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INVESTMENT IN UNCONSOLIDATED JOINT VENTURES | 9 Months Ended
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Sep. 30, 2015
Equity Method Investments and Joint Ventures [Abstract] |
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES | 6. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES As of September 30, 2015, the Company had an aggregate investment of $33.8 million in its equity method joint ventures with unaffiliated third parties. Included in the Company’s investments in unconsolidated joint ventures as of September 30, 2015 is one unconsolidated joint venture, which is a VIE for which the Company is not the primary beneficiary. This joint venture is primarily established to develop real estate property for long-term investment and was deemed to be a VIE primarily based on the fact there are disproportionate voting and economic rights within the joint venture. The Company determined that it was not the primary beneficiary of this VIE based on the fact that the Company has shared control of this entity along with the entity’s partner and therefore does not have controlling financial interests in this VIE. The Company’s aggregate investment in this VIE was $31.0 million. The Company has not provided financial support to this VIE that it was not previously contractually required to provide. In general, future costs of development not financed through a third party will be funded with capital contributions from the Company and its outside partner in accordance with their respective ownership percentages. As of September 30, 2015, the Company owned a 10% limited partnership interest in Ladder Capital Realty Income Partnership I LP (“LCRIP I”) to invest in first mortgage loans held for investment and acted as general partner and Manager to LCRIP I. The Company accounts for its interest in LCRIP I using the equity method of accounting as it exerts significant influence but the unrelated limited partners have substantive participating rights, as well as kick-out rights. During the quarter ended June 30, 2015, the last loan held by LCRIP I was repaid. LCRIP I will continue in existence until the fifth anniversary of the date of its closing, April 15, 2016. As of September 30, 2015, the Company owned a 25% membership interest in Grace Lake JV, LLC (“Grace Lake JV”) which it received in connection with the refinancing of a first mortgage loan on an office building campus in Van Buren Township, MI. The Company accounts for its interest in Grace Lake JV using the equity method of accounting as it has a 25% investment, compared to the 75% investment of its operating partner. As of September 30, 2015, the Company owned a 73.8% membership interest in 24 Second Avenue Holdings LLC (“24 Second Avenue”) to invest in a condominium development located at 24 Second Avenue, New York, NY. The Company accounts for its interest in 24 Second Avenue using the equity method of accounting as its joint venture partner is the managing member of 24 Second Avenue and has substantive participating rights. The following is a summary of the Company’s investments in unconsolidated joint ventures, which we account for using the equity method, as of September 30, 2015 and December 31, 2014 ($ in thousands):
Entity |  | September 30, 2015 |  | December 31, 2014
Ladder Capital Realty Income Partnership I LP |  | $ | 49 |  |  | $ | 3,898 |
Grace Lake JV, LLC |  | 2,753 |  |  | 2,143 |
24 Second Avenue Holdings LLC |  | 30,991 |  |  | — |
Company’s investment in unconsolidated joint ventures |  | $ | 33,793 |  |  | $ | 6,041 |
The following is a summary of the Company’s allocated earnings (losses) based on its ownership interests from investment in unconsolidated joint ventures for the three and nine months ended September 30, 2015 and 2014 ($ in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Entity |  | 2015 |  | 2014 |  | 2015 |  | 2014
Ladder Capital Realty Income Partnership I LP |  | $ | — |  |  | $ | 101 |  |  | $ | 116 |  |  | $ | 987 |
Grace Lake JV, LLC |  | 196 |  |  | 225 |  |  | 685 |  |  | 675 |
24 Second Avenue Holdings LLC |  | (221 | ) |  | — |  |  | (221 | ) |  | — |
Earnings (loss) from investment in unconsolidated joint ventures |  | $ | (25 | ) |  | $ | 326 |  |  | $ | 580 |  |  | $ | 1,662 |
Ladder Capital Realty Income Partnership I LP On April 15, 2011, the Company entered into a limited partnership agreement becoming the general partner and acquiring a 10% limited partnership interest in LCRIP I. Simultaneously with the execution of the LCRIP I Partnership Agreement, the Company was engaged as the manager of LCRIP I and is entitled to a fee based upon the average net equity invested in LCRIP I, which is subject to a fee reduction in the event average net equity invested in LCRIP I exceeds $100.0 million. During the three months ended September 30, 2015 the Company recorded no management fees. During the three months ended September 30, 2014, the Company recorded $83,873 in management fees, which is reflected in fee income in the combined consolidated statements of income. During the nine months ended September 30, 2015 and 2014, the Company recorded $77,447 and $312,417, respectively, in management fees, which is reflected in fee income in the combined consolidated statements of income. During the three and nine months ended September 30, 2015 and 2014, there were no sales of loans to LCRIP I. It is the Company’s policy to defer 10% of the gain on any sale of loans to LCRIP I, representing its 10% limited partnership interest, until such loans are subsequently sold by LCRIP I or repaid. The Company is entitled to income allocations and distributions based upon its limited partnership interest of 10% and is eligible for additional distributions of up to 25% if certain return thresholds are met upon asset sale, full prepayment or other disposition. During the nine months ended September 30, 2015 and the three and nine months ended September 30, 2014, the return thresholds were met on certain assets that have been fully realized. The Company is obligated to provide LCRIP I 10% of any costs related to the assets held in its portfolio as of September 30, 2015. Grace Lake JV, LLC In connection with the origination of a loan in April 2012, the Company received a 25% equity kicker with the right to convert upon a capital event. On March 22, 2013, the loan was refinanced and the Company converted its interest into a 25% limited liability company membership interest in Grace Lake JV, which holds an investment in an office building complex. After taking into account the preferred return of 8.25% and the return of all equity remaining in the property to the Company’s operating partner, the Company is entitled to 25% of the distribution of all excess cash flows and all disposition proceeds upon any sale. The Company is not legally required to provide any future funding to Grace Lake JV. 24 Second Avenue Holdings LLC On August 7, 2015, 24 Second Avenue Holdings LLC was formed between the Company and an operating partner, who is the managing member of 24 Second Avenue. The Company contributed $31.1 million for a 73.8% interest and the operating partner has a 26.2% interest. The Company is entitled to income allocations and distributions based upon its membership interest of 73.8% until the Company achieves a 1.70x profit multiple, after which, ultimately, income is allocated and distributed 50% to the Company and 50% to the operating partner. During the three and nine months ended September 30, 2015, the Company recorded $0.2 million in expenses, which is recorded in earnings (loss) from investment in unconsolidated joint ventures in the combined consolidated statements of income. The Company capitalizes interest related to the cost of its investment as 24 Second Avenue has activities in progress necessary to construct and ultimately sell condominium units. During the three and nine months ended September 30, 2015, the Company capitalized $0.1 million of interest expense, using a weighted average interest rate, which is recorded in investment in unconsolidated joint ventures in the combined consolidated balance sheets. Combined Summary Financial Information for Unconsolidated Joint Ventures The following is a summary of the combined financial position of the unconsolidated joint ventures in which the Company had investment interests as of September 30, 2015 and December 31, 2014 ($ in thousands):
|  | September 30, 2015 |  | December 31, 2014
Total assets |  | $ | 130,433 |  |  | $ | 118,762 |
Total liabilities |  | 88,405 |  |  | 81,073 |
Partners’/members’ capital |  | $ | 42,028 |  |  | $ | 37,689 |
The following is a summary of the combined results from operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the three and nine months ended September 30, 2015 and 2014 ($ in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
Total revenues |  | $ | 4,203 |  |  | $ | 5,700 |  |  | $ | 14,666 |  |  | $ | 19,661 |
Total expenses |  | 4,626 |  |  | 3,727 |  |  | 11,987 |  |  | 12,571 |
Net income (loss) |  | $ | (423 | ) |  | $ | 1,973 |  |  | $ | 2,679 |  |  | $ | 7,090 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32787-111569 + Details
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