Participations Sold

3 Months Ended

Mar. 31, 2017

Mortgage Loans on Real Estate [Line Items]

Loans, Held for Investment

The Company’s loans receivable are comprised of the following:



Loan Type	March 31, 2017		December 31, 2016
Commercial mortgage loans, held for investment, net	$	1,955,816	$	1,641,856
Subordinate loans, held for investment, net	1,195,570		1,051,236
Total loans, held for investment, net	$	3,151,386	$	2,693,092

Activity relating to our loans, held for investment portfolio was as follows:



	Principal Balance		Deferred Fees/Other Items ⁽¹⁾		Provision for Loan Loss		Carrying Value
December 31, 2016	2,720,344		(12,252	)	(15,000	)	2,693,092
Loan fundings	492,282		—		—		492,282
Loan repayments	(44,075	)	—		—		(44,075	)
Unrealized gain (loss) on foreign currency translation	2,808		—		—		2,808
Deferred fees and other items ⁽¹⁾	—		(6,294	)	—		(6,294	)
Amortization of fees and other items ⁽¹⁾	7,854		5,718		—		13,573
March 31, 2017	3,179,213		(12,828	)	(15,000	)	3,151,386


(1)	Other items primarily consist of purchase discounts or premiums, exit fees, and deferred origination expenses.

The following table details overall statistics for our loans receivable portfolio:



	March 31, 2017			December 31, 2016
Number of loans	51			45
Principal balance	$	3,179,213		$	2,720,344
Carrying value	$	3,151,386		$	2,693,092
Unfunded loan commitments⁽¹⁾	$	121,470		$	170,365
Weighted-average cash coupon ⁽²⁾	8.82		%	8.88		%


(1)	Unfunded loan commitments are primarily funded to finance property improvements or lease-related expenditures by the borrowers. These future commitments are funded over the term of each loan, subject in certain cases to an expiration date.


(2)	For floating rate loans, assumes one-month LIBOR of 0.98% and 0.77%, as of March 31, 2017 and December 31, 2016, respectively.

The tables below detail the property type and geographic distribution of the properties securing the loans in our portfolio:



	March 31, 2017			December 31, 2016
Property Type		Carrying Value	% of Portfolio	Carrying Value	% of Portfolio
Hotel		$694,045	22.0%	$408,428	15.2%
Residential - for sale		522,707	16.6%	469,997	17.5%
Urban Retail Predevelopment		498,830	15.8%	491,187	18.2%
Office		256,177	8.1%	255,031	9.5%
Residential Rental		270,912	8.6%	309,243	11.5%
Mixed Use		252,132	8.0%	134,797	4.9%
Retail Center		240,296	7.6%	209,401	7.8%
Healthcare		171,306	5.5%	170,549	6.3%
Industrial		156,941	5.0%	156,809	5.8%
Other		88,040	2.8%	87,650	3.3%
		$3,151,386	100%	$2,693,092	100%



	March 31, 2017		December 31, 2016
Geographic Location	Carrying Value	% of Portfolio	Carrying Value	% of Portfolio
New York City	$1,232,256	39.1%	$1,034,303	38.4%
Midwest	505,769	16.0%	405,992	15.1%
Southeast	490,354	15.6%	332,276	12.3%
International (U.K.)	246,820	7.8%	244,756	9.1%
West	197,068	6.3%	219,664	8.2%
Mid Atlantic	261,076	8.3%	263,717	9.8%
Southwest	79,636	2.5%	54,614	2%
Northeast	138,407	4.4%	137,770	5.1%
Total	$3,151,386	100%	$2,693,092	100%

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.

During 2016, the Company recorded a loan loss provision of $10,000 on a multifamily commercial mortgage loan and $5,000 on a multifamily subordinate loan secured by a multifamily property located in Williston, ND. The loan loss provision was based on the difference between fair value of the underlying collateral, and the carrying value of the loan (prior to the loan loss provision). Fair value of the collateral was determined using a discounted cash flow analysis. The significant unobservable inputs used in determining the collateral value are the terminal capitalization rate and discount rate which were 11% and 10%, respectively. As of March 31, 2017 and December 31, 2016, the aggregate loan loss provision was $10,000 and $5,000 for commercial mortgage loan and subordinate loan, respectively. The Company has ceased accruing payment in kind ("PIK") interest associated with the loan.

Participating Mortgages [Member]

Mortgage Loans on Real Estate [Line Items]

Participations Sold

Participations sold represent the interests in loans the Company originated and subsequently partially sold. The Company presents the participations sold as both assets and non-recourse liabilities because the participation does not qualify as a sale according to ASC 860, Transfers and Servicing. The income earned on the participation sold is recorded as interest income and an identical amount is recorded as interest expense on the Company's condensed consolidated statements of operations.

During January 2015, the Company closed a £34,519 (or $51,996) floating-rate mezzanine loan secured by a portfolio of 44 senior housing facilities located throughout the United Kingdom. During February 2015, the Company closed an additional £20,000 (or $30,672) and participated that balance to an investment fund affiliated with Apollo. During December 2016, the Company qualified for sale accounting with respect to the previous participation sold that was converted to a discrete financial instrument, and therefore deconsolidated the participation sold.

During May 2014, the Company closed a $155,000 floating-rate whole loan secured by the first mortgage and equity interests in an entity that owns a resort hotel in Aruba. During June 2014, the Company syndicated a $90,000 senior participation in the loan and retained a $65,000 junior participation in the loan. During August 2014, both the $90,000 senior participation and the Company's $65,000 junior participation were contributed to a CMBS securitization. In exchange for contributing its $65,000 junior participation, the Company received a CMBS secured solely by the $65,000 junior participation and classified it as CMBS (Held-to-Maturity) on its condensed consolidated financial statements. At March 31, 2017, the participation had a face amount of $84,647, a carrying amount of $84,647 and a cash coupon of LIBOR plus 440 basis points.