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Loans Receivable and Other Lending Investments, net | 12 Months Ended
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Dec. 31, 2013
Receivables [Abstract] |
Loans Receivable and Other Lending Investments, net | Loans Receivable and Other Lending Investments, net The following is a summary of the Company's loans receivable and other lending investments by class ($ in thousands):
| As of December 31,
Type of Investment | 2013 |  | 2012
Senior mortgages | $ | 1,071,662 |  |  | $ | 1,751,256 |
Subordinate mortgages | 60,679 |  |  | 152,737 |
Corporate/Partnership loans | 473,045 |  |  | 450,491 |
Total gross carrying value of loans | $ | 1,605,386 |  |  | $ | 2,354,484 |
Reserves for loan losses | (377,204 | ) |  | (524,499 | )
Total loans receivable, net | $ | 1,228,182 |  |  | $ | 1,829,985 |
Other lending investments—securities | 141,927 |  |  | — |
Total loans receivable and other lending investments, net(1) | $ | 1,370,109 |  |  | $ | 1,829,985 |
Explanatory Note: _______________________________________________________________________________
(1) | The Company's recorded investment in loans as of December 31, 2013 and 2012 also includes accrued interest of $6.5 million and $9.8 million, respectively, which are included in "Accrued interest and operating lease income receivable, net" on the Company's Consolidated Balance Sheets.
During the years ended December 31, 2013, 2012 and 2011, the Company sold loans with total carrying values of $95.1 million, $53.9 million and $144.9 million, respectively, which resulted in a net realized loss of $0.6 million, a net gain of $6.4 million and no gain or loss, respectively. Gains and losses on sales of loans are included in "Other income" on the Company's Consolidated Statements of Operations. Reserve for loan losses—Changes in the Company's reserve for loan losses were as follows ($ in thousands):
| For the Years Ended December 31,
| 2013 |  | 2012 |  | 2011
Reserve for loan losses at beginning of period | $ | 524,499 |  |  | $ | 646,624 |  |  | $ | 814,625 |
Provision for loan losses(1) | 5,489 |  |  | 81,740 |  |  | 46,412 |
Charge-offs | (152,784 | ) |  | (203,865 | ) |  | (214,413 | )
Reserve for loan losses at end of period | $ | 377,204 |  |  | $ | 524,499 |  |  | $ | 646,624 |
Explanatory Note: _______________________________________________________________________________
(1) | For the years ended December 31, 2013, 2012 and 2011, the provision for loan losses includes recoveries of previously recorded loan loss reserves of $63.1 million, $4.6 million and $23.6 million, respectively.
The Company's recorded investment in loans (comprised of a loan's carrying value plus accrued interest) and the associated reserve for loan losses were as follows ($ in thousands):
| Individually Evaluated for Impairment(1) |  | Collectively Evaluated for Impairment(2) |  | Loans Acquired with Deteriorated Credit Quality(3) |  | Total
As of December 31, 2013 |  |  |  |  |  |  |
Loans | $ | 752,425 |  |  | $ | 849,613 |  |  | $ | 9,889 |  |  | $ | 1,611,927 |
Less: Reserve for loan losses | (348,004 | ) |  | (29,200 | ) |  | — |  |  | (377,204 | )
Total | $ | 404,421 |  |  | $ | 820,413 |  |  | $ | 9,889 |  |  | $ | 1,234,723 |
As of December 31, 2012 |  |  |  |  |  |  |
Loans | $ | 1,095,957 |  |  | $ | 1,210,077 |  |  | $ | 58,281 |  |  | $ | 2,364,315 |
Less: Reserve for loan losses | (472,058 | ) |  | (33,100 | ) |  | (19,341 | ) |  | (524,499 | )
Total | $ | 623,899 |  |  | $ | 1,176,977 |  |  | $ | 38,940 |  |  | $ | 1,839,816 |
Explanatory Notes: _______________________________________________________________________________
(1) | The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs aggregating to a net premium of $0.5 million and a net discount of $4.0 million as of December 31, 2013 and 2012, respectively. The Company's loans individually evaluated for impairment primarily represent loans on non-accrual status and therefore, the unamortized amounts associated with these loans are not currently being amortized into income.
(2) | The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs aggregating to a net discount of $4.6 million and $3.8 million as of December 31, 2013 and 2012, respectively.
(3) | The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs aggregating to a net premium of $0.4 million and $0.1 million as of December 31, 2013 and 2012, respectively. These loans had cumulative principal balances of $10.2 million and $58.8 million, as of December 31, 2013 and 2012, respectively.
Credit Characteristics—As part of the Company's process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans. Risk ratings are based on judgments which are inherently uncertain and there can be no assurance that actual performance will not be different than current expectation. The Company's recorded investment in performing loans, presented by class and by credit quality, as indicated by risk rating, was as follows ($ in thousands):
| As of
| December 31, 2013 |  | December 31, 2012
| Performing Loans |  | Weighted Average Risk Ratings |  | Performing Loans |  | Weighted Average Risk Ratings
Senior mortgages | $ | 591,145 |  |  | 2.50 |  |  | $ | 840,593 |  |  | 2.75 |
Subordinate mortgages | 61,364 |  |  | 3.37 |  |  | 99,698 |  |  | 2.27 |
Corporate/Partnership loans | 438,831 |  |  | 3.88 |  |  | 444,772 |  |  | 3.69 |
Total | $ | 1,091,340 |  |  | 3.11 |  |  | $ | 1,385,063 |  |  | 3.01 |
As of December 31, 2013, the Company's recorded investment in loans, aged by payment status and presented by class, were as follows ($ in thousands):
| Current |  | Less Than and Equal to 90 Days |  | Greater Than 90 Days |  | Total Past Due |  | Total
Senior mortgages | $ | 625,267 |  |  | $ | — |  |  | $ | 449,085 |  |  | $ | 449,085 |  |  | $ | 1,074,352 |
Subordinate mortgages | 61,364 |  |  | — |  |  | — |  |  | — |  |  | 61,364 |
Corporate/Partnership loans | 476,211 |  |  | — |  |  | — |  |  | — |  |  | 476,211 |
Total | $ | 1,162,842 |  |  | $ | — |  |  | $ | 449,085 |  |  | $ | 449,085 |  |  | $ | 1,611,927 |
Impaired Loans—The Company's recorded investment in impaired loans, presented by class, were as follows ($ in thousands)(1):
| As of December 31, 2013 |  | As of December 31, 2012
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | $ | 3,012 |  |  | $ | 2,992 |  |  | $ | — |  |  | $ | 108,077 |  |  | $ | 107,850 |  |  | $ | — |
Corporate/Partnership loans | — |  |  | — |  |  | — |  |  | 10,110 |  |  | 10,160 |  |  | — |
Subtotal | $ | 3,012 |  |  | $ | 2,992 |  |  | $ | — |  |  | $ | 118,187 |  |  | $ | 118,010 |  |  | $ | — |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | $ | 650,337 |  |  | $ | 645,463 |  |  | $ | (304,544 | ) |  | $ | 918,975 |  |  | $ | 918,496 |  |  | $ | (442,760 | )
Subordinate mortgages | — |  |  | — |  |  | — |  |  | 53,979 |  |  | 53,679 |  |  | (39,579 | )
Corporate/Partnership loans | 99,076 |  |  | 99,067 |  |  | (43,460 | ) |  | 63,096 |  |  | 63,246 |  |  | (9,060 | )
Subtotal | $ | 749,413 |  |  | $ | 744,530 |  |  | $ | (348,004 | ) |  | $ | 1,036,050 |  |  | $ | 1,035,421 |  |  | $ | (491,399 | )
Total: |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | $ | 653,349 |  |  | $ | 648,455 |  |  | $ | (304,544 | ) |  | $ | 1,027,052 |  |  | $ | 1,026,346 |  |  | $ | (442,760 | )
Subordinate mortgages | — |  |  | — |  |  | — |  |  | 53,979 |  |  | 53,679 |  |  | (39,579 | )
Corporate/Partnership loans | 99,076 |  |  | 99,067 |  |  | (43,460 | ) |  | 73,206 |  |  | 73,406 |  |  | (9,060 | )
Total | $ | 752,425 |  |  | $ | 747,522 |  |  | $ | (348,004 | ) |  | $ | 1,154,237 |  |  | $ | 1,153,431 |  |  | $ | (491,399 | )
Explanatory Note: _______________________________________________________________________________
(1) | All of the Company's non-accrual loans are considered impaired and included in the table above. In addition, as of December 31, 2013 and 2012, certain loans modified through troubled debt restructurings with a recorded investment of $231.8 million and $175.0 million, respectively, are also included as impaired loans in accordance with GAAP although they are performing and on accrual status.
The Company's average recorded investment in impaired loans and interest income recognized, presented by class, were as follows ($ in thousands):
| For the Years Ended December 31,
| 2013 |  | 2012 |  | 2011
| Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | $ | 31,409 |  |  | $ | 9,269 |  |  | $ | 162,093 |  |  | $ | 2,765 |  |  | $ | 309,079 |  |  | $ | 31,799 |
Corporate/Partnership loans | 8,062 |  |  | 6,050 |  |  | 10,110 |  |  | 160 |  |  | 10,110 |  |  | 680 |
Subtotal | $ | 39,471 |  |  | $ | 15,319 |  |  | $ | 172,203 |  |  | $ | 2,925 |  |  | $ | 319,189 |  |  | $ | 32,479 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | $ | 794,247 |  |  | $ | 1,976 |  |  | $ | 1,064,045 |  |  | $ | 3,865 |  |  | $ | 1,608,486 |  |  | $ | 7,187 |
Subordinate mortgages | 32,382 |  |  | — |  |  | 52,208 |  |  | — |  |  | 19,477 |  |  | — |
Corporate/Partnership loans | 77,661 |  |  | 323 |  |  | 62,248 |  |  | 312 |  |  | 66,087 |  |  | 332 |
Subtotal | $ | 904,290 |  |  | $ | 2,299 |  |  | $ | 1,178,501 |  |  | $ | 4,177 |  |  | $ | 1,694,050 |  |  | $ | 7,519 |
Total: |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | $ | 825,656 |  |  | $ | 11,245 |  |  | $ | 1,226,138 |  |  | $ | 6,630 |  |  | $ | 1,917,565 |  |  | $ | 38,986 |
Subordinate mortgages | 32,382 |  |  | — |  |  | 52,208 |  |  | — |  |  | 19,477 |  |  | — |
Corporate/Partnership loans | 85,723 |  |  | 6,373 |  |  | 72,358 |  |  | 472 |  |  | 76,197 |  |  | 1,012 |
Total | $ | 943,761 |  |  | $ | 17,618 |  |  | $ | 1,350,704 |  |  | $ | 7,102 |  |  | $ | 2,013,239 |  |  | $ | 39,998 |
During the years ended December 31, 2013, 2012 and 2011, the Company recorded interest income of $13.3 million, $0.0 million and $26.3 million, respectively, related to the resolution of certain non-performing loans. Interest income was not previously recorded while the loans were on non-accrual status. Troubled Debt Restructurings—During the years ended December 31, 2013 and 2012, the Company modified loans that were determined to be troubled debt restructurings. The recorded investment in these loans was impacted by the modifications as follows, presented by class ($ in thousands):
| For the Years Ended December 31,
| 2013 |  | 2012
| Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment
Senior mortgages | 6 |  |  | $ | 179,030 |  |  | $ | 154,278 |  |  | 8 |  |  | $ | 319,667 |  |  | $ | 272,753 |
Troubled debt restructurings that occurred during the year ended December 31, 2013 included the modification of two performing loans with a combined recorded investment of $4.6 million. The modified terms of these loans granted maturity extensions of one year. In each case, the Company believes the borrowers can perform under the modified terms of the loans and continues to classify these loans as performing. Non-performing loans with a combined investment of $174.5 million were also modified during the year ended December 31, 2013. Included in this balance were two loans with a combined recorded investment of $98.3 million in which the Company received $15.4 million of paydowns and accepted discounted payoff options on these loans, with final payments expected to be made in January 2014 and July 2014 and the loans were reclassified from non-performing to performing status as the Company believes the borrowers can perform under the modified terms of the agreements. The remaining loans were granted payoff option extensions ranging from one year to three years. These loans continued to be classified as non-performing subsequent to modification. Troubled debt restructurings that occurred during the year ended December 31, 2012 included the modifications of performing loans with a combined recorded investment of $64.1 million. The modified terms of these loans granted maturity extensions ranging from one year to three years and included conditional extension options in certain cases dependent on borrower-specific performance hurdles. In each case, the Company believes the borrowers can perform under the modified terms of the loans and continues to classify these loans as performing. Non-performing loans with a combined recorded investment of $255.6 million were also modified during the year ended December 31, 2012 and continued to be classified as non-performing subsequent to modification. Included in this balance was a loan with a recorded investment of $181.5 million prior to modification, for which the Company agreed to reduce the outstanding principal balance and recorded charge-offs totaling $45.5 million, and also reduce the loan's interest rate. The remaining non-performing loans were granted maturity extensions ranging from one month to seven months and the interest rate was reduced on one loan. Generally when granting concessions, the Company will seek to protect its position by requiring incremental pay downs, additional collateral or guarantees and in some cases lookback features or equity kickers to offset concessions granted should conditions impacting the loan improve. The Company's determination of credit losses is impacted by troubled debt restructurings whereby loans that have gone through troubled debt restructurings are considered impaired, assessed for specific reserves, and are not included in the Company's assessment of general loan loss reserves. Loans previously restructured under troubled debt restructurings that subsequently default are reassessed to incorporate the Company's current assumptions on expected cash flows and additional provision expense is recorded to the extent necessary. As of December 31, 2013, the Company had $13.3 million of unfunded commitments associated with modified loans considered troubled debt restructurings. Troubled debt restructurings that subsequently defaulted during the period were as follows ($ in thousands):
| For the Years Ended December 31,
| 2013 |  | 2012
| Number of Loans |  | Outstanding Recorded Investment |  | Number of Loans |  | Outstanding Recorded Investment
Senior mortgages | 1 |  |  | $ | 26,693 |  |  | 1 |  |  | $ | 18,511 |
Securities—As of December 31, 2013, Other lending investments—securities includes the following ($ in thousands):
| Face Value |  | Amortized Cost Basis |  | Net Unrealized Gain (Loss) |  | Estimated Fair Value |  | Net Carrying Value
Available-for-Sale Securities |  |  |  |  |  |  |  |  |
Municipal debt securities | $ | 1,055 |  |  | $ | 1,055 |  |  | $ | (18 | ) |  | $ | 1,037 |  |  | $ | 1,037 |
Held-to-Maturity Securities |  |  |  |  |  |  |  |  |
Corporate debt securities | 139,842 |  |  | 140,890 |  |  | — |  |  | 140,890 |  |  | 140,890 |
Total | $ | 140,897 |  |  | $ | 141,945 |  |  | $ | (18 | ) |  | $ | 141,927 |  |  | $ | 141,927 |
During the year ended December 31, 2013, the Company originated a mandatorily redeemable preferred equity investment, which has an initial term of three years with two 12-month extensions. At December 31, 2013, the Company's investment was $140.9 million and the unfunded commitment was $6.2 million. The investment is classified as a held-to-maturity debt security as the Company has the ability and intent to hold the investment until maturity. As of December 31, 2013, the contractual maturities of the Company's securities were as follows ($ in thousands):
| Held-to-Maturity Securities |  | Available-for-Sale Securities
| Amortized Cost Basis |  | Estimated Fair Value |  | Amortized Cost Basis |  | Estimated Fair Value
Maturities |  |  |  |  |  |  |
Within one year | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
After one year through 5 years | 140,890 |  |  | 140,890 |  |  | — |  |  | — |
After 5 years through 10 years | — |  |  | — |  |  | — |  |  | — |
After 10 years | — |  |  | — |  |  | 1,055 |  |  | 1,037 |
Total | $ | 140,890 |  |  | $ | 140,890 |  |  | $ | 1,055 |  |  | $ | 1,037 |

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