Subordinate Loans

The Company’s subordinate loan portfolio was comprised of the following at September 30, 2014:



Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon
Office - Michigan	May-10	Jun-20	$	9,000	$	8,828	$	8,828	Fixed
Ski Resort - California	Apr-11	May-17	40,000		40,000		39,714		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		9,747		9,747		Fixed
Hotel Portfolio – Various (1)	Nov-12	Nov-15	50,000		47,172		47,260		Floating
Condo Conversion – NY, NY (2)	Dec-12	Jan-15	35,000		35,545		35,722		Floating
Condo Construction – NY, NY (1)	Jan-13	Jul-17	60,000		73,844		73,457		Fixed
Multifamily Conversion – NY, NY (1)	Jan-13	Dec-14	18,000		14,608		14,683		Floating
Hotel Portfolio – Rochester, MN	Jan-13	Feb-18	25,000		24,560		24,560		Fixed
Warehouse Portfolio - Various	May-13	May-23	32,000		32,000		32,000		Fixed
Multifamily Conversion – NY, NY (3)	May-13	Dec-14	44,000		44,000		43,907		Floating
Office Condo - NY, NY	Jul-13	Jul-22	14,000		14,000		13,588		Fixed
Condo Conversion – NY, NY (4)	Aug-13	Sept-15	29,400		29,601		29,491		Floating
Mixed Use - Pittsburgh, PA (1)	Aug-13	Aug-16	22,500		22,500		22,445		Floating
Mixed Use - Various (2)	Dec-13	Dec-18	17,000		18,791		18,608		Fixed
Mixed Use - London, England	Apr-14	Jan-15	54,926		52,034		52,034		Fixed
Hotel - NY, NY	Jun-14	Dec-14	28,250		28,250		28,250		Fixed
Healthcare Portfolio - Various (5)	Jun-14	Jun-16	50,000		50,000		50,000		Floating
Hotel - NY, NY (5)	Jul-14	Jul-16	20,000		20,000		19,834		Floating
Ski Resort - Big Sky, Montana	Aug-14	Sept-20	15,000		15,000		14,851		Fixed
Total/Weighted Average			$	580,601	$	587,005	$	585,504	11.20	%


(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.


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

During January 2014, the Company received a $15,000 principal repayment from a subordinate loan secured by a pledge of the equity interests in the owner of a New York City hotel. The Company realized a 14% internal rate of return ("IRR") on this subordinate loan. See below for a description of how the IRR is calculated.

During June 2014, the Company received a $47,000 principal repayment from a mezzanine loan secured by a pledge of the equity interests in a portfolio of skilled nursing facilities. The Company realized a 12% IRR on this mezzanine loan.

During August 2014, the Company received the final repayment from a $50,000 mezzanine loan secured by a pledge of the equity interests in a borrower that owns a portfolio of seven office parks throughout Florida. The Company realized a 13% IRR on this mezzanine loan.

IRR is the annualized effective compounded return rate that accounts for the time-value of money and represents the rate of return on an investment over a holding period expressed as a percentage of the investment. It is the discount rate that makes the net present value of all cash outflows (the costs of investment) equal to the net present value of cash inflows (returns on investment). It is derived from the negative and positive cash flows resulting from or produced by each transaction (or for a transaction involving more than one investment, cash flows resulting from or produced by each of the investments), whether positive, such as investment returns, or negative, such as transaction expenses or other costs of investment, taking into account the dates on which such cash flows occurred or are expected to occur, and compounding interest accordingly.

The Company’s subordinate 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
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.

During February 2013, the Company received principal repayment 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.

During 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.

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 September 30, 2014 and December 31, 2013.