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