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Fair Value of Financial Instruments
12 Months Ended
Dec. 31, 2021
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

Note 13 – Fair Value of Financial Instruments  

As discussed in Note 2, GAAP requires the disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate that value. The following table details the carrying amount and fair value of the financial instruments described in Note 2:

 

 

December 31, 2021

 

 

December 31, 2020

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

57,268

 

 

$

57,268

 

 

$

72,107

 

 

$

72,107

 

Commercial mortgage loans, net

 

665,498

 

 

 

667,405

 

 

 

441,814

 

 

 

441,267

 

Total

$

722,766

 

 

$

724,673

 

 

$

513,921

 

 

$

513,374

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase agreements - commercial mortgage loans

$

307,083

 

 

$

307,083

 

 

$

290,699

 

 

$

290,699

 

Credit facility payable

 

14,350

 

 

 

14,350

 

 

 

 

 

 

 

Loan participations sold

 

109,772

 

 

 

109,772

 

 

 

 

 

 

 

Total

$

431,205

 

 

$

431,205

 

 

$

290,699

 

 

$

290,699

 

 

The following describes the Company’s methods for estimating the fair value for financial instruments:

The estimated fair values of restricted cash, cash and cash equivalents were based on the bank balance and was a Level 1 fair value measurement.

The estimated fair value of commercial mortgage loans, net is a Level 3 fair value measurement. The Sub-Advisor estimates the fair values of commercial loans based on a discounted cash flow methodology that analyzes various factors including capitalization rates, occupancy rates, sponsorship, geographic concentration, collateral type, market conditions and actions of other lenders.

The estimated fair value of repurchase agreements – commercial mortgage loans, credit facility payable and loan participations sold are Level 3 fair value measurements based on expected present value techniques. This method discounts future estimated cash flows using rates the Company determined best reflect current market interest rates that would be offered for repurchase agreements, credit facilities and loan participations sold with similar characteristics and credit quality.