XML 35 R26.htm IDEA: XBRL DOCUMENT

Loans Held For Investment, Net (Tables)

12 Months Ended

Dec. 31, 2023

Loans Held For Investment, Net [Abstract]

The following tables summarize the Company’s loans held for investment as of December 31, 2023 and 2022:


	As of December 31, 2023
	Outstanding Principal (1)		Original Issue Discount			Carrying Value (1)			Weighted Average Remaining Life (Years) (2)
Senior Term Loans	$	355,745,305	$	(2,104,695	)	$	353,640,610			2.1
Current expected credit loss reserve		-		-			(4,972,647	)
Total loans held at carrying value, net	$	355,745,305	$	(2,104,695	)	$	348,667,963


	As of December 31, 2022
	Outstanding Principal (1)		Original Issue Discount			Carrying Value (1)			Weighted Average Remaining Life (Years) (2)
Senior Term Loans	$	343,029,334	$	(3,755,796	)	$	339,273,538			2.2
Current expected credit loss reserve		-		-			(3,940,939	)
Total loans held at carrying value, net	$	343,029,334	$	(3,755,796	)	$	335,332,599

(1)

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount, deferred loan fees and other upfront fees. Outstanding principal balance includes capitalized PIK interest, if applicable.

(2)

Weighted average remaining life is calculated based on the carrying value of the loans as of December 31, 2023 and 2022, respectively.

Schedule of Activity Related to the CECL Reserve for Outstanding Balances

The following tables present changes in loans held at carrying value as of and for the years ended December 31, 2023 and 2022:


	Principal			Original Issue Discount			Current Expected Credit Loss Reserve			Carrying Value (1)
Balance at December 31, 2022	$	343,029,334		$	(3,755,796	)	$	(3,940,939	)	$	335,332,599
New fundings		93,533,516			(1,332,340	)		-			92,201,176
Principal repayment of loans		(76,876,048	)		-			-			(76,876,048	)
Accretion of original issue discount		-			2,983,441			-			2,983,441
Sale of loan (2)		(13,399,712	)		-			-			(13,399,712	)
PIK Interest		9,458,215			-			-			9,458,215
Current expected credit loss reserve		-			-			(1,031,708	)		(1,031,708	)
Balance at December 31, 2023	$	355,745,305		$	(2,104,695	)	$	(4,972,647	)	$	348,667,963

(1)

(2)

One loan was reclassified as held for sale from loans held for investment as the decision was made to sell the loan during the year ended December 31, 2023 to a syndicate of co-lenders which includes a third party and two affiliates under common control with our Manager. The sale was executed on March 31, 2023 (Note 7).


	Principal			Original Issue Discount			Current Expected Credit Loss Reserve			Carrying Value (1)
Balance at January 1, 2022	$	200,632,056		$	(3,647,490	)	$	(134,542	)	$	196,850,024
New fundings		160,163,120			(3,243,735	)		-			156,919,385
Principal repayment of loans		(17,728,730	)		-			-			(17,728,730	)
Accretion of original issue discount		-			2,874,706			-			2,874,706
Sale of loans		(6,957,500	)		260,723			-			(6,696,777	)
PIK Interest		6,920,388			-			-			6,920,388
Current expected credit loss reserve		-			-			(3,806,397	)		(3,806,397	)
Balance at December 31, 2022	$	343,029,334		$	(3,755,796	)	$	(3,940,939	)	$	335,332,599

(1)

Schedule of Loans Held at Carrying Value Based on Information

A more detailed listing of the Company’s loans held at carrying value based on information available as of December 31, 2023, is as follows:


Loan (1)	Location(s)	Initial Funding Date (1)	Maturity Date (2)	Total Commitment (3)		Principal Balance		Original Issue Discount			Carrying Value		Percentage of Our Loan Portfolio			Future Fundings		Interest Rate (4)	Periodic Payment (5)	YTM IRR (6)
1	Various	10/27/2022	10/30/2026	$	30,000,000	$	29,910,000	$	(635,656	)	$	29,274,344		8.3	%		-	P+6.5% Cash (11)	I/O	17.3%
2	Michigan	1/13/2022	12/31/2024		35,891,667		38,810,119		(81,073	)		38,729,046		11.0	%		-	P+6.65% Cash, 4.25% PIK (17)	P&I	18.0%
3(18)	Various	3/25/2021	11/29/2024		20,105,628		20,657,606		(175,697	)		20,481,909		5.8	%		-	P+10.38% Cash, 2.75% PIK (7)	P&I	23.5%
4	Arizona	4/19/2021	2/14/2023		14,240,129		15,396,370		-			15,396,370		4.4	%		-	P+11.75% PIK (15)	I/O	25.9%
5	Massachusetts	4/19/2021	4/30/2025		3,500,000		3,194,180		-			3,194,180		0.9	%		-	P+12.25% Cash (7)	P&I	22.8%
6(19)	Michigan	8/20/2021	2/20/2024		6,000,000		4,264,421		(535	)		4,263,886		1.2	%		-	P+9% Cash (7)	P&I	20.8%
7	Illinois, Arizona	8/24/2021	6/30/2025		25,000,000		20,184,005		(128,551	)		20,055,454		5.7	%		-	P+6% Cash, 2% PIK (12)	P&I	19.5%
8	West Virginia	9/1/2021	9/1/2024		9,500,000		11,706,059		(42,473	)		11,663,586		3.3	%		-	P+9.25% Cash, 2% PIK (8)	P&I	25.1%
9(20)	Pennsylvania	9/3/2021	6/30/2024		15,000,000		16,402,488		-			16,402,488		4.6	%		-	P+10.75% Cash, 3% PIK (7)	P&I	16.2%
11	Maryland	9/30/2021	9/30/2024		32,000,000		33,310,259		(267,990	)		33,042,269		9.3	%		-	P+8.75% Cash, 2% PIK (7)	I/O	22.0%
12	Various	11/8/2021	10/31/2024		20,000,000		8,710,222		(52,406	)		8,657,816		2.4	%		-	P+7% Cash (13)	P&I	19.5%
13	Michigan	11/22/2021	11/1/2024		13,600,000		13,392,094		(59,248	)		13,332,846		3.8	%		-	P+6% Cash, 1.5% PIK (12)	I/O	19.5%
14	Various	12/27/2021	12/27/2026		5,000,000		5,253,125		-			5,253,125		1.5	%		-	P+12.25% Cash, 2.5% PIK (9)	P&I	22.8%
16	Florida	12/30/2021	12/31/2024		13,000,000		4,437,500		(19,058	)		4,418,442		1.2	%		-	P+9.25% Cash (7)	I/O	36.3%
17	Florida	1/18/2022	1/31/2025		15,000,000		15,000,000		(136,667	)		14,863,333		4.2	%		-	P+4.75% Cash (11)	P&I	14.8%
18	Ohio	2/3/2022	2/28/2025		11,662,050		17,155,637		(92,206	)		17,063,431		4.8	%		-	P+1.75% Cash, 5% PIK (12)	P&I	20.4%
19	Florida	3/11/2022	8/29/2025		20,000,000		20,080,084		(48,217	)		20,031,867		5.7	%		-	11% Cash, 3% PIK	P&I	15.5%
20	Missouri	5/9/2022	5/30/2025		17,000,000		17,691,575		(78,532	)		17,613,043		5.0	%		-	11% Cash, 2% PIK	P&I	14.7%
21	Illinois	7/1/2022	7/29/2026		9,000,000		5,353,186		(56,877	)		5,296,309		1.5	%		-	P+8.5% Cash, 3% PIK (9)	P&I	25.6%
23	Arizona	3/27/2023	3/31/2026		2,000,000		1,860,000		(37,319	)		1,822,681		0.5	%		-	P+7.5% Cash (14)	P&I	19.4%
24	Oregon	3/31/2023	9/27/2026		1,000,000		820,000		-			820,000		0.2	%		-	P+10.5% Cash (10)	P&I	21.7%
25	New York	8/1/2023	6/29/2036		23,309,588		22,611,938		-			22,611,938		6.4	%		-	15% Cash	P&I	16.7%
26	Connecticut	8/31/2023	2/27/2026		5,450,000		5,450,000		(118,004	)		5,331,996		1.5	%		-	14% Cash	P&I	19.1%
27	Nebraska	8/15/2023	6/30/2027		13,061,667		13,061,667		-			13,061,667		3.7	%		-	P+8.75% Cash	P&I	19.0%
28	Ohio	9/13/2023	3/13/2025		2,466,705		2,466,705		-			2,466,705		0.7	%		-	15% Cash	P&I	17.4%
29	Illinois	10/11/2023	10/9/2026		1,062,564		1,066,065		-			1,066,065		0.3	%		-	11.4% Cash, 1.5% PIK	P&I	15.9%
30	Missouri, Arizona	12/20/2023	12/31/2026		15,000,000		7,500,000		(74,186	)		7,425,814		2.1	%		7,500,000	P+7.75% Cash (16)	I/O	18.4%
			Subtotal	$	378,849,998	$	355,745,305	$	(2,104,695	)	$	353,640,610		100	%	$	7,500,000		Wtd Average	19.4%

(1)

All loans originated prior to April 1, 2021 were purchased from affiliated entities at fair value plus accrued interest on or subsequent to April 1, 2021. Loan numbering in the table above is maintained from origination for purposes of comparability and may not be sequential due to maturities, payoffs, or refinancings.

(2)

Certain loans are subject to contractual extension options and may be subject to performance based on other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein and certain borrowers may have the right to prepay with or without a contractual prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

(3)

Total Commitment excludes future amounts to be advanced at sole discretion of the lender and reflects receipt of scheduled amortization payments as of December 31, 2023.

(4)

"P" = prime rate and depicts floating rate loans that pay interest at the prime rate plus a specific percentage; "PIK" = paid-in-kind interest; subtotal represents weighted average interest rate.

(5)

P&I = principal and interest. I/O = interest only. P&I loans may include interest only periods for a portion of the loan term.

(6)

Estimated YTM, calculated on a weighted average principal basis, includes a variety of fees and features that affect the total yield, which may include, but is not limited to, OID, exit fees, prepayment fees, unused fees and contingent features. OID is recognized as a discount to the funded loan principal and is accreted to income over the term of the loan. The estimated YTM calculations require management to make estimates and assumptions, including, but not limited to, the timing and amounts of loan draws on delayed draw loans, the timing and collectability of exit fees, the probability and timing of prepayments and the probability of contingent features occurring. For example, certain credit agreements contain provisions pursuant to which certain PIK interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction of certain specified criteria which we believe may improve the risk profile of the applicable borrower. To be conservative, we have not assumed any prepayment penalties or early payoffs in our estimated YTM calculation. Estimated YTM is based on current management estimates and assumptions, which may change. Actual results could differ from those estimates and assumptions.

(7)

This Loan is subject to a prime rate floor of 3.25%

(8)

This Loan is subject to a prime rate floor of 4.00%

(9)

This Loan is subject to a prime rate floor of 4.75%

(10)

This Loan is subject to a prime rate floor of 5.50%

(11)

This Loan is subject to a prime rate floor of 6.25%

(12)

This Loan is subject to a prime rate floor of 7.00%

(13)

This Loan is subject to a prime rate floor of 7.50%

(14)

This Loan is subject to a prime rate floor of 8.00%

(15)

This Loan is subject to a prime rate floor of 8.25%

(16)

This Loan is subject to a prime rate floor of 8.50%

(17)

This Loan is subject to a prime rate cap of 5.85%

(18)

The aggregate loan commitment to Loan #3 includes a $15.9 million initial commitment which has a base interest rate of 13.625%, 2.75% PIK and a second commitment of $4.2 million which has an interest rate of 15.00%, 2.00% PIK. The statistics presented reflect the weighted average of the terms under all advances for the total aggregate loan commitment.

(19)

As of December 1, 2023, this loan was placed on non-accrual status. In March 2024, we entered into an amendment to Loan #6, which extended the maturity date to April 15, 2024. In connection with this amendment, Loan #6 was restored to accrual status (Note 14).

(20)

As of May 1, 2023, Loan #9 was placed on non-accrual status and continues to be on non-accrual as of December 31, 2023. Loan #9 is included on the consolidated balance sheet as a loan held for investment – related party (Note 7).

Schedule of Presents Aging Analyses of Past Due Loans by Amortized Cost

The following tables present aging analyses of past due loans by amortized cost, excluding the CECL reserve, as of December 31, 2023 and 2022. As of December 31, 2023 and 2022, there was one and zero loans with principal greater than 90 days past due, respectively.


	As of December 31, 2023
	Current Loans		31-60 Days Past Due		61-90 Days Past Due		90+ Days Past Due(1)		Total Past Due		Total Loans		Non- Accrual(1)(2)
Senior Term Loans	$	337,238,122	$	-	$	-	$	16,402,488	$	16,402,488	$	353,640,610	$	20,666,374
Total	$	337,238,122	$	-	$	-	$	16,402,488	$	16,402,488	$	353,640,610	$	20,666,374

(1)

On May 1, 2023, Loan #9 was placed on non-accrual status. On June 20, 2023, the Administrative Agent to Loan #9 issued an acceleration notice requesting immediate payment of all amounts outstanding and therefore is 90 days past due as of December 31, 2023. Loan #9 carries a reserve for current expected credit losses of approximately $1.5 million as of December 31, 2023 (Note 7).

(2)

On December 1, 2023, Loan #6 was placed on non-accrual status. In March 2024, we entered into an amendment to Loan #6, which extended the maturity date to April 15, 2024. In connection with this amendment, Loan #6 was restored to accrual status (Note 14).


	As of December 31, 2022
	Current Loans		31-60 Days Past Due		61-90 Days Past Due		90+ Days Past Due		Total Past Due		Total Loans		Non- Accrual
Senior Term Loans	$	339,273,538	$	-	$	-	$	-	$	-	$	339,273,538	$	-
Total	$	339,273,538	$	-	$	-	$	-	$	-	$	339,273,538	$	-

Schedule of Risk Rating

Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:


Rating		Definition
1		Very low risk
2		Low risk
3		Moderate/average risk
4		High risk/potential for loss: a loan that has a risk of realizing a principal loss
5		Impaired/loss likely: a loan that has a high risk of realizing principal loss, has incurred principal loss or an impairment has been recorded

Schedule of Carrying Value of Loans Held for Investment

As of December 31, 2023 and 2022, the carrying value, excluding the current expected credit loss reserve (the “CECL Reserve”), of the Company’s loans within each risk rating category by year of origination is as follows:


Risk	As of December 31, 2023(1)(2)												As of December 31, 2022(1)
Rating	2023		2022		2021		2020		2019		Total		2022		2021		2020		2019		Total
1	$	820,000	$	37,644,911	$	-	$	-	$	-	$	38,464,911	$	-	$	274,406	$	-	$	-	$	274,406
2		51,320,161		107,007,422		46,792,941		-		-		205,120,524		94,467,449		88,444,868		29,140,546		-		212,052,863
3		2,466,705		5,296,308		58,829,717		-		-		66,592,730		30,415,113		83,131,444		-		-		113,546,557
4		-		-		43,462,445		-		-		43,462,445		-		13,399,712		-		-		13,399,712
5		-		-		-		-		-		-		-		-		-		-		-
Total	$	54,606,866	$	149,948,641	$	149,085,103	$	-	$	-	$	353,640,610	$	124,882,562	$	185,250,430	$	29,140,546	$	-	$	339,273,538

(1)

Amounts are presented by loan origination year with subsequent advances shown in the original year of origination.

(2)

Loans #6 and #9 placed on non-accrual status and are included in risk rating category "3" and “4”, respectively, and carries a reserve for current expected credit losses of approximately $1.6 million as of December 31, 2023.

Schedule of Real Estate Collateral Coverage

Real estate collateral coverage, excluding the CECL Reserve, was as follows as of December 31, 2023 and 2022:


As of December 31, 2023 Real Estate Collateral Coverage(1)
	< 1.0x		1.0x – 1.25x		1.25x – 1.5x		1.50x – 1.75x		1.75x – 2.0x		> 2.0x		Total
Fixed-rate	$	2,466,706	$	-	$	49,041,867	$	17,613,043	$	-	$	-	$	69,121,616
Floating-rate		104,322,083		35,491,887		38,729,046		15,396,370		5,296,308		85,283,300		284,518,994
	$	106,788,789	$	35,491,887	$	87,770,913	$	33,009,413	$	5,296,308	$	85,283,300	$	353,640,610


As of December 31, 2022 Real Estate Collateral Coverage(1)
	< 1.0x		1.0x – 1.25x		1.25x – 1.5x		1.50x – 1.75x		1.75x – 2.0x		> 2.0x		Total
Fixed-rate	$	-	$	-	$	20,406,737	$	17,203,138	$	-	$	20,089,663	$	57,699,538
Floating-rate		63,963,105		78,211,454		13,399,712		9,980,730		12,849,490		103,169,509		281,574,000
	$	63,963,105	$	78,211,454	$	33,806,449	$	27,183,868	$	12,849,490	$	123,259,172	$	339,273,538

(1)

Real estate collateral coverage is calculated based upon most recent third-party appraised values. The Company generally obtains new appraisals of all material real estate collateral at least once annually.

Summary of Geography Concentration of Loans Held for Investment

Geography concentration of our loans held for investment is also a significant credit quality indicator. As of December 31, 2023 and December 31, 2022, our borrowers have operations in the jurisdictions in the table below:


As of December 31, 2023						As of December 31, 2022
Jurisdiction	Outstanding Principal (1)		Our Loan Portfolio			Jurisdiction	Outstanding Principal (1)		Our Loan Portfolio
Michigan	$	56,466,635		16	%	Michigan	$	58,823,506		17	%
Maryland		53,907,352		15	%	Maryland		53,394,180		16	%
Florida		48,815,066		14	%	Florida		51,421,128		15	%
Ohio		27,902,362		8	%	Ohio		45,116,990		13	%
Illinois		25,599,133		7	%	Illinois		30,302,490		9	%
Missouri		25,191,575		7	%	Missouri		17,337,220		5	%
Arizona		24,466,609		7	%	Arizona		19,266,104		6	%
New York		22,611,938		6	%	New York		—		0	%
Pennsylvania		21,674,160		6	%	Pennsylvania		34,606,585		10	%
Nebraska		13,061,667		4	%	Nebraska		—		0	%
Massachusetts		12,308,310		3	%	Massachusetts		15,031,751		4	%
West Virginia		11,706,059		3	%	West Virginia		11,640,004		3	%
Nevada		5,764,439		2	%	Nevada		6,089,376		2	%
Connecticut		5,450,000		2	%	Connecticut		—		0	%
Oregon		820,000		0	%	Oregon		—		0	%
Total	$	355,745,305		100	%	Total	$	343,029,334		100	%

(1) The principal balance of the loans not secured by real estate collateral are included in the jurisdiction representing the principal place of business.

Schedule of Activity Related to the CECL Reserve for Outstanding Balances

Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loans receivable at carrying value as of and for the years ended December 31, 2023 and 2022 is presented in the table below.


	Outstanding		Unfunded			Total
Balance at December 31, 2022	$	3,940,939	$	94,415		$	4,035,354
Provision (recovery) for current expected credit losses		1,031,708		(91,323	)		940,385
Balance at December 31, 2023	$	4,972,647	$	3,092		$	4,975,739


	Outstanding		Unfunded		Total
Balance at January 1, 2022	$	134,542	$	13,407	$	147,949
Provision for current expected credit losses		3,806,397		81,008		3,887,405
Balance at December 31, 2022	$	3,940,939	$	94,415	$	4,035,354