Commercial Mortgage Loans

12 Months Ended

Dec. 31, 2013

Mortgage Loans on Real Estate [Line Items]



Property Type	Location	Interest Rate		Final Extended Maturity Date	Periodic Payment Terms	Face amount of loans		Carrying amount of loans
Commercial mortgage loans
Hotel	New York	8.25	%	Feb - 15	30 year	$	31,317	$	31,317
Office Condo (Headquarters)	New York	8.00	%	Feb - 15	30 year	27,169		27,169
Hotel	Maryland	9.00	%	Apr -15	25 year	24,947		24,785
Condo Conversion	New York	9.00	%	Jan -17	Interest only	45,000		44,867
Condo Conversion	New York	9.67	%	Sept - 16	Interest only	33,167		32,961
Total commercial mortgage loans						161,600		161,099
Subordinate loans (1)
Office	Michigan	13.00	%	Jun - 20	25 year	8,866		8,866
Ski Resort	California	14.00	%	May - 17	Interest only	40,000		39,781
Hotel	New York	12.00	%	Feb - 15	Interest only	15,000		15,207
Mixed Use	North Carolina	11.10	%	Aug - 22	Interest only	6,525		6,525
Office Complex	Missouri	11.75	%	Oct - 22	30 year	9,849		9,849
Hotel Portfolio	Various US cities	11.07	%	Nov - 16	30 year	48,431		48,397
Condo Conversion	New York	9.00	%	Jan -17	Interest only	35,000		34,734
Condo Construction	New York	13.25	%	July - 18	Interest only	66,800		66,340
Multifamily Conversion	New York	10.48	%	Dec - 15	Interest only	18,000		17,906
Hotel Portfolio	Minnesota	11.00	%	Feb - 18	30 year	24,771		24,771
Warehouse Portfolio	Various US cities	11.50	%	May - 23	Interest only	32,000		32,000
Multifamily Conversion	New York	12.25	%	Sept - 14	Interest only	44,000		43,859
Office Condo	New York	11.25	%	Jul - 22	Interest only	14,000		13,565
Condo Conversion	New York	9.67	%	Sept - 16	Interest only	295		2
Mixed Use	Pennsylvania	9.42	%	Aug - 18	Interest only	22,500		22,342
Healthcare Portfolio	Various US cities	11.15	%	Jun - 14	Interest only	47,000		47,000
Mixed Use	Florida	10.42	%	Oct - 18	Interest only	50,000		49,535
Mixed Use	Various US cities	14.00	%	Dec - 18	Interest only	17,000		16,805
Total subordinate loans						500,037		497,484
Total						$	661,637	$	658,583	⁽²⁾


(1)	Subject to prior liens.


(2)	The aggregate cost for federal income tax purposes is $658,583.

The following table summarizes the changes in the carrying amounts of mortgage loans during 2013 and 2012.

Reconciliation of Carrying Amount of Loans



	2013			2012
Balance at beginning of year	$	389,167		$	258,092
New mortgage loans	401,912			159,465
Collections of principal	(137,168		)	(31,408		)
Discount accretion	4,672			3,018
Balance at the close of year	$	658,583		$	389,167

Commercial mortgage loans [Member]

Mortgage Loans on Real Estate [Line Items]

Commercial Mortgage Loans

The Company’s commercial mortgage loan portfolio was comprised of the following at December 31, 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	$	31,317	$	31,317	Fixed		151 rooms
Office Condo (Headquarters) - NY, NY	Feb-10	Feb-15	28,000		27,169		27,169		Fixed		73,419 sq. ft.
Hotel - Silver Spring, MD	Mar-10	Apr-15	26,000		24,947		24,785		Fixed		263 rooms
Condo Conversion – NY, NY (1)	Dec-12	Jan-15	45,000		45,000		44,867		Floating		119,000 sq. ft.
Condo Conversion – NY, NY (2)	Aug-13	Sept-15	33,000		33,167		32,961		Floating		40,000 sq. ft.
Total/Weighted Average			$	164,000	$	161,600	$	161,099	8.82	%


(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.

At December 31, 2013, the New York hotel loan, the New York office condo and the Maryland hotel were all pledged to secure borrowings under the Company’s $100,000 master repurchase facility entered into with JPMorgan Chase Bank, N.A. (the “JPMorgan Facility”). See Note 8 – Borrowings for a description of this facility.

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 as of 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		Floating		119,000 sq. ft.
Total/Weighted Average			$	154,844	$	146,550	$	142,921	7.82	%

During April 2012, a $24,000 two-year fixed rate first mortgage loan on a 155-room boutique hotel in midtown Manhattan was repaid. The loan had an interest rate of 8.00%. The Company repaid $15,444 of borrowings under the JPMorgan Facility in conjunction with this repayment.

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 December 31, 2013 and 2012.