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Loans Held-For-Investment
 12 Months Ended
Dec. 31, 2021
Receivables [Abstract]  
Loans Held-For-Investment
NOTE 8 — LOANS HELD-FOR-INVESTMENT
The Company’s loans held-for-investment consisted of the following as of December 31, 2021 and 2020 (dollar amounts in thousands):
As of December 31,
20212020
Mezzanine loans$— $147,475 
First mortgage loans (1)
1,968,585 341,546 
Total CRE loans held-for-investment and related receivables, net 1,968,585 489,021 
Liquid senior loans655,516 473,603 
Loans held-for-investment and related receivables, net$2,624,101 $962,624 
Less: Current expected credit losses$(15,201)$(70,358)
Total loans held-for-investment and related receivable, net$2,608,900 $892,266 
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(1) As of December 31, 2021, first mortgage loans included $20.1 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan.
During the year ended December 31, 2021, the Company invested $406.7 million in liquid senior loans. During the same period, the Company received $157.0 million of principal payments on liquid senior loans and sold $70.6 million of liquid senior loans, resulting in proceeds of $70.0 million after closing costs and a gain of $41,000. The gain was recorded as a decrease to interest expense and other, net in the consolidated statements of operations. As of December 31, 2021, the Company had $36.5 million of unsettled liquid senior loan purchases included in cash and cash equivalents in the accompanying consolidated balance sheets.
As of December 31, 2021, the Company had $209.4 million of unfunded commitments related to CRE loans held-for-investment, the funding of which is subject to the satisfaction of borrower milestones. These commitments are not reflected in the accompanying consolidated balance sheets.
The following table details overall statistics for the Company’s loans held-for-investment as of December 31, 2021 and 2020 (dollar amounts in thousands):
CRE Loans (1) (2)
Liquid Senior Loans
As of December 31,As of December 31,
2021202020212020
Number of loans22 12 295 194 
Principal balance$1,985,722 $481,438 $659,007 $477,777 
Net book value$1,958,655 $428,393 $650,245 $463,873 
Weighted-average interest rate3.3 %7.5 %3.7 %3.8 %
Weighted-average maximum years to maturity4.32.25.14.9
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(1)    As of December 31, 2021, 100% of the Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR and SOFR.
(2)    Maximum maturity date assumes all extension options are exercised by the borrowers; however, the Company’s CRE loans may be repaid prior to such date.
Activity relating to the Company’s loans held-for-investment portfolio was as follows for the years ended December 31, 2021 and 2020 (dollar amounts in thousands):
Principal Balance
Deferred Fees / Other Items (1)
Loan Fees ReceivableNet Book Value
Balance, January 1, 2020$300,135 $(6,047)$7,542 $301,630 
Loan originations and acquisitions820,015 (5)5 820,015 
Cure payments receivable— 7,351 — 7,351 
Sale of loans(42,031)1,392 — (40,639)
Principal repayments received(119,443)— — (119,443)
Capitalized interest539 — — 539 
Deferred fees and other items— (8,969)(380)(9,349)
Accretion and amortization of fees and other items— 2,520 — 2,520 
Current expected credit losses— (70,358)— (70,358)
Balance, January 1, 2021$959,215 $(74,116)$7,167 $892,266 
Loan originations and acquisitions2,219,064 — — 2,219,064 
Cure payments receivable (2)
— (7,351)— (7,351)
Sale of loans(70,567)649 — (69,918)
Principal repayments received (3)
(326,195)133 — (326,062)
Capitalized interest (2)
(9,469)— — (9,469)
Deferred fees and other items— (19,235)— (19,235)
Accretion and amortization of fees and other items— 5,103 — 5,103 
Foreclosure of assets (2)
(127,320)3,832 (7,167)(130,655)
Current expected credit losses (4)
— 55,157 — 55,157 
Balance, December 31, 2021$2,644,728 $(35,828)$— $2,608,900 
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(1)Other items primarily consist of current expected credit losses (as discussed below), purchase discounts or premiums, accretion of exit fees and deferred origination expenses.
(2)During the year ended December 31, 2021, the Company completed foreclosure of the assets which previously secured its eight mezzanine loans.
(3)Includes the repayment of a $69.2 million first mortgage loan prior to the maturity date.
(4)Includes the reversal of current expected credit losses related to the mezzanine loans upon foreclosure of the assets which previously secured the loans, as further discussed below in “Current Expected Credit Losses,” partially offset by the increase in current expected credit losses related to the Company’s loans held-for-investment during the year ended December 31, 2021.
Current Expected Credit Losses
Current expected credit losses reflect the Company’s current estimate of potential credit losses related to the loans held-for-investment included in the Company’s consolidated balance sheets. Refer to Note 2 — Summary of Significant Accounting Policies for further discussion of the Company’s current expected credit losses.
The following table presents the activity in the Company’s current expected credit losses by loan type for the year ended December 31, 2021 (dollar amounts in thousands):
Mezzanine LoansFirst Mortgage LoansLiquid Senior LoansTotal
Current expected credit losses as of January 1, 2021$58,038 $2,590 $9,730 $70,358 
Foreclosure of assets (1)
(58,038)— — (58,038)
Provision for (reversal of) credit losses— 1,295 (727)568 
Current expected credit losses as of March 31, 2021— 3,885 9,003 12,888 
Provision for (reversal of) credit losses— 2,581 (2,458)123 
Current expected credit losses as of June 30, 2021— 6,466 6,545 13,011 
Reversal of provision for credit losses— (1,179)(613)(1,792)
Current expected credit losses as of September 30, 2021— 5,287 5,932 11,219 
Provision for (reversal of) credit losses — 4,643 (661)3,982 
Current expected credit losses as of December 31, 2021$— $9,930 $5,271 $15,201 
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(1)    During the year ended December 31, 2021, the Company completed foreclosure of the assets which previously secured its eight mezzanine loans.
Changes to current expected credit losses are recognized through net income (loss) on the Company’s consolidated statements of operations.
Troubled Debt Restructuring
An individual financial instrument is classified as a troubled debt restructuring when there is a reasonable expectation that the financial instrument’s contractual terms will be modified in a manner that grants concessions to the borrower who is experiencing financial difficulties. Concessions could include term extensions, payment deferrals, interest rate reductions, principal forgiveness, forbearance, or other actions designed to maximize the Company’s collection on the financial instrument. Current expected credit losses for financial instruments that are troubled debt restructurings are determined individually.
The Company also classifies a financial instrument as a troubled debt restructuring when receivables from third parties, real estate, or other assets are transferred from the debtor to the creditor in order to fully or partially satisfy a debt, such as in the event of a foreclosure or repossession. During the year ended December 31, 2019, the borrower on the Company’s eight  mezzanine loans became delinquent on certain required reserve payments. Throughout 2020, the borrower remained delinquent on the required reserve payments and became delinquent on principal and interest. As a result, the Company classified the loans as a troubled debt restructuring and commenced foreclosure proceedings during the year ended December 31, 2020. Upon completing foreclosure in January 2021, the Company took control of the assets which previously secured the loans, including 75 condominium units and 21 rental units across four buildings. As a result of the foreclosure, the Company recorded a $58.0 million decrease to its provision for credit losses related to its mezzanine loans during the three months ended March 31, 2021. During the year ended December 31, 2021, the Company recorded a $2.9 million net increase to the provision for credit losses related to its first mortgage loans and liquid senior loans to reflect the estimated fair value of such loans, bringing the total current expected credit losses to $15.2 million as of December 31, 2021.
Risk Ratings
As further described in Note 2 — Summary of Significant Accounting Policies, the Company evaluates its loans-held-for-investment portfolio on a quarterly basis. Each quarter, the Company assesses the risk factors of each loan, and assigns a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, loan and credit structure, current LTV, debt yield, collateral performance, and the quality and condition of the sponsor, borrower, and guarantor(s). Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 — Summary of Significant Accounting Policies.
The Company’s primary credit quality indicator is its risk ratings, which are further discussed above. The following table presents the net book value of the Company’s loans-held-for-investment portfolio as of December 31, 2021 by year of origination, loan type, and risk rating (dollar amounts in thousands):
Amortized Cost of Loans Held-For-Investment by Year of Origination (1)
As of December 31, 2021
Number of Loans202120202019Total
First mortgage loans by internal risk rating:
1—$— $— $— $— 
2—— — — — 
3221,777,068 143,932 47,585 1,968,585 
4—— — — — 
5—— — — — 
Total first mortgage loans221,777,068 143,932 47,585 1,968,585 
Liquid senior loans by internal risk rating:
1—— — — — 
23— 8,279 — 8,279 
3288342,982 289,535 3,038 635,555 
44— 11,682 — 11,682 
5—— — — — 
Total liquid senior loans295342,982 309,496 3,038 655,516 
Less: Current expected credit losses(15,201)
Total loans-held-for-investment and related receivables, net
317$2,608,900 
Weighted Average Risk Rating (2)
3.0 
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(1)Date loan was originated or acquired by the Company. Origination dates are subsequently updated to reflect material loan modifications.
(2)Weighted average risk rating calculated based on carrying value at period end.