Real Estate Owned

6 Months Ended

Jun. 30, 2024

REAL ESTATE OWNED

On March 19, 2024, we acquired legal title to an office property located in Mountain View, CA through a deed-in-lieu of foreclosure transaction. The office property previously collateralized a senior mortgage loan with an amortized cost basis of $90.2 million that was risk rated a “5” with a CECL reserve of $29.1 million at the time of the transaction. The acquisition was accounted for as an asset acquisition under ASC Topic 805 “Business Combinations,” and upon acquisition we recognized the office property as an REO asset held for investment. The REO asset was recorded on our consolidated balance sheet at $60.2 million based on its estimated fair value at acquisition. This resulted in a CECL reserve charge-off of $29.1 million during the three months ended March 31, 2024. See Note 2 for additional information on REO.

The following table presents the REO asset included in our consolidated balance sheets ($ in thousands):


	June 30, 2024
Assets
Land and land improvements	$	40,824
Building	19,379
Total	$	60,203
Less: accumulated depreciation	(185)
Real estate owned, net	$	60,018

As of June 30, 2024, we had no REO liabilities and no impairment charges have been recognized for our REO asset.

No income was recognized and expenses were $963,000, consisting of $185,000 of depreciation expense and $778,000 of other operating expenses during the three and six months ended June 30, 2024. There was no income or expense recognized related to REO assets during the three and six months ended June 30, 2023.

As of December 31, 2023, we did not have any REO assets or liabilities.