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SEGMENTS
 12 Months Ended
Dec. 31, 2013
SEGMENTS  
SEGMENTS

19.   SEGMENTS

        The Company's reportable segments reflect the significant components of the Company's operations that are evaluated separately by the Company's chief operating decision maker and have discrete financial information available. The Company organizes its segments based primarily upon the nature of the underlying products and services. The Company's Co-Chief Executive Officers and management review certain financial information, including segmented internal profit and loss statements, which are presented below on that basis. The amounts in the reportable segments included in the tables below are in conformity with GAAP and the Company's significant accounting policies as described in Note 2.

        Prior to the Acquisition, the Company operated in one reportable business segment. As a result of the Acquisition, the Company now operates in two reportable business segments:

  • •
    principal lending—includes all business activities of ACRE, excluding the ACRE Capital business, which generally represents investments in real estate related loans and securities that are held for investment.

    •
    mortgage banking—includes all business activities of the acquired ACRE Capital business.

        The Company is primarily focused on two business segments involving CRE loans. First, in its principal lending business, the Company originates, invests in, manages and services middle-market CRE loans and other CRE-related investments for its own account. These loans are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial and other commercial real estate properties, or by ownership interests therein. Second, in its mortgage banking business, conducted through a recently acquired subsidiary, ACRE Capital, the Company originates, sells and retains servicing of primarily multifamily and other senior living-related CRE loans. These loans are generally held for sale.

        Allocated costs between the segments include management fees and general and administrative expenses payable to the Company's Manager, both of which represent shared costs. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. As the Company integrates ACRE Capital into its existing business, the Company expects future allocations to include costs relating to services performed by one segment on behalf of other segments.

        The table below presents the Company's total assets as of December 31, 2013 by business segment ($ in thousands):

 
   Principal
Lending		   Mortgage
Banking		   Total  

Cash and cash equivalents

   $ 14,444   $ 5,656   $ 20,100  

Restricted cash

     3,036     13,918     16,954  

Loans held for investment

     958,495     —     958,495  

Loans held for sale, at fair value

     84,769     4,464     89,233  

Mortgage servicing rights

     —     59,640     59,640  

Other assets

     16,632     15,861     32,493  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Assets

   $ 1,077,376   $ 99,539   $ 1,176,915  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

        The table below presents the Company's consolidated net income for the year ended December 31, 2013 by business segment ($ in thousands):

 
   Principal
Lending		   Mortgage
Banking		   Total  

Net interest margin:

                    

Interest income from loans held for investment

   $ 37,600   $ —   $ 37,600  

Interest expense

     (8,774 )   —   $ (8,774 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net interest margin

     28,826     —     28,826  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Mortgage banking revenue:

                    

Servicing fees, net

     —     5,802     5,802  

Gains from mortgage banking activities

     —     5,328     5,328  

Provision for loss sharing

     —     (6 )   (6 )

Change in fair value of mortgage servicing rights

     —     (2,697 )   (2,697 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Mortgage banking revenue

     —     8,427     8,427  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other income

     —     1,333     1,333  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total revenue

     28,826     9,760     38,586  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Expenses:

                    

Other interest expense

     6,199     357 (1)   6,556  

Management fees to affiliate

     4,125     116     4,241  

Professional fees

     2,447     477     2,924  

Compensation and benefits

     —     5,456     5,456  

Acquisition and investment pursuit costs

     4,079     —     4,079  

General and administrative expenses

     2,430     1,525     3,955  

General and administrative expenses reimbursed to affiliate

     3,394     216     3,610  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total expenses

     22,674     8,147     30,821  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Changes in fair value of derivatives

     1,739     —     1,739  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income from operations before gain on acquisition and income taxes

     7,891     1,613     9,504  

Gain on acquisition

     4,438     —     4,438  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income before income taxes

     12,329     1,613     13,942  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income tax expense

     —     176     176  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net income

   $ 12,329   $ 1,437   $ 13,766  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               
(1)
Other interest expense does not include interest expense related to the intercompany note between TRS Holdings (as borrower) and the Company (as lender) as described in Note 15. If interest expense related to the intercompany note were included, other interest expense and net income would have been $1.6 million and $244 thousand, respectively, for Mortgage Banking.

        Revenues from three of the Company's customers in the principal lending segment represented approximately $15.0 million of the Company's consolidated revenues for the year ended December 31, 2013. No revenues from a single customer represented 10% or more of the Company's consolidated revenues for the year ended December 31, 2012.