Variable Interest Entities (Tables)

9 Months Ended

Sep. 30, 2014

Assets and Liabilities of Consolidated Variable Interest Entities

The following table presents the assets and liabilities of our consolidated VIEs as of each respective date. As of September 30, 2014 and December 31, 2013, our consolidated VIEs were: Taberna VIII, Taberna IX, RAIT I, RAIT II, Independence Realty Trust, Inc., Willow Grove and Cherry Hill.


	As of September 30, 2014			As of December 31, 2013
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests	$	1,718,528		$	1,816,507
Allowance for losses		(16,205	)		(17,250	)

Total investments in mortgages and loans		1,702,323			1,799,257
Investments in real estate, net of accumulated depreciation of $24,290 and 18,538, respectively		443,428			194,648
Investments in securities and security-related receivables, at fair value		566,330			566,577
Cash and cash equivalents		35,051			3,599
Restricted cash		30,898			40,793
Accrued interest receivable		80,240			68,456
Deferred financing costs, net of accumulated amortization of $19,993 and $17,107, respectively		8,857			10,263
Intangible assets, net of accumulated amortization of $3,495 and $568, respectively		1,327			517

Total assets	$	2,868,454		$	2,684,110

Liabilities and Equity
Indebtedness (including $431,142 and $377,235 at fair value, respectively)	$	2,044,328		$	1,946,536
Accrued interest payable		83,059			73,122
Accounts payable and accrued expenses		10,767			5,771
Derivative liabilities		81,653			113,323
Deferred taxes, borrowers’ escrows and other liabilities		8,634			5,805

Total liabilities		2,228,441			2,144,557
Equity:
Shareholders’ equity:
Accumulated other comprehensive income (loss)		(38,912	)		(59,684	)
RAIT investment		340,609			311,635
Retained earnings (deficit)		188,809			258,270

Total shareholders’ equity		490,506			510,221
Noncontrolling interests		149,507			29,332

Total liabilities and equity	$	2,868,454		$	2,684,110

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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