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Debt and Preferred Equity Investments
 3 Months Ended
Mar. 31, 2022
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 three months ended March 31, 2022 and the twelve months ended December 31, 2021 (in thousands):
March 31, 2022December 31, 2021
Balance at beginning of year (1)
$1,088,723 $1,076,542 
Debt investment originations/fundings/accretion (2)
16,615 193,824 
Preferred equity investment originations/accretion (2)
8,937 13,220 
Redemptions/sales/syndications/equity ownership/amortization (3)
(6,405)(201,446)
Net change in loan loss reserves— 6,583 
Balance at end of period (1)
$1,107,870 $1,088,723 
(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 March 31, 2022 (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$26,088 $26,233 
L + 3.50%
$73,000 $73,000 
3.00%
$99,088 $— 4.25%2022 - 2023
Mezzanine Debt276,040 276,670 
L + 4.95% - 12.57%
450,799 459,865 
2.90% - 14.30%
726,839 4,700,426 6.98% 2022 - 2029
Preferred Equity— — —281,943 282,403 
6.50% - 11.00%
281,943 1,962,750 9.64% 2022 - 2027
Balance at end of period$302,128 $302,903 $805,742 $815,268 $1,107,870 $6,663,176 
(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 roll forward of our total allowance for loan losses for the three months ended March 31, 2022 and the twelve months ended December 31, 2021 (in thousands):
March 31, 2022December 31, 2021
Balance at beginning of year$6,630 $13,213 
Write-offs charged against the allowance— (6,583)
Balance at end of period (1)
$6,630 $6,630 
(1)As of March 31, 2022, 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 March 31, 2022 and December 31, 2021, all debt and preferred equity investments were performing in accordance with their respective terms, with the exception of two investments with a carrying value, net of reserves, of $223.1 million and $6.8 million, as discussed in the Debt Investments and Preferred Equity Investments tables further below.
No other financing receivables were 90 days past due as of March 31, 2022 and December 31, 2021.
The following table sets forth the carrying value of our debt and preferred equity investment portfolio by risk rating as of March 31, 2022 and December 31, 2021 (dollars in thousands):
Risk RatingMarch 31, 2022December 31, 2021
1 - Low Risk Assets - Low probability of loss
$517,330 $644,489 
2 - Watch List Assets - Higher potential for loss
583,650 437,344 
3 - High Risk Assets - Loss more likely than not6,890 6,890 
$1,107,870 $1,088,723 
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 March 31, 2022 (dollars in thousands):
As of March 31, 2022
Risk Rating
2022(1)
2021(1)
2020(1)
Prior(1)
Total
1 - Low Risk Assets - Low probability of loss
$— $142,264 $153,055 $222,011 $517,330 
2 - Watch List Assets - Higher potential for loss
— — 135,157 448,493 583,650 
3 - High Risk Assets - Loss more likely than not
— — — 6,890 6,890 
$— $142,264 $288,212 $677,394 $1,107,870 
(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 March 31, 2022 and December 31, 2021 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 $10.4 million and $10.5 million as of March 31, 2022 and December 31, 2021, respectively. The Company recorded no provisions for loan losses related to these financing receivables for the three months ended March 31, 2022 and 2021. All of these loans have a risk rating of 2 and were performing in accordance with their respective terms.
Debt Investments
    As of March 31, 2022 and December 31, 2021, we held the following debt investments with an aggregate weighted average current yield of 6.65% as of March 31, 2022 (dollars in thousands):
Loan TypeMarch 31, 2022
Future Funding
Obligations		March 31, 2022 Senior
Financing
March 31, 2022
Carrying Value (1)
December 31, 2021
Carrying Value (1)
Maturity
Date (2)
Fixed Rate Investments:
Mezzanine Loan$— $280,000 $44,182 $43,521 August 2022
Mortgage Loan— — 73,000 73,000 April 2023
Mezzanine Loan (3)
— 382,473 225,367 225,367 June 2023
Mezzanine Loan— 276,885 69,264 66,873 June 2023
Mezzanine Loan (4a)(5)
— 105,000 13,366 13,366 June 2024
Mezzanine Loan— 95,000 30,000 30,000 January 2025
Mezzanine Loan (6)
— 1,712,750 55,250 55,250 June 2027
Mezzanine Loan— 85,000 20,000 20,000 December 2029
Total fixed rate$— $2,937,108 $530,429 $527,377  
Floating Rate Investments:
Mezzanine Loan$— $275,000 $49,999 $49,998 April 2023
Mezzanine Loan4,624 181,536 37,824 37,511 July 2022
Mezzanine Loan (4b)(7)
— 1,115,000 135,157 133,735 April 2022
Mezzanine Loan3,761 54,000 8,238 8,050 May 2022
Mortgage and Mezzanine Loan18,142 — 40,161 34,874 December 2022
Mezzanine Loan33,685 137,783 30,749 30,802 May 2023
Total floating rate$60,212 $1,763,319 $302,128 $294,970  
Allowance for loan loss — — (6,630)(6,630)
Total$60,212 $4,700,427 $825,927 $815,717 
(1)Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees.
(2)Represents contractual maturity, excluding any extension options to the extent they have not been exercised as of the date of this filing.
(3)This loan was put on non-accrual in July 2020 and remains on non-accrual as of March 31, 2022. No investment income has been recognized subsequent to it being put on non-accrual. The Company is in discussions with the borrower.
(4)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.
(5)This loan went into default and was put on non-accrual in June 2020 and remains on non-accrual as of March 31, 2022. 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, in which we are not the primary beneficiary.
(6)The borrower under this mezzanine loan is an entity affiliated with HNA, which owns an equity interest in 245 Park Avenue. The borrower filed for bankruptcy protection on October 31, 2021, which the Company contested.
(7)In the second quarter of 2022, this loan was extended for two months to May 2022.
Preferred Equity Investments
As of March 31, 2022 and December 31, 2021, we held the following preferred equity investments with an aggregate weighted average current yield of 9.64% as of March 31, 2022 (dollars in thousands):
TypeMarch 31, 2022
Future Funding
Obligations		March 31, 2022 Senior
Financing
March 31, 2022
Carrying Value (1)
December 31, 2021
Carrying Value (1)
Mandatory Redemption (2)
Preferred Equity (3)
$— $1,712,750 $167,875 $160,772 June 2022
Preferred Equity— 250,000 114,068 112,234 February 2027
Total Preferred Equity$— $1,962,750 $281,943 $273,006  
Allowance for loan loss — — — — 
Total$— $1,962,750 $281,943 $273,006 
(1)Carrying value is net of deferred origination fees.
(2)Represents contractual redemption, 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 contested the filing, on the basis that the filing was done in bad faith and in violation of HNA's agreements with the Company, and is currently appealing the Bankruptcy court's ruling upholding the filing by HNA.