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

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Variable Interest Entities

Multi-family loans consist of the following as of June 30, 2024 and December 31, 2023, respectively (dollar amounts in thousands):

			June 30, 2024						December 31, 2023
Investment amount			$	97,411					$	95,434
Unrealized (losses) gains, net			(4,414)						358
Total, at Fair Value			$	92,997					$	95,792

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):

Residential loans, at fair value						$	285,057
Collateralized debt obligations, at fair value						(275,200)
Net investment						$	9,857

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)

Schedule of Redeemable Noncontrolling Interest in Consolidated VIEs

The following table presents activity in redeemable non-controlling interest in Consolidated VIEs for the three and six months ended June 30, 2024 and 2023, respectively (dollar amounts in thousands):

			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%).

Schedule of Classification and Carrying Value of Unconsolidated 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

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Tabular disclosure of redeemable noncontrolling interest (as defined) included in the statement of financial position as either a liability or temporary equity. As of the date of the statement of financial position, such redeemable noncontrolling interest is currently redeemable, as defined, for cash or other assets of the entity at (1) at a fixed or determinable price on a fixed or determinable date, (2) at the option of the holder of the noncontrolling interest, or (3) upon occurrence of an event that is not solely within the control of the entity.

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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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