Subordinate 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

Subordinate Loans [Member]

Mortgage Loans on Real Estate [Line Items]

Subordinate Loans

The Company’s subordinate loan portfolio was comprised of the following as of December 31, 2013:



Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon
Office - Michigan	May-10	Jun-20	$	9,000	$	8,866	$	8,866	Fixed
Ski Resort - California	Apr-11	May-17	40,000		40,000		39,781		Fixed
Hotel– New York (1)	Jan-12	Feb-14	15,000		15,000		15,207		Fixed
Mixed Use – North Carolina	Jul-12	Jul-22	6,525		6,525		6,525		Fixed
Office Complex - Missouri	Sept-12	Oct-22	10,000		9,849		9,849		Fixed
Hotel Portfolio – Various (1)	Nov-12	Nov-15	50,000		48,431		48,397		Floating
Condo Conversion – NY, NY (2)	Dec-12	Jan-15	35,000		35,000		34,734		Floating
Condo Construction – NY, NY (1)	Jan-13	Jul-17	60,000		66,800		66,340		Fixed
Multifamily Conversion – NY, NY (1)	Jan-13	Dec-14	18,000		18,000		17,906		Floating
Hotel Portfolio – Rochester, MN	Jan-13	Feb-18	25,000		24,771		24,771		Fixed
Warehouse Portfolio - Various	May-13	May-23	32,000		32,000		32,000		Fixed
Multifamily Conversion – NY, NY (3)	May-13	Jun-14	44,000		44,000		43,859		Floating
Office Condo - NY, NY	Jul-13	Jul-22	14,000		14,000		13,565		Fixed
Condo Conversion – NY, NY (4)	Aug-13	Sept-15	294		295		2		Floating
Mixed Use - Pittsburgh, PA (1)	Aug-13	Aug-16	22,500		22,500		22,342		Floating
Healthcare Portfolio - Various	Oct-13	Jun-14	47,000		47,000		47,000		Floating
Mixed Use - Florida (2)	Nov-13	Oct-18	50,000		50,000		49,535		Floating
Mixed Use - Various (2)	Dec-13	Dec-18	17,000		17,000		16,805		Fixed
Total/Weighted Average			$	495,319	$	500,037	$	497,484	11.60	%


(1)	Includes a one-year extension option subject to certain conditions and the payment of an extension fee.


(2)	Includes two one-year extension options subject to certain conditions and the payment of a fee for each extension.


(3)	Includes a three-month extension option subject to certain conditions and the payment of an extension fee.


(4)	Includes a one-year extension option subject to certain conditions and the payment of an extension fee. As of December 31, 2013, the Company had $29,106 of unfunded loan commitments related to this loan.

In February 2013, the Company received principal repayments on two mezzanine loans totaling $50,000 secured by a portfolio of retail shopping centers located throughout the United States. In connection with the repayment, the Company received a yield maintenance payment totaling $2,500. With the yield maintenance payment, the Company realized a 15% IRR on its mezzanine loan investment. For a description of how the IRR is calculated, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Investments.”

In June 2013, the Company received the repayment of a $15,000 mezzanine loan secured by a hotel in New York City. In connection with the repayment, the Company received a yield maintenance payment totaling $1,233. With the yield maintenance payment, the Company realized a 19% IRR on its mezzanine loan investment. For a description of how the IRR is calculated, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Investments.”

During October 2013, the Company received a full principal repayment from a $25,000 mezzanine loan secured by a portfolio of hotels in New York City. The Company realized a 12% IRR on this investment.

During 2013, the Company received a full principal repayment from a $25,000 subordinate financing secured by a retail center in Woodbridge, Virginia. The Company realized a 15% IRR on this investment.

The Company’s subordinate 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
Senior Mezz - Retail - Various	Dec-09	Dec-19	$	30,000	$	30,000	$	30,000	Fixed
Junior Mezz - Retail - Various	Dec-09	Dec-19	20,000		20,000		20,000		Fixed
Office - Michigan	May-10	Jun-20	9,000		8,912		8,912		Fixed
Ski Resort - California	Apr-11	May-17	40,000		40,000		39,831		Fixed
Hotel Portfolio – New York (1)	Aug-11	July-13	25,000		25,000		25,000		Floating
Retail Center – Virginia (2)	Oct-11	Oct-14	25,000		26,243		26,243		Fixed
Hotel– New York (3)	Jan-12	Feb-14	15,000		15,000		15,013		Fixed
Hotel– New York (4)	Mar-12	Mar-14	15,000		15,000		15,000		Floating
Mixed Use – North Carolina	Jul-12	Jul-22	6,525		6,525		6,525		Fixed
Office Complex - Missouri	Sept-12	Oct-22	10,000		9,979		9,979		Fixed
Hotel Portfolio - Various (5)	Nov-12	Nov-15	50,000		49,950		49,743		Floating
Condo Conversion – NY, NY (6)	Dec-12	Jan-15	350		350		—		Floating
Total/Weighted Average			$	245,875	$	246,959	$	246,246	12.46	%


(1)	Includes three one-year extension options subject to certain conditions and the payment of a fee for the fourth and fifth year extensions.


(2)	Includes two one-year extension options subject to certain conditions.


(3)	Includes a one-year extension option subject to certain conditions and the payment of an extension fee.


(4)	Includes two one-year extension options subject to certain conditions and the payment of a fee for the second extension.


(5)	Includes a one-year extension option subject to certain conditions and the payment of an extension fee.


(6)	Includes two one-year extension options subject to certain conditions and the payment of a fee for each extension. As of December 31, 2012, the Company had $34,650 of unfunded loan commitments related to this loan.

During June 2012, the Company modified the $40,000 subordinate loan secured by a ski resort in California. The modification was completed in connection with a modification of both the senior and junior loans in order to provide financial covenant relief to the borrower and included the addition of a 0.5% amendment fee and a 1.0% exit fee upon repayment of the loan. In addition, the interest rate on the mezzanine loan was increased by 0.75% to 14% until the earlier of (i) the loan being back in compliance with its original covenants; or (ii) April 2014. As of December 31, 2012, the mezzanine loan was current on its interest payments to the Company. All of the additional remuneration will be recognized over the remaining life of the loan.

The Company evaluates its loans for possible impairment on a quarterly basis. See Note 5 – Commercial Mortgage Loans for a summary of the metrics reviewed. The Company has determined that an allowance for loan loss was not necessary at December 31, 2013 and December 31, 2012.