Commitments and Contingencies

Unfunded Commitments—The Company generally funds construction and development loans and build-outs of space in real estate assets over a period of time if and when the borrowers and tenants meet established milestones and other performance criteria. The Company refers to these arrangements as Performance-Based Commitments. In addition, the Company sometimes establishes a maximum amount of additional funding which it will make available to a borrower or tenant for an expansion or addition to a project if it approves of the expansion or addition in its sole discretion. The Company refers to these arrangements as Discretionary Fundings. Finally, the Company has committed to invest capital in several real estate funds and other ventures. These arrangements are referred to as Strategic Investments.

As of March 31, 2017, the maximum amount of fundings the Company may be required to make under each category, assuming all performance hurdles and milestones are met under the Performance-Based Commitments, that it approves all Discretionary Fundings and that 100% of its capital committed to Strategic Investments is drawn down, are as follows ($ in thousands):



	Loans and Other Lending Investments⁽¹⁾		Real Estate		Other Investments		Total
Performance-Based Commitments	$	305,862	$	9,814	$	24,059	$	339,735
Strategic Investments	—		—		45,564		45,564
Total⁽²⁾	$	305,862	$	9,814	$	69,623	$	385,299

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(1)	Excludes $155.3 million of commitments on loan participations sold that are not the obligation of the Company.


(2)	The Company did not have any Discretionary Fundings as of March 31, 2017.

Legal Proceedings—The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to the Company's business as a finance and investment company focused on the commercial real estate industry, including loan foreclosure and foreclosure-related proceedings. In addition to such matters, the Company is a party to the following legal proceedings:

Shareholder Action

As previously reported, a shareholder action was filed in 2014 in Maryland state court purporting to assert derivative, class and individual claims against the Company, a number of our current and former senior executives (including our chief executive officer) and current and former directors as defendants. The complaint alleged breach of fiduciary duty, breach of contract and other causes of action arising out of compensation awards granted by the Company to our senior executives in December 2008 and modified in July 2011. On October 30, 2014, the Maryland Circuit Court dismissed all of plaintiffs' claims in the action. Plaintiffs appealed and, on January 28, 2016, the Maryland Court of Special Appeals affirmed the order of the Circuit Court. Plaintiffs appealed that decision and, on January 20, 2017, the Maryland Court of Appeals (Maryland’s highest court) issued its opinion affirming the dismissal of all of plaintiffs’ claims against the Company and the other defendants. This matter is concluded.

U.S. Home Corporation ("Lennar") v. Settlers Crossing, LLC, et al. (Civil Action No. DKC 08-1863)

This litigation involves a dispute over the purchase and sale of approximately 1,250 acres of land in Prince George’s County, Maryland. On January 22, 2015, the United States District Court for the District of Maryland (the District Court) entered a judgment in favor of the Company, as seller, and against Lennar, as purchaser. The District Court found that the Company is entitled to specific performance and awarded damages to the Company in the aggregate amount of: (i) the remaining purchase price to be paid by Lennar of $114.0 million; plus (ii) simple interest on the unpaid amount at a rate of 12% annually, calculated from May 27, 2008, until Lennar proceeds to settlement on the land; plus (iii) real estate taxes paid by the Company; plus (iv) actual and reasonable attorneys' fees and costs incurred by the Company in connection with the litigation. Lennar appealed the District Court's judgment and posted an appeal bond.

On April 12, 2017, the United States Court of Appeals for the Fourth Circuit (the Court of Appeals) affirmed the judgment of the District Court in its entirety. Lennar has filed a petition with the Court of Appeals for rehearing en banc, only with respect to the calculation of interest owed by Lennar on the unpaid purchase price following the date of the judgment of the District Court, which petition is pending. Lennar’s time period to seek review of the Court of Appeals’ decision by the United States Supreme Court has not expired.

On April 21, 2017, the Company and Lennar completed settlement of transfer of the land, pursuant to which we conveyed the land to Lennar and received net proceeds of $231.1 million after payment of $6.3 million in documentary transfer taxes, subject to certain holdbacks and subject also to final resolution of the amount of post-judgment interest owed by Lennar, consisting of $114.0 million of sales proceeds, $121.8 million of interest and $1.6 million of real estate tax reimbursements. The amount of attorneys’ fees and costs to be recovered by the Company will be determined through further proceedings before the District Court. A portion of the net proceeds received by the Company has been paid to the third party which holds a 4.3% participation interest in all proceeds received by the Company.

On a quarterly basis, the Company evaluates developments in legal proceedings that could require a liability to be accrued and/or disclosed. Based on its current knowledge, and after consultation with legal counsel, the Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding that would have a material adverse effect on the Company's consolidated financial statements.