| Commercial Real Estate Loans Held-for-Investment [Text Block] |
Commercial Real Estate Loans Held-for-Investment
The Company originates and purchases commercial real estate debt and related instruments generally to be held as long-term investments. These assets are classified as commercial real estate loans held-for-investment on the condensed consolidated balance sheets. Additionally, the Company is the sole certificate holder of a trust entity that holds a commercial real estate loan. The underlying loan held by the trust is consolidated on the Company’s condensed consolidated balance sheet and classified as commercial real estate loans held-for-investment. See Note 3 - Variable Interest Entities for additional information regarding consolidation of the trust. Commercial real estate loans held-for-investment are reported at cost, net of any unamortized acquisition premiums or discounts, loan fees and origination costs as applicable, unless the loans are deemed impaired.
The following tables summarize the Company’s commercial real estate loans held-for-investment by asset type, property type and geographic location as of September 30, 2015 and December 31, 2014:
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September 30,
2015 |
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December 31,
2014 |
(in thousands) |
Mezzanine Loans |
|
First Mortgages |
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Total |
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Mezzanine Loans |
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First Mortgages |
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Total |
Unpaid principal balance |
$ |
146,237 |
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$ |
146,350 |
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$ |
292,587 |
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$ |
— |
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$ |
— |
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$ |
— |
|
Unamortized (discount) premium |
(289 |
) |
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— |
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|
(289 |
) |
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— |
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— |
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— |
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Unamortized net deferred origination fees |
(127 |
) |
|
(1,261 |
) |
|
(1,388 |
) |
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— |
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— |
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— |
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Carrying value |
$ |
145,821 |
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$ |
145,089 |
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$ |
290,910 |
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$ |
— |
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$ |
— |
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$ |
— |
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Unfunded commitments |
$ |
— |
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$ |
6,772 |
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$ |
6,772 |
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$ |
— |
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$ |
— |
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$ |
— |
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Number of loans |
5 |
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4 |
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9 |
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— |
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— |
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— |
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Weighted average coupon |
8.0 |
% |
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3.9 |
% |
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5.9 |
% |
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— |
% |
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— |
% |
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— |
% |
Weighted average life (years) |
2.4 |
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3.0 |
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2.7 |
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— |
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— |
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— |
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(in thousands) |
September 30,
2015 |
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December 31,
2014 |
Property Type |
Carrying Value |
|
% of Commercial Portfolio |
|
Carrying Value |
|
% of Commercial Portfolio |
Retail |
$ |
104,159 |
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35.8 |
% |
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$ |
— |
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— |
% |
Hotel |
62,611 |
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21.5 |
% |
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— |
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— |
% |
Multifamily |
40,930 |
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14.1 |
% |
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— |
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— |
% |
Office |
83,210 |
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28.6 |
% |
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— |
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|
— |
% |
Total |
$ |
290,910 |
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100.0 |
% |
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$ |
— |
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— |
% |
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(in thousands) |
September 30,
2015 |
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December 31,
2014 |
Geographic Location |
Carrying Value |
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% of Commercial Portfolio |
|
Carrying Value |
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% of Commercial Portfolio |
West |
$ |
132,158 |
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45.4 |
% |
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$ |
— |
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— |
% |
Southeast |
78,302 |
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26.9 |
% |
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— |
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— |
% |
Northeast |
48,528 |
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16.7 |
% |
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— |
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— |
% |
Midwest |
31,922 |
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11.0 |
% |
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— |
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— |
% |
Total |
$ |
290,910 |
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|
100.0 |
% |
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$ |
— |
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— |
% |
The Company did not hold any commercial real estate loans held-for-investment as of December 31, 2014. At September 30, 2015, the Company pledged commercial real estate loans held-for-investment with a carrying value of $45.7 million as collateral for repurchase agreements. See Note 16 - Repurchase Agreements.
The following table summarizes activity related to commercial real estate loans held-for-investment for the three and nine months ended September 30, 2015 and 2014.
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Three Months Ended September 30, |
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Nine Months Ended
September 30, |
(in thousands) |
2015 |
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2014 |
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2015 |
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2014 |
Balance at beginning of period |
$ |
45,605 |
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$ |
— |
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$ |
— |
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$ |
— |
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Originations and purchases |
246,644 |
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— |
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|
292,200 |
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— |
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Repayments |
— |
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— |
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— |
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— |
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Net discount accretion (premium amortization) |
49 |
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— |
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|
98 |
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— |
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(Increase) decrease in net deferred origination fees |
(1,517 |
) |
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— |
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(1,517 |
) |
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— |
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Amortization of net deferred origination fees |
129 |
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— |
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129 |
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— |
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Allowance for loan losses |
— |
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— |
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— |
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— |
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Balance at end of period |
$ |
290,910 |
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$ |
— |
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$ |
290,910 |
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$ |
— |
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The Company evaluates each loan for impairment at least quarterly by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors. Risk factors include property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, loan structure and exit plan, loan-to-value ratio, project sponsorship, and other factors deemed necessary. Risk ratings are defined as follows:
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4 – |
Higher Risk: A loan that has exhibited material deterioration in cash flows and/or other credit factors, which, if negative trends continue, could be indicative of future loss. |
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5 – |
Impaired/Loss Likely: A loan that has a significantly increased probability of default or principal loss. |
The following table presents the number of loans, unpaid principal balance and carrying value (amortized cost) by risk rating for commercial real estate loans as of September 30, 2015 and December 31, 2014:
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(dollars in thousands) |
September 30,
2015 |
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December 31,
2014 |
Risk Rating |
Number of Loans |
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Unpaid Principal Balance |
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Carrying Value |
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Number of Loans |
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Unpaid Principal Balance |
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Carrying Value |
1 – 3 |
9 |
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$ |
292,587 |
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$ |
290,910 |
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— |
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$ |
— |
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$ |
— |
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4 – 5 |
— |
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— |
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— |
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— |
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— |
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— |
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Total |
9 |
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$ |
292,587 |
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$ |
290,910 |
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— |
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$ |
— |
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$ |
— |
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The Company has not recorded any allowances for losses as it is not deemed probable that the Company will not be able to collect all amounts due pursuant to the contractual terms of the loans.
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