Equity Investments in Unconsolidated Subsidiaries

9 Months Ended

Sep. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Equity Investments in Unconsolidated Subsidiaries

4. EQUITY INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

As of September 30, 2016, our equity investments in unconsolidated subsidiaries consisted solely of our carried interest in CTOPI, a fund sponsored and managed by an affiliate of our Manager. Activity relating to our equity investments in unconsolidated subsidiaries was as follows ($ in thousands):

	CTOPI Carried Interest
Total as of December 31, 2015	$	9,441
Distributions		(8,167	)
Income allocation(1)		404
Total as of September 30, 2016	$	1,678

(1) In instances where we have not received cash or all appropriate contingencies have not been eliminated, we have deferred the recognition of promote revenue allocated to us from CTOPI in respect of our carried interest in CTOPI, and recorded an offsetting liability as a component of other liabilities on our consolidated balance sheets.

Our carried interest in CTOPI entitles us to earn promote revenue in an amount equal to 17.7% of the fund’s profits, after a 9% preferred return and 100% return of capital to the CTOPI partners. As of September 30, 2016, we had been allocated $1.7 million of promote revenue from CTOPI based on a hypothetical liquidation of the fund at its net asset value. Accordingly, we have recognized this allocation as an equity investment in CTOPI on our consolidated balance sheets. Generally, we defer recognition of income from CTOPI until cash is received or earned, pending distribution, and appropriate contingencies have been eliminated. We recognized $2.2 million of promote income from CTOPI in respect of our carried interest and recorded such amounts as income in our consolidated statement of operations during the nine months ended September 30, 2016, compared to $5.7 million during the same period in 2015. This carried interest was either received in cash, or was earned and available in cash at CTOPI pending future distribution as of each respective balance sheet date.

CTOPI Incentive Management Fee Grants

In January 2011, we created a management compensation pool for employees equal to 45% of the CTOPI promote distributions received by us. Approximately 68% of the pool is two-thirds vested as of September 30, 2016, with the remainder contingent on continued employment with an affiliate of our Manager and upon our receipt of promote distributions from CTOPI. The remaining 32% of the pool is fully vested as a result of an acceleration event. During the nine months ended September 30, 2016, we recognized $1.1 million under the CTOPI incentive plan, compared to $2.6 million for the same period in 2015. Such amounts were recognized as a component of general and administrative expenses in our consolidated statement of operations.