Our Structured Business loan and investment portfolio consists of ($ in thousands):

(1)

“Weighted Average Pay Rate” is a weighted average, based on the unpaid principal balance (“UPB”) of each loan in our portfolio, of the interest rate that is required to be paid monthly as stated in the individual loan agreements. Certain loans and investments that require an additional rate of interest “Accrual Rate” to be paid at maturity are not included in the weighted average pay rate as shown in the table.

(2)	The “First Dollar Loan-to-Value (“LTV”) Ratio” is calculated by comparing the total of our senior most dollar and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will absorb a total loss of our position.

(3)	The “Last Dollar LTV Ratio” is calculated by comparing the total of the carrying value of our loan and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will initially absorb a loss.

(4)	As of June 30, 2020 and December 31, 2019, bridge loans included 5 and 11, respectively, single-family rental loans with an aggregate UPB of $53.4 million and $66.7 million, respectively, of which $28.3 million and $30.0 million, respectively, was funded.

(5)

As of June 30, 2020 and December 31, 2019, other included 19 and 12, respectively, single-family rental permanent loans with an aggregate UPB of $73.7 million and $41.6 million, respectively, and 1 and 9, respectively, purchased loans with an aggregate UPB of $6.4 million and $28.6 million, respectively.

Concentration of Credit Risk

We are subject to concentration risk in that, at June 30, 2020, the UPB related to 23 loans with five different borrowers represented 13% of total assets. At December 31, 2019, the UPB related to 24 loans with five different borrowers represented 13% of total assets. During both the six months ended June 30, 2020 and the year ended December 31, 2019, no single loan or investment represented more than 10% of our total assets and no single investor group generated over 10% of our revenue. See Note 18 for details on our concentration of related party loans and investments.

We assign a credit risk rating of pass, pass/watch, special mention, substandard or doubtful to each loan and investment, with a pass rating being the lowest risk and a doubtful rating being the highest risk. Each credit risk rating has benchmark guidelines that pertain to debt-service coverage ratios, LTV ratios, borrower strength, asset quality, and funded cash reserves. Other factors such as guarantees, market strength, and remaining loan term and borrower equity are also reviewed and factored into determining the credit risk rating assigned to each loan. This metric provides a helpful snapshot of portfolio quality and credit risk. All portfolio assets are subject to, at a minimum, a thorough quarterly financial evaluation in which historical operating performance and forward-looking projections are reviewed, however, we maintain a higher level of scrutiny and focus on loans that we consider “high risk” and that possess deteriorating credit quality.

Generally speaking, given our typical loan profile, risk ratings of pass, pass/watch and special mention suggest that we expect the loan to make both principal and interest payments according to the contractual terms of the loan agreement. A risk rating of substandard indicates we anticipate the loan may require a modification of some kind. A risk rating of doubtful indicates we expect the loan to underperform over its term, and there could be loss of interest and/or principal. Further, while the above are the primary guidelines used in determining a certain risk rating, subjective items such as borrower strength, market strength or asset quality may result in a rating that is higher or lower than might be indicated by any risk rating matrix.

A summary of the loan portfolio’s internal risk ratings and LTV ratios by asset class as of June 30, 2020 is as follows ($ in thousands):


																Wtd. Avg.		Wtd. Avg.
	UPB by Origination Year															First Dollar		Last Dollar
Asset Class / Risk Rating	2020		2019		2018		2017		2016		Prior		Total			LTV Ratio		LTV Ratio
Multifamily:
Pass	$	487,598	$	454,747	$	19,300	$	32,500	$	—	$	905	$	995,050
Pass/Watch		454,466		1,131,309		187,805		173,600		—		28,800		1,975,980
Special Mention		24,925		572,887		160,749		134,300		—		17,080		909,941
Substandard		—		35,379		42,927		17,700		8,250		—		104,256
Total Multifamily	$	966,989	$	2,194,322	$	410,781	$	358,100	$	8,250	$	46,785	$	3,985,227		4	%	77	%
Land:												Percentage of portfolio		80	%
Special Mention	$	71,018	$	19,524	$	—	$	19,975	$	—	$	—	$	110,517
Substandard		—		—		—		—		—		127,928		127,928
Total Land	$	71,018	$	19,524	$	—	$	19,975	$	—	$	127,928	$	238,445		0	%	91	%
Healthcare:												Percentage of portfolio		5	%
Pass	$	—	$	6,600	$	10,000	$	—	$	—	$	—	$	16,600
Pass/Watch		—		14,750		51,500		41,650		—		—		107,900
Special Mention		—		59,569		15,000		—		—		—		74,569
Doubtful		—		—		—		4,625		—		—		4,625
Total Healthcare	$	—	$	80,919	$	76,500	$	46,275	$	—	$	—	$	203,694		0	%	78	%
Student Housing:												Percentage of portfolio		4	%
Special Mention	$	—	$	44,500	$	3,350	$	—	$	—	$	—	$	47,850
Substandard		23,500		—		13,000		67,250		—		—		103,750
Total Student Housing	$	23,500	$	44,500	$	16,350	$	67,250	$	—	$	—	$	151,600		12	%	76	%
Office:												Percentage of portfolio		3	%
Pass	$	—	$	—	$	5,000	$	—	$	—	$	—	$	5,000
Pass/Watch		—		—		—		34,000		—		—		34,000
Special Mention		—		—		—		43,151		—		9,946		53,097
Substandard		—		—		42,799		—		—		—		42,799
Doubtful		—		—		—		—		—		880		880
Total Office	$	—	$	—	$	47,799	$	77,151	$	—	$	10,826	$	135,776		3	%	76	%
Single-Family Rental:												Percentage of portfolio		3	%
Pass	$	8,565	$	34,607	$	—	$	—	$	—	$	—	$	43,172
Pass/Watch		104		34,753		—		—		—		—		34,857
Special Mention		23,773		161		—		—		—		—		23,934
Total Single-Family Rental	$	32,442	$	69,521	$	—	$	—	$	—	$	—	$	101,963		0	%	75	%
Hotel:												Percentage of portfolio		2	%
Substandard	$	—	$	91,000	$	—	$	—	$	—	$	—	$	91,000
Total Hotel	$	—	$	91,000	$	—	$	—	$	—	$	—	$	91,000		32	%	91	%
Other:												Percentage of portfolio		2	%
Pass	$	—	$	4,000	$	—	$	—	$	—	$	—	$	4,000
Pass/Watch		—		—		9,000		13,580		—		—		22,580
Substandard		—		—		32,600		—		—		3,553		36,153
Doubtful		—		—		—		—		—		1,700		1,700
Total Other	$	—	$	4,000	$	41,600	$	13,580	$	—	$	5,253	$	64,433		7	%	79	%
												Percentage of portfolio		1	%

Grand Total	$	1,093,949	$	2,503,786	$	593,030	$	582,331	$	8,250	$	190,792	$	4,972,138		4	%	78	%

Geographic Concentration Risk

As of June 30, 2020, 16% and 12% of the outstanding balance of our loan and investment portfolio had underlying properties in New York and Texas, respectively. As of December 31, 2019, 18% and 12% of the outstanding balance of our loan and investment portfolio had underlying properties in New York and Texas, respectively. No other states represented 10% or more of the total loan and investment portfolio.

Allowance for Credit Losses

A summary of the changes in the allowance for credit losses is as follows (in thousands):


	Three Months Ended June 30, 2020
	Land		Multifamily		Retail		Office		Hotel		Student Housing		Healthcare		Other		Total
Allowance for credit losses:
Beginning balance	$	78,418	$	31,891	$	11,322	$	6,096	$	7,528	$	1,142	$	3,934	$	1,921	$	142,252
Provision for credit losses (net of recoveries)		(324)		2,715		2,659		2,436		144		2,968		(4)		(35)		10,559
Charge-offs		—		—		—		—		—				—		—		—
Recoveries of reserves		—		—		—		—		—				—		—		—
Ending balance	$	78,094	$	34,606	$	13,981	$	8,532	$	7,672	$	4,110	$	3,930	$	1,886	$	152,811


	Three Months Ended June 30, 2019
Allowance for credit losses	$	67,869	$	—	$	—	$	1,500	$	—	$	—	$	—	$	1,700	$	71,069


	Six Months Ended June 30, 2020
Allowance for credit losses:
Beginning balance, prior to adoption of CECL	$	67,869	$	—	$	—	$	1,500	$	—	$	—	$	—	$	1,700	$	71,069
Impact of adopting CECL - January 1, 2020		77		16,322		335		287		29		68		64		112		17,294
Provision for credit losses (net of recoveries)		10,148		18,284		13,646		6,745		7,643		4,042		3,866		74		64,448
Charge-offs		—		—		—		—		—		—		—		—		—
Recoveries of reserves		—		—		—		—		—		—		—		—		—
Ending balance	$	78,094	$	34,606	$	13,981	$	8,532	$	7,672	$	4,110	$	3,930	$	1,886	$	152,811

	Six Months Ended June 30, 2019
Allowance for credit losses	$	67,869	$	—	$	—	$	1,500	$	—	$	—	$	—	$	1,700	$	71,069

The increase in the provision for credit losses during the three and six months ended June 30, 2020 of $10.6 million and $64.4 million, respectively, compared to the January 1, 2020 cumulative-effect adjustment upon adoption of CECL of $17.3 million, is primarily attributed to the significant adverse change in the economic outlook due to the COVID-19 pandemic. Our estimate of allowance for credit losses on our structured loans and investments, including related unfunded loan commitments, during 2020 was based on a reasonable and supportable forecast period that was adjusted for the expectations that the markets in which we operate will experience a decline in economic conditions, increases in unemployment rates and other market driven factors largely the result of the COVID-19 pandemic that will likely impact loan delinquencies, modifications and potential risk of loss. For the periods beyond the reasonable and supportable forecast, we reverted to our historical loss rate, which was adjusted to address for factors that are not present in our existing portfolio. We also made adjustments for loans that are expected to extend based on available extension options and the timing of their maturities in relation to the current economic conditions.

The expected credit losses over the contractual period of our loans also include the obligation to extend credit through our unfunded loan commitments. Our CECL allowance for unfunded loan commitments are adjusted quarterly and correspond with the associated outstanding loans. As of June 30, 2020, we had outstanding unfunded commitments of $150.9 million that we are obligated to fund as borrowers meet certain requirements.

As of June 30, 2020, accrued interest receivable related to our loans totaling $36.2 million was excluded from the estimate of credit losses and is included in other assets on the consolidated balance sheet.

All of our structured loans and investments are collateral dependent, and as such, the measurement of credit losses may be based on the difference between the fair value of the underlying collateral and the carrying value of the assets as of the period end. A summary of our specific loans considered impaired by asset class is as follows (in thousands):


	June 30, 2020
							Wtd. Avg. First			Wtd. Avg. Last
			Carrying		Allowance for		Dollar LTV			Dollar LTV
Asset Class	UPB (1)		Value		Credit Losses		Ratio			Ratio
Land	$	134,215	$	127,168	$	77,869		0	%		97	%
Hotel		50,000		49,691		7,500		59	%		100	%
Retail		36,154		35,221		13,926		9	%		99	%
Healthcare		4,625		4,730		3,845		0	%		89	%
Office		2,196		2,196		1,500		0	%		75	%
Commercial		1,700		1,700		1,700		63	%		63	%
Total	$	228,890	$	220,706	$	106,340		14	%		98	%


	December 31, 2019
Land	$	134,215	$	126,800	$	67,869	0	%	97	%
Office		2,226		2,226		1,500	0	%	78	%
Commercial		1,700		1,700		1,700	63	%	63	%
Total	$	138,141	$	130,726	$	71,069	1	%	96	%

(1)	Represents the UPB of ten and five impaired loans (less unearned revenue and other holdbacks and adjustments) by asset class at June 30, 2020 and December 31, 2019, respectively.

There were no loans for which the fair value of the collateral securing the loan was less than the carrying value of the loan for which we had not recorded a provision for credit loss as of June 30, 2020 and December 31, 2019.

At June 30, 2020, six loans with an aggregate net carrying value of $43.9 million, net of related loan loss reserves of $16.6 million, were classified as non-performing and, at December 31, 2019, three loans with an aggregate net carrying value of $1.8 million, net of related loan loss reserves of $1.7 million, were classified as non-performing. Income from non-performing loans is generally recognized on a cash basis when it is received. Full income recognition will resume when the loan becomes contractually current and performance has recommenced.

A summary of our non-performing loans by asset class is as follows (in thousands):


	June 30, 2020						December 31, 2019
			Less Than		Greater Than				Less Than		Greater Than
			90 Days		90 Days				90 Days		90 Days
	UPB		Past Due		Past Due		UPB		Past Due		Past Due
Hotel	$	50,000	$	50,000	$	—	$	—	$	—	$	—
Healthcare		4,625		—		4,625		—		—		—
Retail		3,553		—		3,553		1,000		—		1,000
Commercial		1,700		—		1,700		1,700		—		1,700
Office		880		—		880		880		—		880
Total	$	60,758	$	50,000	$	10,758	$	3,580	$	—	$	3,580

In addition, we have six loans with a carrying value totaling $120.7 million at June 30, 2020, that are collateralized by a land development project. These loans were scheduled to mature in March 2020 and were extended to September 2020. The loans do not carry a current pay rate of interest, however, five of the loans with a carrying value totaling $111.3 million entitle us to a weighted average accrual rate of interest of 7.98%. In 2008, we suspended the recording of the accrual rate of interest on these loans, as they were impaired and we deemed the collection of this interest to be doubtful. At June 30, 2020 and December 31, 2019, we had a cumulative allowance for credit losses of $71.4 million and $61.4 million, respectively, related to these loans. The loans are subject to certain risks associated with a development project including, but not limited to, availability of construction financing, increases in projected construction costs, demand for the development's outputs upon completion of the project, and litigation risk. Additionally, these loans were not classified as non-performing as the borrower is in compliance with all of the terms and conditions of the loans.

At both June 30, 2020 and December 31, 2019, we had no loans contractually past due 90 days or more that are still accruing interest. During both the three and six months ended June 30, 2020 and 2019, interest income recognized on nonaccrual loans was de minimis.

There were no loan modifications, refinancing's and/or extensions during both the six months ended June 30, 2020 and 2019 that were considered troubled debt restructurings.

Given the transitional nature of some of our real estate loans, we may require funds to be placed into an interest reserve, based on contractual requirements, to cover debt service costs. At June 30, 2020 and December 31, 2019, we had total interest reserves of $54.4 million and $37.0 million, respectively, on 151 loans and 131 loans, respectively, with an aggregate UPB of $2.85 billion and $2.43 billion, respectively.