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Note 9 - Debt
 9 Months Ended
Sep. 30, 2022
Notes to Financial Statements  
Debt Disclosure [Text Block]

9. Debt

 

The following table summarizes the Company’s financing arrangements in place as of September 30, 2022:

 

 

September 30, 2022

  
 

Facility

    

Collateral

  
 

Date issued

  

Outstanding face amount

    

Carrying value

    

Final stated maturity

    

Weighted average interest rate (1)

    

Weighted average life (years) (2)

    

Outstanding face amount

    

Amortized cost basis

    

Carrying value (3)

    

Weighted average life (years) (2)

  

Master Repurchase Agreements

                                                                          

CMBS

                                                                          

Mizuho(4)

4/15/2020

     351,037       351,037       N/A

(5)

     4.64 %     0.22       1,001,008       564,848       567,690       7.3  

Asset Specific Financing

                                                                          

Single Family Rental loans

                                                                          

Freddie Mac

7/12/2019

     629,250       629,250      

7/12/2029

       2.35 %     5.6       688,728       729,004       729,004       5.6  

Mezzanine loans

                                                                          

Freddie Mac

10/20/2020

     59,252       59,252      

8/1/2031

       0.30 %     7.5       105,817       108,455       108,455       7.5  

Multifamily property

                                                                          

CBRE

12/31/2021

     32,480       32,212       6/1/2028

(6)

     5.80 %     5.7       N/A       59,940       59,940       5.7  

Unsecured Financing

                                                                          

Various

10/15/2020

     36,500       35,452      

10/25/2025

       7.50 %     3.1       N/A       N/A       N/A       N/A  

Various

4/20/2021

     165,000       162,790      

4/15/2026

       5.75 %     3.5       N/A       N/A       N/A       N/A  

Total/weighted average

     $ 1,273,519     $ 1,269,993               3.56 %     3.9     $ 1,795,553     $ 1,462,247     $ 1,465,089       6.7  

 

(1)

Weighted-average interest rate using unpaid principal balances.

(2)

Weighted-average life is determined using the maximum maturity date of the corresponding loans, assuming all extension options are exercised by the borrower.
(3) CMBS are shown at fair value on an unconsolidated basis. SFR Loans and mezzanine loans are shown at their amortized cost.

(4)

On April 15, 2020, three of our subsidiaries entered into a master repurchase agreement with Mizuho Securities (“Mizuho”). Borrowings under these repurchase agreements are collateralized by portions of the CMBS B-Pieces, CMBS I/O Strips, MSCR Notes and mortgage backed securities.

(5)

The master repurchase agreement with Mizuho does not have a stated maturity date. The transactions in place have a one-month to two-month tenor and are expected to roll accordingly.
(6) Debt was assumed upon acquisition of this property and recorded at the outstanding principal amount, net of debt issuance costs. The loan can be prepaid at a 1.0% prepayment premium on any unpaid principal. The loan is open to pre-payment in the last three months of the term.

 

          The following table summarizes the Company’s financing arrangements in place as of December 31, 2021:

 

 

December 31, 2021

  
 

Facility

    

Collateral

  
 

Date issued

  

Outstanding face amount

    

Carrying value

    

Final stated maturity

    

Weighted average interest rate (1)

    

Weighted average life (years) (2)

    

Outstanding face amount

    

Amortized cost basis

    

Carrying value (3)

    

Weighted average life (years) (2)

  

Master Repurchase Agreements

                                                                          

CMBS

                                                                          

Mizuho(4)

4/15/2020

     286,324       286,324     N/A

(5)

     1.97 %     0.03       2,101,790       499,975       531,367       8.0  

Asset Specific Financing

                                                                          

Single Family Rental

                                                                          

Freddie Mac

7/12/2019

     726,312       726,312    

7/12/2029

       2.41 %     6.5       795,223       847,364       847,364       6.5  

Mezzanine

                                                                          

Freddie Mac

10/20/2020

     59,914       59,914     8/1/2031       0.30 %     8.3       97,899       100,857       100,857       8.3  

Multifamily

                                                                          

CBRE

12/31/2021

     32,480       32,176    

6/1/2028

(6)

     2.76 %     6.4       N/A       62,269       62,269       6.4  

Unsecured Financing

                                                                          

Various

10/15/2020

     36,500       35,233    

10/25/2025

       7.50 %     3.8       N/A       N/A       N/A       N/A  

Various

4/20/2021

     135,000       133,092     4/15/2026       5.75 %     4.3       N/A       N/A       N/A       N/A  

Total/weighted average

     $ 1,276,530     $ 1,273,051             2.72 %     4.80     $ 2,994,912     $ 1,510,465     $ 1,541,857       7.6  

 

(1)

Weighted-average interest rate using unpaid principal balances.

(2)

Weighted-average life is determined using the maximum maturity date of the corresponding loans, assuming all extension options are exercised by the borrower.
(3) CMBS are shown at fair value on an unconsolidated basis. SFR Loans and mezzanine loans are shown at their amortized cost.

(4)

On April 15, 2020, three of our subsidiaries entered into a master repurchase agreement with Mizuho. Borrowings under these repurchase agreements are collateralized by portions of the CMBS B-Pieces and CMBS I/O Strips.

(5)

The master repurchase agreement with Mizuho does not have a stated maturity date. The transactions in place have a one-month to two-month tenor and are expected to roll accordingly.
(6) Debt was assumed upon acquisition of this property and recorded at the outstanding principal amount, net of debt issuance costs. The loan can be prepaid at a 1.0% prepayment premium on any unpaid principal. The loan is open to pre-payment in the last three months of the term.

 

Prior to the Formation Transaction, two of our subsidiaries entered into a loan and security agreement dated, July 12, 2019, with Freddie Mac (the “Credit Facility”). Under the Credit Facility, these entities borrowed approximately $788.8 million in connection with their acquisition of senior pooled mortgage loans backed by SFR properties (the “Underlying Loans”). No additional borrowings can be made under the Credit Facility and our obligations will be secured by the Underlying Loans. The Credit Facility is guaranteed by certain members of the Contribution Group and the OP. The guarantors are subject to minimum net worth liquidity covenants. The Credit Facility continues to be guaranteed by members of the Contribution Group and the OP as of September 30, 2022. The Credit Facility was assumed by the Company as part of the Formation Transaction at carrying value, which approximated fair value. As such, the remaining outstanding balance of $788.8 million was contributed to the Company on February 11, 2020. Our borrowings under the Credit Facility will mature on July 12, 2029; however, if an Underlying Loan matures prior to July 12, 2029, the Company will be required to repay the portion of the Credit Facility that is allocated to that loan. As of September 30, 2022, the outstanding balance on the Credit Facility was $629.3 million.

 

We, through the Subsidiary OPs, have borrowed approximately $351.0 million under our repurchase agreements and posted $1.0 billion par value of our CMBS B-Piece, CMBS I/O Strip, MSCR Notes and mortgage backed security investments as collateral as of September 30, 2022. The CMBS B-Pieces, CMBS I/O Strips, MSCR Notes and mortgage backed securities held as collateral are illiquid and irreplaceable in nature. These assets are restricted solely to satisfy the interest and principal balances owed to the lender.

 

On October 15, 2020, the OP issued 7.50% Senior Unsecured Notes (the “OP Notes”) for an aggregate principal amount of $36.5 million and a coupon rate of 7.50%. The OP Notes are due October 15, 2025 and were sold at approximately 99% of par value for proceeds of approximately $36.1 million before offering costs. Additionally, the OP Notes are fully guaranteed by the Company in the event that the OP cannot satisfy the obligations of the OP Notes. As of  September 30, 2022, any action required under the guaranty is considered remote.

 

On October 20, 2020, the Company acquired a portfolio of 18 mezzanine loans with an aggregate principal amount outstanding of approximately $97.9 million and a weighted average fixed interest rate of 7.54% for a price of 102% of the outstanding principal amount plus accrued interest of $0.3 million. Freddie Mac provided seller financing of approximately $59.9 million with a weighted average fixed interest rate of 0.30%. Proceeds from the OP Notes offering and cash on hand were used to fund the remainder of the purchase price.

 

On April 20, 2021, the Company issued $75 million in aggregate principal amount of its 5.75% Senior Unsecured Notes due 2026 (the “5.75% Notes”) at a price equal to 99.5% of par value for proceeds of approximately $73.1 million after original issue discount and underwriting fees.

 

On December 20, 2021, the Company issued an additional $60.0 million aggregate principal amount of its 5.75% Notes at a price equal to 102.8% par value, including accrued interest, for proceeds of approximately $60.9 million after original issue discount and underwriting fees.

 

On January 25, 2022, the Company issued an additional $35.0 million aggregate principal amount of its 5.75% Notes at a price equal to 100.9% par value, including accrued interest, for proceeds of approximately $35.1 million after original issue discount and underwriting fees.

 

On May 20, 2022, the Company purchased $3.0 million aggregate principal amount of its 5.75% Notes at a price equal to 96.3% par value, including accrued interest, for approximately $2.9 million. The purchased 5.75% Notes were cancelled upon settlement.

 

On June 30, 2022, the Company purchased $2.0 million aggregate principal amount of its 5.75% Notes at a price equal to 96.5% par value, including accrued interest, for approximately $2.0 million. The purchased 5.75% Notes were cancelled upon settlement.

 

As of September 30, 2022, the outstanding principal balances related to the SFR Loans and levered mezzanine loans consisted of the following (dollars in thousands):

 

       

Outstanding

                      
   

Investment

  

Principal

                      

Investment

  

Date

  

Balance

  

Location

  

Property Type

  

Interest Type

  

Interest Rate

  

Maturity Date

SFR Loans

                                

Senior loan

  

2/11/2020

   $ 465,689  

Various

  

Single-family

  

Fixed

     2.24 %

9/1/2028

Senior loan

  

2/11/2020

     46,093  

Various

  

Single-family

  

Fixed

     2.14 %

10/1/2025

Senior loan

  

2/11/2020

     34,665  

Various

  

Single-family

  

Fixed

     2.70 %

11/1/2028

Senior loan

  

2/11/2020

     9,333  

Various

  

Single-family

  

Fixed

     2.79 %

9/1/2028

Senior loan

  

2/11/2020

     9,284  

Various

  

Single-family

  

Fixed

     2.45 %

3/1/2026

Senior loan

  

2/11/2020

     8,913  

Various

  

Single-family

  

Fixed

     3.51 %

2/1/2028

Senior loan

  

2/11/2020

     8,887  

Various

  

Single-family

  

Fixed

     3.30 %

10/1/2028

Senior loan

  

2/11/2020

     8,038  

Various

  

Single-family

  

Fixed

     3.14 %

1/1/2029

Senior loan

  

2/11/2020

     6,806  

Various

  

Single-family

  

Fixed

     2.98 %

2/1/2029

Senior loan

  

2/11/2020

     5,971  

Various

  

Single-family

  

Fixed

     2.99 %

3/1/2029

Senior loan

  

2/11/2020

     5,642  

Various

  

Single-family

  

Fixed

     2.40 %

2/1/2024

Senior loan

  

2/11/2020

     5,346  

Various

  

Single-family

  

Fixed

     3.14 %

12/1/2028

Senior loan

  

2/11/2020

     5,037  

Various

  

Single-family

  

Fixed

     2.64 %

10/1/2028

Senior loan

  

2/11/2020

     4,791  

Various

  

Single-family

  

Fixed

     2.48 %

8/1/2023

Senior loan

  

2/11/2020

     4,755  

Various

  

Single-family

  

Fixed

     2.97 %

1/1/2029

Total

   $ 629,250                 2.35 %  

Mezzanine Loans

                                

Senior loan

  

10/20/2020

   $ 8,723  

Wilmington, DE

  

Multifamily

  

Fixed

     0.30 %

6/1/2029

Senior loan

  

10/20/2020

     7,344  

White Marsh, MD

  

Multifamily

  

Fixed

     0.30 %

4/1/2031

Senior loan

  

10/20/2020

     6,353  

Philadelphia, PA

  

Multifamily

  

Fixed

     0.30 %

7/1/2031

Senior loan

  

10/20/2020

     5,881  

Daytona Beach, FL

  

Multifamily

  

Fixed

     0.30 %

7/1/2031

Senior loan

  

10/20/2020

     4,523  

Laurel, MD

  

Multifamily

  

Fixed

     0.30 %

7/1/2031

Senior loan

  

10/20/2020

     4,179  

Temple Hills, MD

  

Multifamily

  

Fixed

     0.30 %

1/1/2029

Senior loan

  

10/20/2020

     3,390  

Temple Hills, MD

  

Multifamily

  

Fixed

     0.30 %

5/1/2029

Senior loan

  

10/20/2020

     3,348  

Lakewood, NJ

  

Multifamily

  

Fixed

     0.30 %

5/1/2029

Senior loan

  

10/20/2020

     2,454  

North Aurora, IL

  

Multifamily

  

Fixed

     0.30 %

11/1/2028

Senior loan

  

10/20/2020

     2,264  

Rosedale, MD

  

Multifamily

  

Fixed

     0.30 %

10/1/2028

Senior loan

  

10/20/2020

     2,215  

Cockeysville, MD

  

Multifamily

  

Fixed

     0.30 %

7/1/2031

Senior loan

  

10/20/2020

     2,026  

Laurel, MD

  

Multifamily

  

Fixed

     0.30 %

7/1/2029

Senior loan

  

10/20/2020

     1,836  

Vancouver, WA

  

Multifamily

  

Fixed

     0.30 %

8/1/2031

Senior loan

  

10/20/2020

     1,763  

Tyler, TX

  

Multifamily

  

Fixed

     0.30 %

11/1/2028

Senior loan

  

10/20/2020

     1,307  

Las Vegas, NV

  

Multifamily

  

Fixed

     0.30 %

10/1/2028

Senior loan

  

10/20/2020

     918  

Atlanta, GA

  

Multifamily

  

Fixed

     0.30 %

8/1/2031

Senior loan

  

10/20/2020

     728  

Des Moines, IA

  

Multifamily

  

Fixed

     0.30 %

3/1/2029

Total

   $ 59,252                 0.30 %  

 

For the nine months ended September 30, 2022 and 2021, the activity related to the carrying value of the master repurchase agreements, secured financing agreements and unsecured financing were as follows (in thousands):

 

   

For the Nine Months Ended September 30,

  
   

2022

    

2021

  

Balances as of January 1,

   $ 1,273,051     $ 1,036,878  

Principal borrowings

     163,162       148,595  

Principal repayments

     (161,999 )     (49,869 )

Repurchase of unsecured notes

     (4,829 )     —  

Accretion of discounts

     572       386  

Amortization of deferred financing costs

     36       —  

Balances as of September 30,

   $ 1,269,993     $ 1,135,990  

 

Schedule of Debt Maturities

 

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to September 30, 2022 are as follows (in thousands):

 

Year

  

Recourse

    

Non-recourse

    

Total

  

2022(1)

   $ —     $ (351,037 )   $ (351,037 )

2023

     —       (4,791 )     (4,791 )

2024

     —       (5,642 )     (5,642 )

2025

     (36,500 )     (46,094 )     (82,594 )

2026

     (197,480 )     (9,284 )     (206,764 )

Thereafter

     —       (622,691 )     (622,691 )
    $ (233,980 )   $ (1,039,539 )   $ (1,273,519 )

 

(1)

The transactions in place in the master repurchase agreement with Mizuho have a one-month to two-month tenor and are expected to roll accordingly.