Debt and Preferred Equity Investments (Tables)

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of debt and preferred equity book balance roll forward

Below is a summary of the activity in our debt and preferred equity investments for the six months ended June 30, 2020 and the twelve months ended December 31, 2019 (in thousands):



	June 30, 2020			December 31, 2019
Balance at beginning of year ⁽¹⁾	$	1,580,306		$	2,099,393
Debt investment originations/accretion ⁽²⁾	289,303			652,866
Preferred equity investment originations/accretion ⁽²⁾	160,645			14,736
Redemptions/sales/syndications/equity ownership/amortization ⁽³⁾	(794,959		)	(1,190,689		)
Net change in loan loss reserves	(13,359		)	4,000
Balance at end of period ⁽¹⁾	$	1,221,936		$	1,580,306


(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.

Schedule of Debt

Below is a summary of our debt and preferred equity investments as of June 30, 2020 (dollars in thousands):



	Floating Rate					Fixed Rate					Total Carrying Value		Senior Financing		Maturity ⁽¹⁾
Type	Carrying Value		Face Value		Interest Rate	Carrying Value		Face Value		Interest Rate	Total Carrying Value		Senior Financing		Maturity ⁽¹⁾
Senior Mortgage Debt	$	117,673	$118,490		L + 2.00 - 4.00%	$	1,173	$1,250		3.00%	$	118,846	$	—	2020 - 2022
Junior Mortgage Debt	85,672		92,887		L + 6.00 - 7.25%	32,722		33,000		6.00%	$	118,394	520,147		2020 - 2023
Mezzanine Debt	283,654		288,675		L + 4.95 - 15.29%	447,653		460,015		2.90 - 9.50%	$	731,307	4,526,784		2020 - 2029
Preferred Equity	—		—		—	253,389		256,644		6.50 - 11.00%	$	253,389	1,962,750		2020 -2027
Balance at end of period	$	486,999	$	500,052	—	$	734,937	$	750,909	—	$	1,221,936

(1)

Excludes available extension options to the extent they have not been exercised as of the date of this filing.

Allowance for Credit Losses on Financing Receivables

The following table is a rollforward of our total allowance for loan losses for the six months ended June 30, 2020 and the twelve months ended December 31, 2019 (in thousands):



	June 30, 2020			December 31, 2019
Balance at beginning of year	$	1,750		$	5,750
Cumulative adjustment upon adoption of ASC 326	27,804			—
Current period provision for loan loss	11,784			—
Write-offs charged against the allowance	(26,229		)	(4,000		)
Balance at end of period	$	15,109		$	1,750

Summary of debt investments

As of June 30, 2020 and December 31, 2019, we held the following debt investments with an aggregate weighted average current yield of 8.28% at June 30, 2020 (dollars in thousands):



Loan Type	June 30, 2020 Future Funding Obligations		June 30, 2020 Senior Financing		June 30, 2020 Amortized Cost ⁽¹⁾			December 31, 2019 Amortized Cost ⁽¹⁾		Maturity Date ⁽²⁾
Fixed Rate Investments:
Mortgage/Mezzanine Loan	$	—	$	63,750	$	56,023		$	55,573	October 2020
Junior Mortgage^(3b)	10,000		67,000		32,722			—		January 2021
Mezzanine Loan	—		15,000		3,500			3,500		September 2021
Mezzanine Loan	—		280,000		39,869			38,734		August 2022
Mezzanine Loan	—		333,943		225,204			215,737		June 2023
Mezzanine Loan⁽⁵⁾	—		82,954		12,717			12,714		November 2023
Mezzanine Loan^(3a)(5)	—		115,000		13,265			12,950		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	—		85,000		20,000			20,000		December 2029
Mezzanine Loan	—		—		—			24,952
Mezzanine Loan	—		—		—			30,000
Total fixed rate	$	10,000	$	2,850,397	$	488,550		$	499,410
Floating Rate Investments:
Junior Mortgage⁽⁵⁾	$	—	$	40,000	$	20,000		$	20,000	April 2020
Mortgage/Mezzanine Loan⁽⁴⁾	1,618		27,122		67,203			82,696		July 2020
Mezzanine Loan	—		275,000		49,882			49,809		April 2021
Junior Mortgage Participation/Mezzanine Loan	—		60,000		15,715			15,698		July 2021
Mezzanine Loan	10,198		161,328		44,296			41,395		July 2021
Mezzanine Loan	6,765		52,196		22,294			15,743		July 2021
Mezzanine Loan^(3c)	—		1,115,000		125,071			222,775		March 2022
Mortgage/Mezzanine Loan	7,795		—		59,670			—		May 2022
Mortgage/Mezzanine Loan	44,000		—		13,963			13,918		December 2022
Mortgage Loan	39,113		353,147		60,010			—		February 2023
Mezzanine Loan	56,509		52,742		17,002			69,839		May 2023
Mortgage/Mezzanine Loan	—		—		—			35,386
Mortgage Loan	—		—		—			19,971
Mortgage Loan	—		—		—			106,473
Mezzanine Loan	—		—		—			51,387
Mortgage/Mezzanine Loan	—		—		—			96,570
Total floating rate	$	165,998	$	2,136,535	$	495,106		$	841,660
Allowance for loan loss	$	—	$	—	$	(15,109	)	$	—
Total	$	175,998	$	4,986,932	$	968,547		$	1,341,070


(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) $12.0 million, (b) $66.6 million and (c) $0.4 million.


(4)	This loan was extended in July 2020.

(5)

This loan is in default and on non-accrual as of the date of this filing. The Company is in discussions with the borrower.

Summary of preferred equity investments

As of June 30, 2020 and December 31, 2019, we held the following preferred equity investments with an aggregate weighted average current yield of 10.00% at June 30, 2020 (dollars in thousands):



Type	June 30, 2020 Future Funding Obligations		June 30, 2020 Senior Financing		June 30, 2020 Amortized Cost ⁽¹⁾		December 31, 2019 Amortized Cost ⁽¹⁾			Mandatory Redemption ⁽²⁾
Preferred Equity	$	—	$	1,712,750	$	151,719	$	98,065		June 2022
Preferred Equity	—		250,000		101,670		—			February 2027
Preferred Equity⁽³⁾	—		—		—		142,921
Total Preferred Equity	$	—	$	1,962,750	$	253,389	$	240,986
Allowance for loan loss	$	—	$	—	$	—	$	(1,750	)
Total	$	—	$	1,962,750	$	253,389	$	239,236


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


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

(3)

In June 2020, we, along with the common member in the investment, amended the partnership documents related to the investment to provide us with more rights over management of the underlying property. This resulted in the investment being accounted for using the equity method as of June 30, 2020. See Note 6, "Investments in Unconsolidated Joint Ventures."