Secured Debt Agreements, Net

3 Months Ended

Mar. 31, 2019

SECURED DEBT AGREEMENTS, NET

Our secured debt agreements include secured credit facilities, asset-specific financings, and a revolving credit agreement. The following table details our secured debt agreements ($ in thousands):

	Secured Debt Agreements
	Borrowings Outstanding
	March 31, 2019			December 31, 2018
Secured credit facilities	$	9,093,821		$	8,870,897
Asset-specific financings		97,699			81,739
Revolving credit agreement		43,845			43,845
Total secured debt agreements	$	9,235,365		$	8,996,481
Deferred financing costs (1)		(27,355	)		(21,725	)
Net book value of secured debt	$	9,208,010		$	8,974,756

(1)	Costs incurred in connection with our secured debt agreements are recorded on our consolidated balance sheet when incurred and recognized as a component of interest expense over the life of each related agreement.

Secured Credit Facilities

The following tables detail our secured credit facilities ($ in thousands):

	March 31, 2019
	Credit Facility Borrowings						Collateral
Lender	Potential (1)		Outstanding		Available (1)		Assets (2)
Deutsche Bank	$	1,865,813	$	1,865,813	$	—	$	2,357,198
Wells Fargo		1,992,903		1,748,737		244,166		2,556,230
JP Morgan		1,078,749		1,078,749		—		1,357,997
Barclays		890,620		890,620		—		1,113,275
Citibank		878,104		801,474		76,630		1,114,229
Bank of America		793,804		793,804		—		992,805
MetLife		675,329		675,329		—		857,689
Morgan Stanley		444,653		414,456		30,197		589,931
Société Générale		321,182		321,182		—		410,165
Goldman Sachs		237,149		237,149		—		314,526
Goldman Sachs — Multi. JV (3)		169,506		169,506		—		221,202
Bank of America — Multi. JV (3)		97,002		97,002		—		122,167
	$	9,444,814	$	9,093,821	$	350,993	$	12,007,414

(1)	Potential borrowings represents the total amount we could draw under each facility based on collateral already approved and pledged. When undrawn, these amounts are immediately available to us at our sole discretion under the terms of each credit facility.

(2)	Represents the principal balance of the collateral assets.

(3)	These facilities finance the loan investments of our consolidated Multifamily Joint Venture. Refer to Note 2 for additional discussion of our Multifamily Joint Venture.

The weighted-average outstanding balance of our secured credit facilities was $9.1 billion for the three months ended March 31, 2019. As of March 31, 2019, we had aggregate borrowings of $9.1 billion outstanding under our secured credit facilities, with a weighted-average cash coupon of LIBOR plus 1.72% per annum, a weighted-average all-in cost of credit, including associated fees and expenses, of LIBOR plus 1.90% per annum, and a weighted-average advance rate of 79.5%.

As of March 31, 2019, outstanding borrowings under these facilities had a weighted-average maturity, including extension options,

of 3.2 years.


	December 31, 2018
	Credit Facility Borrowings						Collateral Assets (2)
Lender	Potential (1)		Outstanding		Available (1)		Collateral Assets (2)
Deutsche Bank	$	1,839,698	$	1,839,698	$	—	$	2,325,047
Wells Fargo		1,908,509		1,822,154		86,355		2,514,513
JP Morgan		1,010,628		1,010,628		—		1,266,259
Barclays		890,620		890,620		—		1,113,275
Citibank		852,470		663,917		188,553		1,076,085
Bank of America		873,446		873,446		—		1,090,117
MetLife		675,329		675,329		—		852,733
Morgan Stanley		341,241		276,721		64,520		457,496
Société Générale		321,182		321,182		—		404,048
Goldman Sachs		230,140		230,140		—		295,368
Goldman Sachs — Multi. JV (3)		170,060		170,060		—		212,983
Bank of America — Multi. JV (3)		97,002		97,002		—		121,636

	$	9,210,325	$	8,870,897	$	339,428	$	11,729,560

(1)	Potential borrowings represents the total amount we could draw under each facility based on collateral already approved and pledged. When undrawn, these amounts are immediately available to us at our sole discretion under the terms of each credit facility.

(2)	Represents the principal balance of the collateral assets.

(3)	These facilities finance the loan investments of our consolidated Multifamily Joint Venture. Refer to Note 2 for additional discussion of our Multifamily Joint Venture.

The weighted-average outstanding balance of our secured credit facilities was $7.7 billion for the three months ended December 31, 2018. As of December 31, 2018, we had aggregated borrowings of $8.9 billion outstanding under our secured credit facilities, with a weighted-average cash coupon of LIBOR plus 1.72% per annum, a weighted-average all-in cost of credit, including associated fees and expenses, of LIBOR plus 1.90% per annum, and a weighted-average advance rate of 79.5%. As of December 31, 2018, outstanding borrowings under these facilities had a weighted-average maturity, including extension options, of 3.5 years.

Borrowings under each facility are subject to the initial approval of eligible collateral loans by the lender and the maximum advance rate and pricing rate of individual advances are determined with reference to the attributes of the respective collateral loan.

The following tables outline the key terms of our credit facilities as of March 31, 2019:

Lender

Currency

Guarantee (1)

Margin Call (2)

Term/Maturity

Goldman Sachs — Multi. JV (3)

25%

Collateral marks only

July 12, 2020 (5)

JP Morgan

$ / £

50%

Collateral marks only

January 7, 2021 (6)

Bank of America — Multi. JV (3)

43%

Collateral marks only

July 19, 2021 (7)

Deutsche Bank

$ / €

60%

(8)

Collateral marks only

August 9, 2021 (8)

Morgan Stanley

$ / £ / €

25%

Collateral marks only

March 1, 2022

Barclays

25%

Collateral marks only

March 29, 2023 (9)

MetLife

50%

Collateral marks only

April 22, 2023 (10)

Bank of America

50%

Collateral marks only

May 21, 2023 (11)

Goldman Sachs

25%

Collateral marks only

October 22, 2023 (12)

Citibank

$ / £ / € / A$ / C$

25%

Collateral marks only

Term matched(13)

Société Générale

$ / £ / €

25%

Collateral marks only

Term matched (13)

Wells Fargo

$ / C$

25%

(4)

Collateral marks only

Term matched (13)(14)

(1)	Other than amounts guaranteed based on specific collateral asset types, borrowings under our credit facilities are non-recourse to us.

(2)	Margin call provisions under our credit facilities do not permit valuation adjustments based on capital markets events, and are limited to collateral-specific credit marks.

(3)	These facilities finance the loan investments of our consolidated Multifamily Joint Venture. Refer to Note 2 for additional discussion of our Multifamily Joint Venture.

(4)	In addition to the 25% guarantee across all borrowings, there is an incremental guarantee of $131.4 million related to $474.4 million of specific borrowings outstanding.

(5)	Includes a one-year extension option which may be exercised at our sole discretion.

(6)	Maturity dates for $520.6 million of specific borrowings outstanding are term-matched to the respective collateral assets.

(7)	Includes two one-year extension options which may be exercised at our sole discretion.

(8)

Includes two one-year extension options which may be exercised at our sole discretion. Specific borrowings outstanding of $860.5 million are 100% guaranteed and the related maturity dates are term-matched to the respective collateral assets. The remainder of the credit facility borrowings are 25% guaranteed.

(9)	Includes three one-year extension options which may be exercised at our sole discretion.

(10)	Includes four one-year extension options which may be exercised at our sole discretion.

(11)	Includes two one-year extension options which may be exercised at our sole discretion.

(12)	Includes three one-year extension options which may be exercised at our sole discretion.

(13)	These secured credit facilities have various availability periods during which new advances can be made and which are generally subject to each lender’s discretion. Maturity dates for advances outstanding are tied to the term of each respective collateral asset.
(14)	This secured credit facility is term-matched other than $128.2 million of specific borrowings that have a maturity date of May 8, 2019.

Currency	Potential Borrowings		Outstanding ‎ Borrowings (1)		Floating Rate Index (2)		Spread (3)			Advance Rate (4)
$	$	7,356,109	$	7,047,922		USD LIBOR		1.70	%		79.6	%
€	€	816,557	€	779,119		EURIBOR		1.51	%		80.0	%
£	£	546,781	£	546,781		GBP LIBOR		2.06	%		77.8	%
C$	C$	371,131	C$	371,122		CDOR		1.80	%		82.1	%
A$	A$	255,270	A$	255,270		BBSY		1.90	%		78.0	%
	$	9,444,814	$	9,093,821				1.72	%		79.5	%

(1)	Potential borrowings represents the total amount we could draw under each facility based on collateral already approved and pledged. When undrawn, these amounts are immediately available to us at our sole discretion under the terms of each credit facility.
(2)	Floating rate indices are generally matched to the payment timing under the terms of each secured credit facility and its respective collateral assets.
(3)	Represents weighted-average spread over the applicable floating rate index, based on borrowings outstanding.
(4)	Represents weighted-average advance rate based on the approved outstanding principal balance of the collateral assets pledged.

Asset-Specific Financings

The following tables detail our asset-specific financings ($ in thousands):

March 31, 2019

Principal

Book

Wtd. Avg.

Asset-Specific Financings

Count

Balance

Value

Yield/Cost (1)

Guarantee (2)

Term (3)

Collateral assets

122,699

112,093

L+

6.05%

n/a

Aug. 2022

Financing provided

97,699

91,624

L+

4.06%

n/a

Aug. 2022

December 31, 2018

Principal

Book

Wtd. Avg.

Asset-Specific Financings

Count

Balance

Value

Yield/Cost (1)

Guarantee (2)

Term (3)

Collateral assets

106,739

104,807

L+

6.08%

n/a

Aug. 2022

Financing provided

81,739

80,938

L+

4.07%

n/a

Aug. 2022

(1)

These floating rate loans and related liabilities are 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 origination fees / financing costs.

(2)	Borrowings under our asset-specific financings are non-recourse to us.

(3)	The weighted-average term is determined based on the maximum maturity of the corresponding loans, assuming all extension options are exercised by the borrower. Each of our asset-specific financings are term-matched to the corresponding collateral loans.

The weighted-average outstanding balance of our asset-specific financings was $88.9 million for the three months ended March 31, 2019 and $68.0 million for the three months ended December 31, 2018.

Revolving Credit Agreement

We have a $250.0 million full recourse secured revolving credit agreement with Barclays that is designed to finance first mortgage originations for up to nine months as a bridge to term financing or syndication. Advances under the agreement are subject to availability under a specified borrowing base and accrue interest at a per annum pricing rate equal to the sum of (i) an applicable base rate or Eurodollar rate and (ii) an applicable margin, in each case, dependent on the applicable type of loan collateral. The maturity date of the facility is April 4, 2020.

During the three months ended March 31, 2019, the weighted-average outstanding borrowings under the revolving credit agreement was $43.8 million and we recorded interest expense of $969,000, including $268,000 of amortization of deferred fees and expenses. As of March 31, 2019, we had $43.8 million of borrowings outstanding under the agreement.

During the three months ended December 31, 2018, the weighted-average outstanding borrowings under the revolving credit agreement was $63.5 million and we recorded interest expense of $1.2 million, including $297,000 of amortization of deferred fees and expenses. As of December 31, 2018, we had $43.8 million of borrowings outstanding under the agreement.

Debt Covenants

Each of the guarantees related to our secured debt agreements contain the following uniform financial covenants: (i) our ratio of earnings before interest, taxes, depreciation, and amortization, or EBITDA, to fixed charges, as defined in the agreements, shall be not less than 1.4 to 1.0; (ii) our tangible net worth, as defined in the agreements, shall not be less than $2.6 billion as of each measurement date plus 75% of the net cash proceeds of future equity issuances subsequent to March 31, 2019; (iii) cash liquidity shall not be less than the greater of (x) $10.0 million or (y) 5% of our recourse indebtedness; and (iv) our indebtedness shall not exceed 83.33% of our total assets. As of March 31, 2019 and December 31, 2018, we were in compliance with these covenants.