Loans Receivable

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

Loans Receivable

5. LOANS RECEIVABLE

As of December 31, 2013, our consolidated balance sheet included $2.0 billion of loans receivable related to our Loan Origination segment and $47.0 million of loans receivable owned by CT CDO I, a consolidated securitization vehicle included in our CT Legacy Portfolio segment. Refer to Note 21 for further discussion of our operating segments.

Activity relating to our loans receivable was ($ in thousands):

	Gross Book Value			Provision for Loan Losses			Net Book Value
December 31, 2012	$	164,180		$	(22,680	)	$	141,500
Loan originations		2,325,433			—			2,325,433
Additional fundings		2,480			—			2,480
Loan satisfactions		(260,400	)		—			(260,400	)
Partial loan repayments and sales		(141,150	)		—			(141,150	)
Deferred origination fees and expenses		(25,402	)		—			(25,402	)
Amortization of deferred fees and expenses		5,965			—			5,965
Unrealized gain on foreign currency translation		797			—			797
Reclassification to loans held-for-sale		(6,601	)		4,601			(2,000	)
December 31, 2013	$	2,065,302		$	(18,079	)	$	2,047,223

As of December 31, 2013, we had unfunded commitments of $164.3 million related to 15 loans receivable, which amounts will only be funded to finance lease-related or capital expenditures by our borrowers. These future commitments will expire over the next five years.

The following table details overall statistics for our loans receivable portfolio ($ in thousands):

	December 31, 2013			December 31, 2012
Number of loans		31			7
Principal balance	$	2,076,411		$	164,180
Net book value(1)	$	2,047,223		$	141,500
Weighted-average cash coupon(2)		L+4.64	%		L+4.73	%
Weighted-average all-in yield(2)		L+5.26	%		L+4.74	%
Weighted-average maximum maturity (years)(3)		4.1			0.7

(1) The primary differences between the principal balance and net book value are deferred origination fees on loans in our Loan Origination segment, and provisions for loan losses in our CT Legacy Portfolio segment.

(2) All loans are floating rate loans indexed to LIBOR as of December 31, 2013 and 2012; however, certain of our loans receivable earn a minimum LIBOR floor ranging from 0.20% to 1.00%. Amounts exclude all non-performing loans.

(3) Maximum maturity date assumes all extension options are exercised.

The tables below detail the types of loans in our loan portfolio, as well as the property type and geographic distribution of the properties securing these loans ($ in thousands):

	December 31, 2013					December 31, 2012
Asset Type	Net Book Value		Percentage			Net Book Value		Percentage
Senior mortgage loans(1)	$	1,800,329		88	%	$	62,500		44	%
Subordinate loans(2)		246,894		12			79,000		56
	$	2,047,223		100	%	$	141,500		100	%
Property Type	Net Book Value		Percentage			Net Book Value		Percentage
Office	$	864,666		42	%	$	111,500		79	%
Multifamily		617,464		30			—		—
Hotel		390,492		19			30,000		21
Other		174,601		9			—		—
	$	2,047,223		100	%	$	141,500		100	%
Geographic Location	Net Book Value		Percentage			Net Book Value		Percentage
Northeast	$	828,571		40	%	$	27,000		19	%
West		469,262		23			92,500		65
Southeast		243,798		12			12,404		9
Southwest		216,429		11			9,596		7
Northwest		166,207		8			—		—
Midwest		85,708		4			—		—
United Kingdom		37,248		2			—		—
	$	2,047,223		100	%	$	141,500		100	%

(1) Includes senior mortgage loans, related contiguous subordinate loans with a net book value of $68.6 million, and pari passu participations in mortgages.

(2) Includes subordinate interests in mortgages and mezzanine loans.

Loan risk ratings

Quarterly, our Manager evaluates our loan portfolio as described in Note 2. In conjunction with our quarterly loan portfolio review, our Manager assesses the performance of each loan, and assigns a risk rating based on several factors, including risk of loss, current LTV, collateral performance, structure, exit plan, and sponsorship. Loans are rated “1” (less risk) through “8” (greater risk), which ratings are defined in Note 2.

The following table allocates the principal balance and net book value of our loans receivable based on our internal risk ratings ($ in thousands):

	December 31, 2013						December 31, 2012
Risk Rating	Number of Loans		Principal Balance		Net Book Value		Number of Loans		Principal Balance		Net Book Value
1 – 3		29	$	2,038,863	$	2,020,223		2	$	47,000	$	47,000
4 – 5		—		—		—		2		92,500		92,500
6 – 8		2		37,548	$	27,000		3		24,680		2,000
		31	$	2,076,411	$	2,047,223		7	$	164,180	$	141,500

In making this risk assessment, one of the primary factors we consider is how senior or junior each loan is relative to other debt obligations of the borrower.

The following tables further allocate our loans receivable by loan type and our internal risk ratings ($ in thousands):

	Senior Mortgage Loans(1)
	December 31, 2013						December 31, 2012
Risk Rating	Number of Loans		Principal Balance		Net Book Value		Number of Loans		Principal Balance		Net Book Value
1 – 3		26	$	1,811,514	$	1,800,329		—	$	—	$	—
4 – 5		—		—		—		1		62,500		62,500
		26	$	1,811,514	$	1,800,329		1	$	62,500	$	62,500

(1) Includes senior mortgage loans, related contiguous subordinate loans with a net book value of $68.6 million, and pari passu participations in mortgages.

	Subordinate Loans(1)
	December 31, 2013						December 31, 2012
Risk Rating	Number of Loans		Principal Balance		Net Book Value		Number of Loans		Principal Balance		Net Book Value
1 – 3		3	$	227,350	$	219,894		2	$	47,000	$	47,000
4 – 5		—		—		—		1		30,000		30,000
6 – 8		2		37,548		27,000		3		24,680		2,000
		5	$	264,898	$	246,894		6	$	101,680	$	79,000

(1) Includes subordinate interests in mortgages and mezzanine loans.

Loan impairments

We do not have any loan impairments in our Loan Origination segment. As of December 31, 2013, CT CDO I, which is in our CT Legacy Portfolio segment, had one impaired subordinate interest in a mortgage loan with a gross book value of $10.5 million that is delinquent on its contractual payments. We have taken a 100% loan loss reserve on this loan.

As of December 31, 2012, consolidated securitization vehicles in our CT Legacy Portfolio segment had one impaired subordinate interest in a mortgage loan with a gross book value of $7.5 million that was current in its interest payments and two impaired subordinate interest in a mortgage loans with a combined gross book value of $17.1 million that were delinquent on their contractual payments. We had an aggregate 92% loan loss reserve on these loans resulting in a net book value of $2.0 million.

Generally, we have recorded loan loss reserves for loans that are in maturity default or otherwise have past-due principal payments. As of December 31, 2013, CT CDO I, which is in our CT Legacy Portfolio segment, had one loan with a net book value of $27.0 million, which was in maturity default but had no reserve recorded. We expect to collect all principal and interest due under this loan. We do not have any loans in maturity default or with past-due principal payments in our Loan Origination segment.

There was no income recorded on impaired loans during the year ended December 31, 2013. We recorded $290,000 of income on impaired subordinate interests in mortgage loans owned by CT CDO I that had an average net book value of $2.8 million during the year ended December 31, 2012. Substantially all income recorded on impaired loans during the prior period was received in cash.

Nonaccrual loans

We do not have any nonaccrual loans in our Loan Origination segment. CT CDO I, which is in our CT Legacy Portfolio segment, had one subordinate interest in a mortgage loan on nonaccrual status with a principal balance of $10.5 million and a net book value of zero as of December 31, 2013. Consolidated securitization vehicles in our CT Legacy Portfolio segment had three subordinate interests in mortgages on nonaccrual status with an aggregate principal balance of $24.7 million and an aggregate net book value of $2.0 million as of December 31, 2012. In accordance with our revenue recognition policies discussed in Note 2, we do not accrue interest on loans that are 90 days past due or, in the opinion of our Manager, are otherwise uncollectable. Accordingly, we did not have any material interest receivable accrued on nonperforming loans as of December 31, 2013 or 2012.