INVESTMENTS IN UNCONSOLIDATED ENTITIES AND LOAN MANAGER

As a specialized asset manager, the Company develops various types of investment vehicles, which it manages under long-term management agreements or similar arrangements. The following table details the Company’s investments in these vehicles, including the range of ownership interests owned (in thousands, except percentages):



	Range of Combined Ownership Interests	June 30, 2013		September 30, 2012
	Range of Combined Ownership Interests	June 30, 2013		September 30, 2012
Real estate investment entities	1% – 12%	$	8,208	$	8,043
Financial fund management partnerships	3% − 50%	4,442		3,983
Trapeza entities	33% − 50%	868		967
Investments in unconsolidated entities		$	13,518	$	12,993

In January 2013, the Company sold its 10% interest in a real estate joint venture to its partner for $3.0 million and recognized a gain of $1.6 million. The Company will continue to manage the asset and will receive property management fees in the future.

Two of the structured finance entities that hold investments in trust preferred assets (“Trapeza entities”) that have incentive distributions, also known as carried interests, are subject to a potential clawback to the extent that such distributions exceed the cumulative net profits of the entities, as defined in the respective partnership agreements (see Note 16). The general partner of those entities is equally owned by the Company and its co-managing partner. Performance-based incentive fees in interim periods are recorded based upon a formula as if the contract were terminated at that date. On a annual basis (interim measurement date), the Company quantifies the cumulative net profits/net losses (as defined under the Trapeza partnership agreements) and allocates income/loss to the limited and general partners according to the terms of such agreements.

Included in investments in unconsolidated entities is the Company's $2.5 million investment in Resource Real Estate Opportunity REIT, Inc. (“RRE Opportunity REIT”), a fund that is in the offering stage until December 2013. The Company accounts for its investment in RRE Opportunity REIT on the cost method since the Company owns less than 1% of the shares outstanding. The Company evaluates all of these investments for impairment on a quarterly basis. There were no identified events that had a significant adverse effect on these investments and, as such, no impairment has been recorded.

Investment in Unconsolidated Loan Manager. Until the Company sold its Apidos Capital Management, LLC (“Apidos”) CLO business to CVC Capital Partners SICAV-FIS, S.A., a private equity firm (“CVC”) on April 17, 2012, the operations of Apidos were included in the Company's consolidated results. Thereafter, the Company has recorded its 33% equity share of the results of the joint venture, CVC Credit Partners, LLC ("CVC Credit Partners"), which includes the Apidos operations, in Financial Fund Management Revenues on the consolidated statements of operations and comprehensive loss. Included in costs and expenses for CVC Credit Partners for the three and nine months ended June 30, 2013 are offering costs associated with a new European investment fund that will hold sub-investment grade European debt. Summarized operating data for CVC Credit Partners is presented below for 2013 (in thousands):



	Three Months Ended			Nine Months Ended
	June 30, 2013			June 30, 2013
Management fee revenues	$	15,841		$	32,809
Costs and expenses	(17,285		)	(29,870		)
Net (loss) income	$	(1,444	)	$	2,939
Portion of net (loss) income attributable to the Company	$	(477	)	$	970

Summarized operating data for CVC Credit Partners is presented below for 2012 (in thousands):



	For the period from April 17 to
	June 30, 2012
Management fee revenues	$	5,105
Costs and expenses	(4,522		)
Net income	$	583
Portion of net income attributable to the Company	$	192

As a part of the transactions in forming the CVC Credit Partners joint venture, the Company received a preferred interest in Apidos (which became a subsidiary of CVC Credit Partners) relating to incentive management fees on pre-joint venture CLOs managed by Apidos. The Company accounts for this interest, with a book value of $6.8 million at June 30, 2013, on the cost method. As the incentive fees are received, in accordance with its preferred interest, the Company receives a distribution of 75% of those amounts which will initially be recorded as income, net of any contractual amounts due to third-parties. On a quarterly basis, the Company will evaluate the investment for impairment by estimating the fair value of the expected future cash flows from the incentive management fees. If the estimated fair value is less than the cost basis of the interest, the preferred interest will be deemed to be impaired. If the Company determines that the shortfall is other-than-temporary, the impairment will be recorded as a reduction of the preferred interest by reducing the revenues previously recorded on these preferred shares. To the extent that the investment in preferred equity has been reduced to zero, all subsequent distributions will be recorded as income.