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Investments In Loans
6 Months Ended
Jun. 30, 2013
Investments In Loans

NOTE 3: INVESTMENTS IN LOANS

Investments in Commercial Mortgages, Mezzanine Loans, Other Loans and Preferred Equity Interests

The following table summarizes our investments in commercial mortgages, mezzanine loans, other loans and preferred equity interests as of June 30, 2013:

 

     Unpaid
Principal
Balance
    Unamortized
(Discounts)
Premiums
    Carrying
Amount
    Number of
Loans
     Weighted-
Average
Coupon (1)
    Range of Maturity Dates

Commercial Real Estate (CRE) Loans

             

Commercial mortgages

   $ 813,289      $ (22,428   $ 790,861        60         6.3   Aug. 2013 to Jul. 2023

Mezzanine loans

     276,264        (3,933     272,331        80         9.4   Aug. 2013 to Apr. 2024

Preferred equity interests

     64,753        (986     63,767        15         9.8   Mar. 2014 to Aug. 2025
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

Total CRE Loans

     1,154,306        (27,347     1,126,959        155         7.2  

Other loans

     35,019        (97     34,922        2         4.6   Aug. 2013 to Oct. 2016
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

Total Loans

   $ 1,189,325      $ (27,444   $ 1,161,881        157         7.1  
        

 

 

    

 

 

   

Deferred fees

     (115     0        (115       
  

 

 

   

 

 

   

 

 

        

Total investments in loans

   $ 1,189,210      $ (27,444   $ 1,161,766          
  

 

 

   

 

 

   

 

 

        

 

(1) Weighted-average coupon is calculated on the unpaid principal amount of the underlying instruments, which does not necessarily correspond to the carrying amount.

The following table summarizes our investments in commercial mortgages, mezzanine loans, other loans and preferred equity interests as of December 31, 2012:

 

     Unpaid
Principal
Balance
    Unamortized
(Discounts)
Premiums
    Carrying
Amount
    Number of
Loans
     Weighted-
Average
Coupon (1)
    Range of Maturity Dates

Commercial Real Estate (CRE) Loans

             

Commercial mortgages

   $ 728,774      $ (25,807   $ 702,967        50         6.4   Mar. 2013 to Jan. 2023

Mezzanine loans

     275,457        (4,355     271,102        83         9.3   Mar. 2013 to Nov. 2038

Preferred equity interests

     64,752        (1,031     63,721        15         9.7   Mar. 2014 to Aug. 2025
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

Total CRE Loans

     1,068,983        (31,193     1,037,790        148         7.4  

Other loans

     38,600        (30     38,570        2         4.9   Mar. 2013 to Oct. 2016
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

Total Loans

     1,107,583        (31,223     1,076,360        150         7.3  
        

 

 

    

 

 

   

Deferred fees

     (1,231     0        (1,231       
  

 

 

   

 

 

   

 

 

        

Total investments in loans

   $ 1,106,352      $ (31,223   $ 1,075,129          
  

 

 

   

 

 

   

 

 

        

 

(1) Weighted-average coupon is calculated on the unpaid principal amount of the underlying instruments which does not necessarily correspond to the carrying amount.

During the six-month period ended June 30, 2013, we acquired one multi-family property with a purchase price of $35,400, which consisted of the assumption of two commercial real estate loans and the issuance of limited liability company membership units. These units are redeemable for our common shares in defined circumstances. See Note 5.

During the six-month period ended June 30, 2012, we completed the conversion of two commercial real estate loans with a carrying value of $24,871 to real estate owned properties. We recorded a gain on asset of $2,529 as the value of the real estate exceeded the carrying amount of the converted loans.

The following table summarizes the delinquency statistics of our commercial real estate loans as of June 30, 2013 and December 31, 2012:

 

Delinquency Status

   As of
June 30,
2013
     As of
December  31,
2012
 

30 to 59 days

   $ 963       $ 1,974   

60 to 89 days

     5,211         5,211   

90 days or more

     24,556         37,130   

In foreclosure or bankruptcy proceedings

     16,697         9,420   
  

 

 

    

 

 

 

Total

   $ 47,427       $ 53,735   
  

 

 

    

 

 

 

 

As of June 30, 2013 and December 31, 2012, approximately $65,597 and $69,080, respectively, of our commercial real estate loans were on non-accrual status and had a weighted-average interest rate of 8.2% and 8.4%. As of June 30, 2013 and December 31, 2012, 1 Other loan with a carrying amount of approximately $14,882 and $18,462, respectively, was on non-accrual status and had a weighted-average interest rate of 7.2%.

Allowance For Losses And Impaired Loans

The following table provides a roll-forward of our allowance for losses for our commercial mortgages, mezzanine loans, and other loans for the three-month periods ended June 30, 2013 and 2012:

 

     For the Three-Month
Period Ended
June 30, 2013
    For the Three-Month
Period Ended
June 30, 2012
 

Beginning balance

   $ 26,206      $ 39,715   

Provision

     500        500   

Charge-offs, net of recoveries

     (2,484     (338
  

 

 

   

 

 

 

Ending balance

   $ 24,222      $ 39,877   
  

 

 

   

 

 

 

The following table provides a roll-forward of our allowance for losses for our commercial mortgages, mezzanine loans, and other loans for the six-month periods ended June 30, 2013 and 2012:

 

     For the Six-Month
Period Ended
June 30, 2013
    For the Six-Month
Period Ended
June 30, 2012
 

Beginning balance

   $ 30,400      $ 46,082   

Provision

     1,000        1,000   

Charge-offs, net of recoveries

     (7,178     (7,205
  

 

 

   

 

 

 

Ending balance

   $ 24,222      $ 39,877   
  

 

 

   

 

 

 

As of June 30, 2013 and December 31, 2012, we identified 15 and 14, respectively, commercial mortgages, mezzanine loans and other loans with unpaid principal balances of $45,280 and $47,394, respectively, as impaired.

The average unpaid principal balance of total impaired loans was $45,979 and $75,728 during the three-month periods ended June 30, 2013 and 2012 and $46,450 and $79,811 during the six-month periods ended June 30, 2013 and 2012. We recorded interest income from impaired loans of $2 and $0 for the three-month periods ended June 30, 2013 and 2012. We recorded interest income from impaired loans of $21 and $62 for the six-month periods ended June 30, 2013 and 2012.

We have evaluated modifications to our commercial real estate loans to determine if the modification constitutes a troubled debt restructuring (TDR) under FASB ASC Topic 310, “Receivables”. During the six-month period ended June 30, 2013, we have determined that a modification to one commercial real estate loan constituted a TDR as the borrower was experiencing financial difficulties and we, as the lender granted a concession to the borrower by extending the maturity date from March 2014 to February 2016. The outstanding recorded investment was $18,995 both before and after the modification. As of June 30, 2013, there were no TDRs that subsequently defaulted.