| Loan Participations Sold, Net |
7. LOAN PARTICIPATIONS SOLD, NET
The financing of a loan by the non-recourse sale of a senior interest
in the loan through a participation agreement generally does not
qualify as a sale under GAAP. Therefore, in the instance of such
sales, we present the whole loan as an asset and the loan
participation sold as a liability on our consolidated balance sheet
until the loan is repaid. The obligation to pay principal and
interest on these liabilities is generally based on the performance
of the related loan obligation. The gross presentation of loan
participations sold does not impact stockholders’ equity or
net income.
The following tables detail statistics for our loan
participations sold ($ in thousands):
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March 31,
2017 |
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Loan Participations Sold
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Count |
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Principal
Balance |
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Book
Value |
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Wtd. Avg.
Yield/Cost(1) |
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Guarantee(2) |
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Wtd. Avg.
Term |
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Total loan
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1 |
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$ |
426,700 |
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$ |
423,575 |
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L+4.48 |
% |
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n/a |
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Dec. 2019 |
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Senior participation(3)(4)
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1 |
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355,583 |
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354,131 |
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L+2.72 |
% |
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$ |
30,120 |
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Dec. 2019 |
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December 31, 2016 |
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Loan Participations Sold
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Count |
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Principal
Balance |
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Book
Value |
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Wtd. Avg.
Yield/Cost(1) |
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Guarantee(2) |
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Wtd. Avg.
Term |
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Total loan
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1 |
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$ |
419,560 |
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$ |
416,233 |
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L+4.48 |
% |
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n/a |
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Dec. 2019 |
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Senior participation(3)(4)
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1 |
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349,633 |
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348,077 |
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L+2.72 |
% |
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$ |
29,616 |
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Dec. 2019 |
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(1)
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Our floating rate loans and related liabilities
were indexed to the various benchmark rates relevant in each
arrangement in terms of currency and payment frequency. Therefore
the net exposure to each benchmark rate is in direct proportion to
our net assets indexed to that rate. In addition to cash coupon,
yield/cost includes the amortization of deferred fees / financing
costs.
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(2)
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Other than one instance where we entered into a
related guarantee agreement for £24.0 million
($30.1 million and $29.6 million as of March 31,
2017 and December 31, 2016, respectively), our loan
participations sold are non-recourse to us.
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(3)
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During the three months ended March 31, 2017
and December 31, 2016, we recorded $2.6 million and
$2.9 million, respectively, of interest expense related to our
loan participations sold, of which $2.5 million and
$2.8 million was paid in cash.
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(4)
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The difference between principal balance and book
value of loan participations sold is due to deferred financing
costs of $1.5 million and $1.6 million as of
March 31, 2017 and December 31, 2016, respectively.
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