The following tables summarize certain characteristics of the Company's investments in commercial mortgage loans as of June 30, 2023 and December 31, 2022:


						Weighted Average
Loan Type	Unpaid Principal Balance		Carrying Value		Loan Count	Floating Rate Loan %		Coupon(1)		Term (Years)(2)
June 30, 2023
Loans held-for-investment
Senior secured loans(3)	$	1,021,956,208	$	1,021,042,905	66	100.0	%	8.6	%	3.1
Allowance for credit losses	N/A		(3,897,895)
	1,021,956,208		1,017,145,010		66	100.0	%	8.6	%	3.1


						Weighted Average
Loan Type	Unpaid Principal Balance		Carrying Value		Loan Count	Floating Rate Loan %		Coupon(1)		Term (Years)(2)
December 31, 2022
Loans held-for-investment
Senior secured loans(3)	$	1,076,865,099	$	1,076,148,186	71	100.0	%	7.6	%	3.5
Allowance for credit losses	NA		(4,258,668)
	1,076,865,099		1,071,889,518		71	100.0	%	7.6	%	3.5

(1) Weighted average coupon assumes applicable one-month LIBOR of 5.19% and 4.18% and 30-day Term Secured Overnight Financing Rate ("SOFR") of 5.14% and 4.19% as of June 30, 2023 and December 31, 2022, respectively, inclusive of weighted average interest rate floors of 0.25% and 0.27%, respectively. As of June 30, 2023, 73.9% of the investments by total investment exposure earned a floating rate indexed to one-month LIBOR and 26.1% of the investments by total investment exposure earned a floating rate indexed to 30-day Term SOFR. As of December 31, 2022, 77.4% of the investments by total investment exposure earned a floating rate indexed to one-month LIBOR and 22.6% of the investments by total investment exposure earned a floating rate indexed to 30-day Term SOFR.

(2) Weighted average remaining term assumes all extension options are exercised by the borrower, provided, however, that our loans may be repaid prior to such date.

(3) As of June 30, 2023, $994,914,714 of the outstanding senior secured loans were held in VIEs and $22,230,296 of the outstanding senior secured loans were held outside of VIEs. As of December 31, 2022, $996,511,403 of the outstanding senior secured loans were held in VIEs and $75,378,115 of the outstanding senior secured loans were held outside VIEs.

Activity: For the six months ended June 30, 2023, the loan portfolio activity was as follows:


	Commercial Mortgage Loans Held-for-Investment



Balance at December 31, 2022	$	1,071,889,518
Purchases, advances and originations	72,630,053
Principal payments	(123,583,470)
Accretion of purchase discount	1,196
Amortization of purchase premium	(10,687)
Accretion of deferred loan fees	129,300
Cumulative-effect adjustment upon adoption of ASU 2016-13	(3,549,501)
Provision for credit losses, net	(361,399)
Balance at June 30, 2023	$	1,017,145,010

Loan Risk Ratings: As further described in Note 2, the Company evaluates the commercial mortgage loan portfolio on a quarterly basis and assigns a risk rating based on a variety of factors. The following table presents the principal balance and net book value of the loan portfolio based on the Company's internal risk ratings as of June 30, 2023 and December 31, 2022:


	June 30, 2023
				Amortized Cost by Year of Origination
Risk Rating	Number of Loans	Outstanding Principal		2023	2022	2021	2019	2017
1	—	$	—	—	—	—	—	—
2	2	36,850,000		17,926,638	18,533,248	—	—	—
3	53	831,892,473		—	138,379,697	628,385,618	41,515,275	19,625,364
4	10	140,539,480		—	50,841,772	89,263,143	—	—


	December 31, 2022
				Amortized Cost by Year of Origination
Risk Rating	Number of Loans	Outstanding Principal		2022	2021	2019	2018	2017
1	—	$	—	—	—	—	—	—
2	11	153,933,750		85,198,084	67,999,500	—	—	—
3	55	852,474,681		101,654,140	672,421,907	42,077,193	16,672,623	19,668,071
4	3	47,448,000		15,000,000	32,448,000	—	—	—
5	2	23,008,668		—	12,750,000	—	6,000,000	—
	71	$	1,076,865,099	201,852,224	785,619,407	42,077,193	22,672,623	19,668,071

As of June 30, 2023, the average risk rating of the commercial mortgage loan portfolio was 3.4 (Moderate Risk), weighted by investment carrying value, with 85.0% of the net carrying value of commercial loans held-for-investment rated 3 (Moderate Risk) or better by the Company's Manager.

As of December 31, 2022, the average risk rating of the commercial mortgage loan portfolio was 3.0 (Moderate Risk), weighted by investment carrying value, with 93.8% of the net carrying value of commercial loans held-for-investment rated 3 (Moderate Risk) or better by the Company's Manager.

The average risk rating of the portfolio has increased during the six months ended June 30, 2023. The change in underlying risk rating consisted of loans that paid off with a risk rating of "2" of $33.5 million, "3" of $84.0 million and a risk rating of "5" of $10.3 million, offset by the purchase of commercial mortgage loans with a risk rating of "2" of $17.9 million and , "3" of $55.0 million during the six months ended June 30, 2023. Additionally, $101.5 million of loans with a risk rating of "2" transitioned to a risk rating of "3," and $93.1 million of loans with a risk rating of "3" transitioned to a risk rating of "4".

Concentration of Credit Risk: The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value as of June 30, 2023 and December 31, 2022:

Loans Held-for-Investment


	June 30, 2023		December 31, 2022
Geography
South	45.2	%	46.6	%
Southwest	24.8		26.7
Mid-Atlantic	15.4		12.4
Midwest	7.9		8.0
West	6.7		6.3
Total	100.0	%	100.0	%


	June 30, 2023		December 31, 2022
Collateral Property Type
Multifamily	89.5	%	89.6	%
Seniors Housing and Healthcare	8.6		6.4
Self-Storage	1.9		1.8
Retail	—		1.6
Office	—		0.6
Total	100.0	%	100.0	%

The following table presents the changes for the three and six months ended June 30, 2023 and June 30, 2022 in the allowance for credit losses on the outstanding balances of the Company's loans held-for-investment:


	Three months ended				Six months ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Allowance for credit losses at beginning of period	$	3,357,527	$	—	$	4,258,668	$	—
Cumulative-effect adjustment upon adoption of ASU 2016-13	—		—		3,549,501
Provision for credit losses	540,368		—		361,399		—
Charge offs	—		—		(4,271,673)
Allowance for credit losses at end of period	$	3,897,895	$	—	$	3,897,895	$	—

The following table presents the changes for the three and six months ended June 30, 2023 and June 30, 2022 in the provision for (release of) credit losses on the unfunded commitments of the Company's loans held-for-investment:


	Three months ended				Six months ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Allowance for credit losses at beginning of period	$	41,225	$	—	$	—	$	—
Cumulative-effect adjustment upon adoption of ASU 2016-13	—		—		41,939		—
(Reversal of) credit losses	14,716		—		14,002		—
Charge offs	—		—		—		—
Allowance for credit losses at end of period	$	55,941	$	—	$	55,941	$	—

We did not have any impaired loans, non-accrual loans, or loans in maturity default other than the loans discussed below as of June 30, 2023 or December 31, 2022.

In February 2023, in connection with the sale of the office building collateralizing an impaired loan by the borrower to an unaffiliated third-party, the Company accepted a discounted payoff of approximately $6.0 million on the impaired loan, which had an unpaid principal balance of $10.3 million. An allowance for credit loss of $4.3 million was recorded for this impaired loan in the year ended December 31, 2022. Upon the discounted payoff, a $4.3 million charge off against the allowance for credit losses was recorded, with de minimis impact to income in the six months ended June 30, 2023.