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Secured Financing Agreements
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
Secured Financing Agreements Secured Financing Agreements
To finance its loans held-for-investment, the Company has a variety of secured financing arrangements with several counterparties, including repurchase facilities, an asset-specific financing facility and a secured credit facility. The Company’s repurchase facilities are collateralized by loans held-for-investment and certain cash balances. Although the transactions under repurchase facilities represent committed borrowings until maturity, other than with respect to the Company’s Centennial Bank repurchase facility, which provides financing on a non-mark-to-market basis, the other respective lenders retain the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets due to collateral-specific credit events, or, with respect to a limited number of the Company’s repurchase facilities, capital market events, would require the Company to fund margin calls. The Company does not typically retain similar rights for the Company to make margin calls on its underlying borrowers as a result of a determination by the Company and/or its financing counterparty that there has been a decrease in the market value of the underlying pledged collateral.
The Company’s asset-specific financing and secured credit facilities are also collateralized by loans held-for-investment. Neither facility contains mark-to-market provisions and the asset-specific financing facility is generally term-matched to the underlying assets.
The following tables summarize details of the Company’s borrowings outstanding on its secured financing agreements as of March 31, 2023, and December 31, 2022:
March 31, 2023
(dollars in thousands)
Maturity Date (1)
Amount Outstanding
Unused Capacity (2)
Total CapacityCarrying Value of CollateralWeighted Average Borrowing Rate
Repurchase facilities:
Morgan Stanley Bank (3)
June 28, 2023$451,720 $148,280 $600,000 $609,241 7.4 %
Goldman Sachs Bank USA (4)
July 13, 202367,749 182,251 250,000 93,119 7.1 %
JPMorgan Chase BankJune 28, 2024409,291 15,709 425,000 623,231 7.7 %
CitibankMay 25, 2025256,021 243,979 500,000 343,227 6.7 %
Centennial Bank (5)
August 29, 20246,790 143,210 150,000 23,971 9.8 %
Total/Weighted Average$1,191,571 $733,429 $1,925,000 $1,692,789 
Asset-specific financings
Term Matched$45,823 $104,177 $150,000 $57,950 6.6 %
Secured credit facility December 21, 2025$100,000 — $100,000 $137,112 11.3 %
December 31, 2022
(dollars in thousands)
Maturity Date (1)
Amount Outstanding
Unused Capacity (2)
Total CapacityCarrying Value of CollateralWeighted Average Borrowing Rate
Repurchase facilities:
Morgan Stanley BankJune 28, 2023$494,250 $105,750 $600,000 $701,469 7.0 %
Goldman Sachs Bank USA (4)
July 13, 202366,914 183,086 250,000 93,651 6.5 %
JPMorgan Chase BankJune 28, 2024132,438 217,562 350,000 211,841 6.7 %
CitibankMay 25, 2025204,593 295,407 500,000 266,179 6.1 %
Wells Fargo Bank (6)
June 28, 202371,091 — 71,091 111,154 6.3 %
Centennial Bank (5)
August 29, 202446,280 $103,720 $150,000 101,844 9.3 %
Total/Weighted Average$1,015,566 $905,525 $1,921,091 $1,486,138 
Asset-specific financings
Term Matched$44,913 $105,087 $150,000 $57,629 6.0 %
Secured credit facility December 21, 2025$100,000 $— $100,000 $157,112 10.8 %
____________________
(1)The facilities are set to mature on the stated maturity date, unless extended pursuant to their terms.
(2)Unused capacity is not committed as of March 31, 2023, and December 31, 2022.
(3)Subsequent to March 31, 2023, the Company entered into a modification of the facility to extend the maturity date to June 28, 2024, and adjust the total capacity to $475 million.
(4)As of March 31, 2023, and December 31, 2022, the Company retained options to increase the maximum facility capacity amount up to $350 million, subject to customary terms and conditions.
(5)As of March 31, 2023, and December 31, 2022, the Company retained options to increase the maximum facility capacity amount up to $200 million, subject to customary terms and conditions.
(6)During the three months ended March 31, 2023, the facility was terminated.
At March 31, 2023, and December 31, 2022, the Company’s borrowings outstanding on its secured financing facilities had contractual maturities as follows:
March 31, 2023
(in thousands)Repurchase Facilities
Asset-Specific Financings (1)
Secured Credit FacilityTotal Amount Outstanding
2023$519,469 $45,823 $— $565,292 
2024416,081 — — 416,081 
2025256,021 — 100,000 356,021 
2026— — — — 
2027— — — — 
Thereafter— — — — 
Total$1,191,571 $45,823 $100,000 $1,337,394 

December 31, 2022
(in thousands)Repurchase Facilities
Asset-Specific Financings (1)
Secured Credit FacilityTotal Amount Outstanding
2023$632,255 $44,913 $— $677,168 
2024178,718 — — 178,718 
2025204,593 — 100,000 304,593 
2026— — — — 
2027— — — — 
Thereafter— — — — 
Total$1,015,566 $44,913 $100,000 $1,160,479 
__________________
(1)Maturity date is term matched to the corresponding loans.
(2)Amount outstanding includes unamortized debt issuance costs.
The following table summarizes certain characteristics of the Company’s repurchase facilities and counterparty concentration at March 31, 2023, and December 31, 2022:
March 31, 2023December 31, 2022
(dollars in thousands)Amount Outstanding
Net Counterparty Exposure (1)
Percent of EquityWeighted Average Years to MaturityAmount Outstanding
Net Counterparty Exposure (1)
Percent of EquityWeighted Average Years to Maturity
Morgan Stanley Bank$451,720 $167,156 18 %0.24$494,250 $213,855 22 %0.49
JPMorgan Chase Bank409,291 225,158 24 %1.25132,438 81,850 8 %1.49
Goldman Sachs Bank USA67,749 27,030 3 %0.2966,914 27,594 3 %0.53
Citibank256,021 89,425 10 %2.16204,593 63,924 6 %2.40
Wells Fargo Bank— — — %0.0071,091 42,447 4 %0.49
Centennial Bank6,790 17,165 2 %1.4246,280 55,712 6 %1.66
Total$1,191,571 $525,934 $1,015,566 $485,382 
____________________
(1)Represents the excess of the carrying amount or market value of the loans held-for-investment pledged as collateral for repurchase facilities, including accrued interest plus any cash on deposit to secure the repurchase obligation, less the amount of the repurchase liability, including accrued interest.
The Company does not anticipate any defaults by its financing counterparties, although there can be no assurance that one or more defaults will not occur.
Financial Covenants
The Company is subject to a variety of financial covenants under its secured financing agreements. The following represent the most restrictive financial covenants across the agreements as of March 31, 2023:
•Unrestricted cash cannot be less than the greater of $30.0 million and 5.0% of recourse indebtedness. As of March 31, 2023, the Company’s unrestricted cash was $223.4 million, while 5.0% of the Company’s recourse indebtedness was $23.0 million.
•Tangible net worth must be greater than the sum of (i) 75.0% of the Company’s tangible net worth as of June 28, 2017, and (ii) 75.0% of net cash proceeds of the Company’s equity issuances after June 28, 2017, which calculates to $931.7 million. As of March 31, 2023, the Company’s tangible net worth was $1.1 billion.
•Target asset leverage ratio cannot exceed 77.5% and total leverage ratio cannot exceed 80.0%. As of March 31, 2023, the Company’s target asset leverage ratio was 71.7% and the Company’s total leverage ratio was 70.5%.
•Minimum interest coverage of no less than 1.5:1.0. As of March 31, 2023, the Company’s minimum interest coverage was 1.6:1.0.
The Company may also be subject to additional financial covenants in connection with various other agreements it enters into in the normal course of its business. The Company was in compliance with all of its financial covenants as of March 31, 2023, and December 31, 2022, and intends to continue to operate in a manner which complies with all of its financial covenants.
Senior Secured Term Loan Facilities
Senior Secured Term Loan Facilities
On September 25, 2020, the Company, as a guarantor, and certain of its subsidiaries, as borrowers, entered into a senior secured term loan credit agreement with certain investment vehicles managed by Pacific Investment Management Company LLC, or PIMCO, providing for up to $300.0 million of senior secured term loan facilities. On September 28, 2020, the Company borrowed $225.0 million under the initial term loan facility and on May 9, 2022, the Company completed the repayment of the borrowings under the senior secured term loan facilities.
During the three months ended March 31, 2022, the Company prepaid $50.0 million of borrowings under the senior secured term loan facilities, resulting in a total payment of approximately $53.0 million, inclusive of the principal amount, prepayment penalty and accrued interest. As a result of this repayment, the Company realized a charge on early extinguishment of debt of approximately $(5.8) million, or $(0.11) per basic share, comprised of the prepayment penalty and a pro-rata charge-off of unamortized discount including transaction costs. There was no realized charge on early extinguishment of debt during the three months ended March 31, 2023.
The following table details the interest expense related to the Senior Secured Term Loan as of the three months ended March 31, 2023, and 2022:
Three Months Ended March 31,
(in thousands)20232022
Cash coupon$— $2,451 
Amortization of issuance costs— 417 
Total interest expense$— $2,868