Loans Receivable

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Loans Receivable

4. LOANS RECEIVABLE

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

	Principal			Deferred Fees and			Net Book
	Balance			Other Items(1)			Value
December 31, 2013	$	2,076,411		$	(29,188	)	$	2,047,223
Loan fundings		1,740,977			—			1,740,977
Loan repayments and sales		(265,809	)		—			(265,809	)
Deferred origination fees and expenses		—			(21,751	)		(21,751	)
Amortization of deferred fees and expenses		—			7,702			7,702
Unrealized gain on foreign currency translation		—			6,837			6,837
Realized loan losses		(10,547	)		10,547			—
Reclassification to other assets		(27,000	)		—			(27,000	)
June 30, 2014	$	3,514,032		$	(25,853	)	$	3,488,179

(1) Includes a loan loss reserve of $10.5 million as of December 31, 2013, related to one loan in the CT Legacy Portfolio segment, owned by CT CDO I, with a principal balance of $10.5 million. This loan was subsequently written-off resulting in an aggregate loan loss reserve of zero as of June 30, 2014.

As of June 30, 2014, we had unfunded commitments of $407.3 million related to 28 loans receivable, which amounts will primarily be funded to finance property improvements or lease-related expenditures by the borrowers. These future commitments will expire over the next five years.

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

	June 30, 2014			December 31, 2013
Number of loans		48			31
Principal balance	$	3,514,032		$	2,076,411
Net book value	$	3,488,179		$	2,047,223
Weighted-average cash coupon(1)		L+4.46	%		L+4.64	%
Weighted-average all-in yield(1)		L+5.02	%		L+5.26	%
Weighted-average maximum maturity (years)(2)		4.1			4.1

(1) As of June 30, 2014, 83% of our loans are indexed to one-month LIBOR and 17% are indexed to three-month LIBOR. In addition, 18% of our loans currently earn interest based on LIBOR floors, with an average floor of 0.31%, as of June 30, 2014. In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs, and accrual of exit fees.

(2) Maximum maturity assumes all extension options are exercised, however our loans may be repaid prior to such date. As of June 30, 2014, 89% of our loans are subject to yield maintenance, lock-out provisions, or other prepayment restrictions and 11% are open to repayment by the borrower.

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):

	June 30, 2014					December 31, 2013
	Net Book					Net Book
Asset Type	Value		Percentage			Value		Percentage
Senior loans(1)	$	3,285,398		94	%	$	1,800,329		88	%
Subordinate loans(2)		202,781		6			246,894		12
	$	3,488,179		100	%	$	2,047,223		100	%
	Net Book					Net Book
Property Type	Value		Percentage			Value		Percentage
Office	$	1,296,464		37	%	$	864,666		42	%
Hotel		1,117,724		32			390,492		19
Multifamily		451,193		13			341,819		17
Condominium		317,876		9			275,645		13
Other		304,922		9			174,601		9
	$	3,488,179		100	%	$	2,047,223		100	%
	Net Book					Net Book
Geographic Location	Value		Percentage			Value		Percentage
United States
Northeast	$	1,149,246		33	%	$	828,571		40	%
West		708,564		20			469,262		23
Southeast		437,627		12			243,798		12
Southwest		304,747		9			216,429		11
Northwest		240,685		7			166,207		8
Midwest		100,865		3			85,708		4
Subtotal		2,941,734		84			2,009,975		98
International
United Kingdom		508,872		15			37,248		2
Netherlands		37,573		1			—		—
Subtotal		546,445		16			37,248		2
Total	$	3,488,179		100	%	$	2,047,223		100	%

(1) Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, note financings of senior mortgage loans, and pari passu participations in senior mortgage loans.

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

Loan Risk Ratings

As described in Note 2, our Manager evaluates our loan portfolio on a quarterly basis. 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. One of the primary factors considered is how senior or junior each loan is relative to other debt obligations of the borrower. Additional factors considered in the assessment include 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 as of June 30, 2014 ($ in thousands):

	Senior Loans(1)						Subordinate Loans(2)						Total
Risk	Number		Principal		Net		Number		Principal		Net		Net
Rating	of Loans		Balance		Book Value		of Loans		Balance		Book Value		Book Value
1 - 3		46	$	3,306,575	$	3,285,398		2	$	207,457	$	202,781	$	3,488,179
4 - 5		—		—		—		—		—		—		—
6 - 8		—		—		—		—		—		—		—
		46	$	3,306,575	$	3,285,398		2	$	207,457	$	202,781	$	3,488,179

(1) Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, note financings of senior mortgage loans, and pari passu participations in senior mortgage loans.

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

The following table allocates the principal balance and net book value of our loans receivable based on our internal risk ratings as of December 31, 2013 ($ in thousands):

	Senior Loans(1)						Subordinate Loans(2)						Total
Risk	Number		Principal		Net		Number		Principal		Net		Net
Rating	of Loans		Balance		Book Value		of Loans		Balance		Book Value		Book Value
1 - 3		26	$	1,811,513	$	1,800,329		3	$	227,350	$	219,894	$	2,020,223
4 - 5		—		—		—		—		—		—		—
6 - 8		—		—		—		2		37,548		27,000		27,000
		26	$	1,811,513	$	1,800,329		5	$	264,898	$	246,894	$	2,047,223

(1) Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, note financings of senior mortgage loans, and pari passu participations in senior mortgage loans.

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

Loan Impairments

We do not have any loan impairments or loans in maturity default as of June 30, 2014. As of December 31, 2013, CT CDO I, which is a component of our CT Legacy Portfolio segment, had one impaired subordinate interest in a mortgage loan with a gross book value of $10.5 million that was delinquent on its contractual payments. As of December 31, 2013, we had recorded a 100% loan loss reserve on this loan. This loan was subsequently written-off resulting in an aggregate loan loss reserve of zero as of June 30, 2014. As of December 31, 2013, CT CDO I had one loan with a net book value of $27.0 million in maturity default, but which had no reserve recorded due to our expectation of future repayment. In June 2014, this loan was restructured and reclassified to other assets.

Nonaccrual Loans

As of June 30, 2014, we did not have any nonaccrual loans in our loan portfolio. As of December 31, 2013, CT CDO I 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. This loan was subsequently written-off resulting in an aggregate loan loss reserve of zero as of June 30, 2014. 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 June 30, 2014 or December 31, 2013.