Loans Receivable and Other Lending Investments, net (Tables)

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Schedule of the company's loans and other lending investments by class

The following is a summary of the Company’s loans receivable and other lending investments by class ($ in thousands):

	As of
	September 30, 2021		December 31, 2020
Construction loans
Senior mortgages	$	191,697	$	449,733
Corporate/Partnership loans		3,516		65,100
Subtotal - gross carrying value of construction loans(1)		195,213		514,833
Loans
Senior mortgages		15,181		35,922
Corporate/Partnership loans		17,941		20,567
Subordinate mortgages		12,248		11,640
Subtotal - gross carrying value of loans		45,370		68,129
Other lending investments
Financing receivables (refer to Note 5)		48,503		46,549
Held-to-maturity debt securities		95,258		90,715
Available-for-sale debt securities		27,535		25,274
Subtotal - other lending investments		171,296		162,538
Total gross carrying value of loans receivable and other lending investments		411,879		745,500
Allowance for loan losses		(6,370)		(13,170)
Total loans receivable and other lending investments, net	$	405,509	$	732,330

(1) As of September 30, 2021, 98% of gross carrying value of construction loans had completed construction.

Schedule of changes in the company's allowance for loan losses

	General Allowance
					Held to
	Construction				Maturity Debt		Financing		Specific
Three Months Ended September 30, 2021	Loans		Loans		Securities		Receivables		Allowance		Total
Allowance for loan losses at beginning of period	$	1,640	$	1,619	$	2,393	$	893	$	590	$	7,135
(Recovery of) provision for loan losses(1)		(149)		(865)		145		54		50		(765)
Allowance for loan losses at end of period	$	1,491	$	754	$	2,538	$	947	$	640	$	6,370
Three Months Ended September 30, 2020
Allowance for loan losses at beginning of period	$	11,736	$	905	$	111	$	1,159	$	21,701	$	35,612
(Recovery of) provision for loan losses(1)		(2,598)		(427)		(56)		17		899		(2,165)
Allowance for loan losses at end of period	$	9,138	$	478	$	55	$	1,176	$	22,600	$	33,447

(1) During the three months ended September 30, 2021 and 2020, the Company recorded a provision for (recovery of) loan losses of ($1.6) million and ($2.0) million, respectively, in its consolidated statements of operations. The recovery in 2021 was due primarily to the repayment of loans during the three months ended September 30, 2021 and an improving macroeconomic forecast on commercial real estate markets since June 30, 2021. Of this amount, $0.9 million related to a recovery of loan losses for unfunded loan commitments and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities." The recovery in 2020 resulted from the reversal of CECL allowances on loans that repaid in full in the third quarter 2020 and a more favorable economic outlook on commercial real estate markets in the third quarter 2020 as compared to the second quarter 2020. Of this amount, $0.7 million related to a recovery of loan losses for unfunded loan commitments and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities" and $0.9 million related to a provision on a non-performing loan that was recorded as a reduction to "Accrued interest and operating lease income receivable, net."

Changes in the Company’s allowance for loan losses were as follows for the nine months ended September 30, 2021 and 2020 ($ in thousands):

	General Allowance
					Held to
	Construction				Maturity Debt		Financing		Specific
Nine Months Ended September 30, 2021	Loans		Loans		Securities		Receivables		Allowance		Total
Allowance for loan losses at beginning of period	$	6,541	$	1,643	$	3,093	$	1,150	$	743	$	13,170
Recovery of loan losses(1)		(5,050)		(889)		(555)		(203)		(103)		(6,800)
Allowance for loan losses at end of period	$	1,491	$	754	$	2,538	$	947	$	640	$	6,370
Nine Months Ended September 30, 2020
Allowance for loan losses at beginning of period	$	6,668	$	265	$	—	$	—	$	21,701	$	28,634
Adoption of new accounting standard(2)		(353)		98		20		964		—		729
Provision for loan losses(1)		2,823		115		35		212		899		4,084
Allowance for loan losses at end of period	$	9,138	$	478	$	55	$	1,176	$	22,600	$	33,447

(1) During the nine months ended September 30, 2021 and 2020, the Company recorded a provision for (recovery of) loan losses of ($7.6) million and $4.1 million, respectively, in its consolidated statements of operations. The recovery in 2021 was due primarily to the repayment of loans during the nine months ended September 30, 2021 and an improving macroeconomic forecast on commercial real estate markets since December 31, 2020. Of this amount, $0.9 million related to a recovery of credit losses for unfunded loan commitments and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities.” The provision for loan losses in 2020 resulted from the macroeconomic impact of COVID-19 on commercial real estate markets, of which $0.9 million related to a recovery of credit losses for unfunded loan commitments and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities" and $0.9 million related to a provision on a non-performing loan that was recorded as a reduction to "Accrued interest and operating lease income receivable, net."

(2) On January 1, 2020, the Company recorded an increase to its allowance for loan losses of $3.3 million upon the adoption of ASU 2016-13, of which $2.5 million related to expected credit losses for unfunded loan commitments and was recorded in “Accounts payable, accrued expenses and other liabilities.”

Schedule of recorded investment in loans and associated allowance for loan losses

The Company’s investment in loans and other lending investments and the associated allowance for loan losses were as follows as of September 30, 2021 and December 31, 2020 ($ in thousands):

	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment(1)		Impairment		Total
As of September 30, 2021
Construction loans(2)	$	58,819	$	136,394	$	195,213
Loans(2)		—		45,370		45,370
Financing receivables		—		48,503		48,503
Held-to-maturity debt securities		—		95,258		95,258
Available-for-sale debt securities(3)		—		27,535		27,535
Less: Allowance for loan losses		(640)		(5,730)		(6,370)
Total	$	58,179	$	347,330	$	405,509
As of December 31, 2020
Construction loans(2)	$	53,305	$	461,528	$	514,833
Loans(2)		—		68,129		68,129
Financing receivables		—		46,549		46,549
Held-to-maturity debt securities		—		90,715		90,715
Available-for-sale debt securities(3)		—		25,274		25,274
Less: Allowance for loan losses		(743)		(12,427)		(13,170)
Total	$	52,562	$	679,768	$	732,330

(1) The carrying value of this loan includes an unamortized discount of $0.8 million and $0.8 million as of September 30, 2021 and December 31, 2020, respectively. The Company’s loans individually evaluated for impairment represent loans on non-accrual status and the unamortized amounts associated with these loans are not currently being amortized into income.

(2) The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs totaling net discounts of $0.2 million and $2.3 million as of September 30, 2021 and December 31, 2020, respectively.

(3) Available-for-sale debt securities are evaluated for impairment under ASC 326-30.

Schedule of investment in performing loans, presented by class and by credit quality, as indicated by risk rating

The Company’s amortized cost basis in performing senior mortgages, corporate/partnership loans, subordinate mortgages and financing receivables, presented by year of origination and by credit quality, as indicated by risk rating, as of September 30, 2021 were as follows ($ in thousands):

	Year of Origination
	2021		2020		2019		2018		2017		Prior to 2017		Total
Senior mortgages
Risk rating
1.0	$	—	$	—	$	—	$	—	$	—	$	—	$	—
1.5		—		—		—		—		—		—		—
2.0		—		—		—		11,900		—		—		11,900
2.5		—		—		—		—		—		—		—
3.0		—		—		—		109,137		—		3,281		112,418
3.5		—		—		—		23,741		—		—		23,741
4.0		—		—		—		—		—		—		—
4.5		—		—		—		—		—		—		—
5.0		—		—		—		—		—		—		—
Subtotal(1)	$	—	$	—	$	—	$	144,778	$	—	$	3,281	$	148,059
Corporate/partnership loans
Risk rating
1.0	$	—	$	—	$	—	$	—	$	—	$	—	$	—
1.5		—		—		—		3,516		—		—		3,516
2.0		—		—		—		—		—		—		—
2.5		—		—		—		—		—		—		—
3.0		—		—		—		—		—		—		—
3.5		—		—		—		—		—		—		—
4.0		—		—		—		17,941		—		—		17,941
4.5		—		—		—		—		—		—		—
5.0		—		—		—		—		—		—		—
Subtotal	$	—	$	—	$	—	$	21,457	$	—	$	—	$	21,457
Subordinate mortgages
Risk rating
1.0	$	—	$	—	$	—	$	—	$	—	$	—	$	—
1.5		—		—		—		—		—		—		—
2.0		—		—		—		—		—		—		—
2.5		—		—		—		—		—		—		—
3.0		—		—		—		—		—		12,248		12,248
3.5		—		—		—		—		—		—		—
4.0		—		—		—		—		—		—		—
4.5		—		—		—		—		—		—		—
5.0		—		—		—		—		—		—		—
Subtotal	$	—	$	—	$	—	$	—	$	—	$	12,248	$	12,248
Financing receivables
Risk rating
1.0	$	—	$	—	$	—	$	—	$	—	$	—	$	—
1.5		—		—		—		—		—		—		—
2.0		—		—		48,503		—		—		—		48,503
2.5		—		—		—		—		—		—		—
3.0		—		—		—		—		—		—		—
3.5		—		—		—		—		—		—		—
4.0		—		—		—		—		—		—		—
4.5		—		—		—		—		—		—		—
5.0		—		—		—		—		—		—		—
Subtotal	$	—	$	—	$	48,503	$	—	$	—	$	—	$	48,503
Total	$	—	$	—	$	48,503	$	166,235	$	—	$	15,529	$	230,267

(1) As of September 30, 2021, excludes $58.8 million for one loan on non-accrual status.

Schedule of recorded investment in loans, aged by payment status and presented by class

The Company’s amortized cost basis in loans, aged by payment status and presented by class, was as follows ($ in thousands):

			Less Than		Greater
			or Equal		Than		Total
	Current		to 90 Days		90 Days		Past Due		Total
As of September 30, 2021
Senior mortgages	$	148,059	$	—	$	58,819		58,819	$	206,878
Corporate/Partnership loans		21,457		—		—		—		21,457
Subordinate mortgages		12,248		—		—		—		12,248
Total	$	181,764	$	—	$	58,819	$	58,819	$	240,583
As of December 31, 2020
Senior mortgages	$	443,154	$	42,501	$	—	$	42,501	$	485,655
Corporate/Partnership loans		42,721		42,946		—		42,946		85,667
Subordinate mortgages		11,640		—		—		—		11,640
Total	$	497,515	$	85,447	$	—	$	85,447	$	582,962

Schedule of recorded investment in impaired loans

	As of September 30, 2021						As of December 31, 2020
			Unpaid						Unpaid
	Amortized		Principal		Related		Amortized		Principal		Related
	Cost		Balance		Allowance		Cost		Balance		Allowance
With an allowance recorded:
Senior mortgages(1)	$	58,819	$	58,069	$	(640)	$	53,305	$	52,552	$	(743)
Total	$	58,819	$	58,069	$	(640)	$	53,305	$	52,552	$	(743)

(1) The Company has one non-accrual loan as of September 30, 2021 and December 31, 2020 that is considered impaired and included in the table above. The Company did not record any interest income on impaired loans for the nine months ended September 30, 2021 and 2020.

Schedule of contractual maturities of securities

					Net				Net
			Amortized		Unrealized		Estimated		Carrying
	Face Value		Cost Basis		Gain		Fair Value		Value
As of September 30, 2021
Available-for-Sale Securities
Municipal debt securities	$	23,855	$	23,855	$	3,680	$	27,535	$	27,535
Held-to-Maturity Securities
Debt securities		100,000		95,258		—		95,258		95,258
Total	$	123,855	$	119,113	$	3,680	$	122,793	$	122,793
As of December 31, 2020
Available-for-Sale Securities
Municipal debt securities	$	20,680	$	20,680	$	4,594	$	25,274	$	25,274
Held-to-Maturity Securities
Debt securities		100,000		90,715		—		90,715		90,715
Total	$	120,680	$	111,395	$	4,594	$	115,989	$	115,989

As of September 30, 2021, the contractual maturities of the Company’s securities were as follows ($ in thousands):

	Held-to-Maturity Debt Securities				Available-for-Sale Debt Securities
	Amortized		Estimated		Amortized		Estimated
	Cost Basis		Fair Value		Cost Basis		Fair Value
Maturities
Within one year	$	—	$	—	$	—	$	—
After one year through 5 years		95,258		95,258		—		—
After 5 years through 10 years		—		—		—		—
After 10 years		—		—		23,855		27,535
Total	$	95,258	$	95,258	$	23,855	$	27,535