The Company uses SPEs to facilitate transactions that involve securitizing financial assets or re-securitizing previously securitized financial assets. The objective of such transactions may include obtaining non-recourse financing, obtaining liquidity or refinancing the underlying securitized financial assets on improved terms. Securitization involves transferring assets to an SPE to convert all or a portion of those assets into cash before they would have been realized in the normal course of business through the SPE’s issuance of debt or equity instruments. Investors in an SPE usually have recourse only to the assets in the SPE and depending on the overall structure of the transaction, may benefit from various forms of credit enhancement, such as over-collateralization in the form of excess assets in the SPE, priority with respect to receipt of cash flows relative to holders of other debt or equity instruments issued by the SPE, or a line of credit or other form of liquidity agreement that is designed with the objective of ensuring that investors receive principal and/or interest cash flow on the investment in accordance with the terms of their investment agreement.

The Company has entered into financing transactions, including residential loan securitizations and re-securitizations, which required the Company to analyze and determine whether the SPEs that were created to facilitate the transactions are VIEs in accordance with ASC 810 and if so, whether the Company is the primary beneficiary requiring consolidation.

During the six months ended June 30, 2024, the Company completed three securitizations of certain residential loans for which the Company received net proceeds of approximately $738.5 million after deducting expenses associated with the securitization transactions. The Company engaged in these transactions for the purpose of obtaining non-recourse, longer-term financing on a portion of its residential loan portfolio. The residential loans serving as collateral for the financings are comprised of performing, re-performing and non-performing and business purpose loans which are included in residential loans, at fair value on the accompanying condensed consolidated balance sheets.

During the six months ended June 30, 2024, the Company exercised its right to an optional redemption of two of its residential loan securitizations with an outstanding principal balance of $193.3 million at the time of redemption, returned the assets held by the trust to the Company and recognized $0.7 million of loss on the extinguishment of collateralized debt obligations.

As of June 30, 2024 and December 31, 2023, the Company evaluated its residential loan securitizations and concluded that the entities created to facilitate each of the financing transactions are VIEs and that the Company is the primary beneficiary of these VIEs (each a “Financing VIE” and collectively, the “Financing VIEs”). Accordingly, the Company consolidated the then-outstanding Financing VIEs as of June 30, 2024 and December 31, 2023.

The Company invests in subordinated securities that represent the first loss position of the Freddie Mac-sponsored residential loan securitizations from which they were issued and certain IOs issued from the securitizations. The Company has evaluated its investments in these securitization trusts to determine whether they are VIEs and if so, whether the Company is the primary beneficiary requiring consolidation. The Company has determined that the Freddie Mac-sponsored residential loan securitization trusts, which we collectively refer to as Consolidated SLST, are VIEs and that the Company is the primary beneficiary of the VIEs within Consolidated SLST. Accordingly, the Company consolidates the assets, liabilities, income and expenses of such VIEs in the accompanying condensed consolidated financial statements (see Notes 2, 3 and 13). The Company has elected the fair value option on the assets and liabilities held within Consolidated SLST, which requires that changes in valuations in the assets and liabilities of Consolidated SLST be reflected in the Company’s condensed consolidated statements of operations. Consolidated SLST is comprised of two securitization trusts and one securitization trust as of June 30, 2024 and December 31, 2023, respectively.

During the three and six months ended June 30, 2024, the Company invested in subordinated securities issued by a Freddie Mac-sponsored residential loan securitization, resulting in the initial consolidation of the VIE as shown below (dollar amounts in thousands):

As of June 30, 2024 and December 31, 2023, the Consolidated SLST securities owned by the Company had a fair value of $156.0 million and $157.2 million, respectively (see Note 16). The Company’s investments in Consolidated SLST securities were not included as collateral to any Financing VIE as of June 30, 2024 and December 31, 2023.

The Company owns joint venture equity investments in entities that own multi-family apartment communities, which the Company determined to be VIEs and for which the Company is the primary beneficiary. Accordingly, the Company consolidates the assets, liabilities, income and expenses of these VIEs in the accompanying condensed consolidated financial statements with non-controlling interests or redeemable non-controlling interests for the third-party ownership of the joint ventures' membership interests.

During the three and six months ended June 30, 2024, the Company sold its joint venture equity investments in one multi-family property and two multi-family properties, respectively, which resulted in the de-consolidation of the joint venture entities' assets and liabilities (see Note 9).

During the year ended December 31, 2023, the Company reconsidered its evaluation of its variable interest in a VIE that owned a multi-family apartment community and in which the Company held a preferred equity investment. The Company determined that it gained the power to direct the activities, and became primary beneficiary, of the VIE and consolidated this VIE into its condensed consolidated financial statements.

The Company accounted for the initial consolidation of the Consolidated Real Estate VIEs in accordance with asset acquisition provisions of ASC 805, as substantially all of the fair value of the assets within the entities are concentrated in either a single identifiable asset or group of similar identifiable assets.

In analyzing whether the Company is the primary beneficiary of the Financing VIEs, Consolidated SLST and Consolidated Real Estate VIEs, the Company considered its involvement in each of the VIEs, including the design and purpose of each VIE, and whether its involvement reflected a controlling financial interest that resulted in the Company being deemed the primary beneficiary of the VIEs. In determining whether the Company would be considered the primary beneficiary, the following factors were assessed:

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 June 30, 2024 (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	$	—		$	—	$	8,368	$	8,368
Residential loans, at fair value	1,831,029			1,004,944		—		2,835,973
Real estate, net held in Consolidated VIEs (1)	—			—		732,437		732,437
Assets of disposal group held for sale (2)	—			—		373,538		373,538
Other assets	152,024			4,394		24,947		181,365
Total assets	$	1,983,053		$	1,009,338	$	1,139,290	$	4,131,681

Collateralized debt obligations ($972,389 at amortized cost, net and $1,577,111 at fair value)	$	1,705,468		$	844,032	$	—	$	2,549,500
Mortgages payable on real estate, net in Consolidated VIEs (3)	—			—		592,919		592,919
Liabilities of disposal group held for sale (2)	—			—		340,138		340,138
Other liabilities	12,517			7,965		15,730		36,212
Total liabilities	$	1,717,985		$	851,997	$	948,787	$	3,518,769
Redeemable non-controlling interest in Consolidated VIEs (4)	$	—		$	—	$	23,088	$	23,088
Non-controlling interest in Consolidated VIEs (5)	$	—		$	—	$	9,628	$	9,628
Net investment (6)	$	265,068		$	157,341	$	157,787	$	580,196

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, 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

The following table presents condensed statements of operations for non-Company-sponsored VIEs for the three months ended June 30, 2024 and 2023, respectively (dollar amounts in thousands). The following table includes net (loss) income from assets and liabilities of disposal group held for sale and intercompany balances have been eliminated for purposes of this presentation.


	Three Months Ended June 30,
	2024						2023
	Consolidated SLST		Consolidated Real Estate		Total		Consolidated SLST		Consolidated Real Estate		Total
Interest income	$	9,154	$	—	$	9,154	$	8,440	$	—	$	8,440
Interest expense	6,752		—		6,752		5,966		—		5,966
Total net interest income	2,402		—		2,402		2,474		—		2,474

Income from real estate	—		33,535		33,535		—		41,885		41,885
Expenses related to real estate	—		46,882		46,882		—		49,881		49,881
Total net loss from real estate	—		(13,347)		(13,347)		—		(7,996)		(7,996)


Unrealized gains (losses), net	542		—		542		(12,328)		—		(12,328)
Gains on derivative instruments, net	—		329		329		—		6,556		6,556
Impairment of real estate	—		(3,557)		(3,557)		—		(16,864)		(16,864)

Other income	—		4		4		—		25		25
Total other income (loss)	542		(3,224)		(2,682)		(12,328)		(10,283)		(22,611)



Net income (loss)	2,944		(16,571)		(13,627)		(9,854)		(18,279)		(28,133)
Net loss attributable to non-controlling interest in Consolidated VIEs	—		8,494		8,494		—		3,892		3,892
Net income (loss) attributable to Company	$	2,944	$	(8,077)	$	(5,133)	$	(9,854)	$	(14,387)	$	(24,241)


	Six Months Ended June 30,
	2024						2023
	Consolidated SLST		Consolidated Real Estate		Total		Consolidated SLST		Consolidated Real Estate		Total
Interest income	$	17,281	$	—	$	17,281	$	17,173	$	—	$	17,173
Interest expense	12,553		—		12,553		12,280		—		12,280
Total net interest income	4,728		—		4,728		4,893		—		4,893

Income from real estate	—		68,628		68,628		—		80,960		80,960
Expenses related to real estate	—		98,643		98,643		—		97,943		97,943
Total net loss from real estate	—		(30,015)		(30,015)		—		(16,983)		(16,983)


Unrealized gains (losses), net	506		—		506		(10,029)		—		(10,029)
Gains on derivative instruments, net	—		2,848		2,848		—		5,258		5,258
Impairment of real estate	—		(35,771)		(35,771)		—		(27,139)		(27,139)
Loss on reclassification of disposal group	—		(14,636)		(14,636)		—		—		—
Other income	—		7		7		—		41		41
Total other income (loss)	506		(47,552)		(47,046)		(10,029)		(21,840)		(31,869)



Net income (loss)	5,234		(77,567)		(72,333)		(5,136)		(38,823)		(43,959)
Net loss attributable to non-controlling interest in Consolidated VIEs	—		30,652		30,652		—		10,593		10,593
Net income (loss) attributable to Company	$	5,234	$	(46,915)	$	(41,681)	$	(5,136)	$	(28,230)	$	(33,366)

The third-party owners of certain of the non-controlling interests in Consolidated VIEs have the ability to sell their ownership interests to the Company, at their election. The Company has classified these third-party ownership interests as redeemable non-controlling interests in Consolidated VIEs in mezzanine equity on the accompanying condensed consolidated balance sheets. The holders of the redeemable non-controlling interests may elect to sell their ownership interests to the Company at fair value once a year and the sales are subject to annual minimum and maximum amount limitations.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Beginning balance	$	20,128	$	54,352	$	28,061	$	63,803
Contributions	—		—		39		—
Distributions	(25)		—		(25)		(3,950)
Net loss attributable to redeemable non-controlling interest in Consolidated VIEs	(4,578)		(3,184)		(18,978)		(8,685)
Adjustment of redeemable non-controlling interest to estimated redemption value (1)	7,563		(16,597)		13,991		(16,597)
Ending balance	$	23,088	$	34,571	$	23,088	$	34,571

(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 June 30, 2024 include a weighted average capitalization rate of 5.8% (ranges from 5.3% to 6.8%) and a weighted average discount rate of 14.9% (ranges from 13.9% to 15.6%).

As of June 30, 2024 and December 31, 2023, the Company evaluated its investment securities available for sale, preferred equity and other equity investments to determine whether they are VIEs and should be consolidated by the Company. Based on a number of factors, the Company determined that, as of June 30, 2024 and December 31, 2023, it does not have a controlling financial interest and is not the primary beneficiary of these VIEs. The following tables present the classification and carrying value of unconsolidated VIEs as of June 30, 2024 and December 31, 2023, respectively (dollar amounts in thousands):


	June 30, 2024
	Multi-family loans		Investment securities available for sale, at fair value		Equity investments		Total

Non-Agency RMBS	$	—	$	23,672	$	—	$	23,672
Preferred equity investments in multi-family properties	92,997		—		102,416		195,413
Joint venture equity investments in multi-family properties	—		—		1,655		1,655
Maximum exposure	$	92,997	$	23,672	$	104,071	$	220,740


	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	—		—		5,720		5,720
Maximum exposure	$	95,792	$	24,462	$	109,962	$	230,216