Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 30, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | NexPoint Real Estate Finance, Inc. | |
Entity Central Index Key | 0001786248 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 5,113,403 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-39210 | |
Entity Tax Identification Number | 84-2178264 | |
Entity Address, Address Line One | 300 Crescent Court | |
Entity Address, Address Line Two | Suite 700 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75201 | |
City Area Code | (972) | |
Local Phone Number | 628-4100 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | MD | |
Common Stock, Par Value $0.01 Per Share | ||
Document Information [Line Items] | ||
Trading Symbol | NREF | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Security Exchange Name | NYSE | |
8.50% Series A Cumulative Redeemable Preferred Stock | ||
Document Information [Line Items] | ||
Trading Symbol | NREF-PRA | |
Title of 12(b) Security | 8.50% Series A Cumulative Redeemable Preferred Stock, par value 0.01 per share | |
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 17,964 | |
Loans, held-for-investment, net | 36,527 | |
Preferred stock | 41,517 | |
Mortgage loans, held-for-investment, net | 927,632 | |
Accrued interest and dividends | 6,838 | |
Mortgage loans held in variable interest entities, at fair value | 5,094,579 | |
CMBS structured pass through certificates, at fair value (Note 7) | 39,845 | |
Other assets | 749 | |
TOTAL ASSETS | 6,165,651 | |
Liabilities: | ||
Secured financing agreements, net | 786,939 | |
Master repurchase agreements | 160,212 | |
Accounts payable and other accrued liabilities | 2,336 | |
Accrued interest payable | 1,201 | |
Bonds payable held in variable interest entities, at fair value | 4,825,943 | |
Total Liabilities | 5,776,631 | |
Redeemable noncontrolling interests in the Operating Partnership | 265,155 | |
Stockholders' Equity: | ||
Preferred stock, $0.01 par value: 100,000,000 shares authorized; 1,645,000 and 0 shares issued and outstanding, respectively | 16 | |
Common stock, $0.01 par value: 500,000,000 shares authorized; 5,350,000 and 10 shares issued and 5,236,489 and 10 shares outstanding, respectively | 53 | |
Additional paid-in capital | 137,787 | |
Accumulated deficit | (3,709) | |
Preferred stock held in treasury at cost; 355,000 shares | (8,567) | |
Common stock held in treasury at cost; 113,511 shares | (1,715) | |
Total Stockholders' Equity | 123,865 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 6,165,651 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 1,645,000 | 0 |
Preferred stock, shares outstanding | 1,645,000 | 0 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares, issued | 5,350,000 | 10 |
Common stock, shares, outstanding | 5,236,489 | 10 |
Common stock, par value | $ 0.01 | $ 0.01 |
Treasury stock, preferred, shares | 355,000 | |
Treasury stock, common, shares | 113,511 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Net interest income | ||
Interest income | $ 10,492 | $ 26,899 |
Interest expense | 6,102 | 14,649 |
Total net interest income | 4,390 | 12,250 |
Other income (loss) | ||
Change in net assets related to consolidated CMBS variable interest entities | 8,920 | (1,207) |
Change in unrealized gain on CMBS structured pass through certificates | (200) | 101 |
Loan loss provision | 14 | (279) |
Dividend income, net | 1,305 | 3,557 |
Total other income (loss) | 10,039 | 2,172 |
Operating expenses | ||
General and administrative expenses | 1,167 | 2,361 |
Loan servicing fees | 1,241 | 3,088 |
Management fees | 480 | 1,027 |
Total operating expenses | 2,888 | 6,476 |
Net income | 11,541 | 7,946 |
Preferred stock dividends | 874 | 874 |
Net income attributable to redeemable noncontrolling interests | 7,805 | 5,293 |
Net income attributable to common stockholders | $ 2,862 | $ 1,779 |
Weighted-average common shares outstanding - basic | 5,261 | 5,253 |
Weighted-average common shares outstanding - diluted | 5,550 | 5,379 |
Earnings per share - basic | $ 0.54 | $ 0.34 |
Earnings per share - diluted | 0.52 | 0.33 |
Dividends declared per common share | $ 0.4000 | $ 1.0198 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Earnings (Loss) Less Dividends | Common Stock Held in Treasury at Cost | Preferred Stock Held in Treasury at Cost |
Beginning Balance, Values at Dec. 31, 2019 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Beginning Balance, Shares at Dec. 31, 2019 | 0 | 0 | |||||
Issuance of common stock through public offering, net | 91,488 | $ 54 | 91,434 | ||||
Issuance of common stock through public offering, net, Shares | 5,350,000 | ||||||
Issuance of preferred stock through public offering, net | 46,081 | $ 20 | 46,061 | ||||
Issuance of preferred stock through public offering, net, Shares | 2,000,000 | ||||||
Vesting of stock-based compensation | 292 | 292 | |||||
Repurchase of common stock | $ (1,716) | $ (1) | (1,715) | ||||
Repurchase of common stock, shares | (113,511) | (113,511) | |||||
Repurchase of preferred stock | $ (8,571) | $ (4) | (8,567) | ||||
Repurchase of preferred stock, Shares | (355,000) | ||||||
Net income attributable to preferred stockholders | 874 | 874 | |||||
Net income attributable to common stockholders | 1,779 | 1,779 | |||||
Preferred stock dividends declared | (874) | (874) | |||||
Common stock dividends declared | (5,488) | (5,488) | |||||
Ending Balance, Values at Sep. 30, 2020 | 123,865 | $ 16 | $ 53 | 137,787 | (3,709) | (1,715) | (8,567) |
Ending balance, Shares at Sep. 30, 2020 | 1,645,000 | 5,236,489 | |||||
Beginning Balance, Values at Jun. 30, 2020 | 86,297 | $ 53 | 91,933 | (4,351) | (1,338) | ||
Beginning Balance, Shares at Jun. 30, 2020 | 5,262,534 | ||||||
Issuance of common stock through public offering, net | (459) | (459) | |||||
Issuance of preferred stock through public offering, net | 46,081 | $ 20 | 46,061 | ||||
Issuance of preferred stock through public offering, net, Shares | 2,000,000 | ||||||
Vesting of stock-based compensation | 252 | 252 | |||||
Repurchase of common stock | (377) | (377) | |||||
Repurchase of common stock, shares | (26,045) | ||||||
Repurchase of preferred stock | (8,571) | $ (4) | (8,567) | ||||
Repurchase of preferred stock, Shares | (355,000) | ||||||
Net income attributable to preferred stockholders | 874 | 874 | |||||
Net income attributable to common stockholders | 2,862 | 2,862 | |||||
Preferred stock dividends declared | (874) | (874) | |||||
Common stock dividends declared | (2,220) | (2,220) | |||||
Ending Balance, Values at Sep. 30, 2020 | $ 123,865 | $ 16 | $ 53 | $ 137,787 | $ (3,709) | $ (1,715) | $ (8,567) |
Ending balance, Shares at Sep. 30, 2020 | 1,645,000 | 5,236,489 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Statement Of Stockholders Equity [Abstract] | ||
Dividends declared per preferred stock | $ 0.5313 | $ 0.5313 |
Dividends declared per common share | $ 0.4000 | $ 1.0198 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Cash flows from operating activities | |
Net income | $ 7,946 |
Adjustments to reconcile net income to net cash provided by operating activities: | |
Amortization of premiums | 5,620 |
Accretion of discounts | (1,549) |
Loan loss provision, net | 279 |
Change in unrealized loss on investments held at fair value | 11,130 |
Vesting of stock-based compensation | 292 |
Changes in operating assets and liabilities: | |
Accrued interest and dividends receivable | (4,477) |
Other assets | (749) |
Accrued interest payable | 1,201 |
Accounts payable, accrued expenses and other liabilities | 1,341 |
Net cash provided by operating activities | 21,034 |
Cash flows from investing activities | |
Proceeds from payments received on mortgage loans held in variable interest entities | 82,671 |
Proceeds from payments received on mortgage loans held for investment | 5,237 |
Purchases of loans, held-for-investment, net | (7,500) |
Purchases of CMBS structured pass through certificates, at fair value | (40,200) |
Purchases of CMBS securitizations held in variable interest entities, at fair value | (150,320) |
Net cash used in investing activities | (110,112) |
Cash flows from financing activities | |
Principal repayments on borrowings under secured financing agreements | (1,825) |
Distributions to bondholders of variable interest entities | (76,495) |
Borrowings under master repurchase agreements | 160,379 |
Principal repayments on borrowings under master repurchase agreements | 167 |
Borrowings under bridge facility | 86,000 |
Bridge facility payments | (181,000) |
Repurchase of preferred stock | (8,571) |
Repurchase of common stock | (1,716) |
Dividends paid to common stockholders | (5,367) |
Distributions to redeemable noncontrolling interests in the Operating Partnership | (13,548) |
Contributions from noncontrolling interests | 11,783 |
Net cash provided by financing activities | 107,042 |
Net increase in cash, cash equivalents and restricted cash | 17,964 |
Cash, cash equivalents and restricted cash, end of period | 17,964 |
Supplemental Disclosure of Cash Flow Information | |
Interest paid | 16,499 |
Supplemental Disclosure of Noncash Activities (Note 2) | |
Contributions from noncontrolling interests, including consolidation of the associated mortgage loans held in variable interest entities | 2,797,735 |
Other assets acquired from contributions from noncontrolling interests | 3,616 |
Assumed debt on contributions from noncontrolling interests, including consolidation of the associated bonds payable held in variable interest entities | (2,539,724) |
Consolidation of mortgage loans and bonds payable held in variable interest entities | 3,179,620 |
Increase in dividends payable upon vesting of restricted stock units | 121 |
Stock dividends received | 1,254 |
Increase in dividends payable to preferred stockholders | 874 |
Common Stock | |
Cash flows from financing activities | |
Proceeds from the issuance of stock through public offering, net of offering costs | 91,488 |
Preferred Stock | |
Cash flows from financing activities | |
Proceeds from the issuance of stock through public offering, net of offering costs | $ 46,081 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Description of Business | 1. Organization and Description of Business NexPoint Real Estate Finance, Inc. (the “Company”, “we”, “our”) is a commercial mortgage real estate investment trust (“REIT”) incorporated in Maryland on June 7, 2019. We intend to elect to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ending December 31, 2020. The Company is focused on originating, structuring and investing in first-lien mortgage loans, mezzanine loans, preferred equity and preferred stock, as well as multifamily commercial mortgage-backed securities (“CMBS securitizations”) The Company commenced operations on February 11, 2020 upon the closing of its initial public offering of shares of its common stock (the “IPO”). Prior to the closing of the IPO, the Company engaged in a series of transactions through which it acquired an initial portfolio consisting of senior pooled mortgage loans backed by single family rental (“SFR”) properties (the “SFR Loans”), the junior most bonds of multifamily CMBS securitizations (the “CMBS B-Pieces”), mezzanine loan and preferred equity investments in real estate companies and properties in other structured real estate investments within the multifamily, SFR and self-storage asset classes (the “Initial Portfolio”). The Initial Portfolio was acquired from affiliates (the “Contribution Group”) of NexPoint Advisors, L.P (our “Sponsor”), pursuant to a contribution agreement with the Contribution Group through which the Contribution Group contributed their interest in the Initial Portfolio to special purpose entities (“SPEs”) owned by subsidiary partnerships of the Company, in exchange for limited partnership interests in subsidiary partnerships of the OP (the “Formation Transaction”). The Company is externally managed by NexPoint Real Estate Advisors VII, L.P. (the “Manager”), through a management agreement dated February 6, 2020 and amended as of July 17, 2020, for a three-year term set to expire on February 6, 2023 (as amended, the “Management Agreement”), by and among the Company and the Manager. The Manager conducts substantially all of the Company’s operations and provides asset management services for its real estate investments. The Company expects it will only have accounting employees while the Management Agreement is in effect. All of the Company’s investment decisions are made by the Manager, subject to general oversight by the Manager’s investment committee and the Company’s board of directors (the “Board”). The Manager is wholly owned by our Sponsor. The Company’s primary investment objective is to generate attractive, risk-adjusted returns for stockholders over the long term. We intend to achieve this objective primarily by originating, structuring and investing in first-lien mortgage loans, mezzanine loans, preferred equity and preferred stock, as well as multifamily CMBS securitizations. We concentrate on investments in real estate sectors where our senior management team has operating expertise, including in the multifamily, SFR, self-storage, hospitality and office sectors predominantly in the top 50 metropolitan statistical areas. In addition, we target lending or investing in properties that are stabilized or have a “light transitional” business plan, meaning a property that requires limited deferred funding to support leasing or ramp-up of operations and for which most capital expenditures are for value-add improvements. Through active portfolio management we seek to take advantage of market opportunities to achieve a superior portfolio risk-mix that delivers attractive total returns. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Accounting The accompanying unaudited consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation. There have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2020. The accompanying unaudited consolidated financial statements have been prepared according to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments and eliminations necessary for the fair presentation of the Company’s financial position as of September 30, 2020 and results of operations for the three and nine months ended September 30, 2020 have been included. Such adjustments are normal and recurring in nature. The unaudited information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited financial statements included in the Company’s Registration Statement on Form S-11, as amended (Registration No. 333-235698), filed with the SEC on February 4, 2020. Secured Financing and Master Repurchase Agreements The Company’s borrowings under secured financing agreements and master repurchase agreements are treated as collateralized financing arrangements carried at their contractual amounts, net of unamortized debt issuance costs, if any. Use of Estimates and Assumptions The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. It is at least reasonably possible that these estimates could change in the near term. Estimates are inherently subjective in nature and actual results could differ from our estimates and the differences could be material. Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has evolved rapidly and, as cases of COVID-19 were identified in additional countries, many countries, including the United States, reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result of the recent spike in COVID-19 cases in the United States, certain states and cities have reinstituted restrictive quarantines, restrictions on travel, “shelter in place” rules, restrictions on the types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. Management expects that additional states and cities will implement similar restrictions if the current trend continues and cannot predict when such restrictions will expire. As a result, the COVID-19 pandemic has negatively impacted, and will likely continue to negatively impact, almost every industry directly or indirectly and may adversely impact our performance or the value of underlying real estate collateral relating to the Company’s investments, increase the default risk applicable to borrowers and make it relatively more difficult for the Company to generate attractive risk-adjusted returns. The extent to which COVID-19 impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted, including additional actions taken to contain COVID-19 or treat its impact, among others. The COVID-19 outbreak, and future pandemics, could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance. COVID-19 may also negatively and materially impact estimates and assumptions used by the Company including, but not limited to, fair value estimates and estimates of an allowance for loan losses. We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business. As of September 30, 2020, there have been two forbearance requests approved in our CMBS B-Piece portfolio, representing 0.8% of our consolidated unpaid principal balance outstanding. Additionally, there were nine forbearance requests approved in our SFR loan book. However, as of September 30, 2020, these loans were no longer in forbearance. Despite these forbearance requests, the master servicers continued to make payments to us for the portion of our CMBS B-Piece and SFR Loans that requested forbearance, and were approved by Freddie Mac, during the entire forbearance period. These agreed upon forbearance requests include both principal and interest payments for three months, with an option to the borrower to extend an additional three months, and require the borrower to repay Freddie Mac within twelve months of the end of the forbearance period. Principles of Consolidation The Company accounts for subsidiary partnerships in which it holds an ownership interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation Variable Interest Entities The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. FASB ASC Topic 810, Consolidation CMBS Trusts The Company consolidates the trusts that issue beneficial ownership interests in mortgage loans secured by commercial real estate (commonly known as CMBS) when the Company holds a variable interest in, and management considers the Company to be the primary beneficiary of those trusts. Management believes the performance of the assets that underlie CMBS issuances most significantly impact the economic performance of the trust, and the primary beneficiary is generally the entity that conducts activities that most significantly impact the performance of the underlying assets. In particular, the most subordinate tranches of CMBS expose the holder to greater variability of economic performance when compared to more senior tranches since the subordinate tranches absorb a disproportionately higher amount of the credit risk related to the underlying assets. Generally, a trust designates the most junior subordinate tranche outstanding as the controlling class, which entitles the holder of the controlling class to unilaterally appoint, remove and replace the special servicer for the trust. For the CMBS that the Company consolidates, the Company owns 100% of the most subordinate tranche of the securities issued by the trusts, which include the controlling class, and has the ability to remove and replace the special servicer. On the Consolidated Balance Sheets as of September 30, 2020, we consolidated the five Freddie Mac K-Series securitization entities (the “CMBS Entities”) that we determined were VIEs and for which we determined we were the primary beneficiary. The CMBS Entities are independent of the Company, and the assets and liabilities of the CMBS Entities are not owned by and are not legal obligations of ours. Our exposure to the CMBS Entities is through the subordinated tranches. For financial reporting purposes, the underlying mortgage loans held by the trusts are recorded as a separate line item on the balance sheet under “Mortgage loans held in variable interest entities, at fair value.” The liabilities of the trusts consist solely of obligations to the CMBS holders of the consolidated trusts, excluding the CMBS B-Piece investments held by the Company. The liabilities are presented as “Bonds payable held in variable interest entities, at fair value” on the Consolidated Balance Sheets. The CMBS B-Pieces held by the Company and the interest earned thereon are eliminated in consolidation. Management has elected the measurement alternative in ASC 810 to report the fair value of the assets and liabilities of the consolidated CMBS Entities in order to provide users of the financial statements with better information regarding the effects of credit risk and other market factors on the CMBS B-Pieces owned by the Company. Management has elected to show interest income and interest expense related to the CMBS Entities in aggregate with the change in fair value as “Change in net assets related to consolidated CMBS variable interest entities.” The residual difference between the fair value of the CMBS Entities’ assets and liabilities represents the Company’s investments in the CMBS B-Pieces. Investment in subsidiaries The Company conducts its operations through the OP, which acts as the general partner of the subsidiary partnerships that own the investments through limited liability companies that are SPEs. The Company is the majority limited partner of the OP, holds approximately 50.28% of the OP Units in the OP and has the ability to remove the general partner of the OP with or without cause, and as such, consolidates the OP. The Company consolidates the SPEs in which it has a controlling financial interest as well as any VIEs where it is the primary beneficiary. All of the investments the SPEs own are consolidated in the unaudited consolidated financial statements. Generally, the assets of each entity can only be used to settle obligations of that particular entity, and the creditors of each entity have no recourse to the assets of other entities or the Company notwithstanding equity pledges various lenders may have in certain entities. Redeemable Noncontrolling Interests Noncontrolling interests represent the ownership interests in consolidated subsidiaries held by entities other than the Company. Those noncontrolling interests that the holder is allowed to redeem before liquidation or termination of the entity that issued those interests are considered redeemable noncontrolling interests. The subsidiary partnerships of the OP have redeemable noncontrolling interests classified on the Consolidated Balance Sheets as temporary equity in accordance with ASC 480. This is presented as “Redeemable noncontrolling interests in the Operating Partnership” on the Consolidated Balance Sheets and their share of “Net Income (Loss)” as “Net Income (Loss) attributable to redeemable noncontrolling interests” in the accompanying Consolidated Statements of Operations. The redeemable noncontrolling interests were initially measured at the fair value of the contributed assets in accordance with ASC 805-50. The redeemable noncontrolling interests will be adjusted to their redemption value if such value exceeds the carrying value of the redeemable noncontrolling interests. Capital contributions, distributions and profits and losses are allocated to the redeemable noncontrolling interests in accordance with the terms of the partnership agreements of the subsidiary partnerships. Acquisition Accounting The Company accounts for the acquisitions of the SFR Loans and CMBS B-Pieces, as asset acquisitions pursuant to ASC 805-50 rather than as business combinations. Substantially all of the fair value of the assets acquired are concentrated in a group of similar identifiable assets, i.e. the SFR Loans represent one acquisition of similar identifiable assets, and the acquisition of the CMBS B-Pieces represents an additional acquisition of similar identifiable assets. Additionally, there were no corresponding in-place workforce, servicing platforms or any other item that could be considered an input or process associated with these assets. As such, the SFR Loans and the CMBS B-Pieces do not constitute businesses as defined by ASC 805-10-55. As the investments in the Initial Portfolio were contributed to the OP’s subsidiary partnerships in a non-cash transaction, cost is based on the fair value of the assets acquired. Formation Transaction The Company commenced operations on February 11, 2020 upon the closing of its IPO. Prior to the closing of the IPO, the Company engaged in the Formation Transaction through which it acquired the Initial Portfolio consisting of SFR Loans, CMBS B-Pieces, mezzanine loan and preferred equity investments in real estate companies and properties in other structured real estate investments within the multifamily, SFR and self-storage asset classes. The Initial Portfolio was acquired from the Contribution Group pursuant to a contribution agreement through which the Contribution Group contributed their interest in the Initial Portfolio to SPEs owned by subsidiary partnerships of the Company, in exchange for limited partnership interests (“Sub OP Units”) in subsidiary partnerships of the OP (“Sub OPs”). The assets and liabilities constituting the Initial Portfolio were contributed at fair value using a cutoff date of January 31, 2020. The mezzanine loan, preferred stock and preferred equity investments were valued using a discounted cash flow model using discount rates negotiated with the Contribution Group. A third-party valuation firm was utilized to value the SFR Loans using the income approach in accordance with ASC Topic 820. The income approach utilizes a discounted cash flow method to present value the expected future cash flows. The future cash flows were projected based on the terms of the loans including interest rates, current balances and servicing fees. The future cash flows depend substantially on various other assumptions such as prepayment rates, prepayment charges, default rates, expected loss given default (severity), and other inputs. The Credit Facility (defined below) contributed along with the SFR Loans was also valued using the income approach as previously described. The equity and financial liabilities of the consolidated CMBS B-Pieces were valued using broker quotes (see Note 2 for more information on our valuation methodologies). The Bridge Facility (defined below) was originated shortly before the closing of the IPO and was contributed at its carrying value, which approximated fair value. The fair values of the contributed cash and accrued interest and dividends approximated their carrying values because of the short-term nature of these instruments. The fair values of the contributed assets described above were agreed upon by the Contribution Group and used to determine the number of Sub OP Units issued. Any purchase premiums or discounts are amortized over the expected life of the investment. The following table shows the par values, fair values and purchase premiums (discounts) of the Initial Portfolio as of February 11, 2020, the closing date of the IPO: Par value Fair Value Premium (Discount) Assets Cash $ 302 $ 302 $ — Loans, held-for-investment, net 22,127 22,282 155 Preferred stock 40,000 40,400 400 Mortgage loans, held-for-investment, net 863,564 934,918 71,354 Accrued interest and dividends 3,616 3,616 — Mortgage loans held in variable interest entities, at fair value 1,790,228 1,790,135 (93 ) $ 2,719,837 $ 2,791,653 $ 71,816 Liabilities Credit facility $ 788,764 $ 788,764 $ — Bridge facility 95,000 95,000 — Bonds payable held in variable interest entities, at fair value 1,655,960 1,655,960 — $ 2,539,724 $ 2,539,724 $ — Total contributions $ 180,113 $ 251,929 $ 71,816 Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. Mortgage and other loans held-for-investment Loans that are held-for-investment are carried at their aggregate outstanding face amount, net of applicable (i) unamortized origination or acquisition premium and discounts, (ii) unamortized deferred fees and other direct loan origination costs, (iii) valuation allowance for loan losses and (iv) write-downs of impaired loans. The effective interest method is used to amortize origination or acquisition premiums and discounts and deferred fees or other direct loan origination costs. In circumstances where, in management’s opinion, the difference between the straight-line and effective interest methods is immaterial, the straight-line method is used. As prepayments of principal are received, any premiums paid are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest income earned on the assets. Income Recognition Interest Income - Loans held-for-investment, available-for-sale securities, CMBS structured pass through certificates, mortgage loans from the consolidated CMBS Entities and debt securities held-to-maturity where the Company expects to collect the contractual interest and principal payments are considered to be performing loans. The Company recognizes income on performing loans in accordance with the terms of the loan on an accrual basis. Interest income also includes amortization of loan premiums or discounts and loan origination costs. Dividend Income - Dividend income is recorded when declared. Realized Gain (Loss) on Sale of Investments - The Company recognizes the excess, or deficiency, of net proceeds received, less the carrying value of such investments, as realized gains or losses, respectively. The Company reverses cumulative, unrealized gains or losses previously reported in its Consolidated Statements of Operations with respect to the investment sold at the time of the sale. Expense Recognition Interest expense, in accordance with the Company’s financing agreements, is recorded on the accrual basis. General and administrative expenses are expensed as incurred. Allowance for Loan Losses The Company, with the assistance of an independent valuations firm, performs a quarterly evaluation of loans classified as held for investment for impairment on a loan by loan basis in accordance with ASC 310-10-35, Receivables, Subsequent Measurement (“ASC 310-10-35”). If we deem that it is probable that we will be unable to collect all amounts owed according to the contractual terms of a loan, impairment of that loan is indicated. If we consider a loan to be impaired, we will establish an allowance for loan losses, through a valuation provision in earnings that reduces carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. For non-impaired loans with no specific allowance the Company determines an allowance for loan losses in accordance with ASC 450-20, Loss Contingencies (“ASC 450-20”), which represents management’s best estimate of incurred losses inherent in the portfolio at the balance sheet date, excluding impaired loans and loans carried at fair value. Management considers quantitative factors likely to cause estimated credit losses including default rate and loss severity rates. The Company also evaluates qualitative factors such as macroeconomic conditions, evaluations of underlying collateral, trends in delinquencies and non-performing assets. Increases to (or reversals of) the allowance for loan loss are included in “Loan loss provision, net” on the accompanying Consolidated Statements of Operations. Significant judgment is required in determining impairment and in estimating the resulting loss allowance, and actual losses, if any, could materially differ from those estimates. We perform a quarterly review of our portfolio. In conjunction with this review, we assess the risk factors of each loan, including, without limitation, ratio, debt yield, property type, geographic and local market dynamics, physical condition, collateral, cash-flow volatility, leasing and tenant profile, loan structure, exit plan and project sponsorship. Based on a scale, our loans are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows: 1 – Outperform – Materially exceeds performance metrics (for example, technical milestones, occupancy, rents, net operating income) included in original or current credit underwriting and business plan; 2 – Exceeds Expectations – Collateral performance exceeds substantially all performance metrics included in original or current credit underwriting and business plan; 3 – Satisfactory – Collateral performance meets, or is on track to meet, underwriting; business plan is met or can reasonably be achieved; 4 – Underperformance – Collateral performance falls short of underwriting, material differences exist from business plan, or both; technical milestones have been missed; defaults may exist, or may soon occur absent material improvement; and 5 – Risk of Impairment/Default – Collateral performance is significantly worse than underwriting; major variance from business plan; loan covenants or technical milestones have been breached; timely exit from loan via sale or refinancing is questionable. We We consider loans to be past-due when a monthly payment is due and unpaid for 60 days or more. Loans will be placed on nonaccrual status and considered non-performing when full payment of principal and interest is in doubt, which generally occurs when they become 120 days or more past-due unless the loan is both well secured and in the process of collection. Accrual of interest on individual loans is discontinued when management believes that, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. Our policy is to stop accruing interest when a loan’s delinquency exceeds 120 days. All interest accrued but not collected for loans that are placed on nonaccrual status or subsequently charged-off are reversed against interest income. Income is subsequently recognized on the cash basis until, in management’s judgment, the borrower’s ability to make periodic principal and interest payments returns and future payments are reasonably assured, in which case the loan is returned to accrual status. For individual loans, a troubled debt restructuring is a formal restructuring of a loan where, for economic or legal reasons related to the borrower’s financial difficulties, a concession that would not otherwise be considered is granted to the borrower. The concession may be granted in various forms, including providing a below-market interest rate, a reduction in the loan balance or accrued interest, an extension of the maturity date, or a combination of these. An individual loan that has had a troubled debt restructuring is considered to be impaired and is subject to the relevant accounting for impaired loans. A loan is written off when it is no longer realizable and/or it is legally discharged. We will evaluate acquired loans and debt securities for which it is probable at acquisition that all contractually required payments will not be collected in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Other-Than-Temporary Impairment The Company accounts for its investment in Preferred Stock as a debt security held to maturity. Debt securities held to maturity are evaluated on a quarterly basis, and more frequently when triggering events or market conditions warrant such an evaluation, to determine whether declines in their value are other-than-temporary impairments (“OTTI”). To determine whether a loss in value is other-than-temporary, the Company utilizes criteria including: the reasons underlying the decline, the magnitude and duration of the decline (greater or less than twelve months) and whether or not we intend to sell or expect that it is more likely than not that we will be required to sell the investment prior to an anticipated recovery of the carrying value. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. In the event that the fair value of debt securities held to maturity is less than amortized cost, we consider whether the unrealized holding loss represents an OTTI. If we do not expect to recover the carrying value of the debt security held-to-maturity based on future expected cash flows, an OTTI exists, and we reduce the carrying value by the impairment amount, recognize the portion of the impairment related to credit factors in earnings and the portion of the impairment related to other factors in accumulated other comprehensive income. For the three and nine months ended September 30, 2020, the Company did not recognize an OTTI related to its investment in debt securities held to maturity. Fair Value GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation. Level 1 – Inputs are adjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 – Inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 – Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The Company follows this hierarchy for our financial instruments. Classifications will be based on the lowest level of input that is significant to the fair value measurement. We review the valuation of Level 3 financial instruments as part of our quarterly process. Valuation of Consolidated VIEs We report the financial assets and liabilities of each CMBS trust that we consolidate at fair value using the measurement alternative included in Accounting Standards Update (“ASU”) No. 2014-13, Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity (“ASU 2014-13”). Pursuant to ASU 2014-13, we measure both the financial assets and financial liabilities of the CMBS trusts we consolidate using the fair value of the financial liabilities (which we consider more observable than the fair value of the financial assets) and the equity of the CMBS trusts beneficially owned by us. As a result, we presented the CMBS issued by the consolidated trusts, but not beneficially owned by us, as financial liabilities in our consolidated financial statements, measured at their estimated fair value; we measured the financial assets as the total estimated fair value of the CMBS issued by the consolidated trust, regardless of whether such CMBS represent interests beneficially owned by us. Under the measurement alternative prescribed by ASU 2014-13, our “Net income (loss)” reflects the economic interests in the consolidated CMBS beneficially owned by us, presented as “Change in net assets related to consolidated CMBS variable interest entities” in our Consolidated Statements of Operations, which includes applicable (1) changes in the fair value of CMBS beneficially owned by us, (2) interest income, interest expense and servicing fees earned from the CMBS trusts and (3) other residual returns or losses of the CMBS trusts, if any. Valuation Methodologies CMBS Trusts - The financial liabilities and equity of the consolidated CMBS trusts were valued using broker quotes. Broker quotes represent the price that an investment could be sold for in a market transaction and represent fair market value. Loans and bonds with quotes that are based on actual trades with a sufficient level of activity on or near the valuation date are classified as Level 2 assets. Loans and bonds that are priced using quotes derived from implied values, bid/ask prices for trades that were never consummated, or a limited amount of actual trades are classified as Level 3 assets because the inputs used by the brokers and pricing services to derive the values are not readily observable. CMBS Structured Pass Through Certificates - We categorize our CMBS Structured Pass Through Certificates (“CMBS I/O Strips”) as Level 2 assets in the fair value hierarchy. CMBS I/O Strips are valued by an independent third-party investment research firm that provides daily fair market value price updates to our investments. SFR Loans, Preferred Equity Investments, Preferred Stock and Mezzanine Loans - We categorize our SFR Loans, preferred equity, preferred stock and mezzanine loan investments as Level 3 assets in the fair value hierarchy. SFR Loans, preferred equity, preferred stock and mezzanine loan investments are valued using a discounted cash flow model using discount rates derived from observable market data applied to the internal rate of return implied by the expected contractual cash flows. The valuation is done for disclosure purposes only as these investments are not carried at fair value on the consolidated balance sheet. Repurchase Agreements - We generally consider our repurchase agreements Level 3 liabilities in the fair value hierarchy as such liabilities represent borrowings on collateral with terms specific to each borrower. Given the short to moderate term of the floating-rate facilities, we generally expect the fair value of repurchase agreements to approximate their outstanding principal balances. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis - Certain assets not measured at fair value on an ongoing basis but that are subject to fair-value adjustments only in certain circumstances, such as when there is evidence of impairment, will be measured at fair value on a nonrecurring basis. For first mortgage loans, mezzanine loans, preferred equity and preferred stock investments, we apply the amortized cost method of accounting, but may be required, from time to time, to record a nonrecurring fair value adjustment in the form of a provision for loan loss or OTTI as discussed above. Overall, our determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are our best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of a financial instrument in the form of a range, we select a value within the range provided by the independent valuation firm, generally the midpoint, to assess the reasonableness of our estimated fair value for that financial instrument. Income Taxes The Company believes that it will operate in a manner that will allow it to qualify for taxation as a REIT under the Code, commencing with its taxable year ending December 31, 2020. As a result of the Company’s expected REIT qualification, the Company does not expect to pay U.S. federal corporate level taxes. To qualify as a REIT, the Company must meet a number of orga |
Loans Held for Investment
Loans Held for Investment | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Loans Held for Investment | 3. Loans Held for Investment The Company’s investments in SFR Loans, mezzanine loans, and preferred equity are accounted for as loans held for investment. The following table summarizes our loans held for investment as of September 30, 2020 (dollars in thousands): Weighted Average Loan Type Outstanding Face Amount Carrying Value (1) Loan Count Fixed Rate (2) Coupon (3) Life (years) (4) September 30, 2020 SFR Loans, held-for-investment $ 861,580 $ 927,632 27 100.00 % 4.91 % 7.60 Mezzanine loan, held-for-investment 7,500 7,500 1 100.00 % 6.50 % 2.75 Preferred equity, held-for-investment 28,877 29,027 4 100.00 % 8.04 % 6.47 $ 897,957 $ 964,159 32 100.00 % 5.03 % 7.53 (1) Carrying value includes the outstanding face amount plus unamortized purchase premiums/discounts and any allowance for loan losses. (2) The weighted-average fixed rate is weighted on current principal balance. (3) The weighted-average coupon is weighted on current principal balance. (4) The weighted-average life is weighted on current principal balance and assumes no prepayments. The maturity date for preferred equity investments represents the maturity date of the senior mortgage, as the preferred equity investments require repayment upon the sale or refinancing of the asset. For the nine months ended September 30, 2020, the loan and preferred equity portfolio activity was as follows (in thousands): Held-for-Investment Total Balance at December 31, 2019 $ — $ — Contributions from noncontrolling interests in the OP 967,202 967,202 Originations 7,500 7,500 Proceeds from principal repayments (1,987 ) (1,987 ) Proceeds from redemption of mezzanine loan, net (3,221 ) (3,221 ) Amortization of loan premium, net (1) (5,056 ) (5,056 ) Loan loss provision, net (2) (279 ) (279 ) Balance at September 30, 2020 $ 964,159 $ 964,159 (1) Includes net amortization of loan purchase premiums. (2) Based on management’s judgment and estimate of credit losses. See Note 2 for additional information. As of September 30, 2020, there were $66.5 million of unamortized premiums on loans held-for-investment, net on the Consolidated Balance Sheets. As discussed in Note 2, the Company evaluates loans classified as held-for-investment on a loan-by-loan basis every quarter. In conjunction with the review of our portfolio, we assess the risk factors of each loan and assign a risk rating based on a variety of factors. Loans are rated “1” through “5,” from least risk to greatest risk, respectively. See Note 2 for a more detailed discussion of the risk factors and ratings. The following table allocates the principal balance and net book value of the loan portfolio based on our internal risk ratings (dollars in thousands): September 30, 2020 Number of Carrying % of Loan Risk Rating Loans Value Portfolio 1 — $ — — 2 — — — 3 32 964,159 100.00 % 4 — — — 5 — — — 32 $ 964,159 100.00 % As of September 30, 2020, all 32 loans held-for-investment in our portfolio were rated “3,” or “Satisfactory” based on the factors assessed by the Company and discussed in Note 2. The following tables present the geographies and property types of collateral underlying the Company’s loans held-for-investment as a percentage of the loans’ face amounts: Geography September 30, 2020 Georgia 43.44 % Florida 21.98 % Texas 8.52 % Minnesota 5.21 % Alabama 4.15 % New Jersey 2.00 % Maryland 1.90 % North Carolina 1.88 % Mississippi 1.13 % Michigan 1.06 % Oklahoma 1.04 % Tennessee 0.97 % Connecticut 0.92 % Missouri 0.83 % New York 0.71 % Illinois 0.70 % Nebraska 0.64 % Virginia 0.63 % Massachusetts 0.60 % Ohio 0.50 % Indiana 0.49 % South Carolina 0.08 % Pennsylvania 0.25 % Kentucky 0.22 % Arkansas 0.15 % 100.00 % Collateral Property Type September 30, 2020 Single Family Rental 95.95 % Multifamily 4.05 % 100.00 % |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 4. Debt The following table summarizes the Company’s financing arrangements in place as of September 30, 2020: September 30, 2020 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) Apr 2020 160,212 160,212 N/A (5) 2.45 % 0.04 1,960,129 317,050 305,709 10.8 Asset Specific Financing Single Family Rental Freddie Mac 7/12/2019 786,939 786,939 7/12/2029 2.44 % 7.6 861,580 927,632 927,632 7.6 Total/weighted average $ 947,151 $ 947,151 2.44 % 6.33 $ 2,821,709 $ 1,244,682 $ 1,233,341 9.84 (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) Assets are shown at fair value. (4) In April 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 tenor and are expected to roll monthly. 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. The guarantors are subject to minimum net worth and liquidity covenants. The Credit Facility continues to be guaranteed by members of the Contribution Group as of September 30, 2020. 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, we will be required to repay the portion of the Credit Facility that is allocated to that loan. As of September 30, 2020, the outstanding balance on the Credit Facility was $786.9 million. In connection with our recent CMBS acquisitions and new mezzanine debt investment, we, through our subsidiary partnerships, have borrowed approximately $160.2 million under our repurchase agreements and posted $1,960.1 million par value of our CMBS B-Piece and CMBS I/O Strip investments as collateral as of September 30, 2020 . 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. As of September 30, 2020, the outstanding principal balances related to the SFR 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 $ 465,689 Various Single-family Fixed 2.24 % 9/1/2028 Senior loan 2/11/2020 9,236 Various Single-family Fixed 3.51 % 2/1/2028 Senior loan 2/11/2020 4,945 Various Single-family Fixed 2.48 % 8/1/2023 Senior loan 2/11/2020 9,633 Various Single-family Fixed 2.79 % 9/1/2028 Senior loan 2/11/2020 6,904 Various Single-family Fixed 2.69 % 7/1/2028 Senior loan 2/11/2020 5,199 Various Single-family Fixed 2.64 % 10/1/2028 Senior loan 2/11/2020 11,252 Various Single-family Fixed 3.02 % 10/1/2028 Senior loan 2/11/2020 5,795 Various Single-family Fixed 2.87 % 9/1/2023 Senior loan 2/11/2020 7,664 Various Single-family Fixed 3.02 % 11/1/2028 Senior loan 2/11/2020 46,146 Various Single-family Fixed 2.14 % 10/1/2025 Senior loan 2/11/2020 8,922 Various Single-family Fixed 3.30 % 10/1/2028 Senior loan 2/11/2020 35,955 Various Single-family Fixed 2.70 % 11/1/2028 Senior loan 2/11/2020 5,933 Various Single-family Fixed 2.68 % 11/1/2028 Senior loan 2/11/2020 13,603 Various Single-family Fixed 2.61 % 11/1/2023 Senior loan 2/11/2020 5,346 Various Single-family Fixed 3.14 % 12/1/2028 Senior loan 2/11/2020 9,502 Various Single-family Fixed 3.02 % 12/1/2028 Senior loan 2/11/2020 9,971 Various Single-family Fixed 2.77 % 12/1/2028 Senior loan 2/11/2020 4,899 Various Single-family Fixed 2.97 % 1/1/2029 Senior loan 2/11/2020 8,417 Various Single-family Fixed 3.14 % 1/1/2029 Senior loan 2/11/2020 5,834 Various Single-family Fixed 2.40 % 2/1/2024 Senior loan 2/11/2020 4,279 Various Single-family Fixed 3.06 % 2/1/2029 Senior loan 2/11/2020 16,076 Various Single-family Fixed 2.91 % 2/1/2029 Senior loan 2/11/2020 7,017 Various Single-family Fixed 2.98 % 2/1/2029 Senior loan 2/11/2020 7,298 Various Single-family Fixed 2.80 % 2/1/2029 Senior loan 2/11/2020 6,150 Various Single-family Fixed 2.99 % 3/1/2029 Senior loan 2/11/2020 9,284 Various Single-family Fixed 2.45 % 3/1/2026 Senior loan 2/11/2020 55,988 Various Single-family Fixed 2.70 % 3/1/2029 Total $ 786,939 2.44 % For the nine months ended September 30, 2020, the activity related to the carrying value of the secured financing agreements and master repurchase agreements were as follows (in thousands): Balances as of December 31, 2019 $ — Assumption of debt 788,764 Principal borrowings 160,379 Principal repayments (1,992 ) Balances as of September 30, 2020 $ 947,151 Schedule of Debt Maturities The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to September 30, 2020 are as follows (in thousands): Year Non-recourse Total 2020¹ $ (160,212 ) $ (160,212 ) 2021 — — 2022 — — 2023 (24,343 ) (24,343 ) 2024 (5,834 ) (5,834 ) Thereafter (756,762 ) (756,762 ) $ (947,151 ) $ (947,151 ) (1) The transactions in place in the master repurchase agreement with Mizuho have a one-month tenor and are expected to roll monthly. KeyBank Bridge Facility On February 7, 2020, we, through our subsidiaries, entered into a $95.0 million bridge facility (the “Bridge Facility”) with KeyBank National Association (“KeyBank”) and immediately drew $95.0 million to fund a portion of the Formation Transaction. The Company used proceeds from the IPO to pay down the entirety of the Bridge Facility. Raymond James Bridge Facility On July 30, 2020, we, through our subsidiaries, entered into a $86.0 million bridge facility (the “RJ Bridge Facility”) with Raymond James Bank, N.A. (“RJ”) and drew $21.0 million on July 30, 2020 and $65.0 million on August 7, 2020. The Company used proceeds from the RJ Bridge Facility to finance the acquisitions of the FREMF 2020-KF81 and FREMF 2020-K113 securitizations. The RJ Bridge Facility was repaid in August 2020. |
CMBS Trusts
CMBS Trusts | 9 Months Ended |
Sep. 30, 2020 | |
Statement Of Financial Position [Abstract] | |
CMBS Trusts | 5. CMBS Trusts As of September 30, 2020, the Company consolidated the CMBS Entities that we determined are VIEs and for which we are the primary beneficiary. The Company elected the fair-value option for each of the trusts and carries the fair values of the trust’s assets and liabilities at fair value in its Consolidated Balance Sheets; recognizes changes in the trust’s net assets, including changes in fair-value adjustments and net interest earned, in its Consolidated Statements of Operations; and records cash interest received from the trusts and cash interest paid to bondholders of the CMBS not beneficially owned by the Company, as operating cash-flows. The following table presents the Company’s recognized Trust’s Assets and Liabilities (in thousands): Trust's Assets September 30, 2020 Mortgage loans held in variable interest entities, at fair value $ 5,094,579 Accrued interest receivable 917 Trust's Liabilities Bonds payable held in variable interest entities, at fair value (4,825,943 ) Accrued interest payable (674 ) The following table presents “Change in net assets related to consolidated CMBS variable interest entities” (in thousands): For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 Net interest earned $ 5,017 $ 10,024 Unrealized loss 3,903 (11,231 ) Change in net assets related to consolidated CMBS variable interest entities $ 8,920 $ (1,207 ) The following tables present the geographies and property types of collateral underlying the CMBS trusts consolidated by the Company as a percentage of the collateral unpaid principal balance: Geography September 30, 2020 Collateral Property Type September 30, 2020 Florida 16.59 % Multifamily 98.32 % Texas 15.13 % Manufactured Housing 1.68 % Arizona 11.96 % 100.00 % California 8.14 % Georgia 7.81 % Washington 5.79 % Nevada 4.55 % New Jersey 3.69 % New York 2.98 % Pennsylvania 2.94 % Indiana 2.16 % Colorado 2.02 % Virginia 1.90 % Ohio 1.80 % North Carolina 1.77 % Tennessee 1.29 % Utah 1.19 % Maryland 1.18 % Missouri 1.07 % South Carolina 0.96 % Louisiana 0.88 % Oklahoma 0.75 % Oregon 0.73 % Dist. of Columbia 0.48 % Kansas 0.47 % Illinois 0.31 % Iowa 0.30 % Kentucky 0.26 % Alabama 0.24 % Connecticut 0.15 % Minnesota 0.14 % Mississippi 0.14 % Wyoming 0.10 % Nebraska 0.08 % Wisconsin 0.06 % 100.00 % |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders Equity Note [Abstract] | |
Preferred Stock | 6. Preferred Stock As of September 30, 2020, the Company held one preferred stock investment accounted for as a debt security held to maturity recorded at amortized cost. The preferred stock investment consists of 41,254 shares of preferred stock in Jernigan Capital, Inc., (“JCAP”), a publicly traded REIT that provides capital to private developers as well as owners and operators of self-storage facilities. The preferred stock pays a fixed quarterly cash dividend of 7% in addition to a quarterly stock dividend of $2.125 million payable on a pro rata basis to the holders of the preferred stock for the first three quarters of 2020 and for the first fiscal quarter of 2021. For the last fiscal quarter of 2020 and for the second fiscal quarter of 2021, the stock dividend varies based on the underlying company’s incremental book value and past aggregate dividends among other things, but will be no less than $2.125 million on a pro rata basis to the holders of the preferred stock. The following table presents the preferred stock investments as of September 30, 2020 (in thousands, except share amounts): Investment Investment Date Shares Carrying Value (1) Property Type Interest Rate (2) Maturity Date Preferred Stock Jernigan Capital 2/11/2020 41,254 $ 41,517 Self-storage 7.00 % 12/31/2021 (1) Carrying value includes an unamortized purchase premium of approximately $0.3 million. (2) Represents the 7% cash dividend and excludes the effect of the quarterly stock dividend. The following table presents activity related to the Company’s preferred stock (in thousands): For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 Dividend income $ 1,363 $ 3,695 Amortization of premium on preferred stock investment (58 ) (138 ) $ 1,305 $ 3,557 |
CMBS Structured Pass Through Ce
CMBS Structured Pass Through Certificates | 9 Months Ended |
Sep. 30, 2020 | |
Mortgage Loans On Real Estate [Abstract] | |
CMBS Structured Pass Through Certificates | 7. CMBS Structured Pass Through Certificates As of September 30, 2020, the Company held six CMBS I/O Strips at fair value. These CMBS I/O Strips consist of interest only tranches of Freddie Mac structured pass through certificates with underlying portfolios of fixed-rate mortgage loans secured by stabilized multifamily properties. The following table presents the CMBS I/O Strips as of September 30, 2020 (in thousands): Investment Investment Date Carrying Value Property Type Interest Rate Current Yield Maturity Date CMBS I/O Strips CMBS I/O Strip 4/15/2020 $ 929 Multifamily 3.52 % 12.66 % 1/25/2037 CMBS I/O Strip 4/15/2020 862 Multifamily 3.03 % 13.25 % 12/25/2037 CMBS I/O Strip 5/18/2020 2,526 Multifamily 2.09 % 14.90 % 9/25/2046 CMBS I/O Strip 8/6/2020 8,913 Multifamily 0.10 % 13.18 % 6/25/2030 CMBS I/O Strip 8/6/2020 1,882 Multifamily 0.10 % 14.19 % 6/25/2030 CMBS I/O Strip 8/6/2020 24,733 Multifamily 3.09 % 13.49 % 5/25/2048 Total $ 39,845 The following table presents activity related to the Company’s CMBS I/O Strips (in thousands): For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 Interest income $ 441 $ 521 Change in unrealized gain on CMBS structured pass through certificates (200 ) 101 $ 241 $ 622 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 8. Fair Value of Financial Instruments Fair-value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market-participant assumptions in fair-value measurements, ASC 820 establishes a fair-value hierarchy that distinguishes between market-participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market-participant assumptions (unobservable inputs classified within Level 3 of the hierarchy): • Level 1 inputs are adjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2 inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar instruments in active markets, and inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals. • Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, related market activity for the asset or liability. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial Instruments Carried at Fair Value See Note 5 and Note 7 for additional information. Financial Instruments Not Carried at Fair Value The fair values of cash and cash equivalents, accrued interest and dividends, accounts payable and other accrued liabilities and accrued interest payable approximated their carrying values because of the short-term nature of these instruments. The estimated fair values of other financial instruments were determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company would realize on the disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts. Long-term indebtedness is carried at amounts that reasonably approximate their fair value. In calculating the fair value of its long-term indebtedness, the Company used interest rate and spread assumptions that reflect current credit worthiness and market conditions available for the issuance of long-term debt with similar terms and remaining maturities. These financial instruments utilize Level 2 inputs . Amounts borrowed under master repurchase agreements are based on their contractual amounts which reasonably approximate their fair value given the short to moderate term and floating rate nature. The carrying values and fair values of the Company’s financial assets and liabilities recorded at fair value on a recurring basis, as well as other financial instruments not carried at fair value as of September 30, 2020 (in thousands): Fair Value Carrying Value Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 17,964 $ 17,964 $ — $ — $ 17,964 Loans, held-for-investment, net 36,527 — — 38,934 38,934 Preferred stock 41,517 — — 42,628 42,628 Mortgage loans, held-for-investment, net 927,632 — — 916,363 916,363 Accrued interest and dividends 6,838 6,838 — — 6,838 Mortgage loans held in variable interest entities, at fair value 5,094,579 — 5,094,579 — 5,094,579 CMBS structured pass through certificates, at fair value 39,845 — 39,845 — 39,845 Other assets 749 749 — — 749 $ 6,165,651 $ 25,551 $ 5,134,424 $ 997,924 $ 6,157,899 Liabilities Secured financing agreements, net $ 786,939 $ — $ — $ 811,739 $ 811,739 Master repurchase agreements 160,212 — — 160,212 160,212 Accounts payable and other accrued liabilities 2,336 2,336 — — 2,336 Accrued interest payable 1,201 1,201 — — 1,201 Bonds payable held in variable interest entities, at fair value 4,825,943 — 4,825,943 — 4,825,943 $ 5,776,631 $ 3,537 $ 4,825,943 $ 971,951 $ 5,801,431 Other Financial Instruments Carried at Fair Value Redeemable noncontrolling interests in the OP have a redemption feature and are marked to their redemption value if such value exceeds the carrying value of the redeemable noncontrolling interests in the OP (see Note 11). The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests in the OP are classified as Level 2 if they are adjusted to their redemption value. At September 30, 2020, the redeemable noncontrolling interests in the OP are valued at their carrying value on the Consolidated Balance Sheets. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 9. Stockholders’ Equity Common Stock On February 11, 2020, the Company completed its IPO of 5,000,000 shares of common stock, par value $0.01 per share, at a price of $19.00 per share. In connection with the IPO, the Company sold an additional 350,000 shares of common stock, par value $0.01 per share, at a price of $19.00 per share pursuant to the partial exercise of the underwriters’ option to purchase additional shares. Gross proceeds from the IPO and partial exercise was approximately $101.7 million. Underwriting discounts and commissions of approximately $6.9 million and offering expenses of approximately $2.9 million were deducted from additional paid in capital. As of September 30, 2020, the Company had 5,350,000 shares of common stock, par value $0.01 per share, issued and 5,236,489 shares of common stock, par value $0.01 per share, outstanding. Preferred Stock On July 24, 2020, the Company issued 2,000,000 shares of its 8.50% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”) at a price to the public of $24.00 per share, for gross proceeds of $48.0 million before deducting underwriting discounts and commissions of approximately $1.2 million and other offering expenses of approximately $0.8 million. The Series A Preferred Stock has a $25.00 per share liquidation preference. In connection with the Series A Preferred Stock offering, one of the Sub OPs purchased 455,000 shares of the Series A Preferred Stock at the public offering price of $24.00 per share. On August 4, 2020, prior to settlement of the purchase, the underwriter sold 100,000 shares of the Series A Preferred Stock at a price of $23.50 per share to an unaffiliated third-party investor as part of the primary offering. The Company reimbursed the underwriter for the differential between the $24.00 per share issue price and the $23.50 per share price paid by the third-party investor. Share Repurchase Program On March 9, 2020, the Board authorized the Company to repurchase up to $10.0 million of its common stock, par value $0.01 per share, during a two-year period that is set to expire on March 9, 2022 (the “Share Repurchase Program”). On September 28, 2020, the Board authorized the expansion of the repurchase program to include the Company’s preferred stock with the same period and repurchase limit. The Company may utilize various methods to affect the repurchases, and the timing and extent of the repurchases will depend upon several factors, including market and business conditions, regulatory requirements and other corporate considerations, including whether the Company’s common stock is trading at a significant discount to net asset value per share. Repurchases under this program may be discontinued at any time. As of September 30, 2020, the Company had repurchased 113,511 shares of its common stock, par value $0.01 per share, at a total cost of approximately $1.7 million, or $15.11 per share. The 113,511 shares of common stock are classified as treasury stock and reduce the number of shares of the Company’s common stock outstanding and, accordingly, are considered in the weighted-average number of shares outstanding during the period. Long Term Incentive Plan On January 31, 2020, the Company’s sole stockholder approved a long-term incentive plan (the “2020 LTIP”) and the Company filed a registration statement on Form S-8 registering 1,319,734 shares of common stock, par value $0.01 per share, which the Company may issue pursuant to the 2020 LTIP. The 2020 LTIP authorizes the compensation committee of the Board to provide equity-based compensation in the form of stock options, appreciation rights, restricted shares, restricted stock units, performance shares, performance units and certain other awards denominated or payable in, or otherwise based on, the Company’s common stock or factors that may influence the value of the Company’s common stock, plus cash incentive awards, for the purpose of providing the Company’s directors, officers and other key employees (and those of the Manager and the Company’s subsidiaries), the Company’s non-employee directors, and potentially certain non-employees who perform employee-type functions, incentives and rewards for performance. Restricted Stock Units . Under the 2020 LTIP, restricted stock units may be granted to the Company’s directors, officers and other key employees (and those of the Adviser and the Company’s subsidiaries) and typically vest over a three to five-year period for officers, employees and certain key employees of the Adviser and annually for directors. Beginning on the date of grant, restricted stock units earn dividends that are payable in cash on the vesting date. On May 8, 2020, pursuant to the 2020 LTIP, the Company granted 14,739 r estricted stock units to its directors and on June 24, 2020, the Company granted 274,274 restricted stock units to its officers and other employees of the Adviser. The following table includes the number of restricted stock units granted, vested, forfeited and outstanding as of September 30, 2020: 2020 Number of Units Weighted Average Grant Date Fair Value Outstanding January 1, 2020 — $ — Granted 289,013 12.11 Vested — — Forfeited — — Outstanding September 30, 2020 289,013 $ 12.11 Dividends The Board declared the third quarterly dividend of 2020 to common shareholders of $0.40 per share on July 27, 2020, which was paid on September 30, 2020. The Board declared a dividend to preferred stockholders of $0.53125 per share on September 28, 2020, which was paid on October 26, 2020. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | 10. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted- average number of shares of the Company’s common stock outstanding and excludes any unvested restricted stock units issued pursuant to the 2020 LTIP. Diluted earnings (loss) per share is computed by adjusting basic earnings (loss) per share for the dilutive effect of the assumed vesting of restricted stock units. During periods of net loss, the assumed vesting of restricted stock units is anti-dilutive and is not included in the calculation of earnings (loss) per share. The effect of the conversion of OP Units held by noncontrolling limited partners is not reflected in the computation of basic and diluted earnings (loss) per share, as they are exchangeable for common stock on a one-for-one basis. The income (loss) allocable to such units is allocated on this same basis and reflected as net income (loss) attributable to redeemable noncontrolling interests in the OP in the accompanying Consolidated Statements of Operations. Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. See Note 11 for additional information. The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods presented (in thousands, except per share amounts): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2020 Numerator for earnings (loss) per share: Net income (loss) $ 11,541 $ 7,946 Preferred stock dividends 874 874 Net income attributable to redeemable noncontrolling interests 7,805 5,293 Net income attributable to common stockholders $ 2,862 $ 1,779 Denominator for earnings (loss) per share: Weighted-average common shares outstanding 5,261 5,253 Denominator for basic earnings per share 5,261 5,253 Weighted-average unvested restricted stock units 289 126 Denominator for diluted earnings per share 5,550 5,379 Earnings (loss) per weighted average common share: Basic $ 0.54 $ 0.34 Diluted $ 0.52 $ 0.33 |
Noncontrolling Interests
Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interests | 11. Noncontrolling Interests Redeemable Noncontrolling Interests in the Subsidiary Operating Partnerships In connection with the Formation Transaction, the Contribution Group contributed assets to SPEs owned by subsidiary partnerships of the Company in exchange for Sub OP Units. Net income (loss) is allocated to holders of Sub OP Units based upon net income (loss) attributable to common stockholders and the weighted-average number of Sub OP Units outstanding to total common shares plus Sub OP Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to Sub OP Units in accordance with the terms of the partnership agreement of the Sub OPs. Each time the Sub OPs distribute cash, limited partners of the Sub OPs receive their pro-rata share of the distribution. In connection with the issuance of Sub OP Units to the Contribution Group on February 11, 2020, the Sub OPs and the OP amended the partnership agreements of the Sub OPs (the “Sub OP Amendments”). Pursuant to the Sub OP Amendments, limited partners holding Sub OP Units have the right to cause the Sub OP to redeem their units at a redemption price equal to and in the form of the Cash Amount (as defined in the partnership agreement of the Sub OPs), provided that such OP Units have been outstanding for at least one year. The OP is the general partner of the Sub OPs and may, in its sole discretion, purchase the Sub OP Units by paying to the Sub OP Unit holder either the Cash Amount or the OP Unit Amount (one OP Unit for each Sub OP Unit, subject to adjustment), as defined in the partnership agreement of the Sub OP. Notwithstanding the foregoing, a limited partner will not be entitled to exercise its redemption right to the extent the issuance of the OP Units to the redeeming limited partner would (1) be prohibited, as determined in the OP’s sole discretion, or (2) cause the acquisition of OP Units by such redeeming limited partner to be “integrated” with any other distribution of OP Units for purposes of complying with the Securities Act. The OP, as the general partner and primary beneficiary of the Sub OPs, consolidates the Sub OPs. Redeemable Noncontrolling Interests in the OP Interests in the OP held by limited partners are represented by OP Units. As of September 30, 2020, the Company is the majority limited partner in the OP. Net income (loss) is allocated to holders of OP Units based upon net income (loss) attributable to common stockholders and the weighted-average number of OP Units outstanding to total common shares plus OP Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to OP Units in accordance with the terms of the partnership agreement of the OP. Each time the OP distributes cash to the Company, limited partners of the OP receive their pro-rata share of the distribution. In connection with the IPO on February 11, 2020, the Company and the OP GP amended the partnership agreement of the OP (the “OP Amendment”). Pursuant to the OP Amendment, limited partners holding OP Units have the right to cause the OP to redeem their units at a redemption price equal to and in the form of the Cash Amount (as defined in the partnership agreement of the OP), provided that such OP Units have been outstanding for at least one year. The Company may, in its sole discretion, purchase the OP Units by paying to the limited partner either the Cash Amount or the REIT Share Amount (one share of common stock of the Company for each OP Unit), as defined in the partnership agreement of the OP. Notwithstanding the foregoing, a limited partner will not be entitled to exercise its redemption right to the extent the issuance of the Company’s common stock to the redeeming limited partner would (1) be prohibited, as determined in the Company’s sole discretion, under the Company’s charter or (2) cause the acquisition of common stock by such redeeming limited partner to be “integrated” with any other distribution of the Company’s common stock for purposes of complying with the Securities Act. Accordingly, the Company records the OP Units held by noncontrolling limited partners outside of permanent equity and reports the OP Units at the greater of their carrying value or their redemption value using the Company’s stock price at each balance sheet date. On July 30, 2020, NREF OP IV, L.P. (“OP IV”), one of the subsidiary partnerships of the OP, entered into subscription agreements with certain entities affiliated with the Manager (the “Manager Affiliates”), which were then-current majority owners of OP IV, for 359,000 Sub OP Units in OP IV for total consideration of approximately $6.6 million. On August 4, 2020, OP IV entered into additional subscription agreements with the Manager Affiliates for 267,320 Sub OP Units in OP IV for total consideration of approximately $4.9 million. The total number of Sub OP Units issued was calculated by dividing the total consideration by the combined book value of the Company’s common stock and the Sub OP Units, on a per share or unit basis, as of June 30, 2020, or $18.33 per Sub OP Unit. On September 30, 2020, the unitholders (other than the OP) of OP IV exercised their redemption right for 100% of their units outstanding. Following direction and approval of the Board and the general partner of OP IV, the OP bought the tendered OP IV units in exchange for an equal number of OP Units. After the transaction, OP IV is wholly-owned by the OP and the Company now owns 50.28% of the OP. The following table sets forth the redeemable noncontrolling interests in the OP (reflecting the OP’s consolidation of the Sub OPs) for the nine months ended September 30, 2020 (in thousands): Redeemable noncontrolling interests in the OP, December 31, 2019 $ — Contributions from redeemable noncontrolling interests in the OP 273,410 Net income attributable to redeemable noncontrolling interests in the OP 5,293 Distributions to redeemable noncontrolling interests in the OP (13,548 ) Redeemable noncontrolling interests in the OP, September 30, 2020 $ 265,155 On July 20, 2020, in connection with the anticipated issuance by the Company of the Series A Preferred Stock, the OP, following the direction and approval of the Board, amended the partnership agreement of the OP to provide for the issuance of 8.50% Series A Cumulative Redeemable Preferred Units (liquidation preference $25.00 per unit) (the “Series A Preferred Units”). The Company contributed the net proceeds from the sale of the Series A Preferred Stock in the Preferred Stock Offering to the OP in exchange for the same number of Series A Preferred Units. The Series A Preferred Units have economic terms that are substantially the same as the terms of the Series A Preferred Stock. The Series A Preferred Units rank, as to distributions and upon liquidation, senior to OP Units. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. Related Party Transactions Management Fee In accordance with the Management Agreement, the Company pays the Manager an advisory fee equal to 1.5% of Equity (as defined below), paid monthly, in cash or shares of Company common stock at the election of our Manager (the “Annual Fee”). The duties performed by the Company’s Manager under the terms of the Management Agreement include, but are not limited to: providing daily management for the Company, selecting and working with third-party service providers, formulating an investment strategy for the Company and selecting suitable investments, managing the Company’s outstanding debt and its interest rate exposure and determining when to sell assets. “Equity” means (a) the sum of (1) total stockholders’ equity immediately prior to the IPO, plus (2) the net proceeds received by the Company from all issuances of the Company’s equity securities in and after the IPO, plus (3) the Company’s cumulative Core Earnings (as defined below) from and after the IPO to the end of the most recently completed calendar quarter, (b) less (1) any distributions to the holders of the Company’s common stock from and after the IPO to the end of the most recently completed calendar quarter and (2) all amounts that the Company or any of its subsidiaries has paid to repurchase for cash the shares of the Company’s equity securities from and after the IPO to the end of the most recently completed calendar quarter. In the Company’s calculation of Equity, the Company will adjust its calculation of Core Earnings to remove the compensation expense relating to awards granted under one or more of its long-term incentive plans that is added back in the calculation of Core Earnings. Additionally, for the avoidance of doubt, Equity does not include the assets contributed to the Company in the Formation Transaction. “Core Earnings” means the net income (loss) attributable to the common stockholders of the Company, computed in accordance with GAAP, including realized gains and losses not otherwise included in net income (loss), excluding any unrealized gains or losses or other similar non-cash items that are included in net income (loss) for the applicable reporting period, regardless of whether such items are included in other comprehensive (loss), or in net income (loss) and adding back amortization of stock-based compensation. Net income (loss) attributable to common stockholders may also be adjusted for one-time events pursuant to changes in GAAP and certain material non-cash income or expense items, in each case after discussions between the Manager and the independent directors of the Board and approved by a majority of the independent directors of the Board. Pursuant to the terms of the Management Agreement, the Company is required to pay directly or reimburse the Manager for all documented Operating Expenses and Offering Expenses it incurs on behalf of the Company. “Operating Expenses” include legal, accounting, financial and due diligence services performed by the Manager that outside professionals or outside consultants would otherwise perform, the Company’s pro rata share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of the Manager required for the Company’s operations, and compensation expenses under the 2020 LTIP. “Offering Expenses” include all expenses (other than underwriters’ discounts) in connection with an offering of securities, including, without limitation, legal, accounting, printing, mailing and filing fees and other documented offering expenses. For the nine months ended September 30, 2020, the Company reimbursed the Manager for approximately $0.1 million of Offering Expenses that were paid on the Company’s behalf. The Initial Portfolio was acquired from the Contribution Group, which consisted of affiliates of our Sponsor, pursuant to a contribution agreement with the Contribution Group through which the Contribution Group contributed their interest in the Initial Portfolio to SPEs owned by subsidiary partnerships of the Company in exchange for Sub OP Units (see Notes 1 and 2 for more information). The Contribution Group owns the noncontrolling interests in the Sub OPs (see Note 11 for more information). Connections at Buffalo Pointe Contribution On May 29, 2020, we and the OP entered into a contribution agreement (the “Buffalo Pointe Contribution Agreement”) with entities affiliated with executive officers of the Company and the Manager, (the “BP Contributors”), whereby the BP Contributors contributed their respective preferred membership interests in NexPoint Buffalo Pointe Holdings, LLC (“Buffalo Pointe”), to the OP for total consideration of $10.0 million paid in OP Units. A total of 564,334.09 OP Units were issued to the BP Contributors, which was calculated by dividing the total consideration of $10.0 million by the combined book value of the Company’s common stock and the Sub OP Units, on a per share or unit basis, as of the end of the first quarter, or $17.72 per OP Unit. Buffalo Pointe owns a stabilized multifamily property located in Houston, Texas with 94.3% occupancy as of September 30, 2020. The preferred equity investment pays current interest at a rate of 6.5%, deferred interest at a rate of 4.5%, has an LTV of 84% and a maturity date of May 1, 2030. Pursuant to the OP’s limited partnership agreement and the Buffalo Pointe Contribution Agreement, t he BP Contributors have the right to cause our OP to redeem their OP Units for cash or, at our election, shares of our common stock on a one-for-one basis, subject to adjustment, as provided and subject to the limitations in our OP’s limited partnership agreement, provided the OP Units have been outstanding for at least one year and our stockholders have approved the issuance of shares of common stock to the BP Contributors. Expense Cap Pursuant to the terms of the Management Agreement, direct payment of operating expenses by the Company, which includes compensation expense relating to equity awards granted under the 2020 LTIP, together with reimbursement of operating expenses to the Manager, plus the Annual Fee, may not exceed 2.5% of equity book value (the “Expense Cap”) for any calendar year or portion thereof, provided, however, that this limitation will not apply to Offering Expenses, legal, accounting, financial, due diligence and other service fees incurred in connection with extraordinary litigation and mergers and acquisitions and other events outside the ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of certain real estate-related investments. For the nine months ended September 30, 2020, operating expenses did not exceed the Expense Cap. For the nine months ended September 30, 2020, the Company incurred management fees of $1.0 million. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 13. Commitments and Contingencies On August 3, 2020, a subsidiary of the OP (“REIT Sub”) entered into an equity commitment letter (the “Equity Commitment Letter”) in connection with a proposed transaction (the “Proposed Transaction”) involving affiliates of the Manager (the “Consortium”). Pursuant to the Equity Commitment Letter, REIT Sub has committed to provide an aggregate equity contribution of approximately $227.0 million (the “Equity Commitment”) to finance the Proposed Transaction, subject to certain reductions for any additional equity or debt financing. The Company is neither a party to the Equity Commitment Letter nor guaranteeing the obligations of REIT Sub under the Equity Commitment Letter. The obligation of REIT Sub to fund the Equity Commitment will terminate automatically and immediately upon the earliest to occur of (a) the valid termination of the agreement and plan of merger (the “Merger Agreement”) related to the Proposed Transaction in accordance with its terms, (b) the closing of the Proposed Transaction or (c) the target company or any of its affiliates or representatives asserting any claim, subject to certain exceptions, against the Consortium or any of its affiliates or representatives in connection with the Equity Commitment Letter, the Merger Agreement or any of the transactions contemplated by the Equity Commitment Letter or the Merger Agreement. In the event that the Merger Agreement is terminated in certain circumstances, under the Merger Agreement, the REIT Sub may be required to pay a termination fee of approximately $9.4 million. As of September 30, 2020, the ultimate amount payable, if any, of the aggregate equity contribution and/or the termination fee was not estimable and the probability of funding either the aggregate equity contribution and/or the termination fee was remote. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events Unsecured Notes Offering On October 15, 2020, the OP issued unsecured notes with a coupon rate of 7.5% and aggregate principal amount of $36.5 million at a 1.02% discount to par for proceeds of approximately $36.1 million before offering costs. Mezzanine Loan Portfolio 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 102.0% 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 unsecured notes offering and cash on hand were used to fund the remainder of the purchase price. Share Repurchase Program The Company has repurchased 123,086 shares if its common stock, par value $0.01, for approximately $1.8 million or $14.37 per share from October 1, 2020 through October 30, 2020. Dividends Declared On October 26, 2020, the Board declared a quarterly dividend of $0.40 per share, payable on December 31, 2020 to common stockholders of record on December 15, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying unaudited consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation. There have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2020. The accompanying unaudited consolidated financial statements have been prepared according to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments and eliminations necessary for the fair presentation of the Company’s financial position as of September 30, 2020 and results of operations for the three and nine months ended September 30, 2020 have been included. Such adjustments are normal and recurring in nature. The unaudited information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited financial statements included in the Company’s Registration Statement on Form S-11, as amended (Registration No. 333-235698), filed with the SEC on February 4, 2020. |
Secured Financing and Master Repurchase Agreements | Secured Financing and Master Repurchase Agreements The Company’s borrowings under secured financing agreements and master repurchase agreements are treated as collateralized financing arrangements carried at their contractual amounts, net of unamortized debt issuance costs, if any. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. It is at least reasonably possible that these estimates could change in the near term. Estimates are inherently subjective in nature and actual results could differ from our estimates and the differences could be material. Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has evolved rapidly and, as cases of COVID-19 were identified in additional countries, many countries, including the United States, reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result of the recent spike in COVID-19 cases in the United States, certain states and cities have reinstituted restrictive quarantines, restrictions on travel, “shelter in place” rules, restrictions on the types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. Management expects that additional states and cities will implement similar restrictions if the current trend continues and cannot predict when such restrictions will expire. As a result, the COVID-19 pandemic has negatively impacted, and will likely continue to negatively impact, almost every industry directly or indirectly and may adversely impact our performance or the value of underlying real estate collateral relating to the Company’s investments, increase the default risk applicable to borrowers and make it relatively more difficult for the Company to generate attractive risk-adjusted returns. The extent to which COVID-19 impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted, including additional actions taken to contain COVID-19 or treat its impact, among others. The COVID-19 outbreak, and future pandemics, could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance. COVID-19 may also negatively and materially impact estimates and assumptions used by the Company including, but not limited to, fair value estimates and estimates of an allowance for loan losses. We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business. As of September 30, 2020, there have been two forbearance requests approved in our CMBS B-Piece portfolio, representing 0.8% of our consolidated unpaid principal balance outstanding. Additionally, there were nine forbearance requests approved in our SFR loan book. However, as of September 30, 2020, these loans were no longer in forbearance. Despite these forbearance requests, the master servicers continued to make payments to us for the portion of our CMBS B-Piece and SFR Loans that requested forbearance, and were approved by Freddie Mac, during the entire forbearance period. These agreed upon forbearance requests include both principal and interest payments for three months, with an option to the borrower to extend an additional three months, and require the borrower to repay Freddie Mac within twelve months of the end of the forbearance period. |
Principles of Consolidation | Principles of Consolidation The Company accounts for subsidiary partnerships in which it holds an ownership interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation |
Variable Interest Entities | Variable Interest Entities The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. FASB ASC Topic 810, Consolidation |
CMBS Trusts | CMBS Trusts The Company consolidates the trusts that issue beneficial ownership interests in mortgage loans secured by commercial real estate (commonly known as CMBS) when the Company holds a variable interest in, and management considers the Company to be the primary beneficiary of those trusts. Management believes the performance of the assets that underlie CMBS issuances most significantly impact the economic performance of the trust, and the primary beneficiary is generally the entity that conducts activities that most significantly impact the performance of the underlying assets. In particular, the most subordinate tranches of CMBS expose the holder to greater variability of economic performance when compared to more senior tranches since the subordinate tranches absorb a disproportionately higher amount of the credit risk related to the underlying assets. Generally, a trust designates the most junior subordinate tranche outstanding as the controlling class, which entitles the holder of the controlling class to unilaterally appoint, remove and replace the special servicer for the trust. For the CMBS that the Company consolidates, the Company owns 100% of the most subordinate tranche of the securities issued by the trusts, which include the controlling class, and has the ability to remove and replace the special servicer. On the Consolidated Balance Sheets as of September 30, 2020, we consolidated the five Freddie Mac K-Series securitization entities (the “CMBS Entities”) that we determined were VIEs and for which we determined we were the primary beneficiary. The CMBS Entities are independent of the Company, and the assets and liabilities of the CMBS Entities are not owned by and are not legal obligations of ours. Our exposure to the CMBS Entities is through the subordinated tranches. For financial reporting purposes, the underlying mortgage loans held by the trusts are recorded as a separate line item on the balance sheet under “Mortgage loans held in variable interest entities, at fair value.” The liabilities of the trusts consist solely of obligations to the CMBS holders of the consolidated trusts, excluding the CMBS B-Piece investments held by the Company. The liabilities are presented as “Bonds payable held in variable interest entities, at fair value” on the Consolidated Balance Sheets. The CMBS B-Pieces held by the Company and the interest earned thereon are eliminated in consolidation. Management has elected the measurement alternative in ASC 810 to report the fair value of the assets and liabilities of the consolidated CMBS Entities in order to provide users of the financial statements with better information regarding the effects of credit risk and other market factors on the CMBS B-Pieces owned by the Company. Management has elected to show interest income and interest expense related to the CMBS Entities in aggregate with the change in fair value as “Change in net assets related to consolidated CMBS variable interest entities.” The residual difference between the fair value of the CMBS Entities’ assets and liabilities represents the Company’s investments in the CMBS B-Pieces. |
Investment in Subsidiaries | Investment in subsidiaries The Company conducts its operations through the OP, which acts as the general partner of the subsidiary partnerships that own the investments through limited liability companies that are SPEs. The Company is the majority limited partner of the OP, holds approximately 50.28% of the OP Units in the OP and has the ability to remove the general partner of the OP with or without cause, and as such, consolidates the OP. The Company consolidates the SPEs in which it has a controlling financial interest as well as any VIEs where it is the primary beneficiary. All of the investments the SPEs own are consolidated in the unaudited consolidated financial statements. Generally, the assets of each entity can only be used to settle obligations of that particular entity, and the creditors of each entity have no recourse to the assets of other entities or the Company notwithstanding equity pledges various lenders may have in certain entities. |
Redeemable Noncontrolling Interests | Redeemable Noncontrolling Interests Noncontrolling interests represent the ownership interests in consolidated subsidiaries held by entities other than the Company. Those noncontrolling interests that the holder is allowed to redeem before liquidation or termination of the entity that issued those interests are considered redeemable noncontrolling interests. The subsidiary partnerships of the OP have redeemable noncontrolling interests classified on the Consolidated Balance Sheets as temporary equity in accordance with ASC 480. This is presented as “Redeemable noncontrolling interests in the Operating Partnership” on the Consolidated Balance Sheets and their share of “Net Income (Loss)” as “Net Income (Loss) attributable to redeemable noncontrolling interests” in the accompanying Consolidated Statements of Operations. The redeemable noncontrolling interests were initially measured at the fair value of the contributed assets in accordance with ASC 805-50. The redeemable noncontrolling interests will be adjusted to their redemption value if such value exceeds the carrying value of the redeemable noncontrolling interests. Capital contributions, distributions and profits and losses are allocated to the redeemable noncontrolling interests in accordance with the terms of the partnership agreements of the subsidiary partnerships. |
Acquisition Accounting | Acquisition Accounting The Company accounts for the acquisitions of the SFR Loans and CMBS B-Pieces, as asset acquisitions pursuant to ASC 805-50 rather than as business combinations. Substantially all of the fair value of the assets acquired are concentrated in a group of similar identifiable assets, i.e. the SFR Loans represent one acquisition of similar identifiable assets, and the acquisition of the CMBS B-Pieces represents an additional acquisition of similar identifiable assets. Additionally, there were no corresponding in-place workforce, servicing platforms or any other item that could be considered an input or process associated with these assets. As such, the SFR Loans and the CMBS B-Pieces do not constitute businesses as defined by ASC 805-10-55. As the investments in the Initial Portfolio were contributed to the OP’s subsidiary partnerships in a non-cash transaction, cost is based on the fair value of the assets acquired. |
Formation Transaction | Formation Transaction The Company commenced operations on February 11, 2020 upon the closing of its IPO. Prior to the closing of the IPO, the Company engaged in the Formation Transaction through which it acquired the Initial Portfolio consisting of SFR Loans, CMBS B-Pieces, mezzanine loan and preferred equity investments in real estate companies and properties in other structured real estate investments within the multifamily, SFR and self-storage asset classes. The Initial Portfolio was acquired from the Contribution Group pursuant to a contribution agreement through which the Contribution Group contributed their interest in the Initial Portfolio to SPEs owned by subsidiary partnerships of the Company, in exchange for limited partnership interests (“Sub OP Units”) in subsidiary partnerships of the OP (“Sub OPs”). The assets and liabilities constituting the Initial Portfolio were contributed at fair value using a cutoff date of January 31, 2020. The mezzanine loan, preferred stock and preferred equity investments were valued using a discounted cash flow model using discount rates negotiated with the Contribution Group. A third-party valuation firm was utilized to value the SFR Loans using the income approach in accordance with ASC Topic 820. The income approach utilizes a discounted cash flow method to present value the expected future cash flows. The future cash flows were projected based on the terms of the loans including interest rates, current balances and servicing fees. The future cash flows depend substantially on various other assumptions such as prepayment rates, prepayment charges, default rates, expected loss given default (severity), and other inputs. The Credit Facility (defined below) contributed along with the SFR Loans was also valued using the income approach as previously described. The equity and financial liabilities of the consolidated CMBS B-Pieces were valued using broker quotes (see Note 2 for more information on our valuation methodologies). The Bridge Facility (defined below) was originated shortly before the closing of the IPO and was contributed at its carrying value, which approximated fair value. The fair values of the contributed cash and accrued interest and dividends approximated their carrying values because of the short-term nature of these instruments. The fair values of the contributed assets described above were agreed upon by the Contribution Group and used to determine the number of Sub OP Units issued. Any purchase premiums or discounts are amortized over the expected life of the investment. The following table shows the par values, fair values and purchase premiums (discounts) of the Initial Portfolio as of February 11, 2020, the closing date of the IPO: Par value Fair Value Premium (Discount) Assets Cash $ 302 $ 302 $ — Loans, held-for-investment, net 22,127 22,282 155 Preferred stock 40,000 40,400 400 Mortgage loans, held-for-investment, net 863,564 934,918 71,354 Accrued interest and dividends 3,616 3,616 — Mortgage loans held in variable interest entities, at fair value 1,790,228 1,790,135 (93 ) $ 2,719,837 $ 2,791,653 $ 71,816 Liabilities Credit facility $ 788,764 $ 788,764 $ — Bridge facility 95,000 95,000 — Bonds payable held in variable interest entities, at fair value 1,655,960 1,655,960 — $ 2,539,724 $ 2,539,724 $ — Total contributions $ 180,113 $ 251,929 $ 71,816 |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. |
Mortgage and Other Loans Held-for-investment | Mortgage and other loans held-for-investment Loans that are held-for-investment are carried at their aggregate outstanding face amount, net of applicable (i) unamortized origination or acquisition premium and discounts, (ii) unamortized deferred fees and other direct loan origination costs, (iii) valuation allowance for loan losses and (iv) write-downs of impaired loans. The effective interest method is used to amortize origination or acquisition premiums and discounts and deferred fees or other direct loan origination costs. In circumstances where, in management’s opinion, the difference between the straight-line and effective interest methods is immaterial, the straight-line method is used. As prepayments of principal are received, any premiums paid are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest income earned on the assets. |
Income Recognition | Income Recognition Interest Income - Loans held-for-investment, available-for-sale securities, CMBS structured pass through certificates, mortgage loans from the consolidated CMBS Entities and debt securities held-to-maturity where the Company expects to collect the contractual interest and principal payments are considered to be performing loans. The Company recognizes income on performing loans in accordance with the terms of the loan on an accrual basis. Interest income also includes amortization of loan premiums or discounts and loan origination costs. Dividend Income - Dividend income is recorded when declared. Realized Gain (Loss) on Sale of Investments - The Company recognizes the excess, or deficiency, of net proceeds received, less the carrying value of such investments, as realized gains or losses, respectively. The Company reverses cumulative, unrealized gains or losses previously reported in its Consolidated Statements of Operations with respect to the investment sold at the time of the sale. |
Expense Recognition | Expense Recognition Interest expense, in accordance with the Company’s financing agreements, is recorded on the accrual basis. General and administrative expenses are expensed as incurred. |
Allowance for Loan Losses | Allowance for Loan Losses The Company, with the assistance of an independent valuations firm, performs a quarterly evaluation of loans classified as held for investment for impairment on a loan by loan basis in accordance with ASC 310-10-35, Receivables, Subsequent Measurement (“ASC 310-10-35”). If we deem that it is probable that we will be unable to collect all amounts owed according to the contractual terms of a loan, impairment of that loan is indicated. If we consider a loan to be impaired, we will establish an allowance for loan losses, through a valuation provision in earnings that reduces carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. For non-impaired loans with no specific allowance the Company determines an allowance for loan losses in accordance with ASC 450-20, Loss Contingencies (“ASC 450-20”), which represents management’s best estimate of incurred losses inherent in the portfolio at the balance sheet date, excluding impaired loans and loans carried at fair value. Management considers quantitative factors likely to cause estimated credit losses including default rate and loss severity rates. The Company also evaluates qualitative factors such as macroeconomic conditions, evaluations of underlying collateral, trends in delinquencies and non-performing assets. Increases to (or reversals of) the allowance for loan loss are included in “Loan loss provision, net” on the accompanying Consolidated Statements of Operations. Significant judgment is required in determining impairment and in estimating the resulting loss allowance, and actual losses, if any, could materially differ from those estimates. We perform a quarterly review of our portfolio. In conjunction with this review, we assess the risk factors of each loan, including, without limitation, ratio, debt yield, property type, geographic and local market dynamics, physical condition, collateral, cash-flow volatility, leasing and tenant profile, loan structure, exit plan and project sponsorship. Based on a scale, our loans are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows: 1 – Outperform – Materially exceeds performance metrics (for example, technical milestones, occupancy, rents, net operating income) included in original or current credit underwriting and business plan; 2 – Exceeds Expectations – Collateral performance exceeds substantially all performance metrics included in original or current credit underwriting and business plan; 3 – Satisfactory – Collateral performance meets, or is on track to meet, underwriting; business plan is met or can reasonably be achieved; 4 – Underperformance – Collateral performance falls short of underwriting, material differences exist from business plan, or both; technical milestones have been missed; defaults may exist, or may soon occur absent material improvement; and 5 – Risk of Impairment/Default – Collateral performance is significantly worse than underwriting; major variance from business plan; loan covenants or technical milestones have been breached; timely exit from loan via sale or refinancing is questionable. We We consider loans to be past-due when a monthly payment is due and unpaid for 60 days or more. Loans will be placed on nonaccrual status and considered non-performing when full payment of principal and interest is in doubt, which generally occurs when they become 120 days or more past-due unless the loan is both well secured and in the process of collection. Accrual of interest on individual loans is discontinued when management believes that, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. Our policy is to stop accruing interest when a loan’s delinquency exceeds 120 days. All interest accrued but not collected for loans that are placed on nonaccrual status or subsequently charged-off are reversed against interest income. Income is subsequently recognized on the cash basis until, in management’s judgment, the borrower’s ability to make periodic principal and interest payments returns and future payments are reasonably assured, in which case the loan is returned to accrual status. For individual loans, a troubled debt restructuring is a formal restructuring of a loan where, for economic or legal reasons related to the borrower’s financial difficulties, a concession that would not otherwise be considered is granted to the borrower. The concession may be granted in various forms, including providing a below-market interest rate, a reduction in the loan balance or accrued interest, an extension of the maturity date, or a combination of these. An individual loan that has had a troubled debt restructuring is considered to be impaired and is subject to the relevant accounting for impaired loans. A loan is written off when it is no longer realizable and/or it is legally discharged. We will evaluate acquired loans and debt securities for which it is probable at acquisition that all contractually required payments will not be collected in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. |
Other-Than-Temporary Impairment | Other-Than-Temporary Impairment The Company accounts for its investment in Preferred Stock as a debt security held to maturity. Debt securities held to maturity are evaluated on a quarterly basis, and more frequently when triggering events or market conditions warrant such an evaluation, to determine whether declines in their value are other-than-temporary impairments (“OTTI”). To determine whether a loss in value is other-than-temporary, the Company utilizes criteria including: the reasons underlying the decline, the magnitude and duration of the decline (greater or less than twelve months) and whether or not we intend to sell or expect that it is more likely than not that we will be required to sell the investment prior to an anticipated recovery of the carrying value. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. In the event that the fair value of debt securities held to maturity is less than amortized cost, we consider whether the unrealized holding loss represents an OTTI. If we do not expect to recover the carrying value of the debt security held-to-maturity based on future expected cash flows, an OTTI exists, and we reduce the carrying value by the impairment amount, recognize the portion of the impairment related to credit factors in earnings and the portion of the impairment related to other factors in accumulated other comprehensive income. For the three and nine months ended September 30, 2020, the Company did not recognize an OTTI related to its investment in debt securities held to maturity. |
Fair Value | Fair Value GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation. Level 1 – Inputs are adjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 – Inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 – Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The Company follows this hierarchy for our financial instruments. Classifications will be based on the lowest level of input that is significant to the fair value measurement. We review the valuation of Level 3 financial instruments as part of our quarterly process. Valuation of Consolidated VIEs We report the financial assets and liabilities of each CMBS trust that we consolidate at fair value using the measurement alternative included in Accounting Standards Update (“ASU”) No. 2014-13, Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity (“ASU 2014-13”). Pursuant to ASU 2014-13, we measure both the financial assets and financial liabilities of the CMBS trusts we consolidate using the fair value of the financial liabilities (which we consider more observable than the fair value of the financial assets) and the equity of the CMBS trusts beneficially owned by us. As a result, we presented the CMBS issued by the consolidated trusts, but not beneficially owned by us, as financial liabilities in our consolidated financial statements, measured at their estimated fair value; we measured the financial assets as the total estimated fair value of the CMBS issued by the consolidated trust, regardless of whether such CMBS represent interests beneficially owned by us. Under the measurement alternative prescribed by ASU 2014-13, our “Net income (loss)” reflects the economic interests in the consolidated CMBS beneficially owned by us, presented as “Change in net assets related to consolidated CMBS variable interest entities” in our Consolidated Statements of Operations, which includes applicable (1) changes in the fair value of CMBS beneficially owned by us, (2) interest income, interest expense and servicing fees earned from the CMBS trusts and (3) other residual returns or losses of the CMBS trusts, if any. Valuation Methodologies CMBS Trusts - The financial liabilities and equity of the consolidated CMBS trusts were valued using broker quotes. Broker quotes represent the price that an investment could be sold for in a market transaction and represent fair market value. Loans and bonds with quotes that are based on actual trades with a sufficient level of activity on or near the valuation date are classified as Level 2 assets. Loans and bonds that are priced using quotes derived from implied values, bid/ask prices for trades that were never consummated, or a limited amount of actual trades are classified as Level 3 assets because the inputs used by the brokers and pricing services to derive the values are not readily observable. CMBS Structured Pass Through Certificates - We categorize our CMBS Structured Pass Through Certificates (“CMBS I/O Strips”) as Level 2 assets in the fair value hierarchy. CMBS I/O Strips are valued by an independent third-party investment research firm that provides daily fair market value price updates to our investments. SFR Loans, Preferred Equity Investments, Preferred Stock and Mezzanine Loans - We categorize our SFR Loans, preferred equity, preferred stock and mezzanine loan investments as Level 3 assets in the fair value hierarchy. SFR Loans, preferred equity, preferred stock and mezzanine loan investments are valued using a discounted cash flow model using discount rates derived from observable market data applied to the internal rate of return implied by the expected contractual cash flows. The valuation is done for disclosure purposes only as these investments are not carried at fair value on the consolidated balance sheet. Repurchase Agreements - We generally consider our repurchase agreements Level 3 liabilities in the fair value hierarchy as such liabilities represent borrowings on collateral with terms specific to each borrower. Given the short to moderate term of the floating-rate facilities, we generally expect the fair value of repurchase agreements to approximate their outstanding principal balances. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis - Certain assets not measured at fair value on an ongoing basis but that are subject to fair-value adjustments only in certain circumstances, such as when there is evidence of impairment, will be measured at fair value on a nonrecurring basis. For first mortgage loans, mezzanine loans, preferred equity and preferred stock investments, we apply the amortized cost method of accounting, but may be required, from time to time, to record a nonrecurring fair value adjustment in the form of a provision for loan loss or OTTI as discussed above. Overall, our determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are our best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of a financial instrument in the form of a range, we select a value within the range provided by the independent valuation firm, generally the midpoint, to assess the reasonableness of our estimated fair value for that financial instrument. |
Income Taxes | Income Taxes The Company believes that it will operate in a manner that will allow it to qualify for taxation as a REIT under the Code, commencing with its taxable year ending December 31, 2020. As a result of the Company’s expected REIT qualification, the Company does not expect to pay U.S. federal corporate level taxes. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute annually at least 90% of its “REIT taxable income,” as defined by the Code, to its stockholders. If the Company fails to meet these requirements, it could be subject to federal income tax on all of the Company’s taxable income at regular corporate rates for that year. The Company would not be able to deduct distributions paid to stockholders in any year in which it fails to qualify as a REIT. Additionally, the Company will also be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. Taxable income from certain non-REIT activities is managed through a taxable REIT subsidiary (“TRS”), which is subject to U.S. federal and applicable state and local corporate income taxes. As of September 30, 2020, the Company believes it is in compliance with all applicable REIT requirements and had no significant taxes associated with its TRS. We evaluate the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Our management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. We have no examinations in progress and none are expected at this time. We recognize our tax positions and evaluate them using a two-step process. First, we determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, we will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement. We had no material unrecognized tax benefit or expense, accrued interest or penalties as of September 30, 2020. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Section 107 of the Jumpstart Our Business Startups Act (“JOBS Act”) p rovides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) for complying with new or revised accounting standards applicable to public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses on Financial Instruments This allowance is deducted from the financial asset’s amortized cost basis to present the net amount expected to be collected. The new expected credit loss model will also apply to purchased financial assets with credit deterioration, superseding current accounting guidance for such assets. The amended guidance also amends the impairment model for available-for-sale debt securities, requiring entities to determine whether all or a portion of the unrealized loss on such securities is a credit loss, and also eliminating the option for management to consider the length of time a security has been in an unrealized loss position as a factor in concluding whether or not a credit loss exists. The amended model states that an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra account to the amortized cost basis, instead of a direct reduction of the amortized cost basis of the investment, as under current guidance. As a result, entities will recognize improvements to estimated credit losses on available-for-sale debt securities immediately in earnings as opposed to in interest income over time. There are also additional disclosure requirements included in this guidance. The amended guidance is to be applied on a modified retrospective basis with the cumulative effect of initially applying the amendments recognized in retained earnings at the date of initial application. However, certain provisions of the guidance are only required to be applied on a prospective basis. That methodology replaces the probable, incurred loss model for those assets. The new standard is effective for the Company for annual and interim periods beginning after December 15, 2023. While the Company is currently evaluating the impact ASU 2016-13 will have on the Company’s consolidated financial statements, the ultimate impact will depend on the portfolio and facts and circumstances near the date of adoption. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326. Financial Instruments – Credit Losses In May 2019, the FASB issued ASU 2019-05, Targeted Transition Relief for Topic 326. Financial Instruments – Credit Losses |
Other Matters | Other Matters During the second quarter of 2020, immaterial errors were identified on the Q1 2020 consolidated statement of cash flows relating to the consolidation of the Company’s CMBS trusts where the Company is the primary beneficiary. The correction of these errors would result in an increase of approximately $28.2 million in investing cash inflows with a corresponding increase in financing cash outflows in the March 31, 2020 consolidated statement of cash flows. Additionally, for the three-month period ended March 31, 2020, the supplemental disclosures of non-cash investing and financing activities omitted non-cash increases in mortgage loans held in VIEs and non-cash increases in bonds payable from consolidated VIEs of approximately $48.0 million related to the consolidation of VIEs resulting from contributions of CMBS B-pieces in connection with the Formation Transaction. These errors have been corrected in the year-to-date cash flow information for 2020. As a result, the table in Note 2 presenting the contributed assets and liabilities has also been corrected to reflect increases of approximately $48.0 million to both the mortgage loans held in VIEs and bonds payable held in VIEs. There was no impact to total contributions. There was also no impact to the Consolidated Balance Sheets, the Consolidated Statement of Operations or the Consolidated Statements of Stockholders’ Equity. These errors have been corrected in the year-to-date cash flow information for 2020 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Par Values, Fair Values and Purchase Premiums (Discounts) of Initial Portfolio | The following table shows the par values, fair values and purchase premiums (discounts) of the Initial Portfolio as of February 11, 2020, the closing date of the IPO: Par value Fair Value Premium (Discount) Assets Cash $ 302 $ 302 $ — Loans, held-for-investment, net 22,127 22,282 155 Preferred stock 40,000 40,400 400 Mortgage loans, held-for-investment, net 863,564 934,918 71,354 Accrued interest and dividends 3,616 3,616 — Mortgage loans held in variable interest entities, at fair value 1,790,228 1,790,135 (93 ) $ 2,719,837 $ 2,791,653 $ 71,816 Liabilities Credit facility $ 788,764 $ 788,764 $ — Bridge facility 95,000 95,000 — Bonds payable held in variable interest entities, at fair value 1,655,960 1,655,960 — $ 2,539,724 $ 2,539,724 $ — Total contributions $ 180,113 $ 251,929 $ 71,816 |
Loans Held for Investment (Tabl
Loans Held for Investment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Summary of Loans Held for Investment | The following table summarizes our loans held for investment as of September 30, 2020 (dollars in thousands): Weighted Average Loan Type Outstanding Face Amount Carrying Value (1) Loan Count Fixed Rate (2) Coupon (3) Life (years) (4) September 30, 2020 SFR Loans, held-for-investment $ 861,580 $ 927,632 27 100.00 % 4.91 % 7.60 Mezzanine loan, held-for-investment 7,500 7,500 1 100.00 % 6.50 % 2.75 Preferred equity, held-for-investment 28,877 29,027 4 100.00 % 8.04 % 6.47 $ 897,957 $ 964,159 32 100.00 % 5.03 % 7.53 (1) Carrying value includes the outstanding face amount plus unamortized purchase premiums/discounts and any allowance for loan losses. (2) The weighted-average fixed rate is weighted on current principal balance. (3) The weighted-average coupon is weighted on current principal balance. (4) The weighted-average life is weighted on current principal balance and assumes no prepayments. The maturity date for preferred equity investments represents the maturity date of the senior mortgage, as the preferred equity investments require repayment upon the sale or refinancing of the asset. |
Summary of Loan and Preferred Equity Portfolio Activity | For the nine months ended September 30, 2020, the loan and preferred equity portfolio activity was as follows (in thousands): Held-for-Investment Total Balance at December 31, 2019 $ — $ — Contributions from noncontrolling interests in the OP 967,202 967,202 Originations 7,500 7,500 Proceeds from principal repayments (1,987 ) (1,987 ) Proceeds from redemption of mezzanine loan, net (3,221 ) (3,221 ) Amortization of loan premium, net (1) (5,056 ) (5,056 ) Loan loss provision, net (2) (279 ) (279 ) Balance at September 30, 2020 $ 964,159 $ 964,159 (1) Includes net amortization of loan purchase premiums. (2) Based on management’s judgment and estimate of credit losses. See Note 2 for additional information. |
Principal Balance and Net Book Value of Loan Portfolio Based on Internal Risk Ratings | The following table allocates the principal balance and net book value of the loan portfolio based on our internal risk ratings (dollars in thousands): September 30, 2020 Number of Carrying % of Loan Risk Rating Loans Value Portfolio 1 — $ — — 2 — — — 3 32 964,159 100.00 % 4 — — — 5 — — — 32 $ 964,159 100.00 % |
Summary of Loans Held for Investment as Percentage of Loans Face Amount | The following tables present the geographies and property types of collateral underlying the Company’s loans held-for-investment as a percentage of the loans’ face amounts: Geography September 30, 2020 Georgia 43.44 % Florida 21.98 % Texas 8.52 % Minnesota 5.21 % Alabama 4.15 % New Jersey 2.00 % Maryland 1.90 % North Carolina 1.88 % Mississippi 1.13 % Michigan 1.06 % Oklahoma 1.04 % Tennessee 0.97 % Connecticut 0.92 % Missouri 0.83 % New York 0.71 % Illinois 0.70 % Nebraska 0.64 % Virginia 0.63 % Massachusetts 0.60 % Ohio 0.50 % Indiana 0.49 % South Carolina 0.08 % Pennsylvania 0.25 % Kentucky 0.22 % Arkansas 0.15 % 100.00 % Collateral Property Type September 30, 2020 Single Family Rental 95.95 % Multifamily 4.05 % 100.00 % |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Company's Financing Arrangements | The following table summarizes the Company’s financing arrangements in place as of September 30, 2020: September 30, 2020 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) Apr 2020 160,212 160,212 N/A (5) 2.45 % 0.04 1,960,129 317,050 305,709 10.8 Asset Specific Financing Single Family Rental Freddie Mac 7/12/2019 786,939 786,939 7/12/2029 2.44 % 7.6 861,580 927,632 927,632 7.6 Total/weighted average $ 947,151 $ 947,151 2.44 % 6.33 $ 2,821,709 $ 1,244,682 $ 1,233,341 9.84 (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) Assets are shown at fair value. (4) In April 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 tenor and are expected to roll monthly. |
Schedule of Outstanding Principal Balances Related to SFR Loans | As of September 30, 2020, the outstanding principal balances related to the SFR 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 $ 465,689 Various Single-family Fixed 2.24 % 9/1/2028 Senior loan 2/11/2020 9,236 Various Single-family Fixed 3.51 % 2/1/2028 Senior loan 2/11/2020 4,945 Various Single-family Fixed 2.48 % 8/1/2023 Senior loan 2/11/2020 9,633 Various Single-family Fixed 2.79 % 9/1/2028 Senior loan 2/11/2020 6,904 Various Single-family Fixed 2.69 % 7/1/2028 Senior loan 2/11/2020 5,199 Various Single-family Fixed 2.64 % 10/1/2028 Senior loan 2/11/2020 11,252 Various Single-family Fixed 3.02 % 10/1/2028 Senior loan 2/11/2020 5,795 Various Single-family Fixed 2.87 % 9/1/2023 Senior loan 2/11/2020 7,664 Various Single-family Fixed 3.02 % 11/1/2028 Senior loan 2/11/2020 46,146 Various Single-family Fixed 2.14 % 10/1/2025 Senior loan 2/11/2020 8,922 Various Single-family Fixed 3.30 % 10/1/2028 Senior loan 2/11/2020 35,955 Various Single-family Fixed 2.70 % 11/1/2028 Senior loan 2/11/2020 5,933 Various Single-family Fixed 2.68 % 11/1/2028 Senior loan 2/11/2020 13,603 Various Single-family Fixed 2.61 % 11/1/2023 Senior loan 2/11/2020 5,346 Various Single-family Fixed 3.14 % 12/1/2028 Senior loan 2/11/2020 9,502 Various Single-family Fixed 3.02 % 12/1/2028 Senior loan 2/11/2020 9,971 Various Single-family Fixed 2.77 % 12/1/2028 Senior loan 2/11/2020 4,899 Various Single-family Fixed 2.97 % 1/1/2029 Senior loan 2/11/2020 8,417 Various Single-family Fixed 3.14 % 1/1/2029 Senior loan 2/11/2020 5,834 Various Single-family Fixed 2.40 % 2/1/2024 Senior loan 2/11/2020 4,279 Various Single-family Fixed 3.06 % 2/1/2029 Senior loan 2/11/2020 16,076 Various Single-family Fixed 2.91 % 2/1/2029 Senior loan 2/11/2020 7,017 Various Single-family Fixed 2.98 % 2/1/2029 Senior loan 2/11/2020 7,298 Various Single-family Fixed 2.80 % 2/1/2029 Senior loan 2/11/2020 6,150 Various Single-family Fixed 2.99 % 3/1/2029 Senior loan 2/11/2020 9,284 Various Single-family Fixed 2.45 % 3/1/2026 Senior loan 2/11/2020 55,988 Various Single-family Fixed 2.70 % 3/1/2029 Total $ 786,939 2.44 % |
Activity Related to Carrying Value of Secured Financing Agreements and Master Repurchase Agreements | For the nine months ended September 30, 2020, the activity related to the carrying value of the secured financing agreements and master repurchase agreements were as follows (in thousands): Balances as of December 31, 2019 $ — Assumption of debt 788,764 Principal borrowings 160,379 Principal repayments (1,992 ) Balances as of September 30, 2020 $ 947,151 |
Summary of Aggregate Scheduled Maturities of Total Debt | The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to September 30, 2020 are as follows (in thousands): Year Non-recourse Total 2020¹ $ (160,212 ) $ (160,212 ) 2021 — — 2022 — — 2023 (24,343 ) (24,343 ) 2024 (5,834 ) (5,834 ) Thereafter (756,762 ) (756,762 ) $ (947,151 ) $ (947,151 ) (1) The transactions in place in the master repurchase agreement with Mizuho have a one-month tenor and are expected to roll monthly. |
CMBS Trusts (Tables)
CMBS Trusts (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Statement Of Financial Position [Abstract] | |
Schedule of Recognized Trusts Assets and Liabilities | The following table presents the Company’s recognized Trust’s Assets and Liabilities (in thousands): Trust's Assets September 30, 2020 Mortgage loans held in variable interest entities, at fair value $ 5,094,579 Accrued interest receivable 917 Trust's Liabilities Bonds payable held in variable interest entities, at fair value (4,825,943 ) Accrued interest payable (674 ) |
Schedule of Change in Net Assets Related to Consolidated CMBS Variable Interest Entities | The following table presents “Change in net assets related to consolidated CMBS variable interest entities” (in thousands): For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 Net interest earned $ 5,017 $ 10,024 Unrealized loss 3,903 (11,231 ) Change in net assets related to consolidated CMBS variable interest entities $ 8,920 $ (1,207 ) |
Schedule of Geographies and Property Types of Collateral Underlying the CMBS Trusts as Percentage of Collateral Unpaid Principal Balance | The following tables present the geographies and property types of collateral underlying the CMBS trusts consolidated by the Company as a percentage of the collateral unpaid principal balance: Geography September 30, 2020 Collateral Property Type September 30, 2020 Florida 16.59 % Multifamily 98.32 % Texas 15.13 % Manufactured Housing 1.68 % Arizona 11.96 % 100.00 % California 8.14 % Georgia 7.81 % Washington 5.79 % Nevada 4.55 % New Jersey 3.69 % New York 2.98 % Pennsylvania 2.94 % Indiana 2.16 % Colorado 2.02 % Virginia 1.90 % Ohio 1.80 % North Carolina 1.77 % Tennessee 1.29 % Utah 1.19 % Maryland 1.18 % Missouri 1.07 % South Carolina 0.96 % Louisiana 0.88 % Oklahoma 0.75 % Oregon 0.73 % Dist. of Columbia 0.48 % Kansas 0.47 % Illinois 0.31 % Iowa 0.30 % Kentucky 0.26 % Alabama 0.24 % Connecticut 0.15 % Minnesota 0.14 % Mississippi 0.14 % Wyoming 0.10 % Nebraska 0.08 % Wisconsin 0.06 % 100.00 % |
Preferred Stock (Tables)
Preferred Stock (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders Equity Note [Abstract] | |
Schedule of Preferred Stock Investments | The following table presents the preferred stock investments as of September 30, 2020 (in thousands, except share amounts): Investment Investment Date Shares Carrying Value (1) Property Type Interest Rate (2) Maturity Date Preferred Stock Jernigan Capital 2/11/2020 41,254 $ 41,517 Self-storage 7.00 % 12/31/2021 (1) Carrying value includes an unamortized purchase premium of approximately $0.3 million. (2) Represents the 7% cash dividend and excludes the effect of the quarterly stock dividend. |
Schedule of Activity Related to Preferred Stock Investments | The following table presents activity related to the Company’s preferred stock (in thousands): For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 Dividend income $ 1,363 $ 3,695 Amortization of premium on preferred stock investment (58 ) (138 ) $ 1,305 $ 3,557 |
CMBS Structured Pass Through _2
CMBS Structured Pass Through Certificates (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Mortgage Loans On Real Estate [Abstract] | |
Summary of CMBS I/O Strips | The following table presents the CMBS I/O Strips as of September 30, 2020 (in thousands): Investment Investment Date Carrying Value Property Type Interest Rate Current Yield Maturity Date CMBS I/O Strips CMBS I/O Strip 4/15/2020 $ 929 Multifamily 3.52 % 12.66 % 1/25/2037 CMBS I/O Strip 4/15/2020 862 Multifamily 3.03 % 13.25 % 12/25/2037 CMBS I/O Strip 5/18/2020 2,526 Multifamily 2.09 % 14.90 % 9/25/2046 CMBS I/O Strip 8/6/2020 8,913 Multifamily 0.10 % 13.18 % 6/25/2030 CMBS I/O Strip 8/6/2020 1,882 Multifamily 0.10 % 14.19 % 6/25/2030 CMBS I/O Strip 8/6/2020 24,733 Multifamily 3.09 % 13.49 % 5/25/2048 Total $ 39,845 |
Schedule of Activity Related to CMBS I/O Strips | The following table presents activity related to the Company’s CMBS I/O Strips (in thousands): For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 Interest income $ 441 $ 521 Change in unrealized gain on CMBS structured pass through certificates (200 ) 101 $ 241 $ 622 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Fair Values of Financial Assets and Liabilities Recorded at Fair Value on a Recurring Basis | The carrying values and fair values of the Company’s financial assets and liabilities recorded at fair value on a recurring basis, as well as other financial instruments not carried at fair value as of September 30, 2020 (in thousands): Fair Value Carrying Value Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 17,964 $ 17,964 $ — $ — $ 17,964 Loans, held-for-investment, net 36,527 — — 38,934 38,934 Preferred stock 41,517 — — 42,628 42,628 Mortgage loans, held-for-investment, net 927,632 — — 916,363 916,363 Accrued interest and dividends 6,838 6,838 — — 6,838 Mortgage loans held in variable interest entities, at fair value 5,094,579 — 5,094,579 — 5,094,579 CMBS structured pass through certificates, at fair value 39,845 — 39,845 — 39,845 Other assets 749 749 — — 749 $ 6,165,651 $ 25,551 $ 5,134,424 $ 997,924 $ 6,157,899 Liabilities Secured financing agreements, net $ 786,939 $ — $ — $ 811,739 $ 811,739 Master repurchase agreements 160,212 — — 160,212 160,212 Accounts payable and other accrued liabilities 2,336 2,336 — — 2,336 Accrued interest payable 1,201 1,201 — — 1,201 Bonds payable held in variable interest entities, at fair value 4,825,943 — 4,825,943 — 4,825,943 $ 5,776,631 $ 3,537 $ 4,825,943 $ 971,951 $ 5,801,431 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Summary of Number of Restricted Stock Units Granted, Vested, Forfeited and Outstanding | The following table includes the number of restricted stock units granted, vested, forfeited and outstanding as of September 30, 2020: 2020 Number of Units Weighted Average Grant Date Fair Value Outstanding January 1, 2020 — $ — Granted 289,013 12.11 Vested — — Forfeited — — Outstanding September 30, 2020 289,013 $ 12.11 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings (Loss) Per Share | The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods presented (in thousands, except per share amounts): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2020 Numerator for earnings (loss) per share: Net income (loss) $ 11,541 $ 7,946 Preferred stock dividends 874 874 Net income attributable to redeemable noncontrolling interests 7,805 5,293 Net income attributable to common stockholders $ 2,862 $ 1,779 Denominator for earnings (loss) per share: Weighted-average common shares outstanding 5,261 5,253 Denominator for basic earnings per share 5,261 5,253 Weighted-average unvested restricted stock units 289 126 Denominator for diluted earnings per share 5,550 5,379 Earnings (loss) per weighted average common share: Basic $ 0.54 $ 0.34 Diluted $ 0.52 $ 0.33 |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Schedule of Redeemable Noncontrolling Interests | The following table sets forth the redeemable noncontrolling interests in the OP (reflecting the OP’s consolidation of the Sub OPs) for the nine months ended September 30, 2020 (in thousands): Redeemable noncontrolling interests in the OP, December 31, 2019 $ — Contributions from redeemable noncontrolling interests in the OP 273,410 Net income attributable to redeemable noncontrolling interests in the OP 5,293 Distributions to redeemable noncontrolling interests in the OP (13,548 ) Redeemable noncontrolling interests in the OP, September 30, 2020 $ 265,155 On July 20, 2020, in connection with the anticipated issuance by the Company of the Series A Preferred Stock, the OP, following the direction and approval of the Board, amended the partnership agreement of the OP to provide for the issuance of 8.50% Series A Cumulative Redeemable Preferred Units (liquidation preference $25.00 per unit) (the “Series A Preferred Units”). The Company contributed the net proceeds from the sale of the Series A Preferred Stock in the Preferred Stock Offering to the OP in exchange for the same number of Series A Preferred Units. The Series A Preferred Units have economic terms that are substantially the same as the terms of the Series A Preferred Stock. The Series A Preferred Units rank, as to distributions and upon liquidation, senior to OP Units. |
Organization and Description _2
Organization and Description of Business - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate Properties [Line Items] | |
Date of incorporation | Jun. 7, 2019 |
OP | |
Real Estate Properties [Line Items] | |
Limited partner ownership percentage | 50.28% |
OP | Two Subsidiary Partnerships | |
Real Estate Properties [Line Items] | |
Limited partner ownership percentage | 27.78% |
OP | One Subsidiary Partnerships | |
Real Estate Properties [Line Items] | |
Limited partner ownership percentage | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2020USD ($)Loan | |
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of loan unpaid principal balance outstanding | 2.44% | 2.44% | |
OTTI related to investment in debt securities held-to-maturity | $ 0 | $ 0 | |
Minimum percentage of distributed taxable income to qualify as REIT | 90.00% | ||
Unrecognized tax benefit or expense, accrued interest or penalties | $ 0 | $ 0 | |
Increase in investing cash inflows | (110,112,000) | ||
Increase in financing cash outflows | $ 107,042,000 | ||
Restatement Adjustment | CMBS Trusts | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Increase in investing cash inflows | $ 28,200,000 | ||
Increase in financing cash outflows | 28,200,000 | ||
Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Loans delinquency period | 120 days | ||
Percentage of uncertain tax positions likelihood of being sustained | 50.00% | ||
OP | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Limited partner ownership percentage | 50.28% | ||
CMBS Trusts | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Variable interest entity, ownership percentage | 100.00% | ||
CMBS B-Piece Investments | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of forbearance requests on loan | Loan | 2 | ||
Percentage of loan unpaid principal balance outstanding | 0.80% | 0.80% | |
CMBS B-Piece Investments | Restatement Adjustment | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Omitted non-cash increases in mortgage loans and bonds payable held in variable interest entities | $ 48,000,000 | ||
SFR Loans | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of forbearance requests on loan | Loan | 9 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Par Values, Fair Values and Purchase Premiums (Discounts) of Initial Portfolio (Details) $ in Thousands | Feb. 11, 2020USD ($) |
Par Value | |
Assets | |
Cash | $ 302 |
Loans, held-for-investment, net | 22,127 |
Preferred stock | 40,000 |
Mortgage loans, held-for-investment, net | 863,564 |
Accrued interest and dividends | 3,616 |
Mortgage loans held in variable interest entities, at fair value | 1,790,228 |
Assets | 2,719,837 |
Liabilities | |
Credit facility | 788,764 |
Bridge facility | 95,000 |
Bonds payable held in variable interest entities, at fair value | 1,655,960 |
Liabilities | 2,539,724 |
Total contributions | 180,113 |
Fair Value | |
Assets | |
Cash | 302 |
Loans, held-for-investment, net | 22,282 |
Preferred stock | 40,400 |
Mortgage loans, held-for-investment, net | 934,918 |
Accrued interest and dividends | 3,616 |
Mortgage loans held in variable interest entities, at fair value | 1,790,135 |
Assets | 2,791,653 |
Liabilities | |
Credit facility | 788,764 |
Bridge facility | 95,000 |
Bonds payable held in variable interest entities, at fair value | 1,655,960 |
Liabilities | 2,539,724 |
Total contributions | 251,929 |
Premium (Discount) | |
Assets | |
Loans, held-for-investment, net | 155 |
Preferred stock | 400 |
Mortgage loans, held-for-investment, net | 71,354 |
Mortgage loans held in variable interest entities, at fair value | (93) |
Assets | 71,816 |
Liabilities | |
Total contributions | $ 71,816 |
Loans Held for Investment - Sum
Loans Held for Investment - Summary of Loans Held for Investment (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($)Loan | |
Accounts Notes And Loans Receivable [Line Items] | |
Outstanding Face Amount | $ 897,957 |
Carrying Value | $ 964,159 |
Loan Count | Loan | 32 |
Weighted Average Fixed Rate | 100.00% |
Weighted Average Coupon | 5.03% |
Weighted Average Life (years) | 7 years 6 months 10 days |
SFR Loans Held-For-Investment | |
Accounts Notes And Loans Receivable [Line Items] | |
Outstanding Face Amount | $ 861,580 |
Carrying Value | $ 927,632 |
Loan Count | Loan | 27 |
Weighted Average Fixed Rate | 100.00% |
Weighted Average Coupon | 4.91% |
Weighted Average Life (years) | 7 years 7 months 6 days |
Mezzanine Loan Held-For-Investment | |
Accounts Notes And Loans Receivable [Line Items] | |
Outstanding Face Amount | $ 7,500 |
Carrying Value | $ 7,500 |
Loan Count | Loan | 1 |
Weighted Average Fixed Rate | 100.00% |
Weighted Average Coupon | 6.50% |
Weighted Average Life (years) | 2 years 9 months |
Preferred Equity, Held-for-Investment | |
Accounts Notes And Loans Receivable [Line Items] | |
Outstanding Face Amount | $ 28,877 |
Carrying Value | $ 29,027 |
Loan Count | Loan | 4 |
Weighted Average Fixed Rate | 100.00% |
Weighted Average Coupon | 8.04% |
Weighted Average Life (years) | 6 years 5 months 19 days |
Loans Held for Investment - S_2
Loans Held for Investment - Summary of Loan and Preferred Equity Portfolio Activity (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Accounts Notes And Loans Receivable [Line Items] | |
Contributions from noncontrolling interests in the OP | $ 967,202 |
Originations | 7,500 |
Proceeds from principal repayments | (1,987) |
Proceeds from redemption of mezzanine loan, net | (3,221) |
Amortization of loan premium, net | (5,056) |
Loan loss provision, net | (279) |
Balance at September 30, 2020 | 964,159 |
Held-For-Investment | |
Accounts Notes And Loans Receivable [Line Items] | |
Contributions from noncontrolling interests in the OP | 967,202 |
Originations | 7,500 |
Proceeds from principal repayments | (1,987) |
Proceeds from redemption of mezzanine loan, net | (3,221) |
Amortization of loan premium, net | (5,056) |
Loan loss provision, net | (279) |
Balance at September 30, 2020 | $ 964,159 |
Loans Held for Investment - Add
Loans Held for Investment - Additional Information (Details) $ in Millions | Sep. 30, 2020USD ($) |
Accounts Notes Loans And Financing Receivable Gross Allowance And Net [Abstract] | |
Unamortized premiums on loans held-for-investment | $ 66.5 |
Loans Held for Investment - Pri
Loans Held for Investment - Principal Balance and Net Book Value of Loan Portfolio Based on Internal Risk Ratings (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($)Loan | |
Accounts Notes And Loans Receivable [Line Items] | |
Number of Loans | Loan | 32 |
Carrying Value | $ | $ 964,159 |
% of Loan Portfolio | 100.00% |
Risk Rating 3 | |
Accounts Notes And Loans Receivable [Line Items] | |
Number of Loans | Loan | 32 |
Carrying Value | $ | $ 964,159 |
% of Loan Portfolio | 100.00% |
Loans Held for Investment - S_3
Loans Held for Investment - Summary of Loans Held for Investment as Percentage of Loans Face Amount (Details) | Sep. 30, 2020 |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 100.00% |
Single Family Rental | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 95.95% |
Multifamily | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 4.05% |
Georgia | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 43.44% |
Florida | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 21.98% |
Texas | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 8.52% |
Minnesota | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 5.21% |
Alabama | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 4.15% |
New Jersey | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 2.00% |
Maryland | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 1.90% |
North Carolina | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 1.88% |
Mississippi | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 1.13% |
Michigan | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 1.06% |
Oklahoma | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 1.04% |
Tennessee | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.97% |
Connecticut | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.92% |
Missouri | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.83% |
New York | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.71% |
Illinois | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.70% |
Nebraska | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.64% |
Virginia | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.63% |
Massachusetts | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.60% |
Ohio | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.50% |
Indiana | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.49% |
South Carolina | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.08% |
Pennsylvania | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.25% |
Kentucky | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.22% |
Arkansas | |
Accounts Notes And Loans Receivable [Line Items] | |
Percent of loans held for investment | 0.15% |
Debt - Summary of Financing Arr
Debt - Summary of Financing Arrangements (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($) | ||
Asset Specific Financing | Facility | ||
Debt Instrument [Line Items] | ||
Outstanding face amount | $ 947,151 | |
Carrying value | $ 947,151 | |
Weighted average interest rate | 2.44% | [1] |
Weighted average life (years) | 6 years 3 months 29 days | [2] |
Asset Specific Financing | Collateral | ||
Debt Instrument [Line Items] | ||
Outstanding face amount | $ 2,821,709 | |
Amortized cost basis | 1,244,682 | |
Carrying value | $ 1,233,341 | [3] |
Weighted average life (years) | 9 years 10 months 2 days | [2] |
Mizuho | Master Repurchase Agreements | Facility | CMBS | ||
Debt Instrument [Line Items] | ||
Date issued | Apr. 30, 2020 | [4] |
Outstanding face amount | $ 160,212 | [4] |
Carrying value | $ 160,212 | [4] |
Weighted average interest rate | 2.45% | [1],[4] |
Weighted average life (years) | 14 days | [2],[4] |
Mizuho | Master Repurchase Agreements | Collateral | CMBS | ||
Debt Instrument [Line Items] | ||
Outstanding face amount | $ 1,960,129 | [4] |
Amortized cost basis | 317,050 | [4] |
Carrying value | $ 305,709 | [3],[4] |
Weighted average life (years) | 10 years 9 months 18 days | [2],[4] |
Freddie Mac | Asset Specific Financing | Facility | ||
Debt Instrument [Line Items] | ||
Date issued | Jul. 12, 2019 | |
Outstanding face amount | $ 786,939 | |
Carrying value | $ 786,939 | |
Final stated maturity | Jul. 12, 2029 | |
Weighted average interest rate | 2.44% | [1] |
Weighted average life (years) | 7 years 7 months 6 days | [2] |
Freddie Mac | Asset Specific Financing | Collateral | ||
Debt Instrument [Line Items] | ||
Outstanding face amount | $ 861,580 | |
Amortized cost basis | 927,632 | |
Carrying value | $ 927,632 | [3] |
Weighted average life (years) | 7 years 7 months 6 days | [2] |
[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] | Assets are shown at fair value. | |
[4] | In April 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. |
Debt - Additional Information (
Debt - Additional Information (Details) | Aug. 07, 2020USD ($) | Jul. 30, 2020USD ($) | Feb. 07, 2020USD ($) | Jul. 12, 2019USD ($)Subsidiary | Sep. 30, 2020USD ($) | Feb. 11, 2020USD ($) |
Debt Instrument [Line Items] | ||||||
Amount borrowed under credit Facility | $ 160,379,000 | |||||
Remaining outstanding balance | 786,939,000 | |||||
Raymond James, Bank, N.A. | ||||||
Debt Instrument [Line Items] | ||||||
Bridge facility | $ 86,000,000 | |||||
Drawn from bridge facility | $ 65,000,000 | $ 21,000,000 | ||||
KeyBank | ||||||
Debt Instrument [Line Items] | ||||||
Bridge facility | $ 95,000,000 | |||||
Drawn from bridge facility | $ 95,000,000 | |||||
Repurchase Agreements | CMBS | ||||||
Debt Instrument [Line Items] | ||||||
Amount borrowed under credit Facility | 160,200,000 | |||||
Repurchase Agreements | CMBS B-Piece and CMBS I/O Strip Investments | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, outstanding amount | 1,960,100,000 | |||||
Loan and Security Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Number of subsidiaries | Subsidiary | 2 | |||||
Amount borrowed under credit Facility | $ 788,800,000 | |||||
Remaining outstanding balance | $ 788,800,000 | |||||
Additional borrowings under credit facility | $ 0 | |||||
Credit facility, maturity date | Jul. 12, 2029 | |||||
Loan and Security Agreement | Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, outstanding amount | $ 786,900,000 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Principal Balances Related to SFR Loans (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Debt Instrument [Line Items] | |
Outstanding Principal Balance | $ 786,939 |
Interest Rate | 2.44% |
Senior Loan | Single Family Rental | Debt Instrument One | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 465,689 |
Interest Type | Fixed |
Interest Rate | 2.24% |
Maturity Date | Sep. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Two | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 9,236 |
Interest Type | Fixed |
Interest Rate | 3.51% |
Maturity Date | Feb. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Three | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 4,945 |
Interest Type | Fixed |
Interest Rate | 2.48% |
Maturity Date | Aug. 1, 2023 |
Senior Loan | Single Family Rental | Debt Instrument Four | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 9,633 |
Interest Type | Fixed |
Interest Rate | 2.79% |
Maturity Date | Sep. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Five | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 6,904 |
Interest Type | Fixed |
Interest Rate | 2.69% |
Maturity Date | Jul. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Six | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 5,199 |
Interest Type | Fixed |
Interest Rate | 2.64% |
Maturity Date | Oct. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Seven | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 11,252 |
Interest Type | Fixed |
Interest Rate | 3.02% |
Maturity Date | Oct. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Eight | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 5,795 |
Interest Type | Fixed |
Interest Rate | 2.87% |
Maturity Date | Sep. 1, 2023 |
Senior Loan | Single Family Rental | Debt Instrument Nine | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 7,664 |
Interest Type | Fixed |
Interest Rate | 3.02% |
Maturity Date | Nov. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Ten | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 46,146 |
Interest Type | Fixed |
Interest Rate | 2.14% |
Maturity Date | Oct. 1, 2025 |
Senior Loan | Single Family Rental | Debt Instrument Eleven | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 8,922 |
Interest Type | Fixed |
Interest Rate | 3.30% |
Maturity Date | Oct. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Twelve | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 35,955 |
Interest Type | Fixed |
Interest Rate | 2.70% |
Maturity Date | Nov. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Thirteen | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 5,933 |
Interest Type | Fixed |
Interest Rate | 2.68% |
Maturity Date | Nov. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Fourteen | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 13,603 |
Interest Type | Fixed |
Interest Rate | 2.61% |
Maturity Date | Nov. 1, 2023 |
Senior Loan | Single Family Rental | Debt Instrument Fifteen | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 5,346 |
Interest Type | Fixed |
Interest Rate | 3.14% |
Maturity Date | Dec. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Sixteen | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 9,502 |
Interest Type | Fixed |
Interest Rate | 3.02% |
Maturity Date | Dec. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Seventeen | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 9,971 |
Interest Type | Fixed |
Interest Rate | 2.77% |
Maturity Date | Dec. 1, 2028 |
Senior Loan | Single Family Rental | Debt Instrument Eighteen | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 4,899 |
Interest Type | Fixed |
Interest Rate | 2.97% |
Maturity Date | Jan. 1, 2029 |
Senior Loan | Single Family Rental | Debt Instrument Nineteen | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 8,417 |
Interest Type | Fixed |
Interest Rate | 3.14% |
Maturity Date | Jan. 1, 2029 |
Senior Loan | Single Family Rental | Debt Instrument Twenty | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 5,834 |
Interest Type | Fixed |
Interest Rate | 2.40% |
Maturity Date | Feb. 1, 2024 |
Senior Loan | Single Family Rental | Debt Instrument Twenty One | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 4,279 |
Interest Type | Fixed |
Interest Rate | 3.06% |
Maturity Date | Feb. 1, 2029 |
Senior Loan | Single Family Rental | Debt Instrument Twenty Two | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 16,076 |
Interest Type | Fixed |
Interest Rate | 2.91% |
Maturity Date | Feb. 1, 2029 |
Senior Loan | Single Family Rental | Debt Instrument Twenty Three | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 7,017 |
Interest Type | Fixed |
Interest Rate | 2.98% |
Maturity Date | Feb. 1, 2029 |
Senior Loan | Single Family Rental | Debt Instrument Twenty Four | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 7,298 |
Interest Type | Fixed |
Interest Rate | 2.80% |
Maturity Date | Feb. 1, 2029 |
Senior Loan | Single Family Rental | Debt Instrument Twenty Five | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 6,150 |
Interest Type | Fixed |
Interest Rate | 2.99% |
Maturity Date | Mar. 1, 2029 |
Senior Loan | Single Family Rental | Debt Instrument Twenty Six | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 9,284 |
Interest Type | Fixed |
Interest Rate | 2.45% |
Maturity Date | Mar. 1, 2026 |
Senior Loan | Single Family Rental | Debt Instrument Twenty Seven | |
Debt Instrument [Line Items] | |
Investment Date | Feb. 11, 2020 |
Outstanding Principal Balance | $ 55,988 |
Interest Type | Fixed |
Interest Rate | 2.70% |
Maturity Date | Mar. 1, 2029 |
Debt - Activity Related to Carr
Debt - Activity Related to Carrying Value of Secured Financing Agreements and Master Repurchase Agreements (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Debt Instrument [Line Items] | |
Principal borrowings | $ 160,379 |
Principal repayments | (167) |
Balances as of September 30, 2020 | 786,939 |
Secured Financing Agreements and Master Repurchase Agreements | |
Debt Instrument [Line Items] | |
Principal borrowings | 160,379 |
Principal repayments | (1,992) |
Balances as of September 30, 2020 | 947,151 |
Secured Financing Agreements and Master Repurchase Agreements | SFR Loans | |
Debt Instrument [Line Items] | |
Principal borrowings | $ 788,764 |
Debt - Summary of Aggregate Sch
Debt - Summary of Aggregate Scheduled Maturities of Total Debt (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Instrument [Line Items] | |
2020¹ | $ (160,212) |
2023 | (24,343) |
2024 | (5,834) |
Thereafter | (756,762) |
Total debt | (947,151) |
Non-recourse | |
Debt Instrument [Line Items] | |
2020¹ | (160,212) |
2023 | (24,343) |
2024 | (5,834) |
Thereafter | (756,762) |
Total debt | $ (947,151) |
CMBS Trusts - Schedule of Recog
CMBS Trusts - Schedule of Recognized Trust's Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Mortgage loans held in variable interest entities, at fair value | $ 5,094,579 | |
CMBS Trusts | ||
ASSETS | ||
Mortgage loans held in variable interest entities, at fair value | 5,094,579 | |
Accrued interest receivable | 917 | |
Liabilities: | ||
Bonds payable held in variable interest entities, at fair value | (4,825,943) | |
Accrued interest payable | $ (674) |
CMBS Trusts - Schedule of Chang
CMBS Trusts - Schedule of Change in Net Assets Related to Consolidated CMBS Variable Interest Entities (Details) - CMBS Variable Interest Entities - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Net interest earned | $ 5,017 | $ 10,024 |
Unrealized loss | 3,903 | (11,231) |
Change in net assets related to consolidated CMBS variable interest entities | $ 8,920 | $ (1,207) |
CMBS Trusts - Schedule of Geogr
CMBS Trusts - Schedule of Geographies and Property Types of Collateral Underlying the CMBS Trusts as Percentage of Collateral Unpaid Principal Balance (Details) - CMBS Trusts | Sep. 30, 2020 |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 100.00% |
Multifamily | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 98.32% |
Manufactured Housing | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 1.68% |
Florida | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 16.59% |
Texas | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 15.13% |
Arizona | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 11.96% |
California | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 8.14% |
Georgia | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 7.81% |
Washington | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 5.79% |
Nevada | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 4.55% |
New Jersey | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 3.69% |
New York | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 2.98% |
Pennsylvania | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 2.94% |
Indiana | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 2.16% |
Colorado | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 2.02% |
Virginia | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 1.90% |
Ohio | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 1.80% |
North Carolina | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 1.77% |
Tennessee | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 1.29% |
Utah | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 1.19% |
Maryland | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 1.18% |
Missouri | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 1.07% |
South Carolina | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.96% |
Louisiana | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.88% |
Oklahoma | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.75% |
Oregon | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.73% |
Dist. of Columbia | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.48% |
Kansas | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.47% |
Illinois | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.31% |
Iowa | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.30% |
Kentucky | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.26% |
Alabama | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.24% |
Connecticut | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.15% |
Minnesota | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.14% |
Mississippi | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.14% |
Wyoming | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.10% |
Nebraska | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.08% |
Wisconsin | |
Financing Receivable Impaired [Line Items] | |
Percentage of collateral unpaid principal balance | 0.06% |
Preferred Stock - Additional In
Preferred Stock - Additional Information (Details) - Jernigan Capital, Inc - Preferred Stock Investment - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | |
Class Of Stock [Line Items] | |||||||
Investment shares | 41,254 | 41,254 | |||||
Cash dividend on preferred stock shares investment, percentage | 7.00% | ||||||
Stock dividend on preferred stock shares investment | $ 2,125 | $ 2,125 | $ 2,125 | ||||
Preferred Stock, dividend payment terms | The preferred stock pays a fixed quarterly cash dividend of 7% in addition to a quarterly stock dividend of $2.125 million payable on a pro rata basis to the holders of the preferred stock. | ||||||
Scenario Forecast | |||||||
Class Of Stock [Line Items] | |||||||
Stock dividend on preferred stock shares investment | $ 2,125 | ||||||
Scenario Forecast | Maximum | |||||||
Class Of Stock [Line Items] | |||||||
Stock dividend on preferred stock shares investment | $ 2,125 | $ 2,125 |
Preferred Stock - Schedule of P
Preferred Stock - Schedule of Preferred Stock Investments (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | ||
Class Of Stock [Line Items] | |||
Carrying Value | $ 41,517 | ||
Jernigan Capital, Inc | Preferred Stock Investment | |||
Class Of Stock [Line Items] | |||
Investment Date | Feb. 11, 2020 | ||
Shares | 41,254 | ||
Carrying Value | [1] | $ 41,517 | |
Property Type | Self-storage | ||
Interest Rate | [2] | 7.00% | |
Maturity Date | Dec. 31, 2021 | ||
[1] | Carrying value includes an unamortized purchase premium of approximately $0.3 million. | ||
[2] | Represents the 7% cash dividend and excludes the effect of the quarterly stock dividend. |
Preferred Stock - Schedule of_2
Preferred Stock - Schedule of Preferred Stock Investments (Parenthetical) (Details) $ in Millions | Sep. 30, 2020USD ($) |
Jernigan Capital, Inc | Preferred Stock Investment | |
Class Of Stock [Line Items] | |
Unamortized purchase premium | $ 0.3 |
Preferred Stock - Schedule of A
Preferred Stock - Schedule of Activity Related to Preferred Stock Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Class Of Stock [Line Items] | ||
Dividend income | $ 1,305 | $ 3,557 |
Preferred Stock Investment | ||
Class Of Stock [Line Items] | ||
Dividend income | 1,363 | 3,695 |
Amortization of premium on preferred stock investment | (58) | (138) |
Total | $ 1,305 | $ 3,557 |
CMBS Structured Pass Through _3
CMBS Structured Pass Through Certificates - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020Loan | |
CMBS I/O Strips | |
Mortgage Loans On Real Estate [Line Items] | |
Number of collateralized mortgage obligations at fair value | 6 |
CMBS Structured Pass Through _4
CMBS Structured Pass Through Certificates - Summary of CMBS I/O Strips (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Mortgage Loans On Real Estate [Line Items] | ||
Carrying Value | $ 927,632 | |
CMBS I/O Strips with Maturity Date 1/25/2037 | Multifamily | ||
Mortgage Loans On Real Estate [Line Items] | ||
Investment Date | Apr. 15, 2020 | |
Carrying Value | $ 929 | |
Interest Rate | 3.52% | |
Current Yield | 12.66% | |
Maturity Date | Jan. 25, 2037 | |
CMBS I/O Strips with Maturity Date 12/25/2037 | Multifamily | ||
Mortgage Loans On Real Estate [Line Items] | ||
Investment Date | Apr. 15, 2020 | |
Carrying Value | $ 862 | |
Interest Rate | 3.03% | |
Current Yield | 13.25% | |
Maturity Date | Dec. 25, 2037 | |
CMBS I/O Strips with Maturity Date 9/25/2046 | Multifamily | ||
Mortgage Loans On Real Estate [Line Items] | ||
Investment Date | May 18, 2020 | |
Carrying Value | $ 2,526 | |
Interest Rate | 2.09% | |
Current Yield | 14.90% | |
Maturity Date | Sep. 25, 2046 | |
13.18% CMBS I/O Strips with Maturity Date 6/25/2030 | Multifamily | ||
Mortgage Loans On Real Estate [Line Items] | ||
Investment Date | Aug. 6, 2020 | |
Carrying Value | $ 8,913 | |
Interest Rate | 0.10% | |
Current Yield | 13.18% | |
Maturity Date | Jun. 25, 2030 | |
14.19% CMBS I/O Strips with Maturity Date 6/25/2030 | Multifamily | ||
Mortgage Loans On Real Estate [Line Items] | ||
Investment Date | Aug. 6, 2020 | |
Carrying Value | $ 1,882 | |
Interest Rate | 0.10% | |
Current Yield | 14.19% | |
Maturity Date | Jun. 25, 2030 | |
CMBS I/O Strips with Maturity Date 5/25/2048 | Multifamily | ||
Mortgage Loans On Real Estate [Line Items] | ||
Investment Date | Aug. 6, 2020 | |
Carrying Value | $ 24,733 | |
Interest Rate | 3.09% | |
Current Yield | 13.49% | |
Maturity Date | May 25, 2048 | |
CMBS I/O Strips | ||
Mortgage Loans On Real Estate [Line Items] | ||
Carrying Value | $ 39,845 |
CMBS Structured Pass Through _5
CMBS Structured Pass Through Certificates - Schedule of Activity Related to CMBS I/O Strips (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Mortgage Loans On Real Estate [Line Items] | ||
Interest income | $ 10,492 | $ 26,899 |
Change in unrealized gain on CMBS structured pass through certificates | 8,920 | (1,207) |
CMBS I/O Strips | ||
Mortgage Loans On Real Estate [Line Items] | ||
Interest income | 441 | 521 |
Change in unrealized gain on CMBS structured pass through certificates | (200) | 101 |
Total | $ 241 | $ 622 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Schedule of Carrying Values and Fair Values of Financial Assets and Liabilities Recorded at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Feb. 11, 2020 | Dec. 31, 2019 |
Liabilities | |||
Secured financing agreements, net | $ 786,939 | ||
Carrying Value | |||
Assets | |||
Cash and cash equivalents | $ 302 | ||
Loans, held-for-investment, net | 22,127 | ||
Preferred stock | 40,000 | ||
Mortgage loans, held-for-investment, net | 863,564 | ||
Accrued interest and dividends | 3,616 | ||
Mortgage loans held in variable interest entities, at fair value | 1,790,228 | ||
Assets | 2,719,837 | ||
Liabilities | |||
Bonds payable held in variable interest entities, at fair value | 1,655,960 | ||
Liabilities | $ 2,539,724 | ||
Fair Value Recurring Basis | |||
Assets | |||
Cash and cash equivalents | 17,964 | ||
Loans, held-for-investment, net | 38,934 | ||
Preferred stock | 42,628 | ||
Mortgage loans, held-for-investment, net | 916,363 | ||
Accrued interest and dividends | 6,838 | ||
Mortgage loans held in variable interest entities, at fair value | 5,094,579 | ||
CMBS structured pass through certificates, at fair value | 39,845 | ||
Other assets | 749 | ||
Assets | 6,157,899 | ||
Liabilities | |||
Secured financing agreements, net | 811,739 | ||
Master repurchase agreements | 160,212 | ||
Accounts payable and other accrued liabilities | 2,336 | ||
Accrued interest payable | 1,201 | ||
Bonds payable held in variable interest entities, at fair value | 4,825,943 | ||
Liabilities | 5,801,431 | ||
Fair Value Recurring Basis | Carrying Value | |||
Assets | |||
Cash and cash equivalents | 17,964 | ||
Loans, held-for-investment, net | 36,527 | ||
Preferred stock | 41,517 | ||
Mortgage loans, held-for-investment, net | 927,632 | ||
Accrued interest and dividends | 6,838 | ||
Mortgage loans held in variable interest entities, at fair value | 5,094,579 | ||
CMBS structured pass through certificates, at fair value | 39,845 | ||
Other assets | 749 | ||
Assets | 6,165,651 | ||
Liabilities | |||
Secured financing agreements, net | 786,939 | ||
Master repurchase agreements | 160,212 | ||
Accounts payable and other accrued liabilities | 2,336 | ||
Accrued interest payable | 1,201 | ||
Bonds payable held in variable interest entities, at fair value | 4,825,943 | ||
Liabilities | 5,776,631 | ||
Fair Value Recurring Basis | Level 1 | |||
Assets | |||
Cash and cash equivalents | 17,964 | ||
Accrued interest and dividends | 6,838 | ||
Other assets | 749 | ||
Assets | 25,551 | ||
Liabilities | |||
Accounts payable and other accrued liabilities | 2,336 | ||
Accrued interest payable | 1,201 | ||
Liabilities | 3,537 | ||
Fair Value Recurring Basis | Level 2 | |||
Assets | |||
Mortgage loans held in variable interest entities, at fair value | 5,094,579 | ||
CMBS structured pass through certificates, at fair value | 39,845 | ||
Assets | 5,134,424 | ||
Liabilities | |||
Bonds payable held in variable interest entities, at fair value | 4,825,943 | ||
Liabilities | 4,825,943 | ||
Fair Value Recurring Basis | Level 3 | |||
Assets | |||
Loans, held-for-investment, net | 38,934 | ||
Preferred stock | 42,628 | ||
Mortgage loans, held-for-investment, net | 916,363 | ||
Assets | 997,924 | ||
Liabilities | |||
Secured financing agreements, net | 811,739 | ||
Master repurchase agreements | 160,212 | ||
Liabilities | $ 971,951 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) | Sep. 28, 2020 | Aug. 04, 2020 | Jul. 27, 2020 | Jul. 24, 2020 | Jul. 20, 2020 | Jun. 24, 2020 | May 08, 2020 | Mar. 09, 2020 | Feb. 11, 2020 | Jan. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Class Of Stock [Line Items] | |||||||||||||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||
Common stock, shares, issued | 5,350,000 | 5,350,000 | 10 | ||||||||||
Common stock, shares, outstanding | 5,236,489 | 5,236,489 | 10 | ||||||||||
Share repurchase program, authorized amount | $ 10,000,000 | ||||||||||||
Stock repurchase program, expiration date | Mar. 9, 2022 | ||||||||||||
Stock repurchase program period in force | 2 years | ||||||||||||
Share repurchase program, treasury stock shares | 113,511 | ||||||||||||
Share repurchase program, treasury stock, value | $ 377,000 | $ 1,716,000 | |||||||||||
Share repurchase program, treasury stock, per share | $ 15.11 | ||||||||||||
Treasury stock, common, shares | 113,511 | 113,511 | |||||||||||
Restricted Stock Units | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Restricted stock units granted | 289,013 | ||||||||||||
Common Stock | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Number of shares issued/sold | 5,350,000 | ||||||||||||
Gross proceeds from IPO | $ 91,488,000 | ||||||||||||
Share repurchase program, treasury stock shares | 26,045 | 113,511 | |||||||||||
Share repurchase program, treasury stock, value | $ 1,000 | ||||||||||||
Dividends payable, amount per share | $ 0.40 | ||||||||||||
Dividends payable date declared | Jul. 27, 2020 | ||||||||||||
Dividend payable date to be paid | Sep. 30, 2020 | ||||||||||||
Preferred Stock | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Gross proceeds from IPO | $ 46,081,000 | ||||||||||||
Dividends payable, amount per share | $ 0.53125 | ||||||||||||
Dividends payable date declared | Sep. 28, 2020 | ||||||||||||
Dividend payable date to be paid | Oct. 26, 2020 | ||||||||||||
2020 LTIP | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Common stock, par value | $ 0.01 | ||||||||||||
2020 LTIP | Restricted Stock Units | Directors | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Restricted stock units granted | 14,739 | ||||||||||||
2020 LTIP | Restricted Stock Units | Officers and Other Employees | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Restricted stock units granted | 274,274 | ||||||||||||
2020 LTIP | Restricted Stock Units | Minimum | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Vesting period | 3 years | ||||||||||||
2020 LTIP | Restricted Stock Units | Maximum [Member] | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Vesting period | 5 years | ||||||||||||
2020 LTIP | Common Stock | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Number of shares issued under the plan | 1,319,734 | ||||||||||||
Series A Cumulative Redeemable Preferred Stock | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Cash dividend on preferred stock shares investment, percentage | 850.00% | ||||||||||||
Preferred stock, liquidation preference per share | $ 25 | ||||||||||||
IPO | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Number of shares issued/sold | 5,000,000 | ||||||||||||
Common stock, par value | $ 0.01 | ||||||||||||
Common stock price, per share | $ 19 | ||||||||||||
Additional number of common stock shares sold | 350,000 | ||||||||||||
Additional common stock sold price, per share | $ 19 | ||||||||||||
Gross proceeds from IPO | $ 101,700,000 | ||||||||||||
Underwriting discount and commission expenses | 6,900,000 | ||||||||||||
Offering expenses | $ 2,900,000 | ||||||||||||
IPO | Series A Cumulative Redeemable Preferred Stock | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Number of shares issued/sold | 2,000,000 | ||||||||||||
Gross proceeds from IPO | $ 48,000,000 | ||||||||||||
Underwriting discount and commission expenses | 1,200,000 | ||||||||||||
Offering expenses | $ 800,000 | ||||||||||||
Cash dividend on preferred stock shares investment, percentage | 8.50% | ||||||||||||
Preferred Stock, price per share | $ 24 | ||||||||||||
Preferred stock, liquidation preference per share | $ 25 | ||||||||||||
Number of shares purchased | 455,000 | ||||||||||||
Stock purchase price per share | $ 24 | ||||||||||||
IPO | Series A Cumulative Redeemable Preferred Stock | Underwriter | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Number of shares issued/sold | 100,000 | ||||||||||||
Stock selling price per share | $ 23.50 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Number of Restricted Stock Units Granted, Vested, Forfeited and Outstanding (Details) - Restricted Stock Units | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Units, Granted | shares | 289,013 |
Number of Units, Outstanding September 30, 2020 | shares | 289,013 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 12.11 |
Weighted Average Grant Date Fair Value, Outstanding September 30, 2020 | $ / shares | $ 12.11 |
Earnings (Loss) Per Share - Add
Earnings (Loss) Per Share - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Stock conversion ratio | 100.00% |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule of Computation of Basic and Diluted Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Numerator for earnings (loss) per share: | ||
Net income (loss) | $ 11,541 | $ 7,946 |
Preferred stock dividends | 874 | 874 |
Net income attributable to redeemable noncontrolling interests | 7,805 | 5,293 |
Net income attributable to common stockholders | $ 2,862 | $ 1,779 |
Denominator for earnings (loss) per share: | ||
Weighted-average common shares outstanding - basic | 5,261 | 5,253 |
Weighted-average unvested restricted stock units | 289 | 126 |
Denominator for diluted earnings per share | 5,550 | 5,379 |
Earnings (loss) per weighted average common share: | ||
Basic | $ 0.54 | $ 0.34 |
Diluted | $ 0.52 | $ 0.33 |
Noncontrolling Interests - Addi
Noncontrolling Interests - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | Aug. 04, 2020 | Jul. 30, 2020 | Jul. 20, 2020 | Sep. 30, 2020 |
Series A Cumulative Redeemable Preferred Stock | ||||
Minority Interest [Line Items] | ||||
Cash dividend on preferred stock shares investment, percentage | 850.00% | |||
Preferred stock, liquidation preference per share | $ 25 | |||
Subscription Agreements | OP IV | ||||
Minority Interest [Line Items] | ||||
Percentage of redemption right exercised | 100.00% | |||
Noncontrolling interest, ownership percentage | 50.28% | |||
OP IV | Subscription Agreements | ||||
Minority Interest [Line Items] | ||||
Book value of common stock per share | $ 18.33 | |||
OP IV | Manager Affiliates | Subscription Agreements | ||||
Minority Interest [Line Items] | ||||
Operating partnership shares issued | 267,320 | 359,000 | ||
Total consideration | $ 4.9 | $ 6.6 |
Noncontrolling Interests - Sche
Noncontrolling Interests - Schedule of Redeemable Noncontrolling Interests (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Noncontrolling Interest [Abstract] | |
Redeemable noncontrolling interests in the OP, December 31, 2019 | |
Contributions from redeemable noncontrolling interests in the OP | 273,410 |
Net income attributable to redeemable noncontrolling interests in the OP | 5,293 |
Distributions to redeemable noncontrolling interests in the OP | (13,548) |
Redeemable noncontrolling interests in the OP, September 30, 2020 | $ 265,155 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | May 29, 2020 | Sep. 30, 2020 | Sep. 30, 2020 |
Related Party Transaction [Line Items] | |||
Offering expenses | $ 100 | ||
Description of partnership units | Pursuant to the OP’s limited partnership agreement and the Buffalo Pointe Contribution Agreement, the BP Contributors have the right to cause our OP to redeem their OP Units for cash or, at our election, shares of our common stock on a one-for-one basis, subject to adjustment, as provided and subject to the limitations in our OP’s limited partnership agreement, provided the OP Units have been outstanding for at least one year and our stockholders have approved the issuance of shares of common stock to the BP Contributors. | ||
Management fees | $ 480 | $ 1,027 | |
NexPoint Real Estate Advisors VII, L.P. | |||
Related Party Transaction [Line Items] | |||
Percentage of annual advisory, paid monthly | 1.50% | ||
Increase (decrease) in operating expense in excess of expense capital | $ 0 | ||
Management fees | $ 1,000 | ||
NexPoint Real Estate Advisors VII, L.P. | Maximum [Member] | |||
Related Party Transaction [Line Items] | |||
Percentage of direct payment of operating expense | 2.50% | ||
Buffalo Pointe | Contribution Agreement | |||
Related Party Transaction [Line Items] | |||
Percentage of preferred equity investment current interest rate | 6.50% | ||
Percentage of preferred equity investment deferred interest rate | 4.50% | ||
Percentage of loan to value | 84.00% | ||
Preferred equity investment maturity date | May 1, 2030 | ||
Buffalo Pointe | Contribution Agreement | Texas | |||
Related Party Transaction [Line Items] | |||
Percentage of occupancy of multifamily property | 94.30% | 94.30% | |
Buffalo Pointe | OP | Contribution Agreement | |||
Related Party Transaction [Line Items] | |||
Consideration paid | $ 10,000 | ||
Operating partnership shares issued | 564,334.09 | ||
Book value of common stock per share | $ 17.72 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | Aug. 03, 2020USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Equity commitment amount | $ 227 |
Termination fee payable | $ 9.4 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) $ / shares in Units, $ in Thousands | Oct. 26, 2020$ / shares | Oct. 20, 2020USD ($)Loan | Oct. 15, 2020USD ($) | Jul. 27, 2020$ / shares | Oct. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2020USD ($)Loan$ / sharesshares | Mar. 09, 2020$ / shares | Dec. 31, 2019$ / shares |
Subsequent Event [Line Items] | |||||||||
Number of mezzanine loans acquired | Loan | 32 | ||||||||
Aggregate principal amount outstanding | $ 897,957 | $ 897,957 | |||||||
Weighted average fixed interest rate | 100.00% | ||||||||
Payments to acquire loans | $ 7,500 | ||||||||
Share repurchase program, treasury stock shares | shares | 113,511 | ||||||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Share repurchase program, treasury stock, value | $ 377 | $ 1,716 | |||||||
Share repurchase program, treasury stock, per share | $ / shares | $ 15.11 | ||||||||
Common Stock | |||||||||
Subsequent Event [Line Items] | |||||||||
Share repurchase program, treasury stock shares | shares | 26,045 | 113,511 | |||||||
Share repurchase program, treasury stock, value | $ 1 | ||||||||
Dividends payable, amount per share | $ / shares | $ 0.40 | ||||||||
Dividends payable date declared | Jul. 27, 2020 | ||||||||
Dividend payable date to be paid | Sep. 30, 2020 | ||||||||
Mezzanine Loan Portfolio | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of mezzanine loans acquired | Loan | 1 | ||||||||
Aggregate principal amount outstanding | $ 7,500 | $ 7,500 | |||||||
Weighted average fixed interest rate | 100.00% | ||||||||
Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Share repurchase program, treasury stock shares | shares | 123,086 | ||||||||
Common stock, par value | $ / shares | $ 0.01 | ||||||||
Share repurchase program, treasury stock, value | $ 1,800 | ||||||||
Share repurchase program, treasury stock, per share | $ / shares | $ 14.37 | ||||||||
Subsequent Event | Common Stock | |||||||||
Subsequent Event [Line Items] | |||||||||
Dividends payable, amount per share | $ / shares | $ 0.40 | ||||||||
Dividends payable date declared | Oct. 26, 2020 | ||||||||
Dividend payable date to be paid | Dec. 31, 2020 | ||||||||
Dividends payable, date of record | Dec. 15, 2020 | ||||||||
Subsequent Event | Mezzanine Loan Portfolio | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of mezzanine loans acquired | Loan | 18 | ||||||||
Aggregate principal amount outstanding | $ 97,900 | ||||||||
Weighted average fixed interest rate | 7.54% | ||||||||
Percentage of acquired outstanding principal amount | 102.00% | ||||||||
Accrued interest | $ 300 | ||||||||
Subsequent Event | Mezzanine Loan Portfolio | Freddie Mac | |||||||||
Subsequent Event [Line Items] | |||||||||
Weighted average fixed interest rate | 0.30% | ||||||||
Payments to acquire loans | $ 59,900 | ||||||||
Unsecured Notes | OP | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Debt instrument, coupon rate | 7.50% | ||||||||
Debt instrument, principal amount | $ 36,500 | ||||||||
Debt instrument discount to par percentage | 1.02% | ||||||||
Proceeds from unsecured notes before offering costs | $ 36,100 |