Note 9—Variable Interest Entities

We have evaluated our loans and investments, mortgage related securities, investments in equity affiliates, senior unsecured notes, junior subordinated notes and CLOs, in order to determine if they qualify as VIEs or as variable interests in VIEs. This evaluation resulted in determining that our bridge loans, junior participation loans, mezzanine loans, preferred equity investments, investments in equity affiliates, junior subordinated notes, CLOs and investments in mortgage related securities are potential VIEs.

Our involvement with VIEs primarily affects our financial performance and cash flows through amounts recorded in interest income, interest expense, provision for loan losses and through activity associated with our derivative instruments.

Consolidated VIEs

We consolidate our CLO and CDO subsidiaries, which qualify as VIEs, of which we are the primary beneficiary. These CLOs and CDOs invest in real estate and real estate-related securities and are financed by the issuance of CLO and CDO debt securities. We, or one of our affiliates, is named collateral manager, servicer, and special servicer for all CLO and CDO collateral assets which we believe gives us the power to direct the most significant economic activities of the entity. We also have exposure to CLO and CDO losses to the extent of our equity interests and also have rights to waterfall payments in excess of required payments to CLO and CDO bond investors. As a result of consolidation, equity interests in these CLOs and CDOs have been eliminated, and the consolidated balance sheets reflect both the assets held and debt issued by the CLOs and CDOs to third parties. Our operating results and cash flows include the gross amounts related to CLO and CDO assets and liabilities as opposed to our net economic interests in the CLO and CDO entities.

Assets held by the CLOs and CDOs are restricted and can be used only to settle obligations of the CLOs and CDOs. The liabilities of the CLOs and CDOs are non-recourse to us and can only be satisfied from each CLOs and CDOs respective asset pool. Assets and liabilities related to the CLOs and CDOs are disclosed parenthetically, in the aggregate, in our consolidated balance sheets. See Note 7—"Debt Obligations" for further details.

We are not obligated to provide, have not provided, and do not intend to provide financial support to any of the consolidated CLOs and CDOs.

Unconsolidated VIEs

We determined that we are not the primary beneficiary of 22 VIEs in which we have a variable interest as of December 31, 2015 because we do not have the ability to direct the activities of the VIEs that most significantly impact each entity's economic performance. VIEs, of which we are not the primary beneficiary, have an aggregate carrying amount of $346.5 million and exposure to real estate debt of approximately $1.7 billion at December 31, 2015.

The following is a summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of December 31, 2015:

Type	Carrying Amount(1)		Maximum Exposure to Loss(2)
Loans	$	344,324,649	$	344,324,649
Securities		1,551,716		1,551,716
Junior subordinated notes(3)		578,000		578,000
Equity investment		100		100

Total	$	346,454,465	$	346,454,465


(1)	Represents the carrying amount of loans and investments before reserves. At December 31, 2015, $152.3 million of loans to VIEs had corresponding loan loss reserves of $80.6 million. See Note 3—"Loans and Investments" for further details.
(2)	Our maximum exposure to loss as of December 31, 2015 would not exceed the carrying amount of its investment.
(3)	It is not appropriate to consolidate these entities as equity interests are variable interests only to the extent that the investment is considered to be at risk. Since our investments were funded by the entities that issued the junior subordinated notes, it is not considered to be at risk.