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Loans Held for Investment | 12 Months Ended
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Dec. 31, 2024
Receivables [Abstract] |
Loans Held for Investment | Loans Held for Investment, net We originate first mortgage loans secured by middle market and transitional CRE, which are generally to be held as long term investments. The table below provides overall statistics for our loan portfolio as of December 31, 2024 and 2023:
|  | As of December 31,
|  | 2024 |  | 2023
Number of loans |  | 21 |  | 24
Total loan commitments |  | $ | 641,213 |  | $ | 670,293
Unfunded loan commitments (1) |  | $ | 30,402 |  | $ | 40,401
Principal balance |  | $ | 610,811 |  | $ | 629,892
Carrying value |  | $ | 601,842 |  | $ | 622,086
Weighted average coupon rate |  | 8.24 | % |  | 9.19 | %
Weighted average all in yield (2) |  | 8.62 | % |  | 9.64 | %
Weighted average floor |  | 2.12 | % |  | 1.36 | %
Weighted average maximum maturity (years) (3) |  | 2.6 |  | 3.0
Weighted average risk rating |  | 3.1 |  | 3.0
(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 table below represents our loan activities during 2023 and 2024:
|  | Principal Balance |  | Deferred Fees and Other Items |  | Amortized Cost
Balance at December 31, 2022 |  | $ | 678,555 |  |  | $ | (8,626) |  |  | $ | 669,929 |
Additional funding |  | 5,650 |  |  | (14) |  |  | 5,636 |
Originations |  | 133,300 |  |  | (1,621) |  |  | 131,679 |
Repayments |  | (171,748) |  |  | (535) |  |  | (172,283) |
Transfer to real estate owned |  | (15,865) |  |  | (95) |  |  | (15,960) |
Net amortization of deferred fees |  | — |  |  | 3,333 |  |  | 3,333 |
Purchase discount accretion |  | — |  |  | 4,128 |  |  | 4,128 |
Balance at December 31, 2023 |  | 629,892 |  |  | (3,430) |  |  | 626,462 |
Additional funding |  | 12,492 |  |  | (158) |  |  | 12,334 |
Originations |  | 133,817 |  |  | (1,757) |  |  | 132,060 |
Repayments |  | (165,390) |  |  | (594) |  |  | (165,984) |
Net amortization of deferred fees |  | — |  |  | 2,697 |  |  | 2,697 |
Purchase discount accretion |  | — |  |  | 2,347 |  |  | 2,347 |
Balance at December 31, 2024 |  | $ | 610,811 |  |  | $ | (895) |  |  | $ | 609,916 |
The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of December 31, 2024 and 2023:
|  | As of December 31,
|  | 2024 |  | 2023
Property Type |  | Number of Loans |  | Amortized Cost |  | Percentage of Value |  | Number of Loans |  | Amortized Cost |  | Percentage of Value
Office |  | 6 |  | $ | 167,749 |  |  | 28 | % |  | 7 |  | $ | 181,268 |  |  | 29 | %
Multifamily |  | 5 |  | 163,987 |  |  | 27 | % |  | 7 |  | 207,734 |  |  | 33 | %
Industrial |  | 5 |  | 136,646 |  |  | 22 | % |  | 5 |  | 118,707 |  |  | 19 | %
Hotel |  | 3 |  | 84,028 |  |  | 14 | % |  | 2 |  | 45,791 |  |  | 7 | %
Retail |  | 2 |  | 57,506 |  |  | 9 | % |  | 3 |  | 72,962 |  |  | 12 | %
|  | 21 |  | $ | 609,916 |  |  | 100 | % |  | 24 |  | $ | 626,462 |  |  | 100 | %
|  | As of December 31,
|  | 2024 |  | 2023
Geographic Location |  | Number of Loans |  | Amortized Cost |  | Percentage of Value |  | Number of Loans |  | Amortized Cost |  | Percentage of Value
South |  | 7 |  | $ | 192,108 |  |  | 32 | % |  | 8 |  | $ | 222,477 |  |  | 36 | %
West |  | 6 |  | 142,560 |  |  | 23 | % |  | 9 |  | 185,294 |  |  | 30 | %
East |  | 4 |  | 139,899 |  |  | 23 | % |  | 3 |  | 89,815 |  |  | 14 | %
Midwest |  | 4 |  | 135,349 |  |  | 22 | % |  | 4 |  | 128,876 |  |  | 20 | %
|  | 21 |  | $ | 609,916 |  |  | 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. As of December 31, 2024 and 2023, the amortized cost of our loan portfolio within each internal risk rating by year of origination was as follows:
December 31, 2024
Risk Rating |  | Number of Loans |  | Percentage of Portfolio |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | Prior |  | Total
1 |  | — |  | — | % |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
2 |  | 4 |  | 18 | % |  | 41,570 |  |  | 53,070 |  |  | — |  |  | 15,252 |  |  | — |  |  | 109,892 |
3 |  | 12 |  | 58 | % |  | 91,515 |  |  | 25,086 |  |  | 163,228 |  |  | 76,034 |  |  | — |  |  | 355,863 |
4 |  | 5 |  | 24 | % |  | — |  |  | — |  |  | — |  |  | 114,556 |  |  | 29,605 |  |  | 144,161 |
5 |  | — |  | — | % |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | 21 |  | 100 | % |  | $ | 133,085 |  |  | $ | 78,156 |  |  | $ | 163,228 |  |  | $ | 205,842 |  |  | $ | 29,605 |  |  | $ | 609,916 |
December 31, 2023
Risk Rating |  | Number of Loans |  | Percentage of Portfolio |  | 2023 |  | 2022 |  | 2021 |  | Prior |  | Total
1 |  | — |  | — | % |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
2 |  | 3 |  | 15 | % |  | 37,323 |  |  | 42,089 |  |  | 15,435 |  |  | — |  |  | 94,847 |
3 |  | 18 |  | 71 | % |  | 94,881 |  |  | 167,491 |  |  | 144,456 |  |  | 38,548 |  |  | 445,376 |
4 |  | 3 |  | 14 | % |  | — |  |  | — |  |  | 86,239 |  |  | — |  |  | 86,239 |
5 |  | — |  | — | % |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | 24 |  | 100 | % |  | $ | 132,204 |  |  | $ | 209,580 |  |  | $ | 246,130 |  |  | $ | 38,548 |  |  | $ | 626,462 |
The tables below present the changes to the allowance for credit losses during the years ended December 31, 2024 and 2023:
|  | Loans Held for Investment, net |  | Unfunded Loan Commitments |  | Total
Balance at December 31, 2023 |  | $ | 4,376 |  |  | $ | 1,452 |  |  | $ | 5,828 |
Provision for credit losses |  | 3,698 |  |  | (618) |  |  | 3,080 |
Balance at December 31, 2024 |  | $ | 8,074 |  |  | $ | 834 |  |  | $ | 8,908 |
|  | Loans Held for Investment, net |  | Unfunded Loan Commitments |  | Total
Balance at December 31, 2022 |  | $ | — |  |  | $ | — |  |  | $ | — |
Cumulative-effect adjustment upon adoption of the CECL model |  | 4,893 |  |  | 1,702 |  |  | 6,595 |
Reversal of credit losses |  | (549) |  |  | (250) |  |  | (799) |
Write offs (1) |  | (708) |  |  | — |  |  | (708) |
Recoveries |  | 740 |  |  | — |  |  | 740 |
Balance at December 31, 2023 |  | $ | 4,376 |  |  | $ | 1,452 |  |  | $ | 5,828 |
(1)Write offs for the year ended December 31, 2023 relate to our loan secured by an office property located in Yardley, PA that was originated in 2019. We assumed legal title to the property through a deed in lieu of foreclosure in June 2023. The increase in the allowance for credit losses during the year ended December 31, 2024 is primarily attributable to declining values for CRE and unfavorable CRE pricing forecasts used in our CECL model and increased provisions for our office loans. 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. In August 2024, we amended the agreement governing our loan secured by an office property in Dallas, TX. As part of this amendment, the loan commitment was reduced by $3,189, the borrower was required to contribute $2,900 to cash reserves and the maturity date was extended by two years to August 25, 2026. As of December 31, 2024, this loan had an amortized cost of $43,511 and a risk rating of 4. In August 2024, we amended the agreement governing our loan secured by an office property in Plano, TX. As part of this amendment, the coupon rate was reduced from SOFR + 4.75% to SOFR + 3.75% and the maturity date was extended by two years to July 1, 2026. As of December 31, 2024, this loan had an amortized cost of $26,635 and a risk rating of 4. In November 2024, we amended the agreement governing our loan secured by an office property in Carlsbad, CA. As part of this amendment, the borrower was required to contribute $1,100 to cash reserves and the maturity date was extended by two years to October 27, 2026. As of December 31, 2024, this loan had an amortized cost of $24,412 and a risk rating of 4. In November 2024, we amended the agreement governing our loan secured by an office property in Bellevue, WA. As part of this amendment, the maturity date was extended by 90 days to February 5, 2025. Subsequently, in January 2025, the maturity date was extended by 60 days to April 7, 2025. As of December 31, 2024, this loan had an amortized cost of $19,997 and a risk rating of 4. There were no other modifications to our loan portfolio for borrowers experiencing financial difficulties during the year ended December 31, 2024. We did not have any outstanding past due loans or nonaccrual loans as of December 31, 2024 or 2023. As of December 31, 2024 and February 13, 2025, our borrowers with outstanding loans had paid their debt service obligations owed and due to us.

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