NOTE 8: 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 that, as of March 31, 2018 and December 31, 2017, our consolidated VIEs were: RAIT I, RAIT II, our floating rate securitizations, RAIT VIE Properties (Willow Grove and Cherry Hill) and the two ventures described in Note 5: Indebtedness (RAIT Venture VIEs).

We consolidate the securitizations that we sponsor as we have retained interests in these entities and control the significant decisions regarding the collateral in these entities, such as the approval of loan workouts. As of March 31, 2018, we consolidated the VIE properties as we own a majority of these entities and control the significant capital and operating decisions regarding the properties. As of March 31, 2018, we consolidated our two RAIT Venture VIEs (each of which consolidates a floating rate securitization) as we own a majority of these entities and control a majority of the significant decisions regarding the collateral in these entities, such as the approval of loan workouts.

The following tables present the assets and liabilities of our consolidated VIEs as of each respective date. Certain amounts included in the tables below are eliminated upon consolidation with our other subsidiaries that maintain investments in the debt or equity securities issued by these entities.

	As of March 31, 2018
	RAIT Securitizations			RAIT VIE Properties			RAIT Venture VIEs		Total
Assets
Investments in commercial mortgage loans, mezzanine loans and preferred equity interests, at amortized cost:
Commercial mortgage loans, mezzanine loans, and preferred equity interests	$	1,018,930		$	—		$	277,554	$	1,296,484
Allowance for losses		(13,732	)		—			—		(13,732	)
Total investments in commercial mortgage loans, mezzanine loans and preferred equity interests		1,005,198			—			277,554		1,282,752
Investments in real estate
Investments in real estate		—			25,570			—		25,570
Accumulated depreciation		—			(7,175	)		—		(7,175	)
Total investments in real estate		—			18,395			—		18,395
Cash and cash equivalents		—			162			189		351
Restricted cash		9,891			350			47,261		57,502
Accrued interest receivable		42,441			—			1,992		44,433
Other assets		126			3,932			—		4,058
Intangible assets
Intangible assets		—			—			—		—
Accumulated amortization		—			—			—		—
Total intangible assets		—			—			—		—
Total assets	$	1,057,656		$	22,839		$	326,996	$	1,407,491
Liabilities and Equity
Indebtedness, net	$	952,648		$	19,597		$	323,714	$	1,295,959
Accrued interest payable		1,989			5,486			1,053		8,528
Accounts payable and accrued expenses		5			3,283			3		3,291
Derivative liabilities		—			—			—		—
Deferred taxes, borrowers’ escrows and other liabilities		—			186			558		744
Total liabilities		954,642			28,552			325,328		1,308,522
Equity:
Shareholders’ equity:
RAIT investment and Retained earnings (deficit)		103,014			(5,713	)		1,553		98,854
Total shareholders’ equity		103,014			(5,713	)		1,553		98,854
Noncontrolling Interests		—			—			115		115
Total liabilities and equity	$	1,057,656		$	22,839		$	326,996	$	1,407,491

	As of December 31, 2017
	RAIT Securitizations		RAIT VIE Properties			RAIT Venture VIE			Total
Assets
Investments in commercial mortgage loans, mezzanine loans and preferred equity interests, at amortized cost:
Commercial mortgage loans, mezzanine loans, and preferred equity interests	$	1,082,528	$	—		$	349,924		$	1,432,452
Allowance for losses		—		—			—			—
Total investments in commercial mortgage loans, mezzanine loans and preferred equity interests		1,082,528		—			349,924			1,432,452
Investments in real estate
Investments in real estate		—		25,536			—			25,536
Accumulated depreciation		—		(6,902	)		—			(6,902	)
Total investments in real estate		—		18,634			—			18,634
Cash and cash equivalents		—		283			92			375
Restricted cash		1,068		237			10			1,315
Accrued interest receivable		41,639		—			2,462			44,101
Other assets		16,860		3,954			—			20,814
Intangible assets
Intangible assets		—		—			—			—
Accumulated amortization		—		—			—			—
Total intangible assets		—		—			—			—
Total assets	$	1,142,095	$	23,108		$	352,488		$	1,517,691
Liabilities and Equity
Indebtedness, net	$	1,034,750	$	19,630		$	354,835		$	1,409,215
Accrued interest payable		1,869		5,356			1,111			8,336
Accounts payable and accrued expenses		23		3,274			—			3,297
Derivative liabilities		—		—			—			—
Deferred taxes, borrowers’ escrows and other liabilities		—		184			643			827
Total liabilities		1,036,642		28,444			356,589			1,421,675
Equity:
Shareholders’ equity:
RAIT investment and Retained earnings (deficit)		105,453		(5,336	)		(4,140	)		95,978
Total shareholders’ equity		105,453		(5,336	)		(4,140	)		95,977
Noncontrolling Interests		—		—			39			39
Total liabilities and equity	$	1,142,095	$	23,108		$	352,488		$	1,517,691

The assets of the VIEs can only be used to settle obligations of the VIEs and are not available to our creditors. The amounts that eliminate in consolidation include $259,755 of total investments in mortgage loans and $344,716 of indebtedness as of March 31, 2018 and $257,625 of total investments in mortgage loans and $370,351 of indebtedness as of December 31, 2017. 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.