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Use of Special Purpose Entities (SPE) and Variable Interest Entities (VIE) (Tables)

12 Months Ended

Dec. 31, 2023

Variable Interest Entity, Measure of Activity [Abstract]

Summary of Assets and Liabilities of Consolidated VIEs

The following table summarizes the aggregate estimated fair value of the assets, liabilities and non-controlling interests associated with the initial consolidation of the joint venture entities and the Changeover VIE and real estate acquisitions by a Consolidated VIE during the years ended December 31, 2023, 2022 and 2021, respectively (dollar amounts in thousands):


	Years Ended December 31,
		2023		2022		2021
Cash (1)		$	102	$	8,576	$	27,907
Operating real estate (1) (2)		54,439		730,988		926,756
Lease intangibles (1) (3)		2,378		41,892		51,970
Other assets (1)		4,722		8,258		32,690
Total assets		61,641		789,714		1,039,323

Mortgages payable on real estate, net (1)		45,142		570,682		669,647
Other liabilities (1)		2,403		4,662		15,914
Total liabilities		47,545		575,344		685,561

Redeemable non-controlling interest (4)		—		—		67,096
Non-controlling interests (5)		3,790		16,293		25,509
Net assets consolidated		$	10,306	$	198,077	$	261,157

(1)In September 2022, the Company announced a repositioning of its business through the opportunistic disposition over time of the Company's joint venture equity investments in multi-family properties and reallocation of its capital away from such assets to its targeted assets. Accordingly, the Company determined that certain joint venture equity investments met the criteria to be classified as held for sale and transferred the assets and liabilities of the respective Consolidated VIEs to assets and liabilities of disposal group held for sale in the accompanying consolidated balance sheets. In December 2023, the Company suspended the marketing of nine of the 14 remaining joint venture equity investments that were reported in assets and liabilities of disposal group held for sale due to unfavorable market conditions and a lack of transactional activity in the multi-family market. As such, the Company determined that these joint venture equity investments no longer met the criteria to be classified as held for sale and transferred either the assets and liabilities of the respective Consolidated VIEs or its equity investment in the joint venture entity to their respective categories or equity investments, at fair value, respectively, on the accompanying consolidated balance sheets as of December 31, 2023. See Note 9 for additional information.

(2)For joint venture equity investments that are not held for sale, operating real estate is included in real estate, net in the accompanying consolidated balance sheets.

(3)For joint venture equity investments that are not held for sale, lease intangibles are included in other assets in the accompanying consolidated balance sheets.

(4)Represents redeemable third-party ownership of membership interests in Consolidated Real Estate VIEs. See Redeemable Non-Controlling Interest in Consolidated VIEs below.

(5)Represents third-party ownership of membership interests in Consolidated Real Estate VIEs.

The following table presents a summary of the assets, liabilities and non-controlling interests of the Company’s residential loan securitizations, Consolidated SLST and Consolidated Real Estate VIEs of as of December 31, 2023 (dollar amounts in thousands). Intercompany balances have been eliminated for purposes of this presentation:


	Financing VIEs		Other VIEs
	Residential Loan Securitizations			Consolidated SLST		Consolidated Real Estate		Total
Cash and cash equivalents	$	—		$	—	$	15,612	$	15,612
Residential loans, at fair value	1,501,908			754,860		—		2,256,768
Real estate, net held in Consolidated VIEs (1)	—			—		979,934		979,934
Assets of disposal group held for sale (2)	—			—		426,017		426,017
Other assets	98,451			2,960		37,035		138,446
Total assets	$	1,600,359		$	757,820	$	1,458,598	$	3,816,777

Collateralized debt obligations ($1,276,780 at amortized cost, net and $593,737 at fair value)	$	1,276,780		$	593,737	$	—	$	1,870,517


Mortgages payable on real estate, net in Consolidated VIEs (3)	—			—		784,421		784,421
Liabilities of disposal group held for sale (2)	—			—		386,024		386,024
Other liabilities	8,421			5,638		21,797		35,856
Total liabilities	$	1,285,201		$	599,375	$	1,192,242	$	3,076,818
Redeemable non-controlling interest in Consolidated VIEs (4)	$	—		$	—	$	28,061	$	28,061
Non-controlling interest in Consolidated VIEs (5)	$	—		$	—	$	20,328	$	20,328
Net investment (6)	$	315,158		$	158,445	$	217,967	$	691,570

(1)Included in real estate, net in the accompanying consolidated balance sheets.

(2)Represents assets and liabilities, respectively, of certain Consolidated Real Estate VIEs included in disposal group held for sale (see Note 9).

(3)Included in mortgages payable on real estate, net in the accompanying consolidated balance sheets.

(4)Represents redeemable third-party ownership of membership interests in Consolidated Real Estate VIEs. See Redeemable Non-Controlling Interest in Consolidated VIEs below.

(5)Represents third-party ownership of membership interests in Consolidated Real Estate VIEs.

(6)The net investment amount is the maximum amount of the Company's investment that is at risk to loss and represents the difference between the carrying value of total assets and total liabilities held by VIEs, less non-controlling interests, if any.

The following table presents a summary of the assets, liabilities and non-controlling interests of the Company's residential loan securitizations, Consolidated SLST and Consolidated Real Estate VIEs as of December 31, 2022 (dollar amounts in thousands). Intercompany balances have been eliminated for purposes of this presentation:


	Financing VIEs		Other VIEs
	Residential Loan Securitizations		Consolidated SLST		Consolidated Real Estate		Total
Cash and cash equivalents	$	—	$	—	$	21,129	$	21,129
Residential loans, at fair value	1,616,114		827,582		—		2,443,696
Real estate, net held in Consolidated VIEs (1)	—		—		543,739		543,739
Assets of disposal group held for sale (2)	—		—		1,142,773		1,142,773
Other assets	92,906		3,168		13,686		109,760
Total assets	$	1,709,020	$	830,750	$	1,721,327	$	4,261,097

Collateralized debt obligations ($1,468,222 at amortized cost, net and $634,495 at fair value)	$	1,468,222	$	634,495	$	—	$	2,102,717
Mortgages payable on real estate, net in Consolidated VIEs (3)	—		—		394,707		394,707
Liabilities of disposal group held for sale (2)	—		—		883,812		883,812
Other liabilities	8,168		3,342		10,511		22,021
Total liabilities	$	1,476,390	$	637,837	$	1,289,030	$	3,403,257
Redeemable non-controlling interest in Consolidated VIEs (4)	$	—	$	—	$	63,803	$	63,803
Non-controlling interest in Consolidated VIEs (5)	$	—	$	—	$	32,967	$	32,967
Net investment (6)	$	232,630	$	192,913	$	335,527	$	761,070

(1)Included in real estate, net in the accompanying consolidated balance sheets.

(2)Represents assets and liabilities, respectively, of certain Consolidated Real Estate VIEs included in disposal group held for sale (see Note 9).

(3)Included in mortgages payable on real estate, net in the accompanying consolidated balance sheets.

(4)Represents redeemable third-party ownership of membership interests in Consolidated Real Estate VIEs. See Redeemable Non-Controlling Interest in Consolidated VIEs below.

(5)Represents third-party ownership of membership interests in Consolidated Real Estate VIEs.

The following table presents the carrying value and estimated fair value of the Company’s financial instruments at December 31, 2023 and 2022, respectively (dollar amounts in thousands):


		December 31, 2023				December 31, 2022
	Fair Value Hierarchy Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Cash and cash equivalents	Level 1	$	187,107	$	187,107	$	244,718	$	244,718

Residential loans	Level 3	3,084,303		3,084,303		3,525,080		3,525,080


Investment securities available for sale	Level 2	2,013,817		2,013,817		99,559		99,559
Multi-family loans	Level 3	95,792		95,792		87,534		87,534

Equity investments	Level 3	147,116		147,116		179,746		179,746
Equity investments in disposal group held for sale	Level 3	—		—		9,010		9,010
Derivative assets	Level 2	6,510		6,510		2,473		2,473
Derivative assets in disposal group held for sale	Level 2	2,960		2,960		29,418		29,418
Financial Liabilities:
Repurchase agreements	Level 2	2,471,113		2,471,113		737,023		737,023
Collateralized debt obligations:
Residential loan securitizations at amortized cost, net	Level 3	1,276,780		1,237,531		1,468,222		1,383,715

Consolidated SLST	Level 3	593,737		593,737		634,495		634,495



Subordinated debentures	Level 3	45,000		32,137		45,000		32,721
Senior unsecured notes	Level 2	98,111		94,952		97,384		91,104
Mortgages payable on real estate	Level 3	784,421		761,194		394,707		377,327
Mortgages payable on real estate in disposal group held for sale	Level 3	378,386		377,735		865,414		864,758

Schedule of Statement of Operations of Variable Interest Entities

Multi-family loans consist of the following as of December 31, 2023 and 2022, respectively (dollar amounts in thousands):


	December 31, 2023		December 31, 2022
Investment amount	$	95,434	$	88,249
Unrealized gains (losses)	358		(715)

Total, at Fair Value	$	95,792	$	87,534

The geographic concentrations of credit risk exceeding 5% of the total multi-family loan investment amounts as of December 31, 2023 and 2022, respectively, are as follows:


	December 31, 2023		December 31, 2022
Texas	32.6	%	30.1	%
Tennessee	15.2	%	15.6	%
Florida	10.5	%	10.9	%
Arkansas	9.5	%	—
Louisiana	7.5	%	7.5	%
Alabama	6.7	%	7.1	%
North Carolina	5.8	%	6.1	%
Indiana	5.3	%	5.7	%

The following tables present condensed statements of operations for non-Company-sponsored VIEs for the years ended December 31, 2023, 2022 and 2021, respectively (dollar amounts in thousands). The following tables include net (loss) income from assets and liabilities of disposal group held for sale and intercompany balances have been eliminated for purposes of this presentation.


	Year Ended December 31,
	2023
	Consolidated SLST		Consolidated Real Estate		Total
Interest income	$	34,061	$	—	$	34,061
Interest expense	24,506		—		24,506
Total net interest income	9,555		—		9,555

Income from real estate	—		160,407		160,407
Expenses related to real estate	—		192,018		192,018
Total net loss from real estate	—		(31,611)		(31,611)

Unrealized losses, net	(10,016)		—		(10,016)
Gains on derivative instruments, net	—		4,837		4,837
Impairment of real estate	—		(89,548)		(89,548)
Loss on reclassification of disposal group	—		(16,163)		(16,163)
Other income	—		2,728		2,728
Total other loss	(10,016)		(98,146)		(108,162)

Net loss	(461)		(129,757)		(130,218)
Net loss attributable to non-controlling interest in Consolidated VIEs	—		29,134		29,134
Net loss attributable to Company	$	(461)	$	(100,623)	$	(101,084)


	Year Ended December 31,
	2022
	Consolidated SLST		Consolidated Real Estate		Total
Interest income	$	36,448	$	—	$	36,448
Interest expense	25,145		—		25,145
Total net interest income	11,303		—		11,303

Income from real estate	—		134,722		134,722
Expenses related to real estate	—		245,650		245,650
Total net loss from real estate	—		(110,928)		(110,928)

Unrealized losses, net	(32,403)		—		(32,403)
Gains on derivative instruments, net	—		27,230		27,230
Impairment of real estate	—		(2,449)		(2,449)
Other income	—		16,308		16,308
Total other (loss) income	(32,403)		41,089		8,686

Net loss	(21,100)		(69,839)		(90,939)
Net loss attributable to non-controlling interest in Consolidated VIEs	—		42,044		42,044
Net loss attributable to Company	$	(21,100)	$	(27,795)	$	(48,895)


	Year Ended December 31,
	2021
	Consolidated SLST		Consolidated Real Estate		Total
Interest income	$	40,944	$	—	$	40,944
Interest expense	28,135		—		28,135
Total net interest income	12,809		—		12,809

Income from real estate	—		12,339		12,339
Expenses related to real estate	—		29,164		29,164
Total net loss from real estate	—		(16,825)		(16,825)

Unrealized gains, net	23,832		—		23,832
Total other income	23,832		—		23,832

Net income (loss)	36,641		(16,825)		19,816
Net loss attributable to non-controlling interest in Consolidated VIEs	—		4,724		4,724
Net income (loss) attributable to Company	$	36,641	$	(12,101)	$	24,540

Schedule of Redeemable Noncontrolling Interest in Consolidated VIEs

The following table presents activity in redeemable non-controlling interest in Consolidated VIEs for the years ended December 31, 2023, 2022 and 2021, respectively (dollar amounts in thousands):


	Years Ended December 31,
	2023		2022		2021
Beginning balance	$	63,803	$	66,392	—
Initial consolidation of Consolidated VIEs	—		—		67,096
Contributions	6		462		—
Distributions	(4,021)		(7,083)		—
Net loss attributable to redeemable non-controlling interest in Consolidated VIEs	(17,067)		(38,190)		(704)
Adjustment of redeemable non-controlling interest to estimated redemption value (1)	(14,175)		44,237		—
Redemption of redeemable non-controlling interest	(485)		(2,015)		—
Ending balance	$	28,061	$	63,803	$	66,392

(1)The Company determines the fair value of the redeemable non-controlling interest utilizing market assumptions and discounted cash flows. The Company applies a discount rate to the estimated future cash flows from the multi-family apartment properties held by the applicable Consolidated VIEs that are allocatable to the redeemable non-controlling interest. This fair value measurement is generally based on unobservable inputs and, as such, is classified as Level 3 in the fair value hierarchy. Significant unobservable inputs utilized in the estimation of fair value of redeemable non-controlling interest as of December 31, 2023 include a weighted average capitalization rate of 5.7% (ranges from 5.3% to 6.5%) and a weighted average discount rate of 14.7% (ranges from 13.6% to 15.6%).

Schedule of Classification and Carrying Value of Unconsolidated VIEs

The following tables present the classification and carrying value of unconsolidated VIEs as of December 31, 2023 and 2022, respectively (dollar amounts in thousands):


	December 31, 2023
	Multi-family loans		Investment securities available for sale, at fair value		Equity investments		Total
Non-Agency RMBS	$	—	$	24,462	$	—	$	24,462
Preferred equity investments in multi-family properties	95,792		—		104,242		200,034
Joint venture equity investments in multi-family properties (1)	—		—		5,720		5,720
Maximum exposure	$	95,792	$	24,462	$	109,962	$	230,216


	December 31, 2022
	Multi-family loans		Investment securities available for sale, at fair value		Equity investments		Assets of disposal group held for sale		Total
ABS	$	—	$	856	$	—	$	—	$	856
Non-Agency RMBS	—		29,290		—		—		29,290
Preferred equity investments in multi-family properties	87,534		—		152,246		—		239,780
Joint venture equity investments in multi-family properties (2)	—		—		—		9,010		9,010
Maximum exposure	$	87,534	$	30,146	$	152,246	$	9,010	$	278,936

(1)Transferred out of assets of disposal group held for sale during the year ended December 31, 2023.

(2)Transferred into assets of disposal group held for sale during the year ended December 31, 2022.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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