4. MORTGAGE LOAN RECEIVABLES

March 31, 2014

						Weighted		Remaining
	Outstanding		Carrying			Average		Maturity
	Face Amount		Value			Yield		(years)

Mortgage loan receivables held for investment, at amortized cost	$	687,212,184	$	674,980,076	(1)	9.51	%	2.11
Mortgage loan receivables held for sale	162,554,033		162,107,043			5.46	%	7.43
Total	$	849,766,217	$	837,087,119

December 31, 2013

						Weighted		Remaining
	Outstanding		Carrying			Average		Maturity
	Face Amount		Value			Yield		(years)

Mortgage loan receivables held for investment, at amortized cost	$	549,573,788	$	539,078,182	(1)	9.76	%	2.14
Mortgage loan receivables held for sale	440,774,789		440,489,789			5.47	%	9.62
Total	$	990,348,577	$	978,967,971

(1) The carrying amount of loan receivables held for investment are presented net of provision for loan losses of $2,650,000 and $2,500,000 at March 31, 2014 and December 31, 2013, respectively.

The following table summarizes the mortgage loan receivables by loan type:

	As of March 31, 2014				As of December 31, 2013
	Outstanding		Carrying		Outstanding		Carrying
	Face Amount		Value		Face Amount		Value
Mortgage loan receivables held for sale
First mortgage loan	$	162,554,033	$	162,107,043	$	440,774,789	$	440,489,789
Total mortgage loan receivables held for sale	162,554,033		162,107,043		440,774,789		440,489,789
Mortgage loan receivables held for investment, at amortized cost
First mortgage loan	546,093,172		537,577,880		420,672,555		413,564,066
Mezzanine loan	141,119,012		140,052,196		128,901,233		128,014,116
Total mortgage loan receivables held for investment, at amortized cost	687,212,184		677,630,076		549,573,788		541,578,182

Reserve for loan losses	—		2,650,000		—		2,500,000
Total	$	849,766,217	$	837,087,119	$	990,348,577	$	979,567,971

For the three months ended March 31, 2014 and 2013, the activity in our loan portfolio was as follows:

	Mortgage loan receivables held for investment, at amortized cost			Mortgage loan receivables held for sale
Balance December 31, 2012	$	326,318,550		$	623,332,620
Origination of mortgage loan receivables	96,414,750			843,902,500
Repayment of mortgage loan receivables	(122,063,197		)	(545,079		)
Proceeds from sales of mortgage loan receivables	—			(947,119,454		)
Realized gain on sale of mortgage loan receivables	—			83,007,462
Transfer between held for investment and held for sale	(8,320,273		)	8,320,273
Accretion/amortization of discount, premium and other fees	1,007,628			—
Loan loss provision	(150,000		)	—
Balance March 31, 2013	$	293,207,458		$	610,898,322

Balance December 31, 2013	$	539,078,182		$	440,489,789
Origination of mortgage loan receivables	147,570,705			463,575,489
Repayment of mortgage loan receivables	(12,335,575		)	(316,067		)
Proceeds from sales of mortgage loan receivables	—			(783,762,354		)
Realized gain on sale of mortgage loan receivables	—			41,302,665
Transfer between held for investment and held for sale	—			—
Accretion/amortization of discount, premium and other fees	816,764			817,521
Loan loss provision	(150,000		)	—
Balance March 31, 2014	$	674,980,076		$	162,107,043

During the three months ended March 31, 2014 and 2013, the transfers of financial assets via sales of loans have been treated as sales by us under ASC 860.

The Company evaluates each of its loans for potential losses at least quarterly. Its loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, as well as the financial and operating capability of the borrower. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management personnel, who utilize various data sources, including (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers’ business plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and other market data. As a result of this analysis, the Company has concluded that none of its loans are individually impaired. However, based on the inherent risks shared among the loans as a group, it is probable that the loans had incurred an impairment due to common characteristics and inherent risks in the portfolio. Therefore, the Company has recorded a reserve, based on a targeted percentage level which it seeks to maintain over the life of the portfolio, as disclosed in the tables below. Historically, the Company has not incurred losses on originated loans. At March 31, 2014 and December 31, 2013, there was $4,255,164 and $4,273,890, respectively, of unamortized discounts included in our mortgage loan receivables held for investment, at amortized cost on our combined consolidated balance sheets. At March 31, 2014, there is one loan on non-accrual status with an amortized cost of $4,620,000 included in our mortgage loan receivables held for investment, at amortized cost on our combined consolidated balance sheets. This loan was not originated by the Company. Instead it was credit impaired at the time of acquisition, which was reflected in Ladder’s purchase price. At December 31, 2013, there is one loan on non-accrual status with an amortized cost of $4,620,000 included in our mortgage loan receivables held for investment, at amortized cost on our combined consolidated balance sheets. This is the same loan described in the previous sentence.

Reserve for Loan Losses

	Three Months Ended March 31,
	2014		2013

Reserve for loan losses at beginning of period	$	2,500,000	$	1,900,000
Reserve for loan losses	150,000		150,000
Charge-offs	—		—
Reserve for loan losses at end of period	$	2,650,000	$	2,050,000