Loans Receivable

12 Months Ended

Dec. 31, 2011

Loans Receivable, Net [Abstract]

Loans Receivable

 Loans Receivable

Loans receivable are as follows (dollars in thousands):

As of December 31,	2011		2010
Total loans receivable, at cost	$	263,187	$	353,583
Valuation allowance:
Specific	$	19,041	$	18,865
General	764		810
Total	$	19,805	$	19,675
Impaired loans:
With a specific valuation allowance, at cost	$	29,702	$	31,855
Without a valuation allowance, at cost	30,357		30,685
Unpaid principal balance	93,922		96,240
For the Year Ended December 31,	2011		2010
Increase in valuation allowance	$	130	$	6,090
Loans receivable charged off	759		140

Loans receivable in non-accrual status were $30 million and $21 million at December 31, 2011 and 2010, respectively. If these loans had been current, additional interest income of $805,000 and $340,000 would have been recognized in accordance with their original terms for the years ended December 31, 2011 and 2010, respectively.

The Company monitors the performance of its loans receivable and assesses the ability of the borrower to pay principal and interest based upon loan structure, underlying property values, cash flow and related financial and operating performance of the property and market conditions. Loans receivable with a potential for default are further assessed using discounted cash flow analysis and comparable cost and sales methodologies, if appropriate.

The Company's six largest loans receivable, which have an aggregate amortized cost of $187 million and an aggregate fair value of $166 million at December 31, 2011, are secured by commercial real estate located primarily in New York City, California, Hawaii and Boston. These loans earn interest at floating LIBOR-based interest rates and have maturities (inclusive of extension options) through March 2016. As part of the evaluation process, the Company reviews certain credit quality indicators for these loans. The Company utilizes an internal risk rating system to assign a risk to each of its commercial loans. The loan rating system takes into consideration credit quality indicators including loan to value ratios, which compare the outstanding loan amount to the estimated value of the property, the borrower's financial condition and performance with respect to loan terms, the Company's position in the capital structure, and the overall leverage in the capital structure. Based on this rating system, three loans with a cost basis of $58 million were considered to be impaired at December 31, 2011 and 2010. For each of these loans, a determination was made as to the amount of loss in the event of a default and whether the loss is probable. The results of the determination were considered in connection with the valuation allowance noted above. An additional credit quality indicator is the debt service coverage ratio, which compares a property's net operating income to the borrower's principal and interest payments. At December 31, 2011, each of the six largest loans referred to above have of debt service coverage ratios greater than 3.0 except one that is lower due to a recent and temporary rate abatement.