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Repurchase Agreements and Credit Facilities
9 Months Ended
Sep. 30, 2024
Disclosure of Repurchase Agreements [Abstract]  
Repurchase Agreements and Credit Facilities

Note 4 – Repurchase Agreements and Credit Facilities

Commercial Mortgage Loans

On February 15, 2018, the Company, through a wholly owned subsidiary, entered into a master repurchase agreement (the “Atlas Repo Facility”) with Column Financial, Inc. as administrative agent for certain of its affiliates. As the Company’s business has grown, it has increased the borrowing limit and extended the maturity. The most recent extension was in November 2023 for a twelve-month term and the maximum advance amount was reduced to $100,000. On February 8, 2023, Column Financial, Inc. and affiliated parties sold

and assigned their interest in the Atlas Repo Facility to Atlas Securitized Products Investments 2, L.P. (“Atlas”) with no changes to the terms of the Atlas Repo Facility. Advances under the Atlas Repo Facility accrue interest at a per annum annual rate equal to SOFR plus 2.50% to 3.00% with a 0.15% to 0.25% floor. The Company paid off the outstanding balance on the Atlas Repo Facility in May 2023 and had no outstanding balance as of September 30, 2024. As there were no borrowings outstanding, the Company was not subject to any financial covenants.

On May 6, 2019, the Company, through a wholly owned subsidiary, entered into an uncommitted master repurchase agreement (the “JPM Repo Facility”) with JPMorgan Chase Bank, National Association (“JPM”). The JPM Repo Facility provides up to $150,000 in advances that the Company expects to use to finance the acquisition or origination of eligible loans and participation interests therein. Advances made prior to December 2021 under the JPM Repo Facility accrue interest at per annum rates equal to the sum of (i) the applicable one-month USD London Interbank Offered Rate (“LIBOR”) index rate plus (ii) a margin of between 1.75% to 2.50% with no floor, depending on the attributes of the purchased assets. Advances made subsequent to December 2021 under the JPM Repo Facility accrue interest at per annum rates equal to the sum of SOFR plus an agreed upon margin. As of September 30, 2024, all of the advances made under the JPM Repo Facility were indexed to SOFR and have margins between 1.85% and 2.85% with a floor between 0.00% to 2.00%. In May 2022, the maturity date of the JPM Repo Facility was extended to May 6, 2023. On May 5, 2023, the Company entered into an amendment that extended the maturity date to May 6, 2026, with the option to extend the maturity date further to May 6, 2028 subject to two optional one-year extensions. The amendment also increased the maximum facility amount to $526,076. The Company used the increased capacity to pay off the balance on the Atlas Repo Facility. The JPM Repo Facility is subject to certain financial covenants. The Company was in compliance with all financial covenant requirements as of September 30, 2024 and December 31, 2023.

On March 10, 2021, the Company, through a wholly owned subsidiary, entered into a loan and security agreement and a promissory note (collectively, the “WA Credit Facility”) with Western Alliance Bank (“Western Alliance”). The WA Credit Facility provides for loan advances up to the lesser of $75,000 or the borrowing base. The borrowing base consists of eligible assets pledged to and accepted by Western Alliance in its discretion up to the lower of (i) 60% to 70% of loan-to-unpaid balance or (ii) 45% to 50% of the loan-to-appraised value (depending on the property type underlying the asset, for both (i) and (ii)). Assets that would otherwise be eligible become ineligible after being pledged as part of the borrowing base for 36 months. Advances under the WA Credit Facility accrue interest at an annual rate equal to one-month LIBOR plus 3.25% with a floor of 0.75%. The initial maturity date of the WA Credit Facility was March 10, 2023. On March 9, 2023, the Company extended the maturity date of the WA Credit Facility to March 10, 2025, modified that loan advances are up to the lesser of $40,000 or the borrowing base, and changed the index rate from LIBOR to SOFR. In addition, the spread increased to 3.50% and the floor to 2.50%. The Company has an option to convert the loan made pursuant to the WA Credit Facility upon its initial maturity to a term loan with the same interest rate and floor and a maturity of two years in exchange for, among other things, a conversion fee of 0.25% of the outstanding amount at the time of conversion. The WA Credit Facility requires maintenance of an average unrestricted aggregate deposit account balance with Western Alliance of not less than $3,750, until the calendar quarter ending on June 30, 2023 and not less than $5,000 commencing with the calendar quarter ending on September 30, 2023. Failure to meet the minimum deposit balance will result in, among other things, the interest rate of the WA Credit Facility increasing by 0.50% per annum for each quarter in which the compensating balances are not maintained. The Company paid off the outstanding balance on the WA Credit Facility in May 2024 and had no outstanding balance as of September 30, 2024. As there were no borrowings outstanding, the Company was not subject to any financial covenants.

The JPM Repo Facility, Atlas Repo Facility and WA Credit Facility (collectively, the “Facilities”) are used to finance eligible loans and each act in the manner of a revolving credit facility that can be repaid as the Company’s assets are paid off and re-drawn as advances against new assets.

The details of the Facilities as of September 30, 2024 and December 31, 2023 are as follows:

September 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

Committed Financing

 

 

Amount
Outstanding
(1)

 

 

Accrued
Interest
Payable

 

 

Collateral
Pledged

 

 

Interest
Rate

 

Days to
Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Atlas Repo Facility

$

100,000

 

 

$

 

 

$

 

 

$

 

 

 

 

 

404

 

JPM Repo Facility

 

526,076

 

 

 

418,765

 

 

 

1,123

 

 

 

574,392

 

 

 

7.43

%

 

1,314

 

Total Repurchase Facilities — commercial mortgage loans

 

626,076

 

 

 

418,765

 

 

 

1,123

 

 

 

574,392

 

 

 

7.43

%

 

1,314

 

WA Credit Facility

 

40,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161

 

 

$

666,076

 

 

$

418,765

 

 

$

1,123

 

 

$

574,392

 

 

 

7.43

%

 

1,314

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

Committed Financing

 

 

Amount
Outstanding
(1)

 

 

Accrued
Interest
Payable

 

 

Collateral
Pledged

 

 

Interest
Rate

 

Days to
Maturity

 

Atlas Repo Facility

$

100,000

 

 

$

 

 

$

 

 

$

 

 

 

 

 

678

 

JPM Repo Facility

 

526,076

 

 

 

457,438

 

 

 

1,385

 

 

 

644,201

 

 

 

7.78

%

 

1,588

 

Total Repurchase Facilities — commercial mortgage loans

 

626,076

 

 

 

457,438

 

 

 

1,385

 

 

 

644,201

 

 

 

7.78

%

 

1,588

 

WA Credit Facility

 

40,000

 

 

 

9,498

 

 

 

42

 

 

 

13,647

 

 

9.34% (2)

 

 

435

 

 

$

666,076

 

 

$

466,936

 

 

$

1,427

 

 

$

657,848

 

 

 

7.81

%

 

1,565

 

 

(1)
Excluding $0 of unamortized debt issuance costs as of September 30, 2024 and December 31, 2023.
(2)
Includes 0.50% additional interest rate during the third and fourth quarters of 2023 as the minimum deposit balance was not met by the Company as of June 30, 2023.