Investments in Unconsolidated Entities

3 Months Ended

Mar. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

The Company has various equity investments in entities where it has the ability to exert significant influence over such entity, but does not control such entity. In these cases the criteria for consolidation have not been met and the Company is required to account for such investments under ASC 323-10; the Company has elected the FVO for its investments in unconsolidated entities. As of March 31, 2024 and December 31, 2023, the Company's investments in unconsolidated entities had an aggregate fair value of $125.4 million and $116.4 million, respectively, which is included on the Condensed Consolidated Balance Sheet in Investments in unconsolidated entities, at fair value. For the three-month periods ended March 31, 2024 and 2023, the Company recognized $2.2 million and $3.4 million, respectively, in Earnings (losses) from investments in unconsolidated entities, on its Condensed Consolidated Statement of Operations. Certain of the entities that the

Company accounts for under ASC 323-10 are deemed to be VIEs, and the maximum amount at risk is generally limited to the Company's investment in the VIE. As of March 31, 2024 and December 31, 2023, the fair value of the Company's investments in unconsolidated entities that have been deemed to be VIEs was $99.9 million and $87.8 million, respectively.

The following table provides details about the Company's investments in unconsolidated entities as of March 31, 2024 and December 31, 2023:

Percentage Ownership
of Unconsolidated Entity

Investment in Unconsolidated Entity

Form of Investment

March 31, 2024

December 31, 2023

Loan Originators:

LendSure Mortgage Corp.(1)(2)

Common shares

63.7%

49.9%

Other(1)

Various

45.0%–50.0%

Co-investments with Ellington affiliate(s)(1):

Elizon DB 2015-1 LLC(3)(4)

Membership Interest

33.5%

30.4%

Elizon NM CRE 2020-1 LLC(3)(5)

Membership Interest

32.5%

11.5%

Elizon CH CRE 2021-1 LLC(3)(6)

Membership Interest

30.6%

29.2%

Equity investments in securitization-related vehicles, including risk retention vehicles(7)

Membership Interest

24.6%–84.5%

Other:

Jepson Holdings Limited(1)(3)

Membership Interest

7.9%

Other(1)(3)(8)

Various

6.1%–79.0%

(1)See Note 16 for additional details on the Company's related party transactions.

(2)As of March 31, 2024, the Company held both voting and non-voting equity interests; its non-voting stake in the entity was 13.8%. As of December 31, 2023, excludes investment in equity interests convertible into non-voting common shares; including such interests the Company's additional non-voting stake in the entity was 13.8%. See Note 16 Related Party Transactions—Transactions Involving Certain Loan Originators for additional information.

(3)The Company has evaluated this entity and determined that it meets the definition of a VIE. The Company evaluated its interest in the VIE and determined that the Company does not have the power to direct the activities of the VIE and does not have control of the underlying assets, where applicable. As a result, the Company determined that it is not the primary beneficiary of this VIE and therefore has not consolidated the VIE.

(4)As discussed in Note 16 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 16) each consolidate their segregated silos of the Joint Entity (as defined in Note 16). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 56.0% and 60.0% as of March 31, 2024 and December 31, 2023, respectively.

(5)As discussed in Note 16 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 16) each consolidate their segregated silos of the Joint Entity (as defined in Note 16). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 64.8% and 74.1% as of March 31, 2024 and December 31, 2023, respectively.

(6)As discussed in Note 16 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 16) each consolidate their segregated silos of the Joint Entity (as defined in Note 16). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 54.2% and 52.1% as of March 31, 2024 and December 31, 2023, respectively.

(7)Includes interests in Consumer Risk Retention Vehicles, as defined in Note 13—Participation in Multi-Seller Consumer Loan Securitizations, and Participated Risk Retention Vehicle and Residential Loan JV, as defined in Note 13—Residential Mortgage Loan Securitizations. The Company has evaluated these entities and determined that they do not meet the definition of a VIE. The Company evaluated its interest in the entity under the voting interest model outlined in ASC 810, and has determined that the Company does not control these entities. As a result, the Company has not consolidated the entity. See Note 13 for additional details on the Company's securitization transactions.

(8)Includes interest in warehouse facilities; see Note 16—Participation in CLO Transactions, for additional details.