| Commercial Real Estate Assets [Text Block] |
Commercial Real Estate Assets
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 assets 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 assets. See Note 3 - Variable Interest Entities for additional information regarding consolidation of the trust. Commercial real estate assets are reported at cost, net of any unamortized acquisition premiums or discounts, loan fees and origination costs as applicable, unless the assets are deemed impaired.
The following tables summarize the Company’s commercial real estate assets by asset type, property type and geographic location as of March 31, 2016 and December 31, 2015:
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March 31,
2016 |
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December 31,
2015 |
(in thousands) |
Mezzanine Loans |
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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 |
$ |
149,779 |
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$ |
600,502 |
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$ |
750,281 |
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$ |
153,913 |
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$ |
513,433 |
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$ |
667,346 |
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Unamortized (discount) premium |
(165 |
) |
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(198 |
) |
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(363 |
) |
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(237 |
) |
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— |
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(237 |
) |
Unamortized net deferred origination fees |
(665 |
) |
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(4,994 |
) |
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(5,659 |
) |
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(830 |
) |
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(5,326 |
) |
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(6,156 |
) |
Carrying value |
$ |
148,949 |
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$ |
595,310 |
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$ |
744,259 |
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$ |
152,846 |
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$ |
508,107 |
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$ |
660,953 |
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Unfunded commitments |
$ |
1,900 |
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$ |
64,568 |
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$ |
66,468 |
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$ |
1,900 |
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$ |
50,334 |
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$ |
52,234 |
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Number of loans |
6 |
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14 |
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20 |
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6 |
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12 |
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18 |
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Weighted average coupon |
8.3 |
% |
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4.6 |
% |
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5.3 |
% |
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8.1 |
% |
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4.5 |
% |
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5.4 |
% |
Weighted average years to maturity (1)
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2.3 |
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3.5 |
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3.2 |
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2.6 |
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3.3 |
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3.1 |
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____________________
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(1) |
Based on contractual maturity date. Certain loans are subject to contractual extension options which may be subject to conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities in connection with loan modifications. |
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(in thousands) |
March 31,
2016 |
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December 31,
2015 |
Property Type |
Carrying Value |
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% of Commercial Portfolio |
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Carrying Value |
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% of Commercial Portfolio |
Retail |
$ |
186,401 |
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25.0 |
% |
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$ |
185,883 |
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28.1 |
% |
Hotel |
81,502 |
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11.0 |
% |
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80,843 |
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12.2 |
% |
Multifamily |
165,916 |
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22.3 |
% |
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139,011 |
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21.1 |
% |
Office |
310,440 |
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41.7 |
% |
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255,216 |
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38.6 |
% |
Total |
$ |
744,259 |
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100.0 |
% |
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$ |
660,953 |
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100.0 |
% |
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(in thousands) |
March 31,
2016 |
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December 31,
2015 |
Geographic Location |
Carrying Value |
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% of Commercial Portfolio |
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Carrying Value |
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% of Commercial Portfolio |
West |
$ |
131,099 |
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17.6 |
% |
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$ |
131,488 |
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19.9 |
% |
Southeast |
80,443 |
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10.8 |
% |
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79,118 |
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12.0 |
% |
Southwest |
201,499 |
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27.1 |
% |
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161,721 |
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24.4 |
% |
Northeast |
264,077 |
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35.5 |
% |
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238,913 |
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36.2 |
% |
Midwest |
67,141 |
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9.0 |
% |
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49,713 |
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7.5 |
% |
Total |
$ |
744,259 |
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100.0 |
% |
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$ |
660,953 |
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100.0 |
% |
At March 31, 2016 and December 31, 2015, the Company pledged commercial real estate assets with a carrying value of $666.8 million and $361.1 million, respectively, as collateral for repurchase agreements and FHLB advances. See Note 15 - Repurchase Agreements and Note 17 - Federal Home Loan Bank of Des Moines Advances.
The following table summarizes activity related to commercial real estate assets for the three months ended March 31, 2016 and 2015.
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Three Months Ended
March 31, |
(in thousands) |
2016 |
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2015 |
Balance at beginning of period |
$ |
660,953 |
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$ |
— |
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Originations and purchases |
86,870 |
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45,556 |
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Repayments |
(4,135 |
) |
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— |
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Net discount accretion (premium amortization) |
73 |
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— |
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(Increase) decrease in net deferred origination fees |
(1,110 |
) |
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— |
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Amortization of net deferred origination fees |
1,608 |
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— |
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Allowance for loan losses |
— |
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— |
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Balance at end of period |
$ |
744,259 |
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$ |
45,556 |
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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 assets as of March 31, 2016 and December 31, 2015:
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(dollars in thousands) |
March 31,
2016 |
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December 31,
2015 |
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 |
20 |
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$ |
750,281 |
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$ |
744,259 |
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18 |
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$ |
667,346 |
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$ |
660,953 |
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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 |
20 |
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$ |
750,281 |
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$ |
744,259 |
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18 |
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$ |
667,346 |
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$ |
660,953 |
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The Company has not recorded any allowances for losses as no loans are past-due and 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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