Note 4. Loans Receivable, Net

As described in Note 1, in conjunction with our March 2011 restructuring of our recourse debt obligations, a significant portion of our assets, including all of our loans, were transferred to a majority-owned subsidiary, CT Legacy REIT. Our only remaining loans have been sold to third-parties and recorded as participations sold assets and liabilities, as further described in Note 8. In addition, as described in Note 2, our consolidated balance sheets separately state our direct assets and liabilities and certain assets and liabilities of consolidated VIEs. See Note 10 for disclosures regarding loans receivable that have been transferred to CT Legacy REIT, and see Note 11 for comparable disclosures regarding loans receivable that are held in consolidated securitization vehicles, as separately stated on our consolidated balance sheets.

Activity relating to our loans receivable for the nine months ended September 30, 2011 was as follows (in thousands):

	Gross Book Value			Provision for Loan Losses			Net Book Value (1)

December 31, 2010		$978,098			($371,780	)		$606,318

Satisfactions (2)		(71,070	)		—			(71,070	)
Principal paydowns		(15,152	)		—			(15,152	)
Discount/premium amortization & other		(7,653	)		—			(7,653	)
Recovery of provision for loan losses		—			7,914			7,914
Realized loan losses		(119,584	)		119,584			—
Transfer to CT Legacy REIT		(739,694	)		244,282			(495,412	)

September 30, 2011		$24,945			$—			$24,945


(1)	Includes loans with a total principal balance of $24.9 million and $979.1 million as of September 30, 2011 and December 31, 2010, respectively.
(2)	Includes final maturities, full repayments, and sales.

The following table details overall statistics for our loans receivable portfolio as of September 30, 2011 and December 31, 2010:

	September 30, 2011	December 31, 2010
Number of investments (1)	1	29
Fixed / Floating (in millions) (2)	$─ / $25	$55 / $551
Coupon (3) (4)	1.49%	4.02%
Yield (3) (4)	1.48%	3.81%
Maturity (years) (3) (5)	0.1	1.7


(1)	Our only remaining loan has been sold to third-parties and recorded as participations sold assets and liabilities, as further described in Note 8.
(2)	Represents the aggregate net book value of our portfolio allocated between fixed rate and floating rate loans.
(3)	Represents a weighted average as of December 31, 2010.
(4)	Calculations for floating rate loans are based on LIBOR of 0.24% and 0.26% as of September 30, 2011 and December 31, 2010, respectively.
(5)	Represents the final maturity of each investment assuming all extension options are executed.

The tables below detail the types of loans in our portfolio, as well as the property type and geographic distribution of the properties securing our loans as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011				December 31, 2010
Asset Type	Book Value		Percentage		Book Value		Percentage
Subordinate interests in mortgages		$24,945		100%		$113,591		18%
Senior mortgages		—		―		240,150		39
Mezzanine loans		—		―		229,346		38
Other		—		―		23,231		5
Total		$24,945		100%		$606,318		100%

Property Type	Book Value		Percentage		Book Value		Percentage
Hotel		24,945		100%		$147,014		24%
Office		—		―		307,390		51
Healthcare		—		―		53,705		9
Multifamily		—		―		18,093		3
Retail		—		―		11,460		2
Other		—		―		68,656		11
Total		$24,945		100%		$606,318		100%

Geographic Location	Book Value		Percentage		Book Value		Percentage
Southeast		$11,978		48%		$170,400		28%
Southwest		10,782		43		94,491		15
Midwest		2,185		9		6,967		1
Northeast		—		―		175,297		29
West		—		―		54,688		9
Northwest		—		―		29,926		5
International		—		―		39,470		7
Diversified		—		―		35,079		6
Total		$24,945		100%		$606,318		100%

Loan risk ratings

Quarterly, management evaluates our loan portfolio for impairment as described in Note 2. In conjunction with our quarterly loan portfolio review, management assesses the performance of each loan, and assigns a risk rating based on several factors including risk of loss, LTV, collateral performance, structure, exit plan, and sponsorship. Loans are rated one (less risk) through eight (greater risk), which ratings are defined in Note 2.

The following table allocates the net book value and principal balance of our loans receivable based on our internal risk ratings as of September 30, 2011 and December 31, 2010 (in thousands):

		Loans Receivable as of September 30, 2011						Loans Receivable as of December 31, 2010
Risk Rating		Number of Loans		Principal Balance		Net Book Value		Number of Loans		Principal Balance		Net Book Value
	1 - 3		1		$24,945		$24,945		10		$375,169		$374,885
	4 - 5		—		—		—		8		141,667		126,540
	6 - 8		—		—		—		11		462,221		104,893

Total			1		$24,945		$24,945		29		$979,057		$606,318

In making this risk assessment, one of the primary factors we consider is how senior or junior each loan is relative to other debt obligations of the borrower. The following tables further allocate our loans receivable by both loan type and our internal risk ratings as of September 30, 2011 and December 31, 2010 (in thousands):

		Senior Mortgage Loans
		as of September 30, 2011						as of December 31, 2010
Risk Rating		Number of Loans		Principal Balance		Net Book Value		Number of Loans		Principal Balance		Net Book Value
	1 - 3		—		$—		$—		2		$129,200		$128,852
	4 - 5		—		—		—		4		57,554		57,513
	6 - 8		—		—		—		3		66,347		53,785

Total			—		$—		$—		9		$253,101		$240,150

		Subordinate Interests in Mortgages
		as of September 30, 2011						as of December 31, 2010
Risk Rating		Number of Loans		Principal Balance		Net Book Value		Number of Loans		Principal Balance		Net Book Value
	1 - 3		1		$24,945		$24,945		1		$48,000		$48,000
	4 - 5		—		—		—		1		28,965		14,483
	6 - 8		—		—		—		5		110,585		51,108

Total			1		$24,945		$24,945		7		$187,550		$113,591

		Mezzanine & Other Loans
		as of September 30, 2011						as of December 31, 2010
Risk Rating		Number of Loans		Principal Balance		Net Book Value		Number of Loans		Principal Balance		Net Book Value
	1 - 3		—		$—		$—		7		$197,969		$198,033
	4 - 5		—		—		—		3		55,148		54,544
	6 - 8		—		—		—		3		285,289		—

Total			—		$—		$—		13		$538,406		$252,577

Loan impairments

We have no impaired loans as of September 30, 2011. However, certain of our loans receivable which were transferred to CT Legacy REIT had previously been impaired, and are discussed in Note 10.

The following table details our average balance of impaired loans by loan type, and the income recorded on such loans subsequent to their impairment during the nine months ended September 30, 2011 (in thousands):

Income on Impaired Loans for the Nine Months Ended September 30, 2011
Asset Type	Average Net Book Value		Income Recorded (1)
Senior Mortgage Loans		$17,269		$255
Subordinate Interests in Mortgages		19,940		225
Mezzanine & Other Loans		—		1,915

Total		$37,209		$2,395


(1)	Substantially all of the income recorded on impaired loans during the period was received in cash. See also Note 10 for disclosure of income recorded on impaired loans subsequent to their transfer to CT Legacy REIT, substantially all of which was also received in cash.

Nonaccrual loans

In accordance with our revenue recognition policies discussed in Note 2, we do not accrue interest on loans which are 90 days past due or, in the opinion of management, are otherwise uncollectable. Accordingly, we do not have any material interest receivable accrued on nonperforming loans as of September 30, 2011.