Other Investments

The Company's other investments and its proportionate share of earnings (losses) from equity method investments were as follows ($ in thousands):



	Carrying Value				Equity in Earnings (Losses)
	As of December 31,				For the Years Ended December 31,
	2015		2014		2015			2014		2013
Other real estate equity investments ⁽¹⁾	$	81,452	$	88,848	$	(5,212	)	$	36,842	$	2,869
iStar Net Lease I LLC ("Net Lease Venture")	69,096		125,360		5,221			1,915		—
Other investments ⁽²⁾⁽³⁾	51,559		63,263		9,434			38,385		23,810
Marina Palms, LLC ("Marina Palms")	30,099		30,677		23,626			14,671		45
Madison Funds	21,966		45,971		(916		)	3,092		14,796
Total other investments	254,172		354,119		$	32,153		$	94,905	$	41,520

_______________________________________________________________________________


(1)	For the year ended December 31, 2014, the Company recognized $32.9 million of earnings from equity method investments resulting from asset sales by one of its equity method investees.


(2)	During the year ended December 31, 2014, the Company recognized $23.4 million of earnings from equity method investments resulting from asset sales and a legal settlement by one of its equity method investees.


(3)	In conjunction with the sale of the Company's interests in Oak Hill Advisors, L.P. in 2011, the Company retained a share of the carried interest related to various funds. During the years ended December 31, 2015 and 2014, the Company recognized $2.2 million and $9.0 million of carried interest income.

Net Lease Venture—In February 2014, the Company partnered with a sovereign wealth fund to form a new unconsolidated entity in which the Company has an equity interest of approximately 51.9%. This entity is not a VIE and the Company does not have controlling interest due to the substantive participating rights of its partner. The partners plan to contribute up to an aggregate $500 million of equity to acquire and develop net lease assets over time. The Company is responsible for sourcing new opportunities and managing the venture and its assets in exchange for a promote and management fee. Several of the Company's senior executives whose time is substantially devoted to the net lease venture own a total of 0.6% equity ownership in the venture via co-investment. These senior executives are also entitled to an amount equal to 50% of any promote payment received based on the 47.5% partner's interest. During the year ended December 31, 2014, the Company sold a net lease asset for net proceeds of $93.7 million, which approximated carrying value, to the venture. The Company also sold its 72% interest in a previously consolidated entity, which owns a net lease asset subject to a mortgage of $26.0 million, to the venture for net proceeds of $10.1 million, which approximated carrying value. During the same period, the venture purchased a portfolio of 58 net lease assets for a purchase price of $200.0 million from a third party. As of December 31, 2015 and 2014, the venture's carrying value of total assets was $400.2 million and $348.1 million, respectively. In June 2015, the venture placed ten year debt financing of $120.0 million on one of its net lease assets. Net proceeds from the financing were distributed to its members of which the Company received approximately $61.2 million. During the years ended December 31, 2015 and 2014, the Company recorded $1.5 million and $1.3 million, respectively, of management fees from the Net Lease Venture. The management fees are included in "Other income" in the Company's consolidated statements of operations

Marina Palms—During the year ended December 31, 2013, the Company sold land for net proceeds of $21.4 million to Marina Palms, a residential condominium development in which the Company has a 47.5% equity interest. This entity is not a VIE and the Company does not have controlling interest due to shared control of the entity with its partner. As of December 31, 2015 and 2014, the venture's carrying value of total assets was $278.5 million and $265.7 million, respectively.

Other real estate equity investments—During the year ended December 31, 2015, the Company sold a commercial operating property for $68.5 million to a newly formed unconsolidated entity in which the Company owns a 50.0% equity interest (refer to Note 4). The Company recognized a gain on sale of $13.6 million, reflecting the Company's share of the interest sold, which was recorded as "Income from sales of real estate" in the Company's consolidated statements of operations. The venture placed financing on the property and proceeds from the financing were distributed to its members. Net proceeds received by the Company were $55.4 million, which was net of the Company's $13.6 million non-cash equity contribution to the venture and inclusive of a $21.0 million distribution from the financing proceeds. This entity is not a VIE and the Company does not have a controlling interest due to shared control of the entity with its partner.

During the year ended December 31, 2014, an unconsolidated entity for which the Company held a 50.0% noncontrolling equity interest sold all of its properties. As a result of the transaction, the Company received net proceeds of $48.1 million and recognized a gain of $32.9 million, which is included in "Earnings from equity method investments" in its consolidated statements of operations.

During the year ended December 31, 2014, the Company contributed land to a newly formed unconsolidated entity in which the Company received an initial equity interest of 85.7%. This entity is a VIE and the Company does not have controlling interest due to shared control of the entity with its partner. As of December 31, 2015 and 2014, the Company had a recorded equity interest of $6.3 million and $9.4 million, respectively. Additionally, the Company committed to provide $45.7 million of mezzanine financing to the entity. As of December 31, 2015, the loan balance was $33.7 million and is included in "Loans receivable and other lending investments, net" on the Company's consolidated balance sheets. During the years ended December 31, 2015 and 2014, the Company recorded $3.9 million and $0.6 million of interest income, respectively.

During the year ended December 31, 2014, the Company and a consortium of co-lenders formed a new unconsolidated entity, in which the Company received an initial 15.7% equity interest, which acquired, via foreclosure sale, title to a land asset which previously served as collateral for a loan receivable held by the consortium. This entity is not a VIE and the Company does not have controlling interest in the entity as the Company's voting rights are based on its ownership percentage in the entity. During the year ended December 31, 2014, as a result of the transaction, the Company recorded an additional provision of $2.8 million in "Provision for (recovery of) loan losses" in its consolidated statements of operations. As of December 31, 2015 and 2014, the Company had a recorded equity interest of $24.0 million and $23.5 million, respectively.

During the year ended December 31, 2013, the Company contributed land to a newly formed unconsolidated entity in which the Company received an equity interest of 75.6%. As of December 31, 2015 and 2014, the Company had a recorded equity interest of $13.5 million and $21.1 million, respectively. This entity is a VIE and the Company does not have controlling interest due to shared control of the entity with its partners.

In addition, during the year ended December 31, 2013, the Company contributed land to a newly formed unconsolidated entity in which the Company also received a 50.0% equity interest. As of December 31, 2015 and 2014, the Company had a recorded equity interest of $9.9 million and $7.8 million, respectively. This entity is not a VIE and the Company does not have controlling interest due to shared control of the entity with its partner.

As of December 31, 2015, the Company's other real estate equity investments included equity interests in real estate ventures ranging from 31% to 70%, comprised of investments of $11.1 million in operating properties and $16.6 million in land assets. As of December 31, 2014, the Company's other real estate equity investments included $13.2 million in operating properties and $13.8 million in land assets.

Madison Funds—As of December 31, 2015, the Company owned a 29.5% interest in Madison International Real Estate Fund II, LP, a 32.9% interest in Madison International Real Estate Liquidity Fund III, LP, a 32.9% interest in Madison International Real Estate Liquidity Fund III AIV, LP and a 29.5% interest in Madison GP1 Investors, LP (collectively, the "Madison Funds"). The Madison Funds invest in ownership positions of entities that own real estate assets. The Company determined that these entities are VIEs and that the Company is not the primary beneficiary.

Other Investments—As of December 31, 2015, the Company also had smaller investments in real estate related funds and other strategic investments in several other entities that were accounted for under the equity method or cost method. During the year ended December 31, 2015, the Company sold available-for-sale securities for proceeds of $7.4 million for gains of $2.6 million, which are included in "Other income" in the Company's consolidated statements of operations. The amount reclassified out of accumulated other comprehensive income into earnings was determined based on the specific identification method.

LNR—In July 2010, the Company acquired an ownership interest of approximately 24% in LNR Property Corporation ("LNR"). LNR is a servicer and special servicer of commercial mortgage loans and CMBS and a diversified real estate investment, finance and management company. In the transaction, the Company and a group of investors, including other creditors of LNR, acquired 100% of the common stock of LNR in exchange for cash and the extinguishment of existing senior notes of LNR's parent holding company (the "Holdco Notes"). The Company contributed $100.0 million aggregate principal amount of Holdco Notes and $100.0 million in cash in exchange for an equity interest of $120.0 million.

Beginning in September 2012, the Company and other owners of LNR entered into negotiations with potential purchasers of LNR. After an extensive due diligence and negotiation process, the LNR owners entered into a definitive contract to sell LNR in January 2013 at a fixed sale price which, from the Company's perspective, reflected in part the Company's then-current expectations about the future results of LNR and potential volatility in its business. The definitive sale contract provided that LNR would not make cash distributions to its owners during the fourth quarter of 2012 through the closing of the sale. Notwithstanding the fixed terms of the contract, our investment balance in LNR increased due to equity in earnings recorded which resulted in our recognition of other than temporary impairment on our investment during the year ended December 31, 2013. In April 2013, the Company completed the sale of its 24% equity interest in LNR and received $220.3 million in net proceeds. Approximately $25.2 million of net proceeds, which were placed in escrow for potential indemnification obligations, were released to the Company in April 2014.

The following table represents investee level summarized financial information for LNR ($ in thousands)⁽¹⁾:



	For the Period from October 1, 2012 to April 19, 2013			For the Year Ended September 30, 2012
Income Statements
Total revenue⁽²⁾	$	179,373		$	332,902
Income tax (expense) benefit	(2,137		)	(6,731		)
Net income attributable to LNR⁽³⁾	113,478			253,039
iStar's ownership percentage	24		%	24		%
iStar's equity in earnings from LNR	$	45,375		$	60,669



	For the Period from October 1, 2012 to April 19, 2013			For the Year Ended September 30, 2012
Cash Flows
Operating cash flows	$	(127,075	)	$	(85,909	)
Cash flows from investing activities	(36,543		)	(55,686		)
Cash flows from financing activities	217,241			229,634
Net cash flows	53,623			88,039
Cash distributions	—			61,179
iStar's ownership percentage	24		%	24		%
Cash distributions received by iStar	$	—		$	14,690

_______________________________________________________________________________

(1)

The Company recorded its investment in LNR, which was sold in April 2013, on a one quarter lag. Therefore, the amounts in the Company's financial statements for the year ended December 31, 2013 was based on balances and results from LNR for the period from October 1, 2012 to April 19, 2013. The amounts in the Company's financial statements for the year ended December 31, 2012 are based on the balances and results from LNR for the year ended September 30, 2012.

(2)

LNR consolidates certain commercial mortgage-backed securities and collateralized debt obligation trusts that are considered VIEs (and for which it is the primary beneficiary), that have been included in the amounts presented above. Total revenue presented above includes $55.5 million and $95.4 million for the period from October 1, 2012 to April 19, 2013 and for the year ended September 30, 2012, respectively, of servicing fee revenue that is eliminated upon consolidation of the VIE's at the LNR level. This income is then added back through consolidation at the LNR level as an adjustment to income allocable to noncontrolling entities and has no net impact on net income attributable to LNR.

(3)

Subsequent to the sale of the Company's interest in LNR, LNR reported a reduction in their earnings of $66.2 million related to a purchase price allocation adjustment. The reduction was reflected in LNR's operations for the three months ended March 31, 2013, which resulted in a net loss for the period. Because the Company recorded its investment in LNR on a one quarter lag, the adjustment was reflected in the quarter ended June 30, 2013. There was no net impact on the Company's previously reported equity in earnings as the Company limited its proportionate share of earnings from LNR pursuant to the definitive sale agreement as described above.

The following table reconciles the activity related to the Company's investment in LNR for the three months ended March 31, 2013 and June 30, 2013, the six months ended December 31, 2013 and the year ended December 31, 2013 ($ in thousands):



	For the Three Months Ended March 31, 2013			For the Three Months Ended June 30, 2013			For the Six Months Ended December 31, 2013		For the Year Ended December 31, 2013
Carrying value of LNR at beginning of period	$	205,773		$	220,281		$	—	$	205,773
Equity in earnings of LNR for the period⁽¹⁾	45,375			—			—		45,375			(a)
Balance before other than temporary impairment	251,148			220,281			—		251,148
Other than temporary impairment⁽¹⁾	(30,867		)	—			—		(30,867		)	(b)
Sales proceeds pursuant to contract	—			(220,281		)	—		(220,281		)
Carrying value of LNR at end of period	220,281			—			—		—

_______________________________________________________________________________

(1)

During the year ended December 31, 2013, the Company recorded an other than temporary impairment of $30.9 million. Subsequent to the sale of the Company's interest in LNR, LNR reported a reduction in their earnings of $66.2 million related to a purchase price allocation adjustment. The reduction was reflected in LNR's operations for the three months ended March 31, 2013, which resulted in a net loss for the period. Because the Company recorded its investment in LNR on a one quarter lag, the adjustment was reflected in the quarter ended June 30, 2013. There was no net impact on the Company's previously reported equity in earnings as the Company limited its proportionate share of earnings from LNR pursuant to the definitive sale agreement as described above.

For the year ended December 31, 2013, the amount that was recognized as income in the Company's Consolidated Statements of Operations is the sum of items (a) and (b), and $1.7 million of income recognized for the release of other comprehensive income related to LNR upon sale, or $16.5 million.

Summarized investee financial information—The following tables present the investee level summarized financial information of the Company's equity method investments ($ in thousands):



	Revenues		Expenses			Net Income Attributable to Parent Entities
For the Year Ended December 31, 2015
Marina Palms, LLC ("Marina Palms")	$	179,333	$	(115,584	)	$	63,749
iStar Net Lease I LLC ("Net Lease Venture")	31,315		(20,666		)	10,060
OHASCF	111,707		(697		)	111,010
1000 SCI, LLC	—		(367		)	(367		)
Outlets at Westgate, LLC ("Westgate")	15,726		(11,150		)	4,576
Other investments	143,143		(97,504		)	45,501
Total	$	481,224	$	(245,968	)	$	234,529
For the Year Ended December 31, 2014
Marina Palms	$	114,125	$	(77,120	)	$	37,005
Net Lease Venture⁽¹⁾	13,826		(9,917		)	3,691
OHASCF	78,262		(951		)	77,311
Westgate	13,118		(9,618		)	3,500
Other investments	406,708		(87,997		)	318,703
Total	$	626,039	$	(185,603	)	$	440,210
For the Year Ended December 31, 2013
OHASCF	$	72,313	$	(1,642	)	$	70,671
Westgate	12,447		(8,889		)	3,558
Marina Palms⁽²⁾	73		(3,525		)	(3,452		)
Other investments	199,680		(63,577		)	135,421
Total	$	284,513	$	(77,633	)	$	206,198

_______________________________________________________________________________


(1)	The Company began accounting for its investment in Net Lease Venture under the equity method of accounting on February 13, 2014. The amounts in the Company's financial statements for the year ended December 31, 2014 are based on the balances and results from Net Lease Venture for the period from February 13, 2014 to December 31, 2014.


(2)	The Company began accounting for its investment in Marina Palms under the equity method of accounting on April 17, 2013. The amounts in the Company's financial statements for the year ended December 31, 2013 are based on the balances and results from Marina Palms for the period from April 17, 2013 to December 31, 2013.



	As of December 31,
	2015		2014
Balance Sheets
Total assets	$	3,597,587	$	3,464,984
Total liabilities	768,622		479,298
Noncontrolling interests	19,208		3,297
Total equity	2,809,757		2,982,389