Debt and Preferred Equity Investments (Tables)

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Schedule of debt and preferred equity book balance roll forward

Below is a summary of the activity relating to our debt and preferred equity investments for the nine months ended September 30, 2019 and the twelve months ended December 31, 2018 (in thousands):



	September 30, 2019			December 31, 2018
Balance at beginning of year ⁽¹⁾	$	2,099,393		$	2,114,041
Debt investment originations/accretion ⁽²⁾	573,786			834,304
Preferred equity investment originations/accretion ⁽²⁾	10,969			151,704
Redemptions/sales/syndications/amortization ⁽³⁾	(733,592		)	(994,906		)
Net change in loan loss reserves	4,000			(5,750		)
Balance at end of period ⁽¹⁾	$	1,954,556		$	2,099,393


(1)	Net of unamortized fees, discounts, and premiums.


(2)	Accretion includes amortization of fees and discounts and paid-in-kind investment income.

(3)

Certain participations in debt investments that were sold or syndicated, but did not meet the conditions for sale accounting, are included in other assets and other liabilities on the consolidated balance sheets.

Allowance for Credit Losses on Financing Receivables

The following table is a rollforward of our total loan loss reserves for the nine months ended September 30, 2019 and the twelve months ended December 31, 2018 (in thousands):



	September 30, 2019			December 31, 2018
Balance at beginning of year	$	5,750		$	—
Expensed	—			6,839
Recoveries	—			—
Charge-offs and reclassifications	(4,000		)	(1,089		)
Balance at end of period	$	1,750		$	5,750

Summary of debt investments

As of September 30, 2019 and December 31, 2018, we held the following debt investments with an aggregate weighted average current yield of 8.89% at September 30, 2019 (dollars in thousands):



Loan Type	September 30, 2019 Future Funding Obligations		September 30, 2019 Senior Financing		September 30, 2019 Carrying Value ⁽¹⁾		December 31, 2018 Carrying Value ⁽¹⁾		Maturity Date ⁽²⁾
Fixed Rate Investments:
Mezzanine Loan^(3a)	$	—	$	1,160,000	$	220,321	$	213,185	March 2020
Mezzanine Loan	—		15,000		3,500		3,500		September 2021
Mezzanine Loan	—		147,000		24,946		24,932		April 2022
Mezzanine Loan	—		280,000		38,177		36,585		August 2022
Mezzanine Loan	—		323,003		211,105		—		June 2023
Mezzanine Loan	—		84,207		12,712		12,706		November 2023
Mezzanine Loan	—		180,000		30,000		30,000		December 2023
Mezzanine Loan^(3b)	—		115,000		12,948		12,941		June 2024
Mezzanine Loan	—		95,000		30,000		30,000		January 2025
Mezzanine Loan	—		1,712,750		55,250		55,250		June 2027
Mezzanine Loan⁽⁴⁾	—		—		—		11,000
Total fixed rate	$	—	$	4,111,960	$	638,959	$	430,099
Floating Rate Investments:
Mezzanine Loan⁽⁵⁾	—		142,000		30,000		15,333		May 2019
Mezzanine Loan⁽⁵⁾	—		—		29,000		14,822		May 2019
Mortgage/Mezzanine Loan⁽⁶⁾	—		—		41,631		154,070		September 2019
Mezzanine Loan⁽⁷⁾	—		350,000		34,999		34,886		October 2019
Mortgage/Mezzanine Loan	5,598		37,291		92,185		62,493		January 2020
Mezzanine Loan	1		579,997		94,730		79,164		January 2020
Mortgage Loan	6,987		—		92,922		88,501		February 2020
Mortgage/Mezzanine Loan	—		—		69,661		—		March 2020
Mezzanine Loan	51		329,673		54,832		53,402		March 2020
Mezzanine Loan	—		40,000		19,999		19,986		April 2020
Mezzanine Loan	5,664		44,812		14,886		12,627		July 2020
Mortgage/Mezzanine Loan	—		—		19,958		19,999		August 2020
Mortgage/Mezzanine Loan	—		64,070		55,349		83,449		October 2020
Mezzanine Loan	28,834		402,237		98,960		88,817		November 2020



Loan Type	September 30, 2019 Future Funding Obligations		September 30, 2019 Senior Financing		September 30, 2019 Carrying Value ⁽¹⁾		December 31, 2018 Carrying Value ⁽¹⁾		Maturity Date ⁽²⁾
Mortgage and Mezzanine Loan	—		—		35,355		35,266		December 2020
Mortgage/Mezzanine Loan	25,504		—		194,545		277,694		April 2021
Mezzanine Loan	9,750		275,000		40,023		24,961		April 2021
Jr. Mortgage Participation/Mezzanine Loan	—		60,000		15,689		15,665		July 2021
Mezzanine Loan	13,978		147,626		40,364		—		July 2021
Mortgage/Jr. Mortgage Participation Loan	—		—		—		84,012
Mortgage/Mezzanine Loan	—		—		—		37,094
Mortgage and Mezzanine Loan	—		—		—		98,804
Mezzanine Loan	—		—		—		7,305
Mezzanine Loan	—		—		—		14,998
Mezzanine Loan	—		—		—		21,990
Mezzanine Loan⁽⁸⁾	—		—		—		37,499
Total floating rate	$	96,367	$	2,472,706	$	1,075,088	$	1,382,837
Total	$	96,367	$	6,584,666	$	1,714,047	$	1,812,936


(1)	Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees.


(2)	Represents contractual maturity, excluding any unexercised extension options.


(3)	Carrying value is net of the following amounts that were sold or syndicated, which are included in other assets and other liabilities on the consolidated balance sheets as a result of the transfers not meeting the conditions for sale accounting: (a) $1.3 million and (b) $12.0 million.


(4)	This loan was sold in 2019.


(5)	This loan is in maturity default. No impairment was recorded as the Company believes that the fair value of the property exceeded the carrying amount of the loans.


(6)	This loan was in maturity default as of September 30, 2019, but was repaid in October 2019.


(7)	This loan was repaid in October 2019.


(8)	In 2019, the Company accepted an assignment of the equity interests in the property in lieu of repayment, and marked the assets received and liabilities assumed to fair value.

Summary of preferred equity investments

As of September 30, 2019 and December 31, 2018, we held the following preferred equity investments with an aggregate weighted average current yield of 9.51% at September 30, 2019 (dollars in thousands):



Type	September 30, 2019 Future Funding Obligations		September 30, 2019 Senior Financing		September 30, 2019 Carrying Value ⁽¹⁾		December 31, 2018 Carrying Value ⁽¹⁾		Mandatory Redemption ⁽²⁾
Preferred Equity	$	—	$	272,000	$	143,614	$	143,183	April 2021
Preferred Equity	—		1,763,271		96,895		143,274		June 2022
Total	$	—	$	2,035,271	$	240,509	$	286,457


(1)	Carrying value is net of deferred origination fees.

(2)

Represents contractual maturity, excluding any unexercised extension options.