INVESTMENTS IN UNCONSOLIDATED ENTITIES AND LOAN MANAGER

3 Months Ended

Mar. 31, 2014

Investments in Unconsolidated Entities [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

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	March 31,		December 31,
		2014		2013
Real estate investment entities	1% – 12%	$	7,712	$	8,271
Financial fund management partnerships	3% − 50%	4,888		5,294
Trapeza entities	33% − 50%	1,009		777
Investments in unconsolidated entities		$	13,609	$	14,342

Included in investments in unconsolidated entities is the Company's $2.5 million investment in RRE Opportunity REIT I ("Opportunity REIT I"), which completed its initial public offering in December 2013 as well as a $200,000 investment in RRE Opportunity REIT II ("Opportunity REIT II"), which is in its offering stage. The Company accounts for its investment in Opportunity REIT I on the cost method since the Company has less than a 1% ownership.

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.

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

	Three Months Ended   March 31, 2014			Three Months Ended   March 31, 2013
Management fee revenues	$	12,388		$	8,248
Costs and expenses	(11,295		)	(6,485		)
Net income	$	1,093		$	1,763
Portion of net income attributable to the Company	$	361		$	582

In conjunction with the CVC Credit Partners joint venture, the Company retained a preferred interest in Apidos (which became a subsidiary of CVC Credit Partners) relating to incentive management fees on legacy CLOs that had been sponsored and managed by Apidos. The Company accounts for this interest, with a book value of $6.8 million at March 31, 2014, on the cost method. As these 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. The Company continually evaluates 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. At such time that the investment has been reduced to zero, all subsequent distributions will be recorded as income.