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Note 9 - Debt
 3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Debt Disclosure [Text Block]

9. Debt

 

The following table summarizes the Company’s financing arrangements in place as of March 31, 2022:

 

 

 

March 31, 2022

 
 

Facility

  

Collateral

 
 

Date issued

 

Outstanding face amount

  

Carrying value

  

Final stated maturity

  

Weighted average interest rate (1)

  

Weighted average life (years) (2)

  

Outstanding face amount

  

Amortized cost basis

  

Carrying value (3)

  

Weighted average life (years) (2)

 

Master Repurchase Agreements

                                     

CMBS

                                     

Mizuho(4)

4/15/2020

  296,991   296,991   N/A

(5)

  2.22%  0.03   2,072,842   479,087   503,642   7.8 

Asset Specific Financing

                                     

Single Family Rental loans

                                     

Freddie Mac

7/12/2019

  639,902   639,902   

7/12/2029

   2.36%  6.1   700,309   744,525   744,525   6.1 

Mezzanine loans

                                     

Freddie Mac

10/20/2020

  59,914   59,914   

8/1/2031

   0.30%  8.1   97,899   100,791   100,791   8.1 

Multifamily property

                                     

CBRE

12/31/2021

  32,480   32,188   6/1/2028

(6)

  3.00%  6.2   N/A   61,346   61,346   6.2 

Unsecured Financing

                                     

Various

10/15/2020

  36,500   35,303   

10/25/2025

   7.50%  3.6   N/A   N/A   N/A   N/A 

Various

4/20/2021

  170,000   167,392   

4/15/2026

   5.75%  4.0   N/A   N/A   N/A   N/A 

Total/weighted average

  $1,235,787  $1,231,690       2.86%  4.4  $2,871,050  $1,385,749  $1,410,304   7.4 

 

(1)

Weighted-average interest rate using unpaid principal balances.

(2)

Weighted-average life is determined using the maximum maturity date of the corresponding loans, assuming all extension options are exercised by the borrower.

(3)CMBS are shown at fair value on an unconsolidated basis. SFR Loans and mezzanine loans are shown at their amortized cost.

(4)

On April 15, 2020, three of our subsidiaries entered into a master repurchase agreement with Mizuho Securities (“Mizuho”). Borrowings under these repurchase agreements are collateralized by portions of the CMBS B-Pieces and CMBS I/O Strips.

(5)

The master repurchase agreement with Mizuho does not have a stated maturity date. The transactions in place have a one-month to two-month tenor and are expected to roll accordingly.

(6)Debt was assumed upon acquisition of this property and recorded at the outstanding principal amount, net of debt issuance costs. The loan can be prepaid at a 1.0% prepayment premium on any unpaid principal. The loan is open to pre-payment in the last three months of the term.

 

          The following table summarizes the Company’s financing arrangements in place as of December 31, 2021:

 

 

December 31, 2021

 
 

Facility

  

Collateral

 
 

Date issued

 

Outstanding face amount

  

Carrying value

  

Final stated maturity

   

Weighted average interest rate (1)

  

Weighted average life (years) (2)

  

Outstanding face amount

  

Amortized cost basis

  

Carrying value (3)

  

Weighted average life (years) (2)

 

Master Repurchase Agreements

                                      

CMBS

                                      

Mizuho(4)

4/15/2020

  286,324   286,324   N/A 

(5)

  1.97%  0.03   2,101,790   499,975   531,367   8.0 

Asset Specific Financing

                                      

Single Family Rental

                                      

Freddie Mac

7/12/2019

  726,312   726,312  

7/12/2029

    2.41%  6.5   795,223   847,364   847,364   6.5 

Mezzanine

                                      

Freddie Mac

10/20/2020

  59,914   59,914  

8/1/2031

    0.30%  8.3   97,899   100,857   100,857   8.3 

Multifamily

                                      

CBRE

12/31/2021

  32,480   32,176  

6/1/2028

 

(6)

  2.76%  6.4   N/A   62,269   62,269   6.4 

Unsecured Financing

                                      

Various

10/15/2020

  36,500   35,233  

10/25/2025

    7.50%  3.8   N/A   N/A   N/A   N/A 

Various

4/20/2021

  135,000   133,092  

4/15/2026

    5.75%  4.3   N/A   N/A   N/A   N/A 

Total/weighted average

 $1,276,530  $1,273,051        2.72%  4.80  $2,994,912  $1,510,465  $1,541,857   7.6 

 

(1)

Weighted-average interest rate using unpaid principal balances.

(2)

Weighted-average life is determined using the maximum maturity date of the corresponding loans, assuming all extension options are exercised by the borrower.

(3)CMBS are shown at fair value on an unconsolidated basis. SFR Loans and mezzanine loans are shown at their amortized cost.

(4)

On April 15, 2020, three of our subsidiaries entered into a master repurchase agreement with Mizuho Securities (“Mizuho”). Borrowings under these repurchase agreements are collateralized by portions of the CMBS B-Pieces and CMBS I/O Strips.

(5)

The master repurchase agreement with Mizuho does not have a stated maturity date. The transactions in place have a one-month to two-month tenor and are expected to roll accordingly.

(6)Debt was assumed upon acquisition of this property and recorded at the outstanding principal amount, net of debt issuance costs. The loan can be prepaid at a 1.0% prepayment premium on any unpaid principal. The loan is open to pre-payment in the last three months of the term.

 

Prior to the Formation Transaction, two of our subsidiaries entered into a loan and security agreement dated, July 12, 2019, with Freddie Mac (the “Credit Facility”). Under the Credit Facility, these entities borrowed approximately $788.8 million in connection with their acquisition of senior pooled mortgage loans backed by SFR properties (the “Underlying Loans”). No additional borrowings can be made under the Credit Facility and our obligations will be secured by the Underlying Loans. The Credit Facility is guaranteed by certain members of the Contribution Group and the OP. The guarantors are subject to minimum net worth liquidity covenants. The Credit Facility continues to be guaranteed by members of the Contribution Group and the OP as of March 31, 2022. The Credit Facility was assumed by the Company as part of the Formation Transaction at carrying value, which approximated fair value. As such, the remaining outstanding balance of $788.8 million was contributed to the Company on February 11, 2020. Our borrowings under the Credit Facility will mature on July 12, 2029; however, if an Underlying Loan matures prior to July 12, 2029, the Company will be required to repay the portion of the Credit Facility that is allocated to that loan. As of March 31, 2022, the outstanding balance on the Credit Facility was $639.9 million.

 

In connection with certain of our previous CMBS acquisitions and a mezzanine debt investment, we, through the Subsidiary OPs, have borrowed approximately $297.0 million under our repurchase agreements and posted $2.1 billion par value of our CMBS B-Piece and CMBS I/O Strip investments as collateral as of March 31, 2022. The CMBS B-Pieces and CMBS I/O Strips held as collateral are illiquid and irreplaceable in nature. These assets are restricted solely to satisfy the interest and principal balances owed to the lender.

 

On October 15, 2020, the OP issued 7.50% Senior Unsecured Notes (the “OP Notes”) for an aggregate principal amount of $36.5 million and a coupon rate of 7.50%. The OP Notes are due October 15, 2025 and were sold at approximately 99% of par value for proceeds of approximately $36.1 million before offering costs. Additionally, the OP Notes are fully guaranteed by the Company in the event that the OP cannot satisfy the obligations of the OP Notes. As of  March 31, 2022, any action required under the guaranty is considered remote.

 

On October 20, 2020, the Company acquired a portfolio of 18 mezzanine loans with an aggregate principal amount outstanding of approximately $97.9 million and a weighted average fixed interest rate of 7.54% for a price of 102% of the outstanding principal amount plus accrued interest of $0.3 million. Freddie Mac provided seller financing of approximately $59.9 million with a weighted average fixed interest rate of 0.30%. Proceeds from the OP Notes offering and cash on hand were used to fund the remainder of the purchase price.

 

On April 20, 2021, the Company issued $75 million in aggregate principal amount of its 5.75% Senior Unsecured Notes due 2026 (the “5.75% Notes”) at a price equal to 99.5% of par value for proceeds of approximately $73.1 million after original issue discount and underwriting fees. An account advised by NexAnnuity Asset Management, L.P., an affiliate of the Manager, purchased $2.5 million par value of the 5.75% Senior Unsecured Notes at issuance.

 

On December 20, 2021, the Company issued an additional $60.0 million aggregate principal amount of its 5.75% Notes at a price equal to 102.8% par value, including accrued interest, for proceeds of approximately $60.9 million after original issue discount and underwriting fees.

 

On January 25, 2022, the Company issued an additional $35.0 million aggregate principal amount of its 5.75% Notes at a price equal to 100.9% par value, including accrued interest, for proceeds of approximately $35.1 million after original issue discount and underwriting fees.

 

As of March 31, 2022, the outstanding principal balances related to the SFR Loans and levered mezzanine loans consisted of the following (dollars in thousands):

 

    

Outstanding

           
  

Investment

 

Principal

           

Investment

 

Date

 

Balance

 

Location

 

Property Type

 

Interest Type

 

Interest Rate

 

Maturity Date

SFR Loans

                

Senior loan

 

2/11/2020

 $465,690 

Various

 

Single-family

 

Fixed

  2.24%

9/1/2028

Senior loan

 

2/11/2020

  46,094 

Various

 

Single-family

 

Fixed

  2.14%

10/1/2025

Senior loan

 

2/11/2020

  34,983 

Various

 

Single-family

 

Fixed

  2.70%

11/1/2028

Senior loan

 

2/11/2020

  9,409 

Various

 

Single-family

 

Fixed

  2.79%

9/1/2028

Senior loan

 

2/11/2020

  9,284 

Various

 

Single-family

 

Fixed

  2.45%

3/1/2026

Senior loan

 

2/11/2020

  9,013 

Various

 

Single-family

 

Fixed

  3.51%

2/1/2028

Senior loan

 

2/11/2020

  8,887 

Various

 

Single-family

 

Fixed

  3.30%

10/1/2028

Senior loan

 

2/11/2020

  8,095 

Various

 

Single-family

 

Fixed

  3.14%

1/1/2029

Senior loan

 

2/11/2020

  6,860 

Various

 

Single-family

 

Fixed

  2.98%

2/1/2029

Senior loan

 

2/11/2020

  6,016 

Various

 

Single-family

 

Fixed

  2.99%

3/1/2029

Senior loan

 

2/11/2020

  5,656 

Various

 

Single-family

 

Fixed

  2.68%

11/1/2028

Senior loan

 

2/11/2020

  5,690 

Various

 

Single-family

 

Fixed

  2.40%

2/1/2024

Senior loan

 

2/11/2020

  5,346 

Various

 

Single-family

 

Fixed

  3.14%

12/1/2028

Senior loan

 

2/11/2020

  5,078 

Various

 

Single-family

 

Fixed

  2.64%

10/1/2028

Senior loan

 

2/11/2020

  4,830 

Various

 

Single-family

 

Fixed

  2.48%

8/1/2023

Senior loan

 

2/11/2020

  4,791 

Various

 

Single-family

 

Fixed

  2.97%

1/1/2029

Senior loan

 

2/11/2020

  4,180 

Various

 

Single-family

 

Fixed

  3.06%

2/1/2029

Total

 $639,902        2.36% 

Mezzanine Loans

                

Senior loan

 

10/20/2020

 $8,723 

Wilmington, DE

 

Multifamily

 

Fixed

  0.30%

6/1/2029

Senior loan

 

10/20/2020

  7,344 

White Marsh, MD

 

Multifamily

 

Fixed

  0.30%

4/1/2031

Senior loan

 

10/20/2020

  6,353 

Philadelphia, PA

 

Multifamily

 

Fixed

  0.30%

7/1/2031

Senior loan

 

10/20/2020

  5,881 

Daytona Beach, FL

 

Multifamily

 

Fixed

  0.30%

7/1/2031

Senior loan

 

10/20/2020

  4,523 

Laurel, MD

 

Multifamily

 

Fixed

  0.30%

7/1/2031

Senior loan

 

10/20/2020

  4,179 

Temple Hills, MD

 

Multifamily

 

Fixed

  0.30%

1/1/2029

Senior loan

 

10/20/2020

  3,390 

Temple Hills, MD

 

Multifamily

 

Fixed

  0.30%

5/1/2029

Senior loan

 

10/20/2020

  3,348 

Lakewood, NJ

 

Multifamily

 

Fixed

  0.30%

5/1/2029

Senior loan

 

10/20/2020

  2,454 

North Aurora, IL

 

Multifamily

 

Fixed

  0.30%

11/1/2028

Senior loan

 

10/20/2020

  2,264 

Rosedale, MD

 

Multifamily

 

Fixed

  0.30%

10/1/2028

Senior loan

 

10/20/2020

  2,215 

Cockeysville, MD

 

Multifamily

 

Fixed

  0.30%

7/1/2031

Senior loan

 

10/20/2020

  2,026 

Laurel, MD

 

Multifamily

 

Fixed

  0.30%

7/1/2029

Senior loan

 

10/20/2020

  1,836 

Vancouver, WA

 

Multifamily

 

Fixed

  0.30%

8/1/2031

Senior loan

 

10/20/2020

  1,763 

Tyler, TX

 

Multifamily

 

Fixed

  0.30%

11/1/2028

Senior loan

 

10/20/2020

  1,307 

Las Vegas, NV

 

Multifamily

 

Fixed

  0.30%

10/1/2028

Senior loan

 

10/20/2020

  918 

Atlanta, GA

 

Multifamily

 

Fixed

  0.30%

8/1/2031

Senior loan

 

10/20/2020

  728 

Des Moines, IA

 

Multifamily

 

Fixed

  0.30%

3/1/2029

Senior loan

 

10/20/2020

  662 

Urbandale, IA

 

Multifamily

 

Fixed

  0.30%

11/1/2030

Total

 $59,914        0.30% 

 

For the three months ended March 31, 2022 and 2021, the activity related to the carrying value of the master repurchase agreements, secured financing agreements and unsecured financing were as follows (in thousands):

 

  

For the Three Months Ended March 31,

 
  

2022

  

2021

 

Balances as of December 31,

 $1,273,051  $1,036,878 

Principal borrowings

  59,314   5,737 

Principal repayments

  (100,884)  (5,800)

Accretion of discounts

  197   65 

Amortization of deferred financing costs

  12   — 

Balances as of March 31,

 $1,231,690  $1,036,880 

 

Schedule of Debt Maturities

 

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to March 31, 2022 are as follows (in thousands):

 

Year

 

Recourse

  

Non-recourse

  

Total

 

2022(1)

 $—  $(296,991) $(296,991)

2023

  —   (4,830)  (4,830)

2024

  —   (5,690)  (5,690)

2025

  (36,500)  (46,094)  (82,594)

2026

  (202,480)  (9,284)  (211,764)

Thereafter

  —   (633,918)  (633,918)
  $(238,980) $(996,807) $(1,235,787)

 

(1)

The transactions in place in the master repurchase agreement with Mizuho have a one-month to two-month tenor and are expected to roll accordingly.