Real Estate Assets, Net

3 Months Ended

Mar. 31, 2024

The Company acquires real estate assets either through direct purchases of properties or through conversions of mortgage loans in its portfolio when a mortgage loan is foreclosed upon and the Company takes title to the property on the foreclosure date or the borrower surrenders the deed in lieu of foreclosure.

Property Held-for-Sale

As of March 31, 2024 and December 31, 2023, the Company’s net investments in real estate owned properties was $5.2 million and $3.8 million, respectively, all of which related to properties held-for-sale. REO property is considered held-for-sale if the REO is expected to be actively marketed for sale. Also, included in the properties held-for-sale balance for the periods as of March 31, 2024 and December 31, 2023, was zero and $0.2 million, respectively, for properties undergoing renovation or which are otherwise in the process of being brought to market. As of March 31, 2024 and December 31, 2023, the Company had a total of 24 and 20 real estate owned properties, respectively. For the three months ended March 31, 2024 and 2023, the majority of the additions to REO held-for-sale were acquired through foreclosure or deed in lieu of foreclosure, and reclassified out of the mortgage loan portfolio.

The following table presents the activity in the Company’s carrying value of property held-for-sale for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three months ended March 31,
	2024			2023
Property Held-for-Sale	Count	Amount		Count	Amount
Balance at beginning of period	20	$	3,785	39	$	6,333
Net transfers from/(to) mortgage loans	6	2,015		(2)	(169)
Adjustments to record at lower of cost or fair value	—	(396)		—	(111)
Disposals	(2)	(213)		(5)	(961)
Balance at end of period	24	$	5,191	32	$	5,092

Dispositions

During the three months ended March 31, 2024 and 2023, the Company sold two and five REO properties, respectively, realizing net gains of approximately $8 thousand and $0.1 million, respectively. These amounts are included in Other income on the Company's consolidated statements of operations. During the three months ended March 31, 2024 and 2023, the Company recorded an expense of lower of cost or net realizable value adjustments in real estate operating expense of $0.4 million and $0.1 million, respectively. These amounts are included in Other expense on the Company's consolidated statements of operations.