12. FAIR VALUES

Assets Recorded at Fair Value

The following table summarizes our assets measured at fair value on a recurring basis ($ in thousands):


	Level 1		Level 2		Level 3		Fair Value⁽¹⁾
September 30, 2014
Other assets, at fair value⁽²⁾	$	—	$	1,625	$	42,296	$	43,921
December 31, 2013
Other assets, at fair value⁽²⁾	$	—	$	1,944	$	54,461	$	56,405

(1)	CT CDO I had one impaired loan with a principal balance of $10.5 million measured on a non-recurring basis that had a 100% loan loss reserve as of December 31, 2013. This loan was written off during the nine months ended September 30, 2014.

(2)	Other assets include loans, securities, equity investments, and other receivables carried at fair value.

The following table reconciles the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs ($ in thousands):


	2014			2013
	Other			Loans			Other			Investment in
	Assets			Held-for-Sale, net			Assets			CT Legacy Assets
January 1,	$	54,461		$	—		$	—		$	132,000
Consolidation of CT Legacy Partners		—			—			166,094			(132,000	)
Transfer from loans receivable, at fair value		—			2,000			—			—
Proceeds from investments		(19,781	)		(3,200	)		(85,547	)		—
Deferred interest		—			—			325			—
Adjustments to fair value included in earnings
Gain on investments at fair value		7,616			—			4,463			—
Valuation allowance on loans held-for-sale		—			1,200			—			—

September 30,	$	42,296		$	—		$	85,335		$	—

Our other assets include loans, securities, equity investments, and other receivables that are carried at fair value. The following describes the key assumptions used in arriving at the fair value of each of these assets as of September 30, 2014 and December 31, 2013.

Securities: As of September 30, 2014, our securities, which had a book value of $10.1 million, were valued by obtaining assessments from third-party dealers.

Loans: The following table lists the range of key assumptions for each type of loans receivable as of September 30, 2014 and December 31, 2013 ($ in millions):


		Recovery			Fair Value as of
Collateral Type	Discount Rate	Percentage⁽¹⁾			September 30, 2014		December 31, 2013
Hotel	(2)		100	%	$	15.0	$	15.0
Office	(3)		100	%		4.0		25.7

					$	19.0	$	40.7

(1)	Represents the proportion of the principal expected to be collected relative to the loan balances as of September 30, 2014 and December 31, 2013, excluding loans for which there is no expectation of future cash flows.

(2)	The discount rate used to value our hotel loan portfolio was 7% as of September 30, 2014 and December 31, 2013. A 100 bp discount rate increase would result in a decrease in book value of 0.2% and 1.4% as of September 30, 2014 and December 31, 2013, respectively.

(3)	The discount rates used to value our office loan portfolio was 15% as of September 30, 2014 and ranged from 6% to 15% as of December 31, 2013. A 100 bp discount rate increase would result in a decrease in fair value of 1.5% and 0.3% as of September 30, 2014 and December 31, 2013, respectively.

Equity investments and other receivables: As of September 30, 2014, equity investments and other receivables, which had an aggregate book value of $13.2 million, were generally valued by discounting expected cash flows and assumptions regarding the collection of principal on the underlying loans and investments.

There were no liabilities recorded at fair value as of September 30, 2014 or December 31, 2013. Refer to Note 2 for further discussion regarding fair value measurement.

Fair Value of Financial Instruments

As discussed in Note 2, GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate that value. The following table details the carrying amount, face amount, and fair value of the financial instruments described in Note 2 ($ in thousands):


	September 30, 2014						December 31, 2013
	Carrying		Face		Fair		Carrying		Face		Fair
	Amount		Amount		Value		Amount		Amount		Value
Financial assets
Cash and cash equivalents	$	63,343	$	63,343	$	63,343	$	52,342	$	52,342	$	52,342
Restricted cash		10,855		10,855		10,855		10,096		10,096		10,096
Loans receivable, net		3,906,226		3,940,626		3,940,626		2,047,223		2,077,227		2,058,699
Financial liabilities
Revolving repurchase facilities		1,669,406		1,669,406		1,669,406		863,622		863,622		863,622
Asset-specific repurchase agreements		226,961		226,961		226,961		245,731		245,731		245,731
Loan participations sold		447,977		447,977		447,977		90,000		90,000		90,000
Convertible notes, net		161,259		172,500		178,934		159,524		172,500		181,772

Estimates of fair value for cash, cash equivalents and convertible notes are measured using observable, quoted market prices, or Level 1 inputs. All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs. See Note 2 for further discussion regarding fair value measurement of certain of our assets and liabilities.