Mezzanine Loan and Preferred Equity Investments (Tables)

9 Months Ended

Sep. 30, 2017

Variable Interest Entity, Nonconsolidated, Carrying Amount, Assets and Liabilities, Net [Abstract]

Schedule of Mezzanine Loans and Preferred Equity Investments

Mezzanine loan and preferred equity investments consist of the following as of September 30, 2017 and December 31, 2016 (dollar amounts in thousands):



	September 30, 2017			December 31, 2016
Investment amount	$	124,172		$	101,154
Deferred loan fees, net	(1,594		)	(1,004		)
Total	$	122,578		$	100,150

The geographic concentrations of credit risk exceeding 5% of the total mezzanine loan and preferred equity investment amounts as of September 30, 2017 and December 31, 2016 are as follows:



	September 30, 2017		December 31, 2016
Texas	27.5	%	43.3	%
New York	21.6	%	—
Virginia	12.3	%	14.9	%
South Carolina	7.9	%	9.4	%
Kentucky	5.9	%	7.2	%

The following tables present the classification and carrying value of unconsolidated VIEs as of September 30, 2017 and December 31, 2016 (dollar amounts in thousands):



	September 30, 2017
	Investment securities, available for sale, at fair value		Receivables and other assets		Mezzanine loan and preferred equity investments		Investment in unconsolidated entities		Total
Multi-family CMBS	$	46,623	$	73	$	—	$	—	$	46,696
Mezzanine loan on multi-family properties	—		—		6,875		—		6,875
Preferred equity investment on multi-family properties	—		—		115,703		10,242		125,945
Equity investment in entities that invest in multi-family properties	—		—		—		24,056		24,056
Total assets	$	46,623	$	73	$	122,578	$	34,298	$	203,572



	December 31, 2016
	Investment securities, available for sale, at fair value		Receivables and other assets		Mezzanine loan and preferred equity investments		Investment in unconsolidated entities		Total
Multi-family CMBS	$	43,897	$	74	$	—	$	—	$	43,971
Mezzanine loan on multi-family properties	—		—		18,881		—		18,881
Preferred equity investment on multi-family properties	—		—		81,269		18,928		100,197
Equity investment in entities that invest in multi-family properties	—		—		—		22,252		22,252
Total assets	$	43,897	$	74	$	100,150	$	41,180	$	185,301

The following table summarizes the Company’s securitized debt collateralized by multi-family CMBS and distressed residential mortgage loans (dollar amounts in thousands):



	Multi-family CMBS Re-securitization ⁽¹⁾		Distressed Residential Mortgage Loan Securitizations
Principal Amount at September 30, 2017	$	33,399	$	70,374
Principal Amount at December 31, 2016	$	33,553	$	132,319
Carrying Value at September 30, 2017 ⁽²⁾	$	28,946	$	69,425
Carrying Value at December 31, 2016 ⁽²⁾	$	28,332	$	130,535
Pass-through rate of Notes issued	5.35%		4.00%

⁽¹⁾

The Company engaged in the re-securitization transaction primarily for the purpose of obtaining non-recourse financing on a portion of its multi-family CMBS portfolio. As a result of engaging in this transaction, the Company remains economically exposed to the first loss position on the underlying multi-family CMBS transferred to the Consolidated VIE. The holders of the Note issued in this re-securitization transaction have no recourse to the general credit of the Company, but the Company does have the obligation, under certain circumstances, to repurchase assets upon the breach of certain representations and warranties. The Company will receive all remaining cash flow, if any, through its retained ownership.


⁽²⁾	Classified as securitized debt in the liability section of the Company’s accompanying condensed consolidated balance sheets, net of debt issuance costs.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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