3. LOANS RECEIVABLE

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


	September 30, 2016			December 31, 2015
Number of loans		106			125
Principal balance	$	8,381,679		$	9,108,361
Net book value	$	8,347,712		$	9,077,007
Unfunded loan commitments⁽¹⁾	$	929,030		$	700,658
Weighted-average cash coupon⁽²⁾		4.85	%		4.84	%
Weighted-average all-in yield⁽²⁾		5.22	%		5.18	%
Weighted-average maximum maturity (years)⁽³⁾		3.2			3.1

(1)

Unfunded commitments will primarily be funded to finance property improvements or lease-related expenditures by the borrowers. These future commitments will be funded over the term of each loan, subject in certain cases to an expiration date.

(2)

As of September 30, 2016, our floating rate loans were indexed to various benchmark rates, with 85% of floating rate loans indexed to USD LIBOR. In addition, $277.3 million of our floating rate loans earned interest based on floors that are above the applicable index, with an average floor of 1.13%, as of September 30, 2016. 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 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 September 30, 2016, 66% of our loans were subject to yield maintenance or other prepayment restrictions and 34% were open to repayment by the borrower without penalty. 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.

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


	Principal Balance			Deferred Fees / Other Items⁽¹⁾			Net Book Value
December 31, 2015	$	9,108,361		$	(31,354)		$	9,077,007
Loan fundings		2,300,636			—			2,300,636
Loan repayments and sales		(2,942,705	)		—			(2,942,705	)
Unrealized (loss) gain on foreign currency translation		(84,613	)		1,181			(83,432	)
Deferred fees and other items⁽¹⁾		—			(35,388	)		(35,388	)
Amortization of fees and other items⁽¹⁾		—			31,594			31,594

September 30, 2016	$	8,381,679		$	(33,967	)	$	8,347,712

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

The tables below detail the property type and geographic distribution of the properties securing the loans in our portfolio ($ in thousands):


September 30, 2016
Property Type	Number of Loans		Net Book Value		Total Loan Exposure⁽¹⁾		Percentage of Portfolio
Office		55	$	4,540,394	$	4,610,800		50	%
Hotel		17		1,761,751		1,832,501		19
Retail		10		823,184		1,215,822		13
Multifamily		8		586,910		588,809		6
Condominium		2		85,436		315,816		3
Manufactured housing		9		297,726		297,847		3
Other		5		252,311		575,948		6

		106	$	8,347,712	$	9,437,543		100	%


Geographic Location	Number of Loans		Net Book Value		Total Loan Exposure⁽¹⁾		Percentage of Portfolio
United States
Northeast		25	$	2,449,223	$	2,461,548		25	%
Southeast		20		1,343,942		1,739,465		18
West		21		1,496,295		1,733,491		18
Midwest		6		618,939		621,012		7
Southwest		9		444,381		443,653		5
Northwest		4		245,934		293,039		3

Subtotal		85		6,598,714		7,292,208		76
International
United Kingdom		9		930,677		1,276,234		14
Canada		8		477,466		474,182		5
Germany		1		218,855		271,922		3
Spain		1		68,572		69,198		1
Netherlands		2		53,428		53,799		1

Subtotal		21		1,748,998		2,145,335		24

Total		106	$	8,347,712	$	9,437,543		100	%

(1)

In certain instances, we finance our loans through the non-recourse sale of a senior loan interest that is not included in our consolidated financial statements. See Note 2 for further discussion. Total loan exposure encompasses the entire loan we originated and financed, including $1.1 billion of such non-consolidated senior interests as of September 30, 2016.


December 31, 2015
Property Type	Number of Loans		Net Book Value		Total Loan Exposure⁽¹⁾		Percentage of Portfolio
Office		55	$	4,039,521	$	4,085,007		41	%
Hotel		20		1,903,544		1,986,113		20
Manufactured housing		18		1,361,572		1,359,132		13
Retail		9		684,944		1,031,405		10
Multifamily		11		580,112		582,545		6
Condominium		3		127,434		353,144		3
Other		9		379,880		750,780		7

		125	$	9,077,007	$	10,148,126		100	%


Geographic Location	Number of Loans		Net Book Value		Total Loan Exposure⁽¹⁾		Percentage of Portfolio
United States
Northeast		25	$	2,260,392	$	2,272,163		22	%
Southeast		27		1,836,766		2,185,609		21
West		22		1,125,238		1,356,301		13
Southwest		15		1,035,839		1,034,732		10
Midwest		5		616,964		617,774		6
Northwest		5		390,307		415,207		4

Subtotal		99		7,265,506		7,881,786		76
International
United Kingdom		10		888,998		1,283,644		13
Canada		11		561,023		558,724		6
Germany		2		235,294		296,424		3
Spain		1		66,661		67,416		1
Netherlands		2		59,525		60,132		1

Subtotal		26		1,811,501		2,266,340		24

Total		125	$	9,077,007	$	10,148,126		100	%

(1)

In certain instances, we finance our loans through the non-recourse sale of a senior loan interest that is not included in our consolidated financial statements. See Note 2 for further discussion. Total loan exposure encompasses the entire loan we originated and financed, including $1.0 billion of such non-consolidated senior interests as of December 31, 2015.

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):


September 30, 2016						December 31, 2015
Risk Rating	Number of Loans	Net Book Value		Total Loan Exposure⁽¹⁾		Risk Rating		Number of Loans	Net Book Value		Total Loan Exposure⁽¹⁾
1	10	$	456,047	$	456,905		1	12	$	919,991	$	925,443
2	53		3,882,247		3,935,513		2	77		5,929,447		6,316,890
3	43		4,009,418		5,045,125		3	35		2,114,531		2,792,510
4	—		—		—		4	1		113,038		113,283
5	—		—		—		5	—		—		—

	106	$	8,347,712	$	9,437,543			125	$	9,077,007	$	10,148,126

(1)

In certain instances, we finance our loans through the non-recourse sale of a senior loan interest that is not included in our consolidated financial statements. See Note 2 for further discussion. Total loan exposure encompasses the entire loan we originated and financed, including $1.1 billion and $1.0 billion of such non-consolidated senior interests as of September 30, 2016 and December 31, 2015, respectively.

The weighted-average risk rating of our total loan exposure was 2.5 and 2.2 as of September 30, 2016 and December 31, 2015, respectively. The increase in weighted-average portfolio risk rating was primarily driven by repayments of loans with lower risk ratings and origination of loans with a “3” risk rating, and not rating downgrades in the existing portfolio.

We did not have any impaired loans, nonaccrual loans, or loans in maturity default as of September 30, 2016 or December 31, 2015. During the third quarter of 2015, one of the loans in our portfolio experienced a maturity default as a result of not meeting certain loan covenants. The loan was subsequently modified to include, among other changes: a redetermination of asset release pricing; an additional contribution of capital by the borrower; and an extension of the maturity date to February 28, 2017. During the nine months ended September 30, 2016, three of the assets collateralizing the $113.3 million loan were sold and the loan was partially repaid by $102.6 million, resulting in a net book value of $10.2 million as of September 30, 2016. The loan’s risk rating was upgraded from “4” as of December 31, 2015 to a “2” as of September 30, 2016 as a result of the collateral asset sales and resulting loan repayments, and positive leasing activity at the remaining collateral assets. As of September 30, 2016 and December 31, 2015, the borrower was current with all terms of the loan and we expect to collect all contractual amounts due thereunder.