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MORTGAGE LOAN RECEIVABLES (Tables)
 3 Months Ended
Mar. 31, 2020
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract]  
Schedule of mortgage loan receivables
 
Outstanding
Face Amount
 
Carrying
Value
 
Weighted
Average
Yield (1)
 
Remaining
Maturity
(years)
 
 
 
 
 
 
 
 
Mortgage loan receivables held for investment, net, at amortized cost:
 
 
 
 
 
 
 
Mortgage loans held by consolidated subsidiaries:
 
 
 
 
 
 
 
First mortgage loans
$
3,330,918

 
$
3,310,167

 
6.72
%
 
1.22
Mezzanine loans
122,975

 
122,612

 
10.84
%
 
3.16
Total mortgage loans held by consolidated subsidiaries
3,453,893

 
3,432,779

 
6.86
%
 
1.29
Current expected credit losses
N/A

 
(49,457
)
 
 
 
 
Total mortgage loan receivables held for investment, net, at amortized cost
3,453,893

 
3,383,322

 
 
 
 
Mortgage loan receivables held for sale:
 
 
 
 
 
 
 
First mortgage loans
154,833

 
146,713

 
3.94
%
 
9.96
Total
$
3,608,726

 
$
3,530,035

 
6.84
%
 
1.66
 
(1)
March 31, 2020 LIBOR rates are used to calculate weighted average yield for floating rate loans.

 
Outstanding
Face Amount
 
Carrying
Value
 
Weighted
Average
Yield (1)
 
Remaining
Maturity
(years)
 
 
 
 
 
 
 
 
Mortgage loan receivables held for investment, net, at amortized cost:
 
 
 
 
 
 
 
Mortgage loans held by consolidated subsidiaries:
 
 
 
 
 
 
 
First mortgage loans
$
3,147,275

 
$
3,127,173

 
6.77
%
 
1.35
Mezzanine loans
130,322

 
129,863

 
10.97
%
 
3.26
Total mortgage loans held by consolidated subsidiaries
3,277,597

 
3,257,036

 
6.94
%
 
1.43
Allowance for loan losses
N/A

 
(20,500
)
 
 
 
 
Total mortgage loan receivables held for investment, net, at amortized cost
3,277,597

 
3,236,536

 
 
 
 
Mortgage loan receivables held for sale:
 
 
 
 
 
 
 
First mortgage loans
122,748

 
122,325

 
4.20
%
 
9.99
Total
$
3,400,345

 
$
3,358,861

 
6.88
%
 
1.75
 
(1)
December 31, 2019 LIBOR rates are used to calculate weighted average yield for floating rate loans.
Summary of mortgage loan receivables by loan type
For the three months ended March 31, 2020 and 2019, the activity in our loan portfolio was as follows ($ in thousands):
 
Mortgage loan receivables held for investment, net, at amortized cost:
 
 
 
Mortgage loans held by consolidated subsidiaries
 
Provision expense for current expected credit loss
 
Mortgage loan 
receivables held
for sale
 
 
 
 
 
 
Balance, December 31, 2019
$
3,257,036

 
$
(20,500
)
 
$
122,325

Origination of mortgage loan receivables
313,936

 
—

 
212,805

Repayment of mortgage loan receivables
(118,531
)
 
—

 
(64
)
Proceeds from sales of mortgage loan receivables
—

 
—

 
(189,358
)
Non-cash disposition of loans via foreclosure(1)
(23,586
)
 
—

 
—

Sale of loans, net
—

 
—

 
1,005

Accretion/amortization of discount, premium and other fees
3,924

 
—

 
—

Release of asset-specific loan loss provision via foreclosure(1)
—

 
2,000

 
—

Provision expense for current expected credit loss (implementation impact)(2)
—

 
(4,964
)
 


Provision expense for current expected credit loss (impact to earnings)(2)
—

 
(17,993
)
 
—

Additional asset-specific reserve
—

 
(8,000
)
 
—

Balance, March 31, 2020
$
3,432,779

 
$
(49,457
)
 
$
146,713

 
(1)
Refer to Note 5 Real Estate and Related Lease Intangibles, Net for further detail on foreclosure of real estate.
(2)
During the three months ended March 31, 2020, the initial impact of the implementation of the CECL accounting standard as of January 1, 2020 is recorded against retained earnings. Subsequent remeasurement thereafter, including the period to date change for the three months ended March 31, 2020, is accounted for as provision expense for current expected credit loss in the consolidated statements of income.

 
Mortgage loan receivables held for investment, net, at amortized cost:
 
 
 
Mortgage loans held by consolidated subsidiaries
 
Mortgage loans transferred but not considered sold
 
Provision for loan losses
 
Mortgage loan
receivables held
for sale
 
 
 
 
 
 
 
 
Balance, December 31, 2018
$
3,318,390

 
$
—

 
$
(17,900
)
 
$
182,439

Origination of mortgage loan receivables
224,418

 
—

 
—

 
175,256

Repayment of mortgage loan receivables
(245,444
)
 
—

 
—

 
(321
)
Proceeds from sales of mortgage loan receivables
—

 
—

 
—

 
(159,424
)
Sale of loans, net
—

 
—

 
—

 
7,079

Transfer between held for investment and held for sale(1)
—

 
15,504

 
—

 
(15,504
)
Accretion/amortization of discount, premium and other fees
5,389

 
—

 
—

 
—

Provision for loan losses
—

 
—

 
(300
)
 
—

Balance, March 31, 2019
$
3,302,753

 
$
15,504

 
$
(18,200
)
 
$
189,525

 
(1)
We sell certain loans into securitizations; however, for a transfer of financial assets to be considered a sale, the transfer must meet the sale criteria of ASC 860 under which the Company must surrender control over the transferred assets which must qualify as recognized financial assets at the time of transfer. The assets must be isolated from the Company, even in bankruptcy or other receivership, the purchaser must have the right to pledge or sell the assets transferred and the Company may not have an option or obligation to reacquire the assets. If the sale criteria are not met, the transfer is considered to be a secured borrowing, the assets remain on the Company’s consolidated balance sheets and the sale proceeds are recognized as a liability. During the three months ended March 31, 2019, the Company reclassified from mortgage loan receivables held for sale to mortgage loans transferred but not considered sold, at amortized cost, one loan with an outstanding face amount of $15.4 million, a book value of $15.5 million (fair value at the date of reclassification) and a remaining maturity of 9.8 years. This loan was sold to the WFCM 2019-C49 securitization trust and is considered a financing for accounting purposes. This transfer has been reflected as a non-cash item on the consolidated statement of cash flows for the three months ended March 31, 2019.
Schedule of provision for loan losses
Allowance for Loan Losses and Non-Accrual Status ($ in thousands)

 
Three Months Ended March 31,
 
 
2020
 
2019
 
 
 
 
 
 
Allowance for loan losses at beginning of period
$
20,500

 
$
17,900

 
Provision expense for current expected credit loss (implementation impact)
4,964

 
—

 
Provision expense for current expected credit loss (impact to earnings)
17,993

 
300

 
Additional asset-specific reserve
8,000

 
—

 
Foreclosure of loans subject to asset-specific reserve
(2,000
)
 
—

 
Allowance for loan losses at end of period
$
49,457

 
$
18,200

 
 
 
 
 
 
 
March 31, 2020
 
December 31, 2019
 
 
 
 
 
 
Principal balance of loans on non-accrual status(1)
$
142,387

(1)
$
98,725

(2)

 
(1)
Represents two of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $26.9 million, two loans with a combined carrying value of $46.4 million, one loan with a carrying value of $61.5 million, and two loans, which were originated simultaneously as part of a single transaction and have a combined carrying value of $7.7 million as further discussed below.
(2)
Represents two of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $26.9 million, one loan with a carrying value of $10.4 million and one loan with a carrying value of $61.5 million, as further discussed below.
Schedule of individually impaired loans
The Company has concluded that none of its loans, other than the four loans discussed below, are individually impaired as of March 31, 2020.

Loan Portfolio by Property Type, Geographic Region and Vintage ($ in thousands)

 
 
Principal Amount
Property Type
 
 
 
 
Multifamily
 
$
1,046,253

Office
 
854,808

Hospitality
 
386,487

Mixed Use
 
423,002

Retail
 
247,958

Other
 
105,879

Industrial
 
174,098

Manufactured Housing
 
82,666

Self-Storage
 
51,425

Subtotal loans
 
3,372,576

Individually impaired loans(1)
 
81,316

Total loans
 
$
3,453,892


 
 
Principal Amount
Geographic Region
 
 
 
 
Northeast
 
$
966,468

Southwest
 
660,635

Midwest
 
640,633

South
 
547,812

West
 
557,028

Subtotal loans
 
3,372,576

Individually impaired loans(1)
 
81,316

Total loans
 
$
3,453,892


 
 
Principal Amount
Vintage
 
 
 
 
2019
 
$
291,604

2018
 
1,319,593

2017
 
1,020,543

2016
 
322,563

Prior to 2016
 
418,273

Subtotal loans
 
3,372,576

Individually impaired loans(1)
 
81,316

Total loans
 
$
3,453,892

 
(1)
Included in individually impaired loans are one loan, originated in 2016, with a carrying value of $5.9 million, collateralized by a mixed use property located in the Northeast region, two loans, which were restructured in 2018, with a combined carrying value of $46.4 million, collateralized by a mixed use property located in the Northeast region, and one loan, originated in 2018, with a carrying value of $4.1 million, collateralized by a hotel located in the Midwest region.