| Debt | Debt The following table presents debt as of June 30, 2022 and December 31, 2021 (dollars in thousands): June 30, 2022 December 31, 2021 Capacity ($) Recourse vs. Non-Recourse (1) Final Contractual Principal Amount (2) Carrying Value (2) Principal Amount (2) Carrying Value (2) Securitization bonds payable, net CLNC 2019-FL1 (3) Non-recourse Aug-35 SOFR (4) + 1.66% $ 702,054 $ 699,645 $ 840,423 $ 836,812 BRSP 2021-FL1 (3) Non-recourse Aug-38 LIBOR + 1.49% 670,000 665,261 670,000 664,087 Subtotal securitization bonds payable, net 1,372,054 1,364,906 1,510,423 1,500,899 Mortgage and other notes payable, net Net lease 6 Non-recourse Oct-27 4.45% 22,840 22,840 23,117 23,117 Net lease 5 Non-recourse Nov-26 4.45% 3,247 3,188 3,282 3,216 Net lease 4 Non-recourse Nov-26 4.45% 7,005 6,877 7,081 6,939 Net lease 3 (5) Non-recourse Jan-22 6.00% — — 11,867 11,807 Net lease 6 Non-recourse Jul-23 LIBOR + 2.15% 674 661 908 889 Net lease 5 Non-recourse Aug-26 4.08% 30,376 30,199 30,639 30,442 Net lease 1 (6) Non-recourse Nov-26 4.45% 17,631 17,309 17,823 17,465 Net lease 1 (7) Non-recourse Mar-28 4.38% 11,648 11,211 11,769 11,332 Net lease 2 (8) Non-recourse Jun-25 3.91% 161,856 164,151 181,504 184,078 Net lease 3 Non-recourse Sep-33 4.77% 200,000 198,733 200,000 198,689 Other real estate 1 Non-recourse Oct-24 4.47% 104,306 104,589 105,090 105,452 Other real estate 3 Non-recourse Jan-25 4.30% 71,618 71,248 72,359 71,922 Other real estate 6 (9) Non-recourse Apr-24 LIBOR + 2.95% — — 30,000 29,859 Loan 9 (10) Non-recourse Jun-24 LIBOR + 3.00% 27,851 27,851 65,377 65,376 Subtotal mortgage and other notes payable, net 659,052 658,857 760,816 760,583 Bank credit facility Bank credit facility $ 165,000 Recourse Jan-27 (11) SOFR + 2.25% — — — — Subtotal bank credit facility — — — — Master repurchase facilities Bank 1 facility 3 $ 400,000 Limited Recourse (12) Apr-26 (13) LIBOR/SOFR + 1.82% (14) 250,162 250,162 109,915 109,915 Bank 3 facility 3 600,000 Limited Recourse (12) Apr-23 (15) LIBOR/SOFR + 1.95% (14) 396,202 396,202 157,409 157,409 Bank 7 facility 1 600,000 Limited Recourse (12) Apr-26 (16) LIBOR/SOFR + 1.79% (14) 415,795 415,795 358,181 358,181 Bank 8 facility 1 250,000 Limited Recourse (12) Jun-23 (17) LIBOR/SOFR + 2.18% (14) 158,504 158,504 177,519 177,519 Bank 9 facility 1 400,000 (18) June-27 (19) LIBOR/SOFR + 1.70% (14) 266,904 266,904 102,098 102,098 Subtotal master repurchase facilities $ 2,250,000 1,487,567 1,487,567 905,122 905,122 Subtotal credit facilities 1,487,567 1,487,567 905,122 905,122 Total $ 3,518,673 $ 3,511,330 $ 3,176,361 $ 3,166,604 _________________________________________ (1) Subject to customary non-recourse carveouts. (2) Difference between principal amount and carrying value of securitization bonds payable, net and mortgage and other notes payable, net is attributable to deferred financing costs, net and premium/discount on mortgage notes payable. (3) The Company, through indirect Cayman subsidiaries, securitized commercial mortgage loans originated by the Company. Senior notes issued by the securitization trusts were generally sold to third parties and subordinated notes retained by the Company. These securitizations are accounted for as secured financing with the underlying mortgage loans pledged as collateral. Principal payments from underlying collateral loans must be applied to repay the notes until fully paid off, irrespective of the contractual maturities on the notes. Underlying collateral loans have initial terms of two (4) As of June 17, 2021, the benchmark index interest rate was converted from the one-month London Interbank Offered Rates (“LIBOR”) to Compounded Secured Overnight Financing Rate (“SOFR”), plus a benchmark adjustment of 11.448 basis points. As of February 19, 2022, the benchmark index interest rate was converted from Compounded SOFR to Term SOFR, plus a benchmark adjustment of 11.448 basis points, conforming with the indenture agreement. (5) During the first quarter of 2022 the property was sold and the mortgage payable was repaid in full. (6) Payment terms are periodic payment of principal and interest for debt on two properties and periodic payment of interest only with principal at maturity (except for principal repayments to release collateral properties disposed) for debt on one property. (7) Represents a mortgage note collateralized by three properties. (8) As of June 30, 2022, the outstanding principal of the mortgage payable was NOK 1.6 billion , which translated to $161.9 million. (9) During the first quarter of 2022 the property was sold and the mortgage payable was repaid in full. (10) The current maturity of the note payable is June 2023, with one one-year extension available at the Company’s option, which may be subject to the satisfaction of certain customary conditions set forth in the governing documents. (11) On January 28, 2022, the Company, through its subsidiaries, including the OP, entered into an Amended and Restated Credit Agreement. Refer to “Bank Credit Facility” within this note for more details. (12) Recourse solely with respect to 25.0% of the financed amount. (13) During the second quarter of 2022, the maturity date was April 2023. In July 2022, the maturity date was extended to July 2024, with three one-year extension options, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents. (14) Represents the weighted average spread as of June 30, 2022. The contractual interest rate depends upon asset type and characteristics and ranges from one-month LIBOR or SOFR plus 1.50% to 2.70%. (15) During the second quarter of 2022, the maturity date was April 2023. In July 2022, the maturity date was extended to April 2025, with two one-year extension options, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents. (16) The current maturity date is April 20 25, with a one-year extension available at the option of the Company, whic h may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents. (17) The current maturity date is June 2023, with no extension currently available at the option of the Company. (18) Recourse is either 25.0% or 50.0% depending on loan metrics. (19) The current maturity date is June 2025, with two one-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents. Future Minimum Principal Payments The following table summarizes future scheduled minimum principal payments at June 30, 2022 based on initial maturity dates or extended maturity dates to the extent criteria are met and the extension option is at the borrower’s discretion (dollars in thousands): Total Securitization Bonds Payable, Net Mortgage Notes Payable, Net Credit Facilities Remaining 2022 $ 1,311 $ — $ 1,311 $ — 2023 557,272 — 2,566 554,706 2024 134,376 — 134,376 — 2025 235,750 — 235,750 — 2026 720,557 — 54,600 665,957 2027 and thereafter 1,869,407 1,372,054 230,449 266,904 Total $ 3,518,673 $ 1,372,054 $ 659,052 $ 1,487,567 Bank Credit Facility The Company uses bank credit facilities (including term loans and revolving facilities) to finance the business. These financings may be collateralized or non-collateralized and may involve one or more lenders. Credit facilities typically have maturities ranging from two On January 28, 2022, the OP (together with certain subsidiaries of the OP from time to time party thereto as borrowers, collectively, the “Borrowers”) entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and the several lenders from time to time party thereto (the “Lenders”), pursuant to which the Lenders agreed to provide a revolving credit facility in the aggregate principal amount of up to $165.0 million, of which up to $25.0 million is available as letters of credit. Loans under the Credit Agreement may be advanced in U.S. dollars and certain foreign currencies, including euros, pounds sterling and swiss francs. The Credit Agreement amended and restated the OP’s prior $300.0 million revolving credit facility that would have matured on February 1, 2022. The Credit Agreement also includes an option for the Borrowers to increase the maximum available principal amount up to $300.0 million, subject to one or more new or existing Lenders agreeing to provide such additional loan commitments and satisfaction of other customary conditions. Advances under the Credit Agreement accrue interest at a per annum rate equal to, at the applicable Borrower’s election, either (x) an adjusted SOFR rate plus a margin of 2.25%, or (y) a base rate equal to the highest of (i) the Wall Street Journal’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) the adjusted SOFR rate plus 1.00%, plus a margin of 1.25%. An unused commitment fee at a rate of 0.25% or 0.35%, per annum, depending on the amount of facility utilization, applies to un-utilized borrowing capacity under the Credit Agreement. Amounts owed under the Credit Agreement may be prepaid at any time without premium or penalty, subject to customary breakage costs in the case of borrowings with respect to which a SOFR rate election is in effect. The maximum amount available for borrowing at any time under the Credit Agreement is limited to a borrowing base valuation of certain investment assets, with the valuation of such investment assets generally determined according to a percentage of adjusted net book value. As of June 30, 2022, the borrowing base valuation is sufficient to permit borrowings of up to the entire $165.0 million commitment. If any borrowing is outstanding for more than 180 days after its initial draw, the borrowing base valuation will be reduced by 50% until all outstanding borrowings are repaid in full. The ability to borrow new amounts under the Credit Agreement terminates on January 31, 2026, at which time the OP may, at its election and by written notice to the Administrative Agent, extend the termination date for two additional terms of six months each, subject to the terms and conditions in the Credit Agreement, resulting in a latest termination date of January 31, 2027. The obligations of the Borrowers under the Credit Agreement are guaranteed pursuant to a Guarantee and Collateral Agreement by substantially all material wholly owned subsidiaries of the OP (the “Guarantors”) in favor of the Administrative Agent (the “Guarantee and Collateral Agreement”) and, subject to certain exceptions, secured by a pledge of substantially all equity interests owned by the Borrowers and the Guarantors, as well as by a security interest in deposit accounts of the Borrowers and the Guarantors in which the proceeds of investment asset distributions are maintained. The Credit Agreement contains various affirmative and negative covenants, including, among other things, the obligation of the Company to maintain REIT status and be listed on the New York Stock Exchange, and limitations on debt, liens and restricted payments. In addition, the Credit Agreement includes the following financial covenants applicable to the OP and its consolidated subsidiaries: (a) minimum consolidated tangible net worth of the OP to be greater than or equal to the sum of (i) $1,112,000,000 and (ii) 70% of the net cash proceeds received by the OP from any offering of its common equity after September 30, 2021 and of the net cash proceeds from any offering by the Company of its common equity to the extent such proceeds are contributed to the OP, excluding any such proceeds that are contributed to the OP within ninety (90) days of receipt and applied to acquire capital stock of the OP; (b) the OP’s ratio of EBITDA plus lease expenses to fixed charges for any period of four (4) consecutive fiscal quarters to be not less than 1.50 to 1.00; (c) the OP’s minimum interest coverage ratio to be not less than 3.00 to 1.00; and (d) the OP’s ratio of consolidated total debt to consolidated total assets to be not more than 0.80 to 1.00. The Credit Agreement also includes customary events of default, including, among other things, failure to make payments when due, breach of covenants or representations, cross default to material indebtedness, material judgment defaults, bankruptcy matters involving any Borrower or any Guarantor and certain change of control events. The occurrence of an event of default will limit the ability of the OP and its subsidiaries to make distributions and may result in the termination of the credit facility, acceleration of repayment obligations and the exercise of remedies by the Lenders with respect to the collateral. As of June 30, 2022, the Company was in compliance with all of its financial covenants under the Credit Agreement. Securitization Financing Transactions Securitization bonds payable, net represent debt issued by securitization vehicles consolidated by the Company. Senior notes issued by these securitization trusts were generally sold to third parties and subordinated notes retained by the Company. Payments from underlying collateral loans must be applied to repay the notes until fully paid off, irrespective of the contractual maturities of the loans. CLNC 2019-FL1 In October 2019, the Company executed a securitization transaction, through wholly-owned subsidiaries, CLNC 2019-FL1, Ltd. and CLNC 2019-FL1, LLC (collectively, “CLNC 2019-FL1”), which resulted in the sale of $840.0 million of investment grade notes. As of June 30, 2022, the securitization reflects an advance rate of 82.8% at a weighted average cost of funds of Adjusted Term SOFR plus 1.66% (before transaction expenses) and is collateralized by a pool of 21 senior loan investments. On March 5, 2021, the Financial Conduct Authority of the U.K. (the “FCA”) announced that LIBOR tenors relevant to CLNC 2019-FL1 would cease to be published or no longer be representative after June 30, 2023. The Alternative Reference Rates Committee (the “ARRC”) interpreted this announcement to constitute a benchmark transition event. As of June 17, 2021, the benchmark index interest rate was converted from LIBOR to compounded SOFR, plus a benchmark adjustment of 11.448 basis points with a lookback period equal to the number of calendar days in the applicable Interest Accrual Period plus two As of February 19, 2022, the benchmark index interest rate was converted from Compounded SOFR to Term SOFR, plus a benchmark adjustment of 11.448 basis points, conforming with the indenture agreement. Term SOFR for any interest accrual period shall be the one month CME Term SOFR Reference Rate as published by the CME Group Benchmark Administration on each benchmark determination date. As of June 30, 2022, the CLNC 2019-FL1 mortgage assets are indexed to LIBOR and the borrowings under CLNC 2019-FL1 are indexed to Term SOFR, creating an underlying benchmark index rate basis difference between CLNC 2019-FL1 assets and liabilities, which is meant to be mitigated by the benchmark replacement adjustment described above. The Company has the right to transition the CLNC 2019-FL1 mortgage assets to SOFR, eliminating the basis difference between CLNC 2019-FL1 assets and liabilities, and will make the determination taking into account the loan portfolio as a whole. The transition to SOFR is not expected to have a material impact to CLNC 2019-FL1’s assets and liabilities and related interest expense. CLNC 2019-FL1 included a two-year reinvestment feature that allowed the Company to contribute existing or newly originated loan investments in exchange for proceeds from repayments or repurchases of loans held in CLNC 2019-FL1, subject to the satisfaction of certain conditions set forth in the indenture. The reinvestment period for CLNC 2019-FL1 expired on October 19, 2021. During the first quarter of 2022, two loans held in CLNC 2019-FL1 were repaid, totaling $54.4 million. During the second quarter of 2022, three loans held in CLNC 2019-FL1 were repaid, totaling $84.0 million. The proceeds from the five loan payoffs were used to amortize the securitization bonds in accordance with the securitization priority of payments. Additionally, CLNC 2019-FL1 contains note protection tests that can be triggered as a result of contributed loan defaults, losses, and certain other events outlined in the indenture, beyond established thresholds. A note protection test failure that is not remedied can result in the redirection of interest proceeds from the below investment grade tranches to amortize the most senior outstanding tranche. While the Company continues to closely monitor all loan investments contributed to CLNC 2019-FL1, a deterioration in the performance of an underlying loan could negatively impact its liquidity position. BRSP 2021-FL1 In July 2021, the Company executed a securitization transaction through wholly-owned subsidiaries, BRSP 2021-FL1, Ltd. and BRSP 2021-FL1, LLC (collectively, “BRSP 2021-FL1”), which resulted in the sale of $670 million of investment grade notes. The securitization reflects an advance rate of 83.75% at a weighted costs of funds of LIBOR plus 1.49% (before transaction costs), and is collateralized by a pool of 33 senior loan investments. BRSP 2021-FL1 includes a two-year reinvestment feature that allows the Company to contribute existing or newly originated loan investments in exchange for proceeds from repayments or repurchases of loans held in BRSP 2021-FL1, subject to the satisfaction of certain conditions set forth in the indenture. In addition to existing eligible loans available for reinvestment, the continued origination of securitization eligible loans is required to ensure that we reinvest the available proceeds within BRSP 2021-FL1. During the first quarter of 2022, one loan held in BRSP 2021-FL1 was fully repaid, totaling $11.7 million. During the second quarter of 2022 three loans held in BRSP 2021-FL1 were fully repaid, totaling $47.9 million. Additionally, subsequent to June 30, 2022 and through August 2, 2022 one loan held in BRSP 2021-FL1, totaling $14.2 million was fully repaid. The Company replaced the repaid loans by contributing existing loan investments of equal value. Additionally, BRSP 2021-FL1 contains note protection tests that can be triggered as a result of contributed loan defaults, losses, and certain other events outlined in the indenture, beyond established thresholds. A note protection test failure that is not remedied can result in the redirection of interest proceeds from the below investment grade tranches to amortize the most senior outstanding tranche. We will continue to closely monitor all loan investments contributed to BRSP 2021-FL1, a deterioration in the performance of an underlying loan could negatively impact our liquidity position. As of June 30, 2022, the Company had $1.6 billion carrying value of CRE debt investments and other assets financed with $1.4 billion of securitization bonds payable, net. As of December 31, 2021, the Company had $1.8 billion carrying value of CRE debt investments financed with $1.5 billion of securitization bonds payable, net. Master Repurchase Facilities As of June 30, 2022, the Company, through subsidiaries, had entered into repurchase agreements with multiple global financial institutions to provide an aggregate principal amount of up to $2.3 billion to finance the origination of first mortgage loans and senior loan participations secured by CRE debt investments (“Master Repurchase Facilities”). The Company agreed to guarantee certain obligations under the Master Repurchase Facilities, which contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of this type. The Master Repurchase Facilities act as revolving loan facilities that can be paid down as assets are repaid or sold and re-drawn upon for new investments. As of June 30, 2022, the Company was in compliance with all of its financial covenants under the Master Repurchase Facilities. As of June 30, 2022, the Company had $2.0 billion carrying value of CRE debt investments financed with $1.5 billion under the Master Repurchase Facilities. As of December 31, 2021, the Company had $1.2 billion carrying value of CRE debt investments financed with $905.1 million under the master repurchase facilities. During the three months ended June 30, 2022, the Company entered into amendments under the Master Repurchase Facility with Bank 7 and Bank 9 to increase the facility sizes by $100 million and extend the maturity dates by one year for each facility. Additionally, subsequent to June 30, 2022, the Company entered into amendments under the Master Repurchase Facility with Bank 1 and Bank 3 to extend the maturity date by one year and four years, respectively. CMBS Credit Facilities |
