QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||||||||
(Address of principal executive offices) | (Zip code) | |||||||||||||
(Registrant’s telephone number, including area code) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||||||
None | None | None |
Large accelerated filer | ☐ | Accelerated filer | ☐ | ☒ | |||||||||||||||||||
Smaller reporting company | Emerging growth company |
September 30, 2023 | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
Real estate assets: | |||||||||||
Land | $ | $ | |||||||||
Buildings, fixtures and improvements | |||||||||||
Intangible lease assets | |||||||||||
Condominium developments | |||||||||||
Total real estate assets, at cost | |||||||||||
Less: accumulated depreciation and amortization | ( | ( | |||||||||
Total real estate assets, net | |||||||||||
Investment in unconsolidated entities | |||||||||||
Real estate-related securities, at fair value, net of credit loss allowances of $ | |||||||||||
Loans held-for-investment and related receivables, net | |||||||||||
Less: Current expected credit losses | ( | ( | |||||||||
Total loans held-for-investment and related receivables, net | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Rents and tenant receivables, net | |||||||||||
Prepaid expenses, derivative assets and other assets | |||||||||||
Deferred costs, net | |||||||||||
Accrued interest receivable | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Repurchase facilities, notes payable and credit facilities, net | $ | $ | |||||||||
Accrued expenses and accounts payable | |||||||||||
Due to affiliates | |||||||||||
Intangible lease liabilities, net | |||||||||||
Distributions payable | |||||||||||
Deferred rental income and other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 11) | |||||||||||
Redeemable common stock | |||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Capital in excess of par value | |||||||||||
Accumulated distributions in excess of earnings | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Non-controlling interests | ( | ||||||||||
Total equity | |||||||||||
Total liabilities, redeemable common stock, non-controlling interests and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rental and other property income | $ | $ | $ | $ | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Property operating | |||||||||||||||||||||||
Real estate tax | |||||||||||||||||||||||
Expense reimbursements to related parties | |||||||||||||||||||||||
Management fees | |||||||||||||||||||||||
Transaction-related | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Real estate impairment | |||||||||||||||||||||||
Increase in provision for credit losses | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Gain on disposition of real estate and condominium developments, net | |||||||||||||||||||||||
Gain on investment in unconsolidated entities | |||||||||||||||||||||||
Unrealized (loss) gain on equity security | ( | ( | ( | ||||||||||||||||||||
Other income, net | |||||||||||||||||||||||
Loss on extinguishment of debt | ( | ( | ( | ( | |||||||||||||||||||
Total other income (loss) | ( | ||||||||||||||||||||||
Net (loss) income | $ | ( | $ | $ | $ | ||||||||||||||||||
Net income allocated to noncontrolling interest | |||||||||||||||||||||||
Net (loss) income attributable to the Company | $ | ( | $ | $ | $ | ||||||||||||||||||
Weighted average number of common shares outstanding: | |||||||||||||||||||||||
Basic and diluted | |||||||||||||||||||||||
Net (loss) income per common share: | |||||||||||||||||||||||
Basic and diluted | $ | ( | $ | $ | $ | ||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net (loss) income | $ | ( | $ | $ | $ | ||||||||||||||||||
Other comprehensive loss | |||||||||||||||||||||||
Unrealized loss on real estate-related securities | ( | ( | ( | ( | |||||||||||||||||||
Amount of loss reclassified from other comprehensive loss into income as an increase in provision for credit losses | |||||||||||||||||||||||
Unrealized gain on interest rate swaps | |||||||||||||||||||||||
Amount of gain reclassified from other comprehensive loss into income as interest expense, net | ( | ( | |||||||||||||||||||||
Total other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive (loss) income | ( | ||||||||||||||||||||||
Comprehensive income attributable to noncontrolling interest | |||||||||||||||||||||||
Comprehensive (loss) income attributable to the Company | $ | ( | $ | $ | $ | ||||||||||||||||||
Common Stock | Capital in Excess of Par Value | Accumulated Distributions in Excess of Earnings | Accumulated Other Comprehensive (Loss) Income | Total Stockholders’ Equity | Non-Controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||
Number of Shares | Par Value | ||||||||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Distributions declared on common stock — $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Redemptions of common stock | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Changes in redeemable common stock | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Distributions declared on common stock — $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Redemptions of common stock | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Changes in redeemable common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Distributions declared on common stock — $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Redemptions of common stock | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Changes in redeemable common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | — | — | — | ( | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Common Stock | Capital in Excess of Par Value | Accumulated Distributions in Excess of Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | Non-Controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||
Number of Shares | Par Value | ||||||||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2022 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Distributions declared on common stock — $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Redemptions of common stock | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Changes in redeemable common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Distributions declared on common stock — $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Redemptions of common stock | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Changes in redeemable common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Distributions declared on common stock — $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Redemptions of common stock | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Changes in redeemable common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization, net | |||||||||||
Amortization of deferred financing costs | |||||||||||
Amortization and accretion on deferred loan fees | ( | ( | |||||||||
Amortization of premiums and discounts on credit investments | ( | ( | |||||||||
Capitalized interest income on real estate-related securities and loans held-for-investment | ( | ( | |||||||||
Equity-based compensation | |||||||||||
Straight-line rental income | ( | ( | |||||||||
Write-offs for uncollectible lease-related receivables | ( | ( | |||||||||
Gain on disposition of real estate assets and condominium developments, net | ( | ( | |||||||||
Loss on sale of credit investments, net | |||||||||||
Gain on investment in unconsolidated entities | ( | ( | |||||||||
Gain on sale of marketable security | ( | ||||||||||
Unrealized (gain) loss on equity security | ( | ||||||||||
Amortization of fair value adjustment and gain on interest rate swaps | ( | ||||||||||
Loss (gain) on interest rate caps | ( | ||||||||||
Impairment of real estate assets | |||||||||||
Increase in provision for credit losses | |||||||||||
Write-off of deferred financing costs | |||||||||||
Return on investment in unconsolidated entities | |||||||||||
Changes in assets and liabilities: | |||||||||||
Rents and tenant receivables, net | |||||||||||
Prepaid expenses and other assets | ( | ||||||||||
Accrued interest receivable | ( | ( | |||||||||
Accrued expenses and accounts payable | ( | ||||||||||
Deferred rental income and other liabilities | ( | ( | |||||||||
Due to affiliates | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Investment in unconsolidated entities | ( | ( | |||||||||
Return of investment in unconsolidated entities | |||||||||||
Investment in real estate-related securities | ( | ( | |||||||||
Investment in liquid corporate senior loans | ( | ( | |||||||||
Investment in real estate assets and capital expenditures | ( | ( | |||||||||
Investment in corporate senior loans | ( | ( | |||||||||
Investment in first mortgage loans | ( | ( | |||||||||
Origination and exit fees received on loans held-for-investment | |||||||||||
Principal payments received on loans held-for-investment | |||||||||||
Principal payments received on real estate-related securities | |||||||||||
Net proceeds from sale of real estate-related securities | |||||||||||
Net proceeds from disposition of real estate assets and condominium developments | |||||||||||
Net proceeds from sale of liquid corporate senior loans | |||||||||||
Redemption of investment in unconsolidated entities | |||||||||||
Proceeds from the settlement of insurance claims | |||||||||||
Net cash provided by (used in) investing activities | $ | $ | ( |
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from financing activities: | |||||||||||
Redemptions of common stock | $ | ( | $ | ( | |||||||
Distributions to stockholders | ( | ( | |||||||||
Proceeds from borrowings | |||||||||||
Repayments of borrowings, and prepayment penalties | ( | ( | |||||||||
Termination of interest rate swaps | ( | ||||||||||
Distributions to non-controlling interests | ( | ||||||||||
Deferred financing costs paid | ( | ( | |||||||||
Net cash (used in) provided by financing activities | ( | ||||||||||
Net increase in cash and cash equivalents and restricted cash | |||||||||||
Cash and cash equivalents and restricted cash, beginning of period | |||||||||||
Cash and cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash and cash equivalents and restricted cash | $ | $ | |||||||||
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | |||||||||||
Distributions declared and unpaid | $ | $ | |||||||||
Accrued capital expenditures | $ | $ | |||||||||
Construction reserve allocation | $ | ( | $ | ||||||||
Accrued deferred financing costs | $ | $ | |||||||||
Mortgage notes payable assumed by buyer in connection with disposition of real estate assets | $ | $ | ( | ||||||||
Equity security received in connection with disposition of real estate assets | $ | $ | ( | ||||||||
Common stock issued through distribution reinvestment plan | $ | $ | |||||||||
Change in fair value of derivative instruments | $ | $ | |||||||||
Change in fair value of real estate-related securities | $ | ( | $ | ( | |||||||
Conversion of preferred units to loans held-for-investment | $ | $ | |||||||||
Supplemental Cash Flow Disclosures: | |||||||||||
Interest paid | $ | $ | |||||||||
Cash paid for taxes | $ | $ |
Buildings | |||||
Site improvements | |||||
Tenant improvements | Lesser of useful life or lease term | ||||
Intangible lease assets | Lease term |
Balance as of September 30, 2023 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||
CMBS | $ | $ | $ | $ | |||||||||||||||||||
Equity security | |||||||||||||||||||||||
Interest rate cap | |||||||||||||||||||||||
Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
Balance as of December 31, 2022 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||
CMBS | $ | $ | $ | $ | |||||||||||||||||||
Equity security | |||||||||||||||||||||||
Interest rate caps | |||||||||||||||||||||||
Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
Level 3 | ||||||||
Beginning Balance, January 1, 2023 | $ | |||||||
Total gains and losses: | ||||||||
( | ||||||||
Current expected credit losses (1) | ( | |||||||
Purchases and payments received: | ||||||||
Discounts, net | ||||||||
Capitalized interest income | ||||||||
Ending Balance, September 30, 2023 | $ |
Nine Months Ended September 30, | ||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
Discount Rate | Terminal Capitalization Rate | Discount Rate | Terminal Capitalization Rate | |||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Asset class impaired: | ||||||||||||||
Land | $ | $ | ||||||||||||
Buildings, fixtures and improvements | ||||||||||||||
Intangible lease assets | ||||||||||||||
Intangible lease liabilities | ( | |||||||||||||
Condominium developments | ||||||||||||||
Total impairment loss | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Intangible lease assets: | |||||||||||
In-place leases and other intangibles, net of accumulated amortization of $ | |||||||||||
$ | $ | ||||||||||
Acquired above-market leases, net of accumulated amortization of $ | |||||||||||
Total intangible lease assets, net | $ | $ | |||||||||
Intangible lease liabilities: | |||||||||||
Acquired below-market leases, net of accumulated amortization of $ | |||||||||||
$ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
In-place lease and other intangible amortization | $ | $ | $ | $ | |||||||||||||||||||
Above-market lease amortization | $ | $ | $ | $ | |||||||||||||||||||
Below-market lease amortization | $ | $ | $ | $ |
Amortization | ||||||||||||||||||||
In-Place Leases and Other Intangibles | Above-Market Leases | Below-Market Leases | ||||||||||||||||||
Remainder of 2023 | $ | $ | $ | |||||||||||||||||
2024 | ||||||||||||||||||||
2025 | ||||||||||||||||||||
2026 | ||||||||||||||||||||
2027 | ||||||||||||||||||||
Thereafter | ||||||||||||||||||||
Total | $ | $ | $ |
Real Estate-Related Securities | ||||||||||||||||||||||||||
Amortized Cost Basis | Unrealized Loss | CECL | Fair Value | |||||||||||||||||||||||
CMBS | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
Equity security | ( | |||||||||||||||||||||||||
Total real estate-related securities | $ | $ | ( | $ | ( | $ |
Amortized Cost Basis | Unrealized Loss | CECL | Fair Value | |||||||||||||||||||||||
Real estate-related securities as of January 1, 2023 | $ | $ | ( | $ | $ | |||||||||||||||||||||
Face value of real estate-related securities acquired | — | — | ||||||||||||||||||||||||
Discounts on purchase of real estate-related securities, net of acquisition costs | ( | — | — | ( | ||||||||||||||||||||||
Amortization of discount on real estate-related securities | — | — | ||||||||||||||||||||||||
Capitalized interest income on real estate-related securities | — | — | ||||||||||||||||||||||||
Principal payments received on real estate-related securities (1) | ( | — | — | ( | ||||||||||||||||||||||
Unrealized loss on real estate-related securities, net | — | ( | — | ( | ||||||||||||||||||||||
Current expected credit losses | — | — | ( | ( | ||||||||||||||||||||||
Real estate-related securities as of September 30, 2023 | $ | $ | ( | $ | ( | $ |
CMBS | ||||||||||||||
Amortized Cost | Estimated Fair Value | |||||||||||||
Due within one year | $ | $ | ||||||||||||
Due after one year through five years | ||||||||||||||
Due after five years through ten years | ||||||||||||||
Due after ten years | ||||||||||||||
Total | $ | $ |
CMBS | |||||
Current expected credit losses as of January 1, 2023 | $ | ||||
Provision for credit losses | |||||
Current expected credit losses as of March 31, 2023 | |||||
Provision for credit losses | |||||
Current expected credit losses as of June 30, 2023 | |||||
Provision for credit losses | |||||
Current expected credit losses as of September 30, 2023 | $ |
As of September 30, | As of December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
First mortgage loans (1) | $ | $ | ||||||||||||
Total CRE loans held-for-investment and related receivables, net | ||||||||||||||
Liquid corporate senior loans | ||||||||||||||
Corporate senior loans | ||||||||||||||
Loans held-for-investment and related receivables, net | $ | $ | ||||||||||||
Less: Current expected credit losses | $ | ( | $ | ( | ||||||||||
Total loans held-for-investment and related receivables, net | $ | $ |
CRE Loans (1) (2) | Liquid Corporate Senior Loans | Corporate Senior Loans | |||||||||||||||||||||||||||||||||
September 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||
Number of loans | |||||||||||||||||||||||||||||||||||
Principal balance | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Net book value | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Weighted-average interest rate | % | % | % | % | % | % | |||||||||||||||||||||||||||||
Weighted-average maximum years to maturity | |||||||||||||||||||||||||||||||||||
Unfunded loan commitments (3) | $ | $ | $ | $ | $ | $ |
CRE Loans | Liquid Corporate Senior Loans | Corporate Senior Loans | Total Loan Portfolio | ||||||||||||||||||||
Balance, January 1, 2023 | $ | $ | $ | $ | |||||||||||||||||||
Loan originations and acquisitions | |||||||||||||||||||||||
Sale of loans | ( | ( | |||||||||||||||||||||
Principal repayments received (1) | ( | ( | ( | ( | |||||||||||||||||||
Deferred fees and other items (2) | ( | ( | ( | ( | |||||||||||||||||||
Accretion and amortization of fees and other items | |||||||||||||||||||||||
(Provision for) reversal of credit losses (3) | ( | ( | ( | ||||||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | $ |
First Mortgage Loans | Unfunded First Mortgage Loans (1) | Liquid Corporate Senior Loans | Unfunded or Unsettled Liquid Corporate Senior Loans (1) | Corporate Senior Loans | Unfunded Corporate Senior Loans (1) | Total | ||||||||||||||||||||||||||||||||||||||
Current expected credit losses as of January 1, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision for (reversal of) credit losses | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Current expected credit losses as of March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision for credit losses | ||||||||||||||||||||||||||||||||||||||||||||
Current expected credit losses as of June 30, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision for (reversal of) credit losses | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Current expected credit losses as of September 30, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Amortized Cost of Loans Held-For-Investment by Year of Origination (1) | ||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||
Number of Loans | 2023 | 2022 | 2021 | 2020 | 2019 | Total | ||||||||||||||||||||||||||||||||||||||
First mortgage loans by internal risk rating: | ||||||||||||||||||||||||||||||||||||||||||||
1 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
2 | ||||||||||||||||||||||||||||||||||||||||||||
3 | ||||||||||||||||||||||||||||||||||||||||||||
4 | ||||||||||||||||||||||||||||||||||||||||||||
5 | ||||||||||||||||||||||||||||||||||||||||||||
Total first mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||
Liquid corporate senior loans by internal risk rating: | ||||||||||||||||||||||||||||||||||||||||||||
1 | ||||||||||||||||||||||||||||||||||||||||||||
2 | ||||||||||||||||||||||||||||||||||||||||||||
3 | ||||||||||||||||||||||||||||||||||||||||||||
4 | ||||||||||||||||||||||||||||||||||||||||||||
5 | (2) | |||||||||||||||||||||||||||||||||||||||||||
Total liquid corporate senior loans | ||||||||||||||||||||||||||||||||||||||||||||
Corporate senior loans by internal risk rating: | ||||||||||||||||||||||||||||||||||||||||||||
1 | ||||||||||||||||||||||||||||||||||||||||||||
2 | ||||||||||||||||||||||||||||||||||||||||||||
3 | ||||||||||||||||||||||||||||||||||||||||||||
4 | ||||||||||||||||||||||||||||||||||||||||||||
5 | ||||||||||||||||||||||||||||||||||||||||||||
Total corporate senior loans | ||||||||||||||||||||||||||||||||||||||||||||
Less: Current expected credit losses | ( | |||||||||||||||||||||||||||||||||||||||||||
Total loans held-for-investment and related receivables, net | $ | |||||||||||||||||||||||||||||||||||||||||||
Weighted Average Risk Rating (3) |
Outstanding Notional | Fair Value of Assets as of | ||||||||||||||||||||||||||||||||||||||||
Balance Sheet | Amount as of | Strike | Effective | Maturity | September 30, | December 31, | |||||||||||||||||||||||||||||||||||
Location | September 30, 2023 | Rate | Date | Date | 2023 | 2022 | |||||||||||||||||||||||||||||||||||
Interest Rate Cap | Prepaid expenses, derivative assets and other assets | $ | 9/13/2022 | 10/9/2023 | $ | $ | |||||||||||||||||||||||||||||||||||
During the Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||||||
Balance as of December 31, 2022 | Debt Issuances & Assumptions (1) | Repayments & Modifications (2) | Amortization | Balance as of September 30, 2023 | |||||||||||||||||||||||||
Notes payable – fixed rate debt | $ | $ | $ | ( | $ | — | $ | ||||||||||||||||||||||
Notes payable – variable rate debt | ( | — | |||||||||||||||||||||||||||
First lien mortgage loan | ( | — | |||||||||||||||||||||||||||
ABS mortgage notes | ( | — | |||||||||||||||||||||||||||
Credit facilities | ( | — | |||||||||||||||||||||||||||
Repurchase facilities | ( | — | |||||||||||||||||||||||||||
Total debt | ( | — | |||||||||||||||||||||||||||
Deferred costs – credit facility (3) | ( | (4) | |||||||||||||||||||||||||||
Deferred costs – fixed rate debt and first lien mortgage loan | ( | (4) | |||||||||||||||||||||||||||
Deferred costs – variable rate debt | ( | ( | (4) | ( | |||||||||||||||||||||||||
Deferred costs – ABS mortgage notes | ( | ( | ( | ||||||||||||||||||||||||||
Total debt, net | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Class of Notes | Initial Principal Balance | Note Rate | Anticipated Repayment Date | Rated Final Payment Date | Credit Rating (1) | |||||||||||||||||||||||||||
A-1 (AAA) | $ | July 2028 | July 2051 | AAA (sf) | ||||||||||||||||||||||||||||
A-2 (AAA) | $ | July 2031 | July 2051 | AAA (sf) | ||||||||||||||||||||||||||||
A-3 (AA) | $ | July 2028 | July 2051 | AA (sf) | ||||||||||||||||||||||||||||
A-4 (AA) | $ | July 2031 | July 2051 | AA (sf) | ||||||||||||||||||||||||||||
A-5 (A) | $ | July 2028 | July 2051 | A (sf) | ||||||||||||||||||||||||||||
A-6 (A) | $ | July 2031 | July 2051 | A (sf) |
Repurchase Facility | Date of Agreement | Maturity Date(1) | Maximum Facility Size | Weighted Average Interest Rate | Loans Financed under Repurchase Facility (2) | Amount Financed | ||||||||||||||||||||||||||||||||
Citibank | 6/4/2020 | 8/17/2024 | $ | (3) | $ | $ | ||||||||||||||||||||||||||||||||
Barclays | 9/21/2020 | 9/22/2025 | (3) | |||||||||||||||||||||||||||||||||||
Wells Fargo | 5/20/2021 | 8/30/2025 | (3) | |||||||||||||||||||||||||||||||||||
Deutsche Bank | 10/8/2021 | 10/8/2024 | (3) | |||||||||||||||||||||||||||||||||||
J.P. Morgan | 6/1/2022 | (4) | — | (4) | (5) | |||||||||||||||||||||||||||||||||
Total | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Principal Repayments | |||||
Remainder of 2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Management fees | $ | $ | $ | $ | |||||||||||||||||||
Expense reimbursements to related parties (1) | $ | $ | $ | $ |
Future Minimum Rental Income | ||||||||
Remainder of 2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Fixed rental and other property income (1) | $ | $ | $ | $ | |||||||||||||||||||
Variable rental and other property income (2) | |||||||||||||||||||||||
Total rental and other property income | $ | $ | $ | $ |
Real Estate | Credit | Corporate/Other (1) | Company Total | ||||||||||||||||||||
Three Months Ended September 30, 2023 | |||||||||||||||||||||||
Rental and other property income | $ | $ | $ | $ | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Property operating | |||||||||||||||||||||||
Real estate tax | |||||||||||||||||||||||
Expense reimbursements to related parties | |||||||||||||||||||||||
Management fees | |||||||||||||||||||||||
Transaction-related | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Real estate impairment | |||||||||||||||||||||||
Increase in provision for credit losses | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Gain on disposition of real estate and condominium developments, net | |||||||||||||||||||||||
Gain on investment in unconsolidated entities | |||||||||||||||||||||||
Unrealized loss on equity security | ( | ( | |||||||||||||||||||||
Other (expense) income, net | ( | ||||||||||||||||||||||
Loss on extinguishment of debt | ( | ( | |||||||||||||||||||||
Segment net income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Total assets as of September 30, 2023 | $ | $ | $ | $ |
Real Estate | Credit | Corporate/Other (1) | Company Total | ||||||||||||||||||||
Nine Months Ended September 30, 2023 | |||||||||||||||||||||||
Rental and other property income | $ | $ | $ | $ | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Property operating | |||||||||||||||||||||||
Real estate tax | |||||||||||||||||||||||
Expense reimbursements to related parties | |||||||||||||||||||||||
Management fees | |||||||||||||||||||||||
Transaction-related | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Real estate impairment | |||||||||||||||||||||||
Increase in provision for credit losses | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Gain on disposition of real estate and condominium developments, net | |||||||||||||||||||||||
Gain on investment in unconsolidated entities | |||||||||||||||||||||||
Unrealized gain on equity security | |||||||||||||||||||||||
Other (expense) income, net | ( | ||||||||||||||||||||||
Loss on extinguishment of debt | ( | ( | ( | ||||||||||||||||||||
Segment net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
Net income allocated to noncontrolling interest | |||||||||||||||||||||||
Segment net income (loss) attributable to the Company | $ | $ | $ | ( | $ | ||||||||||||||||||
Total assets as of September 30, 2023 | $ | $ | $ | $ |
Real Estate | Credit | Corporate/Other (1) | Company Total | ||||||||||||||||||||
Three Months Ended September 30, 2022 | |||||||||||||||||||||||
Rental and other property income | $ | $ | $ | $ | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Property operating | |||||||||||||||||||||||
Real estate tax | |||||||||||||||||||||||
Expense reimbursements to related parties | |||||||||||||||||||||||
Management fees | |||||||||||||||||||||||
Transaction-related | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Real estate impairment | |||||||||||||||||||||||
Increase in provision for credit losses | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Gain (loss) on disposition of real estate and condominium developments, net | ( | ||||||||||||||||||||||
Gain on investment in unconsolidated entities | |||||||||||||||||||||||
Unrealized loss on equity security | ( | ( | |||||||||||||||||||||
Other income, net | |||||||||||||||||||||||
(Loss) gain on extinguishment of debt | ( | ( | |||||||||||||||||||||
Segment net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
Net income allocated to noncontrolling interest | |||||||||||||||||||||||
Segment net income (loss) attributable to the Company | $ | $ | $ | ( | $ | ||||||||||||||||||
Total assets as of September 30, 2022 | $ | $ | $ | $ |
Real Estate | Credit | Corporate/Other (1) (2) | Company Total | ||||||||||||||||||||
Nine Months Ended September 30, 2022 | |||||||||||||||||||||||
Rental and other property income | $ | $ | $ | $ | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Property operating | |||||||||||||||||||||||
Real estate tax | |||||||||||||||||||||||
Expense reimbursements to related parties | |||||||||||||||||||||||
Management fees | |||||||||||||||||||||||
Transaction-related | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Real estate impairment | |||||||||||||||||||||||
Increase in provision for credit losses | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Gain on disposition of real estate and condominium developments, net | |||||||||||||||||||||||
Gain on investment in unconsolidated entities | |||||||||||||||||||||||
Unrealized (loss) gain on equity security | ( | ( | |||||||||||||||||||||
Other income, net | |||||||||||||||||||||||
Loss on extinguishment of debt | ( | ( | ( | ||||||||||||||||||||
Segment net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
Net income allocated to noncontrolling interest | |||||||||||||||||||||||
Segment net income (loss) attributable to the Company | $ | $ | $ | ( | $ | ||||||||||||||||||
Total assets as of September 30, 2022 | $ | $ | $ | $ |
As of September 30, | ||||||||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||||||||
Asset Count | Carrying Value | Asset Count | Carrying Value | |||||||||||||||||||||||||||||||||||
Loan Held-For-Investment | ||||||||||||||||||||||||||||||||||||||
First mortgage loans | 31 | $ | 3,389,950 | 56.6 | % | 29 | $ | 3,259,744 | 48.7 | % | ||||||||||||||||||||||||||||
Liquid corporate senior loans | 298 | 664,744 | 11.1 | % | 313 | 705,750 | 10.6 | % | ||||||||||||||||||||||||||||||
Corporate senior loans | 17 | 162,952 | 2.7 | % | 4 | 57,232 | 0.9 | % | ||||||||||||||||||||||||||||||
Less: Current expected credit losses | (110,710) | (1.8) | % | (29,584) | (0.4) | % | ||||||||||||||||||||||||||||||||
Total loans held-for-investment and related receivables, net | 346 | 4,106,936 | 68.6 | % | 346 | 3,993,142 | 59.8 | % | ||||||||||||||||||||||||||||||
Real Estate-Related Securities | ||||||||||||||||||||||||||||||||||||||
CMBS and equity security | 25 | 664,892 | 11.1 | % | 17 | 470,121 | 7.0 | % | ||||||||||||||||||||||||||||||
Less: Current expected credit losses | (25,748) | (0.4) | % | — | — | % | ||||||||||||||||||||||||||||||||
Total real estate-related securities, net | 25 | 639,144 | 10.7 | % | 17 | 470,121 | 7.0 | % | ||||||||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||||||||||||||||
Total real estate assets and intangible lease liabilities, net | 194 | 1,242,354 | 20.7 | % | 384 | 2,220,272 | 33.2 | % | ||||||||||||||||||||||||||||||
Total Investment Portfolio | 565 | $ | 5,988,434 | 100.0 | % | 747 | $ | 6,683,535 | 100.0 | % |
CRE Loans (1)(2) | Liquid Corporate Senior Loans | CMBS and Equity Security (2) | Corporate Senior Loans | |||||||||||||||||||||||
Number of investments (3) | 31 | 298 | 25 | 17 | ||||||||||||||||||||||
Principal balance | $ | 3,406,765 | $ | 671,321 | $ | 772,198 | $ | 165,701 | ||||||||||||||||||
Net book value | $ | 3,299,530 | $ | 646,753 | $ | 639,144 | $ | 160,653 | ||||||||||||||||||
Unfunded loan commitments | $ | 255,385 | $ | 201 | $ | — | $ | 25,000 | ||||||||||||||||||
Weighted-average interest rate | 8.6 | % | 9.1 | % | 9.1 | % | 11.9 | % | ||||||||||||||||||
Weighted-average maximum years to maturity | 2.9 | 4.4 | 4.6 | 3.5 |
As of September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Number of commercial properties | 194 | 384 | ||||||||||||
Rentable square feet (in thousands) (1) | 6,239 | 11,043 | ||||||||||||
Percentage of rentable square feet leased | 99.8 | % | 99.3 | % | ||||||||||
Percentage of investment-grade tenants (2) | 33.4 | % | 39.3 | % |
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
September 30, 2023 | September 30, 2022 | Change | September 30, 2023 | September 30, 2022 | Change | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||
Credit Segment | $ | 113,766 | $ | 66,222 | $ | 47,544 | $ | 336,887 | $ | 142,669 | $ | 194,218 | |||||||||||||||||||||||
Real Estate Segment | 25,008 | 43,465 | (18,457) | 89,311 | 170,509 | (81,198) | |||||||||||||||||||||||||||||
Corporate | 65 | 94 | (29) | 225 | 294 | (69) | |||||||||||||||||||||||||||||
138,839 | 109,781 | 29,058 | 426,423 | 313,472 | 112,951 | ||||||||||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||||||||||||
Credit Segment | 121,762 | 47,109 | 74,653 | 304,023 | 101,692 | 202,331 | |||||||||||||||||||||||||||||
Real Estate Segment | 26,845 | 32,975 | (6,130) | 77,942 | 139,017 | (61,075) | |||||||||||||||||||||||||||||
Corporate | 12,392 | 12,063 | 329 | 33,762 | 43,686 | (9,924) | |||||||||||||||||||||||||||||
160,999 | 92,147 | 68,852 | 415,727 | 284,395 | 131,332 | ||||||||||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||||||||||||||
Credit Segment | 3,475 | (5,685) | 9,160 | 16,873 | (9,414) | 26,287 | |||||||||||||||||||||||||||||
Real Estate Segment | 4,947 | 1,412 | 3,535 | 43,408 | 101,195 | (57,787) | |||||||||||||||||||||||||||||
Corporate | 2,696 | 2,178 | 518 | 4,048 | 7,395 | (3,347) | |||||||||||||||||||||||||||||
11,118 | (2,095) | 13,213 | 64,329 | 99,176 | (34,847) | ||||||||||||||||||||||||||||||
Net income | (11,042) | 15,539 | (26,581) | 75,025 | 128,253 | (53,228) | |||||||||||||||||||||||||||||
Net income allocated to non-controlling interest | — | 129 | (129) | 8 | 66 | (58) | |||||||||||||||||||||||||||||
Net income attributable to the Company | $ | (11,042) | $ | 15,410 | $ | (26,452) | $ | 75,017 | $ | 128,187 | $ | (53,170) |
For the Three Months Ended September 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Net income | $ | 3,110 | $ | 11,902 | $ | (8,792) | |||||||||||
Loss on extinguishment of debt | — | 5,615 | (5,615) | ||||||||||||||
Other income (expense), net | 385 | (2,423) | 2,808 | ||||||||||||||
Gain on disposition of real estate and condominium developments, net | (5,332) | (4,604) | (728) | ||||||||||||||
Real estate impairment | 6,754 | 527 | 6,227 | ||||||||||||||
Depreciation and amortization | 9,193 | 16,948 | (7,755) | ||||||||||||||
Transaction-related expenses | 82 | 2 | 80 | ||||||||||||||
Management fees | 2,580 | 4,849 | (2,269) | ||||||||||||||
General and administrative expenses | 118 | 215 | (97) | ||||||||||||||
Interest expense, net | 5,358 | 6,940 | (1,582) | ||||||||||||||
Net operating income | $ | 22,248 | $ | 39,971 | $ | (17,723) |
Total | Same Store | Non-Same Store | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended September 30, | For the Three Months Ended September 30, | For the Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||||||||||||||||||||||||||||
Rental and other property income | $ | 25,008 | $ | 43,465 | $ | (18,457) | $ | 24,529 | $ | 24,293 | $ | 236 | $ | 479 | $ | 19,172 | $ | (18,693) | |||||||||||||||||||||||||||||||||||
Property operating expenses | 1,515 | 2,109 | (594) | 1,027 | 942 | 85 | 488 | 1,167 | (679) | ||||||||||||||||||||||||||||||||||||||||||||
Real estate tax expenses | 1,245 | 1,385 | (140) | 929 | 948 | (19) | 316 | 437 | (121) | ||||||||||||||||||||||||||||||||||||||||||||
Total property operating expenses | 2,760 | 3,494 | (734) | 1,956 | 1,890 | 66 | 804 | 1,604 | (800) | ||||||||||||||||||||||||||||||||||||||||||||
Net operating income (loss) | $ | 22,248 | $ | 39,971 | $ | (17,723) | $ | 22,573 | $ | 22,403 | $ | 170 | $ | (325) | $ | 17,568 | $ | (17,893) |
For the Nine Months Ended September 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Net income | $ | 54,777 | $ | 132,687 | $ | (77,910) | |||||||||||
Loss on extinguishment of debt | 1,192 | 18,609 | (17,417) | ||||||||||||||
Other income (expense), net | 4,577 | (4,754) | 9,331 | ||||||||||||||
Gain on disposition of real estate and condominium developments, net | (49,177) | (115,050) | 65,873 | ||||||||||||||
Real estate impairment | 11,568 | 11,869 | (301) | ||||||||||||||
Depreciation and amortization | 33,622 | 54,104 | (20,482) | ||||||||||||||
Transaction-related expenses | 107 | 439 | (332) | ||||||||||||||
Management fees | 8,471 | 17,176 | (8,705) | ||||||||||||||
General and administrative expenses | 540 | 494 | 46 | ||||||||||||||
Interest expense, net | 16,674 | 32,281 | (15,607) | ||||||||||||||
Net operating income | $ | 82,351 | $ | 147,855 | $ | (65,504) |
Total | Same Store | Non-Same Store | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, | For the Nine Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||||||||||||||||||||||||||||
Rental and other property income | $ | 89,311 | $ | 170,509 | $ | (81,198) | $ | 73,447 | $ | 72,789 | $ | 658 | $ | 15,864 | $ | 97,720 | $ | (81,856) | |||||||||||||||||||||||||||||||||||
Property operating expenses | 4,400 | 13,403 | (9,003) | 2,978 | 2,674 | 304 | 1,422 | 10,729 | (9,307) | ||||||||||||||||||||||||||||||||||||||||||||
Real estate tax expenses | 2,560 | 9,251 | (6,691) | 2,829 | 2,809 | 20 | (269) | 6,442 | (6,711) | ||||||||||||||||||||||||||||||||||||||||||||
Total property operating expenses | 6,960 | 22,654 | (15,694) | 5,807 | 5,483 | 324 | 1,153 | 17,171 | (16,018) | ||||||||||||||||||||||||||||||||||||||||||||
Net operating income | $ | 82,351 | $ | 147,855 | $ | (65,504) | $ | 67,640 | $ | 67,306 | $ | 334 | $ | 14,711 | $ | 80,549 | $ | (65,838) |
Period Commencing | Period Ending | Monthly Distribution Amount | ||||||||||||
January 2022 | September 2022 | $0.0305 | ||||||||||||
October 2022 | December 2022 | $0.0339 | ||||||||||||
January 2023 | September 2023 | $0.0350 | ||||||||||||
October 2023 | December 2023 | $0.0367 | ||||||||||||
January 2024 | March 2024 | $0.0375 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||||||||
Distributions paid in cash | $ | 105,179 | 77 | % | $ | 91,297 | 76 | % | |||||||||||||||
Distributions reinvested | 32,117 | 23 | % | 28,664 | 24 | % | |||||||||||||||||
Total distributions | $ | 137,296 | 100 | % | $ | 119,961 | 100 | % | |||||||||||||||
Source of distributions: | |||||||||||||||||||||||
Net cash provided by operating activities (1) | $ | 137,296 | 100 | % | $ | 119,961 | 100 | % | |||||||||||||||
Total sources | $ | 137,296 | 100 | % | $ | 119,961 | 100 | % |
September 30, 2023 | December 31, 2022 | ||||||||||
Cash and cash equivalents | $ | 486,383 | $ | 118,978 | |||||||
Unused borrowing capacity (1) | 1,035,592 | 513,121 | |||||||||
$ | 1,521,975 | $ | 632,099 |
Portfolio Financing Outstanding Principal Balance | Maximum Capacity (1) | ||||||||||||||||
Notes payable – variable rate debt | $ | 494,381 | $ | 494,381 | |||||||||||||
ABS mortgage notes | 758,520 | 758,520 | |||||||||||||||
Credit facilities | 490,500 | 850,000 | |||||||||||||||
Repurchase facilities | 2,328,715 | 3,004,807 | (2) | ||||||||||||||
Total portfolio financing | $ | 4,072,116 | $ | 5,107,708 |
Payments due by period (1) | |||||||||||||||||||||||||||||
Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | |||||||||||||||||||||||||
Principal payments — variable rate debt | $ | 494,381 | $ | 73,612 | $ | — | $ | 420,769 | $ | — | |||||||||||||||||||
Principal payments — ABS mortgage notes | 758,520 | — | — | 303,408 | 455,112 | ||||||||||||||||||||||||
Principal payments — credit facilities | 490,500 | — | — | 490,500 | — | ||||||||||||||||||||||||
Principal payments — repurchase facilities | 2,328,715 | 641,354 | 1,687,361 | — | — | ||||||||||||||||||||||||
Interest payments (2) | 660,718 | 237,787 | 281,439 | 103,400 | 38,092 | ||||||||||||||||||||||||
Total | $ | 4,732,834 | $ | 952,753 | $ | 1,968,800 | $ | 1,318,077 | $ | 493,204 | |||||||||||||||||||
Period (1) | Total Number of Shares Redeemed | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||||||||
July 1, 2023 - July 31, 2023 | 171 | $ | 6.57 | 171 | (2) | ||||||||||||||||||||||||
August 1, 2023 - August 31, 2023 | 1,701,465 | $ | 6.57 | 1,701,465 | (2) | ||||||||||||||||||||||||
September 1, 2023 - September 30, 2023 | 25,764 | $ | 6.57 | 25,764 | (2) | ||||||||||||||||||||||||
Total | 1,727,400 | 1,727,400 | (2) | ||||||||||||||||||||||||||
Incorporated by Reference | |||||||||||||||||||||||||||||
Exhibit No. | Description | Form | File No. | Exhibit | Filing Date | ||||||||||||||||||||||||
3.1 | 8-K | 000-54939 | 3.1 | 8/20/2019 | |||||||||||||||||||||||||
3.2 | 10-K | 000-54939 | 3.2 | 3/28/2023 | |||||||||||||||||||||||||
4.1 | 8-K | 000-54939 | 4.1 | 5/1/2020 | |||||||||||||||||||||||||
4.2 | 8-K | 000-54939 | 4.1 | 8/3/2021 | |||||||||||||||||||||||||
4.3 | 8-K | 000-54939 | 4.2 | 8/3/2021 | |||||||||||||||||||||||||
31.1* | |||||||||||||||||||||||||||||
31.2* | |||||||||||||||||||||||||||||
32.1** | |||||||||||||||||||||||||||||
101.INS* | XBRL Instance Document. | ||||||||||||||||||||||||||||
101.SCH* | XBRL Taxonomy Extension Schema Document. | ||||||||||||||||||||||||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||||||||||||||||||||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | ||||||||||||||||||||||||||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | ||||||||||||||||||||||||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | ||||||||||||||||||||||||||||
104* | Cover Page Interactive Data File (formatted as InLine XBRL and contained in Exhibit 101). |
* | Filed herewith. | ||||
** | In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
CIM Real Estate Finance Trust, Inc. (Registrant) | |||||||||||
By: | /s/ Nathan D. DeBacker | ||||||||||
Name: | Nathan D. DeBacker | ||||||||||
Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
Date: | November 13, 2023 | /s/ RICHARD S. RESSLER | |||||||||
Name: | Richard S. Ressler | ||||||||||
Title: | Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer) |
Date: | November 13, 2023 | /s/ NATHAN D. DEBACKER | |||||||||
Name: | Nathan D. DeBacker | ||||||||||
Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
/s/ Richard S. Ressler | |||||||||||
Name: | Richard S. Ressler | ||||||||||
Title: | Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer) | ||||||||||
/s/ Nathan D. DeBacker | |||||||||||
Name: | Nathan D. DeBacker | ||||||||||
Date: | November 13, 2023 | Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fair value of CMBS | $ 25,748 | $ 0 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 490,000,000 | 490,000,000 |
Common stock, shares issued (in shares) | 437,267,415 | 437,397,414 |
Common stock, shares outstanding (in shares) | 437,267,415 | 437,397,414 |
Condensed Consolidated Statements Of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Revenues: | ||||
Rental and other property income | $ 25,073 | $ 43,559 | $ 89,536 | $ 170,803 |
Interest income | 113,766 | 66,222 | 336,887 | 142,669 |
Total revenues | 138,839 | 109,781 | 426,423 | 313,472 |
Expenses: | ||||
General and administrative | 4,267 | 3,435 | 12,486 | 10,590 |
Interest expense, net | 66,417 | 42,996 | 192,199 | 105,660 |
Property operating | 6,165 | 4,432 | 11,748 | 17,408 |
Real estate tax | 1,581 | 1,793 | 3,629 | 10,530 |
Expense reimbursements to related parties | 3,349 | 3,428 | 10,598 | 10,899 |
Management fees | 12,816 | 12,915 | 38,254 | 39,613 |
Transaction-related | 82 | 9 | 158 | 462 |
Depreciation and amortization | 9,193 | 16,948 | 33,622 | 54,104 |
Real estate impairment | 6,910 | 527 | 11,724 | 19,814 |
Increase in provision for credit losses | 50,219 | 5,664 | 101,309 | 15,315 |
Total expenses | 160,999 | 92,147 | 415,727 | 284,395 |
Other income (expense): | ||||
Gain on disposition of real estate and condominium developments, net | 5,968 | 4,454 | 52,154 | 118,135 |
Gain on investment in unconsolidated entities | 3,136 | 2,195 | 8,172 | 8,858 |
Unrealized (loss) gain on equity security | (2,073) | (9,030) | 3,281 | (15,440) |
Other income, net | 5,172 | 3,630 | 6,346 | 7,207 |
Loss on extinguishment of debt | (1,085) | (3,344) | (5,624) | (19,584) |
Total other income (loss) | 11,118 | (2,095) | 64,329 | 99,176 |
Net (loss) income | (11,042) | 15,539 | 75,025 | 128,253 |
Net income allocated to noncontrolling interest | 0 | 129 | 8 | 66 |
Net (loss) income attributable to the Company | $ (11,042) | $ 15,410 | $ 75,017 | $ 128,187 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 437,339,532 | 437,298,345 | 437,391,323 | 437,339,348 |
Diluted (in shares) | 437,339,532 | 437,298,345 | 437,391,323 | 437,339,348 |
Net (loss) income per common share: | ||||
Basic (in usd per share) | $ (0.03) | $ 0.04 | $ 0.17 | $ 0.29 |
Diluted (in usd per share) | $ (0.03) | $ 0.04 | $ 0.17 | $ 0.29 |
Condensed Consolidated Statements Of Comprehensive (Loss) Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (11,042) | $ 15,539 | $ 75,025 | $ 128,253 |
Other comprehensive loss | ||||
Unrealized loss on real estate-related securities | (944) | (8,709) | (32,860) | (24,496) |
Amount of loss reclassified from other comprehensive loss into income as an increase in provision for credit losses | 0 | 0 | 13,594 | 0 |
Unrealized gain on interest rate swaps | 0 | 78 | 0 | 2,361 |
Amount of gain reclassified from other comprehensive loss into income as interest expense, net | 0 | (2,613) | 0 | (2,551) |
Total other comprehensive loss | (944) | (11,244) | (19,266) | (24,686) |
Comprehensive (loss) income | (11,986) | 4,295 | 55,759 | 103,567 |
Comprehensive income attributable to noncontrolling interest | 0 | 129 | 8 | 66 |
Comprehensive (loss) income attributable to the Company | $ (11,986) | $ 4,166 | $ 55,751 | $ 103,501 |
Condensed Consolidated Statements Of Stockholders’ Equity (Parenthetical) - $ / shares |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
|
Statement of Stockholders' Equity [Abstract] | ||||||
Distributions declared on common stock (in USD per share) | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.09 | $ 0.09 | $ 0.09 |
ORGANIZATION AND BUSINESS |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | NOTE 1 — ORGANIZATION AND BUSINESS CIM Real Estate Finance Trust, Inc. (the “Company”) is a non-exchange traded real estate investment trust (“REIT”) formed as a Maryland corporation on July 27, 2010, that elected to be taxed, and operates its business to qualify, as a REIT for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2012. The Company seeks to attain attractive risk-adjusted returns and create long term value for its investors by investing in a diversified portfolio of senior secured mortgage loans, creditworthy long-term net-leased property investments and other senior loan and liquid credit investments. As of September 30, 2023, the Company’s loan portfolio consisted of 346 loans with a net book value of $4.1 billion, and investments in real estate-related securities of $639.1 million. As of September 30, 2023, the Company owned 194 properties, comprising approximately 6.2 million rentable square feet of commercial space located in 37 states. As of September 30, 2023, the rentable square feet at these properties was 99.8% leased, including month-to-month agreements, if any. As of September 30, 2023, the Company owned condominium developments with a net book value of $106.5 million. A majority of the Company’s business is conducted through CIM Real Estate Finance Operating Partnership, LP, a Delaware limited partnership, of which the Company is the sole general partner and owns, directly or indirectly, 100% of the partnership interests. The Company is externally managed by CIM Real Estate Finance Management, LLC, a Delaware limited liability company (“CMFT Management”), which is an affiliate of CIM Group, LLC (“CIM Group”). CIM Group is a community-focused real estate and infrastructure owner, operator, lender and developer. CIM Group is headquartered in Los Angeles, CA, with offices in Atlanta, GA, Chicago, IL, Dallas, TX, New York, NY, Orlando, FL, Phoenix, AZ and Tokyo, Japan. CIM Group also maintains additional offices across the United States, as well as in Korea, Hong Kong and the United Kingdom to support its platform. The Company relies upon CIM Capital IC Management, LLC, the Company’s investment advisor (the “Investment Advisor”), to provide substantially all of the Company’s day-to-day management with respect to investments in securities and certain other investments. Collectively, CMFT Management, the Company’s manager, and the Investment Advisor, together with certain other affiliates of CIM Group, serve as the Company’s sponsor, which is referred to as the Company’s “sponsor” or “CIM”. On January 26, 2012, the Company commenced its initial public offering on a “best efforts” basis of up to a maximum of $2.975 billion in shares of common stock (the “Initial Offering”). The Company ceased issuing shares in the Initial Offering on April 4, 2014. At the completion of the Initial Offering, a total of approximately 297.4 million shares of common stock had been issued, including approximately 292.3 million shares of common stock sold to the public pursuant to the primary portion of the Initial Offering and approximately 5.1 million shares of common stock issued pursuant to the distribution reinvestment plan (“DRIP”) portion of the Initial Offering. The remaining approximately 404,000 unsold shares from the Initial Offering were deregistered. The Company registered $247.0 million of shares of common stock under the DRIP (the “Initial DRIP Offering”) pursuant to a Registration Statement on Form S-3 (Registration No. 333-192958), which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 19, 2013 and automatically became effective with the SEC upon filing. The Company ceased issuing shares under the Initial DRIP Offering effective as of June 30, 2016. At the completion of the Initial DRIP Offering, a total of approximately $241.7 million of shares of common stock had been issued. The remaining $5.3 million of unsold shares from the Initial DRIP Offering were deregistered. The Company registered an additional $600.0 million of shares of common stock under the DRIP (the “Secondary DRIP Offering,” and together with the Initial DRIP Offering, the “DRIP Offerings,” and the DRIP Offerings collectively with the Initial Offering, the “Offerings”) pursuant to a Registration Statement on Form S-3 (Registration No. 333-212832), which was filed with the SEC on August 2, 2016 and automatically became effective with the SEC upon filing. The Company began to issue shares under the Secondary DRIP Offering on August 2, 2016 and continues to issue shares under the Secondary DRIP Offering. The Company’s board of directors (the “Board”) establishes an updated estimated per share net asset value (“NAV”) of the Company’s common stock on at least an annual basis for purposes of assisting broker-dealers that participated in the Initial Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231. Distributions are reinvested in shares of the Company’s common stock for participants in the DRIP at the estimated per share NAV as determined by the Board. Additionally, the estimated per share NAV as determined by the Board serves as the per share NAV for purposes of the share redemption program. As of September 30, 2023, the estimated per share NAV of the Company’s common stock was $6.57, which was established by the Board on December 19, 2022 using a valuation date of September 30, 2022. On November 9, 2023, the Board established an updated estimated per share NAV of the Company’s common stock, using a valuation date of September 30, 2023, of $6.31 per share. Commencing on November 14, 2023, distributions are reinvested in shares of the Company’s common stock under the DRIP at a price of $6.31 per share and $6.31 per share serves as the most recent estimated per share NAV for purposes of the share redemption program. The Company’s estimated per share NAVs are not audited or reviewed by its independent registered public accounting firm.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying condensed consolidated financial statements. Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of full year results. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2022, and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The condensed consolidated financial statements should also be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In determining whether the Company has controlling interests in an entity and is required to consolidate the accounts in that entity, the Company analyzes its credit and real estate investments in accordance with standards set forth in GAAP to determine whether the entities are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary. The Company’s judgment with respect to its level of influence or control over an entity and whether the Company is the primary beneficiary of a VIE involves consideration of various factors, including the form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions. The Company’s ability to correctly assess its influence or control over an entity affects the presentation of these credit and real estate investments on the Company’s condensed consolidated financial statements. Reclassifications Certain amounts in the Company’s prior period condensed consolidated financial statements have been reclassified to conform to the current period presentation. The Company has chosen to break out the details of $43.0 million and $105.7 million of interest expense, net from other income, net into expenses in the Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2022, respectively, driven by the Company’s current investment portfolio composition being predominantly comprised of credit investments. This reclassification of interest expense, net did not have an impact on net income or cash flow from operating activities. In addition, the Company has chosen to break out the details of $17.7 million of accrued interest receivable from in the Company’s condensed consolidated balance sheet as of September 30, 2022, which resulted in a corresponding breakout of $13.2 million from prepaid expenses and other assets to accrued interest receivable in the Company’s condensed consolidated statement of cash flows for the nine months ended September 30, 2022. The reclassifications had no effect on previously reported totals or subtotals. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows:
Recoverability of Real Estate Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited to: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, lease concessions and other factors; a significant decrease in a property’s revenues due to lease terminations; vacancies; co-tenancy clauses; reduced lease rates; changes in anticipated holding periods; significant increases to budgeted costs for units under development; and a reduction in prevailing market values for assets being considered for disposition. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value is determined using a discounted cash flow analysis and recent comparable sales transactions. During the nine months ended September 30, 2023, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of $11.6 million related to five properties due to sales prices or revised cash flow estimates that were less than their respective carrying values. Additionally, during the nine months ended September 30, 2023, one condominium unit was deemed to be impaired and its carrying value was reduced to its estimated fair value, resulting in impairment charges of $156,000. The Company’s impairment assessment as of September 30, 2023 was based on the most current information available to the Company, including expected holding periods. If the Company’s expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future. During the nine months ended September 30, 2022, the Company recorded impairment charges of $11.9 million related to 19 properties, all of which was due to sales prices that were less than their respective carrying values. Additionally, during the nine months ended September 30, 2022, certain condominium units were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $7.9 million. The assumptions and uncertainties utilized in the evaluation of the impairment of real estate assets are discussed in detail in Note 3 — Fair Value Measurements. See also Note 4 — Real Estate Assets for further discussion regarding real estate investment activity. Assets Held for Sale When a real estate asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the assets related to the property and estimate its fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount is then recorded to reflect the estimated fair value of the property, net of selling costs. As of September 30, 2023, the Company did not identify any real estate assets as held for sale. Dispositions of Real Estate Assets Gains and losses from dispositions are recognized once the various criteria relating to the terms of sale and any subsequent involvement by the Company with the asset sold are met. A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect on an entity’s financial results. Given the Company’s current asset portfolio and strategy, the Company’s dispositions during the nine months ended September 30, 2023 and 2022 did not qualify for discontinued operations presentation and thus, the results of the properties and condominiums that were sold will remain in operating income, and any associated gains or losses from the dispositions are included in gain on disposition of real estate and condominium developments, net. See Note 4 — Real Estate Assets for a discussion of the disposition of individual properties and condominiums during the nine months ended September 30, 2023. Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases and other intangibles, based in each case on their relative fair values. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information. The determination of the fair values of the real estate assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations. Certain acquisition-related expenses related to asset acquisitions are capitalized and allocated to tangible and intangible assets and liabilities, as described above. Acquisition-related manager expense reimbursements are expensed as incurred and are included in expense reimbursements to related parties in the accompanying condensed consolidated statements of operations. Other acquisition-related expenses continue to be expensed as incurred and are included in transaction-related expenses in the accompanying condensed consolidated statements of operations. Investment in Unconsolidated Entities CMFT MT JV Holdings, LLC, an indirect wholly-owned subsidiary of the Company, is engaged in an unconsolidated joint venture arrangement through CIM NP JV Holdings, LLC (“NP JV Holdings”) (the “Unconsolidated Joint Venture”), of which it owns 50% of the outstanding equity. Through the Unconsolidated Joint Venture, which holds approximately 90% of the membership interest in NewPoint JV, LLC (the “NewPoint JV”) pursuant to the terms of the Operating Agreement entered into between the Unconsolidated Joint Venture and NewPoint Bridge Lending, LLC, the Company indirectly owns approximately 45% of the outstanding equity of the NewPoint JV on a fully diluted basis. The Company accounts for its investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and is subsequently adjusted for the Company’s share of equity in NP JV Holdings’ earnings and distributions, including unrealized gains and losses as a result of changes in fair value of the NewPoint JV. The Company records its share of NP JV Holdings’ profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations. The Company recorded a gain of $3.1 million and $8.2 million, respectively, which represented its share of NP JV Holdings’ gain, during the three and nine months ended September 30, 2023, respectively, in the condensed consolidated statements of operations. The Company recorded a gain of $2.2 million and $3.7 million, respectively, which represented its share of NP JV Holdings’ gain, during the three and nine months ended September 30, 2022. During the nine months ended September 30, 2023, the Company contributed an additional $14.5 million in NP JV Holdings. The Company also received $12.4 million in distributions during the nine months ended September 30, 2023, $5.8 million of which can be called back by NewPoint JV through NP JV Holdings as a capital call on a future date. As of September 30, 2023 and December 31, 2022, the Company’s aggregate investment in NP JV Holdings of $110.8 million and $100.6 million, respectively, is included in investment in unconsolidated entities on the condensed consolidated balance sheets. For more information, refer to Note 6 — Investment in Unconsolidated Entities. On March 31, 2022, the Company fully redeemed its $60.7 million investment in CIM UII Onshore, L.P. (“CIM UII Onshore”). Prior to redemption, the Company had less than 5% ownership of CIM UII Onshore and accounted for its investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and subsequently adjusted for the Company’s share of equity in CIM UII Onshore’s earnings and distributions. Prior to redemption, the Company recorded its share of CIM UII Onshore’s profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s consolidated balance sheet and such share is recognized as a profit or loss on the consolidated statements of operations. During the nine months ended September 30, 2022, the Company recorded its share of CIM UII Onshore’s gain totaling $5.2 million. The Company received distributions of $531,000 related to its investment in CIM UII Onshore, all of which was recognized as a return on investment during the nine months ended September 30, 2022. Restricted Cash The Company had $23.3 million and $57.6 million in restricted cash as of September 30, 2023 and December 31, 2022, respectively. Included in restricted cash was $1.7 million and $15.4 million held by lenders in lockbox accounts, as of September 30, 2023 and December 31, 2022, respectively. As part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company. Also included in restricted cash was $2.0 million and $22.6 million of construction reserves, amounts held by lenders in escrow accounts for real estate taxes and other lender reserves for certain properties, in accordance with the associated lender’s loan agreement as of September 30, 2023 and December 31, 2022, respectively. In addition, the Company had a $19.6 million deposit held as cash collateral included in restricted cash as of September 30, 2023 and December 31, 2022 to be applied by Barclays Bank PLC (“Barclays”) as repayment of certain eligible assets transferred under the master repurchase agreement with Barclays. Subsequent to September 30, 2023, Barclays applied the $19.6 million deposit held as cash collateral as repayment towards certain eligible assets financed under the repurchase facility with Barclays. Real Estate-Related Securities Real estate-related securities consists primarily of the Company’s investments in commercial mortgage-backed securities (“CMBS”) and equity securities. The Company determines the appropriate classification for real estate-related securities at the time of purchase and reevaluates such designation as of each balance sheet date. As of September 30, 2023, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities; however, the Company may sell them prior to their maturity. These investments are carried at their estimated fair value with unrealized gains and losses reported in other comprehensive loss. During the nine months ended September 30, 2023, the Company invested $143.2 million in CMBS. As of September 30, 2023, the Company had investments in 24 CMBS with an estimated aggregate fair value of $597.6 million. The amortized cost of the Company’s available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method. In addition, the Company had an investment in an equity security with an estimated aggregate fair value of $41.5 million as of September 30, 2023, which is comprised of Global Net Lease, Inc.’s common stock (“GNL Common Stock”). The GNL Common Stock was converted from RTL Common Stock, which was received as consideration in connection with the RTL Purchase and Sale Agreement (both of which are defined in Note 4 — Real Estate Assets), upon the consummation of the transactions pursuant to the agreement and plan of merger by and among Global Net Lease, Inc. (NASDAQ: GNL) (“GNL”) and The Necessity Retail REIT, Inc. (NASDAQ: RTL) (“RTL”), among others. The RTL Common Stock was cancelled in accordance with the terms of the aforementioned agreement and plan of merger and was converted into 0.670 shares of GNL Common Stock during the three months ended September 30, 2023. This investment is carried at its estimated fair value with unrealized gains and losses reported on the condensed consolidated statements of operations. During the three and nine months ended September 30, 2023, the Company recorded $1.4 million and $4.1 million, respectively, of dividend income on GNL Common Stock. During the three and nine months ended September 30, 2022, the Company recorded $1.4 million and $2.7 million, respectively, of dividend income on GNL Common Stock. Dividend income is included in other income, net on the condensed consolidated statements of operations. The Company also recorded $2.1 million of unrealized loss and $3.3 million of unrealized gain on GNL Common Stock during the three and nine months ended September 30, 2023, respectively, and recorded $9.0 million and $15.5 million of unrealized loss on GNL Common Stock during the three and nine months ended September 30, 2022, respectively, all of which is included in unrealized (loss) gain on equity security in the condensed consolidated statements of operations. The Company monitors its available-for-sale securities for changes in fair value. A loss is recognized when the Company determines that a decline in the estimated fair value of a security below its amortized cost has resulted from a credit loss or other factors, such as market conditions. Such losses that are credit related are recorded as a current expected credit loss in increase in provision for credit losses on the Company’s condensed consolidated statements of operations. Subsequent cumulative adverse changes in expected cash flows on the Company’s available-for-sale securities are recognized as an increase to current expected credit losses. However, the allowance is limited to the amount by which the available-for-sale security’s amortized cost exceeds its fair value. Favorable changes in expected cash flows are recognized as a decrease to current expected credit losses. For additional information regarding the Company’s process for estimating current expected credit losses for its real estate-related securities, see the Current Expected Credit Losses section below. Interest earned is either received in cash or capitalized to real estate-related securities in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each security agreement. During the three and nine months ended September 30, 2023, the Company capitalized $292,000 and $863,000, respectively, of interest income to real estate-related securities. During the three and nine months ended September 30, 2022, the Company capitalized $280,000 and $826,000, respectively, of interest income to real estate-related securities. Loans Held-for-Investment The Company’s loans held-for-investment include loans related to real estate assets, as well as credit investments, including commercial mortgage loans and other loans and securities related to commercial real estate assets, as well as corporate loan opportunities that are consistent with the Company’s investment strategy and objectives. The Company intends to hold the loans held-for-investment for the foreseeable future or until maturity. Loans held-for-investment are carried on the Company’s condensed consolidated balance sheets at amortized cost, net of any current expected credit losses, and is adjusted for amortization of premiums and accretion of discounts to maturity. Interest earned is either received in cash or capitalized to loans held-for-investment and related receivables, net in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each loan agreement. During the nine months ended September 30, 2022, the Company capitalized $62,000 of interest income to loans held-for-investment. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status. See the Revenue Recognition section below for additional information regarding the Company’s revenue from lending activities. As of September 30, 2023, the Company had two first mortgage loan investments on nonaccrual status with an aggregate carrying value of $206.0 million, which represented approximately 8% of the carrying value of the Company’s first mortgage loan portfolio. As of September 30, 2023, one of the Company’s liquid corporate senior loan investments was on a nonaccrual status with a carrying value of $2.9 million, which represented less than 1% of the carrying value of the Company’s liquid corporate senior loans portfolio. For more information regarding these loans, refer to Note 8 — Loans Held-For-Investment. Current Expected Credit Losses The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), on January 1, 2020. Current expected credit losses (“CECL”) required under ASU 2016-13 reflects the Company’s current estimate of potential credit losses related to the Company’s loans held-for-investment and CMBS included in the condensed consolidated balance sheets. Changes to current expected credit losses are recognized through net income on the Company’s condensed consolidated statements of operations. While ASU 2016-13 does not require any particular method for determining current expected credit losses, it does specify current expected credit losses should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan. In addition, other than a few narrow exceptions, ASU 2016-13 requires that all financial instruments subject to the credit loss model have some amount of loss reserve to reflect the GAAP principal underlying the credit loss model that all loans, debt securities, and similar assets have some inherent risk of loss, regardless of credit quality, subordinate capital, or other mitigating factors. The Company estimates the current expected credit loss for its first mortgage loans primarily using the Weighted Average Remaining Maturity method, which has been identified as an acceptable method for estimating CECL reserves in the Financial Accounting Standards Board (“FASB”) Staff Q&A Topic 326, No. 1. This method requires the Company to reference historic loan loss data across a comparable data set and apply such loss rate to each loan investment over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral less costs to sell and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that the Company determines foreclosure is not probable, the Company applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. For the Company’s liquid corporate senior loans and corporate senior loans, the Company uses a probability of default and loss given default method using a comparable data set. The Company may use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data. Quarterly, the Company evaluates the risk of all loans held-for-investment and assigns a risk rating based on a variety of factors, grouped as follows: (i) loan and credit structure, including the as-is loan-to-value (“LTV”) ratio and structural features; (ii) quality and stability of real estate value and operating cash flow, including debt yield, dynamics of the geography, property type and local market, physical condition, stability of cash flow, leasing velocity and quality and diversity of tenancy; (iii) performance against underwritten business plan; and (iv) quality, experience and financial condition of sponsor, borrower and guarantor(s). Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows: 1-Outperform — Most satisfactory asset quality and liquidity, good leverage capacity. A “1” rating maintains predictable and strong cash flows from operations. The trends and outlook for the credit's operations, balance sheet, and industry are neutral to favorable. Collateral, if appropriate, exceeds performance metrics; 2-Meets or Exceeds Expectations — Acceptable asset quality, moderate excess liquidity, modest leverage capacity. A “2” rating could have some financial/non-financial weaknesses which are offset by strengths; however, the credit demonstrates an ample current cash flow from operations. The trends and outlook for the credit's operations, balance sheet, and industry are generally positive or neutral. Collateral performance, if appropriate, meets or exceeds substantially all performance metrics included in original or current underwriting / business plan; 3-Satisfactory — Acceptable asset quality, somewhat strained liquidity, minimal leverage capacity. A “3” rating is at times characterized by acceptable cash flows from operations. The trends and conditions of the credit's operations and balance sheet are neutral. Collateral performance, if appropriate, meets or is on track to meet underwriting; business plan can reasonably be achieved; 4-Underperformance — The debt investment possesses credit deficiencies or potential weaknesses which deserve management’s close and continued attention. The portfolio company’s operations and/or balance sheet have demonstrated an adverse trend or deterioration which, while serious, has not reached the point where the liquidation of debt is jeopardized. These weaknesses are generally considered correctable by the borrower in the normal course of business but may weaken the asset or inadequately protect the Company’s credit position if not checked or corrected. Collateral performance, if appropriate, falls short of original underwriting, material differences exist from business plan, or both; technical milestones have been missed; defaults may exist, or may soon occur absent material improvement; and 5-Default/Possibility of Loss — The debt investment is protected inadequately by the current enterprise value or paying capacity of the obligor or of the collateral, if any. The underlying company’s operations have well-defined weaknesses based upon objective evidence, such as recurring or significant decreases in revenues and cash flows. Major variance from business plan; loan covenants or technical milestones have been breached; timely exit from loan via sale or refinancing is questionable; risk of principal loss. Collateral performance, if appropriate, is significantly worse than underwriting. The Company generally assigns a risk rating of “3” to all newly originated or acquired loans held-for-investment during a most recent quarter, except in the case of specific circumstances warranting an exception. In estimating credit losses related to real estate-related securities, management considers a variety of factors, including, but not limited to, the extent to which the fair value is less than the amortized cost basis, recent events specific to the security, industry or geographic area, the payment structure of the security, the failure of the issuer of the security to make scheduled interest or principal payments, and external credit ratings and recent changes in such ratings. Credit losses, if any, are estimated by calculating the difference between (i) the present value of estimated cash flows expected to be collected from the security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) the net amortized cost basis of the security. Significant judgment is used in estimating future cash flows for the Company’s real estate-related securities. Leases The Company has lease agreements with lease and non-lease components. The Company has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as rental and other property income. Non-lease components included in rental and other property income include certain tenant reimbursements for maintenance services (including common-area maintenance services or “CAM”), real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. As a lessor, the Company has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. The Company is not a party to any material leases where it is the lessee. Significant judgments and assumptions are inherent in not only determining if a contract contains a lease, but also the lease classification, terms, payments, and, if needed, discount rates. Judgments include the nature of any options, including if they will be exercised, evaluation of implicit discount rates and the assessment and consideration of “fixed” payments for straight-line rent revenue calculations. Lease costs represent the initial direct costs incurred in the origination, negotiation and processing of a lease agreement. Such costs include outside broker commissions and other independent third-party costs and are amortized over the life of the lease on a straight-line basis. Costs related to salaries and benefits, supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are expensed as incurred. Upon successful lease execution, leasing commissions are capitalized. Development Activities Project costs and expenses, including interest incurred, associated with the development, construction and lease-up of a real estate project are capitalized as construction in progress. During the nine months ended September 30, 2023 and 2022, the Company capitalized $9.1 million and $10.9 million, respectively, of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets. Included in the amounts capitalized during the nine months ended September 30, 2023 and 2022 was $1.0 million and $1.1 million, respectively, of capitalized interest expense. Revenue Recognition Revenue from leasing activities Rental and other property income is primarily derived from fixed contractual payments from operating leases, and therefore, is generally recognized on a straight-line basis over the term of the lease, which typically begins the date the tenant takes control of the space. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. Variable rental and other property income consists primarily of tenant reimbursements for recoverable real estate taxes and operating expenses which are included in rental and other property income in the period when such costs are incurred, with offsetting expenses in real estate taxes and property operating expenses, respectively, within the condensed consolidated statements of operations. The Company defers the recognition of variable rental and other property income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants are probable. The determination of whether collectability is probable takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon the determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income for amounts previously recorded and a decrease in the outstanding receivable. Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of lease-related receivables is based on the best information available at the time of estimate. The Company does not use a general reserve approach and lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable. Revenue from lending activities Interest income from the Company’s loans held-for-investment and available-for-sale securities is recognized using the effective interest method (or the modified straight-line method when it is materially consistent with the effective interest method). Interest income is comprised of interest earned on loans and the accretion and amortization of net loan origination fees and discounts recognized through the life of each investment. Interest income on loans is accrued as earned, with the accrual of interest suspended when the related loan becomes a nonaccrual loan. Interest income on the Company’s liquid corporate senior loans is accrued as earned beginning on the settlement date. Upon the sale of a security, the realized net gain or loss is computed on the specific identification method. Accrual of interest income is suspended on nonaccrual loans. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status. Interest collected is recognized on a cash basis when received or as a reduction in the amortized cost basis, based on specific facts and circumstances, until accrual is resumed when the loan becomes contractually current and the Company believes all future principal and interest will be received according to the contractual loan terms. Reportable Segments The Company’s segment information reflects how the chief operating decision makers review information for operational decision-making purposes. The Company has two reportable segments: Credit — engages primarily in acquiring and originating primarily floating rate first and second lien mortgage loans, either directly or through co-investments in joint ventures, related to real estate assets. This segment also includes investments in real estate-related securities, liquid corporate senior loans and corporate senior loans. Real estate — engages primarily in acquiring and managing geographically diversified income-producing retail, industrial and office properties that are primarily single-tenant properties, which are leased to creditworthy tenants under long-term net leases. See Note 16 — Segment Reporting for a further discussion regarding these segments. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements. On March 31, 2022, the FASB issued ASU No. 2022-02, Troubled Debt Restructurings and Vintage Disclosures (Topic 326) (“ASU 2022-02”). ASU 2022-02 eliminates the recognition and measurement guidance for troubled debt restructurings (“TDRs”) and, instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The ASU also enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The ASU became effective for the Company beginning January 1, 2023 and is generally to be applied prospectively. ASU 2022-02 did not have an impact on the Company’s condensed consolidated financial statements for the nine months ended September 30, 2023. In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The amendments in this update clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new disclosure requirements related to such equity securities. The amendments are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not believe the adoption of ASU 2022-03 will have an impact on its condensed consolidated financial statements and disclosures. In August 2023, the FASB issued ASU No. 2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 applies to the formation of a joint venture and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance is intended to reduce diversity in practice and provide users of joint venture financial statements with more decision-useful information. The amendments are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. The Company does not believe the adoption of ASU 2023-05 will have a material impact on its condensed consolidated financial statements and disclosures.
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FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS | NOTE 3 — FAIR VALUE MEASUREMENTS GAAP defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows: Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Level 3 — Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability. The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities: Real estate-related securities — The Company generally determines the fair value of its CMBS by utilizing broker-dealer quotations, reported trades or valuation estimates from pricing models to determine the reported price. Pricing models for CMBS are generally discounted cash flow models that usually consider the attributes applicable to a particular class of security (e.g., credit rating, seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available. Depending upon the significance of the fair value inputs used in determining these fair values, these securities are valued using Level 1, Level 2 or Level 3 inputs. As of September 30, 2023, the Company concluded that $438.1 million of its CMBS fell under Level 2 and $159.6 million of its CMBS fell under Level 3. The Company’s equity security investment is valued using Level 1 inputs. The estimated fair value of the Company’s equity security is based on quoted market prices that are readily and regularly available in an active market. Credit facilities and notes payable — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. These financial instruments are valued using Level 2 inputs. As of September 30, 2023, the estimated fair value of the Company’s debt was $3.95 billion, compared to a carrying value of $4.07 billion. The estimated fair value of the Company’s debt as of December 31, 2022 was $4.32 billion, compared to a carrying value of $4.44 billion. Derivative instruments — The Company’s derivative instruments are comprised of interest rate caps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of September 30, 2023 and December 31, 2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Loans held-for-investment — The Company’s loans held-for-investment are recorded at cost upon origination net of loan origination fees and discounts. The Company estimates the fair value of its loans held-for-investment by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk. The Company has determined that its commercial real estate (“CRE”) loans held-for-investment and corporate senior loans are classified in Level 3 of the fair value hierarchy. The Company’s liquid corporate senior loans are classified as Level 2 or Level 3 depending on the number of market quotations or indicative prices from pricing services that are available, and whether the depth of the market is sufficient to transact at those prices in amounts approximating the Company’s investment position at the measurement date. As of September 30, 2023, $576.7 million and $65.6 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of December 31, 2022, $494.4 million and $168.0 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of September 30, 2023, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $4.14 billion, compared to its carrying value of $4.11 billion. As of December 31, 2022, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $3.98 billion, compared to its carrying value of $4.00 billion. Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses, other liabilities, due to affiliates and distributions payable to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liable for, upon disposition of the financial assets and liabilities. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. The Company does not expect that changes in classifications between levels will be frequent. Items Measured at Fair Value on a Recurring Basis In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets that are required to be measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 (in thousands):
The following are reconciliations of the changes in financial assets with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, 2023 (in thousands):
____________________________________ (1) Does not include $7.1 million of unrealized losses recognized prior to January 1, 2023 that were reclassified from other comprehensive loss on the condensed consolidated statements of comprehensive (loss) income to increase in provision for credit losses on the condensed consolidated statements of operations during the nine months ended September 30, 2023. Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges) Certain financial and nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The Company’s process for identifying and recording impairment related to real estate assets and intangible assets is discussed in Note 2 — Summary of Significant Accounting Policies. As discussed in Note 4 — Real Estate Assets, during the nine months ended September 30, 2023, real estate assets related to five properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $38.6 million, resulting in impairment charges of $11.6 million. Additionally, during the nine months ended September 30, 2023, one condominium unit was deemed to be impaired and its carrying value was reduced to its estimated fair value, resulting in impairment charges of $156,000. During the nine months ended September 30, 2022, real estate assets related to 19 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $114.1 million, resulting in impairment charges of $11.9 million. Additionally, during the nine months ended September 30, 2022, certain condominium units were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $7.9 million. The Company estimates fair values using Level 3 inputs and a combined income and market approach, specifically using discounted cash flow analysis and recent comparable sales transactions. The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgment and to make certain key assumptions, including, but not limited to, the following: (1) terminal capitalization rates; (2) discount rates; (3) the number of years the property will be held; (4) property operating expenses; and (5) re-leasing assumptions, including the number of months to re-lease, market rental income and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and the future performance and sustainability of the Company’s tenants. The Company determined that the selling prices used to determine the fair values were Level 2 inputs. The following summarizes the ranges of discount rates and terminal capitalization rates used for the Company’s impairment test for the real estate assets during the nine months ended September 30, 2023 and 2022:
The following table presents the impairment charges by asset class recorded during the nine months ended September 30, 2023 and 2022 (in thousands):
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REAL ESTATE ASSETS |
9 Months Ended |
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Sep. 30, 2023 | |
Real Estate [Abstract] | |
REAL ESTATE ASSETS | NOTE 4 — REAL ESTATE ASSETS Property Acquisitions During the nine months ended September 30, 2023 and 2022, the Company did not acquire any properties. Condominium Development Project During the nine months ended September 30, 2023 and 2022, the Company capitalized $9.1 million and $10.9 million, respectively, of expenditures associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets. Condominium Dispositions During the nine months ended September 30, 2023, the Company disposed of condominium units for an aggregate sales price of $43.1 million, resulting in proceeds of $39.1 million after closing costs and a gain of $3.0 million. During the nine months ended September 30, 2022, the Company disposed of condominium units for an aggregate sales price of $24.2 million, resulting in proceeds of $22.0 million after closing costs and a gain of $3.1 million. The Company has no continuing involvement that would preclude sale treatment with these condominium units. The gain on sale of condominium units is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations. 2023 Property Dispositions On December 29, 2022, certain subsidiaries of the Company entered into an Agreement of Purchase and Sale (the “Realty Income Purchase and Sale Agreement”) with certain subsidiaries of Realty Income Corporation (NYSE: O) (“Realty Income”), to sell to Realty Income 185 single-tenant net lease properties encompassing approximately 4.6 million gross rentable square feet of commercial space across 34 states for total consideration of $894.0 million. The consideration was paid in cash. During the nine months ended September 30, 2023, the Company disposed of 186 properties, including 183 retail properties and three industrial properties, for an aggregate gross sales price of $913.5 million, resulting in proceeds of $903.7 million after closing costs and a gain of $43.9 million. The sale of 178 of these properties closed pursuant to the Realty Income Purchase and Sale Agreement for total consideration of $861.0 million, resulting in proceeds of $852.6 million after closing costs and a gain of $32.3 million. No properties are remaining to be sold pursuant to the Realty Income Purchase and Sale Agreement. The Company has no continuing involvement that would preclude sale treatment with these properties. The gain on sale of real estate is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations. 2022 Property Dispositions On December 20, 2021, certain subsidiaries of the Company entered into an Agreement of Purchase and Sale, as amended (the “RTL Purchase and Sale Agreement”), with American Finance Trust, Inc. (subsequently known as RTL), American Finance Operating Partnership, L.P. (subsequently known as The Necessity Retail REIT Operating Partnership, L.P.) (“RTL OP”), and certain of their subsidiaries (collectively, the “Purchaser”) to sell to the Purchaser 79 shopping centers and two single-tenant properties encompassing approximately 9.5 million gross rentable square feet of commercial space across 27 states for total consideration of $1.32 billion (the “Purchase Price”). The Purchase Price included the Purchaser’s option to seek the assumption of certain existing debt, and Purchaser’s issuance of up to $53.4 million in value of RTL’s Class A common stock, par value $0.01 per share (“RTL Common Stock”) (now known as GNL Common Stock; refer to Note 2 — Summary of Significant Accounting Policies for additional information), or Class A units in RTL OP (“RTL OP Units”), subject to certain limits described more fully in the RTL Purchase and Sale Agreement. During the nine months ended September 30, 2022, the Company disposed of 130 properties, including 65 retail properties, 56 anchored shopping centers, six industrial properties and three office buildings and an outparcel of land for an aggregate gross sales price of $1.71 billion, resulting in proceeds of $1.67 billion after closing costs and a gain of $115.0 million. Included in this amount of properties disposed were two properties previously owned through a consolidated joint venture arrangement. The sale of 81 of these properties closed pursuant to the RTL Purchase and Sale Agreement for total consideration of $1.33 billion, which consisted of $1.28 billion in cash proceeds and $53.4 million of RTL Common Stock, which shares are subject to certain registration rights as described in the RTL Purchase and Sale Agreement. During the nine months ended September 30, 2022, the Company recognized earnout income of $68.7 million related to the disposition of these properties pursuant to the RTL Purchase and Sale Agreement, and recorded a related receivable of $20.3 million in prepaid expenses and other assets in the condensed consolidated balance sheets. The Company has no continuing involvement with these properties that would preclude sale treatment. The gain on sale of real estate, including the earnout income, is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations. During the three and nine months ended September 30, 2023, the Company received $5.3 million in additional earnout proceeds upon the settlement of earnout claims related to the disposition of the properties pursuant to the RTL Purchase and Sale Agreement, which is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations. Impairment The Company performs quarterly impairment review procedures, primarily through continuous monitoring of events and changes in circumstances that could indicate that the carrying value of certain of its real estate assets may not be recoverable. See Note 2 — Summary of Significant Accounting Policies for a discussion of the Company’s accounting policies regarding impairment of real estate assets. During the nine months ended September 30, 2023, five properties totaling approximately 240,000 square feet with a carrying value of $50.2 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $38.6 million, resulting in impairment charges of $11.6 million, which were recorded in the condensed consolidated statements of operations. Additionally, during the nine months ended September 30, 2023, one condominium unit was deemed to be impaired and its carrying value was reduced to its estimated fair value, resulting in impairment charges of $156,000, which was recorded in the condensed consolidated statements of operations. During the nine months ended September 30, 2022, 19 properties totaling approximately 832,000 square feet with a carrying value of $126.0 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $114.1 million, resulting in impairment charges of $11.9 million, which were recorded in the condensed consolidated statements of operations. Additionally, during the nine months ended September 30, 2022, certain condominium units were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $7.9 million, which were recorded in the condensed consolidated statements of operations. See Note 3 — Fair Value Measurements for a further discussion regarding these impairment charges.
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INTANGIBLE LEASE ASSETS AND LIABILITIES |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE LEASE ASSETS AND LIABILITIES | NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES Intangible lease assets and liabilities consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands, except weighted average life remaining):
Amortization of the above-market leases is recorded as a reduction to rental and other property income, and amortization expense for the in-place leases and other intangibles is included in depreciation and amortization in the accompanying condensed consolidated statements of operations. Amortization of below-market leases is recorded as an increase to rental and other property income in the accompanying condensed consolidated statements of operations. The following table summarizes the amortization related to the intangible lease assets and liabilities for the three and nine months ended September 30, 2023 and 2022 (in thousands):
As of September 30, 2023, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):
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INVESTMENT IN UNCONSOLIDATED ENTITIES |
9 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
INVESTMENT IN UNCONSOLIDATED ENTITIES | NOTE 6 — INVESTMENT IN UNCONSOLIDATED ENTITIES During the year ended December 31, 2021, the Company entered into the Unconsolidated Joint Venture, of which the Company owns 50% of the outstanding equity. The Unconsolidated Joint Venture holds approximately 90% of the membership interest in the NewPoint JV. Through the Unconsolidated Joint Venture, the Company has an approximate 45% interest in the NewPoint JV and accounts for its investment under the equity method. The primary purpose of the NewPoint JV is to source, underwrite, close and service on an ongoing basis multifamily bridge loans, participation interests, and other debt instruments such as loans. As of September 30, 2023, the carrying value of the Company’s investment in NP JV Holdings was $110.8 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance sheets. The Company received $12.4 million in distributions related to its investment in NP JV Holdings during the nine months ended September 30, 2023, $7.6 million of which was recognized as a return on investment and $4.8 million of which was recognized as a return of investment and reduced the invested capital and the carrying amount. As of September 30, 2023, the Company had $104.0 million of unfunded commitments related to NewPoint JV. These commitments are not reflected in the accompanying condensed consolidated balance sheets. The Company provided a limited guaranty to NewPoint JV, under which the Company agreed to guarantee the Unconsolidated Joint Venture’s cross indemnity and its share of capital contribution obligations under the agreement with NewPoint JV. On March 31, 2022, the Company fully redeemed its $60.7 million investment in CIM UII Onshore, which represented less than 5% ownership of CIM UII Onshore and approximated fair value. During the nine months ended September 30, 2022, the Company recognized an equity method net gain of $5.2 million related to its investment in CIM UII Onshore. The Company recognized distributions of $531,000 related to its investment in CIM UII Onshore during the nine months ended September 30, 2022, all of which was recognized as a return on investment.
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REAL ESTATE-RELATED SECURITIES |
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REAL ESTATE-RELATED SECURITIES | NOTE 7 — REAL ESTATE-RELATED SECURITIES As of September 30, 2023, the Company had real estate-related securities with an aggregate estimated fair value of $639.1 million, which included 24 CMBS investments and an investment in a publicly-traded equity security. The CMBS have initial maturity dates ranging from December 2023 through June 2058 and have interest rates ranging from 6.6% to 12.4% as of September 30, 2023, with one CMBS earning a zero coupon rate. The following is a summary of the Company’s real estate-related securities as of September 30, 2023 (in thousands):
The following table provides the activity for the real estate-related securities during the nine months ended September 30, 2023 (in thousands):
____________________________________ (1) Includes the repayment of the Company’s position in two different tranches of a CMBS instrument prior to their stated maturity dates. During the nine months ended September 30, 2023, the Company invested $143.2 million in CMBS. Unrealized gains and losses on CMBS are recorded in other comprehensive loss, with a portion of the amount subsequently reclassified into other income, net in the accompanying condensed consolidated statements of operations as securities are sold and gains and losses are recognized. Unrealized gains and losses on the equity security are reported on the condensed consolidated statements of operations. During the nine months ended September 30, 2023, the Company recorded $16.0 million of net unrealized loss on its real estate-related securities, comprised of a $19.3 million unrealized loss on CMBS, which is included in other comprehensive loss in the accompanying condensed consolidated statements of comprehensive (loss) income and a $3.3 million unrealized gain on the Company’s equity security, which is included in unrealized (loss) gain on equity security in the accompanying condensed consolidated statements of operations. The scheduled maturities of the Company’s CMBS as of September 30, 2023 are as follows (in thousands):
Actual maturities of real estate-related securities can differ from contractual maturities because borrowers on certain corporate credit securities may have the right to prepay their respective debt obligations at any time. In addition, factors such as prepayments and interest rates may affect the yields on such securities. Current Expected Credit Losses Current expected credit losses reflect the Company’s current estimate for potential credit losses related to real estate-related securities included in the Company’s condensed consolidated balance sheets. Current expected credit related losses are recorded in increase in provision for credit losses on the Company’s condensed consolidated statements of operations. 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 related to its position in one of two different tranches of a CMBS instrument for the nine months ended September 30, 2023 (in thousands):
During the nine months ended September 30, 2023, the loan collateralizing one of the Company’s CMBS positions was transferred from the master servicer to a special servicer due to payment default generated by halted rent payments on the underlying office properties being mortgaged. In March 2023, the underlying collateral of the loan was appraised by the special servicer, resulting in an appraisal reduction representing approximately 44% of one of the CMBS position’s tranches the Company is invested in. Though the appraisal reduction was subsequently reversed during the nine months ended September 30, 2023, the initial appraisal reduction resulted in reduced cash flows received from the respective CMBS investment during the nine months ended September 30, 2023. The Company considered various factors, including the factors noted above, in determining whether a credit loss existed. The present value of cash flows expected to be collected from the CMBS position did not exceed its amortized cost basis, and as such the Company determined the security had incurred a credit loss. The Company does not intend to sell the CMBS position and it is not considered more likely than not that the Company will be forced to sell the security prior to recovering the amortized cost. As a result of the credit loss incurred, the Company reclassified $13.6 million of unrealized loss from other comprehensive loss on the condensed consolidated statements of comprehensive (loss) income to increase in provision for credit losses on the condensed consolidated statements of operations during the nine months ended September 30, 2023, and recorded an incremental $12.1 million to increase in provision for credit losses on the condensed consolidated statements of operations identified as part of the Company’s quantitative credit loss assessment. The Company will continue to monitor for changes in expected cash flows in order to continue to measure the credit loss. As of September 30, 2023, there were 15 CMBS positions with unrealized losses reflected in other comprehensive loss in the accompanying condensed consolidated statements of comprehensive (loss) income. Upon evaluating these securities, the Company concluded that the unrealized losses included in other comprehensive loss as of September 30, 2023 were noncredit-related and would be recovered from the securities’ estimated future cash flows. The Company considered various factors in reaching this conclusion, including that the Company did not intend to sell the securities, it was not considered more likely than not that the Company would be forced to sell the securities prior to recovering the amortized cost, and there were no material credit events that would have caused the Company to conclude that the amortized cost would not be recovered.
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LOANS HELD-FOR-INVESTMENT |
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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 September 30, 2023 and December 31, 2022 (in thousands):
____________________________________ (1) As of September 30, 2023, first mortgage loans included $20.2 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan. The following table details overall statistics for the Company’s loans held-for-investment as of September 30, 2023 and December 31, 2022 (dollar amounts in thousands):
____________________________________ (1)As of September 30, 2023, 100% of the Company’s CRE loans by principal balance earned a floating rate of interest indexed to the Secured Overnight Financing Rate (“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. (3)Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying condensed consolidated balance sheets. This balance does not include unsettled liquid corporate senior loan purchases of $9.3 million that are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. Activity relating to the Company’s loans held-for-investment portfolio was as follows (in thousands):
____________________________________ (1)Includes the repayment of a $105.0 million first mortgage loan prior to the maturity date. (2)Other items primarily consist of purchase discounts or premiums and deferred origination expenses. (3)Does not include current expected losses for unfunded or unsettled loan commitments. Such amounts are included in accrued expenses and accounts payable on the accompanying condensed consolidated balance sheets. Current Expected Credit Losses Current expected credit losses reflect the Company’s current estimate of potential credit losses related to loans held-for-investment included in the Company’s condensed 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 related to loans held-for-investment by loan type for the nine months ended September 30, 2023 (in thousands):
____________________________________ (1)Current expected losses for unfunded or unsettled loan commitments are included in accrued expenses and accounts payable on the condensed consolidated balance sheets. Changes to current expected credit losses are recognized through net income on the Company’s condensed consolidated statements of operations. During the three months ended September 30, 2023, the Company recorded a net increase of $47.9 million in the current expected credit loss reserve against the loans held-for-investment portfolio, bringing the total current expected credit loss reserve on funded and unfunded commitments to $120.2 million. The current expected credit loss reserve reflects certain loans assessed for impairment as well as macroeconomic and current portfolio conditions. As of September 30, 2023, the Company had two collateral dependent risk-rated 5 first mortgage loan investments on nonaccrual status: (i) a $134.2 million commercial first mortgage loan on an office building in Massachusetts primarily due to a decrease in rent collection, reduced leasing activity, and stabilization costs required; and (ii) a $128.9 million commercial first mortgage loan on an office building in Virginia primarily due to slower than anticipated leasing activity driven by COVID-accelerated office trends and decreased in-place occupancy. Future interest collections related to these loans will be recognized as interest income on a cash basis. As of September 30, 2023, the Company’s asset-specific credit loss reserve totaled $63.9 million, which related to the Company’s impaired risk-rated 5 first mortgage loans. The asset-specific credit loss reserve is recorded based on the Company’s estimation of the fair value of each of the loan’s underlying collateral as of September 30, 2023. 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 ratio, 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 September 30, 2023 by year of origination, loan type, and risk rating (dollar amounts in thousands):
____________________________________ (1)Date loan was originated or acquired by the Company. Origination dates are subsequently updated to reflect material loan modifications. (2)As of September 30, 2023, one of the Company’s liquid corporate senior loan investments was on nonaccrual status with a carrying value of $2.9 million, which represented less than 1% of the carrying value of the Company’s liquid corporate senior loans portfolio. (3)Weighted average risk rating calculated based on carrying value at period end.
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 9 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In the normal course of business, the Company uses certain types of derivative instruments for the purpose of managing or hedging its interest rate risk. During the nine months ended September 30, 2023, one of the Company’s interest rate cap agreements matured. As of September 30, 2023, the Company had one non-designated interest rate cap agreement. The following table summarizes the terms of the Company’s interest rate cap agreement as of September 30, 2023 and December 31, 2022 (dollar amounts in thousands):
____________________________________ (1)The index used for this derivative instrument is 1-Month Term SOFR. Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 3 — Fair Value Measurements. The notional amount under the derivative instruments is an indication of the extent of the Company’s involvement in each instrument, but does not represent exposure to credit, interest rate or market risks. Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company has an interest rate cap that is used to manage exposure to interest rate movements, but does not meet the requirements to be designated as a hedging instrument. The change in fair value of the derivative instruments that are not designated as hedges is recorded directly to earnings in other income, net on the accompanying condensed consolidated statements of operations. Interest rate swaps are designated as cash flow hedges in order to hedge the variability of the anticipated cash flows on the Company’s variable rate debt. The change in fair value of the derivative instruments designated as hedges is recorded in other comprehensive loss, with a portion of the amount subsequently reclassified to interest expense as interest payments are made on the Company’s variable rate debt. During the year ended December 31, 2022, two of the Company’s interest rate swap agreements matured and three interest rate swap agreements were terminated prior to the maturity dates. For the three and nine months ended September 30, 2023, no amounts were reclassified from other comprehensive loss as a change to interest expense. For the three and nine months ended September 30, 2022, the amount of gain reclassified from other comprehensive loss as a decrease to interest expense was $2.6 million for both periods. The total unrealized loss on interest rate swaps of $20,000 as of September 30, 2022 is included in accumulated other comprehensive loss in the accompanying condensed consolidated statements of stockholders’ equity. No such unrealized amounts on interest rate swaps were remaining in other comprehensive loss as of September 30, 2023. Subsequent to September 30, 2023, the Company’s remaining interest rate cap matured. The Company includes cash flows from interest rate swap agreements in net cash flows provided by operating activities on its condensed consolidated statements of cash flows, as the Company’s accounting policy is to present cash flows from hedging instruments in the same category in its condensed consolidated statements of cash flows as the category for cash flows from the hedged items. The Company has agreements with each of its derivative counterparties that contain provisions whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value, inclusive of interest payments and accrued interest. In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. The Company records credit risk valuation adjustments on its derivative instruments based on the credit quality of the Company and the respective counterparty. There were no events of default related to the derivative instrument as of September 30, 2023.
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REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT FACILITIES |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT FACILITIES | NOTE 10 — REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT FACILITIES As of September 30, 2023, the Company had $4.1 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of 3.0 years and a weighted average interest rate of 6.4%. The weighted average years to maturity is computed using the scheduled repayment date as specified in each loan agreement where applicable. The weighted average interest rate is computed using the interest rate in effect until the scheduled repayment date. The following table summarizes the debt balances as of September 30, 2023 and December 31, 2022, and the debt activity for the nine months ended September 30, 2023 (in thousands):
____________________________________ (1)Includes deferred financing costs incurred during the period. (2)In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility (defined below), the Company recognized a loss on extinguishment of debt of $5.6 million during the nine months ended September 30, 2023, which included approximately $1.0 million in prepayment penalties. (3)Deferred costs related to the term portion of the CMFT Credit Facility. (4)In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility, the Company wrote off approximately $3.8 million of unamortized deferred loan costs. Notes Payable During the nine months ended September 30, 2023, the Company legally defeased a mortgage loan with an outstanding balance of $23.7 million, resulting in a $205,000 loss on extinguishment of debt in the Company’s condensed consolidated statement of operations during the nine months ended September 30, 2023, and repaid the remaining $12.8 million of fixed rate debt outstanding, both in connection with the disposition of the underlying properties securing the fixed rate debt. As of September 30, 2023, the Company had $494.4 million of variable rate debt outstanding, which included $420.8 million of borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”) and $73.6 million of borrowings financed through a note on note financing arrangement with Citibank, N.A. (the “Citibank Financing”). As of September 30, 2023, the Citibank Financing had three one-year extension options remaining, subject to certain conditions set forth in its financing agreement. In addition, upon completing foreclosure proceedings to take control of the assets which previously secured the Company’s mezzanine loans in January 2021, the Company assumed $102.6 million in variable rate debt related to the underlying properties (the “Assumed Variable Rate Debt”), which the Company subsequently refinanced and paid down the outstanding balance during the year ended December 31, 2022. During the nine months ended September 30, 2023, the Company paid down the $43.1 million outstanding balance on the refinanced Assumed Variable Rate Debt and terminated the Assumed Variable Rate Debt. The Company’s outstanding variable rate debt had a weighted average interest rate of 7.4% as of September 30, 2023, and matures on various dates from August 2024 to January 2028. First Lien Mortgage Loan On July 15, 2021, JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan Chase”), and DBR Investments Co. Limited originated a $650.0 million first lien mortgage loan (the “Mortgage Loan”) to 114 single purpose entities, each of which is an affiliate of the Company and is managed on a day-to-day basis by affiliates of CIM. During the nine months ended September 30, 2023, the Company paid down the $121.9 million outstanding balance on the Mortgage Loan, $105.8 million of which was in connection with the sale of properties pursuant to the Realty Income Purchase and Sale Agreement. Refer to Note 4 — Real Estate Assets for additional information regarding the sale. ABS Mortgage Notes On July 28, 2021, the Company issued $774.0 million aggregate principal amount of asset backed securities (“ABS”) mortgage notes, Series 2021-1 (the “Class A Notes”) in six classes, as shown below:
(1)Reflects credit rating from Standard & Poor’s Financial Services LLC (“Standard & Poor’s”). The collateral pool for the Class A Notes is comprised of 175 of the Company’s double- and triple-net leased single tenant properties, together with the related leases and certain other rights and interests. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the Class A Notes was $963.9 million. As of September 30, 2023, amounts outstanding on the Class A Notes totaled $758.5 million with a weighted average interest rate of 2.8%. The Company may prepay the Class A Notes in full on or after the payment date beginning in July 2026 for the Class A-1 (AAA) Notes, the Class A-3 (AA) Notes and the Class A-5 (A) Notes, and on or after the payment date in July 2028 for the Class A-2 (AAA) Notes, the Class A-4 (AA) Notes and the Class A-6 (A) Notes. Credit Facilities During the nine months ended September 30, 2023, CMFT CL Lending Sub AB, LLC (the “Borrower”), an indirect wholly owned subsidiary of the Company, entered into a revolving loan and security agreement (the “Loan and Security Agreement”) with each of the lenders from time to time party thereto (the “Lenders”), Ally Bank as administrative agent and arranger (“Ally Bank”), U.S. Bank Trust Company, National Association, as the collateral custodian, and U.S. Bank National Association as the document custodian, which provides for borrowings in an aggregate principal amount up to $300.0 million (the “Loan Facility”), which may be increased during the revolving period (as defined below) to an aggregate principal amount up to $500.0 million as agreed to by the Borrower, any applicable Lender and Ally Bank. Borrowings under the Loan and Security Agreement will bear interest equal to SOFR for the relevant interest period, plus an applicable rate. The applicable rate is 2.875% per annum (and an additional 2.00% per annum following an event of default under the Loan and Security Agreement). The revolving period began on February 10, 2023 and concludes on the day preceding the earlier to occur of (i) the scheduled revolving period end date of February 10, 2026, (ii) the date of the declaration of the revolving period end date upon the occurrence and continuation of an event of default, and (iii) the termination date. The termination date is the earlier to occur of (i) February 10, 2028 (two years after the revolving period end date) and (ii) the date of the declaration of the termination date or the date of the automatic occurrence of the termination date upon the occurrence and continuation of an event of default. As of September 30, 2023, the amounts borrowed and outstanding under the Loan Facility totaled $75.0 million at a weighted average interest rate of 8.2%. The Company had a credit agreement with the lenders from time to time parties thereto, JPMorgan Chase, as administrative agent, letter of credit issuer and syndication agent, and PNC Bank, N.A., as syndication agent, that provided for borrowings in the initial amount of $300.0 million (the “CMFT Credit Facility”). The CMFT Credit Facility was set to mature on July 15, 2025. During the nine months ended September 30, 2023, the Company paid down the $240.0 million outstanding balance under the CMFT Credit Facility and terminated the CMFT Credit Facility. CMFT Corporate Credit Securities, LLC, an indirect wholly-owned, bankruptcy-remote subsidiary of the Company, has a revolving credit and security agreement (the “Third Amended Credit and Security Agreement”) with the lenders from time to time parties thereto, Citibank, as administrative agent, CMFT Securities Investments, LLC, a wholly-owned subsidiary of the Company (“CMFT Securities”), as equityholder and as collateral manager, Citibank (acting through its Agency & Trust division), as both a collateral agent and as a collateral custodian, and Virtus Group, LP, as collateral administrator. The Third Amended Credit and Security Agreement provides for available borrowings under the revolving credit facility to an aggregate principal amount up to $550.0 million (the “Credit Securities Revolver”). The Credit Securities Revolver may be increased from time to time pursuant to the Third Amended Credit and Security Agreement. As of September 30, 2023, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $415.5 million at a weighted average interest rate of 7.4%. Borrowings under the Third Amended Credit and Security Agreement will bear interest equal to the one-month Term SOFR (as defined in the Third Amended Credit and Security Agreement) for the relevant interest period, plus an applicable rate. The applicable rate is dependent on the type of loan being financed, which includes broadly syndicated, private and middle market loans meeting certain criteria as set forth in the Third Amended Credit and Security Agreement and ranges from 1.90% to 2.75% per annum during the first two years of the reinvestment period and 2.00% to 2.85% during the last year of the reinvestment period and 2.10% to 2.95% per annum during the amortization period (and, in each case, an additional 2.00% per annum following an event of default under the Third Amended Credit and Security Agreement). The reinvestment period began on December 31, 2019 and concludes on the earlier of (i) the date that is three years after June 23, 2022, the date the third amendment became effective, (ii) the final maturity date and (iii) the date on which the total assets under management of the Company and its wholly-owned subsidiaries is less than $1.25 billion (the “Reinvestment Period”). The final maturity date is the earliest to occur of: (i) the date that the Credit Securities Revolver is paid down and (ii) the second anniversary after the Reinvestment Period concludes. Borrowings under the Third Amended Credit and Security Agreement are secured by substantially all of the assets held by CMFT Corporate Credit Securities, LLC, which shall primarily consist of liquid corporate senior secured loans subject to certain eligibility criteria under the Third Amended Credit and Security Agreement. The Company believes it was in compliance with the financial covenants under the Company’s various fixed and variable rate debt agreements, as of September 30, 2023. Repurchase Facilities As of September 30, 2023, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays, Wells Fargo Bank, N.A. (“Wells Fargo”), Deutsche Bank AG (“Deutsche Bank”), and J.P. Morgan Securities LLC (“J.P. Morgan”) (collectively, the “Repurchase Agreements”) to provide financing primarily through each bank’s purchase of the Company’s CRE mortgage loans and CMBS and future funding advances (the “Repurchase Facilities”). The following table is a summary of the Repurchase Facilities as of September 30, 2023 (dollar amounts in thousands):
__________________________________ (1)As of September 30, 2023, the repurchase facilities with Citibank and Wells Fargo each have two one-year extension options remaining, the repurchase facility with Barclays has one one-year extension option remaining and the repurchase facility with Deutsche Bank has three one-year extension options remaining. All repurchase facilities are subject to certain conditions set forth in their respective Repurchase Agreements. (2)CRE mortgage loan balances financed under the Repurchase Facilities with Citibank, Barclays, Wells Fargo and Deutsche Bank reflect the aggregate outstanding principal balance while the CMBS balance financed under the J.P. Morgan Repurchase Facility reflects fair value. (3)Advances under the Repurchase Agreements accrue interest at per annum rates based on Term SOFR (as such term is defined in the applicable Repurchase Agreement) or the daily compounded SOFR plus a spread ranging from 1.30% to 3.00% to be determined on a case-by-case basis between Citibank, Barclays, Wells Fargo or Deutsche Bank and the CMFT Lending Subs. (4)Facilities under the repurchase facility with J.P. Morgan (“J.P. Morgan Repurchase Facility”) carry a rolling term which is reset monthly. Such facilities carry no maximum facility size. (5)Under the Master Repurchase Agreement with J.P. Morgan, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by J.P. Morgan, which as of September 30, 2023, ranges from 1.05% to 1.45%. The Repurchase Agreements provide for simultaneous agreements by Citibank, Barclays, Wells Fargo, Deutsche Bank and J.P. Morgan to re-sell such purchased CRE mortgage loans and CMBS back to CMFT Lending Subs at a certain future date or upon demand. In connection with certain of the Repurchase Agreements, the Company (as the guarantor) entered into guaranties with Citibank, Barclays, Wells Fargo, and Deutsche Bank (the “Guaranties”), under which the Company agreed to guarantee up to 25% of the CMFT Lending Subs’ obligations under certain Repurchase Agreements. The Repurchase Agreements and the Guaranties contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guaranties contain financial covenants that require the Company to maintain: (i) minimum liquidity of not less than the lower of (a) $50.0 million and (b) the greater of (A) $10.0 million and (B) 5% of the Company’s recourse indebtedness, as defined in the Guaranties; (ii) minimum consolidated net worth greater than or equal to $1.0 billion plus (a) 75% of the equity issued by the Company following the respective closing dates of the Repurchase Agreements (the “Repurchase Closing Dates”) minus (b) the aggregate amount of any redemptions or similar transaction by the Company from the Repurchase Closing Dates; (iii) maximum leverage ratio of total indebtedness to total equity less than or equal to 80%; and (iv) minimum interest coverage ratio of EBITDA (as defined in the Guaranties) to interest expense equal to or greater than 1.40. The Company believes it was in compliance with the financial covenants under the Repurchase Agreements as of September 30, 2023. Maturities The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to September 30, 2023 (in thousands):
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 — COMMITMENTS AND CONTINGENCIES Litigation In the ordinary course of business, the Company may become subject to litigation and claims. The Company is not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or of which the Company’s properties are the subject. Unfunded Commitments As of September 30, 2023, the Company had $280.6 million of unfunded loan commitments related to its existing CRE loans held-for-investment, corporate senior loans, and liquid corporate senior loans, and $104.0 million of unfunded commitments related to NewPoint JV. These commitments are not reflected in the accompanying condensed consolidated balance sheets. As of September 30, 2023, the Company had $9.3 million of unsettled liquid corporate senior loan acquisitions, $5.9 million of which settled subsequent to September 30, 2023. Additionally, the Company had $89.1 million of unsettled liquid corporate senior loan sales as of September 30, 2023, $75.8 million of which settled subsequent to September 30, 2023. Unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets and unsettled sales are included in loans held-for-investment and related receivables, net in the accompanying condensed consolidated balance sheets. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. In addition, the Company may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify the Company against future remediation costs. The Company also carries environmental liability insurance on its properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which the Company may be liable. The Company is not aware of any environmental matters which it believes are reasonably likely to have a material effect on its results of operations, financial condition or liquidity
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RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS | NOTE 12 — RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS The Company has incurred fees and expenses payable to CMFT Management and certain of its affiliates in connection with the acquisition, management and disposition of its assets. On March 24, 2023, the Company and CMFT Management entered into the second amended and restated management agreement (the “Management Agreement”), which amended and restated the amended and restated management agreement between the parties dated August 20, 2019. Management and investment advisory fees The Company pays CMFT Management a management fee, payable quarterly in arrears, equal to the greater of (a) $250,000 per annum ($62,500 per quarter) and (b) 1.50% per annum (0.375% per quarter) of the Company’s Equity (as defined in the Management Agreement). CMFT Securities has an investment advisory and management agreement dated December 6, 2019 (the “Investment Advisory and Management Agreement”) with the Investment Advisor. CMFT Securities was formed for the purpose of holding any securities investments and certain other investments made by the Company. The Investment Advisor, a wholly-owned subsidiary of CIM Group, is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Pursuant to the Investment Advisory and Management Agreement, the Investment Advisor manages the day-to-day business affairs of CMFT Securities and its investments in corporate credit and real estate-related securities (collectively, the “Managed Assets”), subject to the supervision of the Board. In connection with the services provided by the Investment Advisor, CMFT Securities pays the Investment Advisor an investment advisory fee (the “Investment Advisory Fee”), payable quarterly in arrears, equal to 1.50% per annum (0.375% per quarter) of CMFT Securities’ Equity (as defined in the Investment Advisory and Management Agreement). Because the Managed Assets are excluded from the calculation of management fees payable by the Company to CMFT Management pursuant to the Management Agreement, the total management and advisory fees payable by the Company to its external advisors are not increased as a result of the Investment Advisory and Management Agreement. In addition, the Investment Advisor has a sub-advisory agreement dated December 6, 2019 (the “Sub-Advisory Agreement”) with OFS Capital Management, LLC (the “Sub-Advisor”) to act as an investment sub-advisor to CMFT Securities. The Sub-Advisor is registered as an investment adviser under the Advisers Act and is an affiliate of the Investment Advisor. The Sub-Advisor principally provides investment management services with respect to the corporate credit-related securities held by CMFT Securities and its subsidiaries. The Sub-Advisor may allocate a portion of these corporate credit-related securities to its other clients, including affiliates of CIM Group. On a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee and incentive compensation attributable to the assets for which the Sub-Advisor has provided investment management services payable to the Investment Advisor as sub-advisory fees. Incentive compensation CMFT Management is entitled to receive incentive compensation, payable with respect to each quarter, which is generally equal to the excess of (a) the product of (i) 20% and (ii) the excess of (A) Core Earnings (as defined in the Management Agreement) of the Company for the previous 12-month period, over (B) the product of (1) the Company’s Consolidated Equity (as defined in the Management Agreement) in the previous 12-month period, and (2) 7% per annum, over (b) the sum of any incentive compensation paid to CMFT Management with respect to the first three calendar quarters of such previous 12-month period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable). During the three and nine months ended September 30, 2023 and 2022, no incentive compensation fees were incurred. In addition, the Investment Advisor is eligible to receive a portion of the incentive compensation payable to CMFT Management pursuant to the Management Agreement. In the event that the incentive compensation is earned and payable with respect to any quarter, CMFT Management calculates the portion of the incentive compensation that was attributable to the Managed Assets and payable to the Investment Advisor. Expense reimbursements to related parties The Company reimburses CMFT Management, the Investment Advisor or their affiliates for certain expenses paid or incurred in connection with the services provided to the Company. The Company will reimburse CMFT Management, the Investment Advisor, or their affiliates for salaries and benefits paid to personnel who provide services to the Company, excluding the Company’s executive officers (other than the chief financial officer) and any portfolio management, acquisitions or investment professionals. The Company recorded fees and expense reimbursements as shown in the table below for services provided by CMFT Management or its affiliates related to the services described above during the periods indicated (in thousands):
____________________________________ (1)Excludes $984,000 of expense reimbursements recorded during the nine months ended September 30, 2022 attributable to earnout leasing costs under the RTL Purchase and Sale Agreement, which are included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations. Due to Affiliates Of the amounts shown above, $14.8 million and $14.6 million had been incurred, but not yet paid, for services provided by CMFT Management or its affiliates in connection with the management and operating activities during the nine months ended September 30, 2023 and 2022, respectively, and such amounts were recorded as liabilities of the Company as of such dates. Development Management Agreements On January 7, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its mezzanine loans, including 75 condominium units and 21 rental units across four buildings in New York. Upon foreclosure, and with the approval of the Board’s former valuation, compensation and affiliate transactions committee, CIM NY Management, LLC, an affiliate of the Company’s manager, CMFT Management, entered into a Development Management Agreement with the indirect wholly owned subsidiaries of the Company that own each of the four buildings (the “Building Owners”), wherein CIM NY Management, LLC will act as project manager in overseeing the development and construction of property improvements in accordance with each respective Development Management Agreement (the “Development Services”). In consideration for the Development Services, CIM NY Management, LLC will receive a development management fee from the Building Owners equal to 4% of the aggregate gross project costs expended during the term of the Development Management Agreement, subject to the conditions in each respective Development Management Agreement. During the nine months ended September 30, 2023 and 2022, the Company recorded $311,000 and $337,000, respectively, in development management fees. Additionally, CIM NY Management, LLC is reimbursed by the Building Owners for expenses incurred in connection with the Development Services, including services provided that are incidental to but not part of the Development Services. The Development Management Agreement shall remain in effect until the project completion date, and is terminable by either party with fifteen days prior notice to the other party, with or without cause. Affiliated Investments In September 2021, the Company co-invested $68.4 million in preferred units and $138.8 million in a first mortgage loan to a third-party for the purchase of a multi-family, office and retail building in Fort Lauderdale, Florida with CIM Real Assets & Credit Fund, a fund that is advised by affiliates of CMFT Management (“CIM RACR”). The Company redeemed its investment in the preferred units during the year ended December 31, 2022 in exchange for an investment in a first mortgage loan. As of September 30, 2023, $203.7 million of the first mortgage loan was outstanding. In October 2021, the Company invested in a $130.0 million first mortgage loan, with an initial advance of $119.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management. As of September 30, 2023, $123.0 million of the first mortgage loan was outstanding. In November 2021, the Company entered into the Unconsolidated Joint Venture (the “MT-FT JV”) with CMMT Holdings, LLC, a fund that is advised by an affiliate of CMFT Management (“CMMT”), for the purposes of investing in the NewPoint JV. The Company owns 50% of the equity interests of the MT-FT JV and has committed to fund capital to the MT-FT JV up to $212.5 million, of which $108.5 million has been funded, net of $45.8 million returned to the Company that can be called back by NewPoint JV through NP JV Holdings as a capital call on a future date. For more information on the NewPoint JV, see Note 2 — Summary of Significant Accounting Policies and Note 6 — Investment in Unconsolidated Entities. In December 2021, the Company invested in a $155.0 million first mortgage loan, with an initial advance of $154.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management. As of September 30, 2023, $154.0 million of the first mortgage loan was outstanding. In April 2022, the Company invested in a $147.0 million first mortgage loan, with an initial advance of $143.0 million, to a third-party, which was previously funded by a fund that is advised by an affiliate of CMFT Management. As of September 30, 2023, $145.5 million of the first mortgage loan was outstanding. During the year ended December 31, 2022, the Company and CIM RACR co-invested $75.9 million and $14.7 million, respectively, in five corporate senior loans to a third-party. During the nine months ended September 30, 2023, the Company and CIM RACR co-invested $77.0 million and $15.0 million, respectively, in eight corporate senior loans to a third-party. As of September 30, 2023, $133.6 million of the corporate senior loans was outstanding. The Sub-Advisor provided investment management services related to these corporate senior loans pursuant to the Sub-Advisory Agreement. Subsequent to September 30, 2023, the Company and CIM RACR co-invested $26.1 million and $1.5 million, respectively, in one corporate senior loan to a third-party. The Sub-Advisor provided investment management services related to this corporate senior loan pursuant to the Sub-Advisory Agreement.
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ECONOMIC DEPENDENCY |
9 Months Ended |
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Sep. 30, 2023 | |
Economic Dependency [Abstract] | |
ECONOMIC DEPENDENCY | NOTE 13 — ECONOMIC DEPENDENCY Under various agreements, the Company has engaged and may in the future engage CMFT Management or its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and stockholder relations. As a result of these relationships, the Company is dependent upon CMFT Management or its affiliates. In the event that these companies are unable to provide the Company with these services, the Company would be required to find alternative providers of these services.
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STOCKHOLDERS’ EQUITY |
9 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 14 — STOCKHOLDERS’ EQUITY Equity-Based Compensation On August 10, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “2018 Plan”), under which 400,000 of the Company’s shares of common stock were reserved for issuance. On April 27, 2022, the Board and the compensation committee of the Board approved the Amended and Restated CIM Real Estate Finance Trust, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Plan was approved by the Company’s stockholders at the Company’s 2022 Annual Meeting of Stockholders held on July 12, 2022. The 2022 Plan superseded and replaced the 2018 Plan. Awards that are granted on or after the effective date of the 2022 Plan are subject to the terms and provisions of the 2022 Plan. The total number of shares of Company common stock reserved and available for issuance under the 2022 Plan at any time during the term of the 2022 Plan is 250,000 shares, which is a reduction from 400,000 shares authorized for issuance under the 2018 Plan, and awards of approximately 183,000 shares of common stock are available for future grant at September 30, 2023. Under the 2022 Plan, the Board or the compensation committee of the Board has the authority to grant certain awards to employees, non-employee directors, and consultants or advisors of the Company, including stock option awards, restricted stock awards or deferred stock awards, which awards will further align such persons’ interests with the interests of the Company’s stockholders. The Board or the compensation committee of the Board also has the authority to determine the terms of any award granted pursuant to the 2022 Plan, including vesting schedules, restrictions and acceleration of any restrictions. The 2022 Plan may be amended or terminated by the Board or the compensation committee of the Board at any time, subject to the right of the Company’s stockholders to approve certain amendments. As of September 30, 2023, the Company has granted awards of approximately 116,000 restricted shares in the aggregate to the independent members of the Board under the 2018 Plan and approximately 67,000 restricted shares in the aggregate to the independent members of the Board under the 2022 Plan. As of September 30, 2023, the 116,000 restricted shares granted under the 2018 plan had vested based on one year of continuous service, and on October 1, 2023, the 67,000 restricted shares granted under the 2022 Plan vested based on one year of continuous service. The fair value of the Company’s share awards is determined using the Company’s per share NAV on the date of grant. Compensation expense related to the restricted shares is recognized over the vesting period. The Company recorded compensation expense of $120,000 and $360,000 for the three and nine months ended September 30, 2023, respectively, and $120,000 and $277,000 for the three and nine months ended September 30, 2022, respectively, related to the restricted shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. All compensation expense related to these restricted shares was recognized ratably over the period of service as of September 30, 2023. On October 1, 2023, as part of the annual retainers paid to the independent members of the Board and pursuant to the 2022 Plan, the independent members of the Board were each granted 12,177 restricted shares, which will vest on October 1, 2024.
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LEASES |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | NOTE 15 — LEASES The Company’s real estate assets are leased to tenants under operating leases for which the terms, expirations and extension options vary. The Company’s operating leases do not convey to the lessee the right to purchase the underlying asset upon expiration of the lease period. To determine whether a contract contains a lease, the Company reviews contracts to determine if the agreement conveys the right to control the use of an asset. The Company accounts for lease and non-lease components as a single, combined operating lease component. Non-lease components primarily consist of maintenance services, including CAM, real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. Non-lease components are considered to be variable rental and other property income and are recognized in the period incurred. As of September 30, 2023, the Company’s leases had a weighted-average remaining term of 10.9 years. Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of September 30, 2023, the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands):
A certain amount of the Company’s rental and other property income is from tenants with leases which are subject to contingent rent provisions. These contingent rents are subject to the tenant achieving periodic revenues in excess of specified levels. For the three and nine months ended September 30, 2023 and 2022, the amount of the contingent rent earned by the Company was not significant. Rental and other property income during the three and nine months ended September 30, 2023 and 2022 consisted of the following (in thousands):
__________________________________ (1)Consists primarily of fixed contractual payments from operating leases with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above- and below-market leases, and is net of uncollectible lease-related receivables. (2)Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses, and percentage rent. The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 9.9 years, with a lease liability (in ) and a related right-of-use (“ROU”) asset (in ) of $2.0 million in the condensed consolidated balance sheets. The lease liability and ROU asset were initially measured at the present value of the future minimum lease payments using a discount rate of 4.3%. This reflects the Company’s incremental borrowing rate, which was calculated based on the interest rate the Company would incur to borrow on a fully collateralized basis over a term similar to the lease. The Company recognized $63,000 and $188,000 of ground lease expense during the three and nine months ended September 30, 2023, respectively, of which $61,000 and $182,000, respectively, was paid in cash during the period it was recognized. As of September 30, 2023, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $63,000 for the remainder of 2023, $250,000 annually for 2024 through 2028, and $1.2 million thereafter through the maturity date of the lease in August 2033.
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LEASES | NOTE 15 — LEASES The Company’s real estate assets are leased to tenants under operating leases for which the terms, expirations and extension options vary. The Company’s operating leases do not convey to the lessee the right to purchase the underlying asset upon expiration of the lease period. To determine whether a contract contains a lease, the Company reviews contracts to determine if the agreement conveys the right to control the use of an asset. The Company accounts for lease and non-lease components as a single, combined operating lease component. Non-lease components primarily consist of maintenance services, including CAM, real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. Non-lease components are considered to be variable rental and other property income and are recognized in the period incurred. As of September 30, 2023, the Company’s leases had a weighted-average remaining term of 10.9 years. Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of September 30, 2023, the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands):
A certain amount of the Company’s rental and other property income is from tenants with leases which are subject to contingent rent provisions. These contingent rents are subject to the tenant achieving periodic revenues in excess of specified levels. For the three and nine months ended September 30, 2023 and 2022, the amount of the contingent rent earned by the Company was not significant. Rental and other property income during the three and nine months ended September 30, 2023 and 2022 consisted of the following (in thousands):
__________________________________ (1)Consists primarily of fixed contractual payments from operating leases with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above- and below-market leases, and is net of uncollectible lease-related receivables. (2)Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses, and percentage rent. The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 9.9 years, with a lease liability (in ) and a related right-of-use (“ROU”) asset (in ) of $2.0 million in the condensed consolidated balance sheets. The lease liability and ROU asset were initially measured at the present value of the future minimum lease payments using a discount rate of 4.3%. This reflects the Company’s incremental borrowing rate, which was calculated based on the interest rate the Company would incur to borrow on a fully collateralized basis over a term similar to the lease. The Company recognized $63,000 and $188,000 of ground lease expense during the three and nine months ended September 30, 2023, respectively, of which $61,000 and $182,000, respectively, was paid in cash during the period it was recognized. As of September 30, 2023, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $63,000 for the remainder of 2023, $250,000 annually for 2024 through 2028, and $1.2 million thereafter through the maturity date of the lease in August 2033.
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SEGMENT REPORTING |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | NOTE 16 — SEGMENT REPORTING The Company has two reportable segments: Credit and Real Estate. Corporate/other represents all corporate level and unallocated items and includes the Company’s other asset management activities and expenses. There were no changes in the structure of the Company’s internal organization that prompted the change in reportable segments. Prior period amounts have been revised to conform to the current year presentation shown below. The following tables present segment reporting for the three and nine months ended September 30, 2023 and 2022 (in thousands):
(1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
__________________________________ (1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
__________________________________ (1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
__________________________________ (1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021. (2)Includes the Company’s investment in CIM UII Onshore.
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SUBSEQUENT EVENTS |
9 Months Ended |
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Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17 — SUBSEQUENT EVENTS Redemption of Shares of Common Stock Subsequent to September 30, 2023, the Company redeemed approximately 1.6 million shares for $10.7 million (at a redemption price of $6.57 per share). The remaining redemption requests received during the three months ended September 30, 2023 totaling approximately 27.3 million shares went unfulfilled. Investment and Disposition Activity Subsequent to September 30, 2023, the Company’s investment and disposition activity included the following: •Disposed of two properties and two condominium units for an aggregate gross sales price of $17.3 million, resulting in net proceeds of $15.5 million after closing costs and a gain of approximately $1.1 million. •Purchased $8.8 million in one CMBS. •Settled $6.9 million of liquid corporate senior loan purchases, $5.9 million of which were traded as of September 30, 2023, and settled $89.9 million of liquid corporate senior loans sales, resulting in a $150,000 net loss on sale. •Invested $44.4 million in two corporate senior loans to a third-party. •Acquired one first mortgage loan with a principal balance of $169.4 million. •Contributed an additional $25.6 million in NP JV Holdings. Financing Activity •Barclays applied the $19.6 million deposit held as cash collateral as repayment towards certain eligible assets financed under the repurchase facility with Barclays. •Repaid $51.8 million of borrowings under the repurchase facilities with Deutsche Bank, Citibank, Wells Fargo, and J.P. Morgan. •Financed a first mortgage loan under a note on note financing arrangement with Barclays for $127.1 million.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ (11,042) | $ 15,410 | $ 75,017 | $ 128,187 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||
Basis of Accounting | The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying condensed consolidated financial statements. | ||||||||||||||||||||||||||||||
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of full year results. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2022, and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The condensed consolidated financial statements should also be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In determining whether the Company has controlling interests in an entity and is required to consolidate the accounts in that entity, the Company analyzes its credit and real estate investments in accordance with standards set forth in GAAP to determine whether the entities are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary. The Company’s judgment with respect to its level of influence or control over an entity and whether the Company is the primary beneficiary of a VIE involves consideration of various factors, including the form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions. The Company’s ability to correctly assess its influence or control over an entity affects the presentation of these credit and real estate investments on the Company’s condensed consolidated financial statements.
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Reclassifications | Reclassifications Certain amounts in the Company’s prior period condensed consolidated financial statements have been reclassified to conform to the current period presentation. The Company has chosen to break out the details of $43.0 million and $105.7 million of interest expense, net from other income, net into expenses in the Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2022, respectively, driven by the Company’s current investment portfolio composition being predominantly comprised of credit investments. This reclassification of interest expense, net did not have an impact on net income or cash flow from operating activities. In addition, the Company has chosen to break out the details of $17.7 million of accrued interest receivable from in the Company’s condensed consolidated balance sheet as of September 30, 2022, which resulted in a corresponding breakout of $13.2 million from prepaid expenses and other assets to accrued interest receivable in the Company’s condensed consolidated statement of cash flows for the nine months ended September 30, 2022. The reclassifications had no effect on previously reported totals or subtotals.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Real Estate Assets, Recoverability of Real Estate Assets, Assets Held for Sale, and Dispositions of Real Estate Assets | Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows:
Recoverability of Real Estate Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited to: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, lease concessions and other factors; a significant decrease in a property’s revenues due to lease terminations; vacancies; co-tenancy clauses; reduced lease rates; changes in anticipated holding periods; significant increases to budgeted costs for units under development; and a reduction in prevailing market values for assets being considered for disposition. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value is determined using a discounted cash flow analysis and recent comparable sales transactions.The Company’s impairment assessment as of September 30, 2023 was based on the most current information available to the Company, including expected holding periods. If the Company’s expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future. The assumptions and uncertainties utilized in the evaluation of the impairment of real estate assets are discussed in detail in Note 3 — Fair Value Measurements. See also Note 4 — Real Estate Assets for further discussion regarding real estate investment activity. Assets Held for Sale When a real estate asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the assets related to the property and estimate its fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount is then recorded to reflect the estimated fair value of the property, net of selling costs. As of September 30, 2023, the Company did not identify any real estate assets as held for sale. Dispositions of Real Estate Assets Gains and losses from dispositions are recognized once the various criteria relating to the terms of sale and any subsequent involvement by the Company with the asset sold are met. A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect on an entity’s financial results. Given the Company’s current asset portfolio and strategy, the Company’s dispositions during the nine months ended September 30, 2023 and 2022 did not qualify for discontinued operations presentation and thus, the results of the properties and condominiums that were sold will remain in operating income, and any associated gains or losses from the dispositions are included in gain on disposition of real estate and condominium developments, net.
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Allocation of Purchase Price of Real Estate Assets | Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases and other intangibles, based in each case on their relative fair values. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information. The determination of the fair values of the real estate assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations. Certain acquisition-related expenses related to asset acquisitions are capitalized and allocated to tangible and intangible assets and liabilities, as described above. Acquisition-related manager expense reimbursements are expensed as incurred and are included in expense reimbursements to related parties in the accompanying condensed consolidated statements of operations. Other acquisition-related expenses continue to be expensed as incurred and are included in transaction-related expenses in the accompanying condensed consolidated statements of operations.
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Investments in Unconsolidated Entities | Investment in Unconsolidated Entities CMFT MT JV Holdings, LLC, an indirect wholly-owned subsidiary of the Company, is engaged in an unconsolidated joint venture arrangement through CIM NP JV Holdings, LLC (“NP JV Holdings”) (the “Unconsolidated Joint Venture”), of which it owns 50% of the outstanding equity. Through the Unconsolidated Joint Venture, which holds approximately 90% of the membership interest in NewPoint JV, LLC (the “NewPoint JV”) pursuant to the terms of the Operating Agreement entered into between the Unconsolidated Joint Venture and NewPoint Bridge Lending, LLC, the Company indirectly owns approximately 45% of the outstanding equity of the NewPoint JV on a fully diluted basis. The Company accounts for its investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and is subsequently adjusted for the Company’s share of equity in NP JV Holdings’ earnings and distributions, including unrealized gains and losses as a result of changes in fair value of the NewPoint JV. The Company records its share of NP JV Holdings’ profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations. The Company recorded a gain of $3.1 million and $8.2 million, respectively, which represented its share of NP JV Holdings’ gain, during the three and nine months ended September 30, 2023, respectively, in the condensed consolidated statements of operations. The Company recorded a gain of $2.2 million and $3.7 million, respectively, which represented its share of NP JV Holdings’ gain, during the three and nine months ended September 30, 2022. During the nine months ended September 30, 2023, the Company contributed an additional $14.5 million in NP JV Holdings. The Company also received $12.4 million in distributions during the nine months ended September 30, 2023, $5.8 million of which can be called back by NewPoint JV through NP JV Holdings as a capital call on a future date. As of September 30, 2023 and December 31, 2022, the Company’s aggregate investment in NP JV Holdings of $110.8 million and $100.6 million, respectively, is included in investment in unconsolidated entities on the condensed consolidated balance sheets. For more information, refer to Note 6 — Investment in Unconsolidated Entities. On March 31, 2022, the Company fully redeemed its $60.7 million investment in CIM UII Onshore, L.P. (“CIM UII Onshore”). Prior to redemption, the Company had less than 5% ownership of CIM UII Onshore and accounted for its investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and subsequently adjusted for the Company’s share of equity in CIM UII Onshore’s earnings and distributions. Prior to redemption, the Company recorded its share of CIM UII Onshore’s profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s consolidated balance sheet and such share is recognized as a profit or loss on the consolidated statements of operations. During the nine months ended September 30, 2022, the Company recorded its share of CIM UII Onshore’s gain totaling $5.2 million. The Company received distributions of $531,000 related to its investment in CIM UII Onshore, all of which was recognized as a return on investment during the nine months ended September 30, 2022.
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Restricted Cash | Restricted CashAs part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company. | ||||||||||||||||||||||||||||||
Real Estate-Related Securities | Real Estate-Related Securities Real estate-related securities consists primarily of the Company’s investments in commercial mortgage-backed securities (“CMBS”) and equity securities. The Company determines the appropriate classification for real estate-related securities at the time of purchase and reevaluates such designation as of each balance sheet date. As of September 30, 2023, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities; however, the Company may sell them prior to their maturity. These investments are carried at their estimated fair value with unrealized gains and losses reported in other comprehensive loss.The Company monitors its available-for-sale securities for changes in fair value. A loss is recognized when the Company determines that a decline in the estimated fair value of a security below its amortized cost has resulted from a credit loss or other factors, such as market conditions. Such losses that are credit related are recorded as a current expected credit loss in increase in provision for credit losses on the Company’s condensed consolidated statements of operations. Subsequent cumulative adverse changes in expected cash flows on the Company’s available-for-sale securities are recognized as an increase to current expected credit losses. However, the allowance is limited to the amount by which the available-for-sale security’s amortized cost exceeds its fair value. Favorable changes in expected cash flows are recognized as a decrease to current expected credit losses. For additional information regarding the Company’s process for estimating current expected credit losses for its real estate-related securities, see the Current Expected Credit Losses section below. Interest earned is either received in cash or capitalized to real estate-related securities in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each security agreement. During the three and nine months ended September 30, 2023, the Company capitalized $292,000 and $863,000, respectively, of interest income to real estate-related securities. During the three and nine months ended September 30, 2022, the Company capitalized $280,000 and $826,000, respectively, of interest income to real estate-related securities.
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Loans Held-for-Investment | Loans Held-for-Investment The Company’s loans held-for-investment include loans related to real estate assets, as well as credit investments, including commercial mortgage loans and other loans and securities related to commercial real estate assets, as well as corporate loan opportunities that are consistent with the Company’s investment strategy and objectives. The Company intends to hold the loans held-for-investment for the foreseeable future or until maturity. Loans held-for-investment are carried on the Company’s condensed consolidated balance sheets at amortized cost, net of any current expected credit losses, and is adjusted for amortization of premiums and accretion of discounts to maturity. Interest earned is either received in cash or capitalized to loans held-for-investment and related receivables, net in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each loan agreement. During the nine months ended September 30, 2022, the Company capitalized $62,000 of interest income to loans held-for-investment. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status.
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Current Expected Credit Losses | Current Expected Credit Losses The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), on January 1, 2020. Current expected credit losses (“CECL”) required under ASU 2016-13 reflects the Company’s current estimate of potential credit losses related to the Company’s loans held-for-investment and CMBS included in the condensed consolidated balance sheets. Changes to current expected credit losses are recognized through net income on the Company’s condensed consolidated statements of operations. While ASU 2016-13 does not require any particular method for determining current expected credit losses, it does specify current expected credit losses should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan. In addition, other than a few narrow exceptions, ASU 2016-13 requires that all financial instruments subject to the credit loss model have some amount of loss reserve to reflect the GAAP principal underlying the credit loss model that all loans, debt securities, and similar assets have some inherent risk of loss, regardless of credit quality, subordinate capital, or other mitigating factors. The Company estimates the current expected credit loss for its first mortgage loans primarily using the Weighted Average Remaining Maturity method, which has been identified as an acceptable method for estimating CECL reserves in the Financial Accounting Standards Board (“FASB”) Staff Q&A Topic 326, No. 1. This method requires the Company to reference historic loan loss data across a comparable data set and apply such loss rate to each loan investment over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral less costs to sell and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that the Company determines foreclosure is not probable, the Company applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. For the Company’s liquid corporate senior loans and corporate senior loans, the Company uses a probability of default and loss given default method using a comparable data set. The Company may use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data. Quarterly, the Company evaluates the risk of all loans held-for-investment and assigns a risk rating based on a variety of factors, grouped as follows: (i) loan and credit structure, including the as-is loan-to-value (“LTV”) ratio and structural features; (ii) quality and stability of real estate value and operating cash flow, including debt yield, dynamics of the geography, property type and local market, physical condition, stability of cash flow, leasing velocity and quality and diversity of tenancy; (iii) performance against underwritten business plan; and (iv) quality, experience and financial condition of sponsor, borrower and guarantor(s). Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows: 1-Outperform — Most satisfactory asset quality and liquidity, good leverage capacity. A “1” rating maintains predictable and strong cash flows from operations. The trends and outlook for the credit's operations, balance sheet, and industry are neutral to favorable. Collateral, if appropriate, exceeds performance metrics; 2-Meets or Exceeds Expectations — Acceptable asset quality, moderate excess liquidity, modest leverage capacity. A “2” rating could have some financial/non-financial weaknesses which are offset by strengths; however, the credit demonstrates an ample current cash flow from operations. The trends and outlook for the credit's operations, balance sheet, and industry are generally positive or neutral. Collateral performance, if appropriate, meets or exceeds substantially all performance metrics included in original or current underwriting / business plan; 3-Satisfactory — Acceptable asset quality, somewhat strained liquidity, minimal leverage capacity. A “3” rating is at times characterized by acceptable cash flows from operations. The trends and conditions of the credit's operations and balance sheet are neutral. Collateral performance, if appropriate, meets or is on track to meet underwriting; business plan can reasonably be achieved; 4-Underperformance — The debt investment possesses credit deficiencies or potential weaknesses which deserve management’s close and continued attention. The portfolio company’s operations and/or balance sheet have demonstrated an adverse trend or deterioration which, while serious, has not reached the point where the liquidation of debt is jeopardized. These weaknesses are generally considered correctable by the borrower in the normal course of business but may weaken the asset or inadequately protect the Company’s credit position if not checked or corrected. Collateral performance, if appropriate, falls short of original underwriting, material differences exist from business plan, or both; technical milestones have been missed; defaults may exist, or may soon occur absent material improvement; and 5-Default/Possibility of Loss — The debt investment is protected inadequately by the current enterprise value or paying capacity of the obligor or of the collateral, if any. The underlying company’s operations have well-defined weaknesses based upon objective evidence, such as recurring or significant decreases in revenues and cash flows. Major variance from business plan; loan covenants or technical milestones have been breached; timely exit from loan via sale or refinancing is questionable; risk of principal loss. Collateral performance, if appropriate, is significantly worse than underwriting. The Company generally assigns a risk rating of “3” to all newly originated or acquired loans held-for-investment during a most recent quarter, except in the case of specific circumstances warranting an exception. In estimating credit losses related to real estate-related securities, management considers a variety of factors, including, but not limited to, the extent to which the fair value is less than the amortized cost basis, recent events specific to the security, industry or geographic area, the payment structure of the security, the failure of the issuer of the security to make scheduled interest or principal payments, and external credit ratings and recent changes in such ratings. Credit losses, if any, are estimated by calculating the difference between (i) the present value of estimated cash flows expected to be collected from the security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) the net amortized cost basis of the security. Significant judgment is used in estimating future cash flows for the Company’s real estate-related securities.
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Leases | Leases The Company has lease agreements with lease and non-lease components. The Company has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as rental and other property income. Non-lease components included in rental and other property income include certain tenant reimbursements for maintenance services (including common-area maintenance services or “CAM”), real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. As a lessor, the Company has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. The Company is not a party to any material leases where it is the lessee. Significant judgments and assumptions are inherent in not only determining if a contract contains a lease, but also the lease classification, terms, payments, and, if needed, discount rates. Judgments include the nature of any options, including if they will be exercised, evaluation of implicit discount rates and the assessment and consideration of “fixed” payments for straight-line rent revenue calculations. Lease costs represent the initial direct costs incurred in the origination, negotiation and processing of a lease agreement. Such costs include outside broker commissions and other independent third-party costs and are amortized over the life of the lease on a straight-line basis. Costs related to salaries and benefits, supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are expensed as incurred. Upon successful lease execution, leasing commissions are capitalized.
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Development Activities | Development Activities Project costs and expenses, including interest incurred, associated with the development, construction and lease-up of a real estate project are capitalized as construction in progress. During the nine months ended September 30, 2023 and 2022, the Company capitalized $9.1 million and $10.9 million, respectively, of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets. Included in the amounts capitalized during the nine months ended September 30, 2023 and 2022 was $1.0 million and $1.1 million, respectively, of capitalized interest expense.
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Revenue Recognition | Revenue Recognition Revenue from leasing activities Rental and other property income is primarily derived from fixed contractual payments from operating leases, and therefore, is generally recognized on a straight-line basis over the term of the lease, which typically begins the date the tenant takes control of the space. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. Variable rental and other property income consists primarily of tenant reimbursements for recoverable real estate taxes and operating expenses which are included in rental and other property income in the period when such costs are incurred, with offsetting expenses in real estate taxes and property operating expenses, respectively, within the condensed consolidated statements of operations. The Company defers the recognition of variable rental and other property income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants are probable. The determination of whether collectability is probable takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon the determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income for amounts previously recorded and a decrease in the outstanding receivable. Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of lease-related receivables is based on the best information available at the time of estimate. The Company does not use a general reserve approach and lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable. Revenue from lending activities Interest income from the Company’s loans held-for-investment and available-for-sale securities is recognized using the effective interest method (or the modified straight-line method when it is materially consistent with the effective interest method). Interest income is comprised of interest earned on loans and the accretion and amortization of net loan origination fees and discounts recognized through the life of each investment. Interest income on loans is accrued as earned, with the accrual of interest suspended when the related loan becomes a nonaccrual loan. Interest income on the Company’s liquid corporate senior loans is accrued as earned beginning on the settlement date. Upon the sale of a security, the realized net gain or loss is computed on the specific identification method. Accrual of interest income is suspended on nonaccrual loans. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status. Interest collected is recognized on a cash basis when received or as a reduction in the amortized cost basis, based on specific facts and circumstances, until accrual is resumed when the loan becomes contractually current and the Company believes all future principal and interest will be received according to the contractual loan terms.
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Reportable Segments | Reportable Segments The Company’s segment information reflects how the chief operating decision makers review information for operational decision-making purposes. The Company has two reportable segments: Credit — engages primarily in acquiring and originating primarily floating rate first and second lien mortgage loans, either directly or through co-investments in joint ventures, related to real estate assets. This segment also includes investments in real estate-related securities, liquid corporate senior loans and corporate senior loans. Real estate — engages primarily in acquiring and managing geographically diversified income-producing retail, industrial and office properties that are primarily single-tenant properties, which are leased to creditworthy tenants under long-term net leases. See Note 16 — Segment Reporting for a further discussion regarding these segments.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements. On March 31, 2022, the FASB issued ASU No. 2022-02, Troubled Debt Restructurings and Vintage Disclosures (Topic 326) (“ASU 2022-02”). ASU 2022-02 eliminates the recognition and measurement guidance for troubled debt restructurings (“TDRs”) and, instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The ASU also enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The ASU became effective for the Company beginning January 1, 2023 and is generally to be applied prospectively. ASU 2022-02 did not have an impact on the Company’s condensed consolidated financial statements for the nine months ended September 30, 2023. In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The amendments in this update clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new disclosure requirements related to such equity securities. The amendments are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not believe the adoption of ASU 2022-03 will have an impact on its condensed consolidated financial statements and disclosures. In August 2023, the FASB issued ASU No. 2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 applies to the formation of a joint venture and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance is intended to reduce diversity in practice and provide users of joint venture financial statements with more decision-useful information. The amendments are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. The Company does not believe the adoption of ASU 2023-05 will have a material impact on its condensed consolidated financial statements and disclosures.
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Fair Value Measurement | The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities: Real estate-related securities — The Company generally determines the fair value of its CMBS by utilizing broker-dealer quotations, reported trades or valuation estimates from pricing models to determine the reported price. Pricing models for CMBS are generally discounted cash flow models that usually consider the attributes applicable to a particular class of security (e.g., credit rating, seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available. Depending upon the significance of the fair value inputs used in determining these fair values, these securities are valued using Level 1, Level 2 or Level 3 inputs. As of September 30, 2023, the Company concluded that $438.1 million of its CMBS fell under Level 2 and $159.6 million of its CMBS fell under Level 3. The Company’s equity security investment is valued using Level 1 inputs. The estimated fair value of the Company’s equity security is based on quoted market prices that are readily and regularly available in an active market. Credit facilities and notes payable — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. These financial instruments are valued using Level 2 inputs. As of September 30, 2023, the estimated fair value of the Company’s debt was $3.95 billion, compared to a carrying value of $4.07 billion. The estimated fair value of the Company’s debt as of December 31, 2022 was $4.32 billion, compared to a carrying value of $4.44 billion. Derivative instruments — The Company’s derivative instruments are comprised of interest rate caps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of September 30, 2023 and December 31, 2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Loans held-for-investment — The Company’s loans held-for-investment are recorded at cost upon origination net of loan origination fees and discounts. The Company estimates the fair value of its loans held-for-investment by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk. The Company has determined that its commercial real estate (“CRE”) loans held-for-investment and corporate senior loans are classified in Level 3 of the fair value hierarchy. The Company’s liquid corporate senior loans are classified as Level 2 or Level 3 depending on the number of market quotations or indicative prices from pricing services that are available, and whether the depth of the market is sufficient to transact at those prices in amounts approximating the Company’s investment position at the measurement date. As of September 30, 2023, $576.7 million and $65.6 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of December 31, 2022, $494.4 million and $168.0 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of September 30, 2023, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $4.14 billion, compared to its carrying value of $4.11 billion. As of December 31, 2022, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $3.98 billion, compared to its carrying value of $4.00 billion. Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses, other liabilities, due to affiliates and distributions payable to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liable for, upon disposition of the financial assets and liabilities. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. The Company does not expect that changes in classifications between levels will be frequent.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||
Summary of Estimated Useful Lives of Real Estate Assets By Class | The estimated useful lives of the Company’s real estate assets by class are generally as follows:
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FAIR VALUE MEASUREMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on a Recurring Basis | In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets that are required to be measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 (in thousands):
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Reconciliation of the Changes in Liabilities With Level 3 Inputs | The following are reconciliations of the changes in financial assets with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, 2023 (in thousands):
____________________________________ (1) Does not include $7.1 million of unrealized losses recognized prior to January 1, 2023 that were reclassified from other comprehensive loss on the condensed consolidated statements of comprehensive (loss) income to increase in provision for credit losses on the condensed consolidated statements of operations during the nine months ended September 30, 2023.
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Summary of Discount Rates and Terminal Capitalization rates of the Company’s Impairment Test | The following summarizes the ranges of discount rates and terminal capitalization rates used for the Company’s impairment test for the real estate assets during the nine months ended September 30, 2023 and 2022:
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Summary of Impairment Charges by Asset Class | The following table presents the impairment charges by asset class recorded during the nine months ended September 30, 2023 and 2022 (in thousands):
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INTANGIBLE LEASE ASSETS AND LIABILITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-lived Intangible Assets and Liabilities | Intangible lease assets and liabilities consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands, except weighted average life remaining):
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Schedule of Amortization Expense Related to the Intangible Lease Assets | The following table summarizes the amortization related to the intangible lease assets and liabilities for the three and nine months ended September 30, 2023 and 2022 (in thousands):
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Schedule of Finite-lived Intangible Assets, Future Amortization Expense | As of September 30, 2023, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):
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REAL ESTATE-RELATED SECURITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Securities Available for Sale | The following is a summary of the Company’s real estate-related securities as of September 30, 2023 (in thousands):
The following table provides the activity for the real estate-related securities during the nine months ended September 30, 2023 (in thousands):
____________________________________ (1) Includes the repayment of the Company’s position in two different tranches of a CMBS instrument prior to their stated maturity dates. The scheduled maturities of the Company’s CMBS as of September 30, 2023 are as follows (in thousands):
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Schedule of Allowance for Financing Receivable | The following table presents the activity in the Company’s current expected credit losses related to its position in one of two different tranches of a CMBS instrument for the nine months ended September 30, 2023 (in thousands):
The Company’s loans held-for-investment consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):
____________________________________ (1) As of September 30, 2023, first mortgage loans included $20.2 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan. The following table details overall statistics for the Company’s loans held-for-investment as of September 30, 2023 and December 31, 2022 (dollar amounts in thousands):
____________________________________ (1)As of September 30, 2023, 100% of the Company’s CRE loans by principal balance earned a floating rate of interest indexed to the Secured Overnight Financing Rate (“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. (3)Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying condensed consolidated balance sheets. This balance does not include unsettled liquid corporate senior loan purchases of $9.3 million that are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. Activity relating to the Company’s loans held-for-investment portfolio was as follows (in thousands):
____________________________________ (1)Includes the repayment of a $105.0 million first mortgage loan prior to the maturity date. (2)Other items primarily consist of purchase discounts or premiums and deferred origination expenses. (3)Does not include current expected losses for unfunded or unsettled loan commitments. Such amounts are included in accrued expenses and accounts payable on the accompanying condensed consolidated balance sheets. The following table presents the activity in the Company’s current expected credit losses related to loans held-for-investment by loan type for the nine months ended September 30, 2023 (in thousands):
____________________________________ (1)Current expected losses for unfunded or unsettled loan commitments are included in accrued expenses and accounts payable on the condensed consolidated balance sheets.
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LOANS HELD-FOR-INVESTMENT (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allowance for Financing Receivable | The following table presents the activity in the Company’s current expected credit losses related to its position in one of two different tranches of a CMBS instrument for the nine months ended September 30, 2023 (in thousands):
The Company’s loans held-for-investment consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):
____________________________________ (1) As of September 30, 2023, first mortgage loans included $20.2 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan. The following table details overall statistics for the Company’s loans held-for-investment as of September 30, 2023 and December 31, 2022 (dollar amounts in thousands):
____________________________________ (1)As of September 30, 2023, 100% of the Company’s CRE loans by principal balance earned a floating rate of interest indexed to the Secured Overnight Financing Rate (“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. (3)Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying condensed consolidated balance sheets. This balance does not include unsettled liquid corporate senior loan purchases of $9.3 million that are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. Activity relating to the Company’s loans held-for-investment portfolio was as follows (in thousands):
____________________________________ (1)Includes the repayment of a $105.0 million first mortgage loan prior to the maturity date. (2)Other items primarily consist of purchase discounts or premiums and deferred origination expenses. (3)Does not include current expected losses for unfunded or unsettled loan commitments. Such amounts are included in accrued expenses and accounts payable on the accompanying condensed consolidated balance sheets. The following table presents the activity in the Company’s current expected credit losses related to loans held-for-investment by loan type for the nine months ended September 30, 2023 (in thousands):
____________________________________ (1)Current expected losses for unfunded or unsettled loan commitments are included in accrued expenses and accounts payable on the condensed consolidated balance sheets.
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Schedule of Financing Receivable Credit Quality Indicators | The following table presents the net book value of the Company’s loans held-for-investment portfolio as of September 30, 2023 by year of origination, loan type, and risk rating (dollar amounts in thousands):
____________________________________ (1)Date loan was originated or acquired by the Company. Origination dates are subsequently updated to reflect material loan modifications. (2)As of September 30, 2023, one of the Company’s liquid corporate senior loan investments was on nonaccrual status with a carrying value of $2.9 million, which represented less than 1% of the carrying value of the Company’s liquid corporate senior loans portfolio. (3)Weighted average risk rating calculated based on carrying value at period end.
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | The following table summarizes the terms of the Company’s interest rate cap agreement as of September 30, 2023 and December 31, 2022 (dollar amounts in thousands):
____________________________________ (1)The index used for this derivative instrument is 1-Month Term SOFR.
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REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT FACILITIES (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table summarizes the debt balances as of September 30, 2023 and December 31, 2022, and the debt activity for the nine months ended September 30, 2023 (in thousands):
____________________________________ (1)Includes deferred financing costs incurred during the period. (2)In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility (defined below), the Company recognized a loss on extinguishment of debt of $5.6 million during the nine months ended September 30, 2023, which included approximately $1.0 million in prepayment penalties. (3)Deferred costs related to the term portion of the CMFT Credit Facility. (4)In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility, the Company wrote off approximately $3.8 million of unamortized deferred loan costs. On July 28, 2021, the Company issued $774.0 million aggregate principal amount of asset backed securities (“ABS”) mortgage notes, Series 2021-1 (the “Class A Notes”) in six classes, as shown below:
(1)Reflects credit rating from Standard & Poor’s Financial Services LLC (“Standard & Poor’s”).
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Schedule of Repurchase Agreements | The following table is a summary of the Repurchase Facilities as of September 30, 2023 (dollar amounts in thousands):
__________________________________ (1)As of September 30, 2023, the repurchase facilities with Citibank and Wells Fargo each have two one-year extension options remaining, the repurchase facility with Barclays has one one-year extension option remaining and the repurchase facility with Deutsche Bank has three one-year extension options remaining. All repurchase facilities are subject to certain conditions set forth in their respective Repurchase Agreements. (2)CRE mortgage loan balances financed under the Repurchase Facilities with Citibank, Barclays, Wells Fargo and Deutsche Bank reflect the aggregate outstanding principal balance while the CMBS balance financed under the J.P. Morgan Repurchase Facility reflects fair value. (3)Advances under the Repurchase Agreements accrue interest at per annum rates based on Term SOFR (as such term is defined in the applicable Repurchase Agreement) or the daily compounded SOFR plus a spread ranging from 1.30% to 3.00% to be determined on a case-by-case basis between Citibank, Barclays, Wells Fargo or Deutsche Bank and the CMFT Lending Subs. (4)Facilities under the repurchase facility with J.P. Morgan (“J.P. Morgan Repurchase Facility”) carry a rolling term which is reset monthly. Such facilities carry no maximum facility size. (5)Under the Master Repurchase Agreement with J.P. Morgan, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by J.P. Morgan, which as of September 30, 2023, ranges from 1.05% to 1.45%.
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Schedule of Maturities of Long-term Debt | The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to September 30, 2023 (in thousands):
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RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | The Company recorded fees and expense reimbursements as shown in the table below for services provided by CMFT Management or its affiliates related to the services described above during the periods indicated (in thousands):
____________________________________ (1)Excludes $984,000 of expense reimbursements recorded during the nine months ended September 30, 2022 attributable to earnout leasing costs under the RTL Purchase and Sale Agreement, which are included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.
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LEASES (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Income from Operating Leases | As of September 30, 2023, the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands):
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Schedule of Components of Lease Income | Rental and other property income during the three and nine months ended September 30, 2023 and 2022 consisted of the following (in thousands):
__________________________________ (1)Consists primarily of fixed contractual payments from operating leases with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above- and below-market leases, and is net of uncollectible lease-related receivables. (2)Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses, and percentage rent.
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SEGMENT REPORTING (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information | The following tables present segment reporting for the three and nine months ended September 30, 2023 and 2022 (in thousands):
(1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
__________________________________ (1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
__________________________________ (1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
__________________________________ (1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021. (2)Includes the Company’s investment in CIM UII Onshore.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reclassifications (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Accounting Policies [Abstract] | |||||
Interest expense, net | $ 66,417 | $ 42,996 | $ 192,199 | $ 105,660 | |
Accrued interest receivable | 26,902 | 17,700 | 26,902 | 17,700 | $ 22,343 |
Prepaid expenses, derivative assets and other assets | $ 8,024 | $ 13,200 | $ 8,024 | $ 13,200 | $ 26,243 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses, derivative assets and other assets | Prepaid expenses, derivative assets and other assets | Prepaid expenses, derivative assets and other assets | Prepaid expenses, derivative assets and other assets |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Real Estate Assets (Details) |
Sep. 30, 2023 |
---|---|
Buildings | |
Real Estate Properties [Line Items] | |
Property, plant and equipment, useful life | 40 years |
Site improvements | |
Real Estate Properties [Line Items] | |
Property, plant and equipment, useful life | 15 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recoverability of Real Estate Assets (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023
USD ($)
condominiumUnit
property
|
Sep. 30, 2022
USD ($)
property
|
|
Real Estate [Line Items] | ||
Impairment of real estate assets | $ 11,600 | $ 11,900 |
Impairment of real estate, number of properties | property | 5 | 19 |
Condominium Units | ||
Real Estate [Line Items] | ||
Impairment of real estate assets | $ 156 | $ 7,900 |
Impairment of real estate, number of units | condominiumUnit | 1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Restricted Cash (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
---|---|---|---|
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | $ 23,342 | $ 57,616 | $ 62,941 |
Cash collateral included in restricted cash | 19,600 | 19,600 | |
Restricted Lockbox Accounts | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | 1,700 | 15,400 | |
Escrow Deposits | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | $ 2,000 | $ 22,600 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Real Estate-Related Securities (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023
USD ($)
shares
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
security
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
|
|
Debt Securities, Available-for-sale [Line Items] | |||||
Fair Value | $ 639,144 | $ 639,144 | $ 576,391 | ||
Unrealized gain (loss) on equity security | (2,100) | $ (9,000) | 3,281 | $ (15,462) | |
Capitalized interest income on real estate-related securities | 292 | 280 | 863 | 826 | |
CMBS | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Net investments in debt securities | 143,200 | $ 143,200 | |||
Number of debt instruments | security | 24 | ||||
Fair Value | 597,614 | $ 597,614 | |||
GNL Common Stock | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Investments redeemed | $ 41,500 | 41,500 | |||
Shares converted (in shares) | shares | 0.670 | ||||
Dividend income, equity securities operating | $ 1,400 | $ 1,400 | $ 4,100 | $ 2,700 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans Held-for-Investments (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
loan
|
|
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Capitalized interest | $ 62 | |
First Mortgage Loans | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Number of loan investments | loan | 2 | |
Nonaccrual status with a carrying value | $ 206,000 | |
Percentage carrying value of loan portfolio (less than) | 8.00% | |
Liquid corporate senior loans | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Nonaccrual status with a carrying value | $ 2,900 | |
Percentage carrying value of loan portfolio (less than) | 1.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Development Activities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Condominium developments | $ 106,476 | $ 130,494 | |
Capitalized interest cost | 1,000 | $ 1,100 | |
Condominium Units | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Condominium developments | $ 9,100 | $ 10,900 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reportable Segment (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
segment
| |
Accounting Policies [Abstract] | |
Number of reportable segments | 2 |
FAIR VALUE MEASUREMENTS - Level 3 Reconciliation (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
| |
Total gains and losses: | |
Fair Value Recurring Basis Unobservable Input Reconciliation Liability Gain Loss Statement Of Other Comprehensive Income Extensible List Not Disclosed Flag | Unrealized loss included in other comprehensive loss, net |
Level 3 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 189,901 |
Total gains and losses: | |
Unrealized loss included in other comprehensive loss, net | (21,681) |
Current expected credit losses | (18,729) |
Purchases and payments received: | |
Discounts, net | 9,204 |
Capitalized interest income | 863 |
Ending balance | 159,558 |
Current expected credit losses | 18,729 |
Level 3 | Other | |
Total gains and losses: | |
Current expected credit losses | (7,100) |
Purchases and payments received: | |
Current expected credit losses | $ 7,100 |
FAIR VALUE MEASUREMENTS - Discount Rates and Terminal Capitalization Rates (Details) |
Sep. 30, 2023 |
Sep. 30, 2022 |
---|---|---|
Minimum | Discount Rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Discount rate | 7.50% | 8.00% |
Minimum | Terminal Capitalization Rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Discount rate | 7.00% | 7.50% |
Maximum | Discount Rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Discount rate | 11.90% | 9.70% |
Maximum | Terminal Capitalization Rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Discount rate | 11.40% | 9.20% |
FAIR VALUE MEASUREMENTS - Summary of Impairment Charges by Asset Class (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment of real estate assets | $ 11,724 | $ 19,814 |
Intangible lease liabilities | 0 | (4) |
Land | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment of real estate assets | 2,954 | 2,041 |
Buildings, fixtures and improvements | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment of real estate assets | 7,856 | 8,793 |
Intangible lease assets | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment of real estate assets | 758 | 1,039 |
Condominium developments | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment of real estate assets | $ 156 | $ 7,945 |
REAL ESTATE ASSETS - Property Acquisition (Details) - property |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Commercial Real Estate | ||
Real Estate [Line Items] | ||
Number of properties acquired | 0 | 0 |
REAL ESTATE ASSETS - Condominium Development Project and Dispositions (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Real Estate [Line Items] | |||
Condominium developments | $ 106,476 | $ 130,494 | |
Net proceeds from disposition of real estate assets and condominium developments | 948,141 | $ 1,278,609 | |
Gain on disposition of real estate, net | 52,154 | 118,135 | |
Condominium Units | |||
Real Estate [Line Items] | |||
Condominium developments | 9,100 | 10,900 | |
Condominium Dispositions | |||
Real Estate [Line Items] | |||
Aggregate gross sales price | 43,100 | 24,200 | |
Net proceeds from disposition of real estate assets and condominium developments | 39,100 | 22,000 | |
Gain on disposition of real estate, net | $ 3,000 | $ 3,100 |
REAL ESTATE ASSETS - Impairment (Details) ft² in Thousands, $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023
USD ($)
ft²
property
condominiumUnit
|
Sep. 30, 2022
USD ($)
ft²
property
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impairment of real estate, number of properties | property | 5 | 19 |
Area of real estate property impaired | ft² | 240 | 832 |
Impairment of real estate assets | $ 11,600 | $ 11,900 |
Condominium Units | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impairment of real estate assets | $ 156 | 7,900 |
Impairment of real estate, number of units | condominiumUnit | 1 | |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate asset deemed to be impaired | $ 50,200 | 126,000 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate asset deemed to be impaired | $ 38,600 | $ 114,100 |
INTANGIBLE LEASE ASSETS AND LIABILITIES - Components (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Intangible lease assets: | |||
Intangible leased assets | $ 106,114 | $ 185,593 | |
Intangible lease liabilities: | |||
Acquired below market liabilities, net | 13,647 | 19,054 | |
Below market lease, accumulated amortization | $ 4,843 | 5,575 | |
Below market lease, weighted average useful life | 12 years 4 months 24 days | 12 years 3 months 18 days | |
In-place leases and other intangibles | |||
Intangible lease assets: | |||
Intangible leased assets | $ 102,094 | 174,954 | |
Accumulated amortization of intangible lease assets | $ 48,051 | $ 86,881 | |
Useful life | 11 years 4 months 24 days | 11 years 1 month 6 days | |
Acquired above-market leases | |||
Intangible lease assets: | |||
Intangible leased assets | $ 4,020 | $ 10,639 | |
Accumulated amortization of intangible lease assets | $ 2,923 | $ 4,210 | |
Useful life | 11 years 3 months 18 days | 12 years 10 months 24 days |
INTANGIBLE LEASE ASSETS AND LIABILITIES - Schedule of Finite-Lived Intangible Assets Amortization Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Below-market lease amortization | $ 309 | $ 469 | $ 1,055 | $ 1,532 |
In-place lease and other intangible amortization | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | 2,965 | 5,866 | 11,061 | 18,978 |
Above-market lease amortization | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 116 | $ 272 | $ 468 | $ 893 |
INTANGIBLE LEASE ASSETS AND LIABILITIES - Schedule of Finite-lived Intangible Assets and Liabilities, Future Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Amortiztaion, In-Place Leases and Other Intangibles, Above-Market Leases | ||
Total | $ 106,114 | $ 185,593 |
Amortization, Below-Market Leases | ||
Remainder of 2023 | 293 | |
2024 | 1,126 | |
2025 | 1,120 | |
2026 | 1,120 | |
2027 | 1,120 | |
Thereafter | 8,868 | |
Total | 13,647 | 19,054 |
In-Place Leases and Other Intangibles | ||
Amortiztaion, In-Place Leases and Other Intangibles, Above-Market Leases | ||
Remainder of 2023 | 2,881 | |
2024 | 11,339 | |
2025 | 10,945 | |
2026 | 9,755 | |
2027 | 9,086 | |
Thereafter | 58,088 | |
Total | 102,094 | 174,954 |
Above-Market Leases | ||
Amortiztaion, In-Place Leases and Other Intangibles, Above-Market Leases | ||
Remainder of 2023 | 106 | |
2024 | 424 | |
2025 | 424 | |
2026 | 379 | |
2027 | 356 | |
Thereafter | 2,331 | |
Total | $ 4,020 | $ 10,639 |
REAL ESTATE-RELATED SECURITIES - Summary of Real Estate Securities (Details) $ in Thousands |
Sep. 30, 2023
USD ($)
tranche
|
Jun. 30, 2023
USD ($)
|
Mar. 31, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized Cost Basis | $ 744,524 | |||
Unrealized Loss | (79,632) | $ (63,646) | ||
CECL | (25,748) | 0 | ||
Fair Value | 639,144 | 576,391 | ||
CMBS | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized Cost Basis | 691,136 | |||
Unrealized Loss | (67,774) | |||
CECL | (25,748) | $ (23,452) | $ 0 | $ 0 |
Fair Value | $ 597,614 | |||
Number of tranches | tranche | 2 | |||
Equity security | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized Cost Basis | $ 53,388 | |||
Unrealized Loss | (11,858) | |||
CECL | 0 | |||
Fair Value | $ 41,530 |
REAL ESTATE-RELATED SECURITIES - The Scheduled Maturities of Real Estate-Related Securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Amortized Cost | ||
Total | $ 744,524 | |
Estimated Fair Value | ||
Total | 639,144 | $ 576,391 |
CMBS | ||
Amortized Cost | ||
Due within one year | 540,448 | |
Due after one year through five years | 107,450 | |
Due after five years through ten years | 0 | |
Due after ten years | 43,238 | |
Total | 691,136 | |
Estimated Fair Value | ||
Due within one year | 460,430 | |
Due after one year through five years | 107,826 | |
Due after five years through ten years | 0 | |
Due after ten years | 29,358 | |
Total | $ 597,614 |
REAL ESTATE-RELATED SECURITIES - Schedule of Current Expected Credit Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2023 |
|
Debt Instrument [Line Items] | ||||
Beginning balance | $ 0 | $ 0 | ||
Current expected credit losses | 25,748 | |||
Ending balance | $ 25,748 | 25,748 | ||
CMBS | ||||
Debt Instrument [Line Items] | ||||
Beginning balance | 23,452 | $ 0 | 0 | 0 |
Current expected credit losses | 2,296 | 23,452 | 0 | |
Ending balance | $ 25,748 | $ 23,452 | $ 0 | $ 25,748 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2023
USD ($)
agreement
interest_rate_cap
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
agreement
interest_rate_cap
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2022
derivative
|
|
Derivatives, Fair Value [Line Items] | |||||
Derivative, number of instruments matured (derivative) | derivative | 2 | ||||
Derivative, number of instruments terminated (derivative) | derivative | 3 | ||||
Amount of gain reclassified from other comprehensive loss into income as interest expense, net | $ | $ 0 | $ 2,613 | $ 0 | $ 2,551 | |
Interest Rate Cap | |||||
Derivatives, Fair Value [Line Items] | |||||
Number of derivative assets held | interest_rate_cap | 1 | 1 | |||
Derivative, number of instruments held (derivative) | agreement | 1 | 1 | |||
Interest Rate Swap | |||||
Derivatives, Fair Value [Line Items] | |||||
Total unrealized loss on interest rate swap | $ | $ 0 | $ 20 | $ 0 | $ 20 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Schedule of Derivative Instruments (Details) - Prepaid expenses, derivative assets and other assets - Interest Rate Cap - Cash Flow Hedging - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Derivative [Line Items] | ||
Outstanding notional amount | $ 62,000 | |
Interest rate | 4.00% | |
Fair value of assets | $ 18 | $ 5,040 |
REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT FACILITIES - Schedule of ABS Mortgage Notes (Details) - ABS mortgage notes |
Jul. 28, 2021
USD ($)
|
---|---|
Line of Credit Facility [Line Items] | |
Initial Principal Balance | $ 774,000,000 |
A-1 (AAA) | |
Line of Credit Facility [Line Items] | |
Initial Principal Balance | $ 146,400,000 |
Note Rate | 2.09% |
A-2 (AAA) | |
Line of Credit Facility [Line Items] | |
Initial Principal Balance | $ 219,600,000 |
Note Rate | 2.57% |
A-3 (AA) | |
Line of Credit Facility [Line Items] | |
Initial Principal Balance | $ 39,200,000 |
Note Rate | 2.51% |
A-4 (AA) | |
Line of Credit Facility [Line Items] | |
Initial Principal Balance | $ 58,800,000 |
Note Rate | 3.04% |
A-5 (A) | |
Line of Credit Facility [Line Items] | |
Initial Principal Balance | $ 124,000,000 |
Note Rate | 2.91% |
A-6 (A) | |
Line of Credit Facility [Line Items] | |
Initial Principal Balance | $ 186,000,000 |
Note Rate | 3.44% |
REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT FACILITIES - Schedule of Maturities of Long-term Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Principal Repayments | ||
Remainder of 2023 | $ 304,807 | |
2024 | 579,361 | |
2025 | 1,518,159 | |
2026 | 0 | |
2027 | 790,429 | |
Thereafter | 879,360 | |
Total | $ 4,072,116 | $ 4,443,911 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Nov. 13, 2023 |
Sep. 30, 2023 |
|
Subsequent event | Reserves For Settlement Of Loan Acquisitions | ||
Other Commitments [Line Items] | ||
Loans settled | $ 5.9 | |
Subsequent event | Reserves For Settlement Of Loan Sales | ||
Other Commitments [Line Items] | ||
Loans settled | 75.8 | |
Unfunded Loan Commitment | ||
Other Commitments [Line Items] | ||
Unfunded loan commitments | $ 280.6 | |
Unfunded Loan Commitment | N P J V Holdings | ||
Other Commitments [Line Items] | ||
Unfunded loan commitments | 104.0 | |
Unfunded or Unsettled Liquid Senior Loans | ||
Other Commitments [Line Items] | ||
Unfunded loan commitments | $ 9.3 | |
Unfunded or Unsettled Liquid Senior Loan Sales | Subsequent event | ||
Other Commitments [Line Items] | ||
Unfunded loan commitments | $ 89.1 |
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS - Management and Investment Advisory Fees (Details) - USD ($) |
Dec. 06, 2019 |
Aug. 20, 2019 |
---|---|---|
Related Party Transaction [Line Items] | ||
Investment advisory fee, percent per quarter | 0.375% | |
Advisors | ||
Related Party Transaction [Line Items] | ||
Management fee per annum | $ 250,000 | |
Management fee per quarter | $ 62,500 | |
Management fee percent per annum | 1.50% | |
Management fee percent per quarter | 0.375% | |
Investment advisory fee, percent per annum | 1.50% | |
Investment sub-advisory fees, percent per quarter | 50.00% |
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS - Incentive Compensation (Details) - Advisors - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 20, 2019 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Related Party Transaction [Line Items] | |||||
Incentive compensation. in excess of product, quarterly percentage | 20.00% | ||||
Incentive compensation. in excess of product, annualized percentage | 7.00% | ||||
Incentive compensation fees | $ 0 | $ 0 | $ 0 | $ 0 |
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS - Schedule of Related Party Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Related Party Transaction [Line Items] | ||||
Management fees | $ 12,816 | $ 12,915 | $ 38,254 | $ 39,613 |
Expense reimbursements to related parties | 3,349 | 3,428 | 10,598 | 10,899 |
Gain on disposition of real estate and condominium developments, net | 5,968 | 4,454 | 52,154 | 118,135 |
Advisors | Management fees | ||||
Related Party Transaction [Line Items] | ||||
Management fees | 12,816 | 12,915 | 38,254 | 39,613 |
Advisors | Expense reimbursements to related parties | ||||
Related Party Transaction [Line Items] | ||||
Expense reimbursements to related parties | $ 3,349 | $ 3,428 | 10,598 | $ 10,899 |
Advisors | Expense Reimbursements Attributable To Earnout Leasing Costs | ||||
Related Party Transaction [Line Items] | ||||
Gain on disposition of real estate and condominium developments, net | $ 984 |
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS - Due from (to) Affiliates (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Sep. 30, 2022 |
---|---|---|
Advisors | Acquisition, Disposition and Operating Activities Fees and Expenses | ||
Related Party Transaction [Line Items] | ||
Due to affiliates | $ 14.8 | $ 14.6 |
LEASES - Future Minimum Rental Income (Details) $ in Thousands |
Sep. 30, 2023
USD ($)
|
---|---|
Future Minimum Rental Income | |
Remainder of 2023 | $ 22,228 |
2024 | 87,937 |
2025 | 87,684 |
2026 | 84,909 |
2027 | 82,487 |
Thereafter | 635,498 |
Total | $ 1,000,743 |
LEASES - Schedule of Components of Lease Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Leases [Abstract] | ||||
Fixed rental and other property income | $ 23,510 | $ 40,875 | $ 83,902 | $ 153,522 |
Variable rental and other property income | 1,563 | 2,684 | 5,634 | 17,281 |
Total rental and other property income | $ 25,073 | $ 43,559 | $ 89,536 | $ 170,803 |
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