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Loans Receivable and Other Lending Investments, net | 6 Months Ended
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Jun. 30, 2015
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
Type of Investment | June 30, 2015 |  | December 31, 2014
Senior mortgages | $ | 884,927 |  |  | $ | 737,535 |
Corporate/Partnership loans | 609,843 |  |  | 497,796 |
Subordinate mortgages | 28,773 |  |  | 53,331 |
Total gross carrying value of loans | 1,523,543 |  |  | 1,288,662 |
Reserves for loan losses | (121,934 | ) |  | (98,490 | )
Total loans receivable, net | 1,401,609 |  |  | 1,190,172 |
Other lending investments—securities | 165,687 |  |  | 187,671 |
Total loans receivable and other lending investments, net(1) | $ | 1,567,296 |  |  | $ | 1,377,843 |
Explanatory Note: _______________________________________________________________________________
(1) | The Company's recorded investment in loans as of June 30, 2015 and December 31, 2014 includes accrued interest of $8.8 million and $7.0 million, respectively, which are included in "Accrued interest and operating lease income receivable, net" on the Company's Consolidated Balance Sheets.
In June 2015, the Company received a loan with a fair value of $146.7 million as a non-cash paydown on an existing loan and reduced the principal balance by the same amount. The loan received has been recorded as a loan receivable and is included in "Loans receivable and other lending investments, net" on the Company’s Consolidated Balance Sheet. During the six months ended June 30, 2015, the Company sold a loan with a carrying value of $5.5 million. No gain or loss was recognized as a result of the transaction. During the six months ended June 30, 2014, the Company sold loans with total carrying values of $30.8 million, which resulted in a realized gain of $19.0 million. Gains and losses on sales of loans are included in "Other income" on the Company's Consolidated Statements of Operations. Reserve for Loan Losses—Changes in the Company's reserve for loan losses were as follows ($ in thousands):
| For the Three Months Ended June 30, |  | For the Six Months Ended June 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
Reserve for loan losses at beginning of period | $ | 102,783 |  |  | $ | 370,076 |  |  | $ | 98,490 |  |  | $ | 377,204 |
Provision for (recovery of) loan losses(1) | 19,151 |  |  | (2,792 | ) |  | 23,444 |  |  | (6,192 | )
Charge-offs | — |  |  | (229,380 | ) |  | — |  |  | (233,108 | )
Reserve for loan losses at end of period | $ | 121,934 |  |  | $ | 137,904 |  |  | $ | 121,934 |  |  | $ | 137,904 |
Explanatory Note: _______________________________________________________________________________
(1) | For the three and six months ended June 30, 2015, the provision for loan losses includes recoveries of previously recorded loan loss reserves of $0.3 million and $0.6 million, respectively. For the three and six months ended June 30, 2014, the provision for loan losses includes recoveries of previously recorded loan loss reserves of $2.4 million and $7.6 million, respectively.
The Company's recorded investment in loans (comprised of a loan's carrying value plus accrued interest) and the associated reserve for loan losses were as follows ($ in thousands):
| Individually Evaluated for Impairment(1) |  | Collectively Evaluated for Impairment(2) |  | Total
As of June 30, 2015 |  |  |  |  |
Loans | $ | 179,589 |  |  | $ | 1,352,725 |  |  | $ | 1,532,314 |
Less: Reserve for loan losses | (94,834 | ) |  | (27,100 | ) |  | (121,934 | )
Total | $ | 84,755 |  |  | $ | 1,325,625 |  |  | $ | 1,410,380 |
As of December 31, 2014 |  |  |  |  |
Loans | $ | 139,672 |  |  | $ | 1,156,031 |  |  | $ | 1,295,703 |
Less: Reserve for loan losses | (64,990 | ) |  | (33,500 | ) |  | (98,490 | )
Total | $ | 74,682 |  |  | $ | 1,122,531 |  |  | $ | 1,197,213 |
Explanatory Notes: _______________________________________________________________________________
(1) | The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs aggregating to a net discount of $0.2 million and $0.2 million as of June 30, 2015 and December 31, 2014, 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 $11.1 million and $10.6 million as of June 30, 2015 and December 31, 2014, respectively.
Credit Characteristics—As part of the Company's process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans. Risk ratings are based on judgments which are inherently uncertain and there can be no assurance that actual performance will be similar to current expectation. The Company's recorded investment in performing loans, presented by class and by credit quality, as indicated by risk rating, was as follows ($ in thousands):
| As of June 30, 2015 |  | As of December 31, 2014
| Performing Loans |  | Weighted Average Risk Ratings |  | Performing Loans |  | Weighted Average Risk Ratings
Senior mortgages | $ | 760,515 |  |  | 2.71 |  |  | $ | 611,009 |  |  | 2.73 |
Corporate/Partnership loans | 564,461 |  |  | 3.30 |  |  | 501,620 |  |  | 3.88 |
Subordinate mortgages | 29,132 |  |  | 3.65 |  |  | 53,836 |  |  | 2.87 |
Total | $ | 1,354,108 |  |  | 2.98 |  |  | $ | 1,166,465 |  |  | 3.23 |
As of June 30, 2015, 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(1) |  | Total Past Due |  | Total
Senior mortgages | $ | 766,515 |  |  | $ | 6,083 |  |  | $ | 116,230 |  |  | $ | 122,313 |  |  | $ | 888,828 |
Corporate/Partnership loans | 614,354 |  |  | — |  |  | — |  |  | — |  |  | 614,354 |
Subordinate mortgages | 29,132 |  |  | — |  |  | — |  |  | — |  |  | 29,132 |
Total | $ | 1,410,001 |  |  | $ | 6,083 |  |  | $ | 116,230 |  |  | $ | 122,313 |  |  | $ | 1,532,314 |
Explanatory Note: _______________________________________________________________________________
(1) | As of June 30, 2015, the Company had four loans which were greater than 90 days delinquent and were in various stages of resolution, including legal proceedings, environmental concerns and foreclosure-related proceedings, and ranged from 1.0 to 7.0 years outstanding.
Impaired Loans—The Company's recorded investment in impaired loans, presented by class, were as follows ($ in thousands)(1):
| As of June 30, 2015 |  | As of December 31, 2014
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | $ | 129,696 |  |  | $ | 128,709 |  |  | $ | (69,141 | ) |  | $ | 130,645 |  |  | $ | 129,744 |  |  | $ | (64,440 | )
Corporate/Partnership loans | 49,893 |  |  | 49,893 |  |  | (25,693 | ) |  | 9,027 |  |  | 9,057 |  |  | (550 | )
Total | $ | 179,589 |  |  | $ | 178,602 |  |  | $ | (94,834 | ) |  | $ | 139,672 |  |  | $ | 138,801 |  |  | $ | (64,990 | )
Explanatory Note: _______________________________________________________________________________
(1) | All of the Company's non-accrual loans are considered impaired and included in the table above. In addition, as of June 30, 2015 and December 31, 2014, certain loans modified through troubled debt restructurings with a recorded investment of $1.4 million and $10.4 million, respectively, are also included as impaired loans in accordance with GAAP although they are performing and on accrual status. The Company did not have impaired loans without related allowances recorded.
The Company's average recorded investment in impaired loans and interest income recognized, presented by class, were as follows ($ in thousands):
| For the Three Months Ended June 30, |  | For the Six Months Ended June 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
| Average Recorded Investment |  | Interest Income Recognized |  | 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 | $ | — |  |  | $ | — |  |  | $ | 87,642 |  |  | $ | 186 |  |  | $ | — |  |  | $ | — |  |  | $ | 59,432 |  |  | $ | 687 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | 130,016 |  |  | 17 |  |  | 354,695 |  |  | 70 |  |  | 130,226 |  |  | 34 |  |  | 453,242 |  |  | 123 |
Corporate/Partnership loans | 28,301 |  |  | 3 |  |  | 63,142 |  |  | 52 |  |  | 21,876 |  |  | 12 |  |  | 75,120 |  |  | 117 |
Subtotal | 158,317 |  |  | 20 |  |  | 417,837 |  |  | 122 |  |  | 152,102 |  |  | 46 |  |  | 528,362 |  |  | 240 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | 130,016 |  |  | 17 |  |  | 442,337 |  |  | 256 |  |  | 130,226 |  |  | 34 |  |  | 512,674 |  |  | 810 |
Corporate/Partnership loans | 28,301 |  |  | 3 |  |  | 63,142 |  |  | 52 |  |  | 21,876 |  |  | 12 |  |  | 75,120 |  |  | 117 |
Total | $ | 158,317 |  |  | $ | 20 |  |  | $ | 505,479 |  |  | $ | 308 |  |  | $ | 152,102 |  |  | $ | 46 |  |  | $ | 587,794 |  |  | $ | 927 |
Troubled Debt Restructurings—During the six months ended June 30, 2015 and 2014, the Company did not modify any loans that were determined to be troubled debt restructurings. 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 June 30, 2015, there were no unfunded commitments associated with modified loans considered troubled debt restructurings. Securities—Other lending investments—securities includes the following ($ in thousands):
| Face Value |  | Amortized Cost Basis |  | Net Unrealized Gain (Loss) |  | Estimated Fair Value |  | Net Carrying Value
As of June 30, 2015 |  |  |  |  |  |  |  |  |
Available-for-Sale Securities |  |  |  |  |  |  |  |  |
Municipal debt securities | $ | 1,010 |  |  | $ | 1,010 |  |  | $ | 90 |  |  | $ | 1,100 |  |  | $ | 1,100 |
Held-to-Maturity Securities |  |  |  |  |  |  |  |  |
Corporate debt securities | 152,576 |  |  | 164,587 |  |  | — |  |  | 168,674 |  |  | 164,587 |
Total | $ | 153,586 |  |  | $ | 165,597 |  |  | $ | 90 |  |  | $ | 169,774 |  |  | $ | 165,687 |
As of December 31, 2014 |  |  |  |  |  |  |  |  |
Available-for-Sale Securities |  |  |  |  |  |  |  |  |
Municipal debt securities | $ | 1,020 |  |  | $ | 1,020 |  |  | $ | 147 |  |  | $ | 1,167 |  |  | $ | 1,167 |
Held-to-Maturity Securities |  |  |  |  |  |  |  |  |
Corporate debt securities | 176,254 |  |  | 186,504 |  |  | — |  |  | 190,199 |  |  | 186,504 |
Total | $ | 177,274 |  |  | $ | 187,524 |  |  | $ | 147 |  |  | $ | 191,366 |  |  | $ | 187,671 |

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