3. LOANS RECEIVABLE

During the second quarter of 2015, we completed the acquisition of a $4.9 billion portfolio of commercial mortgage loans secured by properties located in North America and Europe from General Electric Capital Corporation, or GE, and certain of its affiliates and joint venture partnerships. During the year ended December 31, 2015, we originated and acquired $7.5 billion of loans, inclusive of the GE acquisition, and funded $221.1 million under existing loans.

The following table details overall statistics for our loans receivable portfolio as of December 31, 2015 ($ in thousands):


	Floating Rate			Fixed Rate			Total
Number of loans		92			33			125
Principal balance	$	7,098,180		$	2,010,181		$	9,108,361
Net book value	$	7,064,279		$	2,012,728		$	9,077,007
Unfunded loan commitments⁽¹⁾	$	696,276		$	4,382		$	700,658
Weighted-average cash coupon⁽²⁾		L+4.09	%		5.63	%		4.84	%
Weighted-average all-in yield⁽²⁾		L+4.49	%		5.78	%		5.18	%
Weighted-average maximum maturity (years)⁽³⁾		3.3			2.6			3.1

(1)

Unfunded commitments will primarily be funded to finance property improvements or lease-related expenditures by the borrowers. These future commitments will expire over the next four years.

(2)

As of December 31, 2015, our floating rate loans were indexed to various benchmark rates, with 84% of floating rate loans indexed to USD LIBOR. In addition, $147.9 million of our floating rate loans earned interest based on floors that are above the applicable index, with an average floor of 1.80%, as of December 31, 2015. In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs, purchase discounts, and accrual of both extension and exit fees. Cash coupon and all-in yield for the total portfolio assume applicable floating benchmark rate for weighted-average calculation.

(3)

Maximum maturity assumes all extension options are exercised by the borrower, however our loans may be repaid prior to such date. As of December 31, 2015, 64% of our loans were subject to yield maintenance or other prepayment restrictions and 36% were open to repayment by the borrower without penalty.

As of December 31, 2014, our loan portfolio was 100% comprised of floating rate loans. The following table details overall statistics for our loans receivable portfolio as of December 31, 2014 ($ in thousands):


	December 31, 2014
Number of loans		60
Principal balance	$	4,462,897
Net book value	$	4,428,500
Unfunded loan commitments⁽¹⁾	$	513,229
Weighted-average cash coupon⁽²⁾		L+4.36	%
Weighted-average all-in yield⁽²⁾		L+4.81	%
Weighted-average maximum maturity (years)⁽³⁾		3.9

(1)

Unfunded commitments will primarily be funded to finance property improvements or lease-related expenditures by the borrowers. These future commitments will expire over the next four years.

(2)

As of December 31, 2014, all of our loans were floating rate loans and were indexed to various benchmark rates, with 79% of floating rate loans indexed to USD LIBOR. In addition, 14% of our floating rate loans earned interest based on floors that are above the applicable index, with an average floor of 0.31%, as of December 31, 2014. In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs, and accrual of both extension and exit fees.

(3)

Maximum maturity assumes all extension options are exercised by the borrower, however our loans may be repaid prior to such date. As of December 31, 2014, 85% of our loans were subject to yield maintenance or other prepayment restrictions and 15% were open to repayment by the borrower without penalty.

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


	Principal Balance			Deferred Fees / Other Items⁽¹⁾			Net Book Value
December 31, 2013	$	2,077,227		$	(30,004	)	$	2,047,223
Loan originations, acquisitions, and fundings		3,067,263			—			3,067,263
Loan repayments		(591,246	)		—			(591,246	)
Unrealized (loss) gain on foreign currency translation		(52,801	)		725			(52,076	)
Deferred fees and other items⁽¹⁾		—			(35,449	)		(35,449	)
Amortization of fees and other items⁽¹⁾		—			19,785			19,785
Charge-offs⁽²⁾		(10,546	)		10,546			—
Reclassification to other assets		(27,000	)		—			(27,000	)

December 31, 2014	$	4,462,897		$	(34,397	)	$	4,428,500

Loan originations, acquisitions, and fundings		7,203,145			—			7,203,145
Loan repayments		(2,407,920	)		—			(2,407,920	)
Unrealized (loss) gain on foreign currency translation		(149,761	)		492			(149,269	)
Deferred fees and other items⁽¹⁾		—			(33,501	)		(33,501	)
Amortization of fees and other items⁽¹⁾		—			36,052			36,052

December 31, 2015	$	9,108,361		$	(31,354	)	$	9,077,007

(1)	Other items primarily consist of purchase discounts or premiums, exit fees, and deferred origination expenses.

(2)	Represents the charge off of a loan held by CT Legacy Partners that was fully reserved in a prior year.

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, 2015					December 31, 2014
Asset Type	Net Book Value		Percentage			Net Book Value		Percentage
Senior loans⁽¹⁾	$	8,847,044		97	%	$	4,340,586		98	%
Subordinate loans⁽²⁾		229,963		3			87,914		2

	$	9,077,007		100	%	$	4,428,500		100	%


Property Type	Net Book Value		Percentage			Net Book Value		Percentage
Office	$	4,039,521		45	%	$	1,878,605		42	%
Hotel		1,903,544		21			1,267,486		29
Manufactured housing		1,361,572		15			—		—
Retail		684,944		8			270,812		6
Multifamily		580,112		6			426,094		10
Condominium		127,434		1			315,686		7
Other		379,880		4			269,817		6

	$	9,077,007		100	%	$	4,428,500		100	%


Geographic Location	Net Book Value		Percentage			Net Book Value		Percentage
United States
Northeast	$	2,260,392		25	%	$	1,383,258		31	%
Southeast		1,836,766		20			657,484		15
West		1,125,238		12			628,275		14
Southwest		1,035,839		11			405,741		9
Midwest		616,964		7			335,406		8
Northwest		390,307		4			138,796		3

Subtotal		7,265,506		79			3,548,960		80
International
United Kingdom		888,998		10			622,692		14
Canada		561,023		6			137,024		3
Germany		235,294		3			—		—
Spain		66,661		1			86,289		2
Netherlands		59,525		1			33,535		1

Subtotal		1,811,501		21			879,540		20

Total	$	9,077,007		100	%	$	4,428,500		100	%

(1)

Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, and pari passu participations in senior mortgage loans.

(2)

Includes mezzanine loans and subordinate interests in mortgages.

Loan Risk Ratings

As further 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 risk factors of each loan, and assigns a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, risk of loss, current LTV, debt yield, collateral performance, structure, exit plan, and sponsorship. Loans are rated “1” (less risk) through “5” (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, 2015					December 31, 2014
Risk Rating	Number of Loans	Principal Balance		Net Book Value		Number of Loans	Principal Balance		Net Book Value
1	12	$	925,443	$	919,991	5	$	209,961	$	209,112
2	77		5,948,922		5,929,447	44		3,339,972		3,313,906
3	35		2,120,713		2,114,531	11		912,964		905,482
4	1		113,283		113,038	—		—		—
5	—		—		—	—		—		—

	125	$	9,108,361	$	9,077,007	60	$	4,462,897	$	4,428,500

We did not have any impaired or nonaccrual loans as of December 31, 2015 or 2014. During the third quarter of 2015, one of the loans in our portfolio with a net book value of $113.0 million experienced a maturity default as a result of not meeting certain loan covenants. During the fourth quarter of 2015, the loan was modified to include, among other changes: a redetermination of asset release pricing; an additional borrower contribution of capital; and an extension of the maturity date to February 29, 2016. We are presently negotiating a longer term modification to provide the borrower with additional time to repay our loan from the sale of the collateral assets. As of December 31, 2015, the borrower is current with all terms of the loan and we expect to collect all contractual amounts due thereunder. We did not have any loans in maturity default as of December 31, 2014.