Debt and Preferred Equity Investments (Tables)

12 Months Ended

Dec. 31, 2013

Investments, Debt and Equity Securities [Abstract]

As of December 31, 2013 and 2012, we held the following debt investments with an aggregate weighted average current yield of approximately 11.47% at December 31, 2013 (in thousands):



Loan Type	December 31, 2013 Senior Financing		December 31, 2013 Carrying Value, Net of Discounts and Deferred Origination Fees			December 31, 2012 Carrying Value, Net of Discounts and Deferred Origination Fees			Initial Maturity Date
Junior Participation	$	398,500	$	11,856		$	—		March 2015
Mezzanine Loan	205,000		68,319			66,307			February 2016
Mortgage/Mezzanine Loan	166,710		44,742			44,013			May 2016
Mezzanine Loan	177,000		15,012			15,906			May 2016
Junior Participation	133,000		49,000			49,000			June 2016
Mezzanine Loan	165,000		71,312			70,967			November 2016
Mortgage/Mezzanine Loan(1)	1,109,000		80,983			115,804			March 2017
Mezzanine Loan(2)	521,750		20,954			—			June 2017
Other Loan	15,000		3,500			3,500			September 2021
Mezzanine Loan(3)	90,000		19,926			—			November 2023
Mortgage Loan(4)	—		—			218,068			—
Total fixed rate	$	2,980,960	$	385,604		$	583,565
Junior Participation(5)	$	80,932	$	24,046		$	—		February 2014
Junior Participation(6)	57,750		10,873			10,869			June 2014
Mortgage/Mezzanine Loan	330,000		131,724			131,231			July 2014
Mezzanine Loan	180,000		59,892			59,739			August 2014
Mezzanine Loan(7)	89,956		38,549			34,444			October 2014
Mortgage Loan	—		30,000			—			December 2014
Mezzanine Loan	110,000		49,110			—			September 2015
Mezzanine Loan(8)	92,711		27,662			55,336			December 2015
Mezzanine Loan	775,000		72,823			—			March 2016
Mezzanine Loan(9)	160,000		22,526			7,624			June 2016
Mezzanine Loan	87,300		25,590			34,761			July 2016
Mezzanine Loan(10)	163,500		25,725			—			November 2016
Mezzanine Loan(11)	33,289		11,798			—			December 2016
Mortgage/Mezzanine Loan	55,000		20,553			—			July 2018
Mortgage Loan	—		—			14,745			—
Mezzanine Loan	—		—			37,288			—
Mortgage/Mezzanine Loan	—		—			47,253			—
Total floating rate	$	2,215,438	$	550,871		$	433,290
Total	5,196,398		936,475			1,016,855
Loan loss reserve(12)			(1,000		)	(7,000		)
			$	935,475		$	1,009,855

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(1)	Interest is added to the principal balance for this accrual only loan. In January 2013, we sold 50% of the mezzanine loan for $57.8 million and recognized additional income of $12.9 million, which is included in investment income on the consolidated statements of income.

(2)

In October 2013, we entered into a loan participation agreement in the amount of $41.3 million on a $82.5 million mortgage. As a result of the transfer not meeting the conditions for sale accounting, the portion that was participated out has been recorded in other assets and other liabilities in the accompanying consolidated balance sheet. In addition, as of December 31, 2013, we were committed to fund an additional $20.0 million in connection with this loan.


(3)	In November 2013, we entered into a loan participation agreement in the amount of $5.0 million on a $25.0 million mortgage. As a result of the transfer not meeting the conditions for sale accounting, the portion that was participated out has been recorded in other assets and other liabilities in the consolidated balance sheets.


(4)	In November 2012, we acquired this nonperforming loan with an original balance of $219.0 million subject to interest based on default rate. In connection with the repayment of the loan in May 2013, we recognized additional income of $6.4 million, which is included in investment income on our consolidated statements of income.


(5)	As of December 31, 2013, we were committed to fund an additional $0.9 million in connection with this loan.


(6)	In December 2013, the loan was extended to June 2014.


(7)	As of December 31, 2013, we were committed to fund an additional $11.2 million in connection with this loan.


(8)	We funded $56.3 million at origination. In June 2013, we sold 50% of our interest in the $85.0 million mezzanine loan. Additionally, in December 2013 we closed on an $8.5 million future funding upsize, bringing our total additional committed funding amount to $22.1 million at December 31, 2013.

(9)

As part of the refinancing of the related senior mortgage in June 2013, we originated a $30.0 million mezzanine loan and our previous investment in the amount of $15.0 million, including the $7.4 million participated interest, was repaid in full. Following the refinancing, we entered into a loan participation agreement in the amount of $7.4 million on a $30.0 million mortgage. Due to our continued involvement with the loan, the portion that was participated out has been recorded in other assets and other liabilities in the consolidated balance sheets.


(10)	As of December 31, 2013, we were committed to fund an additional $11.4 million in connection with this loan.


(11)	As of December 31, 2013, we were committed to fund an additional $0.3 million in connection with this loan.


(12)	Loan loss reserves are specifically allocated to investments. Our reserves reflect management's judgment of the probability and severity of losses based on Level 3 data. We cannot be certain that our judgment will prove to be correct or that reserves will be adequate over time to protect against potential future losses.

Summary of preferred equity investments

As of December 31, 2013 and 2012, we held the following preferred equity investments with an aggregate weighted average current yield of approximately 10.91% at December 31, 2013 (in thousands):



Type	December 31, 2013 Senior Financing		December 31, 2013 Carrying Value, Net of Discounts and Deferred Origination Fees		December 31, 2012 Carrying Value, Net of Discounts and Deferred Origination Fees		Initial Mandatory Redemption
Preferred equity(1)	$	525,000	$	115,198	$	99,768	July 2015
Preferred equity(1)(2)	55,747		25,896		18,925		April 2016
Preferred equity(1)	926,260		218,330		209,959		July 2016
Preferred equity	70,000		9,940		9,927		November 2017
	$	1,577,007	$	369,364	$	338,579

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(1)	The difference between the pay and accrual rates is included as an addition to the principal balance outstanding.


(2)	As of December 31, 2013, the loan is fully funded.

Rollforward of total allowance for loan loss reserves

The following table is a rollforward of our total loan loss reserves at December 31, 2013, 2012 and 2011 (in thousands):



	December 31,
	2013			2012			2011
Balance at beginning of year	$	7,000		$	50,175		$	61,361
Expensed	—			3,000			10,875
Recoveries	—			(2,436		)	(4,370		)
Charge-offs and reclassifications	(6,000		)	(43,739		)	(17,691		)
Balance at end of period	$	1,000		$	7,000		$	50,175

Summary of impaired loans, which may include non-accrual loans

The following table presents impaired loans, which may include non-accrual loans, as of December 31, 2013 and 2012, respectively (in thousands):



	December 31, 2013						December 31, 2012
	Unpaid Principal Balance		Recorded Investment		Allowance Allocated		Unpaid Principal Balance		Recorded Investment		Allowance Allocated
With no related allowance recorded:
Commercial real estate	$	—	$	—	$	—	$	—	$	—	$	—
With an allowance recorded:
Commercial real estate	10,750		10,750		1,000		10,750		10,750		7,000
Total	$	10,750	$	10,750	$	1,000	$	10,750	$	10,750	$	7,000

Summary of average recorded investment in impaired loans, including non-accrual loans and the related investment and preferred equity income recognized

The following table presents the average recorded investment in impaired loans, which may include non-accrual loans and the related investment and preferred equity income recognized during the years ended December 31, 2013 and 2012, respectively (in thousands):



	Year Ended December 31,
	2013		2012
Average recorded investment in impaired loans	$	10,881	$	50,231
Investment income recognized	7,117		3,712