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LOANS HELD FOR INVESTMENT (Tables) | 3 Months Ended
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Mar. 31, 2025
Receivables [Abstract] |
Schedule of Loans Held for Investments | The Company’s investments in loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of March 31, 2025 and December 31, 2024 ($ in thousands):
|  | As of March 31, 2025
|  | Carrying Amount (1) |  | Outstanding Principal (1) |  | Weighted Average Unleveraged Effective Yield |  | Weighted Average Remaining Life (Years) (4)
Senior mortgage loans |  | $ | 1,336,798 |  |  | $ | 1,381,528 |  |  | 6.2 | % | (2) | 8.3 | % | (3) |  | 1.0
Subordinated debt and preferred equity investments |  | 18,466 |  |  | 22,881 |  |  | — | % | (2) | — | % | (3) |  | 2.0
Total loans held for investment portfolio |  | $ | 1,355,264 |  |  | $ | 1,404,409 |  |  | 6.1 | % | (2) | 8.3 | % | (3) |  | 1.0
|  | As of December 31, 2024
|  | Carrying Amount (1) |  | Outstanding Principal (1) |  | Weighted Average Unleveraged Effective Yield |  | Weighted Average Remaining Life (Years) (4)
Senior mortgage loans |  | $ | 1,617,835 |  |  | $ | 1,655,141 |  |  | 6.8 | % | (2) | 8.6 | % | (3) |  | 0.9
Subordinated debt and preferred equity investments |  | 38,853 |  |  | 43,365 |  |  | 7.5 | % | (2) | 15.7 | % | (3) |  | 1.5
Total loans held for investment portfolio |  | $ | 1,656,688 |  |  | $ | 1,698,506 |  |  | 6.9 | % | (2) | 8.7 | % | (3) |  | 1.0
______________________________ (1)The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discounts, deferred loan fees and origination costs and cost-recovery proceeds. (2)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of March 31, 2025 and December 31, 2024 as weighted by the total outstanding principal balance of each loan. (3)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all interest accruing loans held by the Company as of March 31, 2025 and December 31, 2024 as weighted by the total outstanding principal balance of each interest accruing loan (excludes loans on non-accrual status as of March 31, 2025 and December 31, 2024). (4)Remaining Life is based on contractual maturity date and does not include contractual extension options not yet exercised.
Schedule of Current Investment Portfolio | A more detailed listing of the Company’s loans held for investment portfolio based on information available as of March 31, 2025 is as follows ($ in millions):
Loan Type |  | Location |  | Outstanding Principal (1) |  | Carrying Amount (1) |  | Interest Rate |  | Unleveraged Effective Yield (2) |  | Maturity Date (3) |  | Payment Terms (4) |
Senior Mortgage Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Office |  | IL |  | $165.1 |  | $148.2 |  | (5) |  | —% | (5) | Jul 2025 | (5) | I/O |
Multifamily |  | NY |  | 132.2 |  | 132.1 |  | S+3.90% |  | 8.7% |  | Jun 2025 |  | I/O |
Residential/Condo |  | NY |  | 129.1 |  | 105.7 |  | S+8.95% |  | —% | (6) | Dec 2025 |  | I/O |
Mixed-use |  | NY |  | 77.5 |  | 77.4 |  | S+3.75% |  | 8.3% |  | Jul 2025 |  | I/O |
Office |  | Diversified |  | 77.3 |  | 76.8 |  | S+3.75% |  | 8.6% |  | Jul 2026 |  | P/I | (7)
Office |  | AZ |  | 77.0 |  | 76.9 |  | S+3.61% |  | 8.3% |  | Oct 2025 |  | I/O |
Office |  | NC |  | 70.6 |  | 70.5 |  | S+3.65% |  | 8.0% |  | Aug 2028 |  | I/O |
Multifamily |  | TX |  | 68.5 |  | 68.4 |  | S+2.95% |  | 7.6% |  | Dec 2025 |  | I/O |
Hotel |  | CA |  | 60.8 |  | 60.6 |  | S+4.20% |  | 8.8% |  | Mar 2026 | (8) | I/O |
Office |  | NY |  | 59.0 |  | 59.0 |  | S+2.65% |  | 7.0% |  | Jul 2027 | (9) | I/O |
Multifamily |  | OH |  | 57.3 |  | 57.0 |  | S+3.05% |  | 7.7% |  | Oct 2026 |  | I/O |
Hotel |  | NY |  | 55.7 |  | 55.5 |  | S+4.40% |  | 9.0% |  | Mar 2026 |  | I/O |
Office |  | IL |  | 54.2 |  | 54.2 |  | S+4.25% |  | 8.7% |  | Jan 2027 | (10) | I/O |
Office (Life Sciences) |  | MA |  | 51.5 |  | 49.1 |  | S+3.75% |  | —% | (11) | Apr 2026 |  | I/O |
Industrial |  | MA |  | 47.4 |  | 47.3 |  | S+2.90% |  | 7.3% |  | Jun 2028 |  | I/O |
Multifamily |  | CA |  | 31.7 |  | 31.7 |  | S+3.00% |  | 7.6% |  | Dec 2025 |  | I/O |
Multifamily |  | PA |  | 28.2 |  | 28.2 |  | S+2.50% |  | 6.8% |  | Dec 2025 |  | I/O |
Industrial |  | NJ |  | 27.8 |  | 27.8 |  | S+8.85% |  | 13.2% |  | Nov 2024 | (12) | I/O |
Multifamily |  | WA |  | 23.1 |  | 23.1 |  | S+3.00% |  | 7.5% |  | Nov 2025 |  | I/O |
Multifamily |  | TX |  | 23.1 |  | 23.0 |  | S+2.60% |  | 7.4% |  | Oct 2025 |  | I/O |
Office |  | CA |  | 20.1 |  | 20.1 |  | S+3.50% |  | 8.1% |  | Nov 2025 |  | P/I | (7)
Self Storage |  | PA |  | 18.2 |  | 18.1 |  | S+3.00% |  | 7.6% |  | Dec 2025 |  | I/O |
Self Storage |  | IN |  | 11.4 |  | 11.4 |  | S+3.60% |  | 8.0% |  | Jun 2026 |  | I/O |
Self Storage |  | MA |  | 7.7 |  | 7.7 |  | S+3.00% |  | 7.6% |  | Nov 2025 |  | I/O |
Industrial |  | CA |  | 7.0 |  | 7.0 |  | S+3.85% |  | 8.2% |  | Jan 2027 | (13) | I/O |
Subordinated Debt and Preferred Equity Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Industrial |  | CA |  | 12.6 |  | 10.9 |  | S+3.85% |  | —% | (13) | Jan 2027 | (13) | I/O |
Office |  | NY |  | 10.3 |  | 7.6 |  | 5.50% |  | —% | (9) | Jul 2027 | (9) | I/O |
Total/Weighted Average |  |  |  | $1,404.4 |  | $1,355.3 |  |  |  | 6.1% |  |  |  |  |
_________________________ (1)The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discounts, deferred loan fees and origination costs and cost-recovery proceeds. For the loans held for investment that represent co-investments with other investment vehicles managed by Ares Management (see Note 12 included in these consolidated financial statements for additional information on co-investments), only the portion of Carrying Amount and Outstanding Principal held by the Company is reflected. (2)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on SOFR as of March 31, 2025 or the SOFR floor, as applicable. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of March 31, 2025 as weighted by the outstanding principal balance of each loan. (3)Reflects the initial loan maturity date excluding any contractual extension options. Certain loans are subject to contractual extension options that generally vary between one and two 12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications. (4)I/O = interest only, P/I = principal and interest. (5)The Illinois loan is structured as both a senior and mezzanine loan with the Company holding both positions. The senior position has a per annum interest rate of S + 2.25% and the mezzanine position has a fixed per annum interest rate of 10.00%. The senior and mezzanine loans were both on non-accrual status as of March 31, 2025 and the Unleveraged Effective Yield is not applicable. In March 2025, the Company and the borrower entered into a modification and extension agreement to, among other things, extend the maturity date on the Illinois loan from March 2025 to July 2025. For the three months ended March 31, 2025, the Company received $1.9 million of interest payments in cash on the senior loan that was recognized as a reduction to the carrying value of the loan and the borrower is current on all contractual interest payments. (6)The New York loan is structured as both a senior and mezzanine loan with the Company holding both positions. The senior and mezzanine positions each have a per annum interest rate of S + 8.95%. The senior and mezzanine loans were both on non-accrual status as of March 31, 2025 and the Unleveraged Effective Yield is not applicable. (7)In February 2023, amortization began on the senior diversified loan, which had an outstanding principal balance of $77.3 million as of March 31, 2025. In December 2023, amortization began on the senior California loan, which had an outstanding principal balance of $20.1 million as of March 31, 2025. The remainder of the loans in the Company’s portfolio are non-amortizing through their primary terms. (8)In March 2025, the Company and the borrower entered into a modification and extension agreement to, among other things, extend the maturity date on the senior California loan from March 2025 to March 2026. (9)The New York loan is structured as both a senior A-Note and a subordinated B-Note with the Company holding both positions. The subordinated B-Note is subordinate to new sponsor equity related to additional capital contributions. The senior A-Note, which had an outstanding principal balance of $59.0 million as of March 31, 2025, has a per annum interest rate of S + 2.65% and the subordinated B-Note, which had an outstanding principal balance of $10.3 million as of March 31, 2025, has a fixed per annum interest rate of 5.50%. As of March 31, 2025, the subordinated B-Note was on non-accrual status and therefore, the Unleveraged Effective Yield is not applicable. As of March 31, 2025, the borrower is current on all contractual interest payments for the senior A-Note and the subordinated B-Note. (10)In January 2025, the Company and the borrower entered into a modification and extension agreement to, among other things, extend the maturity date on the senior Illinois loan from January 2025 to January 2027. (11)The senior Massachusetts loan was on non-accrual status as of March 31, 2025 and the Unleveraged Effective Yield is not applicable. For the three months ended March 31, 2025, the Company received $1.0 million of interest payments in cash on the senior Massachusetts loan that was recognized as a reduction to the carrying value of the loan and the borrower is current on all contractual interest payments. (12)As of March 31, 2025, the senior New Jersey loan, which is collateralized by an industrial property, is in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the November 2024 maturity date and the borrower is current on all contractual interest payments. (13)The California loan is structured as a senior A-Note, with an outstanding principal balance of $7.0 million as of March 31, 2025, a subordinated B-Note with no outstanding principal balance and an unfunded commitment of $500 thousand for certain lender approved leasing costs and a subordinated C-Note, with an outstanding principal balance of $12.6 million as of March 31, 2025. The subordinated B-Note and C-Note are subordinate to new sponsor equity related to additional capital contributions. As of March 31, 2025, the subordinated C-Note was on non-accrual status and therefore, the Unleveraged Effective Yield is not applicable. As of March 31, 2025, the borrower is current on all contractual interest payments for the senior A-Note and the subordinated C-Note.
Schedule of Activity in Loan Portfolio | For the three months ended March 31, 2025, the activity in the Company’s loan portfolio was as follows ($ in thousands):
Balance at December 31, 2024 |  | $ | 1,656,688 |
Initial funding |  | — |
Origination and other loan fees and discounts, net of costs |  | (233) |
Additional funding |  | 7,234 |
Amortizing payments |  | (3,310) |
Loan payoffs |  | (306,396) |
Origination and other loan fees and discount accretion |  | 1,281 |
Balance at March 31, 2025 |  | $ | 1,355,264 |

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