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LOANS HELD FOR INVESTMENT (Tables)
 6 Months Ended
Jun. 30, 2022
Receivables [Abstract]  
Schedule of loans held for investments
The Company’s investments in loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of June 30, 2022 and December 31, 2021 ($ in thousands):

 As of June 30, 2022
Carrying Amount (1)Outstanding Principal (1)Weighted Average Unleveraged Effective YieldWeighted Average Remaining Life (Years)
Senior mortgage loans $2,588,834 $2,607,786 6.2 %(2)6.3 %(3)1.5
Subordinated debt and preferred equity investments17,059 17,662 13.7 %(2)13.7 %(3)3.5
Total loans held for investment portfolio $2,605,893 $2,625,448 6.2 %(2)6.3 %(3)1.6

 As of December 31, 2021
Carrying Amount (1)Outstanding Principal (1)Weighted Average Unleveraged Effective YieldWeighted Average Remaining Life (Years)
Senior mortgage loans $2,397,655 $2,411,718 5.3 %(2)5.4 %(3)1.5
Subordinated debt and preferred equity investments16,728 17,394 13.7 %(2)13.7 %(3)4.0
Total loans held for investment portfolio$2,414,383 $2,429,112 5.4 %(2)5.5 %(3)1.6
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(1)The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.
(2)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of June 30, 2022 and December 31, 2021 as weighted by the outstanding principal balance of each loan.
(3)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all interest accruing loans held by the Company
as of June 30, 2022 and December 31, 2021 as weighted by the total outstanding principal balance of each interest accruing loan (excludes loans on non-accrual status as of June 30, 2022 and December 31, 2021).
Schedule of current investment portfolio
A more detailed listing of the Company’s loans held for investment portfolio based on information available as of June 30, 2022 is as follows ($ in millions, except percentages):
Loan TypeLocationOutstanding Principal (1)Carrying Amount (1)Interest RateUnleveraged Effective Yield (2)Maturity Date (3)Payment Terms (4)
Senior Mortgage Loans:
OfficeIL$151.5$151.2L+3.60%5.8%Mar 2023I/O
MultifamilyNY128.0126.4S+3.90%6.0%Jun 2025I/O
OfficeDiversified114.6114.5L+3.65%5.9%Jan 2023I/O
MultifamilyTX100.099.0S+3.50%5.5%Jul 2025I/O
IndustrialIL95.795.1L+4.55%6.8%May 2024I/O
Mixed-useFL84.084.0L+4.25%6.0%Feb 2023I/O
OfficeAZ77.476.7L+3.50%5.7%Oct 2024I/O
Mixed-useNY75.074.5L+3.65%5.8%Jul 2024I/O
OfficeNC69.369.2L+4.25%7.0%Mar 2023(5)P/I(6)
Residential CondominiumFL69.268.8L+5.25%7.6%Jul 2023I/O
HotelOR/WA68.167.7L+3.45%6.8%Nov 2022(7)I/O
MultifamilyTX67.266.6L+2.85%5.0%Dec 2024I/O
Multifamily/OfficeSC67.066.8L+2.90%4.9%Nov 2024I/O
OfficeNC65.064.5L+3.55%5.8%Aug 2024I/O
Residential CondominiumNY64.263.4S+8.95%12.4%Oct 2023I/O(8)
OfficeNY64.163.4L+3.85%6.0%Aug 2025I/O
OfficeIL61.060.9L+3.75%5.8%Dec 2022I/O
Mixed-useCA58.157.9(9)8.6%Jan 2024I/O
OfficeIL56.956.8S+3.95%6.2%Jun 2023(10)I/O
Self StorageNJ55.555.6L+3.80%5.5%Feb 2024I/O
HotelDiversified50.250.2L+3.60%6.1%Sep 2022P/I(6)
OfficeGA48.248.2L+3.05%5.7%Dec 2022I/O
HotelCA40.039.9L+4.12%6.4%Jan 2023I/O
HotelCA39.238.6S+4.20%6.3%Mar 2025I/O
Mixed-useCA37.937.8L+4.10%6.5%Mar 2023I/O
Mixed-useTX35.835.7(11)6.3%Sep 2022I/O
HotelIL35.030.5S+4.00%—%(12)May 2024(12)I/O
Student HousingCA34.934.9L+3.95%5.8%Jul 2023(13)I/O
MultifamilySC34.034.0L+6.50%10.2%Sep 2022I/O
OfficeCA32.632.6L+3.35%6.0%Nov 2022I/O
MultifamilyCA31.731.5L+2.90%5.0%Dec 2025I/O
HotelNY30.730.2S+4.40%6.5%Mar 2026I/O
OfficeIL30.230.1L+3.80%6.2%Jan 2023I/O
HotelMI30.029.7L+3.95%5.9%Dec 2022(14)I/O
MultifamilyPA29.329.3L+3.00%5.0%Dec 2022I/O
OfficeNC28.528.3L+3.53%6.8%May 2023I/O
IndustrialFL25.525.4L+2.90%4.9%Dec 2025I/O
IndustrialCO24.624.4(15)9.6%Feb 2023I/O
IndustrialNJ23.323.0L+3.75%6.2%May 2024I/O
MultifamilyWA23.123.0L+2.90%4.9%Nov 2025I/O
OfficeCA22.922.8L+3.40%6.0%Nov 2022I/O
MultifamilyTX22.021.8L+2.50%4.7%Oct 2024I/O
IndustrialCA19.619.5L+3.75%6.3%Mar 2023I/O
Student HousingAL19.519.4L+3.85%6.0%May 2024I/O
OfficeMA19.318.5S+3.75%6.3%Apr 2025I/O
MultifamilyWA18.718.7L+3.00%5.2%Mar 2023I/O
Self StoragePA17.417.2L+2.90%5.0%Dec 2025I/O
ResidentialCA14.314.313.00%—%(16)May 2021(16)I/O
Self StoragePA13.813.6L+3.05%5.2%Oct 2024I/O
Self StorageMD12.512.4L+3.05%5.1%Oct 2024I/O
Self StorageFL10.810.8L+2.90%5.1%Dec 2023I/O
IndustrialTX10.410.3L+5.25%7.4%Dec 2024I/O
Self StorageWA10.210.2L+3.05%5.1%Oct 2024I/O
IndustrialFL9.59.4L+4.75%8.1%Nov 2024I/O
Self StorageMO9.08.9L+3.05%5.1%Oct 2024I/O
Self StorageMA8.58.5L+2.90%4.9%Dec 2024I/O
IndustrialPA8.08.0L+5.50%7.7%Sep 2024I/O
Self StorageTX8.08.0L+2.90%4.9%Aug 2024I/O
Self StorageMA7.77.6L+2.90%4.9%Nov 2024I/O
IndustrialPA7.06.9L+5.90%8.1%Nov 2024I/O
Self StorageFL7.06.9L+2.90%5.1%Dec 2023I/O
IndustrialTN6.76.6L+5.50%7.7%Nov 2024I/O
Self StorageFL6.46.4L+2.90%5.1%Dec 2023I/O
Self StorageMA6.36.3L+2.90%4.9%Oct 2024I/O
Self StorageMO6.36.3L+3.00%4.9%Dec 2023I/O
IndustrialFL5.95.9S+5.90%8.0%Feb 2025I/O
Self StorageNJ5.95.9L+2.90%5.1%Jul 2024I/O
Self StorageIL5.65.6L+3.00%5.1%Dec 2023I/O
Self StorageWI5.45.4L+2.90%4.9%Jul 2024I/O
IndustrialFL4.74.6S+5.75%7.8%Mar 2025I/O
Self StorageFL4.54.5L+2.90%4.9%Jun 2024I/O
Self StorageFL4.44.4L+2.90%5.0%Dec 2023I/O
Self StorageCO3.23.2L+2.90%4.7%Apr 2024I/O
IndustrialCO2.92.9L+6.25%8.4%Sep 2024I/O
Self StorageTX2.92.9L+2.90%4.8%Sep 2024I/O
IndustrialAZ2.72.6L+5.90%8.1%Oct 2024I/O
IndustrialGA1.31.3L+5.25%7.4%Sep 2024I/O
Subordinated Debt and Preferred Equity Investments:
OfficeNJ17.717.112.00%13.6%Jan 2026I/O
Total/Weighted Average $2,625.4$2,605.96.2%

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(1)The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs. For the loans held for investment that represent co-investments with other investment vehicles managed by Ares Management (see Note 14 included in these consolidated financial statements for additional information on co-investments), only the portion of Carrying Amount and Outstanding Principal held by the Company is reflected.
(2)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR or SOFR as of June 30, 2022 or the LIBOR or SOFR floor, as applicable. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of June 30, 2022 as weighted by the outstanding principal balance of each loan.
(3)Certain loans are subject to contractual extension options that generally vary between one and two 12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.
(4)I/O = interest only, P/I = principal and interest.
(5)In March 2022, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior North Carolina loan to March 2023.
(6)Amortization began on the senior North Carolina loan, which had an outstanding principal balance of $69.3 million as of June 30, 2022 and the senior diversified loan, which had an outstanding principal balance of $50.2 million as of June 30, 2022, in April 2022 and October 2021, respectively. The remainder of the loans in the Company’s portfolio are non-amortizing through their primary terms.
(7)In May 2022, the Company and the borrower entered into a modification and extension agreement to, among other things, extend the maturity date on the senior Oregon/Washington loan from May 2022 to November 2022.
(8)This senior mortgage loan refinanced the previously existing $71.8 million senior mortgage loan that was held by the Company.
(9)At origination, the California loan was structured as both a senior and mezzanine loan with the Company holding both positions. The senior loan, which had an outstanding principal balance of $45.0 million as of June 30, 2022, accrues
interest at a per annum rate of L + 3.80% and the mezzanine loan, which had an outstanding principal balance of $13.1 million as of June 30, 2022, accrues interest at a per annum rate of 18.00%.
(10)In May 2022, the Company and the borrower entered into a modification and extension agreement to, among other things, amend the interest rate from L + 3.95% to S + 3.95% and extend the maturity date on the senior Illinois loan from June 2022 to June 2023. The borrower is current on all contractual interest payments.
(11)The senior Texas loan is split into two separate notes: Note A, which had an outstanding principal balance of $35.3 million as of June 30, 2022, accrues interest at a per annum rate of L + 3.75% and Note B, which had an outstanding principal balance of $0.4 million as of June 30, 2022, accrues interest at a per annum rate of L + 10.00%.
(12)Loan was on non-accrual status as of June 30, 2022 and therefore, there is no Unleveraged Effective Yield as the loan is non-interest accruing. In March 2022, the Company and the borrower entered into a modification and extension agreement to, among other things, amend the interest rate from L + 4.40% to S + 4.00% and extend the maturity date on the senior Illinois loan from May 2022 to May 2024. For the three months ended June 30, 2022, the Company received in cash and recognized $365 thousand of interest income on the senior Illinois loan and the borrower is current on all contractual interest payments. However, the senior Illinois loan is currently in default due to the failure of the borrower to make certain contractual reserve deposits by the May 2022 due date.
(13)In May 2022, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior California loan to July 2023.
(14)In June 2022, the Company and the borrower entered into a modification and extension agreement to, among other things, extend the maturity date on the senior Michigan loan from July 2022 to December 2022.
(15)At origination, the Colorado loan was structured as a senior loan and in January 2022, the Company also originated the mezzanine loan. The senior loan, which had an outstanding principal balance of $20.8 million as of June 30, 2022, accrues interest at a per annum rate of L + 6.75% and the mezzanine loan, which had an outstanding principal balance of $3.8 million as of June 30, 2022, accrues interest at a per annum rate of S + 8.50%.
(16)Loan was on non-accrual status as of June 30, 2022 and therefore, there is no Unleveraged Effective Yield as the loan is non-interest accruing. As of June 30, 2022, the senior California loan, which is collateralized by a residential property, is in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the May 2021 maturity date. The Company evaluated this loan for impairment and concluded that no impairment charge should be recognized as of June 30, 2022. This conclusion was based in part on: (1) the current estimated fair market value of the underlying collateral property, (2) the estimated value of the contractual right to residual proceeds from the sale of a second residential property and (3) the recourse payment guarantee from two individuals that are the owners of the underlying collateral. The estimated fair market value of the underlying collateral property was determined using the comparable market sales approach.
Schedule of activity in loan portfolio
For the six months ended June 30, 2022, the activity in the Company’s loan portfolio was as follows ($ in thousands):
Balance at December 31, 2021$2,414,383 
Initial funding473,200 
Origination fees and discounts, net of costs(7,345)
Additional funding 58,045 
Amortizing payments(1,176)
Loan payoffs(336,152)
Origination fee accretion 4,938 
Balance at June 30, 2022$2,605,893