Loan Participations Sold, Net

12 Months Ended

Dec. 31, 2019

6. 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.

We did not have any loan participations sold as of December 31, 2019. During the year ended December 31, 2019, we recorded $3.2 million of interest expense related to our loan participations sold. During

the

year ended December 31, 2018, we recorded $16.6 million of interest expense related to our loan participations sold. The following table details our loan participations sold as of December 31, 2018 ($ in thousands):


	December 31, 2018
Loan Participations Sold	Count		Principal Balance		Book Value		Yield/Cost (1)			Guarantee (2)		Term
Total loan		1	$	123,745	$	122,669		L+5.92	%		n/a		Feb. 2022
Senior participation (3)		1		94,528		94,418		L+4.07	%	$	—		Feb. 2022

(1)

Our 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 fees / financing costs.

(2)	As of December 31, 2018, our loan participations sold were non-recourse to us.

(3)	The difference between principal balance and book value of loan participations sold is due to deferred financing costs of $110,000 as of December 31, 2018.