DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2016

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

6. DISCONTINUED OPERATIONS

        We have reflected the lending segment, which was acquired on the Acquisition Date, as held for sale at March 31, 2016 and December 31, 2015, based on a plan approved by the Board of Directors to sell the lending segment that, when completed, will result in the deconsolidation of the lending segment. During July 2015, to maximize value, we modified our strategy from a strategy of selling the lending segment as a whole to a strategy of soliciting buyers for components of the business. This change in the sale methodology resulted in the need to extend the period to complete the sale of the lending segment beyond one year. In connection with our plan, we have expensed transaction costs of $9,000 and $163,000 as incurred during the three months ended March 31, 2016 and 2015, respectively.

        In December 2015, pursuant to the modified plan, we sold substantially all of our commercial mortgage loans to an unrelated third party and recognized a gain of $5,151,000. We are continuing our efforts and are actively soliciting the sale of the remainder of the lending segment.

        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 March 31, 2016 and December 31, 2015:

	March 31, 2016		December 31, 2015
	(in thousands)
Assets held for sale
Loans receivable, net	$	126,726	$	103,440
Cash and cash equivalents		13,347		15,936
Restricted cash		1,869		819
Accounts receivable and interest receivable, net		1,060		691
Other intangible assets		2,957		2,957
Other assets		4,968		5,149
Total assets held for sale, net	$	150,927	$	128,992
Liabilities associated with assets held for sale
Debt	$	55,446	$	47,121
Accounts payable and accrued expenses		2,843		2,302
Other liabilities		5,203		3,317
Total liabilities associated with assets held for sale	$	63,492	$	52,740

        Loans receivable, net consist of the following:

	March 31, 2016			December 31, 2015
	(in thousands)
Commercial mortgage loans	$	2,834		$	3,511
SBA 7(a) loans, subject to secured borrowings		35,062			36,574
SBA 7(a) loans		48,077			43,096
Commercial real estate loans, subject to secured borrowings		40,794			20,408
Loans receivable		126,767			103,589
Deferred capitalized costs, net		241			406
Loan loss reserves		(282	)		(555	)
Loans receivable, net	$	126,726		$	103,440

        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, Subject to Secured Borrowings—Represents mezzanine loans secured by an indirect ownership interest in entities that either directly or indirectly own parcels of commercial real estate. These loans have a variable interest rate.

        Debt consists of the following:

	March 31, 2016		December 31, 2015
	(in thousands)
Secured Borrowings—Government Guaranteed Loans:
Secured borrowing principal on SBA 7(a) loans sold for a premium and excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.95% and 3.90% at March 31, 2016 and December 31, 2015, respectively	$	28,138	$	29,481
Secured borrowing principal on loans sold for excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.83% and 1.58% at March 31, 2016 and December 31, 2015, respectively		4,909		4,947
Total Secured Borrowings—Government Guaranteed Loans		33,047		34,428
Secured Borrowings—Commercial Real Estate Loans:
Secured borrowings based on 49% of the principal on commercial real estate loans with variable interest rates, reset monthly, based on 30-day LIBOR with weighted average coupon rate of 11.19% and 9.77% at March 31, 2016 and December 31, 2015, respectively		19,989		10,000
Total Secured Borrowings—Commercial Real Estate Loans		19,989		10,000
Unamortized premiums and discounts, net		2,410		2,693
Total Secured Borrowings	$	55,446	$	47,121

        Secured Borrowings—Represents sold 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 are for government guaranteed loans, they may include cash premiums which 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 our lending segment debt (face value) at March 31, 2016 are as follows:

Years Ending December 31,	Secured Borrowings Principal(1)
	(in thousands)
2016 (Nine months ending December 31, 2016)	$	2,051
2017		11,111
2018		11,092
2019		1,168
2020		1,212
Thereafter		26,402
	$	53,036

(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 March 31,
	2016		2015
	(in thousands)
Revenue—Interest and other income	$	3,342	$	5,178
Expenses:
Interest expense		477		301
Fees to related party		1,062		1,143
General and administrative		184		574
Provision for income taxes		190		198
Total expenses		1,913		2,216
Income from operations of assets held for sale	$	1,429	$	2,962