Variable Interest Entities

12 Months Ended

Dec. 31, 2013

Variable Interest Entities

NOTE 9: VARIABLE INTEREST ENTITIES

The determination of when to consolidate a VIE is based on the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance together with either the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. We evaluated our investments and determined as of December 31, 2013 our consolidated VIEs were: Taberna VIII, Taberna IX, RAIT I, RAIT II, IRT and two investments in real estate. The following table presents the assets and liabilities of our consolidated VIEs as of each respective date.

	As of December 31, 2013			As of December 31, 2012
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests	$	1,816,507		$	1,917,925
Allowance for losses		(17,250	)		(17,125	)
Total investments in mortgages and loans		1,799,257			1,900,800
Investments in real estate, net of accumulated depreciation of $18,538 and 1,941, respectively		194,648			20,609
Investments in securities and security-related receivables, at fair value		566,577			654,795
Cash and cash equivalents		3,599			276
Restricted cash		40,793			50,203
Accrued interest receivable		68,456			67,271
Deferred financing costs, net of accumulated amortization of $17,107 and $13,633, respectively		10,263			12,741
Intangible assets, net of accumulated amortization of $568 and $0, respectively		517			0
Total assets	$	2,684,110		$	2,706,695
Liabilities and Equity
Indebtedness (including $377,235 and $187,048 at fair value, respectively)	$	1,946,536		$	1,724,356
Accrued interest payable		73,122			59,914
Accounts payable and accrued expenses		5,771			3,335
Derivative liabilities		113,323			151,438
Deferred taxes, borrowers’ escrows and other liabilities		5,805			4,877
Total liabilities		2,144,557			1,943,920
Equity:
Shareholders’ equity:
Accumulated other comprehensive income (loss)		(59,684	)		(90,954	)
RAIT investment		262,760			295,641
Retained earnings (deficit)		258,270			558,088
Total shareholders’ equity		461,346			762,775
Noncontrolling interests		78,207			0
Total liabilities and equity	$	2,684,110		$	2,706,695

The assets of the VIEs can only be used to settle obligations of the VIEs and are not available to our creditors. Certain amounts included in the table above are eliminated upon consolidation with other our subsidiaries that maintain investments in the debt or equity securities issued by these entities. We do not have any contractual obligation to provide the VIEs listed above with any financial support. We have not and do not intend to provide financial support to these VIEs that we were not previously contractually required to provide.