Note 16 — Variable Interest Entities

Our involvement with VIEs primarily affects our financial performance and cash flows through amounts recorded in interest income, interest expense, provision for loan losses and through activity associated with our derivative instruments.

Consolidated VIEs. We have determined that our operating partnership, ARLP, and our CLO subsidiaries, which are owned by ARLP, are VIEs. ARLP is already consolidated in our financial statements, therefore, the identification of this entity as a VIE had no impact on our consolidated financial statements.

Our CLO subsidiaries invest in real estate and real estate-related securities and are financed by the issuance of CLO debt securities. We, or one of our affiliates, are named collateral manager, servicer, and special servicer for all CLO collateral assets which we believe gives us the power to direct the most significant economic activities of the entity. We also have exposure to CLO losses to the extent of our equity interests and also have rights to waterfall payments in excess of required payments to CLO bond investors. As a result of consolidation, equity interests in these CLOs have been eliminated, and the consolidated balance sheets reflect both the assets held and debt issued by the CLOs to third parties. Our operating results and cash flows include the gross amounts related to CLO assets and liabilities as opposed to our net economic interests in the CLO entities.

The assets and liabilities related to these consolidated CLOs are as follows:

	September 30, 2017		December 31, 2016
Assets:
Restricted cash	$	136,408,829	$	15,542,304
Loans and investments, net	1,249,875,600		957,527,492
Due from related party	11,397,903		—
Other assets	9,441,853		6,982,452

Total assets	$	1,407,124,185	$	980,052,248


Liabilities:
Collateralized loan obligations	$	1,066,230,488	$	728,441,109
Other liabilities	2,185,528		1,645,426

Total liabilities	$	1,068,416,016	$	730,086,535

Assets held by the CLOs are restricted and can be used only to settle obligations of the CLOs. The liabilities of the CLOs are non-recourse to us and can only be satisfied from each CLOs respective asset pool. See Note 11 — Debt Obligations for details.

We are not obligated to provide, have not provided, and do not intend to provide financial support to any of the consolidated CLOs.

Unconsolidated VIEs. We determined that we are not the primary beneficiary of 20 VIEs in which we have a variable interest as of September 30, 2017 because we do not have the ability to direct the activities of the VIEs that most significantly impact each entity’s economic performance.

The following is a summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of September 30, 2017:

Type	Carrying Amount (1)
Loans	$	281,608,227
B Piece bonds	18,851,089
Agency IOs	4,442,532
Equity investments	2,120,447

Total	$	307,022,295

(1)

Represents the carrying amount of loans and investments before reserves. At September 30, 2017, $182.8 million of loans to VIEs had corresponding loan loss reserves of $81.6 million. See Note 4 — Loans and Investments for details. In addition, the maximum loss exposure as of September 30, 2017 would not exceed the carrying amount of our investment.

These unconsolidated VIEs have exposure to real estate debt of approximately $2.07 billion at September 30, 2017.