Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

(a) Lease Commitments

The Company’s primary lease commitment relates to its corporate headquarters. For the three months ended June 30, 2024 and 2023, the Company recorded an expense in connection with this lease of approximately $1.5 million and $1.5 million, respectively, and for the six months ended June 30, 2024 and 2023, $2.8 million and $2.7 million, respectively. The original term specified in this lease is approximately fifteen years with a termination date of December 2036 and an option to renew for an additional five years.

At June 30, 2024, the contractual minimum rental payments (exclusive of possible rent escalation charges and normal recurring charges for maintenance, insurance and taxes) regarding the Company’s lease commitments were as follows:


Year Ending December 31,	Minimum Rental Payments
(In Thousands)
2024 (1)	$	3,028
2025	5,212
2026	4,839
2027	5,119
2028	5,055
Thereafter	41,944
Total	$	65,197
Present Value Discount	(23,049)
Total Lease Liability (Note 7)	$	42,148

(1) Reflects contractual minimum rental payments due for the period from July 1, 2024 through December 31, 2024.

Additionally, in June 2023, Lima One executed a lease agreement on new office space in Greenville, South Carolina for a thirteen-year term. The Company expects the average annual lease rental expense to be approximately $3.2 million. Lima One currently expects to relocate to the space in the latter half of 2025. The agreement can be terminated by the Company if vertical construction of the building has not commenced by September 1, 2024.

(b) Representations and Warranties in Connection with Loan Securitization and Other Loan Sale Transactions

In connection with the loan securitization and sale transactions entered into by the Company, the Company has the obligation under certain circumstances to repurchase assets previously transferred to securitization vehicles, or otherwise sold, upon breach of certain representations and warranties. As of June 30, 2024, the Company was not aware of any material unsettled repurchase claims that would require a reserve (see Note 14).

At June 30, 2024, the Company had unfunded commitments in connection with its Single-family and Multifamily transitional loans of $412.3 million and $82.8 million, respectively (see Note 3). These commitments are subject to certain conditions that the respective borrowers must meet before funding is required. In addition, from time to time, Lima One makes short-term commitments to originate mortgage loans; such commitments were not significant at June 30, 2024.

(d) Guarantee

In connection with one of its investments in a loan origination partner, the Company has guaranteed up to $42.5 million of such investee’s warehouse financing. As of June 30, 2024, the Company has not recorded a liability in connection with this guarantee.