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Debt and Preferred Equity Investments
 12 Months Ended
Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]  
Debt and Preferred Equity Investments Debt and Preferred Equity Investments
Below is a summary of the activity in our debt and preferred equity investments for the twelve months ended December 31, 2020 and 2019 (in thousands):
December 31, 2020December 31, 2019
Balance at beginning of year (1)
$1,580,306 $2,099,393 
Debt investment originations/accretion (2)
389,300 652,866 
Preferred equity investment originations/accretion (2)
167,042 14,736 
Redemptions/sales/syndications/equity ownership/amortization (3)
(1,048,643)(1,190,689)
Net change in loan loss reserves(11,463)4,000 
Balance at end of period (1)
$1,076,542 $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.
Below is a summary of our debt and preferred equity investments as of December 31, 2020 (dollars in thousands):
Floating RateFixed RateTotal Carrying ValueSenior Financing
Maturity(1)
TypeCarrying ValueFace ValueInterest RateCarrying ValueFace ValueInterest Rate
Senior Mortgage Debt$62,751 $63,425 
L + 2.00 - 3.50%
$1,249 $1,250 3.50%$64,000 $— 2021 - 2022
Junior Mortgage Debt7,200 12,000 
L + 7.25 - 7.25%
32,888 33,000 6.00%40,088 127,000 2021
Mezzanine Debt275,926 280,119 
L + 4.95 - 14.07%
436,742 448,938 
2.90 - 14.30%
712,668 4,459,287 2021 - 2029
Preferred Equity— — —259,786 262,254 
6.50 - 11.00%
259,786 1,962,750 2022 - 2027
Balance at end of period$345,877 $355,544 $730,665 $745,442 $1,076,542 $6,549,037 
(1) Excludes available extension options to the extent they have not been exercised as of the date of this filing.
The following table is a rollforward of our total allowance for loan losses for the years ended December 31, 2020, 2019 and 2018 (in thousands):
December 31,
202020192018
Balance at beginning of year$1,750 $5,750 $— 
Cumulative adjustment upon adoption of ASC 32627,803 — — 
Current period provision for loan loss20,693 — 6,839 
Write-offs charged against the allowance (1)
(37,033)(4,000)(1,089)
Balance at end of period (2)
$13,213 $1,750 $5,750 
(1)Includes $19.0 million of charges recorded against investments that were sold during the year ended December 31, 2020. These charges are included in loan loss and other investment reserves, net of recoveries, in our consolidated statements of operations.
(2)As of December 31, 2020, we had recorded an allowance for loan loss on all financing receivables on non-accrual except for one financing receivable with a carrying value of $225.2 million.
At December 31, 2020, all debt and preferred equity investments were performing in accordance with their respective terms, with the exception of one investment with a carrying value, net of reserves, of $6.8 million, as discussed in subnote 6 of the Debt Investments table below. At December 31, 2019, all debt and preferred equity investments were performing in accordance with their respective terms.
The following table sets forth the net book value of our debt and preferred equity investment portfolio by risk rating as of December 31, 2020 and 2019 ($ in thousands):
Risk RatingDecember 31, 2020December 31, 2019
1 - Low Risk Assets - Low probability of loss
$695,035 $1,180,831 
2 - Watch List Assets - Higher potential for loss
365,167 399,475 
3 - High Risk Assets - Loss more likely than not
16,340 — 
$1,076,542 $1,580,306 
The following table sets forth the net book value of our debt and preferred equity investment portfolio by year of origination and risk rating as of December 31, 2020 ($ in thousands):
As of December 31, 2020
Risk Rating
2020(1)
2019(1)
2018(1)
Prior(1)
Total
1 - Low Risk Assets - Low probability of loss
$346,320 $55,318 $209,941 $83,456 $695,035 
2 - Watch List Assets - Higher potential for loss
— 239,215 56,244 69,708 365,167 
3 - High Risk Assets - Loss more likely than not
— — — 16,340 16,340 
$346,320 $294,533 $266,185 $169,504 $1,076,542 
(1) Year in which the investment was originated or acquired by us or in which a material modification occurred.
We have determined that we have one portfolio segment of financing receivables at December 31, 2020 and 2019 comprising commercial real estate which is primarily recorded in debt and preferred equity investments.
Included in other assets is an additional amount of financing receivables totaling $66.2 million and $131.1 million at December 31, 2020 and 2019, respectively, for which the Company recorded adjustments upon adoption of ASC 326 of $11.4 million and provisions for loan losses of $14.6 million for the twelve months ended December 31, 2020. All of these loans have a risk rating of 2 and were performing in accordance with their respective terms with the exception of one financing receivable, which was put on nonaccrual in August 2018, that has a risk rating of 3 and a carrying value at December 31, 2020 of $2.5 million.
Debt Investments
As of December 31, 2020 and 2019, we held the following debt investments with an aggregate weighted average current yield of 5.80%, at December 31, 2020 (dollars in thousands):
Loan TypeDecember 31, 2020
Future Funding
Obligations		December 31, 2020
Senior
Financing
December 31, 2020
Carrying Value (1)
December 31, 2019
Carrying Value (1)

Maturity
Date (2)
Fixed Rate Investments:
Junior Mortgage (3b)(4)
$10,000 $67,000 $32,888 $— January 2021
Mezzanine Loan— 15,000 3,500 3,500 September 2021
Mortgage/Mezzanine Loan— 63,750 56,244 55,573 October 2021
Mezzanine Loan— 280,000 41,057 38,734 August 2022
Mezzanine Loan (5)
— 353,772 225,204 215,737 June 2023
Mezzanine Loan (3a)(6)
— 105,000 13,366 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 
Mezzanine Loan— — — 12,714 
Total fixed rate$10,000 $2,777,272 $477,509 $499,410  
Floating Rate Investments:
Mezzanine Loan$— $275,000 $49,956 $49,809 April 2021
Junior Mortgage Participation/Mezzanine Loan— 60,000 15,733 15,698 July 2021
Mezzanine Loan7,031 172,809 35,318 41,395 July 2021
Mezzanine Loan— 61,744 29,106 15,743 July 2021
Mezzanine Loan (3c)
— 1,115,000 127,915 222,775 March 2022
Mortgage and Mezzanine Loan7,085 — 60,532 — May 2022
Mortgage and Mezzanine Loan44,000 — 14,011 13,918 December 2022
Mezzanine Loan53,845 64,462 19,889 69,839 May 2023
Mortgage and Mezzanine Loan— — — 35,386 
Junior Mortgage (7)
— — — 20,000 
Mortgage Loan— — — 19,971 
Mortgage Loan— — — 106,473 
Mezzanine Loan — — — 51,387 
Mortgage/Mezzanine Loan— — — 96,570 
Mortgage/Mezzanine Loan— — — 82,696 
Total floating rate$111,961 $1,749,015 $352,460 $841,660  
Allowance for loan loss$— $— $(13,213)$— 
Total$121,961 $4,526,287 $816,756 $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)In January 2021, this loan was extended six months to July 2021.
(5)This loan was put on non-accrual in July 2020 and remains on non-accrual at December 31, 2020. No investment income has been recognized subsequent to it being put on non-accrual.
(6)This loan went into default and was put on non-accrual in June 2020 and remains on non-accrual at December 31, 2020. No investment income has been recognized subsequent to it being put on non-accrual. The Company is in discussions with the borrower.
(7)In October 2020, the Company accepted a purchase in lieu of repayment and marked the assets received and liabilities assumed to fair value.

Preferred Equity Investments
As of December 31, 2020 and 2019, we held the following preferred equity investments with an aggregate weighted average current yield of 9.96% at December 31, 2020 (dollars in thousands):
TypeDecember 31, 2020
Future Funding
Obligations		December 31, 2020
Senior
Financing
December 31, 2020
Carrying Value (1)
December 31, 2019
Carrying Value (1)

Mandatory
Redemption (2)
Preferred Equity$— $1,712,750 $154,691 $98,065 June 2022
Preferred Equity— 250,000 105,095 — February 2027
Preferred Equity (3)
— — 141,171 
Total Preferred Equity$— $1,962,750 $259,786 $239,236  
Allowance for loan loss$— $— $— $(1,750)
Total$— $1,962,750 $259,786 $240,986 
(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 885 Third Avenue, amended the partnership documents related to the investment to provide us with more rights over the management of the underlying property. This resulted in the investment being accounted for using the equity method. See Note 6, "Investments in Unconsolidated Joint Ventures."