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, 2018			December 31, 2017
Senior mortgages	$	849,192		$	791,152
Corporate/Partnership loans⁽¹⁾	129,988			488,921
Subordinate mortgages	9,822			9,495
Total gross carrying value of loans	989,002			1,289,568
Reserves for loan losses	(54,495		)	(78,489		)
Total loans receivable, net	934,507			1,211,079
Other lending investments—securities	118,365			89,576
Total loans receivable and other lending investments, net	$	1,052,872		$	1,300,655

_______________________________________________________________________________


(1)	In the second quarter 2018, the Company resolved a non-performing loan with a carrying value of $145.8 million. Refer to "Impaired Loans" section below.

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,
	2018			2017			2018			2017
Reserve for loan losses at beginning of period	$	69,466		$	79,389		$	78,489		$	85,545
Provision for (recovery of) loan losses	18,892			(600		)	18,037			(5,528		)
Charge-offs	(33,863		)	—			(42,031		)	(1,228		)
Reserve for loan losses at end of period	$	54,495		$	78,789		$	54,495		$	78,789

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, 2018
Loans	$	67,068		$	927,074		$	994,142
Less: Reserve for loan losses	(40,395		)	(14,100		)	(54,495		)
Total⁽³⁾	$	26,673		$	912,974		$	939,647
As of December 31, 2017
Loans	$	237,877		$	1,056,944		$	1,294,821
Less: Reserve for loan losses	(60,989		)	(17,500		)	(78,489		)
Total⁽³⁾	$	176,888		$	1,039,444		$	1,216,332

_______________________________________________________________________________

(1)

The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs totaling net discounts of $0.5 million and $0.7 million as of June 30, 2018 and December 31, 2017, respectively. The Company's loans individually evaluated for impairment primarily represent loans on non-accrual status; 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 totaling net discounts of $3.7 million and net premiums of $6.2 million as of June 30, 2018 and December 31, 2017, respectively.

(3)

The Company's recorded investment in loans as of June 30, 2018 and December 31, 2017, including accrued interest of $5.1 million and $5.3 million, respectively, is included in "Accrued interest and operating lease income receivable, net" on the Company's consolidated balance sheets. As of June 30, 2018 and December 31, 2017, the total amounts exclude $118.4 million and $89.6 million, respectively, of securities that are evaluated for impairment under ASC 320.

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, which range from 1 (lower risk) to 5 (higher risk), 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 designates loans as non-performing at such time as: (1) the loan becomes 90 days delinquent; (2) the loan has a maturity default; or (3) management determines it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan. All non-performing loans are placed on non-accrual status and income is only recognized in certain cases upon actual cash receipt.

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, 2018			As of December 31, 2017
	Performing Loans		Weighted Average Risk Ratings	Performing Loans		Weighted Average Risk Ratings
Senior mortgages	$	786,399	2.78	$	713,057	2.72
Corporate/Partnership loans	130,823		2.85	334,364		2.85
Subordinate mortgages	9,852		3.00	9,523		3.00
Total	$	927,074	2.79	$	1,056,944	2.77

The Company's recorded investment in loans, aged by payment status and presented by class, was as follows ($ in thousands):



	Current		Less Than and Equal to 90 Days		Greater Than 90 Days⁽¹⁾		Total Past Due		Total
As of June 30, 2018
Senior mortgages	$	792,399	$	—	$	61,068	$	61,068	$	853,467
Corporate/Partnership loans	130,823		—		—		—		130,823
Subordinate mortgages	9,852		—		—		—		9,852
Total	$	933,074	$	—	$	61,068	$	61,068	$	994,142
As of December 31, 2017
Senior mortgages	$	719,057	$	—	$	75,343	$	75,343	$	794,400
Corporate/Partnership loans	334,364		—		156,534		156,534		490,898
Subordinate mortgages	9,523		—		—		—		9,523
Total	$	1,062,944	$	—	$	231,877	$	231,877	$	1,294,821

_______________________________________________________________________________

(1)

As of June 30, 2018, the Company had two loans which were greater than 90 days delinquent and were in various stages of resolution, including legal and foreclosure-related proceedings and environmental matters, and ranged from 3.0 to 9.0 years outstanding. As of December 31, 2017, the Company had four loans which were greater than 90 days delinquent and were in various stages of resolution, including legal and foreclosure-related proceedings and environmental matters, and ranged from 1.0 to 9.0 years outstanding.

Impaired Loans—In the second quarter 2018, the Company resolved a non-performing loan with a carrying value of $145.8 million. The Company received a $45.8 million cash payment and a preferred equity position with a face value of $100.0 million that is mandatorily redeemable in five years. The Company recorded the preferred equity at its fair value of $77.0 million and will accrue interest over the expected duration of the position. In addition, the Company recorded a $21.4 million loan loss provision and simultaneously charged-off of the remaining unpaid balance.

The Company's recorded investment in impaired loans, presented by class, was as follows ($ in thousands)⁽¹⁾:



	As of June 30, 2018							As of December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance			Recorded Investment		Unpaid Principal Balance		Related Allowance
With an allowance recorded:
Senior mortgages	$	67,068	$	67,451	$	(40,395	)	$	81,343	$	81,431	$	(48,518	)
Corporate/Partnership loans	—		—		—			156,534		145,849		(12,471		)
Total	$	67,068	$	67,451	$	(40,395	)	$	237,877	$	227,280	$	(60,989	)

____________________________________________________________


(1)	All of the Company's non-accrual loans are considered impaired and included in the table above.

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,
	2018				2017				2018				2017
	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:
Subordinate mortgages	$	—	$	—	$	11,023	$	—	$	—	$	92	$	10,970	$	—
Subtotal	—		—		11,023		—		—		92		10,970		—
With an allowance recorded:
Senior mortgages	67,252		—		82,368		—		71,949		—		83,556		—
Corporate/Partnership loans	78,338		—		156,839		—		104,403		—		156,941		—
Subtotal	145,590		—		239,207		—		176,352		—		240,497		—
Total:
Senior mortgages	67,252		—		82,368		—		71,949		—		83,556		—
Corporate/Partnership loans	78,338		—		156,839		—		104,403		—		156,941		—
Subordinate mortgages	—		—		11,023		—		—		92		10,970		—
Total	$	145,590	$	—	$	250,230	$	—	$	176,352	$	92	$	251,467	$	—

Securities—Other lending investments—securities include the following ($ in thousands):



	Face Value		Amortized Cost Basis		Net Unrealized Gain		Estimated Fair Value		Net Carrying Value
As of June 30, 2018
Available-for-Sale Securities
Municipal debt securities	$	21,185	$	21,185	$	655	$	21,840	$	21,840
Held-to-Maturity Securities
Debt securities	119,538		96,525		378		96,903		96,525
Total	$	140,723	$	117,710	$	1,033	$	118,743	$	118,365
As of December 31, 2017
Available-for-Sale Securities
Municipal debt securities	$	21,230	$	21,230	$	1,612	$	22,842	$	22,842
Held-to-Maturity Securities
Debt securities	66,618		66,734		1,581		68,315		66,734
Total	$	87,848	$	87,964	$	3,193	$	91,157	$	89,576

As of June 30, 2018, 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	$	19,518	$	19,896	$	—	$	—
After one year through 5 years	77,007		77,007		—		—
After 5 years through 10 years	—		—		—		—
After 10 years	—		—		21,185		21,840
Total	$	96,525	$	96,903	$	21,185	$	21,840