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Equity Method Investments | 12 Months Ended
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Dec. 31, 2023
Equity Method Investments and Joint Ventures [Abstract] |
Equity Method Investments | Note 5 – 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. In December 2023, KNFH II 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. CPFH LLC, KNFH LLC, DHC8 LLC and KNFH II 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. For the year ended December 31, 2023, the Company’s share of the joint venture’s provision for credit losses was approximately $0.7 million. As of December 31, 2023, the Company's share of the allowance for credit losses was approximately $0.9 million, representing a credit loss rate of 4.3% specific to its equity method investments, 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 December 31, 2023, the Company has recorded no actual credit losses through its equity method investments. Based on the nature of our equity method investments, the joint venture entities' revenues and gross profit are not materially different and furthermore, operating income and net income have no material differences. The table below details the Company’s joint venture revenues and earnings (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |
Revenues and gross profit: |  |  |  |  |  |
CPFH LLC |  | $ | — |  |  | $ | 31,072 |
KNFH LLC |  |  | 303 |  |  |  | 22,183 |
DHC8 LLC |  |  | 1,533 |  |  |  | — |
KNFH II LLC |  |  | — |  |  |  | — |
HGC Funding I LLC and Origination I LLC |  |  | 4,942 |  |  |  | 2,665 |
HGC MPG Funding LLC |  |  | 1,400 |  |  |  | — |
Total revenues and gross profit |  | $ | 8,178 |  |  | $ | 55,920 |
Operating income (loss) and net income (loss): |  |  |  |  |  |
CPFH LLC |  | $ | — |  |  | $ | 15,357 |
KNFH LLC |  |  | (146 | ) |  |  | 9,930 |
DHC8 LLC |  |  | 1,305 |  |  |  | — |
KNFH II LLC |  |  | — |  |  |  | — |
HGC Funding I LLC and Origination I LLC |  |  | 4,378 |  |  |  | 2,645 |
HGC MPG Funding LLC |  |  | 1,395 |  |  |  | — |
Total operating income (loss) and net income (loss) |  | $ | 6,932 |  |  | $ | 27,932 |
The table below details the summarized components of assets and liabilities of the Company’s joint ventures (in thousands):
|  | December 31, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
Assets: |  |  |  |  |  |
CPFH LLC |  |  | — |  |  |  | — |
KNFH LLC |  |  | 292 |  |  |  | — |
DHC8 LLC |  |  | 7,061 |  |  |  | 8,561 |
KNFH II LLC |  |  | 8,150 |  |  |  | — |
HGC Funding I LLC and Origination I LLC |  |  | 28,389 |  |  |  | 53,385 |
HGC MPG Funding LLC |  |  | 38,081 |  |  |  | — |
Total assets |  | $ | 81,973 |  |  | $ | 61,946 |
Liabilities: |  |  |  |  |  |
CPFH LLC |  |  | — |  |  |  | — |
KNFH LLC |  |  | 289 |  |  |  | 47 |
DHC8 LLC |  |  | 1,102 |  |  |  | 1,028 |
KNFH II LLC |  |  | 4,000 |  |  |  | — |
HGC Funding I LLC and Origination I LLC |  |  | 10 |  |  |  | 1,504 |
HGC MPG Funding LLC |  |  | — |  |  |  | — |
Total liabilities |  | $ | 5,401 |  |  | $ | 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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