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Commercial Mortgage, Subordinate Loans and Other Lending Assets, Net (Tables)
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Schedule of Loan Portfolio
Our loan portfolio was comprised of the following at June 30, 2020 and December 31, 2019 ($ in thousands):
Loan Type
 
June 30, 2020
 
December 31, 2019
Commercial mortgage loans, net (1)
 
$
5,343,437

 
$
5,326,967

Subordinate loans and other lending assets, net
 
1,044,400

 
1,048,126

Total
 
$
6,387,837

 
$
6,375,093



  ———————
(1)
Includes $125.7 million and $126.7 million in 2020 and 2019, respectively, of contiguous financing structured as subordinate loans.
Schedule of Activity Related to Loan Investment Portfolio
Activity relating to our loan portfolio, for the six months ended June 30, 2020, was as follows ($ in thousands):
 
 
Principal
Balance
 
Deferred Fees/Other Items (1)
 
Specific Provision for Loan Loss
 
Carrying Value, Net
December 31, 2019
 
$
6,467,842

 
$
(35,768
)
 
$
(56,981
)
 
$
6,375,093

New loan fundings
 
447,440

 
—

 
—

 
447,440

Add-on loan fundings (2)
 
223,027

 
—

 
—

 
223,027

Loan repayments and sales
 
(398,402
)
 
—

 
—

 
(398,402
)
Gain (loss) on foreign currency translation
 
(90,893
)
 
1,327

 
—

 
(89,566
)
Specific CECL Allowance
 
—

 
—

 
(140,500
)
 
(140,500
)
Realized loss on investment
 
(15,000
)
 
—

 
—

 
(15,000
)
Net loss on loan sales
 
(4,948
)
 
3,543

 
—

 
(1,405
)
Deferred fees
 
—

 
(5,718
)
 
—

 
(5,718
)
PIK interest and amortization of fees
 
24,656

 
12,756

 
—

 
37,412

June 30, 2020
 
$
6,653,722

 
$
(23,860
)
 
$
(197,481
)
 
$
6,432,381

General CECL Allowance (3)
 
 
 
 
 
 
 
(44,544
)
Carrying value net, as of June 30, 2020
 
 
 
 
 
 
 
$
6,387,837

———————
(1)
Other items primarily consist of purchase discounts or premiums, gains and losses on loan sales, exit fees and deferred origination expenses.
(2)
Represents fundings for loans closed prior to 2020.
(3)
$4.1 million of the General CECL Allowance is excluded from this table because it relates to unfunded commitments and has been recorded as a liability under accounts payable, accrued expenses and other liabilities in the condensed consolidated balance sheet.
Schedule of Overall Statistics for the Loan Portfolio
The following table details overall statistics for our loan portfolio at the dates indicated ($ in thousands):
 
 
June 30, 2020
 
December 31, 2019
Number of loans
 
71

 
72

Principal balance
 
$
6,653,722

 
$
6,467,842

Carrying value, net
 
$
6,387,837

 
$
6,375,093

Unfunded loan commitments (1)
 
$
1,462,774

 
$
1,952,887

Weighted-average cash coupon (2)
 
5.9
%
 
6.5
%
Weighted-average remaining fully-extended term (3)
 
3.1 years

 
3.3 years

Weighted-average expected term (4)
 
2.1 years

 
1.8 years

  ———————
(1)
Unfunded loan commitments are funded to finance construction costs, tenant improvements, leasing commissions, or carrying costs. These future commitments are funded over the term of each loan, subject in certain cases to an expiration date.
(2)
For floating rate loans, based on applicable benchmark rates as of the specified dates. For loans placed on non-accrual or cost recovery the interest rate used in calculating weighted-average cash coupon is 0%.
(3)
Assumes all extension options are exercised.
(4)
Expected term represents our estimated timing of repayments as of June 30, 2020 and December 31, 2019, respectively.
Schedule of Mortgage Loans on Real Estate
The table below details the property type of the properties securing the loans in our portfolio at the dates indicated ($ in thousands):
 
 
June 30, 2020
 
December 31, 2019
Property Type
 
Carrying
Value
 
% of
Portfolio(1)
 
Carrying
Value
 
% of
Portfolio
Office
 
$
1,764,267

 
27.4
%
 
$
1,401,400

 
22.0
%
Hotel
 
1,551,144

 
24.1

 
1,660,162

 
26.0

Residential-for-sale: construction
 
783,359

 
12.2

 
692,816

 
10.9

Residential-for-sale: inventory
 
282,034

 
4.4

 
321,673

 
5.1

Urban Retail
 
622,894

 
9.7

 
643,706

 
10.1

Healthcare
 
355,121

 
5.5

 
371,423

 
5.8

Urban Predevelopment
 
294,401

 
4.6

 
409,864

 
6.4

Other
 
779,161

 
12.1

 
874,049

 
13.7

Total
 
$
6,432,381

 
100.0
%
 
$
6,375,093

 
100.0
%
General CECL Allowance
 
(44,544
)
 
 
 
 
 
 
Total carrying value, net
 
$
6,387,837

 
 
 


 



  ———————
(1) Percentage of portfolio calculations are made prior to consideration of General CECL Allowance.

Geography

The table below details the geographic distribution of the properties securing the loans in our portfolio at the dates indicated ($ in thousands):
 
 
June 30, 2020
 
December 31, 2019
Geographic Location
 
Carrying
Value
 
% of
Portfolio(1)
 
Carrying
Value
 
% of
Portfolio
New York City
 
$
2,359,066

 
36.7
%
 
$
2,167,487

 
34.0
%
Northeast
 
132,308

 
2.1

 
110,771

 
1.7

United Kingdom
 
1,236,696

 
19.2

 
1,274,390

 
20.0

West
 
725,507

 
11.3

 
728,182

 
11.4

Midwest
 
556,873

 
8.6

 
614,337

 
9.6

Southeast
 
521,586

 
8.1

 
564,166

 
8.9

Other
 
900,345

 
14.0

 
915,760

 
14.4


Total
 
$
6,432,381

 
100.0
%
 
$
6,375,093

 
100.0
%
General CECL Allowance
 
(44,544
)
 
 
 
 
 
 
Total carrying value, net
 
$
6,387,837

 
 
 
 
 
 

  ———————
(1) Percentage of portfolio calculations are made prior to consideration of the General CECL Allowance.
Schedule of Carrying Value of Loan Portfolio Based on Internal Risk Ratings
The following tables allocate the carrying value of our loan portfolio based on our internal risk ratings and date of origination at the dates indicated ($ in thousands):
June 30, 2020
 
 
 
 
 
 
 
 
 
Year Originated
Risk Rating
 
Number of Loans
 
Total
 
% of Portfolio
 
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior
1
 
—

 
—
 
—
%
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

2
 
1

 
32,000
 
0.5
%
 
 
—

 
—

 
—

 
—

 
—

 
32,000

3
 
63

 
6,002,285
 
93.3
%
 
 
431,012

 
2,616,479

 
1,438,946
 
782,956

 
88,861
 
644,031

4
 
1

 
8,000

 
0.1
%
 
 
—

 
—

 
—

 
8,000

 
—

 
—

5
 
6

 
390,096

 
6.1
%
 
 
—

 
—

 
28,872
 
126,871

 
114,910
 
119,443

Total
 
71

 
$
6,432,381

 
100.0
%
 
 
$
431,012

 
$
2,616,479

 
$1,467,818
 
$
917,827

 
$203,771
 
$
795,474

General CECL Allowance
 
(44,544
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total carrying value, net
$
6,387,837

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
W.A. Risk Rating
3.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


December 31, 2019
 
 
 
 
 
 
 
 
 
Year Originated
Risk Rating
 
Number of Loans
 
Total
 
% of Portfolio
 
 
2019
 
2018
 
2017
 
2016
 
2015
 
Prior
1
 
—

 
$
—

 
—
%
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

2
 
8

 
348,324

 
5.5
%
 
 
—

 
241,676

 
—

 
36,250

 
24,546

 
45,852

3
 
61

 
5,707,555

 
89.5
%
 
 
2,736,825

 
1,355,014

 
912,636

 
72,540

 
499,700

 
130,840

4
 
1

 
182,910

 
2.9
%
 
 
—

 
—

 
—

 
182,910

 
—

 
—

5
 
2

 
136,304

 
2.1
%
 
 
—

 
—

 
—

 
—

 
—

 
136,304

Total
 
72

 
$
6,375,093

 
100.0
%
 
 
$
2,736,825

 
$
1,596,690

 
$
912,636

 
$
291,700

 
$
524,246

 
$
312,996

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
W.A. Risk Rating
 
3.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Schedule of CECL Reserves
The following schedule illustrates the quarterly changes in the CECL Allowance since we adopted the CECL Standard on January 1, 2020 ($ in thousands):

 
 
Specific CECL Allowance(1)
 
General CECL Allowance
 
Total CECL Allowance
 
CECL Allowance as % of Amortized Cost
 
 
 
Funded
Unfunded
Total
 
 
General
Total
December 31, 2019
$
56,981

 
$
—

$
—

$
—

 
$
56,981

 
—
%
—
%
Changes:
 
 
 
 
 
 
 
 
 
 
 
January 1, 2020 - Adoption of CECL Standard
—

 
27,779

3,088

30,867

 
30,867

 

 
 
Q1 Allowances
150,000

 
30,494

2,971

33,465

 
183,465

 
 
 
March 31, 2020
$
206,981

 
$
58,273

$
6,059

$
64,332

 
$
271,313

 
1.08
%
4.05
%
Changes:
 
 
 
 
 
 
 
 
 
 
 
Q2 Allowances (Reversals)
5,500

 
(13,729
)
(1,940
)
(15,669
)
 
(10,169
)
 
 
 
 
Realized Loss
(15,000
)
 
—

—

—

 
(15,000
)
 
 
 
June 30, 2020
$
197,481

 
$
44,544

$
4,119

$
48,663

 
$
246,144

 
0.81
%
3.71
%
  ———————
(1) As of December 31, 2019, amount represents specific loan loss provisions recorded on assets before the adoption of the CECL Standard. After the adoption of the CECL Standard on January 1, 2020, amounts represent Specific CECL Allowances.

Refer to the following schedule of the General CECL Allowance as of June 30, 2020, and as of the date of adoption, January 1, 2020 ($ in thousands):

 
 
June 30, 2020
 
January 1, 2020(1)
Commercial mortgage loans, net
 
$
22,775

 
$
12,149

Subordinate loans and other lending assets, net
 
21,769

 
15,630

Unfunded commitments(2)
 
4,119

 
3,088

Total General CECL Allowance
 
$
48,663

 
$
30,867

  ———————
(1) As of January 1, 2020, we adopted the CECL Standard through a cumulative-effect adjustment to retained earnings
(2) The General CECL Allowance on Unfunded commitments is recorded as a liability on the condensed consolidated balance sheet within accounts payable, accrued expenses and other liabilities
Schedule of Loans in Cost Recovery
The following table summarizes the specific provision for loan losses that has been recorded on our portfolio as of June 30, 2020 ($ in thousands):

Type
Property type
Location
Amortized cost(1)
Interest recognition status/ as of date
Mortgage
 
 
 
 
Urban Predevelopment(3)
Brooklyn, NY
126,871

Cost Recovery/ 3/1/2020
 
Urban Predevelopment(3)
Miami, FL
114,910

Cost Recovery/ 3/1/2020
 
Retail Center(4)(5)
Cincinnati, OH
103,424

 Cost Recovery/ 10/1/2019
 
Hotel(2)
Pittsburgh, PA
28,872

Cost Recovery/ 3/31/2020
 
Residential-for-sale: inventory(6)(7)
Bethesda, MD
2,695

Cost Recovery/ 1/1/2018
Mortgage total:
 
$
376,772

 
Mezzanine
 
 
 
 
Hotel(2)
Washington, DC
$
13,324

 Cost Recovery/ 3/31/2020
Mezzanine total:
 
$
13,324

 
Grand total:
 
$
390,096

 
  ———————

(1)
Amortized cost is shown net of $197.5 million of provisions, $5.5 million and $140.5 million of which were taken during the three and six months ended June 30, 2020 due to factors including COVID-19. See Note 2 for additional information regarding COVID-19.
(2)
The fair value of hotel collateral was determined by applying a discount rate ranging from 8.5% to 11.0% and a capitalization rate ranging from 7.0% to 9.0%. For the hotel located in Washington, DC, during the three and six months ended June 30, 2020, $0.2 million of interest paid was applied towards reducing the carrying value of the loan.
(3)
The fair value of urban predevelopment collateral was determined by assuming rent per square foot ranging from $48 to $225 and a capitalization rate ranging from 5.0% to 5.5%.
(4)
The fair value of retail collateral was determined by applying a capitalization rate of 8.3%.
(5)
The entity in which we own an interest and which owns the underlying property was deemed to be a VIE and we determined that we are not the primary beneficiary of that VIE. During the three and six months ended June 30, 2020, $0.4 million and $1.1 million, respectively, of interest paid was applied towards reducing the carrying value of the loan.
(6)
The fair value of residential-for-sale: inventory was determined by assuming a sales price per square foot of $371.
(7)
A $3.0 million portion of this provision was recorded on an investment previously recorded under other assets on our condensed consolidated balance sheet.