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Debt and Preferred Equity Investments (Tables)
 6 Months Ended
Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
Schedule of debt and preferred equity book balance roll forward
Below is a summary of the activity in our debt and preferred equity investments for the six months ended June 30, 2023 and the twelve months ended December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Balance at beginning of year (1)
$623,280 $1,088,723 
Debt investment originations/fundings/accretion (2)
16,115 62,992 
Preferred equity investment originations/accretion (2)
3,971 37,505 
Redemptions/sales/syndications/equity ownership/amortization— (565,940)
Net change in loan loss reserves(6,890)— 
Balance at end of period (1)
$636,476 $623,280 
(1)Net of unamortized fees, discounts, and premiums.
(2)Accretion includes amortization of fees and discounts and paid-in-kind investment income.
Schedule of debt
Below is a summary of our debt and preferred equity investments as of June 30, 2023 (dollars in thousands):
Floating RateFixed RateTotal Carrying ValueSenior FinancingWeighted Average Yield at End of Period
Maturity (1)
TypeCarrying ValueFace ValueInterest RateCarrying ValueFace ValueInterest Rate
Mezzanine Debt$154,528 $154,709 
S + 4.95% - 13.25%
$358,119 $373,104 
7.00% - 14.30%
$512,647 $1,724,174 5.96%2023 - 2029
Preferred Equity— — —123,829 123,829 6.5%123,829 250,000 6.55%2027
Balance at end of period$154,528 $154,709 $481,948 $496,933 $636,476 $1,974,174 
(1)Excludes available extension options to the extent they have not been exercised as of the date of this filing.
Allowance for credit losses on financing receivables
The following table is a roll forward of our total allowance for loan losses for the six months ended June 30, 2023 and the twelve months ended December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Balance at beginning of year$6,630 $6,630 
Current period provision for loan loss6,890 — 
Balance at end of period (1)
$13,520 $6,630 
(1)As of June 30, 2023, all debt and preferred equity investments on non-accrual had an allowance for loan loss except for two debt investments with carrying values of $225.4 million and $50.0 million.
Schedule of investment in financing receivables and risk rating
The following table sets forth the carrying value of our debt and preferred equity investment portfolio by risk rating as of June 30, 2023 and December 31, 2022 (dollars in thousands):
Risk RatingJune 30, 2023December 31, 2022
1 - Low Risk Assets - Low probability of loss
$201,185 $264,069 
2 - Watch List Assets - Higher potential for loss
435,291 352,321 
3 - High Risk Assets - Loss more likely than not— 6,890 
$636,476 $623,280 
The following table sets forth the carrying value of our debt and preferred equity investment portfolio by year of origination and risk rating as of June 30, 2023 (dollars in thousands):
As of June 30, 2023
Risk Rating
2023 (1)
2022 (1)
2021 (1)
Prior (1)(2)
Total
1 - Low Risk Assets - Low probability of loss
$— $— $— $201,185 $201,185 
2 - Watch List Assets - Higher potential for loss
— — 82,752 352,539 435,291 
3 - High Risk Assets - Loss more likely than not
— — — — — 
$— $— $82,752 $553,724 $636,476 
(1)Year in which the investment was originated or acquired by us or in which a material modification occurred.
(2)During the six months ended June 30, 2023, we recognized a $6.9 million provision for loan loss related to an investment originated prior to 2021.
Summary of debt investments As of June 30, 2023 and December 31, 2022, we held the following debt investments with an aggregate weighted average current yield of 5.96% as of June 30, 2023 (dollars in thousands):
Loan TypeJune 30, 2023
Future Funding
Obligations		June 30, 2023 Senior
Financing
June 30, 2023
Carrying Value (1)
December 31, 2022
Carrying Value (1)
Maturity
Date (2)
Fixed Rate Investments:
Mezzanine Loan (3)
$— $399,460 $225,367 $225,367 June 2023
Mezzanine Loan (4)
— 272,147 82,752 77,109 June 2023
Mezzanine Loan (5)(6)
— 105,000 13,366 13,366 June 2024
Mezzanine Loan— 95,000 30,000 30,000 January 2025
Mezzanine Loan— 85,000 20,000 20,000 December 2029
Total fixed rate$— $956,607 $371,485 $365,842  
Floating Rate Investments:
Mezzanine Loan (7)
$— $275,000 $50,000 $50,000 April 2023
Mezzanine Loan (8)
— 186,084 39,083 39,083 July 2023
Mezzanine Loan3,761 54,000 8,243 8,243 November 2023
Mezzanine Loan7,618 252,483 57,356 46,884 May 2024
Total floating rate$11,379 $767,567 $154,682 $144,210  
Allowance for loan loss $— $— $(13,520)$(6,630)
Total$11,379 $1,724,174 $512,647 $503,422 
(1)Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees.
(2)Represents contractual maturity, excluding any extension options to the extent they have not been exercised as of the date of this filing.
(3)This loan was put on non-accrual in July 2020 and remains on non-accrual as of June 30, 2023. No investment income has been recognized subsequent to it being put on non-accrual. The loan went into default in June 2023 and the Company is in discussions with the borrower with respect to the loan.
(4)This loan went into default in June 2023. The Company is in discussions with the borrower with respect to the loan.
(5)Carrying value is net of a $12.0 million participation that was sold and did not meet the conditions for sale accounting. That participation is included in Other assets and Other liabilities on the consolidated balance sheets as a result.
(6)This loan went into default and was put on non-accrual in June 2020 and remains on non-accrual as of June 30, 2023. No investment income has been recognized subsequent to it being put on non-accrual. In the first quarter of 2023, the Company fully reserved the balance of the investment. Additionally, we determined the borrower entity to be a VIE, in which we are not the primary beneficiary.
(7)This loan went into default and was put on non-accrual in January 2023 and remains on non-accrual as of June 30, 2023. No investment income has been recognized subsequent to it being put on non-accrual. The Company is in discussions with the borrower with respect to the loan.
(8)This loan went into default in April 2023. The Company is in discussions with the borrower with respect to the loan.
Summary of preferred equity investments
As of June 30, 2023 and December 31, 2022, we held the following preferred equity investment with an aggregate weighted average current yield of 6.55% as of June 30, 2023 (dollars in thousands):
TypeJune 30, 2023
Future Funding
Obligations		June 30, 2023 Senior
Financing
June 30, 2023
Carrying Value (1)
December 31, 2022
Carrying Value (1)
Mandatory Redemption (2)
Preferred Equity$— $250,000 $123,829 $119,858 February 2027
Allowance for loan loss $— $— $— $— 
Total$— $250,000 $123,829 $119,858 
(1)Carrying value is net of deferred origination fees.
(2)Represents contractual redemption, excluding any unexercised extension options.