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Loans Receivable and Other Lending Investments, net | 9 Months Ended
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Sep. 30, 2018
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 | September 30, 2018 |  | December 31, 2017
Senior mortgages | $ | 801,595 |  |  | $ | 791,152 |
Corporate/Partnership loans(1) | 152,390 |  |  | 488,921 |
Subordinate mortgages | 9,990 |  |  | 9,495 |
Total gross carrying value of loans | 963,975 |  |  | 1,289,568 |
Reserves for loan losses | (54,695 | ) |  | (78,489 | )
Total loans receivable, net | 909,280 |  |  | 1,211,079 |
Other lending investments—securities | 119,772 |  |  | 89,576 |
Total loans receivable and other lending investments, net | $ | 1,029,052 |  |  | $ | 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 September 30, |  | For the Nine Months Ended September 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
Reserve for loan losses at beginning of period |  | $ | 54,495 |  |  | $ | 78,789 |  |  | $ | 78,489 |  |  | $ | 85,545 |
Provision for (recovery of) loan losses |  | 200 |  |  | (2,600 | ) |  | 18,237 |  |  | (8,128 | )
Charge-offs |  | — |  |  | — |  |  | (42,031 | ) |  | (1,228 | )
Reserve for loan losses at end of period |  | $ | 54,695 |  |  | $ | 76,189 |  |  | $ | 54,695 |  |  | $ | 76,189 |
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 September 30, 2018 |  |  |  |  |
Loans | $ | 66,936 |  |  | $ | 901,936 |  |  | $ | 968,872 |
Less: Reserve for loan losses | (40,395 | ) |  | (14,300 | ) |  | (54,695 | )
Total(3) | $ | 26,541 |  |  | $ | 887,636 |  |  | $ | 914,177 |
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 September 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 $3.4 million and net premiums of $6.2 million as of September 30, 2018 and December 31, 2017, respectively.
(3) | The Company's recorded investment in loans as of September 30, 2018 and December 31, 2017, including accrued interest of $5.4 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 September 30, 2018 and December 31, 2017, the total amounts exclude $119.8 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 September 30, 2018 |  | As of December 31, 2017
| Performing Loans |  | Weighted Average Risk Ratings |  | Performing Loans |  | Weighted Average Risk Ratings
Senior mortgages | $ | 738,570 |  |  | 3.18 |  |  | $ | 713,057 |  |  | 2.72 |
Corporate/Partnership loans | 153,346 |  |  | 3.39 |  |  | 334,364 |  |  | 2.85 |
Subordinate mortgages | 10,020 |  |  | 3.50 |  |  | 9,523 |  |  | 3.00 |
Total | $ | 901,936 |  |  | 3.22 |  |  | $ | 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 September 30, 2018 |  |  |  |  |  |  |  |  |
Senior mortgages | $ | 744,570 |  |  | $ | — |  |  | $ | 60,936 |  |  | $ | 60,936 |  |  | $ | 805,506 |
Corporate/Partnership loans | 153,346 |  |  | — |  |  | — |  |  | — |  |  | 153,346 |
Subordinate mortgages | 10,020 |  |  | — |  |  | — |  |  | — |  |  | 10,020 |
Total | $ | 907,936 |  |  | $ | — |  |  | $ | 60,936 |  |  | $ | 60,936 |  |  | $ | 968,872 |
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 September 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 4.0 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 investment 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 investment. 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 September 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 | $ | 66,936 |  |  | $ | 67,133 |  |  | $ | (40,395 | ) |  | $ | 81,343 |  |  | $ | 81,431 |  |  | $ | (48,518 | )
Corporate/Partnership loans | — |  |  | — |  |  | — |  |  | 156,534 |  |  | 145,849 |  |  | (12,471 | )
Total | $ | 66,936 |  |  | $ | 67,133 |  |  | $ | (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 September 30, |  | For the Nine Months Ended September 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 | $ | — |  |  | $ | 209 |  |  | $ | 5,501 |  |  | $ | 385 |  |  | $ | — |  |  | $ | 301 |  |  | $ | 8,227 |  |  | $ | 385 |
Subtotal | — |  |  | 209 |  |  | 5,501 |  |  | 385 |  |  | — |  |  | 301 |  |  | 8,227 |  |  | 385 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | 67,001 |  |  | — |  |  | 82,007 |  |  | — |  |  | 70,696 |  |  | — |  |  | 83,100 |  |  | — |
Corporate/Partnership loans | — |  |  | — |  |  | 156,399 |  |  | — |  |  | 78,302 |  |  | — |  |  | 156,811 |  |  | — |
Subtotal | 67,001 |  |  | — |  |  | 238,406 |  |  | — |  |  | 148,998 |  |  | — |  |  | 239,911 |  |  | — |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Senior mortgages | 67,001 |  |  | — |  |  | 82,007 |  |  | — |  |  | 70,696 |  |  | — |  |  | 83,100 |  |  | — |
Corporate/Partnership loans | — |  |  | — |  |  | 156,399 |  |  | — |  |  | 78,302 |  |  | — |  |  | 156,811 |  |  | — |
Subordinate mortgages | — |  |  | 209 |  |  | 5,501 |  |  | 385 |  |  | — |  |  | 301 |  |  | 8,227 |  |  | 385 |
Total | $ | 67,001 |  |  | $ | 209 |  |  | $ | 243,907 |  |  | $ | 385 |  |  | $ | 148,998 |  |  | $ | 301 |  |  | $ | 248,138 |  |  | $ | 385 |
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 September 30, 2018 |  |  |  |  |  |  |  |  |
Available-for-Sale Securities |  |  |  |  |  |  |  |  |
Municipal debt securities | $ | 21,185 |  |  | $ | 21,185 |  |  | $ | 97 |  |  | $ | 21,282 |  |  | $ | 21,282 |
Held-to-Maturity Securities |  |  |  |  |  |  |  |  |
Debt securities | 120,195 |  |  | 98,490 |  |  | 1,640 |  |  | 100,130 |  |  | 98,490 |
Total | $ | 141,380 |  |  | $ | 119,675 |  |  | $ | 1,737 |  |  | $ | 121,412 |  |  | $ | 119,772 |
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 September 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 | $ | 20,184 |  |  | $ | 20,434 |  |  | $ | — |  |  | $ | — |
After one year through 5 years | 78,306 |  |  | 79,696 |  |  | — |  |  | — |
After 5 years through 10 years | — |  |  | — |  |  | — |  |  | — |
After 10 years | — |  |  | — |  |  | 21,185 |  |  | 21,282 |
Total | $ | 98,490 |  |  | $ | 100,130 |  |  | $ | 21,185 |  |  | $ | 21,282 |

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