DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2015

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

7. DISCONTINUED OPERATIONS

        We have reflected the lending segment, which was acquired on the Acquisition Date as disclosed in Note 2, as held for sale at September 30, 2015 and December 31, 2014, based on a plan approved by the Board of Directors to sell the lending business that, when completed, will result in the deconsolidation of the lending segment. In connection with our plan, we have expensed transaction costs of $111,000 and $335,000 during the three and nine months ended September 30, 2015, respectively.

        The following is a reconciliation of the carrying amounts of assets and liabilities that are classified as held for sale on the consolidated balance sheets as of September 30, 2015 and December 31, 2014:

	September 30, 2015		December 31, 2014
	(in thousands)
Assets held for sale
Loans receivable, net	$	188,248	$	189,052
Cash and cash equivalents		6,591		9,937
Restricted cash		827		916
Accounts receivable and interest receivable, net		808		738
Other intangible assets		2,957		2,957
Other assets		5,544		5,199
Total assets held for sale	$	204,975	$	208,799
Liabilities associated with assets held for sale
Debt	$	38,337	$	41,901
Accounts payable and accrued expenses		2,484		2,709
Other liabilities		3,521		5,181
Total liabilities associated with assets held for sale	$	44,342	$	49,791

        Loans receivable, net consist of the following:

	September 30, 2015			December 31, 2014
	(in thousands)
Commercial mortgage loans	$	88,923		$	108,864
SBA 7(a) loans, subject to secured borrowings		37,783			41,328
SBA 7(a) loans		41,431			38,707
Commercial real estate loans		20,170			—
Loans receivable		188,307			188,899
Deferred capitalized costs, net		215			292
Loan loss reserves		(274	)		(139	)
Net loans receivable	$	188,248		$	189,052

        Commercial Mortgage Loans—Represents loans to small businesses collateralized by first liens on the real estate of the related business.

        SBA 7(a) Loans, Subject to Secured Borrowings—Represents the government guaranteed portion of loans which were sold with the proceeds received from the sale reflected as "secured borrowings—government guaranteed loans." There is no credit risk associated with these loans since the SBA has guaranteed payment of the principal.

        SBA 7(a) Loans—Represents the non-government guaranteed retained portion of loans originated under the SBA 7(a) Program and the government guaranteed portion of loans that have not yet been fully funded or sold.

        Commercial Real Estate Loans—Represents a mezzanine loan secured by an indirect ownership interest in an entity that either directly or indirectly owns parcels of commercial real estate. The loan has a variable interest rate.

        Debt consists of the following:

	September 30, 2015		December 31, 2014
	(in thousands)
Secured borrowing principal on loans sold for a premium and excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.91% and 3.92% at September 30, 2015 and December 31, 2014, respectively	$	30,545	$	33,654
Secured borrowing principal on loans sold for excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.58%		4,982		5,085
		35,527		38,739
Unamortized premiums on loans sold for a premium and excess spread		2,810		3,162
Total secured borrowings—government guaranteed loans	$	38,337	$	41,901

        Secured Borrowings—Government Guaranteed Loans—Represents sold SBA 7(a) Program loans which are treated as secured borrowings since the loan sales did not meet the derecognition criteria provided for in ASC 860-30,Secured Borrowing and Collateral. To the extent secured borrowings include cash premiums, these premiums are included in secured borrowings and amortized as a reduction to interest expense over the life of the loan using the effective interest method and fully amortized when the loan is repaid in full.

        Future principal payments on the debt (face value) at September 30, 2015 are as follows:

Years Ending December 31,	Secured Borrowings Principal(1)
	(in thousands)
2015 (Three months ending December 31, 2015)	$	1,188
2016		1,169
2017		1,208
2018		1,249
2019		1,293
Thereafter		29,420
	$	35,527

(1)           Principal payments are generally dependent upon cash flows received from the underlying loans. Our estimate of their repayment is based on scheduled principal payments on the underlying loans. Our estimate will differ from actual amounts to the extent we experience prepayments and/or loan liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans.

        The following is the detail of income from operations of assets held for sale classified as discontinued operations on the consolidated statements of operations:

	Three Months Ended September 30,
	2015		2014
	(in thousands)
Revenue—Interest and other income	$	6,777	$	5,078
Expenses:
Interest expense		230		398
Fees to related party(1)		1,181		—
General and administrative(1)		179		1,263
Provision for income taxes		179		112
Total expenses		1,769		1,773
Income from operations of assets held for sale	$	5,008	$	3,305

(1)           Salaries and related benefits of $1,035,000 were included in general and administrative expense for the three months ended September 30, 2014 while, as a result of the transfer of our employees to an affiliate (see Note 14), such expenses were included in fees to related party for the three months ended September 30, 2015.

	Nine Months Ended September 30, 2015		From the Acquisition Date through September 30, 2014
	(in thousands)
Revenue—Interest and other income	$	17,723	$	12,875
Expenses:
Interest expense		651		952
Fees to related party(1)		3,417		—
General and administrative(1)		1,047		2,921
Provision for income taxes		654		420
Total expenses		5,769		4,293
Income from operations of assets held for sale	$	11,954	$	8,582

(1)           Salaries and related benefits of $2,360,000 were included in general and administrative expense for the period from the Acquisition Date through September 30, 2014 while, as a result of the transfer of our employees to an affiliate (see Note 14), such expenses were included in fees to related party for the nine months ended September 30, 2015.