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Debt and Preferred Equity Investments (Tables)
3 Months Ended
Mar. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Schedule of debt and preferred equity book balance roll forward
Below is a summary of the activity relating to our debt and preferred equity investments for the three months ended March 31, 2019 and the twelve months ended December 31, 2018 (in thousands):
 
March 31, 2019
 
December 31, 2018
Balance at beginning of year (1)
$
2,099,393

 
$
2,114,041

Debt investment originations/accretion (2)
436,819

 
834,304

Preferred equity investment originations/accretion (2)
3,416

 
151,704

Redemptions/sales/syndications/amortization (3)
(271,387
)
 
(994,906
)
Net change in loan loss reserves
4,000

 
(5,750
)
Balance at end of period (1)
$
2,272,241

 
$
2,099,393

(1)
Net of unamortized fees, discounts, and premiums.
(2)
Accretion includes amortization of fees and discounts and paid-in-kind investment income.
(3)
Certain participations in debt investments that were sold or syndicated, but did not meet the conditions for sale accounting, are included in other assets and other liabilities on the consolidated balance sheets.
Allowance for Credit Losses on Financing Receivables
The following table is a rollforward of our total loan loss reserves for the three months ended March 31, 2019 and the twelve months ended December 31, 2018 (in thousands):
 
March 31, 2019
 
December 31, 2018
Balance at beginning of year
$
5,750

 
$

Expensed

 
6,839

Recoveries

 

Charge-offs and reclassifications
(4,000
)
 
(1,089
)
Balance at end of period
$
1,750

 
$
5,750

Summary of debt investments
As of March 31, 2019 and December 31, 2018, we held the following debt investments with an aggregate weighted average current yield of 8.79% at March 31, 2019 (dollars in thousands):
Loan Type
 
March 31, 2019
Future Funding
Obligations
 
March 31, 2019 Senior
Financing
 
March 31, 2019
Carrying Value
(1)
 
December 31, 2018
Carrying Value
(1)
 
Maturity
Date
(2)
Fixed Rate Investments:
 
 
 
 
 
 
 
 
 
 
Mezzanine Loan(3a)
 
$

 
$
1,163,005

 
$
215,511

 
$
213,185

 
March 2020
Loan Type
 
March 31, 2019
Future Funding
Obligations
 
March 31, 2019 Senior
Financing
 
March 31, 2019
Carrying Value
(1)
 
December 31, 2018
Carrying Value
(1)
 
Maturity
Date
(2)
Mezzanine Loan
 

 
15,000

 
3,500

 
3,500

 
September 2021
Mezzanine Loan
 

 
147,000

 
24,937

 
24,932

 
April 2022
Mezzanine Loan
 

 
280,000

 
37,099

 
36,585

 
August 2022
Mezzanine Loan
 

 
318,078

 
202,184

 

 
June 2023
Mezzanine Loan
 

 
85,097

 
12,708

 
12,706

 
November 2023
Mezzanine Loan
 

 
180,000

 
30,000

 
30,000

 
December 2023
Mezzanine Loan(3b)
 

 
115,000

 
12,943

 
12,941

 
June 2024
Mezzanine Loan
 

 
95,000

 
30,000

 
30,000

 
January 2025
Mezzanine Loan
 

 
1,712,750

 
55,250

 
55,250

 
June 2027
Mezzanine Loan(4)
 

 

 

 
11,000

 
 
Total fixed rate
 
$

 
$
4,110,930

 
$
624,132

 
$
430,099

 
 
Floating Rate Investments:
 
 
 
 
 
 
 
 
 
 
Mezzanine Loan(5)
 

 
45,025

 
37,500

 
37,499

 
January 2019
Mezzanine Loan(3c)(6)
 

 
150,000

 
15,381

 
15,333

 
April 2019
Mezzanine Loan(3d)(6)
 

 

 
14,869

 
14,822

 
April 2019
Mezzanine Loan(6)
 

 
40,000

 
19,999

 
19,986

 
April 2019
Mezzanine Loan(7)
 

 
265,000

 
24,993

 
24,961

 
April 2019
Mortgage/Jr. Mortgage Participation Loan
 
39,321

 
236,424

 
85,308

 
84,012

 
August 2019
Mortgage/Mezzanine Loan
 

 

 
19,999

 
19,999

 
August 2019
Mortgage/Mezzanine Loan
 
1,027

 

 
128,560

 
154,070

 
September 2019
Mezzanine Loan
 

 
350,000

 
34,923

 
34,886

 
October 2019
Mortgage/Mezzanine Loan
 
9,656

 
64,521

 
112,886

 
62,493

 
January 2020
Mezzanine Loan
 
509

 
576,313

 
94,118

 
79,164

 
January 2020
Mortgage/Mezzanine Loan
 

 

 
69,310

 

 
March 2020
Mortgage Loan
 
9,776

 

 
89,995

 
88,501

 
February 2020
Mezzanine Loan
 
828

 
324,989

 
53,917

 
53,402

 
March 2020
Mortgage/Mezzanine Loan
 
8,093

 

 
230,879

 
277,694

 
April 2020
Mortgage/Mezzanine Loan
 

 
62,957

 
36,991

 
37,094

 
June 2020
Mezzanine Loan
 
7,392

 
39,649

 
13,145

 
12,627

 
July 2020
Mortgage/Mezzanine Loan
 

 

 
83,663

 
83,449

 
October 2020
Mezzanine Loan
 
35,467

 
375,459

 
92,055

 
88,817

 
November 2020
Mortgage and Mezzanine Loan
 
31,027

 

 
101,028

 
98,804

 
December 2020
Mortgage and Mezzanine Loan
 

 

 
35,295

 
35,266

 
December 2020
Jr. Mortgage Participation/Mezzanine Loan
 

 
60,000

 
15,674

 
15,665

 
July 2021
Mezzanine Loan(8)
 

 

 

 
7,305

 
 
Mezzanine Loan(8)
 

 

 

 
14,998

 
 
Mezzanine Loan(8)
 

 

 

 
21,990

 
 
Total floating rate
 
$
143,096

 
$
2,590,337

 
$
1,410,488

 
$
1,382,837

 
 
Total
 
$
143,096

 
$
6,701,267

 
$
2,034,620

 
$
1,812,936

 
 
(1)
Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees.
(2)
Represents contractual maturity, excluding any unexercised extension options.
(3)
Carrying value is net of the following amounts that were sold or syndicated, which are included in other assets and other liabilities on the consolidated balance sheets as a result of the transfers not meeting the conditions for sale accounting: (a) $1.3 million, (b) $12.0 million, (c) $14.6 million, and (d) $14.1 million.
(4)
This loan was sold in 2019.
(5)
As of January 2019, this loan was in maturity default. No impairment was recorded as the Company believes that the fair value of the property exceeded the carrying amount of the loans. In April 2019, the Company accepted an assignment of the equity interests in the property in lieu of repayment, and marked the assets received and liabilities assumed to fair value.
(6)
This loan was extended in April 2019.
(7)
This loan was modified in April 2019.
(8)
This loan was repaid in 2019.
Summary of preferred equity investments
As of March 31, 2019 and December 31, 2018, we held the following preferred equity investments with an aggregate weighted average current yield of 8.74% at March 31, 2019 (dollars in thousands):
Type
 
March 31, 2019
Future Funding
Obligations
 
March 31, 2019 Senior
Financing
 
March 31, 2019
Carrying Value
(1)
 
December 31, 2018
Carrying Value
(1)
 
Mandatory Redemption (2)
Preferred Equity
 
$

 
$
272,000

 
$
143,009

 
$
143,183

 
April 2021
Preferred Equity
 

 
1,762,761

 
94,612

 
143,274

 
June 2022
Total
 
$

 
$
2,034,761

 
$
237,621

 
$
286,457

 
 
(1)
Carrying value is net of deferred origination fees.
(2)
Represents contractual maturity, excluding any unexercised extension options.