehicle, as defined in Note 10—Participation in Multi-Seller Consumer Loan Securitization. The Company has evaluated this entity and determined that it does not meet the definition of a VIE. The Company evaluated its interest in the entity under the voting interest model outlined in ASC 810, and has determined that the Company does not control this entity. As a result, the Company has not consolidated the entity. See Note 10 for additional details on the Company's securitization transactions. (8)Includes interest in warehouse facilities; see Note 13—Participation in CLO Transactions, for additional details. (9)Excludes investment in non-voting common shares of a loan originator; including such shares the Company's additional non-voting stake in such entity was 16.4% as of September 30, 2021. There were no additional non-voting shares held by the Company at December 31, 2020. See Note 13 Related Party Transactions—Transactions Involving Certain Loan Originators for additional information. As of September 30, 2021, the Company's two largest investments in unconsolidated entities were in mortgage loan originators, LendSure Mortgage Corp. and Longbridge Financial, LLC, or "Longbridge." As of September 30, 2021 and December 31, 2020, the fair value of the Company's investment in LendSure Mortgage Corp. was $27.1 million and $15.5 million, respectively, which is included on the Condensed Consolidated Balance Sheet in Investments in unconsolidated entities, at fair value. The Company's investment in Longbridge was considered significant pursuant to Regulation S-X for the year ended December 31, 2020. For the three-month periods ended September 30, 2021 and 2020, the Company recognized $(6.2) million and $8.9 million, respectively of unrealized gains (losses) from its investment in Longbridge, which is included in Earnings (losses) from investments in unconsolidated entities on the Condensed Consolidated Statement of Operations. For the nine-month periods ended September 30, 2021 and 2020, the Company recognized $5.1 million and $13.2 million, respectively, of unrealized gains from its investment in Longbridge. As of September 30, 2021 and December 31, 2020, the fair value of the Company's investment in Longbridge was $65.7 million and $60.6 million, respectively, which is included on the Condensed Consolidated Balance Sheet in Investments in unconsolidated entities, at fair value. The following table provides a summary of the results of operations of Longbridge for the three- and nine-month periods ended September 30, 2021 and 2020.
|  | Three-Month Period Ended |  | Nine-Month Period Ended
(In thousands) |  | September 30, 2021 |  | September 30, 2020 |  | September 30, 2021 |  | September 30, 2020
Revenue(1) |  | $ | (21,954) |  |  | $ | 114,064 |  |  | $ | 168,664 |  |  | $ | 240,739 |
Net income (loss) |  | $ | (8,243) |  |  | $ | 15,962 |  |  | $ | 23,469 |  |  | $ | 28,901 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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