8 unchanged sentences
In addition, with respect to any particular target investment, prior to origination or acquisition our Manager’s investment team evaluates, among other things, relative valuation, comparable company analysis, supply and demand trends, shape-of-yield curves, delinquency and default rates, recovery of various sectors and vintage of collateral.
−Removed: LIBOR Transition
−Removed: In July 2017, the United Kingdom’s Financial Conduct Authority (the “FCA”) (the authority that regulates LIBOR) announced its intention to cease sustaining LIBOR by the end of 2021.
−Removed: The ICE Benchmark Administration (the “IBA”), which is supervised by the FCA, ended publication of the one-week and two-month USD LIBOR tenors on December 31, 2021, and the remaining USD LIBOR tenors (overnight, one-month, three-month, six-month and 12-month) ended following their publication on June 30, 2023.
−Removed: On April 3, 2023, the FCA announced that it would compel the IBA to publish an unrepresentative synthetic USD LIBOR through September 30, 2024 for use in legacy contracts.
−Removed: As of June 30, 2024 , seven of our loans, representing approximately 37% of our portfolio based on aggregate outstanding principal balances, paid interest at a variable rate tied to SOFR.
−Removed: If this floating benchmark is no longer available, our applicable loan documents generally include fallback provisions that allow us to choose a new index based upon comparable information.
−Removed: However, if this benchmark is no longer available, we may need to renegotiate some of our agreements to determine a replacement index or rate of interest.
−Removed: As such, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined and any changes to benchmark interest rates could increase our financing costs, which could impact our results of operations, cash flows and the market value of our loans.
−Removed: In addition, changes to another index could result in mismatches with the interest rate of loans that we are financing.
−Removed: As of June 30, 2024 , none of our loans paid interest at a variable rate tied to LIBOR.
Changes in Fair Value of Our Assets
2 unchanged sentences
We may carry our loans at fair value or carrying value in our consolidated balance sheet.
−Removed: As of June 30, 2024 and December 31, 2023, one and two of our loans held for investment were carried at fair value within loans held at fair value in our consolidated balance sheets, respectively, with changes in fair value recorded through earnings.
+Added: As of September 30, 2024 and December 31, 2023, one and two of our loans held for investment were carried at fair value within loans held at fair value in our consolidated balance sheets, respectively, with changes in fair value recorded through earnings.
We evaluate our loans on a quarterly basis and fair value is determined by our Board through its independent Audit and Valuation Committee.
29 unchanged sentences
however, this is mitigated to the extent our loans bear interest at a floating rate.
−Removed: As of June 30, 2024, a decrease of 50 bps or increase of 50 bps of the market yield would have resulted in a change in unrealized gain (loss) of approximately $0.2 million and $(0.2) million, respectively.
−Removed: As of June 30, 2024, we had seven floating-rate loans, representing approximately 37% of our portfolio based on aggregate outstanding principal balances.
+Added: As of September 30, 2024, a decrease of 50 bps or increase of 50 bps of the market yield would have resulted in a change in unrealized gain (loss) of approximately $0.3 million and $(0.3) million, respectively.
+Added: As of September 30, 2024, we had seven floating-rate loans, representing approximately 38% of our portfolio based on aggregate outstanding principal balances.
These floating benchmark rates included one-month SOFR subject to a weighted average floor of 3.6% and quoted at 4.8%.
1 unchanged sentence
Interest Rate Cap Risk
−Removed: Through our Manager, we originate both fixed and floating rate loans and going forward, we intend to have the majority of our loans by aggregate commitments accrue at floating rates.
+Added: Through our Manager, we originate both fixed and floating rate loans.
These are assets in which the loans may be subject to periodic and lifetime interest rate caps and floors, which limit the amount by which the asset’s interest yield may change during any given period.
22 unchanged sentences
As a result, we cannot predict the percentage of our capital that will be invested in any individual target investment at any given time.
−Removed: Our loan portfolio as of June 30, 2024 was concentrated with the top three borrowers representing approximately 49.5% of the aggregate outstanding principal balances and approximately 49.6% of the total loan commitments.
+Added: Our loan portfolio as of September 30, 2024 was concentrated with the top three borrowers representing approximately 56.5% of the aggregate outstanding principal balances and approximately 57.5% of the total loan commitments.
Additionally, the industry is experiencing significant consolidation, which we expect to increase, among cannabis operations and certain of our borrowers may combine, increasing the concentration of our borrower portfolio with those consolidated operators.
−Removed: Our largest credit facility represented approximately 23.6% of the aggregate outstanding principal balances of our portfolio and approximately 18.7% of our total loan commitments as of June 30, 2024.
+Added: Our largest credit facility represented approximately 26.5% of the aggregate outstanding principal balances of our portfolio and approximately 21.0% of our total loan commitments as of September 30, 2024.
The borrower under this credit facility is a Subsidiary of Private Company G, a multi-state operator with real estate assets in several states, certain of which have been included as collateral in connection with the senior term loan.
−Removed: Our portion of the senior term loan provided to such borrower has a principal amount of $79.2 million outstanding as of June 30, 2024, which is fully funded.
+Added: Our portion of the senior term loan provided to such borrower has a principal amount of $79.2 million outstanding as of September 30, 2024, which is fully funded.
This senior term loan accrues interest at a fixed rate of 12.5%, a minimum portion of which is payable in cash pursuant to the excess cash flow sweep, and the remainder of which, if any, is paid in kind.
4 unchanged sentences
Also, should a loan default or otherwise be seized, we may be prohibited from owning cannabis assets and thus could not take possession of collateral, in which case we would look to sell the loan, which could result in us realizing a loss on the transaction.
−Removed: Real Estate Risk
−Removed: Commercial real estate loans are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors);
−Removed: local real estate conditions;
−Removed: changes or continued weakness in specific industry segments;
−Removed: construction quality, age and design;
−Removed: demographic factors;
−Removed: and retroactive changes to building or similar codes.
−Removed: In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loan or loans, as the case may be, which could also cause us to suffer losses.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.