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Equity Method Investments | 6 Months Ended
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Jun. 30, 2024
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. 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. During the six months ended June 30, 2024, the Company recorded a $0.1 million adjustment for its share of the joint venture’s increase to the provision for credit losses. As of June 30, 2024, the Company's share of the allowance for credit losses was approximately $1.0 million, which was primarily related to HGC Origination I LLC and HGC MPG Funding LLC. As of June 30, 2024, the Company has incurred no actual credit losses through its equity method investments. As of June 30, 2024, the amortized cost basis of the Company's share of loans in nonaccrual status recorded in equity method investments was $18.9 million. The tables below details the Company’s joint venture revenues and earnings during the six months ended June 30, 2024 and 2023 (in thousands):
|  | Six Months Ended June 30, 2024 |
|  | KNFH LLC |  |  | DHC8 LLC |  |  | KNFH II LLC |  |  | HGC Origination I LLC and HGC Funding I LLC |  |  | HGC MPG Funding LLC |
Revenue |  | $ | — |  |  | $ | 551 |  |  | $ | 13,245 |  |  | $ | 2,302 |  |  | $ | 2,524 |
Gross profit |  |  | — |  |  |  | 551 |  |  |  | 5,208 |  |  |  | 2,302 |  |  |  | 2,524 |
Operating income (loss) |  |  | — |  |  |  | 443 |  |  |  | 5,107 |  |  |  | 2,226 |  |  |  | 2,524 |
Net income (loss): |  | $ | — |  |  | $ | 443 |  |  | $ | 5,107 |  |  | $ | 2,235 |  |  | $ | 2,524 |
|  | Six Months Ended June 30, 2023 |
|  | KNFH LLC |  |  | DHC8 LLC |  |  | KNFH II LLC |  |  | HGC Origination I LLC and HGC Funding I LLC |  |  | HGC MPG Funding LLC |
Revenue |  | $ | 303 |  |  | $ | 821 |  |  | $ | — |  |  | $ | 2,541 |  |  | $ | 118 |
Gross profit |  |  | 303 |  |  |  | 821 |  |  |  | — |  |  |  | 2,541 |  |  |  | 118 |
Operating income (loss) |  |  | (141 | ) |  |  | 701 |  |  |  | — |  |  |  | 2,562 |  |  |  | 118 |
Net income (loss): |  | $ | (141 | ) |  | $ | 701 |  |  | $ | — |  |  | $ | 2,562 |  |  | $ | 118 |
The table below details the summarized components of assets and liabilities of the Company’s joint ventures, as of June 30, 2024 and December 31, 2023 (in thousands):
|  | June 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Assets: |  |  |  |  |  |
KNFH LLC |  | $ | — |  |  | $ | 292 |
DHC8 LLC |  |  | 4,165 |  |  |  | 7,061 |
KNFH II LLC |  |  | 8,164 |  |  |  | 8,150 |
HGC Origination I LLC and HGC Funding I LLC |  |  | 27,426 |  |  |  | 28,389 |
HGC MPG Funding LLC |  |  | 36,004 |  |  |  | 38,081 |
Total assets |  | $ | 75,759 |  |  | $ | 81,973 |
Liabilities: |  |  |  |  |  |
KNFH LLC |  | $ | — |  |  | $ | 289 |
DHC8 LLC |  |  | 1,059 |  |  |  | 1,102 |
KNFH II LLC |  |  | 2,267 |  |  |  | 4,000 |
HGC Origination I LLC and HGC Funding I LLC |  |  | 992 |  |  |  | 10 |
HGC MPG Funding LLC |  |  | — |  |  |  | — |
Total liabilities |  | $ | 4,318 |  |  | $ | 5,401 |

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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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