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Business Combination | 9 Months Ended
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Sep. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
Business Combination | 24. Business Combination On July 15, 2025, (the "Acquisition Date"), the Company, through a wholly owned subsidiary, acquired the outstanding ownership interests in Constructive that were not previously owned by the Company through the consummation of a membership interest purchase agreement, thereby increasing the Company's ownership of Constructive to 100%. Constructive is a business purpose loan lender specializing in rental and transitional loans for real estate investors. In increasing the Company's ownership of Constructive to 100%, the Company bolstered its access to Constructive's proprietary origination channels and third-party distribution network. The results of Constructive's operations have been included in the condensed consolidated financial statements since the Acquisition Date. The estimated Acquisition Date fair value of the consideration transferred totaled approximately $67.8 million, which consisted of the following (dollar amounts in thousands):
Cash (1) | $ | 31,525 |
Holdback for representations and warranties (2) | 2,500 |
Fair value of previously held membership interests | 33,759 |
Total consideration transferred | $ | 67,784 |
(1)Includes initial cash consideration of approximately $31.5 million and a post-closing working capital adjustment of approximately $15.1 thousand which was delivered to the sellers of Constructive on September 24, 2025. (2)The holdback for representations and warranties in the amount of $2.5 million is to be released to the sellers, net of losses incurred or sustained by the Company related to representation or warranties made by the sellers for conditions that existed as of the Acquisition Date, if any, on January 15, 2027. Prior to the Acquisition Date, the Company owned 50% of the outstanding ownership interests in Constructive which it accounted for as an equity method investment, utilizing the fair value election (see Note 6). The Acquisition Date fair value of the Company's previously held ownership interest in Constructive was approximately $33.8 million and is included in the measurement of consideration transferred. The Company determined the estimated fair value of its previously held ownership interests in Constructive using weighted multiples of origination volume and earnings before taxes, depreciation and amortization and NAV of the entity. Also prior to the Acquisition Date, the Company purchased business purpose loans from Constructive (see Note 6). The following table summarizes the estimated fair values of the assets acquired and liabilities assumed by the Company at the Acquisition Date (dollar amounts in thousands). The membership interest purchase agreement included a post-closing working capital adjustment that was calculated as approximately $15.1 thousand and was settled with the sellers of Constructive on September 24, 2025. The holdback for representations and warranties described above will be settled with the sellers of Constructive after the Acquisition Date. The Company has also engaged a third party specialist for valuations of certain intangible assets. Thus, the provisional measurements of assets and liabilities are subject to change.
Cash | $ | 10,670 |
Residential loans | 580 |
Residential loans held for sale | 145,748 |
Restricted cash (1) | 4,122 |
Other assets | 8,982 |
Intangible assets (1) | 18,000 |
Total identifiable assets acquired | $ | 188,102 |
Repurchase agreements and warehouse facilities | $ | 135,817 |
Other liabilities | 6,897 |
Total liabilities assumed | $ | 142,714 |
Net identifiable assets acquired | $ | 45,388 |
Goodwill | $ | 22,396 |
Net assets acquired | $ | 67,784 |
(1)Included in other assets on the condensed consolidated balance sheets. The approximately $18.0 million of identified intangible assets were recognized at estimated fair value on the Acquisition Date. Intangible assets haven been provisionally assigned as shown in the following table (dollar amounts in thousands). As noted earlier, the fair values of the acquired identifiable intangible assets are provisional pending final valuations for these assets.
Intangible asset |  | Acquisition Date Fair Value |  | Accumulated Amortization |  | Carrying Value at September 30, 2025 |  | Amortization Period (Years)
Customer relationships |  | $ | 17,000 |  |  | $ | (354) |  |  | $ | 16,646 |  |  | 10
Trade name |  | 1,000 |  |  | (19) |  |  | 981 |  |  | 11
Total identified intangible assets (weighted average amortization period) |  | $ | 18,000 |  |  | $ | (373) |  |  | $ | 17,627 |  |  | 10.06
During the three and nine months ended September 30, 2025, the Company recognized $0.4 million of amortization expense related to these intangible assets, which is included in general and administrative expenses on the Company's condensed consolidated statements of operations. The estimated amortization expense related to the acquired identifiable intangible assets is as follows (dollar amounts in thousands):
|  | Amortization expense for
Year Ending December 31, |  | Customer relationships |  | Trade name
2026 |  | $ | 1,700 |  |  | $ | 91 |
2027 |  | $ | 1,700 |  |  | $ | 91 |
2028 |  | $ | 1,700 |  |  | $ | 91 |
2029 |  | $ | 1,700 |  |  | $ | 91 |
2030 |  | $ | 1,700 |  |  | $ | 91 |
The $22.4 million of goodwill recognized is attributable primarily to the expected benefits arising from synergies with the Company's existing operations, the assembled workforce of Constructive and the anticipated growth opportunities from expanding the Company's business purpose lending platform and is assigned to the Constructive reporting unit (see Note 25) for the Company's ongoing evaluation of goodwill for impairment in accordance with ASC 350, Intangibles - Goodwill and Other. As of September 30, 2025, there was a change in the recognized amount of goodwill as a result of payment of the post-closing working capital adjustment of approximately $15.1 thousand. As noted earlier, the goodwill recorded is provisional pending final valuations of assets and losses incurred or sustained by the Company related to representation or warranties made by the sellers as of the Acquisition Date. The Company estimates that $20.3 million of goodwill is deductible for tax purposes. The amount of revenue of Constructive included in the Company's condensed consolidated statements of operations for the period from the Acquisition Date through September 30, 2025 is $14.4 million. The Company recognized acquisition-related costs of approximately $1.3 million, which are included in portfolio operating expenses on the condensed consolidated statements of operations. The following table presents the pro forma consolidated revenue and net income (loss) attributable to the Company's common stockholders as if Constructive had been included in the consolidated results of the Company for the three and nine months ended September 30, 2025 and 2024, respectively (dollar amounts in thousands):
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
|  | 2025 |  | 2024 |  | 2025 |  | 2024
Revenue |  | $ | 151,715 |  |  | $ | 142,053 |  |  | $ | 403,443 |  |  | $ | 242,153 |
Net income (loss) attributable to Company's common stockholders |  | $ | 33,787 |  |  | $ | 30,808 |  |  | $ | 73,531 |  |  | $ | (53,373) |
Basic proforma earnings per common share |  | $ | 0.37 |  |  | $ | 0.34 |  |  | $ | 0.81 |  |  | $ | (0.59) |
Diluted pro forma earnings per common share |  | $ | 0.37 |  |  | $ | 0.34 |  |  | $ | 0.80 |  |  | $ | (0.59) |
These amounts have been calculated after applying the Company's accounting policies and adjustments for consolidation and amortization that would have been recorded assuming the estimated fair value adjustments to intangible assets had been applied on January 1, 2024. Material, nonrecurring pro forma adjustments directly attributable to the business combination have been included in the pro forma revenue and net income (loss) attributable to the Company's common stockholders shown above as if the transaction occurred on January 1, 2024. These adjustments include acquisition expenses and estimated income tax expense.

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