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SALE OF COMMERCIAL REAL ESTATE BUSINESS | 9 Months Ended
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Sep. 30, 2021
Discontinued Operations and Disposal Groups [Abstract] |
SALE OF COMMERCIAL REAL ESTATE BUSINESS |
9. SALE OF COMMERCIAL REAL ESTATE BUSINESS
On March 25, 2021, the Company entered into a definitive agreement to sell substantially all of the assets that comprise its CRE business to Slate Asset Management L.P. and Slate Grocery REIT (together, “Slate”) for $2.33 billion. The transaction includes equity interests, loan assets and associated liabilities, and CMBS (other than commercial CRTs). The Company also intends to sell nearly all of the remaining CRE business assets that are not included in the transaction with Slate. During the three months ended September 30, 2021, the majority of assets held for sale and the associated liabilities were transferred to Slate, with the remaining assets expected to be transferred by the end of the year subject to regulatory approvals. The pretax income (loss) of the CRE business was $5.9 million and ($24.8) million for the three and nine months ended September 30, 2021, respectively and $10.4 million and ($151.9) million for the three and nine months ended September 30, 2020, respectively. Certain employees who primarily supported the CRE business joined Slate in connection with the sale. The carrying values of the major classes of assets and liabilities of the disposal group held for sale as of September 30, 2021 are presented in the table below:
| September 30, 2021
| (dollars in thousands)
Cash and cash equivalents | $ | 2,772 |
Securities | 8,016 |
Assets transferred or pledged to securitization vehicles | 52,684 |
Real estate, net | 142,381 |
Intangible assets, net | 6,573 |
Other assets | 25,616 |
Total assets of disposal group held for sale | $ | 238,042 |
Mortgages payable | $ | 113,362 |
Interest payable | 347 |
Other liabilities | 45,799 |
Total liabilities of disposal group held for sale | $ | 159,508 |
Certain assets and liabilities of the disposal group held for sale are in VIEs that are consolidated by the Company because it is the primary beneficiary. The remaining security in the disposal group held for sale is carried at fair value and is categorized in Level 2 of the fair value measurement hierarchy as the valuation is based upon quoted prices in active markets for similar assets. The remaining loan held for sale is reported as Assets pledged to securitization vehicles and is carried at lower of cost or fair value and as such that loan required a valuation allowance of $28.4 million and had a nonrecurring fair value measurement of $52.7 million as of September 30, 2021. This nonrecurring fair value measurement is categorized as Level 3 of the fair value measurement hierarchy as there are unobservable inputs, which are significant to the overall fair value. The real estate held for sale is carried at lower of cost or fair value and was based upon the sale price and allocated to individual properties to determine if a valuation allowance was necessary.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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