Annual report pursuant to Section 13 and 15(d)

Discontinued Operations

v3.8.0.1
Discontinued Operations
 12 Months Ended
Dec. 31, 2017
Discontinued Operations [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]
Discontinued Operations
On June 28, 2017, the Company contributed its equity interests in its wholly owned subsidiary, TH Commercial Holdings LLC, to Granite Point and, in exchange for its contribution, received approximately 33.1 million shares of common stock of Granite Point, representing approximately 76.5% of the outstanding stock of Granite Point upon completion of the IPO of its common stock on June 28, 2017. On November 1, 2017, the Company distributed, on a pro rata basis, the 33.1 million shares of Granite Point common stock that it acquired in connection with the contribution to stockholders holding shares of Two Harbors common stock outstanding as of the close of business on October 20, 2017. Due to the Company’s controlling ownership interest in Granite Point through November 1, 2017, its results of operations and financial condition through such date reflect Granite Point’s commercial strategy, which includes as target assets first mortgages, mezzanine loans, B-notes and preferred equity. As of November 1, 2017, the Company no longer has a controlling interest in Granite Point and, therefore, has deconsolidated Granite Point and its subsidiaries from its financial statements and reclassified all of Granite Point’s current and prior period assets, liabilities and results of operations to discontinued operations. In accordance with ASC 845, Nonmonetary Transactions, the pro rata distribution of a consolidated subsidiary is recognized at carrying amount within stockholders’ equity. As a result, no gain or loss was recognized on the distribution.
Summarized financial information for the discontinued operations are presented below.
 
November 1,
2017
 
December 31,
2016
Assets:
 
 
 
Commercial real estate assets
$
2,233,080

 
$
1,412,543

Available-for-sale securities, at fair value
12,814

 
12,686

Cash and cash equivalents
84,183

 
56,019

Restricted cash
2,838

 
260

Accrued interest receivable
6,588

 
3,745

Due from counterparties
—

 
249

Other assets
22,774

 
10,105

Total Assets
$
2,362,277

 
$
1,495,607

Liabilities:
 
 
 
Repurchase agreements
$
1,516,294

 
$
451,167

Dividends payable
48

 
—

Other liabilities
10,337

 
1,357

Total Liabilities
$
1,526,679

 
$
452,524

 
 
Year Ended
 
 
December 31,
 
 
2017
 
2016
 
2015
Interest income:
 
 
 
 
 
 
Commercial real estate assets
 
$
92,153

 
$
59,819

 
$
9,055

Available-for-sale securities
 
857

 
1,002

 
84

Other
 
11

 
7

 
—

Total interest income
 
93,021

 
60,828

 
9,139

Interest expense
 
31,372

 
11,029

 
477

Net interest income
 
61,649

 
49,799

 
8,662

Other income
 
—

 
203

 
195

Expenses:
 
 
 
 
 
 
Management fees
 
7,717

 
7,173

 
1,178

Servicing expenses
 
1,090

 
605

 
73

Other operating expenses
 
8,699

 
6,878

 
7,398

Total expenses
 
17,506

 
14,656

 
8,649

Income from discontinued operations before income taxes
 
44,143

 
35,346

 
208

(Benefit from) provision for income taxes
 
(3
)
 
(11
)
 
70

Income from discontinued operations
 
44,146

 
35,357

 
138

Income from discontinued operations attributable to noncontrolling interest
 
3,814

 
—

 
—

Income from discontinued operations attributable to common stockholders
 
$
40,332

 
$
35,357

 
$
138