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REAL ESTATE OWNED | 3 Months Ended
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Mar. 31, 2025
Real Estate Owned [Abstract] |
REAL ESTATE OWNED | REAL ESTATE OWNED On September 19, 2024, the Company acquired legal title to a multi-building office property located in North Carolina through a deed in lieu of foreclosure. Prior to September 19, 2024, the office property collateralized a $68.6 million senior mortgage loan held by the Company that was in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the May 2024 maturity date. In conjunction with the deed in lieu of foreclosure, the Company derecognized the $68.6 million senior mortgage loan and recognized the office property as real estate owned. As the Company does not expect to complete a sale of the office property within the next twelve months, the office property is considered held for investment, and is carried at its estimated fair value at acquisition and is presented net of accumulated depreciation or amortization and impairment charges. At acquisition, the Company recognized a realized loss of $5.8 million on the derecognition of the senior mortgage loan as the fair value of the office property at acquisition of $60.2 million and the net operating assets and liabilities held at the office property of $(201) thousand at acquisition was less than the $65.8 million cost basis of the senior mortgage loan. Certain operating assets and liabilities of the office property are included within other assets and other liabilities, respectively, in the Company’s consolidated balance sheets and include items such as prepaid expenses, rent receivables, straight-line rent receivables and payables and trade payables. On September 8, 2023, the Company acquired legal title to a mixed-use property located in Florida through a consensual foreclosure. Prior to September 8, 2023, the mixed-use property collateralized an $82.9 million senior mortgage loan held by the Company that was in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the February 2023 maturity date. In conjunction with the consensual foreclosure, the Company derecognized the $82.9 million senior mortgage loan and recognized the mixed-use property as real estate owned. As the Company does not expect to complete a sale of the mixed-use property within the next twelve months, the mixed-use property is considered held for investment, and is carried at its estimated fair value at acquisition and is presented net of accumulated depreciation or amortization and impairment charges. The Company did not recognize any gain or loss on the derecognition of the senior mortgage loan as the fair value of the mixed-use property of $84.3 million and the net operating assets and liabilities held at the mixed-use property of $(1.4) million at acquisition approximated the $82.9 million carrying value of the senior mortgage loan. Certain operating assets and liabilities of the mixed-use property are included within other assets and other liabilities, respectively, in the Company’s consolidated balance sheets and include items such as prepaid expenses, rent receivables, straight-line rent receivables and payables and trade payables. The following table summarizes the Company’s real estate owned held for investment as of March 31, 2025 and December 31, 2024 ($ in thousands):
|  | As of
|  | March 31, 2025 |  | December 31, 2024
Land |  | $ | 35,019 |  |  | $ | 35,019 |
Buildings and improvements |  | 81,433 |  |  | 81,434 |
In-place lease intangibles |  | 34,841 |  |  | 34,826 |
Above-market lease intangibles |  | 4,634 |  |  | 4,634 |
Below-market lease intangibles |  | (11,105) |  |  | (11,105) |
Total real estate owned held for investment |  | 144,822 |  |  | 144,808 |
Less: Accumulated depreciation and amortization |  | (7,958) |  |  | (5,776) |
Real estate owned held for investment, net |  | $ | 136,864 |  |  | $ | 139,032 |
As of March 31, 2025 and December 31, 2024, no impairment charges have been recognized for real estate owned held for investment. For the three months ended March 31, 2025 and 2024, the Company incurred net depreciation and amortization expense of $2.2 million and $786 thousand, respectively. With the exception of amortization related to intangible assets and liabilities for above-market or below-market leases, depreciation and amortization expense is included within expenses from real estate owned in the Company’s consolidated statements of operations. Amortization related to intangible assets and liabilities for above-market or below-market leases is recognized as an adjustment to rental revenue and is included within revenue from real estate owned in the Company’s consolidated statements of operations. Intangible Lease Assets and Liabilities For the three months ended March 31, 2025, there were no property acquisitions. The weighted average amortization period for the intangible lease assets and liabilities acquired in connection with the Company’s real estate owned held for investment during the year ended December 31, 2024 was 5.0 years as of the acquisition date. The following table summarizes the Company’s intangible lease assets and liabilities that are included within real estate owned held for investment as of March 31, 2025 and December 31, 2024 ($ in thousands):
|  | As of March 31, 2025 |  | As of December 31, 2024
|  | Gross |  | Accumulated Amortization |  | Net |  | Gross |  | Accumulated Amortization |  | Net
Assets: |  |  |  |  |  |  |  |  |  |  |  |
In-place lease intangibles |  | $ | 34,841 |  |  | $ | (5,748) |  |  | $ | 29,093 |  |  | $ | 34,826 |  |  | $ | (4,222) |  |  | $ | 30,604 |
Above-market lease intangibles |  | 4,634 |  |  | (693) |  |  | 3,941 |  |  | 4,634 |  |  | (421) |  |  | 4,213 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Below-market lease intangibles |  | (11,105) |  |  | 1,615 |  |  | (9,490) |  |  | (11,105) |  |  | 1,356 |  |  | (9,749) |
The following table summarizes the amortization of intangible lease assets and liabilities related to real estate owned held for investment for the three months ended March 31, 2025 and 2024 ($ in thousands):
|  | Consolidated Statement of Operations Location |  | For the Three Months Ended March 31, |  |  |
|  |  | 2025 |  | 2024 |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |
In-place lease intangibles |  | Expenses from real estate owned |  | $ | 1,527 |  |  | $ | 588 |  |  |  |  |  |
Above-market lease intangibles |  | Revenue from real estate owned |  | (271) |  |  | (28) |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Below-market lease intangibles |  | Revenue from real estate owned |  | 262 |  |  | 257 |  |  |  |  |  |
The following table summarizes the estimated net amortization schedule for the Company’s intangible lease assets and liabilities that are included within real estate owned held for investment as of March 31, 2025 ($ in thousands):
|  | In-Place |  | Above-Market |  | Below-Market
|  | Lease Intangibles |  | Lease Intangibles |  | Lease Intangibles
Remainder of 2025 |  | $ | 4,142 |  |  | $ | 794 |  |  | $ | (782) |
2026 |  | 4,741 |  | 975 |  | (618) |
2027 |  | 3,781 |  | 705 |  | (571) |
2028 |  | 3,053 |  | 490 |  | (542) |
2029 |  | 2,647 |  | 384 |  | (539) |
Thereafter |  | 10,729 |  | 593 |  | (6,438) |
Total |  | $ | 29,093 |  |  | $ | 3,941 |  |  | $ | (9,490) |
Future Minimum Lease Payments The following table summarizes the future minimum contractual lease payments to be collected by the Company under non-cancelable operating leases related to real estate owned held for investment, excluding tenant reimbursements of expenses and variable lease payments, as of March 31, 2025 ($ in thousands):
Remainder of 2025 |  | $ | 14,569 |
2026 |  | 19,329
2027 |  | 17,672
2028 |  | 16,177
2029 |  | 15,188
Thereafter |  | 31,944
Total |  | $ | 114,879 |

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- Definition Real Estate Owned [Abstract] + References No definition available. + Details
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- Definition The entire disclosure for real estate owned (as defined). Generally, the largest component of real estate owned by lenders is assets taken in settlement of troubled loans through surrender or foreclosure. Real estate investments, real estate loans that qualify as investments in real estate, and premises that are no longer used in operations may also be included in real estate owned. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Section 45 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org/1943274/2147481990/310-10-45-3 + Details
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