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

12 Months Ended

Dec. 31, 2024

Variable Interest Entity, Measure of Activity [Abstract]

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


	December 31, 2024		December 31, 2023
Investment amount	$	90,485	$	95,434
Unrealized (losses) gains	(4,293)		358

Total, at Fair Value	$	86,192	$	95,792

The geographic concentrations of credit risk exceeding 5% of the total multi-family loan investment amounts as of December 31, 2024 and 2023, respectively, are as follows:


	December 31, 2024		December 31, 2023
Texas	36.1	%	32.6	%
Tennessee	14.4	%	15.2	%
Florida	11.6	%	10.5	%
Arkansas	10.3	%	9.5	%
Louisiana	8.8	%	7.5	%
North Carolina	6.2	%	5.8	%
Indiana	5.6	%	5.3	%

During the year ended December 31, 2024, the Company invested in a subordinated security 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 tables present condensed statements of operations for non-Company-sponsored VIEs for the years ended December 31, 2024, 2023 and 2022, 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,
	2024
	Consolidated SLST		Consolidated Real Estate		Total
Interest income	$	39,194	$	—	$	39,194
Interest expense	26,491		—		26,491
Total net interest income	12,703		—		12,703

Income from real estate	—		121,463		121,463
Expenses related to real estate	—		163,762		163,762
Total net loss from real estate	—		(42,299)		(42,299)

Unrealized gains, net	2,902		—		2,902
Gains on derivative instruments, net	—		2,788		2,788
Impairment of real estate	—		(43,959)		(43,959)
Loss on reclassification of disposal group	—		(14,636)		(14,636)
Other income	—		26,031		26,031
Total other income (loss)	2,902		(29,776)		(26,874)

Net income (loss)	15,605		(72,075)		(56,470)
Net loss attributable to non-controlling interest in Consolidated VIEs	—		31,924		31,924
Net income (loss) attributable to Company	$	15,605	$	(40,151)	$	(24,546)


	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)

Schedule 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 Consolidated Real Estate VIEs and real estate acquisitions by a Consolidated Real Estate VIE during the years ended December 31, 2023 and 2022, respectively. There were no initial consolidation of Consolidated Real Estate VIEs or real estate acquisitions by a Consolidated VIE during the year ended December 31, 2024 (dollar amounts in thousands):


	Years Ended December 31,
		2023		2022
Cash (1)		$	102	$	8,576
Operating real estate (1) (2)		54,439		730,988
Lease intangibles (1) (3)		2,378		41,892
Other assets (1)		4,722		8,258
Total assets		61,641		789,714

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


Non-controlling interests (4)		3,790		16,293
Net assets consolidated		$	10,306	$	198,077

(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 assets and liabilities related to certain joint venture equity investments in multi-family properties is included in assets and liabilities of disposal group held for sale on the accompanying consolidated balance sheets as of December 31, 2024 and 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 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 securitizations, Consolidated SLST and Consolidated Real Estate VIEs of as of December 31, 2024 (dollar amounts in thousands). Intercompany balances have been eliminated for purposes of this presentation:


			Other VIEs
	Financing VIEs		Consolidated SLST	Consolidated Real Estate		Total
Cash and cash equivalents	$	—		$	—	$	4,151	$	4,151
Residential loans, at fair value	2,243,800			965,672		—		3,209,472
Real estate, net held in Consolidated VIEs (1)	—			—		481,161		481,161
Assets of disposal group held for sale (2)	—			—		118,613		118,613
Other assets	154,426			4,065		16,696		175,187
Total assets	$	2,398,226		$	969,737	$	620,621	$	3,988,584

Collateralized debt obligations ($2,135,680 at fair value, and $842,764 at amortized cost, net)	$	2,166,853		$	811,591	$	—	$	2,978,444


Mortgages payable on real estate, net in Consolidated VIEs (3)	—			—		366,606		366,606
Liabilities of disposal group held for sale (2)	—			—		97,065		97,065
Other liabilities	16,162			8,313		10,621		35,096
Total liabilities	$	2,183,015		$	819,904	$	474,292	$	3,477,211
Redeemable non-controlling interest in Consolidated VIEs (4)	$	—		$	—	$	12,359	$	12,359
Non-controlling interest in Consolidated VIEs (5)	$	—		$	—	$	3,930	$	3,930
Net investment (6)	$	215,211		$	149,833	$	130,040	$	495,084

(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 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:


			Other VIEs
	Financing VIEs		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 ($593,737 at fair value, and $1,276,780 at amortized cost, net)	$	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.

The following table presents the carrying value and estimated fair value of the Company’s financial instruments at December 31, 2024 and 2023, respectively (dollar amounts in thousands):


		December 31, 2024				December 31, 2023
	Fair Value Hierarchy Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Cash and cash equivalents	Level 1	$	167,422	$	167,422	$	187,107	$	187,107

Residential loans	Level 3	3,841,738		3,841,738		3,084,303		3,084,303


Investment securities available for sale	Level 2	3,828,544		3,828,544		2,013,817		2,013,817
Multi-family loans	Level 3	86,192		86,192		95,792		95,792

Equity investments	Level 3	113,492		113,492		147,116		147,116

Derivative assets	Level 2	56		56		6,510		6,510
Derivative assets in disposal group held for sale	Level 2	67		67		2,960		2,960
Mortgage servicing rights	Level 3	21,003		21,003		—		—
Financial Liabilities:
Repurchase agreements	Level 2	4,012,225		4,012,225		2,471,113		2,471,113
Collateralized debt obligations:
Residential loan securitizations at amortized cost, net	Level 3	842,764		818,482		1,276,780		1,237,531
Residential loan securitizations at fair value	Level 2	1,253,332		1,253,332		—		—
Consolidated SLST	Level 3	811,591		811,591		593,737		593,737
Non-Agency RMBS re-securitization	Level 2	70,757		70,757		—		—


Subordinated debentures	Level 3	45,000		38,918		45,000		32,137
Senior unsecured notes:
Senior unsecured notes at amortized cost, net	Level 2	98,886		98,632		98,111		94,952
Senior unsecured notes at fair value	Level 2	60,310		60,310		—		—
Mortgages payable on real estate	Level 3	366,606		347,915		784,421		761,194
Mortgages payable on real estate in disposal group held for sale	Level 3	93,370		93,370		378,386		377,735

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, 2024, 2023 and 2022, respectively (dollar amounts in thousands):


	Years Ended December 31,
	2024		2023		2022
Beginning balance	$	28,061	$	63,803	$	66,392

Contributions	46		6		462
Distributions	(8,809)		(4,021)		(7,083)
Net loss attributable to redeemable non-controlling interest in Consolidated VIEs	(16,926)		(17,067)		(38,190)
Adjustment of redeemable non-controlling interest to estimated redemption value (1)	10,613		(14,175)		44,237
Redemption of redeemable non-controlling interest	(626)		(485)		(2,015)
Ending balance	$	12,359	$	28,061	$	63,803

(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, 2024 include a weighted average capitalization rate of 5.6% (ranges from 5.0% to 6.3%) and a weighted average discount rate of 14.8% (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 December 31, 2024 and 2023, respectively (dollar amounts in thousands):


	December 31, 2024
	Multi-family loans		Investment securities available for sale, at fair value		Equity investments		Other assets		Total
Non-Agency RMBS	$	—	$	22,892	$	—	$	—	$	22,892
Preferred equity investments in multi-family properties	86,192		—		73,436		—		159,628
Joint venture equity investments in multi-family properties	—		—		1,338		—		1,338
Other investments	—		—		—		2,000		2,000
Maximum exposure	$	86,192	$	22,892	$	74,774	$	2,000	$	185,858


	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

- 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.

+ References + Details