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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 The Company elected the practical expedient under ASC 326 to exclude accrued interest from amortized cost. As of December 31, 2024 and 2023, accrued interest receivable of $0.3 million and $1.2 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment. Portfolio Summary The table below provides a summary of the Company’s loan portfolio. Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.
| December 31, 2024 |  | December 31, 2023
| Fixed Rate |  | Floating Rate (1)(2) |  | Total |  | Fixed Rate |  | Floating Rate (1)(2) |  | Total
Number of loans | 1 |  | 2 |  | 3 |  | 4 |  | 2 |  | 6
Principal balance | $ | 2,843,280 |  |  | $ | 43,059,173 |  |  | $ | 45,902,453 |  |  | $ | 44,377,373 |  |  | $ | 43,059,173 |  |  | $ | 87,436,546 |
Carrying value | $ | 2,573,280 |  |  | $ | 27,814,616 |  |  | $ | 30,387,896 |  |  | $ | 44,528,468 |  |  | $ | 33,814,996 |  |  | $ | 78,343,464 |
Fair value | $ | 2,573,280 |  |  | $ | 28,068,902 |  |  | $ | 30,642,182 |  |  | $ | 44,313,689 |  |  | $ | 34,214,046 |  |  | $ | 78,527,735 |
Weighted-average coupon rate(3) | —% |  | 19.5% |  | 19.5% |  | 13.8% |  | 20.3% |  | 15.8%
Weighted-average remaining term (years) (3) (4) | 0.00 |  | 0.10 |  | 0.10 |  | 0.76 |  | 1.10 |  | 0.87
_______________ (1)As of December 31, 2024 and 2023, these loans pay a coupon rate of Secured Overnight Financing Rate (“SOFR”) or forward-looking term rate based on SOFR (“Term SOFR”), as applicable, plus a fixed spread. Coupon rates shown were determined using average SOFR and Term SOFR of 4.5% and 4.3%, respectively, as of December 31, 2024, and 5.3% and 5.4%, respectively, as of December 31, 2023. (2)As of both December 31, 2024 and 2023, two loans were subject to a SOFR or Term SOFR floor, as applicable. (3)Excludes non-performing loans as of December 31, 2024 and 2023. (4)Represents current effective maturity as of December 31, 2024 and 2023, exclusive of any extension options available. Lending Activities The following tables present the activities of the Company’s loan portfolio:
| Loans Held for Investment, Net |  | Loans Held for Investment through Participation Interests, Net |  | Total |
Balance, January 1, 2024 | $ | 60,458,534 |  |  | $ | 17,884,930 |  |  | $ | 78,343,464 |  |
Origination, funding and purchase of loans | 843,996 |  |  | 215,907 |  |  | 1,059,903 |  |
Principal repayments received | (42,941,496) |  |  | — |  |  | (42,941,496) |  |
Net amortization of premiums on loans | (126,278) |  |  | — |  |  | (126,278) |  |
Accrual, payment and accretion of investment-related fees and other, net | 51,579 |  |  | — |  |  | 51,579 |  |
Reversal of (provision for) credit losses | 289,560 |  |  | (6,288,836) |  |  | (5,999,276) |  |
Balance, December 31, 2024 | $ | 18,575,895 |  |  | $ | 11,812,001 |  |  | $ | 30,387,896 |  |
| Loans Held for Investment, Net |  | Loans Held for Investment through Participation Interests, Net |  | Total |
Balance, January 1, 2023 | $ | 79,082,650 |  |  | $ | 42,330,376 |  |  | $ | 121,413,026 |  |
Cumulative effect of adoption of credit loss accounting standard effective January 1, 2023 (Note 2) | (593,040) |  |  | — |  |  | (593,040) |  |
Origination and purchase of loans | 4,183,830 |  |  | 1,194,248 |  |  | 5,378,078 |  |
Principal repayments received | (21,655,810) |  |  | (20,346,058) |  |  | (42,001,868) |  |
Net amortization of premiums on loans | (915,998) |  |  | (81,411) |  |  | (997,409) |  |
Accrual, payment and accretion of investment-related fees and other, net | 232,871 |  |  | 85,047 |  |  | 317,918 |  |
Reversal of (provision for) credit losses | 124,031 |  |  | (5,297,272) |  |  | (5,173,241) |  |
Balance, December 31, 2023 | $ | 60,458,534 |  |  | $ | 17,884,930 |  |  | $ | 78,343,464 |  |
Portfolio Information The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans. Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.
|  | December 31, 2024 |  | December 31, 2023 |
Loan Structure |  | Principal Balance |  | Carrying Value |  | % of Total |  | Principal Balance |  | Carrying Value |  | % of Total |
Preferred equity investments |  | $ | 45,902,453 |  |  | $ | 30,387,896 |  |  | 100.0 | % |  | $ | 63,186,546 |  |  | $ | 53,973,564 |  |  | 68.9 | % |
First mortgages |  | — |  |  | — |  |  | — | % |  | 21,250,000 |  |  | 21,462,168 |  |  | 27.4 | % |
Mezzanine loans |  | — |  |  | — |  |  | — | % |  | 3,000,000 |  |  | 2,907,732 |  |  | 3.7 | % |
Total |  | $ | 45,902,453 |  |  | $ | 30,387,896 |  |  | 100.0 | % |  | $ | 87,436,546 |  |  | $ | 78,343,464 |  |  | 100.0 | % |
|  | December 31, 2024 |  | December 31, 2023
Property Type |  | Principal Balance |  | Carrying Value |  | % of Total |  | Principal Balance |  | Carrying Value |  | % of Total |
Mixed use |  | $ | 18,567,296 |  |  | $ | 18,575,895 |  |  | 61.1 | % |  | $ | 18,567,296 |  |  | $ | 18,557,439 |  |  | 23.7 | % |
Office |  | 24,491,877 |  |  | 9,238,721 |  |  | 30.4 | % |  | 24,491,877 |  |  | 15,257,557 |  |  | 19.5 | % |
Multifamily |  | 2,843,280 |  |  | 2,573,280 |  |  | 8.5 | % |  | 20,127,373 |  |  | 20,158,568 |  |  | 25.7 | % |
Infrastructure |  | — |  |  | — |  |  | — | % |  | 21,250,000 |  |  | 21,462,168 |  |  | 27.4 | % |
Student housing |  | — |  |  | — |  |  | — | % |  | 3,000,000 |  |  | 2,907,732 |  |  | 3.7 | % |
Total |  | $ | 45,902,453 |  |  | $ | 30,387,896 |  |  | 100.0 | % |  | $ | 87,436,546 |  |  | $ | 78,343,464 |  |  | 100.0 | % |
|  | December 31, 2024 |  | December 31, 2023
Geographic Location |  | Principal Balance |  | Carrying Value |  | % of Total |  | Principal Balance |  | Carrying Value |  | % of Total
United States |  |  |  |  |  |  |  |  |  |  |  |
California |  | $ | 18,567,296 |  |  | $ | 18,575,895 |  |  | 61.1 | % |  | $ | 21,567,296 |  |  | $ | 21,465,171 |  |  | 27.4 | %
New York |  | 27,335,157 |  |  | 11,812,001 |  |  | 38.9 | % |  | 27,119,250 |  |  | 17,884,930 |  |  | 22.8 | %
Utah |  | — |  |  | — |  |  | — | % |  | 21,250,000 |  |  | 21,462,168 |  |  | 27.4 | %
Georgia |  | — |  |  | — |  |  | — | % |  | 17,500,000 |  |  | 17,531,195 |  |  | 22.4 | %
Total |  | $ | 45,902,453 |  |  | $ | 30,387,896 |  |  | 100.0 | % |  | $ | 87,436,546 |  |  | $ | 78,343,464 |  |  | 100.0 | %
Allowance for Credit Losses As described in Note 2, on January 1, 2023, the Company adopted the provisions of ASU 2016-13, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses. The adoption of ASU 2016-13 resulted in a $0.7 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to member’s capital as of January 1, 2023. Certain of the Company’s performing loans contain provisions for future funding commitments, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These unfunded commitments on loans amounted to approximately $0.7 million and $0.7 million as of December 31, 2024 and 2023, respectively. The liability for credit losses on unfunded commitments is included in other liabilities on the consolidated balance sheets. As discussed in Note 2, for loans that are considered non-performing, the Company removes them from the industry loss rate approach and analyzes them separately for recoverability. As of December 31, 2024 and 2023, the Company had two non-performing loans with total amortized cost of $27.3 million and $27.1 million, respectively. Accordingly, the Company utilized the estimated fair value of the loan collateral or sponsor’s guarantee to estimate the total specific allowance for credit losses of $15.5 million and $9.2 million as of December 31, 2024 and December 31, 2023, respectively. Please see “Significant Unobservable Inputs” in Note 5 for information on how the fair values of these loans were determined. The following table presents the activity in allowance for credit losses:
|  | Year Ended December 31, 2024
|  | Allowance on Non-Performing Loans |  | Allowance on Performing Loans |  | Total
|  |  | Funded |  | Unfunded |
Allowance for credit losses, beginning of period |  | $ | 9,234,321 |  |  | $ | 469,010 |  |  | $ | 8,801 |  |  | $ | 9,712,132 |
Provision for (reversal of provision for) credit losses |  | 6,288,835 |  |  | (289,559) |  |  | (2,202) |  |  | 5,997,074 |
Charge-offs |  | — |  |  | — |  |  | — |  |  | — |
Recoveries |  | — |  |  | — |  |  | — |  |  | — |
Allowance for credit losses, end of period |  | $ | 15,523,156 |  |  | $ | 179,451 |  |  | $ | 6,599 |  |  | $ | 15,709,206 |
|  | Year Ended December 31, 2023
|  | Allowance on Non-Performing Loans |  | Allowance on Performing Loans |  | Total
|  |  | Funded |  | Unfunded |
Allowance for credit losses, beginning of period |  | $ | 3,937,050 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,937,050 |
Cumulative effect of adoption of ASU 2016-13 effective January 1, 2023 (Note 2) |  | — |  |  | 593,040 |  |  | 68,382 |  |  | 661,422 |
Provision for (reversal of provision for) credit losses |  | 5,297,271 |  |  | (124,030) |  |  | (59,581) |  |  | 5,113,660 |
Charge-offs |  | — |  |  | — |  |  | — |  |  | — |
Recoveries |  | — |  |  | — |  |  | — |  |  | — |
Allowance for credit losses, end of period |  | $ | 9,234,321 |  |  | $ | 469,010 |  |  | $ | 8,801 |  |  | $ | 9,712,132 |
Accrued Interest Receivable The Company elected not to measure a CECL reserve on accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely manner. If the Company determines it has uncollectible accrued interest receivable, it generally will reverse the accrued and unpaid interest against interest income and suspend the accrual for future interest income. For the years ended December 31, 2024 and 2023, the Company did not reverse any interest income accrual because all accrued interest income was deemed collectible. As of December 31, 2024 and 2023, the Company had two loans that were in default, and suspended interest income accrual of $5.0 million and $4.2 million for the years ended December 31, 2024 and 2023, respectively, because recovery of such income was not probable. As of December 31, 2024 and 2023, there was no outstanding interest receivable on these loans. Loan Risk Rating The Company assesses the risk factors of each performing loan and assigns each performing loan a risk rating between 1 and 5, which is an average of the numerical ratings in the following categories: (i) sponsor capability and financial condition; (ii) loan and collateral performance relative to underwriting; (iii) quality and stability of collateral cash flows and/or reserve balances; and (iv) loan to value. Based on a 5-point scale, the Company’s performing loans are rated “1” through “5”, from less risk to greater risk as follows:
Risk Rating |  | Description
1 |  | Very low risk
2 |  | Low risk
3 |  | Moderate/average risk
4 |  | Higher risk
5 |  | Highest risk
Additionally, as discussed in Note 2, during the loan review process, if the Company determines that it is not able to collect all amounts due for both principal and interest according to the contractual terms of a loan, or if a loan is in maturity default, the Company considers that loan non-performing. The following tables present the amortized cost of the Company's loan portfolio by year of origination and loan risk rating:
|  | December 31, 2024
Loan Risk Rating |  | Number of Loans |  | Amortized Cost |  | % of Total |  | Amortized Cost by Year Originated
|  |  |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior
1 |  | — |  |  | $ | — |  |  | — | % |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
2 |  | — |  |  | — |  |  | — | % |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
3 |  | — |  |  | — |  |  | — | % |  | — |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
4 |  | 1 |  |  | 18,755,345 |  |  | 40.7 | % |  | — |  |  | — |  |  | 18,755,345 |  |  | — |  |  | — |  |  | — |
5 |  | — |  |  | — |  |  | — | % |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Non-performing |  | 2 |  |  | 27,335,157 |  |  | 59.3 | % |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,335,157 |
|  | 3 |  |  | 46,090,502 |  |  | 100.0 | % |  | $ | — |  |  | $ | — |  |  | $ | 18,755,345 |  |  | $ | — |  |  | $ | — |  |  | $ | 27,335,157 |
Allowance for credit losses |  | (15,702,606) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total, net of allowance for credit losses |  | $ | 30,387,896 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | December 31, 2023
Loan Risk Rating |  | Number of Loans |  | Amortized Cost |  | % of Total |  | Amortized Cost by Year Originated
|  |  |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior
1 |  | — |  |  | $ | — |  |  | — | % |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
2 |  | — |  |  | — |  |  | — | % |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
3 |  | 3 |  |  | 42,130,731 |  |  | 47.9 | % |  | — |  |  |  |  | 39,195,427 |  |  | — |  |  | — |  |  | 2,935,304 |
4 |  | 1 |  |  | 18,796,818 |  |  | 21.3 | % |  | — |  |  | 18,796,818 |  |  | — |  |  | — |  |  | — |  |  | — |
5 |  | — |  |  | — |  |  | — | % |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Non-performing |  | 2 |  |  | 27,119,246 |  |  | 30.8 | % |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 27,119,246 |
|  | 6 |  |  | 88,046,795 |  |  | 100.0 | % |  | $ | — |  |  | $ | 18,796,818 |  |  | $ | 39,195,427 |  |  | $ | — |  |  | $ | — |  |  | $ | 30,054,550 |
Allowance for credit losses |  | (9,703,331) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total, net of allowance for credit losses |  | $ | 78,343,464 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Held-to-Maturity Debt Securities In the first quarter of 2023, the Company purchased $10.0 million of corporate bonds with a coupon rate of 6.125% that matured on May 15, 2023. The Company classified these bonds as held-to-maturity debt securities, as it had the intent and ability to hold these securities until maturity. These securities were recorded at amortized cost and were fully redeemed at par on May 15, 2023.

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