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Debt and Preferred Equity Investments
 9 Months Ended
Sep. 30, 2021
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 nine months ended September 30, 2021 and the twelve months ended December 31, 2020 (in thousands):
September 30, 2021December 31, 2020
Balance at beginning of year (1)
$1,076,542 $1,580,306 
Debt investment originations/fundings/accretion (2)
104,358 389,300 
Preferred equity investment originations/accretion (2)
9,823 167,042 
Redemptions/sales/syndications/equity ownership/amortization (3)
(145,196)(1,048,643)
Net change in loan loss reserves6,583 (11,463)
Balance at end of period (1)
$1,052,110 $1,076,542 
(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 September 30, 2021 (dollars in thousands):
Floating RateFixed RateTotal Carrying ValueSenior FinancingWeighted Average Yield at End of Period
Maturity (1)
TypeCarrying ValueFace ValueInterest RateCarrying ValueFace ValueInterest Rate
Senior Mortgage Debt$17,995 $18,241 
L + 3.50%
$1,250 $1,250 
3.50%
$19,245 $— 6.57%2021 - 2022
Mezzanine Debt263,499 264,778 
L + 4.95% - 12.97%
499,757 510,116 
2.90% - 14.30%
763,256 4,637,210 6.53% 2021 - 2029
Preferred Equity— — —269,609 270,850 
6.50% - 11.00%
269,609 1,962,750 9.90% 2022 - 2027
Balance at end of period$281,494 $283,019 $770,616 $782,216 $1,052,110 $6,599,960 
(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 nine months ended September 30, 2021 and the twelve months ended December 31, 2020 (in thousands):
September 30, 2021December 31, 2020
Balance at beginning of year$13,213 $1,750 
Cumulative adjustment upon adoption of ASC 326— 27,803 
Current period provision for loan loss — 20,693 
Write-offs charged against the allowance(1)
(6,583)(37,033)
Balance at end of period(2)
$6,630 $13,213 
(1)Includes $0.3 million and $19.0 million of charges recorded against investments that were sold during the nine months ended September 30, 2021 and the year ended December 31, 2020, respectively. These charges are included in loan loss and other investment reserves, net of recoveries, in our consolidated statements of operations for the year ended December 31, 2020.
(2)As of September 30, 2021, all financing receivables on non-accrual had an allowance for loan loss except for one debt investment with a carrying value of $225.4 million.

As of September 30, 2021 and 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 the Debt Investments table further below.
No other financing receivables were 90 days past due as of September 30, 2021 and December 31, 2020 with the exception of a $27.7 million financing receivable included in Other assets, which was put on non-accrual in August 2018 as a result of an interest default.
The following table sets forth the carrying value of our debt and preferred equity investment portfolio by risk rating as of September 30, 2021 and December 31, 2020 (dollars in thousands):
Risk RatingSeptember 30, 2021December 31, 2020
1 - Low Risk Assets - Low probability of loss
$693,139 $695,035 
2 - Watch List Assets - Higher potential for loss
352,081 365,167 
3 - High Risk Assets - Loss more likely than not6,890 16,340 
$1,052,110 $1,076,542 
The following table sets forth the carrying value of our debt and preferred equity investment portfolio by year of origination and risk rating as of September 30, 2021 (dollars in thousands):
As of September 30, 2021
Risk Rating
2021(1)
2020(1)
2019(1)
Prior(1)
Total
1 - Low Risk Assets - Low probability of loss
$64,515 $276,930 $57,230 $294,464 $693,139 
2 - Watch List Assets - Higher potential for loss
— — 253,096 98,985 352,081 
3 - High Risk Assets - Loss more likely than not
— — — 6,890 6,890 
$64,515 $276,930 $310,326 $400,339 $1,052,110 
(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 as of September 30, 2021 and December 31, 2020 comprised of commercial real estate which is primarily recorded in debt and preferred equity investments.
Included in Other assets is an additional amount of financing receivables representing loans to joint venture partners totaling $50.3 million and $66.2 million as of September 30, 2021 and December 31, 2020, respectively. The Company recorded no provisions for loan losses related to these financing receivables for the three and nine months ended September 30, 2021. The Company recorded no provision and $6.3 million for loan losses related to these financing receivables for three and nine months ended September 30, 2020, respectively. 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 as of September 30, 2021 of $2.5 million.
Debt Investments
    As of September 30, 2021 and December 31, 2020, we held the following debt investments with an aggregate weighted average current yield of 6.53% as of September 30, 2021 (dollars in thousands):
Loan TypeSeptember 30, 2021
Future Funding
Obligations		September 30, 2021 Senior
Financing
September 30, 2021
Carrying Value (1)
December 31, 2020
Carrying Value (1)
Maturity
Date (2)
Fixed Rate Investments:
Mortgage/Mezzanine Loan (3)
$— $— $56,250 $56,244 October 2021
Mezzanine Loan— 280,000 42,889 41,057 August 2022
Mezzanine Loan (4)
— 370,642 225,367 225,204 June 2023
Mezzanine Loan— 272,659 64,515 — June 2023
Mezzanine Loan (5a)(6)
— 105,000 13,366 13,366 June 2024
Mezzanine Loan— 95,000 30,000 30,000 January 2025
Mezzanine Loan (7)
— 1,712,750 55,250 55,250 June 2027
Mezzanine Loan— 85,000 20,000 20,000 December 2029
Junior Mortgage— — — 32,888 
Mezzanine Loan— — — 3,500 
Total fixed rate$— $2,921,051 $507,637 $477,509  
Floating Rate Investments:
Mezzanine Loan— 275,000 49,996 49,956 April 2022
Mezzanine Loan5,209 179,763 37,230 35,318 July 2022
Mezzanine Loan (5b)
— 1,115,000 132,249 127,915 March 2022
Mezzanine Loan4,268 54,000 7,697 6,958 May 2022
Mortgage and Mezzanine Loan30,437 — 27,729 14,011 December 2022
Mezzanine Loan47,497 92,396 26,594 19,889 May 2023
Junior Mortgage Participation/Mezzanine Loan (8)
— — — 15,733 
Mezzanine Loan— — — 29,106 
Mortgage Loan— — — 53,574 
Total floating rate$87,411 $1,716,159 $281,495 $352,460  
Allowance for loan loss — — (6,630)(13,213)
Total$87,411 $4,637,210 $782,502 $816,756 
(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)In November 2021, this loan was extended to December 2021.
(4)This loan was put on non-accrual in July 2020 and remains on non-accrual as of September 30, 2021. No investment income has been recognized subsequent to it being put on non-accrual. The Company is in discussions with the borrower.
(5)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, and (b) $0.4 million.
(6)This loan went into default and was put on non-accrual in June 2020 and remains on non-accrual as of September 30, 2021. No investment income has been recognized subsequent to it being put on non-accrual. The Company is in discussions with the borrower. Additionally, we determined the borrower entity to be a VIE which we are not the primary beneficiary.
(7)On October 31, 2021, HNA, through an affiliated entity, filed for Chapter 11 bankruptcy protection on account of its investment in 245 Park Avenue, together with another asset in Chicago. The Company will be contesting the filing, on the basis that the filing was done in bad faith and in violation of HNA's agreements with the Company.
(8)In September 2021, the Company was the successful bidder for the fee interest in 690 Madison Avenue at the foreclosure of the asset, at which time the Company's outstanding principal and accrued interest balance were credited to our equity investment in the property. See Note 3, "Property Acquisitions" and Note 16, "Fair Value Measurements."
Preferred Equity Investments
As of September 30, 2021 and December 31, 2020, we held the following preferred equity investments with an aggregate weighted average current yield of 9.90% as of September 30, 2021 (dollars in thousands):
TypeSeptember 30, 2021
Future Funding
Obligations		September 30, 2021 Senior
Financing
September 30, 2021
Carrying Value (1)
December 31, 2020
Carrying Value (1)
Mandatory Redemption (2)
Preferred Equity (3)
$— $1,712,750 $159,218 $154,691 June 2022
Preferred Equity— 250,000 110,390 105,095 February 2027
Total Preferred Equity$— $1,962,750 $269,608 $259,786  
Allowance for loan loss — — — — 
Total$— $1,962,750 $269,608 $259,786 
(1)Carrying value is net of deferred origination fees.
(2)Represents contractual maturity, excluding any unexercised extension options.
(3)On October 31, 2021, HNA, through an affiliated entity, filed for Chapter 11 bankruptcy protection on account of its investment in 245 Park Avenue, together with another asset in Chicago. The Company will be contesting the filing, on the basis that the filing was done in bad faith and in violation of HNA's agreements with the Company.