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Commercial Mortgage Loans | 9 Months Ended
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Sep. 30, 2013
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Commercial Mortgage Loans | Commercial Mortgage Loans The Company’s commercial mortgage loan portfolio was comprised of the following at September 30, 2013:
Description | Date of Investment |  | Maturity Date |  | Original Face Amount |  | Current Face Amount |  | Carrying Value |  | Coupon |  | Property Size
Hotel - NY, NY | Jan-10 |  | Feb-15 |  | $ | 32,000 |  |  | $ | 31,385 |  |  | $ | 31,385 |  |  | Fixed |  |  | 151 rooms
Office Condo (Headquarters) - NY, NY | Feb-10 |  | Feb-15 |  | 28,000 |  |  | 27,235 |  |  | 27,235 |  |  | Fixed |  |  | 73,419 sq. ft.
Hotel - Silver Spring, MD | Mar-10 |  | Apr-15 |  | 26,000 |  |  | 25,033 |  |  | 24,840 |  |  | Fixed |  |  | 263 rooms
Condo Conversion – NY, NY (1) | Dec-12 |  | Jan-15 |  | 45,000 |  |  | 45,000 |  |  | 44,732 |  |  | Floating |  |  | 119,000 sq. ft.
Condo Conversion – NY, NY (2) | Aug-13 |  | Sept-15 |  | 33,000 |  |  | 33,000 |  |  | 32,701 |  |  | Floating |  |  | 40,000 sq. ft.
Total/Weighted Average |  |  |  |  | $ | 164,000 |  |  | $ | 161,653 |  |  | $ | 160,893 |  |  | 8.83 | % |  |
(1) | This loan includes two one-year extension options subject to certain conditions and the payment of a fee for each extension.
(2) | This loan includes a one-year extension option subject to certain conditions and the payment of a fee.
During March 2013, the Company consented to the transfer of the controlling ownership of the borrower under the Silver Spring, Maryland loan. In conjunction with its consent, the Company received a $280 fee, which will be recognized over the remaining life of the loan. During September 2013, two senior sub-participation interests in a first mortgage loan which was secured by over 20 acres of land in South Boston, Massachusetts were repaid at par. The senior sub-participation interests were purchased at 78% of par (including a 3% brokerage fee). Upon the repayment, the Company realized an internal rate of return ("IRR") of 25% on its investment. For a description of how the IRR is calculated, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Conditions and Results of Operations—Investments”. The Company’s commercial mortgage loan portfolio was comprised of the following at December 31, 2012:
Description | Date of Investment |  | Maturity Date |  | Original Face Amount |  | Current Face Amount |  | Carrying Value |  | Coupon |  | Property Size
Hotel - NY, NY | Jan-10 |  | Feb-15 |  | $ | 32,000 |  |  | $ | 31,571 |  |  | $ | 31,571 |  |  | Fixed |  |  | 151 rooms
Office Condo (Headquarters) - NY, NY | Feb-10 |  | Feb-15 |  | 28,000 |  |  | 27,419 |  |  | 27,419 |  |  | Fixed |  |  | 73,419 sq. ft.
Hotel - Silver Spring, MD | Mar-10 |  | Apr-15 |  | 26,000 |  |  | 25,273 |  |  | 25,273 |  |  | Fixed |  |  | 263 rooms
Mixed Use – South Boston, MA (1) | Apr-12 |  | Dec-13 |  | 23,844 |  |  | 17,287 |  |  | 14,105 |  |  | Floating |  |  | 20 acres
Condo Conversion – NY, NY (2) | Dec-12 |  | Jan-15 |  | 45,000 |  |  | 45,000 |  |  | 44,553 |  |  | Fixed |  |  | 119,000 sq. ft.
Total/Weighted Average |  |  |  |  | $ | 154,844 |  |  | $ | 146,550 |  |  | $ | 142,921 |  |  | 7.82 | % |  |
(1) | This loan is a senior sub-participation interest in a $120,000 first mortgage. In December 2012, the borrower exercised a one-year extension option which was subject to repayment of $33,000 of the entire first mortgage loan (of which the Company received its pro rata portion) and the payment of a fee on the outstanding balance of the entire first mortgage loan.
(2) | This loan includes two one-year extension options subject to certain conditions and the payment of a fee for each extension.
The Company evaluates its loans for possible impairment on a quarterly basis. 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/sponsor on a loan by loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations are sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan 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 borrower operates. Such loan loss analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including (i) periodic financial data such as debt service coverage ratio, property occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections and (iii) current credit spreads and discussions with market participants. An allowance for loan loss is established when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. The Company has determined that an allowance for loan losses was not necessary at September 30, 2013 and December 31, 2012.

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