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Loans Held for Investment, net
 3 Months Ended
Mar. 31, 2024
Receivables [Abstract]  
Loans Held for Investment, net Loans Held for Investment, net
We originate first mortgage loans secured by middle market and transitional commercial real estate, or CRE, which are generally to be held as long term investments. We fund our loan portfolio using cash on hand and advancements under our Secured Financing Facilities, as defined in Note 5. See Note 5 for further information regarding our secured financing agreements.
The table below provides overall statistics for our loan portfolio as of March 31, 2024 and December 31, 2023:    
As of March 31, 2024As of December 31, 2023
Number of loans2124
Total loan commitments$628,891$670,293
Unfunded loan commitments (1)
$38,259$40,401
Principal balance $590,632$629,892
Carrying value$583,486$622,086
Weighted average coupon rate9.14 %9.19 %
Weighted average all in yield (2)
9.58 %9.64 %
Weighted average floor1.41 %1.36 %
Weighted average maximum maturity (years) (3)
2.83.0
Weighted average risk rating3.03.0
(1)Unfunded loan commitments are primarily used to finance property improvements and leasing capital and are generally funded over the term of the loan.
(2)All in yield represents the yield on a loan, including amortization of deferred fees over the initial term of the loan and excluding any purchase discount accretion.
(3)    Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.
The tables below represent our loan activities during the three months ended March 31, 2024 and 2023:
Principal BalanceDeferred Fees and Other ItemsAmortized Cost
Balance at December 31, 2023$629,892 $(3,430)$626,462 
Additional funding1,044 (158)886 
Repayments(40,304)(136)(40,440)
Net amortization of deferred fees— 582 582 
Purchase discount accretion— 1,145 1,145 
Balance at March 31, 2024$590,632 $(1,997)$588,635 
Principal BalanceDeferred Fees and Other ItemsAmortized Cost
Balance at December 31, 2022$678,555 $(8,626)$669,929 
Additional funding1,884 (14)1,870 
Repayments(51,743)(175)(51,918)
Net amortization of deferred fees— 1,004 1,004 
Purchase discount accretion— 1,185 1,185 
Balance at March 31, 2023$628,696 $(6,626)$622,070 
The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of March 31, 2024 and December 31, 2023:
March 31, 2024December 31, 2023
Property Type
Number of Loans
Amortized Cost
Percentage of Value
Number of Loans
Amortized Cost
Percentage of Value
Multifamily7$208,610 35 %7$207,734 33 %
Office6166,618 28 %7181,268 29 %
Industrial4110,181 19 %5118,707 19 %
Retail257,387 10 %372,962 12 %
Hotel245,839 8 %245,791 7 %
21$588,635 100 %24$626,462 100 %

March 31, 2024December 31, 2023
Geographic Location
Number of Loans
Amortized Cost
Percentage of ValueNumber of LoansAmortized CostPercentage of Value
South7$208,046 35 %8$222,477 36 %
West8170,369 29 %9185,294 30 %
Midwest4128,970 22 %4128,876 20 %
East281,250 14 %389,815 14 %
21$588,635 100 %24$626,462 100 %
Credit Quality Information and Allowance for Credit Losses
We evaluate the credit quality of each of our loans at least quarterly by assessing a variety of risk factors in relation to each loan and assigning a risk rating to each loan based on those factors. The higher the number, the greater the risk level. See our 2023 Annual Report for more information regarding our loan risk ratings.
As of March 31, 2024 and December 31, 2023, the amortized cost of our loan portfolio within each internal risk rating by year of origination was as follows:
March 31, 2024
Risk RatingNumber of LoansPercentage of Portfolio2024202320222021PriorTotal
1—— %$— $— $— $— $— $— 
2314 %— 83,229 — — — 83,229 
31571 %— 49,141 195,121 144,692 29,571 418,525 
4315 %— — — 86,881 — 86,881 
5—— %— — — — — — 
21100 %$— $132,370 $195,121 $231,573 $29,571 $588,635 
December 31, 2023
Risk RatingNumber of LoansPercentage of Portfolio2023202220212020PriorTotal
1—— %$— $— $— $— $— $— 
2315 %37,323 42,089 15,435 — — 94,847 
31871 %94,881 167,491 144,456 38,548 — 445,376 
4314 %— — 86,239 — — 86,239 
5—— %— — — — — — 
24100 %$132,204 $209,580 $246,130 $38,548 $— $626,462 
Allowance for credit losses
We measure our allowance for credit losses using the current expected credit loss, or CECL, model, which is based upon historical experience, current conditions, and reasonable and supportable forecasts incorporating forward-looking information that affect the collectability of the reported amount.
The allowance for credit losses is a valuation account that is deducted from the related loans’ amortized cost basis in our condensed consolidated balance sheets. Our loans typically include commitments to fund incremental proceeds to borrowers over the life of the loan; these future funding commitments are also subject to the CECL model. The allowance for credit losses related to unfunded loan commitments is included in accounts payable, accrued liabilities and other liabilities in our condensed consolidated balance sheets.
Given the lack of historical loss data related to our loan portfolio, we estimate our expected losses using an analytical model that considers the likelihood of default and loss given default for each individual loan. This analytical model incorporates data from a third party database with historical loan loss information for commercial mortgage-backed securities, or CMBS, and CRE loans since 1998. Significant inputs to the model include certain loan specific data, such as loan to value, or LTV, property type, geographic location, occupancy, vintage year, remaining loan term, net operating income, expected timing and amounts of future loan fundings, and macroeconomic forecast assumptions, including the performance of CRE assets, unemployment rates, interest rates and other factors. We utilize the model to estimate credit losses over a reasonable and supportable economic forecast period of 12 months, followed by a straight-line reversion period of six months to average historical losses. Average historical losses are established using a population of third party historical loss data that approximates our portfolio as of the measurement date. We evaluate the estimated allowance for each of our loans individually and we consider our internal loan risk rating as the primary credit quality indicator underlying our assessment.
We have elected to exclude accrued interest receivable from amortized cost and not to measure an allowance for credit losses on accrued interest receivable. Accrued interest receivables are generally written off when payments are 120 days past due. Such amounts are reversed against interest income and no further interest will be recorded until it is collected.
If a loan is determined to be collateral dependent (because the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral property) and the borrower is experiencing financial difficulties, but foreclosure is not probable, we may elect to apply a practical expedient to determine the loan's allowance for credit losses by comparing the collateral's fair value, less costs to sell, if applicable, to the amortized cost basis of the loan. For collateral-dependent loans for which foreclosure is probable, the related allowance for credit losses is determined using the fair value, less costs to sell, if applicable, of the collateral compared to the loan's amortized cost.
See Note 2 to our Consolidated Financial Statements included in Part IV, Item 15 of our 2023 Annual Report for further information regarding our measurement of our allowance for credit losses.
The tables below represent the changes to the allowance for credit losses during the three months ended March 31, 2024 and 2023:
Loans Held for Investment, netUnfunded Loan CommitmentsTotal
Balance at December 31, 2023$4,376 $1,452 $5,828 
Provision for (reversal of) credit losses
773 (76)697 
Balance at March 31, 2024$5,149 $1,376 $6,525 
Loans Held for Investment, netUnfunded Loan CommitmentsTotal
Balance at December 31, 2022$— $— $— 
Cumulative-effect adjustment upon adoption of the CECL model
4,893 1,702 6,595 
Reversal of credit losses(758)(229)(987)
Balance At March 31, 2023$4,135 $1,473 $5,608 
The increase in the allowance for credit losses during the three months ended March 31, 2024 is primarily attributable to a negative outlook in CRE pricing forecasts. The decrease in the allowance for credit losses during the three months ended March 31, 2023, compared to the January 1, 2023 cumulative-effect adjustment upon adoption of the CECL model, was primarily attributable to a favorable macroeconomic outlook as of March 31, 2023, most notably in near-term CRE pricing, and loan repayments.
We may enter into loan modifications that include, among other changes, extensions of maturity dates, repurposing or required replenishment of reserves, increases or decreases in loan commitments and required pay downs of principal amounts outstanding. Loan modifications are evaluated to determine whether a modification results in a new loan or a continuation of an existing loan under ASC 310. There were no modifications to our loan portfolio for borrowers experiencing financial difficulties during the three months ended March 31, 2024.
We did not have any outstanding past due loans or nonaccrual loans as of March 31, 2024 or December 31, 2023. As of March 31, 2024 and April 25, 2024, all of our borrowers had paid their debt service obligations owed and due to us. See our 2023 Annual Report for more information regarding our nonaccrual policy