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Equity Method Investments | 9 Months Ended
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Sep. 30, 2023
Equity Method Investments and Joint Ventures [Abstract] |
Equity Method Investments | Note 6 – Equity Method Investments In November 2018, CPFH LLC, of which the Company holds a 25% share, was formed to purchase certain real estate assets among partners in a joint venture. In March 2020, HGC Origination I LLC and HGC Funding I LLC were formed as joint ventures with a partner for purposes of conducting business relating to the sourcing, origination and funding of loans to debt purchasing clients. In April 2022, KNFH LLC, of which the Company holds a 25% share, was formed to purchase certain real estate assets and machinery and equipment among partners in a joint venture. In December 2022, DHC8 LLC, of which the Company holds a 13.33% share, was formed to provide funding and receive principal and interest payments as a result of the initial investment. In May 2023, HGC MPG Funding LLC, of which the Company holds a 25% share, was formed as a joint venture with a partner for purposes of conducting business relating to the sourcing, origination and funding of loans to debt purchasing clients. CPFH LLC, KNFH LLC and DHC8 LLC are joint ventures formed in connection with the Company’s Industrial Assets Division, whereas HGC Origination I LLC, HGC Funding I LLC, and HGC MPG Funding LLC were formed in connection with the Financial Assets Division. The Company has significant influence over the operations and financial policies of each of its equity method investments. In accordance with ASC 326, the Company performs a review of notes receivable on a quarterly basis for each of its specialty lending investments. During the nine months ended September 30, 2023, the Company’s share of the joint venture’s provision for credit losses was approximately $0.5 million. As of September 30, 2023, the Company's share of the reserve for credit losses was approximately $0.7 million, which was primarily related to HGC Origination I LLC and HGC MPG Funding LLC. The provision for credit losses was primarily driven by weakening economic conditions for the underlying charged-off and nonperforming portfolio collections and increases in loan balances. As of September 30, 2023, the Company has recorded no actual credit losses through its equity method investments. The table below details the Company’s joint venture revenues and earnings during the nine months ended September 30, 2023 and 2022 (in thousands):
|  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |
Revenues: |  |  |  |  |  |
CPFH LLC |  | $ | — |  |  | $ | 31,072 |
KNFH LLC |  |  | 303 |  |  |  | 16,882 |
DHC8 LLC |  |  | 1,183 |  |  |  | — |
HGC Origination I LLC and HGC Funding I LLC |  |  | 3,769 |  |  |  | 1,611 |
HGC MPG Funding LLC |  |  | 552 |  |  |  | — |
Total revenues |  | $ | 5,807 |  |  | $ | 49,565 |
Operating income (loss): |  |  |  |  |  |
CPFH LLC |  | $ | — |  |  | $ | 15,357 |
KNFH LLC |  |  | (144 | ) |  |  | 6,915 |
DHC8 LLC |  |  | 1,009 |  |  |  | — |
HGC Origination I LLC and HGC Funding I LLC |  |  | 2,374 |  |  |  | 1,589 |
HGC MPG Funding LLC |  |  | 548 |  |  |  | — |
Total operating income |  | $ | 3,787 |  |  | $ | 23,861 |
The table below details the summarized components of assets and liabilities of the Company’s joint ventures, as of September 30, 2023 and December 31, 2022 (in thousands):
|  | September 30, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
Assets: |  |  |  |  |  |
KNFH LLC |  | $ | 294 |  |  | $ | — |
DHC8 LLC |  |  | 7,497 |  |  |  | 8,561 |
HGC Origination I LLC and HGC Funding I LLC |  |  | 43,412 |  |  |  | 53,385 |
HGC MPG Funding LLC |  |  | 18,402 |  |  |  | — |
Total assets |  | $ | 69,605 |  |  | $ | 61,946 |
Liabilities: |  |  |  |  |  |
KNFH LLC |  | $ | 285 |  |  | $ | 47 |
DHC8 LLC |  |  | 1,144 |  |  |  | 1,028 |
HGC Origination I LLC and HGC Funding I LLC |  |  | — |  |  |  | 1,504 |
HGC MPG Funding LLC |  |  | — |  |  |  | — |
Total liabilities |  | $ | 1,429 |  |  | $ | 2,579 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 3: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Topic 323 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481543/323-740-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 323 -Publisher FASB -URI https://asc.fasb.org//323/tableOfContent + Details
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