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. |
|