10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2016

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-14760

RAIT FINANCIAL TRUST

(Exact name of registrant as specified in its charter)

Maryland	23-2919819
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Two Logan Square, 100 N. 18th Street, 23rd Floor, Philadelphia, PA	19103
(Address of principal executive offices)	(Zip Code)

(215) 207-2100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes     ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes     ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  No

A total of 92,177,079 common shares of beneficial interest, par value $0.03 per share, of the registrant were outstanding as of November 7, 2016.

RAIT FINANCIAL TRUST

TABLE OF CONTENTS

		Page
	PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015	1
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015	2
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2016 and 2015	3
	Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2016	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	63
Item 4.	Controls and Procedures	63
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 6.	Exhibits	65
	Signatures	66

PART I—FINANCIAL INFORMATION

Item  1. Financial Statements

RAIT Financial Trust

Consolidated Balance Sheets

(Unaudited and dollars in thousands, except share and per share information)

	As of September 30, 2016			As of December 31, 2015
Assets
Investment in mortgages and loans:
Commercial mortgages, mezzanine loans, and preferred equity interests	$	1,373,615		$	1,623,583
Allowance for loan losses		(18,655	)		(17,097	)
Total investment in mortgages and loans, net (including $1,074,583 and $1,428,961 held by consolidated VIEs, respectively)		1,354,960			1,606,486
Investments in real estate, net of accumulated depreciation of $156,613 and $158,688, respectively (including $192,765 and $252,376 held by consolidated VIEs, respectively)		808,749			986,942
Cash and cash equivalents		36,019			87,581
Restricted cash		229,957			207,599
Accrued interest receivable		41,603			47,343
Other assets		81,546			67,566
Intangible assets, net of accumulated amortization of $19,308 and $13,234, respectively		23,165			28,864
Assets of discontinued operations (See Note 16)		1,306,532			1,383,547
Total assets	$	3,882,531		$	4,415,928
Liabilities and Equity
Indebtedness, net of unamortized discounts, premiums and deferred financing costs of $36,719 and $53,092, respectively (including $1,326,212 and $1,762,672 held by consolidated VIEs, respectively)		1,975,863		$	2,399,475
Accrued interest payable		10,464			8,595
Accounts payable and accrued expenses		20,082			22,557
Derivative liabilities		1,748			4,727
Deferred taxes, borrowers’ escrows and other liabilities		168,692			197,908
Liabilities of discontinued operations (see Note 16)		906,225			952,530
Total liabilities		3,083,074			3,585,792
Series D cumulative redeemable preferred shares, $0.01 par value per share, 4,000,000 shares authorized, 4,000,000 and 4,000,000 shares issued and outstanding, respectively		90,728			85,395
Equity:
Shareholders’ equity:
Preferred shares, $0.01 par value per share, 25,000,000 shares authorized;
7.75% Series A cumulative redeemable preferred shares, liquidation preference $25.00 per share, 8,069,288 shares authorized, 5,344,353 and 5,306,084 shares issued and outstanding, respectively		53			53
8.375% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share, 4,300,000 shares authorized, 2,340,969 and 2,340,969 shares issued and outstanding, respectively		23			23
8.875% Series C cumulative redeemable preferred shares, liquidation preference $25.00 per share, 3,600,000 shares authorized, 1,640,425 and 1,640,425 shares issued and outstanding, respectively		17			17
Series E cumulative redeemable preferred shares, $0.01 par value per share, 4,000,000 shares authorized		—			—
Common shares, $0.03 par value per share, 200,000,000 shares authorized 92,174,644 and 91,586,767 issued and outstanding, respectively, including  960,795 and 742,764 unvested restricted common share awards, respectively		2,766			2,748
Additional paid in capital		2,090,210			2,087,137
Accumulated other comprehensive income (loss)		(112	)		(4,699	)
Retained earnings (deficit)		(1,731,141	)		(1,680,751	)
Total shareholders’ equity		361,816			404,528
Noncontrolling interests - continuing operations		5,386			3,948
Noncontrolling interests - discontinued operations		341,527			336,265
Total noncontrolling interests		346,913			340,213
Total equity		708,729			744,741
Total liabilities and equity	$	3,882,531		$	4,415,928

The accompanying notes are an integral part of these consolidated financial statements.

1

RAIT Financial Trust

Consolidated Statements of Operations

(Unaudited and dollars in thousands, except share and per share information)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
Investment interest income	$	20,189		$	24,468		$	69,510		$	71,823
Investment interest expense		(8,512	)		(8,021	)		(26,957	)		(22,517	)
Net interest margin		11,677			16,447			42,553			49,306
Property income		29,614			29,968			89,335			94,401
Fee and other income		1,946			2,537			5,974			14,760
Total revenue		43,237			48,952			137,862			158,467
Expenses:
Interest expense		13,298			14,723			43,135			46,259
Real estate operating expense		14,635			14,991			43,810			47,804
Compensation expense		6,245			5,541			17,367			15,648
General and administrative expense		3,708			3,769			12,007			12,762
Acquisition expense		197			153			376			1,392
Provision for loan losses		1,533			1,850			4,202			5,850
Depreciation and amortization expense		11,466			10,482			39,273			34,622
Total expenses		51,082			51,509			160,170			164,337
Operating (Loss) Income		(7,845	)		(2,557	)		(22,308	)		(5,870	)
Interest and other income (expense), net		(70	)		(398	)		30			(1,035	)
Gains (losses) on assets		18,194			7,430			23,811			24,711
Gains (losses) on extinguishments of debt		(6	)		-			998			-
Asset impairment		(18,872	)		(7,250	)		(26,658	)		(7,250	)
Change in fair value of financial instruments		(1,375	)		620			(7,055	)		13,466
Income (loss) before taxes		(9,974	)		(2,155	)		(31,182	)		24,022
Income tax benefit (provision)		15,302			(23	)		18,051			(1,320	)
Income from continuing operations		5,328			(2,178	)		(13,131	)		22,702
Discontinued operations:
Income (loss) from discontinued operations		4,112			27,004			38,473			28,831
Net income (loss)		9,440			24,826			25,342			51,533
(Income) loss allocated to preferred shares		(8,715	)		(8,303	)		(25,850	)		(24,383	)
(Income) loss allocated to noncontrolling interests		(729	)		(23,055	)		(24,920	)		(21,823	)
Net income (loss) allocable to common shares	$	(4	)	$	(6,532	)	$	(25,428	)	$	5,327
Amount attributable to common shares
Net income (loss) available to common shares from continuing operations	$	(2,048	)	$	(10,009	)	$	(35,526	)	$	24
Net income (loss) available to common shares from discontinued operations		2,044			3,477			10,098			5,303
Net income (loss)	$	(4	)	$	(6,532	)	$	(25,428	)	$	5,327
Earnings (loss) per share-Basic:
Earnings (loss) per share from continuing operations	$	(0.02	)	$	(0.11	)	$	(0.39	)	$	-
Earnings (loss) per share from discontinued operations	$	0.02		$	0.04		$	0.11		$	0.06
Earnings (loss) per share-Basic	$	—		$	(0.07	)	$	(0.28	)	$	0.06
Weighted-average shares outstanding-Basic		91,201,784			87,110,958			91,137,041			83,799,244
Earnings (loss) per share-Diluted:
Earnings (loss) per share from continuing operations	$	(0.02	)	$	(0.11	)	$	(0.39	)	$	-
Earnings (loss) per share from discontinued operations	$	0.02		$	0.04		$	0.11		$	0.06
Earnings (loss) per share-Diluted	$	—		$	(0.07	)	$	(0.28	)	$	0.06
Weighted average shares outstanding-Diluted		91,201,784			87,110,958			91,137,041			85,645,609

The accompanying notes are an integral part of these consolidated financial statements.

2

RAIT Financial Trust

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited and dollars in thousands)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Net income (loss)	$	9,440		$	24,826		$	25,342		$	51,533
Other comprehensive income (loss):
Change in fair value of interest rate hedges		3			(248	)		(133	)		(430	)
Realized (gains) losses on interest rate hedges reclassified to earnings		785			3,831			4,824			13,196
Total other comprehensive income from continuing operations		788			3,583			4,691			12,766
Discontinued operations:
Other comprehensive income (loss) from discontinued operations		468			—			(719	)		—
Total other comprehensive income		1,256			3,583			3,972			12,766
Comprehensive income (loss) before allocation to noncontrolling interests		10,696			28,409			29,314			64,299
Allocation to noncontrolling interests - net (income) loss		(729	)		(23,055	)		(24,920	)		(21,823	)
Allocation to noncontrolling interests - other comprehensive (income) loss		(396	)	—				615		—
Comprehensive income (loss)	$	9,571		$	5,354		$	5,009		$	42,476

The accompanying notes are an integral part of these consolidated financial statements.

3

RAIT Financial Trust

Consolidated Statement of Changes in Equity

(Unaudited and dollars in thousands, except share information)

	Preferred Shares— Series A		ParValue Preferred Shares— Series A		Preferred Shares— Series B		Par Value Preferred Shares— Series B		Preferred Shares— Series C		Par Value Preferred Shares— Series C		Common Shares			Par Value Common Shares			Additional Paid In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Deficit)			Total Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance, December 31, 2015		5,306,084	$	53		2,340,969	$	23		1,640,425	$	17		91,586,767		$	2,748		$	2,087,137		$	(4,699	)	$	(1,680,751	)	$	404,528		$	340,213		$	744,741
Net income (loss)	—		—		—		—		—		—		—			—			—			—				422			422			24,920			25,342
Preferred shares issued, net		38,269	—		—		—		—		—		—			—				610		—			—				610		—				610
Preferred dividends	—		—		—		—		—		—		—			—			—			—				(20,517	)		(20,517	)	—				(20,517	)
Preferred Series D discount amortization	—		—		—		—		—		—		—			—			—			—				(5,333	)		(5,333	)	—				(5,333	)
Common dividends declared	—		—		—		—		—		—		—			—			—			—				(24,962	)		(24,962	)	—				(24,962	)
Other comprehensive income (loss), net	—		—		—		—		—		—		—			—			—				4,587		—				4,587			(615	)		3,972
Share-based compensation	—		—		—		—		—		—			877,814			26			2,841		—			—				2,867		—				2,867
Issuance of noncontrolling interests	—		—		—		—		—		—		—			—			—			—			—			—				689			689
Distribution to noncontrolling interests	—		—		—		—		—		—		—			—				—		—			—				—			(23,248	)		(23,248	)
Derecognition of noncontrolling interests	—		—		—		—		—		—		—			—				—		—			—				—			4,954			4,954
Common shares activity related to equity compensation	—		—		—		—		—		—			(296,745	)		(8	)		(378	)	—			—				(386	)	—				(386	)
Common shares issued, net	—		—		—		—		—		—			6,808			—			—		—			—				—		—				—
Balance, September  30, 2016		5,344,353	$	53		2,340,969	$	23		1,640,425	$	17		92,174,644		$	2,766		$	2,090,210		$	(112	)	$	(1,731,141	)	$	361,816		$	346,913		$	708,729

The accompanying notes are an integral part of these consolidated financial statements.

4

RAIT Financial Trust

Consolidated Statements of Cash Flows

(Unaudited and dollars in thousands)

	For the Nine Months Ended September 30,
	2016			2015
Operating activities:
Net income (loss)	$	25,342		$	51,533
Adjustments to reconcile net income (loss) to cash flow from operating activities:
Provision for loan losses		4,202			5,850
Share-based compensation expense		3,673			3,553
Depreciation and amortization		66,332			51,190
Amortization of deferred financing costs and debt discounts		16,202			13,103
Deferral of loan origination costs, net		(1,537	)		(2,716	)
Amortization of above/below market leases		(1,336	)		(44	)
(Gains) losses on assets		(56,074	)		(24,711	)
(Gains) losses on extinguishment of debt		(440	)		—
TSRE financing extinguishment expenses		—			23,219
(Gains) on IRT merger with TSRE		(732	)		(64,012	)
Asset impairment		26,658			7,250
Change in fair value of financial instruments		7,055			(13,466	)
Provision (benefit) for deferred taxes		(18,090	)		851
Changes in assets and liabilities:
Decrease (increase) in accrued interest receivable		5,702			(2,305	)
Decrease (increase) in other assets		(4,567	)		482
Increase in accrued interest payable		3,300			3,409
(Decrease) increase in accounts payable and accrued expenses		516			(19,453	)
Increase in other liabilities		1,415			3,660
Origination of conduit loans		(13,800	)		(317,154	)
Sales of conduit loans		35,177			339,542
Net conduit loans (originated) sold		21,377			22,388
Cash flows provided by (used in) operating activities		98,998			59,781
Investing activities:
Proceeds from sales or repayments of other securities		—			31,241
Origination of loans for investment		(82,416	)		(362,574	)
Principal repayments on loans		308,254			169,611
Investments in real estate		(23,613	)		(44,079	)
IRT's acquisition of TSRE, net of cash acquired		—			(137,094	)
Proceeds from the disposition of real estate		212,580			40,089
(Increase) decrease in restricted cash		(56,882	)		6,454
Cash flows provided by (used in) investing activities		357,923			(296,352	)
Financing activities:
Repayments on secured credit facilities and loans payable on real estate		(243,854	)		(273,872	)
Proceeds from secured credit facilities, term loans and loans payable on real estate		199,480			488,725
Repayments and repurchase of CDO notes payable and floating rate transactions		(465,622	)		(222,955	)
Proceeds from issuance of senior notes from floating rate CMBS transactions		22,559			181,215
Repurchase of convertible notes and senior notes		(47,614	)		—
Repayments of senior secured notes		(6,000	)		(6,000	)
Net proceeds (repayments) related to conduit loan repurchase agreements		(30,153	)		(27,242	)
Net proceeds (repayments) related to floating rate loan repurchase agreements		102,635			126,389
Proceeds from issuance of joint venture interests accounted for as indebtedness		24,796			—
Distribution to noncontrolling interests		(23,246	)		(15,577	)
Issuance of noncontrolling interests		689			—
TSRE financing extinguishment expenses		—			(23,219	)
Payments for deferred costs and convertible senior note hedges		(2,903	)		(10,935	)
Preferred share issuance, net of costs incurred		610			13,061
Common share issuance, net of costs incurred		(1,192	)		41,657
Distributions paid to preferred shareholders		(22,643	)		(19,445	)
Distributions paid to common shareholders		(24,930	)		(44,305	)
Cash flows (used in) provided by financing activities		(517,388	)		207,497
Net change in cash and cash equivalents		(60,467	)		(29,074	)
'Net change in cash and cash equivalents from discontinued operations		(8,905	)		2,181
'Net change in cash and cash equivalents from continuing operations		(51,562	)		(31,255	)
Cash and cash equivalents at the beginning of the period		87,581			106,963
Cash and cash equivalents at the end of the period	$	36,019		$	75,708

5

The accompanying notes are an integral part of these consolidated financial statements.

6

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

NOTE 1: THE COMPANY

RAIT Financial Trust is a multi-strategy commercial real estate company that is a self-managed and self-advised Maryland real estate investment trust, or REIT.  References to “RAIT”, “we”, “us”, and “our” refer to RAIT Financial Trust and its subsidiaries, unless the context otherwise requires. We invest in and manage a portfolio of real estate-related assets, including direct ownership of real estate properties, and provide a comprehensive set of debt financing options to the real estate industry. We have used our vertically integrated platform to originate commercial real estate loans, acquire commercial real estate properties and invest in, manage and service commercial real estate assets.

We finance a substantial portion of our investments through borrowing and securitization strategies seeking to match the maturities and terms of our financings with the maturities and terms of those investments, and to mitigate interest rate risk through derivative instruments.

On September 27, 2016, we entered into a securities and asset purchase agreement, or the IRT internalization agreement, with one of our consolidated variable interest entities, Independence Realty Trust, Inc. or IRT, pursuant to which IRT will complete a management internalization, or the IRT management internalization, and separation from us.  The IRT management internalization consists of two parts: (i) the acquisition of Independence Realty Advisors, LLC, or the IRT advisor, which is our subsidiary and IRT’s external advisor, and (ii) the acquisition of certain assets and the assumption of certain liabilities relating to our multifamily property management business which we refer to as RAIT Residential, including property management contracts relating to apartment properties owned by ourselves, IRT, and third parties.  The purchase price to be paid by IRT for the IRT management internalization is $43.0 million, subject to certain pro rations at closing.  The internalization agreement provides that the closing of the management internalization will occur no earlier than December 20, 2016.  As part of the same agreement, we also agreed to sell up to all of the 7,269,719 shares of IRT’s common stock owned by certain of our subsidiaries, subject to market conditions.  See Note 16: Discontinued Operations and Note 17: Subsequent Events for further information.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with U.S. generally accepted accounting principles, or GAAP. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2015 included in our Annual Report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position and consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

The Consolidated Statement of Operations for the nine-month period ended September 30, 2016 includes the impact of correcting the reporting of certain activity that occurred in the three-month period ended March 31, 2016. Specifically, the correction adjusts a clerical error made in the determination of the amount of investment interest expense by increasing investment interest expense and decreasing interest expense by $1,424 for the three-month period ended March 31, 2016. This correction had no impact to any other periods. We will also correct this error in our Consolidated Statement of Operations for the three months ended March 31, 2016 when it is presented in our filing on Form 10-Q for the quarter ended March 31, 2017.

We evaluated this correction and determined, based on quantitative and qualitative factors, that the change was not material to the consolidated financial statements taken as a whole for any previously filed consolidated financial statements.

As of September 30, 2016, certain entities or distinguishable components of RAIT have been presented as discontinued operations. See Note 16: Discontinued Operations for further information.

6

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

b. Principles of Consolidation

The consolidated financial statements reflect our accounts and the accounts of our majority-owned and/or controlled subsidiaries. We also consolidate entities that are variable interest entities, or VIEs, where we have determined that we are the primary beneficiary of such entities. The portions of these entities that we do not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements. All intercompany accounts and transactions have been eliminated in consolidation.

Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 810, “Consolidation”, the determination of whether to consolidate a VIE is based on the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance together with either the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. We define the power to direct the activities that most significantly impact the VIE’s economic performance as the ability to buy, sell, refinance, or recapitalize assets or entities, and solely control other material operating events or items of the entity. For our commercial mortgages, mezzanine loans, and preferred equity investments, certain rights we hold are protective in nature and would preclude us from having the power to direct the activities that most significantly impact the VIE’s economic performance. Assuming both criteria are met, we would be considered the primary beneficiary and would consolidate the VIE. We will continually assess our involvement with VIEs and consolidate the VIEs when we are the primary beneficiary. During the second quarter of 2016, we began presenting our floating rate securitizations as VIEs and corrected the prior period disclosure.  In addition, we began presenting assets and liabilities of consolidated VIEs in a parenthetical disclosure on the consolidated balance sheets.  As of September 30, 2016, we corrected the parenthetical disclosure on the consolidated balance sheet as of December 31, 2015, as certain indebtedness that eliminated in consolidation was excluded from this disclosure.  After adjusting for liabilities related to discontinued operations, this decreased the amount of liabilities held by variable interest entities by $481,865.  See Note 8: Variable Interest Entities for additional disclosures pertaining to VIEs and Note 16: Discontinued Operations for additional disclosures pertaining to discontinued operations.

For entities that we do not consolidate, we account for our investment in them either under the equity method pursuant to ASC Topic 323, “Investments-Equity Method and Joint Ventures” or cost method pursuant to ASC Topic 325, “Investments – Other”. During the nine months ended September 30, 2016, we wrote off $864 of our retail property management subsidiary’s investment in an entity because it no longer held the investment. The charge was reported in asset impairment in the consolidated statements of operations.

c. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The items that include significant estimates are fair value of financial instruments and allowance for loan losses. Actual results could differ from those estimates.

7

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

d. Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and highly liquid investments with maturities of three months or less when purchased.  Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250 per institution.  We mitigate credit risk by placing cash and cash equivalents with major financial institutions.  To date, we have not experienced any losses on cash and cash equivalents.

e. Restricted Cash

Restricted cash consists primarily of tenant escrows and borrowers’ funds held by us to fund certain expenditures or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans.  As of September 30, 2016 and December 31, 2015, we had $126,896 and $160,453, respectively, of tenant escrows and borrowers’ funds.

Restricted cash also includes proceeds from the issuance of securitization notes that are restricted for the purpose of funding additional investments in securities subsequent to the balance sheet date.  As of September 30, 2016 and December 31, 2015, we had $103,061 and $47,146, respectively, of restricted cash held by securitizations.

f. Investments in Commercial Mortgage Loans, Mezzanine Loans and Preferred Equity Interests

We invest in commercial mortgage loans, mezzanine loans and preferred equity interests. We account for our investments in commercial mortgage loans, mezzanine loans and preferred equity interests at amortized cost. The carrying value of these investments is adjusted for origination discounts/premiums, nonrefundable fees and direct costs for originating loans which are amortized into income on a level yield basis over the terms of the loans.

g. Allowance for Loan Losses, Impaired Loans and Non-accrual Status

We maintain an allowance for loan losses on our investments in commercial mortgage loans, mezzanine loans and preferred equity interests. Management’s periodic evaluation of the adequacy of the allowance is based upon expected and inherent risks in the portfolio, the estimated value of underlying collateral, and current economic conditions. The credit quality of our loans is monitored via quantitative and qualitative metrics.  Quantitatively we evaluate items such as the current debt service coverage ratio and annual net operating income of the underlying property.  Qualitatively we evaluate items such as recent operating performance of the underlying property and history of the borrower’s ability to provide financial support.  These items together are considered in developing our view of each loan’s risk rating which are categorized as either watchlist/impaired or satisfactory.  Management reviews loans for impairment and establishes specific reserves when a loss is probable under the provisions of FASB ASC Topic 310, “Receivables.” A loan is impaired when it is probable that we may not collect all principal and interest payments according to the contractual terms. As part of the detailed loan review, we consider many factors about the specific loan, including payment history, asset performance, borrower’s financial capability and other characteristics. Management evaluates loans for non-accrual status each reporting period. A loan is placed on non-accrual status when the loan payment deficiencies exceed 90 days unless it is well secured and in the process of collection, or if the collection of principal and interest in full is not probable. Payments received for non-accrual loans are applied to accrued interest receivable. Past due interest is recognized on non-accrual loans when they are removed from non-accrual status and are making current interest payments. The allowance for loan losses is increased by the provision for loan losses and decreased by charge-offs (net of recoveries). We charge off a loan when we determine that all commercially reasonable means of recovering the loan balance have been exhausted.  This may occur at a variety of times, including when we receive cash or other assets in a pre-foreclosure sale or take control of the underlying collateral in full satisfaction of the loan upon foreclosure. We consider circumstances such as these to indicate that the loan collection process has ceased and that a loan is uncollectible.

h. Investments in Real Estate

Investments in real estate are shown net of accumulated depreciation. We capitalize those costs that have been determined to improve the real property and depreciate those costs on a straight-line basis over the useful life of the asset. We depreciate real property using the following useful lives: buildings and improvements—30 to 40 years; furniture, fixtures, and equipment—5 to 10 years; and tenant improvements—shorter of the lease term or the life of the asset. Costs for ordinary maintenance and repairs are charged to expense as incurred.

8

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

Acquisitions of real estate assets and any related intangible assets are recorded initially at fair value under FASB ASC Topic 805, “Business Combinations.” Fair value is determined by management based on market conditions and inputs at the time the asset is acquired. The fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases for acquired in-place leases and the value of tenant relationships, based in each case on their fair values. Purchase accounting is applied to assets and liabilities associated with the real estate acquired. Transaction costs and fees incurred related to acquisitions are expensed as incurred.

Upon the acquisition of properties, we estimate the fair value of acquired tangible assets (consisting of land, building and improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases and tenant relationships), and assumed debt at the date of acquisition, based on the evaluation of information and estimates available at that date. In determining the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the differences between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease. The capitalized above-market lease values and the capitalized below-market lease values are amortized as an adjustment to property income over the lease term.

The aggregate value of in-place leases is determined by evaluating various factors, including an estimate of carrying costs during the expected lease-up periods, current market conditions and similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, legal and other related costs. The value assigned to this intangible asset is amortized over the assumed lease up period.

Management reviews our investments in real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on an estimate of the future undiscounted cash flows (excluding interest charges) expected to result from the long-lived asset’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a long-lived asset, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property.

i. Revenue Recognition

1) Interest income—We recognize interest income from investments in commercial mortgage loans, mezzanine loans, and preferred equity interests on a yield to maturity basis. Certain of our commercial mortgage loans, mezzanine loans and preferred equity interests provide for the accrual of interest at specified rates which differ from current payment terms. Interest income is recognized on such loans at the accrual rate subject to management’s determination that accrued interest and outstanding principal are ultimately collectible. Management will cease accruing interest on these loans when it determines that the interest income may not be collectible based on the ultimate value of the underlying collateral using discounted cash flow models and market based assumptions. The accrued interest receivable associated with these loans as of September 30, 2016 and December 31, 2015 was $28,782 and $34,132, respectively.  These loans are considered to be impaired when the total amount owed exceeds the estimated value of the underlying collateral.  None of these loans were considered to be impaired as of September 30, 2016 and December 31, 2015.

Origination fees and direct loan origination costs on our investments in commercial mortgages, mezzanine loans and preferred equity interests are deferred and amortized to investment interest income, using the effective interest method, over the contractual life of the underlying loan security or loan, in accordance with FASB ASC Topic 310, “Receivables.”

2) Property income—We generate property income from tenant rent and other tenant-related activities at our consolidated real estate properties. For multi-family real estate properties, property income is recorded when due from residents and recognized monthly as it is earned and realizable, under lease terms which are generally for periods of one year or less. For retail and office real estate properties, property income is recognized on a straight-line basis from the later of the date of the commencement of the lease or the date of acquisition of the property subject to existing leases, which averages minimum rents over the terms of the leases. For retail and office real estate properties, leases also typically provide for

9

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

tenant reimbursement of a portion of common area maintenance and other operating expenses to the extent that a tenant’s pro rata share of expenses exceeds a base year level set in the lease.

3) Fee and other income—We generate fee and other income through our various subsidiaries by (a) funding conduit loans for sale into unaffiliated commercial mortgage-backed securities, or CMBS, securitizations, (b) providing or arranging to provide financing to our borrowers, (c) providing ongoing asset management services to investment portfolios under cancelable management agreements, and (d) providing property management services to third parties. We recognize revenue for these activities when the fees are fixed or determinable, are evidenced by an arrangement, collection is reasonably assured and the services under the arrangement have been provided. While we may receive asset management fees when they are earned, we eliminate earned asset management fee income from securitizations while such securitizations are consolidated. During the three and nine months ended September 30, 2016, we earned $340 and $1,118, respectively, of asset management fees, which were eliminated as they were associated with consolidated securitizations.  During the three and nine months ended September 30, 2015, we earned $427 and $1,485, respectively, of asset management fees, which were eliminated as they were associated with consolidated securitizations.

Also, during the three and nine months ended September 30, 2016 we earned $1,727 and $5,141 of asset management fees, respectively, and $206 and $350 of incentive fees, respectively, related to our advisory agreement with IRT.  During the three and nine months ended September 30, 2015 we earned $1,259 and $3,306 of asset management fees, respectively, and $0 and $425 of incentive fees, respectively, related to our advisory agreement with IRT. During the three and nine months ended September 30, 2016 we also earned $1,219 and $3,710, respectively, of property management and leasing fees related to our property management agreements with IRT’s properties.   During the three and nine months ended September 30, 2015 we also earned $861 and $2,381, respectively, of property management and leasing fees related to our property management agreements with IRT’s properties. As we consolidate IRT, these fees are eliminated in consolidation.

j. Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

• Level 1: Valuations are based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are equity securities listed in active markets. As such, valuations of these investments do not entail a significant degree of judgment.

• Level 2: Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

• Level 3: Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.  

10

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of investment, whether the investment is new, whether the investment is traded on an active exchange or in the secondary market, and the current market condition. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that management believes market participants would use in pricing the asset or liability at the measurement date. We use prices and inputs that management believes are current as of the measurement

date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be transferred from Level 1 to Level 2 or Level 2 to Level 3.

Many financial instruments have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that buyers in the market are willing to pay for an asset. Ask prices represent the lowest price that sellers in the market are willing to accept for an asset. For financial instruments whose inputs are based on bid-ask prices, we do not require that fair value always be a predetermined point in the bid-ask range. Our policy is to allow for mid-market pricing and adjusting to the point within the bid-ask range that results in our best estimate of fair value.

Fair value for certain of our Level 3 financial instruments is derived using internal valuation models. These internal valuation models include discounted cash flow analyses developed by management using current interest rates, estimates of the term of the particular instrument, specific issuer information and other market data for securities without an active market. In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, the impact of our own credit spreads is also considered when measuring the fair value of financial assets or liabilities, including derivative contracts. Where appropriate, valuation adjustments are made to account for various factors, including bid-ask spreads, credit quality and market liquidity. These adjustments are applied on a consistent basis and are based on observable inputs where available. Management’s estimate of fair value requires significant management judgment and is subject to a high degree of variability based upon market conditions, the availability of specific issuer information and management’s assumptions.

k. Investments in Securities

During the first quarter of 2015, we sold all our remaining investments in securities with an aggregate fair value of $31,412 and we had no investments in securities as of September 30, 2016 and December 31, 2015.

l. Transfers of Financial Assets

We account for transfers of financial assets under FASB ASC Topic 860, “Transfers and Servicing”, as either sales or financings.  Transfers of financial assets that result in sales accounting are those in which (1) the transfer legally isolates the transferred assets from the transferor, (2) the transferee has the right to pledge or exchange the transferred assets and no condition both constrains the transferee’s right to pledge or exchange the assets and provides more than a trivial benefit to the transferor, and (3) the transferor does not maintain effective control over the transferred assets.  If the transfer does not meet these criteria, the transfer is accounted for as a financing.  Financial assets that are treated as sales are removed from our accounts with any realized gain (loss) reflected in earnings during the period of sale.  Financial assets that are treated as financings are maintained on the balance sheet with proceeds received from the legal transfer reflected as securitized borrowings or security-related receivables.

m. Deferred Financing Costs

Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method.

11

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

n. Intangible Assets

Intangible assets on our consolidated balance sheets represent identifiable intangible assets acquired in business acquisitions. We amortize identified intangible assets to expense over their estimated lives using the straight-line method. We evaluate intangible assets for impairment as events and circumstances change, in accordance with FASB ASC Topic 360, “Property, Plant, and Equipment.” The gross carrying amount for our customer relationships was $14,997 and $19,149 as of September 30, 2016 and December 31, 2015, respectively. The gross carrying amount for our customer relationships has decreased as $4,151 of these assets became fully amortized during the nine months ended September 30, 2016, $2,552 of which was due to the acceleration of amortization as a result of the cancellation of two customer relationships. The gross carrying amount for our in-place leases, above market leases, and ground lease was $25,976 and $23,047 as of September 30, 2016 and December 31, 2015, respectively. The gross carrying amount for Urban Retail’s trade name was $1,500 as of September 30, 2016 and December 31, 2015. The accumulated amortization for our intangible assets was $19,308 and $13,234 as of September 30, 2016 and December 31, 2015, respectively. We recorded amortization expense of $2,333 and $1,700 for the three months ended September 30, 2016 and 2015, respectively, and $10,105 and $5,707 for the nine months ended September 30, 2016 and 2015, respectively. Based on the intangible assets identified above, we expect to record amortization expense of intangible assets of $2,045 for the remainder of 2016, $5,327 for 2017, $3,605 for 2018, $3,023 for 2019, $2,528 for 2020 and $6,638 thereafter.  

o. Goodwill

Goodwill on our consolidated balance sheet represented the amounts paid in excess of the fair value of the net assets acquired from business acquisitions accounted for under FASB ASC Topic 805, “Business Combinations.” Pursuant to FASB ASC Topic 350, “Intangibles-Goodwill and Other”, goodwill is not amortized to expense but rather is analyzed for impairment. We evaluate goodwill for impairment on an annual basis and as events and circumstances change, in accordance with FASB ASC Topic 350. As of September 30, 2016 and December 31, 2015, we have $8,854 of goodwill that is included in Other Assets in the accompanying consolidated balance sheets.  

p. Income Taxes

RAIT, Taberna Realty Finance Trust, or TRFT, and IRT have each elected to be taxed as a REIT and to comply with the related provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. Accordingly, we generally will not be subject to U.S. federal income tax to the extent of our dividends to shareholders and as long as certain asset, income and share ownership tests are met. If we were to fail to meet these requirements, we would be subject to U.S. federal income tax, which could have a material adverse impact on our results of operations and amounts available for dividends to our shareholders. Management believes that all of the criteria to maintain RAIT’s, TRFT’s, and IRT’s REIT qualification have been met for the applicable periods, but there can be no assurance that these criteria will continue to be met in subsequent periods.  

We maintain various taxable REIT subsidiaries, or TRSs, which may be subject to U.S. federal, state and local income taxes and foreign taxes. Current and deferred taxes are provided on the portion of earnings (losses) recognized by us with respect to our interest in domestic TRSs. Deferred income tax assets and liabilities are computed based on temporary differences between our GAAP consolidated financial statements and the federal and state income tax basis of assets and liabilities as of the consolidated balance sheet date. We evaluate the realizability of our deferred tax assets (e.g., net operating loss and capital loss carryforwards) and recognize a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of our deferred tax assets will not be realized. When evaluating the realizability of our deferred tax assets, we consider estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires management to forecast our business and general economic environment in future periods. Changes in estimate of deferred tax asset realizability, if any, are included in income tax expense on the consolidated statements of operations.

Our TRS entities generate taxable revenue from advisory fees for services provided to IRT and collateral management fees from consolidated securitizations. In consolidation, these fees are eliminated as IRT and securitizations are included in the consolidated group. Nonetheless, all income taxes are expensed and are paid by the TRSs in the year in which the revenue is received. These income taxes are not eliminated when the related revenue is eliminated in consolidation.

12

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The TRS entities may be subject to tax laws that are complex and potentially subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws. Actual income taxes paid may vary from estimates depending upon changes in income tax laws, actual results of operations, and the final audit of tax returns by taxing authorities. Tax assessments may arise several years after tax returns have been filed. We review the tax balances of our TRS entities quarterly and, as new information becomes available, the balances are adjusted as appropriate.

During the three and nine months ended September 30, 2016, we recognized a deferred tax benefit of $15,302 related to the release of a valuation allowance on our deferred tax assets due to projected taxable income at our TRS entities emanating from the IRT internalization agreement described in Note 1: The Company. We expect to utilize this deferred tax benefit upon the closing of the IRT management internalization, which is expected to occur in December of 2016 as described in Note 16: Discontinued Operations.

q. Recent Accounting Pronouncements

Adopted within these Financial Statements

In February 2015, the FASB issued an accounting standard classified under FASB ASC Topic 810, “Consolidation”. This accounting standard amends the consolidation analysis required under GAAP and requires management to reevaluate all previous consolidation conclusions. This standard considers limited partnerships to be VIEs, unless the limited partners have either substantive kick-out or participating rights. The presumption that a general partner should consolidate a limited partnership has also been eliminated. The standard amends the effect that fees paid to a decision maker or service provider have on the consolidation analysis, as well as amends how variable interests held by a reporting entity’s related parties affect the consolidation conclusion. This standard also clarifies how to determine whether equity holders as a group have power over an entity. This standard was effective for interim and annual reporting periods beginning on or after December 15, 2015, with early adoption permitted. The adoption of this accounting standard did not have an impact on our previous conclusions with respect to the entities consolidated in our consolidated financial statements.

In April 2015, the FASB issued an accounting standard classified under FASB ASC Topic 835, “Interest”. This accounting standard amends existing guidance to change reporting requirements for debt issuance costs by requiring debt issuance costs to be presented on the balance sheet as a direct deduction from the debt liability. This standard was effective for interim and annual reporting periods beginning on or after December 15, 2015, with an early adoption permitted. Retrospective application to prior periods is required. The adoption of this accounting standard resulted in the reclassification of $31,368 of deferred costs, net of $33,769 of accumulated amortization, as of December 31, 2015 to total indebtedness on our consolidated balance sheet.

In September 2015, the FASB issued an accounting standard classified under FASB ASC Topic 805, “Business Combinations”.  This accounting standard amends existing guidance related to measurement period adjustments by requiring the adjustments to be recognized prospectively with disclosure of the impact of the adjustments had they been applied previously.  This standard was effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted.  As this standard only applies to measurement period adjustments that occur after the effective date, this standard did not have a material impact on our consolidated financial statements.

Not Yet Adopted Within These Financial Statements

In May 2014, the FASB issued an accounting standard classified under FASB ASC Topic 606, “Revenue from Contracts with Customers”. This accounting standard generally replaces existing guidance by requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This accounting standard applies to all contracts with customers, except those that are within the scope of other Topics in the FASB ASC. During 2016, the FASB issued three amendments to this accounting standard which provide further clarification to this accounting standard. These standards amending FASB ASC Topic 606 are currently effective for annual reporting periods beginning after December 15, 2017. Management is currently evaluating the impact that these standards may have on our consolidated financial statements.

In January 2016, the FASB issued an accounting standard classified under FASB ASC Topic 825, “Financial Instruments”. This accounting standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.  Among other things, the amendment (i) eliminates certain disclosure requirements for financial instruments measured at amortized

13

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

cost; (ii) requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) requires separate presentation, in other comprehensive income, of the change in fair value of a liability, when the fair value option has been elected, resulting from a change in the instrument-specific credit risk; and (iv) requires separate presentation of financial instruments by measurement category and form.  This standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted for the separate presentation of changes in fair value due to changes in instrument-specific credit risk. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In February 2016, the FASB issued an accounting standard classified under FASB ASC Topic 842, “Leases”.  This accounting standard amends lease accounting by requiring the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases on the balance sheet and disclosing key information about leasing arrangements.  This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years.  Early application of the amendments in this standard is permitted. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 815, “Derivatives and Hedging”.  This accounting standard clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met.  This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.  Management does not expect this standard to have a significant impact on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 815, “Derivatives and Hedging”. This accounting standard clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts.  This accounting standard clarifies what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative.  Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks.  This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period. Management does not expect this standard to have a significant impact on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 718, “Compensation – Stock Compensation”.  This accounting standard simplifies several aspects of the accounting for share-based payment award transactions, including: (i) income tax consequences; (ii) classification of awards as either equity or liabilities; and (iii) classification on the statement of cash flows.  This standard is effective for annual periods beginning after December 15, 2016, and interim period within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.  

In June 2016, the FASB issued an accounting standard classified under FASB ASC Topic 326, “Financial Instruments-Credit Losses”.  The amendments in this standard provide an approach based on expected losses to estimate credit losses on certain types of financial instruments.  The amendments also modify the impairment model for available for sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  The amendments in this standard expand the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses.  In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.  This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Management is currently evaluating the impact that this standard will have on our consolidated financial statements.

In August 2016, the FASB issued an accounting standard classified under FASB ASC Topic 230, “Statement of Cash Flows”.  This accounting standard provides guidance on eight specific cash flow issues; (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the

14

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

effective interest rate of the borrowing; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies; including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions; and (viii) separately identifiable cash flows and application of the predominance principle.  The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  Management is currently evaluating the impact that this standard may have on our consolidated statement of cash flows.

In October 2016, the FASB issued an accounting standard classified under FASB ASC Topic 740, “Income Taxes”.  The amendments in this accounting standard provide that the current and deferred income tax consequences of an intra-entity transfer of an asset other than inventory should be recognized when the transfer occurs rather than when the asset has been sold to an outside party.   Two common examples of assets included in the scope of this accounting standard are intellectual property and property, plant, and equipment.  The amendments in this standard are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods.  Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued.  The amendments in this accounting standard should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In October 2016, the FASB issued an accounting standard classified under FASB ASC Topic 810, “Consolidation”.  The amendments in this accounting standard provide guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE.  The amendments in this accounting standard do not change the characteristics of a primary beneficiary in current GAAP.  A primary beneficiary of a VIE has both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.  If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a VIE), the amendments in this accounting standard require that the reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interest in a VIE and, on a proportionate basis, its indirect variable interest in a VIE held through related parties, including related parties that are under common control with the reporting entity.  If after performing that assessment, a reporting entity that is the single decision maker of a VIE concludes that it does not have the characteristics of a primary beneficiary, the amendments continue to require that the reporting entity evaluate whether it and one or more of its related parties under common control, as a group, have the characteristics of a primary beneficiary.  The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

NOTE 3: INVESTMENTS IN LOANS

Investments in Commercial Mortgage Loans, Mezzanine Loans, and Preferred Equity Interests

The following table summarizes our investments in commercial mortgage loans, mezzanine loans and preferred equity interests as of September 30, 2016:

	Unpaid Principal Balance			Unamortized (Discounts) Premiums			Carrying Amount			Number of Loans		Weighted- Average Coupon (1)			Range of Maturity Dates (2)
Commercial Real Estate (CRE)
Commercial mortgage loans (3)	$	1,228,732		$	(902	)	$	1,227,830			100		5.7	%	Oct. 2016 - Dec. 2025
Mezzanine loans		110,055			(219	)		109,836			34		9.3	%	Oct. 2016 - Jun. 2027
Preferred equity interests		36,828			(1	)		36,827			14		7.2	%	Jan. 2017 - Jan. 2029
Total CRE		1,375,615			(1,122	)		1,374,493			148		6.0	%
Deferred fees, net		(878	)		-			(878	)
Total	$	1,374,737		$	(1,122	)	$	1,373,615

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RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

(1) Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

(2) Does not include the maturity dates of four loans all of which had maturity dates prior to September 30, 2016 and have been identified as impaired.  These loans are 90 days or more past due.   

(3) Commercial mortgage loans includes three conduit loans with an unpaid principal balance and carrying amount of $27,570, a weighted-average coupon of 4.8% and maturity dates ranging from June 2025 through December 2025. These commercial mortgage loans are accounted for as loans held for sale.    

The following table summarizes our investments in commercial mortgage loans, mezzanine loans and preferred equity interests as of December 31, 2015:

	Unpaid Principal Balance			Unamortized (Discounts) Premiums			Carrying Amount			Number of Loans		Weighted- Average Coupon (1)			Range of Maturity Dates (2)
Commercial Real Estate (CRE)
Commercial mortgage loans (3)	$	1,427,328		$	(1,049	)	$	1,426,279			124		5.2	%	Mar.2016 to Jan. 2029
Mezzanine loans		169,556			(218	)		169,338			57		10.0	%	Jan. 2016 to May 2025
Preferred equity interests		30,237			(1	)		30,236			7		6.9	%	Feb. 2016 to Aug. 2025
Total CRE		1,627,121			(1,268	)		1,625,853			188		6.1	%
Deferred fees, net		(2,270	)		—			(2,270	)
Total	$	1,624,851		$	(1,268	)	$	1,623,583

(1) Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

(2) Does not include the maturity dates of three mezzanine loans that were 90 days or more past due which had contractual maturity dates prior to December 31, 2015.

(3) Commercial mortgage loans includes six conduit loans with an unpaid principal balance and carrying amount of $49,239, a weighted-average coupon of 4.8% and maturity dates ranging from December 2020 through January 2026. These commercial mortgage loans are accounted for as loans held for sale.

The following table summarizes the delinquency statistics of our commercial real estate loans as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016
Delinquency Status	Current		30 to 59 days		60 to 89 days		90 days or more		In foreclosure or bankruptcy proceedings		Total		Non-accrual (1)
Commercial mortgage loans	$	1,153,931	$	—	$	—		74,800	$	—	$	1,228,731	$	92,035
Mezzanine loans		100,503		—		—		9,553		—		110,056	$	9,553
Preferred equity interests		36,828		—		—		—		—		36,828	$	7,880
Total	$	1,291,262	$	—	$	—	$	84,353	$	—	$	1,375,615	$	109,468

(1) Includes four loans that were current, but are on non-accrual due to uncertainty over whether we will fully collect principal and interest.

16

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

	As of December 31, 2015
Delinquency Status	Current		30 to 59 days		60 to 89 days		90 days or more		In foreclosure or bankruptcy proceedings (1)		Total		Non-Accrual (2)
Commercial mortgage loans	$	1,427,328	$	—	$	—	$	—	$	—	$	1,427,328	$	15,645
Mezzanine loans		167,145		—		—		1,163		1,248		169,556		12,346
Preferred equity interests		30,237		—		—		—		—		30,237		7,946
Total	$	1,624,710	$	—	$	—	$	1,163	$	1,248	$	1,627,121	$	35,937

(1) These loans were on non-accrual due to uncertainty over whether we will fully collect principal and interest.

(2) Includes six loans that were current in accordance with their terms, but are on non-accrual due to uncertainty over whether we will fully collect principal and interest.

As of September 30, 2016 and December 31, 2015, all of our commercial mortgage loans, mezzanine loans and preferred equity interests that were 90 days or more past due or in foreclosure were on non-accrual status.  As of September 30, 2016 and December 31, 2015, $109,468 and $35,937, respectively, of our commercial real estate loans were on non-accrual status and had a weighted-average interest rate of 5.4% and 4.6%, respectively. Also, as of September 30, 2016 and December 31, 2015, four and two loans, respectively, with an unpaid principal balance of $28,933 and $13,002, respectively, and a weighted average interest rate of 12.6% and 11.6%, respectively, were recognizing interest on the cash basis. Additionally, as of September 30, 2016 and December 31, 2015, one loan, with an unpaid principal balance of $18,500, which had previously been restructured in a troubled debt restructuring, or TDR, did not accrue interest in accordance with its restructured terms as it has the option to be prepaid at par.

We are in the process of completing a restructuring of a $74,800 loan, which was greater than 90 days past due as of September 30, 2016.  This restructuring, which would be considered a TDR, involves separating the loan into seven individual loans that will be cross-collateralized, capitalizing past due interest and advances, extending the maturity date and reducing the contractual interest rate.  The probable incurred losses of $1,933 related to this restructuring was recognized as provision for loan losses as of September 30, 2016.  

Allowance For Loan Losses And Impaired Loans

We closely monitor our loans which require evaluation for loan loss in two categories: satisfactory and watchlist/impaired. Loans classified as watchlist/impaired are generally loans which have credit weaknesses or in which the credit quality of the collateral has deteriorated. This is determined by evaluating quantitative factors including debt service coverage ratios, net operating income of the underlying collateral and qualitative factors such as current performance of the underlying collateral.  As of September 30, 2016 and December 31, 2015 we have classified our investment in loans by credit risk category as follows:

	As of September 30, 2016
Credit Status	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Satisfactory	$	1,136,697	$	82,002	$	28,948	$	1,247,647
Watchlist / Impaired		92,035		28,053		7,880		127,968
Total	$	1,228,732	$	110,055	$	36,828	$	1,375,615

	As of December 31, 2015
Credit Status	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Satisfactory	$	1,336,883	$	135,710	$	22,291		$	1,494,884
Watchlist / Impaired		90,445		33,846		7,946			132,237
Total	$	1,427,328	$	169,556	$	30,237		$	1,627,121

17

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following tables provide roll-forwards of our allowance for loan losses for our commercial mortgage loans, mezzanine loans and preferred equity interests for the three months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30, 2016
	Commercial Mortgage Loans			Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	4,397		$	10,861		$	2,979		$	18,237
Provision for loan losses		1,957			(394	)		(30	)		1,533
Charge-offs, net of recoveries		(10	)		(1,105	)		—			(1,115	)
Ending balance	$	6,344		$	9,362		$	2,949		$	18,655

	For the Three Months Ended September 30, 2015
	Commercial Mortgage Loans		Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	—	$	11,470		$	1,326		$	12,796
Provision for loan losses		3,154		(1,255	)		(49	)		1,850
Charge-offs, net of recoveries		—		0			—			-
Ending balance	$	3,154	$	10,215		$	1,277		$	14,646

The following tables provide roll-forwards of our allowance for loan losses for our commercial mortgages, mezzanine loans and preferred equity interests for the nine months ended September 30, 2016 and 2015:

	For the Nine Months Ended September 30, 2016
	Commercial Mortgage Loans			Mezzanine Loans			Preferred Equity		Total
Beginning balance	$	3,154		$	12,139		$	1,804	$	17,097
Provision for loan losses		3,200			(143	)		1,145		4,202
Charge-offs, net of recoveries		(10	)		(2,634	)		—		(2,644	)
Ending balance	$	6,344		$	9,362		$	2,949	$	18,655

	For the Nine Months Ended September 30, 2015
	Commercial Mortgage Loans		Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	—	$	7,892		$	1,326		$	9,218
Provision for loan losses		3,154		2,745			(49	)		5,850
Charge-offs, net of recoveries		—		(422	)		—			(422	)
Ending balance	$	3,154	$	10,215		$	1,277		$	14,646

Information related to those loans on our watchlist or considered to be impaired was as follows:

	As of September 30, 2016
Watchlist/Impaired Loans	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Watchlist/Impaired loans expecting full recovery	$	—	$	18,500	$	—	$	18,500
Watchlist/Impaired loans with reserves		92,035		9,553		7,880		109,468
Total Watchlist/Impaired Loans (1)	$	92,035	$	28,053	$	7,880	$	127,968
Allowance for loan losses	$	6,344	$	9,362	$	2,949	$	18,655

(1) As of September 30, 2016, there was no unpaid principal relating to previously identified TDRs that are on accrual status.

18

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

	As of December 31, 2015
Watchlist/Impaired Loans	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Watchlist/Impaired loans expecting full recovery	$	74,800	$	3,000	$	—	$	77,800
Watchlist/Impaired loans with reserves		15,645		30,846		7,946		54,437
Total Watchlist/Impaired Loans (1)	$	90,445	$	33,846	$	7,946	$	132,237
Allowance for loan losses	$	3,154	$	12,139	$	1,804	$	17,097

(1) As of December 31, 2015, there was no unpaid principal relating to previously identified TDRs that are on accrual status.

The average unpaid principal balance and recorded investment of total watchlist/impaired loans was $128,485 and $78,680 during the three months ended September 30, 2016 and 2015, respectively, and $130,299 and $79,791 during the nine months ended September 30, 2016 and 2015, respectively. We recorded interest income of $193 and $1,129 on loans that were watchlist/impaired for the three months ended September 30, 2016 and 2015, respectively.  We recorded interest income of $2,715 and $2,882 on loans that were watchlist/impaired for the nine months ended September 30, 2016 and 2015, respectively.

We have evaluated restructurings of our commercial real estate loans to determine if the restructuring constitutes a TDR under FASB ASC Topic 310, “Receivables”. During the nine months ended September 30, 2016, we have determined that a restructuring of one commercial real estate loan with an unpaid principal balance of $15,645 constituted a TDR as the interest payment rate was decreased, although interest will continue to accrue on the original contractual rate, subject to management’s determination that it is collectible, and will be owed upon maturity. During the nine months ended September 30, 2015, there were no restructurings of our commercial real estate loans that constituted a TDR. As of September 30, 2016, there were no TDRs that subsequently defaulted for restructurings that had been entered into within the previous 12 months.

Loan-to-Real Estate Conversion

During the three months ended September 30, 2016, we did not convert any commercial real estate loans to owned real estate property.    

During the nine months ended September 30, 2016, we completed the conversion of one mezzanine loan with a carrying value of $332 to real estate owned property. The conversion resulted in approximately $18,380 of real estate-related assets and $17,696 of debt being reflected on our consolidated balance sheets. We recognized a charge-off of $1,203 upon conversion.

NOTE 4: INVESTMENTS IN REAL ESTATE

The table below summarizes our investments in real estate:

	Book Value
	As of September 30, 2016			As of December 31, 2015
Multi-family real estate properties	$	284,529		$	470,689
Office real estate properties		401,989			395,224
Industrial real estate properties		93,462			94,938
Retail real estate properties		134,824			134,331
Parcels of land		50,558			50,448
Subtotal		965,362			1,145,630
Less: Accumulated depreciation and amortization		(156,613	)		(158,688	)
Investments in real estate (1)	$	808,749		$	986,942

(1) As of September 30, 2016, two of our multifamily properties, with a carrying amount of $34,450, and two of our parcels of land, with a carrying amount of $12,556, were considered held-for-sale.

As of September 30, 2016 and December 31, 2015, our investments in real estate were comprised of land of $191,035 and $225,122, respectively, and buildings and improvements of $774,327 and $920,508, respectively.

19

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

As of September 30, 2016, our investments in real estate of $965,362 were financed through $230,679 of mortgage loans or other debt held by third parties and $760,182 of mortgage loans held by our RAIT I and RAIT II CDO securitizations. As of December 31, 2015, our investments in real estate of $1,145,630 were financed through $269,790 of mortgages held by third parties and $851,711 of mortgage loans held by our RAIT I and RAIT II CDO securitizations. Together, along with commercial real estate loans held by RAIT I and RAIT II, these mortgage loans serve as collateral for the CDO notes payable issued by the RAIT I and RAIT II CDO securitizations. All intercompany balances and interest charges are eliminated in consolidation.

Acquisitions:

During the first quarter of 2016, we received additional information regarding estimates we had made for certain assets including cash related to tenant security deposits related to our October 2015 acquisition of 10 industrial properties through our conversion of a mezzanine loan to real estate owned property.  This information led to an increase in fair value of the net assets acquired of $437, which we recognized within interest income, as the converted loan was on non-accrual and the fair value of the net assets acquired exceeded the amount of the converted loan plus previously accrued interest.

During the first quarter of 2016, we received additional information regarding estimates we had made as part of the purchase price allocation related to our December 2015 acquisition of Erieview Tower & Parking.  This information, which related to an allocation of the estimated costs required to stabilize this property and an adjacent property to which we have rights to as collateral secured by a first mortgage, led to an increase in fair value of the net assets acquired of $1,499.  This was offset by a decrease of $1,499 to the previously discussed collateral which is reported within investment in mortgage loans, mezzanine loans and preferred equity interests on our consolidated balance sheets.  The $1,499 increase in the net assets acquired was related to an increase in investments in real estate of $3,351, a decrease in intangible assets of $57 and an increase in intangible liabilities of $1,795.  The cumulative catch up effect of the allocation (based on the different useful lives) was an increase to net income of $11.

As discussed in Note 3, we completed the conversion of one mezzanine loan with a carrying value of $332 to real estate owned property in April 2016.  The conversion resulted in approximately $18,380 of real estate assets and $17,696 of debt being reflected on our consolidated balance sheets.  We have performed fair value analyses for the assets acquired and liabilities assumed. We expect to complete the purchase accounting process as soon as practicable, but no later than one year from the date of acquisition.

The following table summarizes the aggregate estimated fair value of the assets and liabilities associated with the properties acquired during the nine months ended September 30, 2016, on the date of acquisition, for the real estate accounted for under FASB ASC Topic 805.

Description	Fair Value of Assets Acquired During the Nine Months Ended September 30, 2016
Assets acquired:
Investments in real estate	$	16,652
Cash and cash equivalents		66
Restricted cash		221
Accounts receivable and other assets		5
Intangible assets		2,610
Total assets acquired		19,554
Liabilities assumed:
Indebtedness, net		17,696
Accounts payable and accrued expenses		448
Other liabilities		1,068
Total liabilities assumed		19,212
Estimated fair value of net assets acquired	$	342

20

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following table summarizes the consideration transferred to acquire the real estate properties and the amounts of identified assets acquired and liabilities assumed at the respective acquisition date:

Description	Total Estimated Fair Value
Fair value of consideration transferred:
Investments in loans, accrued interest receivable and other assets (net of allowance for loan losses of $1,213)	$	332
Total	$	332

The table below presents the revenue and net income (loss) for the properties acquired during the nine months ended September 30, 2016 as reported in our consolidated financial statements.

	For the Three Months Ended September 30, 2016					For the Nine Months Ended September 30, 2016
Property	Total Revenue		Net income (loss) allocable to common shares			Total Revenue		Net income (loss) allocable to common shares
Indiana Portfolio	$	731	$	(245	)	$	1,277	$	(563	)
Total	$	731	$	(245	)	$	1,277	$	(563	)

The tables below present the revenue, net income and earnings per share effect of the acquired properties on a pro forma basis as if the acquisitions occurred on January 1, 2015.  These pro forma results are not necessarily indicative of the results which actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods.

	For the Three Months ended September 30,						For the Nine Months ended September 30,
Description	2016			2015			2016			2015
Pro forma total revenue (unaudited)	$	43,237		$	49,579		$	138,439		$	160,349
Pro forma net income (loss) allocable to common shares (unaudited)		(4	)		(6,561	)		(25,386	)		5,241
Earnings (loss) per share attributable to common shareholders
Basic-as pro forma (unaudited)		(0.00	)		(0.08	)		(0.28	)		0.06
Diluted-as pro forma (unaudited)		(0.00	)		(0.08	)		(0.28	)		0.06

21

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

Dispositions:

During the nine months ended September 30, 2016, we disposed of ten multifamily real estate properties, one office property and one parcel of land.  We also recognized $5 of loss on sale related to properties sold in the prior year as we settled remaining amounts with the buyers. The below table summarizes the current year dispositions and also presents each property’s contribution to net income (loss) allocable to common shares, excluding the impact of the gain (loss) on sale:

								Net income (loss) allocable to common shares
Property Name	Property Type	Date of Sale	Sale Price		Gain (loss) on sale			For the Three Months Ended September 30, 2016			For the Nine Months Ended September 30, 2016
Mineral/Lincoln	Office	03/25/2016		7,949		(374	)		1			—
Ventura	Multifamily	03/30/2016		8,750		115			9			45
Saxony	Land	04/06/2016		1,500		(12	)		—			(4	)
Desert Wind (1)	Multifamily	05/18/2016		8,750		(2,032	)		2			52
Las Vistas (1)	Multifamily	05/18/2016		10,500		(61	)		9			122
Penny Lane (1)	Multifamily	05/18/2016		10,000		3,248			31			121
Sandal Ridge (1)	Multifamily	05/18/2016		12,250		3,482			29			162
Silversmith	Multifamily	06/03/2016		6,200		1,227			(3	)		95
Coles Crossing (2)	Multifamily	09/20/2016		43,750		(3,965	)		345			90
Eagle Ridge and Grand Terrace	Multifamily	09/21/2016		44,650		11,757			275			534
Augusta	Multifamily	09/28/2016		37,500		10,431			321			871
Total			$	191,799	$	23,816		$	1,019		$	2,088

(1) These properties were disposed of as a group of assets in a portfolio sale on May 18, 2016.

(2) The loss on sale related to this property primarily results from a defeasance premium of $1,318 and the write off of the noncontrolling interest of $2,518.

In November of 2016, we sold two multifamily real estate properties for a combined sales price of $43,400.  We expect to recognize gains on the sale of these assets.

Impairment:

During the three and nine months ended September 30, 2016, we recognized impairment of real estate assets of $16,442 and $21,661, respectively, as it was more likely than not we would dispose of the assets before the end of their previously estimated useful lives and a portion of our recorded investment in these assets was determined to not be recoverable. During the nine months ended September 30, 2016, we expensed tenant improvements and straight-line rent receivables aggregating $1,703 associated with tenants who vacated our properties early. We also recognized a loss on our retail property management subsidiary’s investment in an unconsolidated entity of $864.

22

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

NOTE 5: INDEBTEDNESS

We maintain various forms of short-term and long-term financing arrangements. Generally, these financing agreements are collateralized by assets within securitizations.

The following table summarizes our total recourse and non-recourse indebtedness as of September 30, 2016:

Description	Unpaid Principal Balance		Unamortized Discount/Premium and Deferred Financing Costs			Carrying Amount		Weighted- Average Interest Rate			Contractual Maturity
Recourse indebtedness:
7.0% convertible senior notes (1)	$	871	$	(27	)	$	844		7.0	%	Apr. 2031
4.0% convertible senior notes (2)		126,098		(6,215	)		119,883		4.0	%	Oct. 2033
7.625% senior notes		57,287		(1,747	)		55,540		7.6	%	Apr. 2024
7.125% senior notes		70,731		(1,545	)		69,186		7.1	%	Aug. 2019
Senior secured notes		64,000		(4,560	)		59,440		7.0	%	Apr. 2017 to Apr. 2019
Junior subordinated notes, at fair value (3)		18,671		(7,147	)		11,524		4.6	%	Mar. 2035
Junior subordinated notes, at amortized cost		25,100		(208	)		24,892		3.3	%	Apr. 2037
CMBS facilities		169,550		(921	)		168,629		2.8	%	Nov.2016 to Jul. 2018
Total recourse indebtedness		532,308		(22,370	)		509,938		4.8	%
Non-recourse indebtedness:
CDO notes payable, at amortized cost (4)(5)		728,362		(9,165	)		719,197		1.4	%	2045 to 2046
CMBS securitizations (6)		496,913		(4,420	)		492,493		3.1	%	Jan. 2031 to Dec. 2031
Loans payable on real estate (8)		230,678		(858	)		229,820		5.8	%	June 2016 to April 2026
Total non-recourse indebtedness		1,455,953		(14,443	)		1,441,510		2.7	%
Other indebtedness (7)		24,321		94			24,415		—			—
Total indebtedness	$	2,012,582	$	(36,719	)	$	1,975,863		3.2	%

(1) Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2021, and April 2026.

(2) Our 4.0% convertible senior notes are redeemable at par, at the option of the holder, in October 2018, October 2023, and October 2028.

(3) Relates to liabilities which we elected to record at fair value under FASB ASC Topic 825.

(4)     Excludes CDO notes payable purchased by us which are eliminated in consolidation.

(5) Collateralized by $1,107,924 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $641,118 of which eliminates in consolidation.  These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(6) Collateralized by $618,494 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(7) Represents a 40% interest issued to an unaffiliated third party in a venture to which we contributed the junior notes and equity of a floating rate securitization.  We retained a 60% interest in this venture, and, as a result of our controlling financial interest, we consolidated the venture.  We received approximately $24,796 of proceeds as a result of issuing this 40% interest, which has an unpaid principal balance of $24,321.  This 40% interest has no stated maturity date and does not provide for its mandatory redemption or any required return or interest payment.  The venture interests allocate the distributions on such junior notes and equity when made between the parties to the venture.

(8) Certain loans payable on real estate had maturity dates of June 2016. These loans payable on real estate are currently in the process of being refinanced with the lenders.           

23

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following table summarizes our total recourse and non-recourse indebtedness as of December 31, 2015:

Description	Unpaid Principal Balance		Unamortized Discount and Deferred Finance Costs			Carrying Amount		Weighted- Average Interest Rate			Contractual Maturity
Recourse indebtedness:
7.0% convertible senior notes (1)	$	30,048	$	(1,180	)	$	28,868		7.0	%	Apr. 2031
4.0% convertible senior notes (2)		141,750		(8,711	)		133,039		4.0	%	Oct. 2033
7.625% senior notes		60,000		(2,048	)		57,952		7.6	%	Apr. 2024
7.125% senior notes		71,905		(2,156	)		69,749		7.1	%	Aug. 2019
Senior secured notes		70,000		(6,955	)		63,045		7.0	%	Apr. 2017 to Apr. 2019
Junior subordinated notes, at fair value (3)		18,671		(8,167	)		10,504		4.3	%	Mar. 2035
Junior subordinated notes, at amortized cost		25,100		(216	)		24,884		2.7	%	Apr. 2037
CMBS facilities		97,067		(344	)		96,723		2.4	%	Jul. 2016 to Jan. 2018
Total recourse indebtedness		514,541		(29,777	)		484,764		5.1	%
Non-recourse indebtedness:
CDO notes payable, at amortized cost (4)(5)		950,981		(13,412	)		937,569		0.9	%	Jun. 2045 to Nov. 2046
CMBS securitizations (6)		717,255		(8,745	)		708,510		2.4	%	May 2031 to Dec. 2031
Loans payable on real estate		269,790		(1,158	)		268,632		5.6	%	Apr. 2016 to Apr. 2026
Total non-recourse indebtedness		1,938,026		(23,315	)		1,914,711		2.1	%
Total indebtedness	$	2,452,567	$	(53,092	)	$	2,399,475		2.7	%

(1) Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2016, April 2021, and April 2026.

(2) Our 4.0% convertible senior notes are redeemable at par, at the option of the holder, in October 2018, October 2023, and October 2028.

(3) Relates to liabilities which we elected to record at fair value under FASB ASC Topic 825.

(4) Excludes CDO notes payable purchased by us which are eliminated in consolidation.

(5) Collateralized by $1,388,194 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $815,745 of which eliminates in consolidation. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(6) Collateralized by 885,055 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

Recourse indebtedness refers to indebtedness that is recourse to our general assets, including the loans payable on real estate that are guaranteed by us. Non-recourse indebtedness consists of indebtedness of consolidated VIEs (e.g., securitization vehicles) and loans payable on real estate which is recourse only to specific assets pledged as collateral to the lenders. The creditors of each consolidated VIE have no recourse to our general credit.

The current status or activity in our financing arrangements occurring as of or during the nine months ended September 30, 2016 is as follows:

Recourse Indebtedness

7.0% convertible senior notes. The 7.0% convertible senior notes are convertible at the option of the holder at a current conversion rate of 190.2627 common shares per $1 principal amount of 7.0% convertible senior notes (equivalent to a current conversion price of $5.26 per common share).

On April 1, 2016, we redeemed $29,177 of the 7.0% convertible senior notes at a redemption price equal to the principal amount

plus accrued and unpaid interest. As of September 30, 2016, $871 of the 7.0% convertible notes remain outstanding.

24

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

4.0% convertible senior notes. The 4.0% convertible senior notes are convertible at the option of the holder at a current conversion rate of 108.5803 common shares per $1 principal amount of 4.0% convertible senior notes (equivalent to a current conversion price of $9.21 per common share).

During the second quarter of 2016, we repurchased $15,652 in principal amount of the 4.0% convertible senior notes for $14,075. As of September 30, 2016, $126,098 of the 4.0% convertible senior notes remain outstanding.

7.625% senior notes. During the second quarter of 2016, we repurchased $2,713 in principal amount of the 7.625% senior notes for $2,172.  As of September 30, 2016, $57,287 of the 7.625% senior notes remain outstanding.

7.125% senior notes. During the second quarter of 2016, we repurchased $1,174 in principal amount of the 7.125% senior notes for $1,081.  As of September 30, 2016, $70,731 of the 7.125% senior notes remain outstanding.

Senior secured notes. During the nine months ended September 30, 2016, we prepaid $6,000 of the senior secured notes. As of September 30, 2016, we have $64,000 of outstanding senior secured notes.  

Junior subordinated notes, at fair value. At issuance, we elected to record the current $18,671 junior subordinated note at fair value under FASB ASC Topic 825, with all subsequent changes in fair value recorded in earnings. As of September 30, 2016, the fair value of this indebtedness was $11,524.

Junior subordinated notes, at amortized cost.  During the nine months ended September 30, 2016, there was no activity other than recurring interest during the current period.

CMBS facilities. As of September 30, 2016, we had $0 of outstanding CMBS borrowings and $77,264 of outstanding commercial mortgage borrowings under the amended and restated master repurchase agreement, or the Amended MRA.  The Amended MRA had a capacity of $200,000 with a limit of $100,000 for floating rate loans.  In July of 2016, this facility was amended decreasing the capacity to $150,000 and extending the maturity date to July of 2018.  As of September 30, 2016, we were in compliance with all financial covenants contained in the Amended MRA.

 As of September 30, 2016, we had $6,770 of outstanding borrowings under the $150,000 CMBS facility. As of September 30, 2016, we were in compliance with all financial covenants contained in the $150,000 CMBS facility.

As of September 30, 2016, we had $48,276 of outstanding borrowings under the $75,000 commercial mortgage facility. As of September 30, 2016, we were in compliance with all financial covenants contained in the $75,000 commercial mortgage facility.

As of September 30, 2016, we had $37,240 of outstanding borrowings under the $150,000 commercial mortgage facility. As of September 30, 2016, we were in compliance with all financial covenants contained in the $150,000 commercial mortgage facility.

Non-Recourse Indebtedness

CDO notes payable, at amortized cost. CDO notes payable at amortized cost represent notes issued by consolidated CDO securitizations which are used to finance the acquisition of commercial mortgage loans, mezzanine loans, and other loans in our commercial real estate portfolio. Generally, CDO notes payable are comprised of various classes of notes payable, with each class bearing interest at variable or fixed rates. Both RAIT I and RAIT II are meeting all of their over collateralization, or OC, and interest coverage, or IC, trigger tests as of September 30, 2016.

During the third quarter of 2016, we repurchased $5,880 in principal amount of the CDO notes payable. The aggregate purchase price was $4,988 and we recorded a gain on extinguishment of debt of $682.

CMBS securitizations.  During the third quarter of 2016, RAIT exercised its right to unwind RAIT FL2, thereby repaying all of the outstanding notes. As a result, as of September 30, 2016, RAIT FL2 had $0 of total collateral at par value.

25

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

As of September 30, 2016, our subsidiary, RAIT 2014-FL3 Trust, or RAIT FL3, had $115,878 of total collateral at par value, none of which is defaulted. RAIT FL3 had classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $78,491 to investors. We currently own the unrated classes of junior notes, including a class with an aggregate principal balance of $37,387, and the equity, or the retained interests, of RAIT FL3. RAIT FL3 does not have OC triggers or IC triggers.

As of September 30, 2016, our subsidiary, RAIT 2015-FL4 Trust, or RAIT FL4, had $173,888 of total collateral at par value, none of which is defaulted. This includes $18,000 of collateral repayments which were passed through to investors subsequent to September 30, 2016. RAIT FL4 had classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $132,498 to investors. We currently own the unrated classes of junior notes, including a class with an aggregate principal balance of $41,390, and the equity, or the retained interests, of RAIT FL4. RAIT FL4 does not have OC triggers or IC triggers.

As of September 30, 2016, our subsidiary, RAIT 2015-FL5 Trust, or RAIT FL5, has $346,728 of total collateral at par value, none of which is defaulted. RAIT FL5 had classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $285,924 to investors.  Upon closing, we retained $23,019 of investment grade notes and all of the unrated classes of junior notes and equity. In February 2016, we contributed the unrated classes of junior notes and equity of RAIT FL5 to a venture. We retained a 60% interest in the venture, and, as a result of our controlling financial interest, we consolidated the venture.  We received approximately $24,796 of proceeds as a result of this contribution. RAIT FL5 does not have OC triggers or IC triggers.  In April 2016, we sold the $23,019 of investment grade notes that we retained upon closing.

Loans payable on real estate. As of September 30, 2016 and December 31, 2015, we had $230,678 and $269,790, respectively, of other indebtedness outstanding relating to loans payable on consolidated real estate. These loans are secured by specific consolidated real estate and commercial loans included in our consolidated balance sheets.

During the nine months ended September 30, 2016, we repaid $55,441 of mortgage indebtedness as part of four property dispositions.

During the nine months ended September 30, 2016, we assumed a first mortgage on our investments in real estate related to the acquisition of the Indiana portfolio that had a total principal balance of $17,987.

Maturity of Indebtedness

Generally, the majority of our indebtedness is payable in full upon the maturity or termination date of the underlying indebtedness.  The following table displays the aggregate contractual maturities of our indebtedness on or before December 31 by year:

	Recourse indebtedness		Non-recourse indebtedness
2016	$	44,010	$	90,479
2017		32,000		33,439
2018		141,540		16,453
2019		86,731		1,512
2020		-		10,236
Thereafter (1)		228,027		1,303,834
Total	$	532,308	$	1,455,953

(1) Includes $871 of our 7.0% convertible senior notes which are redeemable at par at the option of the holders in April 2021, and April 2026.  Includes $126,098 of our 4.0% convertible senior notes which are redeemable at par at the option of the holders in October 2018, October 2023, and October 2028.  

26

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

NOTE 6: DERIVATIVE FINANCIAL INSTRUMENTS

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions.  While these instruments may impact our periodic cash flows, they benefit us by minimizing the risks and/or costs previously described.  The counterparties to these contractual arrangements are major financial institutions with which we and our affiliates may also have other financial relationships. In the event of nonperformance by the counterparties, we are potentially exposed to credit loss. However, because of the high credit ratings of the counterparties, we do not anticipate that any of the counterparties will fail to meet their obligations.

Interest Rate Swaps and Caps

We have entered into various interest rate swap contracts to hedge interest rate exposure on floating rate indebtedness.

We designate interest rate hedge agreements at inception and determine whether or not the interest rate hedge agreement is highly effective in offsetting interest rate fluctuations associated with the identified indebtedness. At designation, certain of these interest rate swaps had a fair value not equal to zero. However, we concluded, at designation, that these hedging arrangements were highly effective during their term using regression analysis and determined that the hypothetical derivative method would be used in measuring any ineffectiveness. At each reporting period, we update our regression analysis and, we concluded that these hedging arrangements were highly effective during their remaining term and used the hypothetical derivative method in measuring the ineffective portions of these hedging arrangements. As of September 30, 2016, all of our cash flow hedge interest rate swaps had reached maturity.    

The following table summarizes the aggregate notional amount and estimated net fair value of our derivative instruments as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016							As of December 31, 2015
	Notional		Fair Value of Assets		Fair Value of Liabilities			Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges:
Interest rate swaps	$	-	$	-	$	-		$	243,816	$	-	$	(4,672	)
Interest rate cap		-		-		-			-		-		-
Other interest rate swaps & caps		60,235		52		(1,748	)		37,325		182		(55	)
Net fair value	$	60,235	$	52	$	(1,748	)	$	281,141	$	182	$	(4,727	)

Effective interest rate swaps and caps are reported in accumulated other comprehensive income and the fair value of these hedge agreements is included in other assets or derivative liabilities.

For interest rate swaps and caps that are considered effective hedges, we reclassified realized losses of $785  and $3,831, respectively, to interest expense for the three months ended September 30, 2016 and 2015 and $4,824 and $13,196 for the nine months ended September 30, 2016 and 2015.

Changes in the fair value of our other interest rate swaps and caps are reported in change in fair value of financial instruments in the Consolidated Statements of Operations.  

NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

FASB ASC Topic 825, “Financial Instruments” requires disclosure of the fair value of financial instruments for which it is practicable to estimate that value. The fair value of investments in mortgages and loans, investments in securities, CDO notes payable, convertible senior notes, junior subordinated notes, warrants and investor share appreciation rights, or SARs and derivative assets and liabilities is based on significant observable and unobservable inputs. The fair value of cash and cash equivalents, restricted cash, secured credit facilities, CMBS facilities, commercial mortgage facilities and other indebtedness approximates cost due to the nature of these instruments.

27

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following table summarizes the carrying amount and the fair value of our financial instruments as of September 30, 2016:

Financial Instrument	Carrying Amount		Estimated Fair Value
Assets
Total investment in mortgages and loans, net	$	1,354,960	$	1,321,940
Cash and cash equivalents		36,019		36,019
Restricted cash		229,957		229,957
Derivative assets		52		52
Liabilities
Recourse indebtedness:
7.0% convertible senior notes		844		951
4.0% convertible senior notes		119,883		117,271
7.625% senior notes		55,540		51,329
7.125% senior notes		69,186		69,062
Senior secured notes		59,440		64,596
Junior subordinated notes, at fair value		11,524		11,524
Junior subordinated notes, at amortized cost		24,892		12,262
CMBS facilities		168,629		169,550
Non-recourse indebtedness:
CDO notes payable, at amortized cost		719,197		639,060
CMBS securitizations		492,493		494,264
Loans payable on real estate		229,820		238,856
Other indebtedness		24,415		24,321
Derivative liabilities		1,748		1,748
Warrants and investor SARs		30,100		30,100

28

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following table summarizes the carrying amount and the fair value of our financial instruments as of December 31, 2015:

Financial Instrument	Carrying Amount		Estimated Fair Value
Assets
Total investment in mortgages and loans, net	$	1,606,486	$	1,537,086
Cash and cash equivalents		125,886		125,886
Restricted cash		213,012		213,012
Derivative assets		206		206
Liabilities
Recourse indebtedness:
7.0% convertible senior notes		28,868		27,795
4.0% convertible senior notes		133,039		104,184
7.625% senior notes		57,952		46,560
7.125% senior notes		69,749		62,471
Senior secured notes		63,045		66,725
Junior subordinated notes, at fair value		10,504		10,504
Junior subordinated notes, at amortized cost		24,884		11,221
CMBS facilities		96,723		97,067
Non-recourse indebtedness:
CDO notes payable, at amortized cost		937,569		801,289
CMBS securitizations		708,510		709,001
Loans payable on real estate		268,632		281,840
Derivative liabilities		4,727		4,727
Warrants and investor SARs		26,200		26,200

Fair Value Measurements

The following tables summarize information about our assets and liabilities measured at fair value on a recurring basis as of September 30, 2016, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:

Assets:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of September 30, 2016
Derivative assets	$	—	$	52	$	—	$	52
Total assets	$	—	$	52	$	—	$	52

Liabilities:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of September 30, 2016
Junior subordinated notes, at fair value	$	—	$	—	$	11,524	$	11,524
Derivative liabilities		—		1,748		—		1,748
Warrants and investor SARs		—		—		30,100		30,100
Total liabilities	$	—	$	1,748	$	41,624	$	43,372

(a) During the nine months ended September 30, 2016, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

29

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following tables summarize information about our assets and liabilities measured at fair value on a recurring basis as of December 31, 2015, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:

Assets:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of December 31, 2015
Derivative assets	$	—	$	206	$	—	$	206
Total assets	$	—	$	206	$	—	$	206

Liabilities:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of December 31, 2015
Junior subordinated notes, at fair value	$	—	$	—	$	10,504	$	10,504
Derivative liabilities		—		4,727		—		4,727
Warrants and investor SARs		—		—		26,200		26,200
Total liabilities	$	—	$	4,727	$	36,704	$	41,431

(a) During the year ended December 31, 2015, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

When estimating the fair value of our Level 3 financial instruments, management uses various observable and unobservable inputs. These inputs include yields, credit spreads, duration, effective dollar prices and overall market conditions on not only the exact financial instrument for which management is estimating the fair value, but also financial instruments that are similar or issued by the same issuer when such inputs are unavailable. Generally, an increase in the yields, credit spreads or estimated duration will decrease the fair value of our financial instruments. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value, as determined by management, may fluctuate from period to period and any ultimate liquidation or sale of the investment may result in proceeds that may be significantly different than fair value.  

For the fair value of our junior subordinated notes, at fair value, and warrant and investor SARs classified as Level 3 liabilities, we estimate the fair value of these financial instruments using significant unobservable inputs.  For the junior subordinated notes, at fair value, we use a discounted cash flow model as the valuation technique and the significant unobservable inputs as of December 31, 2015 include discount rates ranging from 12.9% to 13.3% and as of September 30, 2016 include discount rates ranging from 10.8% to 11.1%.  For the warrants and investor SARs, we utilized a third party valuation firm who used a binomial model as the valuation technique and the significant unobservable inputs as of September 30, 2016 and December 31, 2015 include 52.0% and 61.0%, respectively, for the annual volatility of our common shares of beneficial interest over the term of the warrants and investor SARs, 10.0% and 12.0%, respectively, for the credit adjusted discount rate on our unsecured debt issued that may be issued in satisfaction of the warrants and investor SARs, and 9.80% and 10.6%, respectively, for the dividend rate and future dividend rate on our common shares of beneficial interest.

The following table summarizes additional information about assets and liabilities that are measured at fair value on a recurring basis for which we have utilized level 3 inputs to determine fair value for the nine months ended September 30, 2016:

Liabilities	Warrants and investor SARS		Junior Subordinated Notes, at Fair Value		Total Level 3 Liabilities
Balance, as of December 31, 2015	$	26,200	$	10,504	$	36,704
Change in fair value of financial instruments		3,900		1,020		4,920
Purchases		—		—		—
Principal Repayments		—		—		—
Balance, as of September 30, 2016	$	30,100	$	11,524	$	41,624

30

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following table summarizes additional information about assets and liabilities that are measured at fair value on a recurring basis for which we have utilized level 3 inputs to determine fair value for the three months ended September 30, 2016:

Liabilities	Warrants and investor SARS		Junior Subordinated Notes, at Fair Value		Total Level 3 Liabilities
Balance, as of June 30, 2016	$	29,300	$	10,789	$	40,089
Change in fair value of financial instruments		800		735		1,535
Purchases		—		—		—
Principal Repayments		—		—		—
Balance, as of September 30, 2016	$	30,100	$	11,524	$	41,624

Non-Recurring Fair Value Measurements

As of March 31, 2016, we measured a real estate asset at a fair value of $6,386 in our consolidated balance sheets as it was impaired.  The fair value was based on an executed letter of intent to sell the real estate asset and was classified within Level 2 of the fair value hierarchy.  The significant input was the purchase price derived by the potential buyer.

As of June 30, 2016, we measured a real estate asset at a fair value of $43,313 in our consolidated balance sheets as it was impaired.  The fair value was based on an executed purchase and sale agreement and was classified within Level 2 of the fair value hierarchy.  The significant input was the purchase price included in the purchase and sale agreement.

As of September 30, 2016, we measured three of our multifamily real estate assets at a fair value of $41,615 in our consolidated balance sheets as they were impaired.  The fair values were based on an executed purchase and sale agreement, bids, and an executed letter of intent to sell the real estate asset and were classified within Level 2 of the fair value hierarchy.  The significant inputs were the purchase price derived by the potential buyers and the purchase price included in the purchase and sale agreement.

As of September 30, 2016, we measured ten of our industrial real estate assets at a fair value of $83,973 in our consolidated balance sheets as they were impaired. The valuation technique was discounted cash flows and was classified in Level 3 of the fair value hierarchy. The terminal capitalization rates and discount rates are the significant inputs to the valuations and ranged from 8.2% to 11.0% and 8.3% to 11.5%, respectively.

Our other non-recurring fair value measurements relate primarily to our commercial real estate loans that are considered impaired and for which we maintain an allowance for loss. In determining the allowance for losses, we estimate the fair value of the respective commercial real estate loan and compare that fair value to our total investment in the loan. When estimating the fair value of the commercial real estate loan, management uses discounted cash flow analyses and capitalization rates on the underlying property’s net operating income. The discounted cash flow analyses and capitalization rates are based on market information and comparable sales of similar properties.  These methodologies are classified in Level 3 of the fair value hierarchy.

31

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following tables summarize the valuation technique and the level of the fair value hierarchy for financial instruments that are not fair valued in the accompanying consolidated balance sheets but for which fair value is required to be disclosed. The fair value of cash and cash equivalents, restricted cash, secured credit facilities, CMBS facilities, commercial mortgage facilities and other indebtedness approximates cost due to the nature of these instruments and are not included in the tables below.

	Carrying Amount as of September 30, 2016		Estimated Fair Value as of September 30, 2016		Valuation Technique	Level in Fair Value Hierarchy
Total investment in mortgages and loans, net	$	1,354,960	$	1,321,940	Discountedcash flows	Three
7.0% convertible senior notes		844		951	Trading price	One
4.0% convertible senior notes		119,883		117,271	Trading price	One
7.625% senior notes		55,540		51,329	Trading price	One
7.125% senior notes		69,186		69,062	Trading price	One
Senior secured notes		59,440		64,596	Discounted cash flows	Three
Junior subordinated notes, at amortized cost		24,892		12,262	Discounted cash flows	Three
CDO notes payable, at amortized cost		719,197		639,060	Discounted cash flows	Three
CMBS securitizations		492,493		494,264	Discounted cash flows	Three
Loans payable on real estate		229,820		238,856	Discounted cash flows	Three

	Carrying Amount as of December 31, 2015		Estimated Fair Value as of December 31, 2015		Valuation Technique	Level in Fair Value Hierarchy
Total investment in mortgages and loans, net	$	1,606,486	$	1,537,086	Discountedcash flows	Three
7.0% convertible senior notes		28,868		27,795	Trading price	One
4.0% convertible senior notes		133,039		104,184	Trading price	One
7.625% senior notes		57,952		46,560	Trading price	One
7.125% senior notes		69,749		62,471	Trading price	One
Senior secured notes		63,045		66,725	Discounted cash flows	Three
Junior subordinated notes, at amortized cost		24,884		11,221	Discounted cash flows	Three
CDO notes payable, at amortized cost		937,569		801,289	Discounted cash flows	Three
CMBS securitization		708,510		709,001	Discounted cash flows	Three
Loans payable on real estate		268,632		281,840	Discounted cash flows	Three

Change in Fair Value of Financial Instruments

The following table summarizes realized and unrealized gains and losses on assets and liabilities for which we elected the fair value option of FASB ASC Topic 825, “Financial Instruments” and derivatives as reported in change in fair value of financial instruments in the accompanying consolidated statements of operations:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
Description	2016			2015			2016			2015
Change in fair value of trading securities and    security-related receivables	$	—		$	—		$	—		$	(173	)
Change in fair value of junior subordinated notes		(735	)		1,673			(1,020	)		1,909
Change in fair value of derivatives		160			(644	)		(2,135	)		(1,064	)
Change in fair value of warrants and investors SARs		(800	)		(409	)		(3,900	)		12,794
Change in fair value of financial instruments	$	(1,375	)	$	620		$	(7,055	)	$	13,466

32

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The changes in the fair value for the trading securities and security-related receivables, and junior subordinated notes for which the fair value option was elected for the three and nine months ended September 30, 2016 and 2015 was primarily attributable to changes in instrument specific credit risks. The changes in the fair value of derivatives for which the fair value option was elected for the three and nine months ended September 30, 2016 and 2015 were mainly due to changes in interest rates. The changes in fair value of the warrants and investor SARs for the three and nine months ended September 30, 2016 and 2015 were due to changes in the reference stock price and volatility.

NOTE 8: VARIABLE INTEREST ENTITIES

The determination of when to consolidate a VIE is based on the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance together with either the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. On January 1, 2016, we adopted a new accounting standard related to consolidation.  Refer to NOTE 2: Summary of Significant Accounting Policies for further information.  We evaluated our investments and determined that, as of September 30, 2016, our consolidated VIEs were: RAIT I, RAIT II, our floating rate securitizations, IRT, RAIT VIE Properties (Willow Grove, Cherry Hill, South Terrace, McDowell, and our ten industrial properties) and the venture described in Note 5: Indebtedness (RAIT Venture VIE).  As of December 31, 2015, our consolidated VIEs were: RAIT I, RAIT II, our floating rate securitizations, IRT, and RAIT VIE Properties (Willow Grove, Cherry Hill, South Terrace, Cole’s Crossing, McDowell, and our ten industrial properties).  Previously, we had not disclosed our floating rate securitizations as VIEs and have corrected the prior period disclosure.  

We consolidate the securitizations that we sponsor as we have retained interests in these entities and control the significant decisions regarding the collateral in these entities, such as the approval of loan workouts.  As of September 30, 2016, we consolidate IRT as we own 15.4% of IRT’s common stock and control the significant decisions of IRT through our advisory agreement.  As of September 30, 2016, we consolidate the VIE properties as we own a majority of these entities and control the significant capital and operating decisions regarding the properties. As of September 30, 2016, we consolidate the Venture VIE (which consolidates a floating rate securitization) as we own a majority of this entity and control a majority of the significant decisions regarding the collateral in this entity, such as the approval of loan workouts.

33

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The following tables present the assets and liabilities of our consolidated VIEs as of each respective date. Certain amounts included in the tables below are eliminated upon consolidation with our other subsidiaries that maintain investments in the debt or equity securities issued by these entities.

	As of September 30, 2016
	RAIT Securitizations		IRT		RAIT VIE Properties			RAIT Joint Venture VIE			Total
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and    preferred equity interests	$	1,352,591	$	—	$	—		$	345,843		$	1,698,434
Allowance for losses		—		—		—			—			0
Total investments in mortgages and loans		1,352,591		—		—			345,843			1,698,434
Investments in real estate
Investments in real estate		—		—		222,535			—			222,535
Accumulated depreciation		—		—		(29,770	)		—			(29,770	)
Total investments in real estate		—		—		192,765			—			192,765
Cash and cash equivalents		—		—		2,788			1			2,789
Restricted cash		10,309		—		1,770			4			12,083
Accrued interest receivable		69,315		—		—			1,516			70,831
Other assets		513		—		11,218			—			11,731
Intangible assets
Intangible assets		—		—		5,616			—			5,616
Accumulated amortization		—		—		(3,304	)		—			(3,304	)
Total intangible assets		—		—		2,312			—			2,312
Assets of discontinued operations		—		1,306,242		—			—			1,306,242
Total assets	$	1,432,728	$	1,306,242	$	210,853		$	347,364		$	3,297,187
Liabilities and Equity
Indebtedness, net	$	1,220,413	$	—	$	231,744		$	343,970		$	1,796,127
Accrued interest payable		975	$	—		13,602			827			15,404
Accounts payable and accrued expenses		2		—		5,991			—			5,993
Derivative liabilities		—		—		—			—			—
Deferred taxes, borrowers’ escrows and other liabilities		—		—		2,339			—			2,339
Liabilities of discontinued operations		—		906,103		—			—			906,103
Total liabilities		1,221,390		906,103		253,676			344,797			1,819,863
Equity:
Shareholders’ equity:
Accumulated other comprehensive income (loss)		—		—		—			—			—
RAIT investment		36,079		55,271		39,398			2,869			133,617
Retained earnings (deficit)		175,259		—		(84,080	)		(302	)		90,877
Total shareholders’ equity		211,338		55,271		(44,682	)		2,567			224,494
Noncontrolling Interests		—		344,868		1,859			—			346,727
Total liabilities and equity	$	1,432,728	$	1,306,242	$	210,853		$	347,364		$	3,297,187

34

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

	As of December 31, 2015
	RAIT Securitizations			IRT		RAIT VIE Properties			Total
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and    preferred equity interests	$	2,242,416		$	—	$	—		$	2,242,416
Allowance for losses		—			—		—			—
Total investments in mortgages and loans		2,242,416			—		—			2,242,416
Investments in real estate
Investments in real estate		—			—		278,774			278,774
Accumulated depreciation		—			—		(26,398	)		(26,398	)
Total investments in real estate		—			—		252,376			252,376
Cash and cash equivalents		—			—		1,589			1,589
Restricted cash		14,944			—		2,859			17,803
Accrued interest receivable		77,130			—		—			77,130
Other assets		479			—		13,740			14,219
Intangible assets
Intangible assets		—			—		5,245			5,245
Accumulated amortization		—			—		(1,446	)		(1,446	)
Total intangible assets		—			—		3,799			3,799
Assets of discontinued operations					1,383,188					1,383,188
Total assets	$	2,334,969		$	1,383,188	$	274,363		$	3,992,520
Liabilities and Equity
Indebtedness, net	$	2,058,739		$	—	$	273,766		$	2,332,505
Accrued interest payable		2,207			—		13,997			16,204
Accounts payable and accrued expenses		8			—		6,000			6,008
Derivative liabilities		4,672			—		—			4,672
Deferred taxes, borrowers’ escrows and other liabilities		176			—		3,842			4,018
Liabilities of discontinued operations		—			952,406		—			952,406
Total liabilities		2,065,802			952,406		297,605			3,315,813
Equity:
Shareholders’ equity:
Accumulated other comprehensive income (loss)		(4,691	)		—		—			(4,691	)
RAIT investment		118,174			54,389		35,792			208,355
Retained earnings (deficit)		155,684			—		(59,454	)		96,230
Total shareholders’ equity		269,167			54,389		(23,662	)		299,894
Noncontrolling Interests		—			376,393		420			376,813
Total liabilities and equity	$	2,334,969		$	1,383,188	$	274,363		$	3,992,520

The assets of the VIEs can only be used to settle obligations of the VIEs and are not available to our creditors. The amounts that eliminate in consolidation include $623,851 of total investments in mortgage loans and $469,915 of indebtedness as of September 30, 2016 and $813,455 of total investments in mortgage loans, $569,833 of indebtedness and $38,075 of liabilities of discontinued operations as of December 31, 2015. As of September 30, 2016, we corrected this December 31, 2015 disclosure as it excluded certain indebtedness that eliminated in consolidation. We do not have any contractual obligation to provide the VIEs listed above with any financial support. We have not and do not intend to provide financial support to these VIEs that we were not previously contractually required to provide.

35

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

NOTE 9: SERIES D PREFERRED SHARES

On October 1, 2012, we entered into a Securities Purchase Agreement, or the purchase agreement, with ARS VI Investor I, LLC, or the investor, an affiliate of Almanac Realty Investors, LLC, or Almanac. During the period from the effective date of the purchase agreement through September 30, 2016, we sold to the investor on a private placement basis in four sales between October 2012 and March 2014 for an aggregate purchase price of $100,000, or the total commitment, the following securities: (i) 4,000,000 Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share, of us, or the Series D Preferred Shares, (ii) common share purchase warrants, or the warrants, exercisable for 9,931,000 of our common shares, or the common shares (which have subsequently adjusted to 11,035,875 shares), and (iii) common share appreciation rights, or the investor SARs, with respect to up to 6,735,667 common shares (which have subsequently adjusted to 7,485,045 shares).

In September 2015, we amended the Securities Purchase Agreement with Almanac related to the Series D Preferred Shares.  This amendment changed two of the covenants therein.  As consideration for this amendment, we paid Almanac $450.  We accounted for this amendment as a modification of the Series D Preferred Shares.

The warrants and investor SARs had an initial strike price of $6.00 per common share, subject to adjustment. As of the filing of this report, the strike price has adjusted to $5.40.

The warrants and investor SARs were both determined to be classified as liabilities and had a combined fair value of $30,100 as of September 30, 2016. The initial fair value of the warrants and investor SARs are recorded as a liability and re-measured at each reporting period until the warrants and investor SARs are settled. Changes in fair value will be recorded in earnings as a component of the change in fair value of financial instruments in the consolidated statement of operations.

The following table summarizes the sales activity of the Series D Preferred Shares from the effective date of the agreement through September 30, 2016:

Aggregate purchase price			$	100,000
Initial value of warrants and investor SARs issued to-date	(21,805	)
Costs incurred	(6,834	)
Total discount				(28,639	)
Discount amortization to-date				19,367
Carrying amount of Series D Preferred Shares			$	90,728

36

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

NOTE 10: SHAREHOLDERS’ EQUITY

Preferred Shares

Dividends:

The following table summarizes the dividends we declared and paid on the preferred shares for the nine months ended September 30, 2016:

	March 31, 2016		June 30, 2016		September 30, 2016
Series A Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	2,570	$	2,570	$	2,589
Series B Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	1,225	$	1,225	$	1,225
Series C Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	910	$	910	$	910
Series D Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	2,125	$	2,125	$	2,125

At Market Issuance Sales Agreement (ATM):

On June 13, 2014, we entered into an At Market Issuance Sales Agreement, or the 2014 Preferred ATM agreement, with MLV & Co. LLC, or MLV, providing that, from time to time during the term of the 2014 Preferred ATM agreement, on the terms and subject to the conditions set forth therein, we may issue and sell through MLV up to $150,000 aggregate amount of preferred shares.

With respect to each series of preferred shares, the maximum amount issuable is as follows: 4,000,000 Series A Preferred Shares, 1,000,000 Series B Preferred Shares, and 1,000,000 Series C Preferred Shares. Unless the 2014 Preferred ATM agreement is earlier terminated by MLV or us, the 2014 Preferred ATM agreement automatically terminates upon the issuance and sale of all of the Series A Preferred Shares, Series B Preferred Shares, and Series C Preferred Shares.

During the three and nine months ended September 30, 2016, we issued a total of 38,269 Series A Preferred Shares pursuant to the ATM agreement at a weighted average price of $20.94 and we received $777 of net proceeds.

As of September 30, 2016, 2,724,935 Series A Preferred Shares, 947,496 Series B Preferred Shares, and 999,675 Series C Preferred Shares remain available for issuance under the 2014 Preferred ATM agreement.

Common Shares

Dividends:

On March 14, 2016, the board of trustees declared a $0.09 dividend on our common shares to holders of record as of April 8, 2016. The dividend was paid on April 29, 2016 and totaled $8,200. During the three months ended March 31, 2016, we also paid $348 of dividends on restricted common share awards that vested in this period.

37

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

On June 15, 2016, the board of trustees declared a $0.09 dividend on our common shares to holders of record as of July 8, 2016. The dividend was paid on July 29, 2016 and totaled $8,202. During the nine months ended September 30, 2016, we also paid $10 of dividends on restricted common share awards that vested as of March 31, 2016.

On September 19, 2016, the board of trustees declared a $0.09 dividend on our common shares to holders of record as of October 7, 2016. The dividend was paid on October 31, 2016 and totaled $8,202.  

Equity Compensation:

On February 23, 2016, the compensation committee awarded 168,776 common shares, valued at $400 using our closing stock price of $2.37, to the board’s non-management trustees. These awards vested immediately. On February 22, 2016, the compensation committee awarded 367,000 restricted common shares, valued at $873 using our closing stock price of $2.38, to our non-executive officer employees. These awards generally vest over a three-year period.

On February 22, 2016, the compensation committee awarded 895,000 SARs, valued at $206 based on a Black-Scholes option pricing model at the date of grant, to our non-executive officer employees. The SARs vest over a three-year period and may be exercised between the date of vesting and February 22, 2021, the expiration date of the SARs.

On March 31, 2015, the compensation committee adopted a 2015 Long Term Incentive Plan, or the LTIP, and made awards, or the 2015 awards, to the eligible officers setting forth the basis on which the eligible officers could earn equity compensation for the years 2015 through 2018. Pursuant to the LTIP, each eligible officer was granted an initial long term equity award, consisting of both a performance share unit award for a three year performance period and an annual restricted share award vesting over a four year period. See Note 13 to the consolidated financial statements in the 2015 Annual Report on Form 10-K for further details regarding these awards. For the three and nine months ended September 30, 2016, we recorded $122 and $366, respectively, of compensation expense related to the LTIP.

On April 22, 2016, the compensation committee made awards, or the 2016 awards, to the eligible executives pursuant to the LTIP.  The LTIP awards consist of both a performance share unit award for a three year performance period commencing January 1, 2016 and ending December 31, 2018 and an annual restricted share award vesting over a four year period. Three components of the performance share unit award have market conditions and had grant date fair values of $1.55, $1.44 and $1.07 per share.  Both the annual cash bonus plan and the LTIP were adopted pursuant to our 2012 Incentive Award Plan.  For the three and nine months ended September 30, 2016, we recorded $120 and $240, respectively, of compensation expense related to the LTIP plan.

For 2016, compensation awarded under the LTIP is based on predefined performance for 75% of the awards. Performance measures and weighting for the performance component of the 2016 through 2018 awards are based on the following objective performance measures relating to our total shareholder return, or TSR, as compared to a peer group of public companies over the same period for 40% of the award, TSR as compared to the TSR for the NAREIT Mortgage Index for 30% of the award, and our absolute TSR for 30% of the award.  The remaining 25% of the compensation award is time-based vesting over four years.

On May 23, 2016, the compensation committee awarded 161,290 common share awards, valued at $500, using our closing stock price of $3.10, to our President, under the terms of the 2012 Incentive Award Plan.  The common shares subject to the award vest 25% on the date of grant and 25% per year on the first three anniversaries of the date of grant and also vest upon the President’s separation from service for “Good Reason” as defined in the award.

Dividend Reinvestment and Share Purchase Plan (DRSPP):

We have a dividend reinvestment and share purchase plan, or DRSPP, under which we registered and reserved for issuance, in the aggregate, 10,500,000 common shares. During the nine months ended September 30, 2016, we issued a total of 6,808 common shares pursuant to the DRSPP at a weighted-average price of $2.94 per share and we received $20 of net proceeds. As of September 30, 2016, 7,754,914 common shares, in the aggregate, remain available for issuance under the DRSPP.

38

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

Capital on Demand™ Sales Agreement (COD):

On November 21, 2012, we entered into a Capital on Demand™ Sales Agreement, or the COD sales agreement, with JonesTrading Institutional Services LLC, or JonesTrading, pursuant to which we may issue and sell up to 10,000,000 of our common shares from time to time through JonesTrading acting as agent and/or principal, subject to the terms and conditions of the COD sales agreement. Unless the COD sales agreement is earlier terminated by JonesTrading or us, the COD sales agreement automatically terminates upon the issuance and sale of all of the common shares subject to the COD sales agreement. During the nine months ended September 30, 2016, we did not issue any common shares pursuant to this agreement. As of September 30, 2016, 7,918,919 common shares, in the aggregate, remain available for issuance under the COD sales agreement.

Noncontrolling Interests

During the three months ended September 30, 2016, we derecognized the noncontrolling interest of $2,518 related to Cole’s Crossing as the property was sold.  During the three months ended September 30, 2016, we derecognized the noncontrolling interest of $2,436 related to ten of our industrial properties as they were impaired.  See Note 4: Investments in Real Estate for further discussion regarding impairment on our real estate assets.

As of September 30, 2016 and December 31, 2015, we held 7,269,719 shares of IRT common stock representing 15.4% and 15.5%, respectively, of the outstanding shares of IRT common stock.  We consolidate IRT as it is a VIE and we are the primary beneficiary. See Note 8 for additional disclosures pertaining to VIEs.

On October 5, 2016, IRT repurchased all 7,269,719 shares of IRT common stock that were owned by us at a purchase price of $8.55 per share. See Note 16: Discontinued Operations for further information regarding the impact of this transaction and Note 17: Subsequent Events for further information regarding activities that occurred after September 30, 2016.

39

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

NOTE 11: EARNINGS (LOSS) PER SHARE

The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Income (loss) from continuing operations	$	5,328		$	(2,178	)	$	(13,131	)	$	22,702
(Income) loss allocated to preferred shares		(8,715	)		(8,303	)		(25,850	)		(24,383	)
(Income) loss allocated to noncontrolling interests		1,339			472			3,455			1,705
Income (loss) from continuing operations allocable to common shares		(2,048	)		(10,009	)		(35,526	)		24
Income (loss) from discontinued operations		4,112			27,004			38,473			28,831
(Income) loss from discontinued operations allocated to noncontrolling interests		(2,068	)		(23,527	)		(28,375	)		(23,528	)
Income (loss) from discontinued operations allocable to common shares		2,044			3,477			10,098			5,303
Net income (loss) allocable to common shares	$	(4	)	$	(6,532	)	$	(25,428	)	$	5,327
Weighted-average shares outstanding—Basic		91,201,784			87,110,958			91,137,041			83,799,244
Dilutive securities		—			—			—			1,846,365
Weighted-average shares outstanding—Diluted		91,201,784			87,110,958			91,137,041			85,645,609
Earnings (loss) per share—Basic:
Continuing operations	$	(0.02	)	$	(0.11	)	$	(0.39	)	$	-
Discontinued operations		0.02			0.04			0.11			0.06
Earnings (loss) per share—Basic	$	—		$	(0.07	)	$	(0.28	)	$	0.06
Earnings (loss) per share—Diluted:
Continuing operations	$	(0.02	)	$	(0.11	)	$	(0.39	)	$	-
Discontinued operations		0.02			0.04			0.11			0.06
Earnings (loss) per share—Diluted	$	—		$	(0.07	)	$	(0.28	)	$	0.06

For the three and nine months ended September 30, 2016, securities convertible into 26,648,284 and 26,449,861 common shares, respectively, were excluded from the earnings (loss) per share computations because their effect would have been anti-dilutive. For the three and nine months ended September 30, 2015, securities convertible into 21,143,824 and 20,720,300 common shares, respectively, were excluded from the earnings (loss) per share computations because their effect would have been anti-dilutive.

NOTE 12: RELATED PARTY TRANSACTIONS

In the ordinary course of our business operations, we have ongoing relationships and have engaged in transactions with the related entities described below. All of these relationships and transactions were approved or ratified by our audit committee as being on terms comparable to those available on an arm’s-length basis from an unaffiliated third party or otherwise not creating a conflict of interest.

Andrew M. Silberstein serves as a trustee on our board of trustees, as designated pursuant to the purchase agreement. Mr. Silberstein is an equity owner of Almanac and an officer of the investor and holds indirect equity interests in the investor. The transactions pursuant to the purchase agreement are described above in Note 9.

As discussed in Note 17: Subsequent Events, we deconsolidated IRT from our consolidated financial statements as of October 5, 2016.  As a result, the IRT management internalization as described in Note 1: The Company, which will occur no earlier than December 20, 2016 will be a related party transaction.

40

RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

NOTE 13: SUPPLEMENTAL DISCLOSURE TO STATEMENT OF CASH FLOWS

The following are supplemental disclosures to the statements of cash flows for the nine months ended September 30, 2016 and 2015:

	For the Nine Months Ended September 30,
	2016			2015
Cash paid for interest	$	79,848		$	51,839
Cash paid (refunds received) for taxes		311			283
Non-cash increase (decrease) in investments in real estate, intangible assets and other liabilities from conversion of loans		(1,499	)		—
Non-cash increase (decrease) in indebtedness from the assumption of debt from property acquisitions		—			121,885

For a discussion of the non-cash decrease in investments in real estate, intangible assets and other liabilities that occurred during the nine months ended September 30, 2016, see Note 4.

NOTE 14: SEGMENT REPORTING

As a group, our executive officers act as the Chief Operating Decision Maker (“CODM”). The CODM reviews operating results of our reportable segments to make decisions about investments and resources and to assess performance for each of these reportable segments.

Historically, we have conducted our business through the following reportable segments:

• Our real estate lending, owning and managing segment concentrates on lending, owning and managing commercial real estate assets throughout the United States. The form of our investment may range from first mortgage loans to equity ownership of a commercial real estate property. We manage our investments internally through our asset management and property management professionals.

• Our IRT segment concentrates on the ownership of apartment properties in opportunistic markets throughout the United States.

As discussed in Note 16: Discontinued Operations, as of September 30, 2016, IRT is a discontinued operation.  As a result, we only have one reportable segment that relates to our continuing operations.

NOTE 15: COMMITMENTS AND CONTINGENCIES

We are involved from time to time in litigation on various matters, including disputes with tenants of owned properties, disputes arising out of agreements to purchase or sell properties and disputes arising out of our loan portfolio. Given the nature of our business activities, these lawsuits are considered routine to the conduct of our business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. We do not expect that the liabilities, if any, that may ultimately result from such routine legal actions will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

On November 23, 2015, a shareholders’ derivative action, or the action, captioned Lobins v. Brown, et al., was filed in the Court of Common Pleas of Philadelphia County, or the court, (Civil Case No. 151103347) naming RAIT, as nominal defendant, and certain of our current and former executive officers and trustees as defendants, or the individual defendants.  The complaint in the action alleged that the individual defendants breached their fiduciary duties in connection with certain restructuring fees paid to TCM. These restructuring fees were the subject of the investigation by the staff of the SEC, the settlement of which was concluded on September 3, 2015.  The parties reached a settlement in the action consisting of our adoption of additions to our Trust Governance Guidelines and the creation of a Board-level Risk Management Committee.  On June 29, 2016, the court entered an order granting final approval of the settlement, which resolves the issues raised in the action and dismisses the action.

NOTE 16: DISCONTINUED OPERATIONS

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RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

As discussed in Note 1: The Company, the IRT internalization agreement was entered into on September 27, 2016 which provides for us to sell: i) the IRT advisor, which is a subsidiary of ours; ii) certain assets and the assumption of certain liabilities relating to our multifamily property management business; and iii) up to all of the 7,269,719 shares of IRT’s common stock that we own.  The closing of the IRT management internalization is expected to occur in December of 2016, subject to the condition of the internalization agreement that it will occur no earlier than December 20, 2016.

As the IRT internalization agreement results in our probable disposal of our investment in IRT, our advisory agreement with IRT and our multifamily property management business as well as a strategic shift in our operations and financial results, we determined that these entities or distinguishable components of RAIT should be reported as discontinued operations as of September 30, 2016.  As discussed in Note 14: Segment Reporting, IRT was part of our IRT segment.  The IRT advisor and our multifamily property management business were parts of our real estate lending, owning and managing segment.

The table below presents the total assets and the total liabilities of these entities or distinguishable components of RAIT that are discontinued operations as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016		As of December 31, 2015
Assets
Investments in real estate, net	$	1,263,901	$	1,332,377
Cash and cash equivalents		29,400		38,305
Restricted cash		8,028		5,413
Other assets		5,203		3,641
Intangible assets, net		-		3,811
Total assets of discontinued operations	$	1,306,532	$	1,383,547
Liabilities
Indebtedness, net	$	880,643	$	928,607
Accrued interest payable		830		1,239
Accounts payable and accrued expenses		18,627		17,115
Derivative liabilities		696		—
Deferred taxes, borrowers’ escrows and other liabilities		5,429		5,569
Total liabilities of discontinued operations	$	906,225	$	952,530

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RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

The table below presents the statements of operations of these entities or distinguishable components of RAIT that are discontinued operations for the three and nine months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
Property income		38,353			25,491			115,252			69,866
Fee and other income		661			768			2,260			1,768
Total revenue		39,014			26,259			117,512			71,634
Expenses:
Interest expense		8,820			4,851			27,454			12,671
Real estate operating expense		16,107			11,090			47,588			30,184
Compensation expense		1,861			1,820			6,037			4,892
General and administrative expense		949			721			3,298			2,192
Acquisition expense		19			12,523			37			12,724
Depreciation and amortization expense		7,784			4,772			27,059			16,663
Total expenses		35,540			35,777			111,473			79,326
Operating (Loss) Income		3,474			(9,518	)		6,039			(7,692	)
Interest and other income (expense), net		(2	)		18			(2	)		19
Gains (losses) on assets		(1	)		—			32,262			—
Gain (loss) on IRT merger with TSRE		641			64,012			732			64,012
TSRE financing extinguishment and employee separation expenses		—			(27,508	)		—			(27,508	)
Gains (losses) on extinguishments of debt		—			—			(558	)		—
Net income (loss) from discontinued operations	$	4,112		$	27,004		$	38,473		$	28,831

The table below summarizes the cash flows provided by operating, financing and investing activities of these entities or distinguishable components of RAIT that are discontinued operations for the nine months ended September 30, 2016 and 2015

	For the Nine Months Ended September 30,
	2016			2015
Cash flow from operating activities from discontinued operations	$	32,993		$	4,972
Cash flow from investing activities from discontinued operations		29,522			(169,605	)
Cash flow from financing activities from discontinued operations		(71,420	)		166,814
Net change in cash and cash equivalents from discontinued operations		(8,905	)		2,181
Cash and cash equivalents at beginning of period - discontinued operations		38,305			14,763
Cash and cash equivalents at end of period - discontinued operations	$	29,400		$	16,944

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RAIT Financial Trust

Notes to Consolidated Financial Statements

As of September 30, 2016

(Unaudited and dollars in thousands, except share and per share amounts)

NOTE 17: SUBSEQUENT EVENTS

On October 5, 2016, the IRT stock repurchase closed and we sold 7,269,719 shares of IRT’s common stock to IRT at a price of $8.55 per share.  This price was equal to the price to the public in IRT’s October 2016 public offering of its common stock less underwriting discounts or commissions.  These shares represented all of the IRT common stock we owned.  We received $62,156 of proceeds from the IRT stock repurchase.  

On October 5, 2016, we used $43,703 of the proceeds of the IRT stock repurchase to repay indebtedness which was collateralized by the IRT shares.

As a result of the IRT stock repurchase on October 5, 2016, we no longer held any variable interests in IRT.  As a result, we concluded that we were not the primary beneficiary of IRT and deconsolidated IRT from our consolidated financial statements as of October 5, 2016.  

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

In addition to historical information, this discussion and analysis contains forward-looking statements. These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “will,” “expect,” “anticipate,” “estimate,”  “seek,” “continue” or similar words. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties include, without limitation, those set forth in our filings with the Securities and Exchange Commission, including those described in the “Forward Looking Statements” and “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2015 and in this quarterly report on Form 10-Q; that we cannot assure you that we will be able to successfully implement the property sales program or achieve the expected results described in the Overview below; and whether we will be able to sell any of the properties identified as marketed for sale or as part of our previously disclosed capital recycling and debt reduction plan and what the terms and effects of any such sales will be referenced in the Securitization Summary below. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this report, except as may be required by applicable law.

Overview

We are a multi-strategy commercial real estate company that is a self-managed and self-advised Maryland real estate investment trust, or REIT. We have used our vertically integrated platform to originate commercial real estate loans, acquire commercial real estate properties and invest in, manage and service commercial real estate assets. As described below, we are seeking to simplify our platform to focus on our higher-yielding lending business, which offers a comprehensive set of debt financing options to the commercial real estate industry.  While we implement this simplification, we continue to own and manage a portfolio of commercial real estate properties and manage real estate assets for third parties which blends the higher-yielding lending business with the stability and recurring income stream from owning and managing properties.

In order to take advantage of market opportunities in the future, and to maximize shareholder value over time, we will continue to focus on:

• simplifying our platform to focus on our higher-yielding lending business;

• identifying opportunities to generate gains and liquidity through the sale of commercial real estate properties;

• maintaining and expanding our sources of liquidity; and

• managing our leverage to seek to provide attractive risk-adjusted returns for our shareholders.

During the quarter ended September 30, 2016, we continued taking steps to simplify our business through the sale of non-core assets to focus on our commercial real estate lending platform.  One significant step we took was entering into the IRT internalization agreement which will monetize RAIT’s investment in IRT, enabling us to deconsolidate IRT from our financial statements and allows IRT to internalize its management.  As described below under “Independence Realty Trust, Inc.,” we expect the steps and transactions contemplated by the IRT internalization to result in changes in our management and may affect our GAAP and Non-GAAP financial measures and operating metrics.  As described below, on October 5, 2016, IRT repurchased all of our shares of IRT common stock pursuant to the IRT internalization agreement and we received gross proceeds of approximately $62.2 million and used approximately $43.7 million of those proceeds to repay indebtedness which had been collateralized by our shares of IRT common stock.  The IRT stock repurchase also resulted in the deconsolidation of IRT as of October 5, 2016.  We expect to complete the IRT internalization transferring the IRT advisor and identified assets of RAIT Residential to IRT for a purchase price of $43.0 million in December 2016, subject to the terms and conditions of the IRT internalization agreement.  As a result of the IRT internalization, IRT, the IRT advisor and the property management business of RAIT Residential were presented as discontinued operations in our financial statements as of September 30, 2016.  We expect to recognize a gain upon the closing of the IRT internalization as the consideration received is expected to exceed the net assets recognized on our balance sheet that will be transferred.  We expect to redeploy the net proceeds from the internalization into our core commercial real estate lending activities with the goal of expanding those activities and taking advantage of opportunities to strengthen and reinforce our market positions and balance sheet.  

We also continue to simplify our business through opportunistic property sales and expense reductions. We expect that, in the near term, selling assets may have a negative impact on our net income and CAD as we de-lever the balance sheet, right-size the company and take time to reinvest capital.  With respect to property sales during the nine months ended September 30, 2016, we have sold 12 properties totaling $192 million generating $24 million of GAAP gains and net proceeds of $15.1 million after repaying indebtedness associated with these properties.  In addition, we have identified 12 properties for sale which have an aggregate carrying value of $192.9 million.  These properties are under contract and we expect to sell them during the fourth quarter of 2016 which

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should generate approximately $40 million of GAAP gains and $24 million of net proceeds after repaying indebtedness associated with these properties.  We also incurred $18.9 million of asset impairments in the quarter ended September 30, 2016, including $8.9 million of asset impairments on three real estate assets that we expect to sell in the fourth quarter of 2016 and $10.0 million associated with a portfolio of ten of our industrial properties.  Our exposure to this industrial portfolio began with a mezzanine loan originated in 2006 which we converted to real estate owned in late 2015.  During the quarter ended September 30, 2016, we decided not to invest additional capital that would not meet our return objectives into this portfolio and initiated steps to dispose of the portfolio.  Overall, we believe our performance with respect to our owned real estate business in the third quarter of 2016 reflected successful implementation of strategies to improve the operating results of our owned properties while we have continued to implement our strategy of recycling capital and reducing leverage by selling appropriate properties.

With respect to our commercial real estate lending business, we are on track to complete our sixth floating rate securitization by the end of 2016.  We are seeing an increase in floating rate volume on terms that meet our lending criteria. With respect to our conduit lending business, in response to near term regulatory risk retention requirements and market changes, we are waiting for more stability in the commercial mortgage backed securities, or CMBS, market before committing additional capital to the origination of conduit loans.

Our commercial real estate loans continued to see elevated repayments in the third quarter of 2016 as compared to the third quarter of 2015.  Accordingly, our net interest margin, or NIM, from our investments in loans decreased $4.8 million in the third quarter of 2016 from the third quarter of 2015.  From a credit perspective, substantially all of our loans originated after the last economic recession continue to perform as expected.  However, our non-accrual loans increased by $74.0 million during the quarter ended September 30, 2016, all attributable to a single pre-recession loan to a single borrower.  We are in the process of separating the loan into seven individual loans that we believe will provide easier access to the underlying collateral and a structure that incentivizes the borrower to either sell or refinance the properties as expeditiously as possible. We have reserved approximately $2.0 million as of quarter end to cover potential shortfalls related to these loans.

Implementing the strategies described above has contributed to our liquidity and capital resources and reduced our indebtedness. In 2016, we have reduced our indebtedness by $440 million using proceeds from real estate sales and loans repayments.  This includes the repayment of $58.6 million of our recourse debt.  During the fourth quarter of 2016, we expect to generate $85.3 million of cash from property sales and monetizing our investment in IRT.

Investors should read Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or the Annual Report, for a detailed discussion of the following items:

• Trends relating to capital markets.

• Trends relating to originating and financing conduit loans and bridge loans.

• Trends relating to investments in real estate.

• Interest rate environment.

• Prepayment rates.

• Commercial real estate performance.

Our Investment Portfolio

Our consolidated investment portfolio is currently comprised of the following asset classes:

Commercial mortgage loans, mezzanine loans, and preferred equity interests. We originate and own senior long-term conduit mortgage loans, short-term bridge loans, subordinated, or “mezzanine,” financing and preferred equity interests. These assets are in most cases “non-recourse” or limited recourse loans secured by commercial real estate assets or real estate entities. This means that we look primarily to the assets securing the loan for repayment, subject to certain standard exceptions. We originate loans that are eligible to be sold to securitizations issuing CMBS, which we refer to as conduit loans. We may from time to time acquire existing commercial real estate loans from third parties who have originated such loans, including banks, other institutional lenders or third-party investors. Where possible, we seek to maintain direct lending relationships with borrowers, as opposed to investing in loans controlled by third party lenders.

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The tables below describe certain characteristics of our commercial mortgage loans, mezzanine loans, and preferred equity interests as of September 30, 2016 (dollars in thousands):

	Carrying Value		Weighted- Average Coupon		Range of Maturities	Number of Loans
Commercial Real Estate (CRE) Loans
Commercial mortgage loans	$	1,227,830		5.7%	Oct. 2016 - Dec. 2025		100
Mezzanine loans		109,836		9.3%	Oct. 2016 - Jun. 2027 (1)		34
Preferred equity interests		36,827		7.2%	Jan. 2017 - Jan. 2029		14
Total investments in loans	$	1,374,493		6.0%			148

(1) Does not include the maturity dates of four loans all of which had maturity dates prior to September 30, 2016 and have been identified as impaired. These loans are 90 days or more past due.

During the nine months ended September 30, 2016, we originated $89.2 million of CRE loans and received CRE loan repayments of $308.3 million, contributing to a net reduction in our loan portfolio of $251.5 million.  We finance our consolidated CRE loans on a long-term basis through securitizations.

The charts below describe the property types and the geographic breakdown of our commercial mortgage loans, mezzanine loans, other loans, and preferred equity interests as of September 30, 2016:

(a) Based on carrying amount.

Investments in real estate. We invest in real estate properties, primarily multi-family properties, throughout the United States. We manage substantially all of our properties through our property management subsidiaries.   The table below describes certain characteristics of our investments in real estate as of September 30, 2016 (dollars in thousands):

	Investments in Real Estate (a)		Average Physical Occupancy		Units/ Square Feet/ Acres		Number of Properties
RAIT Multi-family real estate properties	$	284,529		92.3%		3,221		12
Office real estate properties		333,337		78.5%		2,253,564		14
Industrial real estate properties		93,462		70.5%		1,840,577		12
Retail real estate properties		123,434		72.4%		1,378,171		5
Redevelopment real estate properties		80,042		39.8%		1,206,514		2
Parcels of land		50,558	N/A			13.7		7
Total	$	965,362		—				52

(a) Based on properties owned as of September 30, 2016.

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The charts below describe the property types and the geographic breakdown of our investments in real estate as of September 30, 2016:

(a) Based on book value.

Securitization Summary

Overview. We have used securitizations to match fund the interest rates and maturities of our assets with the interest rates and maturities of the related financing. This strategy has helped us reduce interest rate and funding risks on our loan portfolios for the long-term. A securitization is a structure in which multiple classes of debt and equity are issued by a special purpose entity to finance a portfolio of assets. Cash flow from the portfolio of assets is used to repay the securitization liabilities sequentially, in order of seniority. The most senior classes of debt typically have credit ratings of “AAA” through “BBB–” and therefore can be issued at yields that are lower than the average yield of the loans collateralizing the securitization. The debt tranches are typically rated based on portfolio quality, diversification and structural subordination. The equity securities issued by the securitization are the “first loss” piece of the capital structure, but they are entitled to all residual amounts available for payment after the obligations to the debt holders have been satisfied. Our retained interests described below included in our investments in our consolidated securitizations are typically in such “first loss” position. Historically, the stated maturity of the debt issued by a securitization we have sponsored and consolidated has been between 15 and 17 years. However, we expect the weighted average life of such debt to be shorter than the stated maturity due to the financial condition of the borrowers on the underlying loans and the characteristics of such loans, including the existence and frequency of exercise of any permitted prepayment, the prevailing level of interest rates, the actual default rate and the actual level of any recoveries on any defaulted loans. Debt issued by these securitizations is non-recourse to us and payable solely from the payments by the borrowers on the loans collateralizing these securitizations. These assets are in most cases “non-recourse” or limited recourse loans secured by commercial real estate assets or real estate entities. This means that we look primarily to the assets securing the loan for repayment, subject to certain standard exceptions.

As of September 30, 2016, we have sponsored five securitizations with varying amounts of retained or residual interests held by us which we consolidate in our financial statements as follows: RAIT I, RAIT II, RAIT 2014-FL3 Trust, or RAIT FL3, RAIT 2014-FL4 Trust, or RAIT FL4, and RAIT 2015-FL5, or RAIT FL5. We refer to RAIT FL2, RAIT FL3 and RAIT FL4 and RAIT FL5 as the FL securitizations. We exercised our rights and unwound a sixth and seventh securitization we had sponsored, RAIT 2013-FL1 Trust, or RAIT FL1, in 2015 and RAIT 2014-FL2 Trust, or RAIT FL2, in the third quarter of 2016.  The assets and liabilities of these securitizations are presented at amortized cost in our consolidated financial statements. We originated substantially all of the loans collateralizing RAIT I, RAIT II and the FL securitizations. We serve as the collateral manager, servicer and special servicer on RAIT I and RAIT II and as servicer and special servicer for each of the FL securitizations.

Over time, our returns on and cash flows from our retained interests in our securitizations generally decrease as the senior classes of debt bearing relatively lower interest rates are paid down by collateral pool payments and other proceeds leaving more junior classes of debt bearing relatively higher interest rates on the smaller collateral pool.  As a result, we continue to evaluate strategies to manage the returns on our capital allocated to our retained interests in each of our securitizations consistent with our rights and obligations under our securitizations and relevant market conditions, which may include, without limitation, unwinding a securitization and rolling the remaining collateral over to a new securitization and may involve, where applicable, selling our properties securing loans included in the collateral pool and repaying such loans.

Securitization Performance. RAIT I and RAIT II contain interest coverage triggers, or IC triggers, and over collateralization triggers, or OC triggers, which must be met in order for us to receive our subordinated management fees and our lower-rated debt or residual equity returns. If the IC triggers or OC triggers are not met in a given period, then the cash flows are redirected from lower rated tranches and used to repay the principal amounts to the senior tranches of CDO notes payable. These conditions and the re-direction of cash flow continue until the triggers are met by curing the underlying payment defaults, paying down the CDO notes

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payable or other actions permitted under the relevant securitization indenture. As of the most recent payment information, all applicable IC triggers and OC triggers are being met for our two commercial real estate securitizations, RAIT I and RAIT II, and we continue to receive all of our management fees, interest and residual returns from these securitizations. The FL securitizations do not have IC triggers and OC triggers.

Repayment of the loans collateralizing RAIT I and RAIT II outside their contractual maturities have increased during 2016, and we expect it to continue to increase in the remainder of 2016 through 2019. In addition, we are currently marketing twelve properties for sale with an aggregate net book value of $192.9 million at September 30, 2016.  The related indebtedness of these properties is expected to be repaid with the proceeds of any sales, which primarily includes paying down the most senior notes outstanding issued by RAIT I and RAIT II, as applicable.  We continue to evaluate our real estate portfolio with regards to identifying other possible properties to sell as part of our previously disclosed capital recycling and debt reduction plan.  Because we own properties that are financed, in part, by loans collateralizing RAIT I and RAIT II, sales of our properties could result in a significant reduction of our securitization notes payable. These repayments have reduced our returns from these securitizations and we expect future repayments to continue to reduce these returns.  We continue to evaluate alternative strategies seeking to replace these returns.

If the CDO notes issued by RAIT I and RAIT II have not been redeemed in full prior to the distribution date occurring in February 2017, in the case of RAIT I, and June 2017, in the case of RAIT II, then an auction of the collateral assets of RAIT I or RAIT II, as relevant, will be conducted by the relevant trustee periodically thereafter and, if certain conditions set forth in the relevant indenture are satisfied, such collateral assets will be sold at the auction and the relevant CDO notes will be redeemed, in whole, but not in part, on such distribution date. The initial auction for RAIT I was held in November 2016 but no sale occurred as no bids were received.

A summary of the investments in our consolidated securitizations as of the most recent payment information is as follows:

• RAIT I—RAIT I has $676.2 million of total collateral at par value, of which $52.4 million is defaulted. The current overcollateralization, or OC, test is passing at 132.0% with an OC trigger of 116.2%. We currently own $46.1 million of the securities that were originally rated investment grade and $200.0 million of the non-investment grade securities issued by this securitization. We are currently receiving all distributions required by the terms of our retained interests in this securitization and are receiving all of our collateral management fees. We pledged $28.4 million of the securities we own issued by RAIT I as collateral for a senior secured note we issued.

• RAIT II—RAIT II has $509.0 million of total collateral at par value, of which $19.5 million is defaulted. The current OC test is passing at 128.2% with an OC trigger of 111.7%. We currently own $92.8 million of the securities that were originally rated investment grade and $140.7 million of the non-investment grade securities issued by this securitization. We are currently receiving all distributions required by the terms of our retained interests in this securitization and are receiving all of our collateral management fees. We pledged $51.1 million of the securities we own issued by RAIT II as collateral for a senior secured note we issued.

• RAIT FL2—During the third quarter of 2016, RAIT exercised its right to unwind RAIT 2014-FL2 Trust, or RAIT FL2, and repaid the outstanding notes.We refinanced the $100 million of remaining loans through our warehouse financing arrangement. Loan repayments in RAIT FL2 decreased the efficiency of the securitization and by unwinding this securitization, we increased our returns on our remaining assets. We are evaluating whether to re-securitize the remaining loans in our future FL securitizations.

• RAIT FL3—RAIT FL3 has $115.9 million of total collateral at par value, of which there is no collateral that is in default. RAIT FL3 does not have OC triggers or IC triggers. RAIT FL3, has classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $78.5 million to investors. We currently own the unrated classes of junior notes, including a class with an aggregate principal balance of $37.4 million, and the equity, or the retained interests, of RAIT FL3.

• RAIT FL4—RAIT FL4 has $155.9 million of total collateral at par value, of which there is no collateral that is in default. RAIT FL4 does not have OC triggers or IC triggers. RAIT FL4, has classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $114.5 million to investors. We currently own the unrated classes of junior notes, including a class with an aggregate principal balance of $41.4 million, and the equity, or the retained interests, of RAIT FL4.

• RAIT FL5—RAIT FL5 has $346.7 million of total collateral at par value, of which there is no collateral that is in default.  RAIT FL5 does not have OC triggers or IC triggers. RAIT FL5, has classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $285.9 million to investors.  A venture, in which we have retained a 60% interest, owns the unrated classes of junior notes and the equity, or the retained interests, of RAIT FL5.  The unrated classes of junior notes have an aggregate principal balance of $60.8 million.

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Independence Realty Trust, Inc.

As of September 30, 2016, we held 7,269,719 shares of IRT common stock, representing 15.4% percent of the outstanding shares of IRT common stock and we externally advised IRT through our subsidiary, the IRT advisor.  We consolidated IRT in our financial results as of September 30, 2016.  For the nine months ended September 30, 2016, we earned $5.5 million of fees from IRT under the advisory agreement with IRT and received $3.9 million of distributions declared on our IRT common stock, both of which are eliminated in consolidation.

As described below under “IRT Management Internalization,” we sold all 7,269,719 shares to IRT on October 5, 2016 in connection with the IRT management internalization.  As a result of the IRT stock repurchase, we deconsolidated IRT as of October 5, 2016 and we presented IRT as a discontinued operation in our financial statements as of September 30, 2016.  

IRT Management Internalization

On September 27, 2016, we entered into a securities and asset purchase agreement, or the IRT internalization agreement, with IRT, pursuant to which IRT will complete a management internalization and separation from us.  The IRT management internalization consists of two parts: (i) the acquisition of Independence Realty Advisors, LLC, or the IRT advisor, which is our subsidiary and IRT’s external advisor, and (ii) the acquisition of certain assets and the assumption of certain liabilities relating to our multifamily property management business which we refer to as RAIT Residential, including property management contracts relating to apartment properties owned by ourselves, IRT, and third parties.  The purchase price to be paid by IRT for the IRT management internalization is $43.0 million, subject to certain pro rations at closing.  The IRT internalization agreement also provided for IRT to repurchase all of the 7,269,719 shares of IRT’s common stock, or the IRT purchased shares, owned by certain of our subsidiaries.

On October 5, 2016, IRT used approximately $62.2 million of the proceeds from an underwritten offering, or the IRT October 2016 offering, of IRT common stock to repurchase the IRT purchased shares, from certain of RAIT’s subsidiaries at a purchase price of $8.55 per share.  This price was equal to the price to the public in the IRT October 2016 offering less underwriting discounts or commissions.  The IRT purchased shares represented all of the shares of IRT common stock owned by RAIT and its subsidiaries.   As a result of the IRT stock repurchase, RAIT determined that it no longer is the primary beneficiary of IRT, and as a result, RAIT deconsolidated IRT as of October 5, 2016. RAIT used approximately $43.7 million of the proceeds of the IRT stock repurchase to repay indebtedness which was collateralized by the IRT purchased shares.

The IRT internalization agreement provides that the IRT management internalization will occur, subject to the terms and conditions contained therein, no earlier than December 20, 2016 and we expect it to occur by December 31, 2016.  As required by the IRT internalization agreement, IRT reported that it reserved $43.0 million in net proceeds from the IRT October 2016 offering to consummate this transaction.  

RAIT Management Changes Resulting From IRT Management Internalization

Upon closing of the IRT management internalization, Scott F. Schaeffer, RAIT’s chief executive officer, or CEO, is expected to terminate his employment with RAIT and enter into an employment agreement with IRT. Scott L. N. Davidson, currently RAIT’s president, is expected to be elevated to the office of CEO of RAIT upon the closing of the IRT management internalization. James J. Sebra, RAIT’s chief financial officer, or CFO, is expected to enter into an employment agreement with IRT upon the closing of the IRT management internalization. Mr. Sebra is also expected to remain RAIT’s CFO until the later to occur of March 31, 2017 or the filing of RAIT’s Form 10-K for the fiscal year ending December 31, 2016 with the SEC. In addition, more than 400 current employees of RAIT and RAIT Residential are expected to become employees of IRT.  The IRT management internalization is conditioned upon, among other things, customary closing conditions including obtaining identified third party consents.

RAIT has entered into memorandums of understanding, or MOUs, with each of Mr. Schaeffer and Mr. Sebra setting forth the terms of each executive’s expected resignation from RAIT and an employment agreement with Mr. Davidson setting forth the terms of his expected employment as RAIT’s CEO. The obligations set forth in each MOU are contingent upon the second closing under the IRT management internalization agreement.

Pursuant to the terms of Mr. Schaeffer’s MOU, as discussed above, as of the closing of the IRT management internalization, he will resign from his position as CEO. Mr. Schaeffer will receive a cash payment of $500,000 and a share award under the 2012 plan of 150,000 shares of RAIT’s common shares of beneficial interest, or common shares. The share award may be granted in one or more separate awards in amounts to be determined by RAIT’s compensation committee of the board of trustees, or the compensation committee. Half of the shares granted to Mr. Schaeffer pursuant to this award will vest six months after the date of grant. The remaining half of the shares will vest one year after the date of grant. Upon his resignation, Mr. Schaeffer will enter into a one year consulting agreement with RAIT. Mr. Schaeffer’s incentive compensation award for 2016, if any, will be determined and awarded by the compensation committee in a manner consistent with RAIT’s past practices for granting such awards. All equity awards that Mr. Schaeffer currently holds will continue to vest in accordance with the vesting schedule applicable to each award. Mr. Schaeffer and RAIT will also sign a mutual release of claims releasing each other from their obligations under his existing employment agreement,

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and releasing each other from any and all claims arising out of or with respect to his employment by RAIT or the termination thereof. Effective October 18, 2016, Mr. Schaeffer resigned from his position as chairman of the board of trustees and will remain a trustee until this closing when he will resign from the board of trustees. Michael M. Malter, an independent trustee already serving on the board of trustees, was elected to replace Mr. Schaeffer as chairman of the board.

Pursuant to the terms of Mr. Davidson’s MOU, as discussed above, as of the closing of the IRT management internalization, he will be elevated to the position of CEO of RAIT and will join the board of trustees. Mr. Davidson also entered into a new employment agreement on November 1, 2016 which will govern his employment as RAIT’s CEO and take effect at the closing of the IRT management internalization. Mr. Davidson will receive a one-time cash payment of $1,350,000 and a share award under the 2012 plan of an aggregate of 600,000 shares of RAIT’s common shares of beneficial interest, or the SD share award. The SD share award may be granted in one or more separate awards in amounts to be determined by the compensation committee order to comply with the terms and conditions of the 2012 plan, provided that in no event shall the total number of shares awarded exceed 600,000. Fifty percent of the shares granted pursuant to the SD share award will vest on the second anniversary of the closing of the IRT management internalization, regardless of the date granted. The remaining fifty percent of the shares granted pursuant to the SD share award will vest on the third anniversary of the closing of the IRT management internalization, regardless of the date granted. Further, Mr. Davidson’s MOU provides that the board of trustees expects that Mr. Davidson’s discretionary performance compensation for 2016 will be paid at the maximum target level. In addition, for the purpose of determining Mr. Davidson’s 2017 performance compensation award, cash available for distribution goals for 2017, as established by the compensation committee, shall be adjusted to account for payments made to Mr. Schaeffer and Mr. Sebra as part of the terms of their separation from RAIT as a result of the IRT management internalization.

Pursuant to the terms of Mr. Sebra’s MOU, as discussed above, he will remain in his current position as CFO of RAIT until the later to occur of March 31, 2017 or the filing of RAIT’s Form 10-K for the fiscal year ending December 31, 2016 with the SEC (the “Resignation Date”), at which time Mr. Sebra will resign from his position as CFO of RAIT. In the event the Company hires a new CFO, Mr. Sebra may resign prior to the Resignation Date, provided, however, that any early resignation shall be at the option and in the sole discretion of the Company. Mr. Sebra’s incentive compensation award for 2016, if any, will be determined and awarded by the compensation committee in a manner consistent with RAIT’s past practices for granting such awards. Should Mr. Sebra remain employed by RAIT after December 31, 2016, he will continue to be paid his current base salary. He will also receive a fixed cash bonus equal to the portion of his 2016 cash bonus, if any, prorated based on the period that he was employed by the Company during 2017. All equity awards that Mr. Sebra currently holds will continue to vest in accordance with the vesting schedule applicable to each award. Mr. Sebra and RAIT will also sign a mutual release of claims releasing each other from their obligations under his existing employment agreement, and releasing each other from any and all claims arising out of or with respect to his employment by RAIT or the termination thereof.

Pursuant to the terms of the IRT internalization agreement, by the second closing of the IRT management internalization, RAIT and IRT will enter into a shared services agreement, pursuant to which RAIT and IRT will share office space and provide each other certain transitional services such as information technology, human resources, insurance, investor relations, legal, tax and accounting for a six-month transition period after the closing.

Assets Under Management

Assets under management, or AUM, is an operating measure representing the total assets that we own or are managing for third parties. While not all AUM generates fee income, it is an important operating measure to gauge our asset growth, volume of originations, size and scale of our operations and our performance. AUM includes our total investment portfolio and assets associated with unconsolidated securitizations for which we derive asset management fees.

The table below summarizes our AUM as of September 30, 2016 and December 31, 2015 (dollars in thousands):

	AUM as of September 30, 2016		AUM as of December 31, 2015
Commercial real estate loan portfolio (1)	$	2,338,977	$	2,772,750
IRT (2)		1,316,725		1,372,015
Property management (3)		1,472,399		1,778,836
Total	$	5,128,101	$	5,923,601

(1) As of September 30, 2016 and December 31, 2015, our commercial real estate portfolio was comprised of $460.3 million and $554.0 million, respectively, of assets collateralizing RAIT I and RAIT II and $965.4 million and $1.1 billion, respectively, of investments in real estate of RAIT, and $294.8 million and $188.0 million, respectively, of commercial mortgage loans, mezzanine loans and preferred equity interests that were not securitized. As of September 30, 2016 and December 31, 2015, our

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commercial real estate portfolio was also comprised of $618.5 million and $885.1 million, respectively, of assets collateralizing our floating rate securitizations.

(2) The IRT management internalization, which is expected to occur in December of 2016, will decrease our AUM as IRT will become the manager of its real estate assets as well as our multifamily real estate assets, which is included within the commercial real estate portfolio in the table above.

(3) Urban Retail manages 74 properties with 17,397,355 square feet in 28 states as of September 30, 2016. RAIT Residential provides property management services to multifamily properties, including IRT’s properties.

Results of Operations

Three Months Ended September 30, 2016 Compared to the Three Months Ended September 30, 2015

The following table sets forth information regarding our consolidated results of operations for the three months ended September 30, 2016 and 2015.

	For the Three Months Ended September 30,
	2016			2015			$ Variance			% Variance
Revenue:
Investment interest income	$	20,189		$	24,468		$	(4,279	)		-17	%
Investment interest expense		(8,512	)		(8,021	)		(491	)		6	%
Net interest margin		11,677			16,447			(4,770	)		-29	%
Property income		29,614			29,968			(354	)		-1	%
Fee and other income		1,946			2,537			(591	)		-23	%
Total revenue		43,237			48,952			(5,715	)		-12	%
Expenses:
Interest expense		13,298			14,723			(1,425	)		-10	%
Real estate operating expense		14,635			14,991			(356	)		-2	%
Compensation expense		6,245			5,541			704			13	%
General and administrative expense		3,708			3,769			(61	)		-2	%
Acquisition expense		197			153			44			29	%
Provision for loan losses		1,533			1,850			(317	)		-17	%
Depreciation and amortization expense		11,466			10,482			984			9	%
Total expenses		51,082			51,509			(427	)		-1	%
Operating (Loss) Income		(7,845	)		(2,557	)		(5,288	)		207	%
Interest and other income (expense), net		(70	)		(398	)		328			-82	%
Gains (losses) on assets		18,194			7,430			10,764			145	%
Gains (losses) on extinguishments of debt		(6	)		-			(6	)	N/M*
Asset impairment		(18,872	)		(7,250	)		(11,622	)		160	%
Change in fair value of financial instruments		(1,375	)		620			(1,995	)		-322	%
Income (loss) before taxes		(9,974	)		(2,155	)		(7,819	)		363	%
Income tax benefit (provision)		15,302			(23	)		15,325			-66630	%
Income from continuing operations		5,328			(2,178	)		7,506			-345	%
Discontinued operations:
Income (loss) from discontinued operations		4,112			27,004			(22,892	)		-85	%
Net income (loss)		9,440			24,826			(15,386	)		-62	%
(Income) loss allocated to preferred shares		(8,715	)		(8,303	)		(412	)		5	%
(Income) loss allocated to noncontrolling interests		(729	)		(23,055	)		22,326			-97	%
Net income (loss) allocable to common shares	$	(4	)	$	(6,532	)	$	6,528			-100	%

*N/M – Not Meaningful

Revenue

Net interest margin. Net interest margin decreased$4.8 million, or 29%, to $11.7 million for the three months ended September 30, 2016 from $16.5 million for the three months ended September 30, 2015. Investment interest income decreased due to two transactions during the three months ended September 30, 2015 that resulted in $2.8 million of interest income being recognized in that period as well as loan repayments that have occurred since October 1, 2015. Investment interest expense increased $0.5 million

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due to the RAIT FL5 securitization issued in December 2015 and increases in LIBOR partially offset by a decrease in interest expense due to a reduction in securitization-related indebtedness due to repayments of the underlying loans.

Property income. Property income decreased $0.4 million to $29.6 million for the three months ended September 30, 2016 from $30.0 million for the three months ended September 30, 2015. The decrease is attributable to $5.8 million of property income related to 18 properties disposed of or deconsolidated in or after the three months ended September 30, 2015. The decrease was partially offset by $4.6 million of property income from 15 new properties acquired or consolidated since September 30, 2015, and $0.8 million of property income from improved occupancy and rental rates in 2016 as compared to 2015 in the remaining properties.

Fee and other income. Fee and other income decreased $0.6 million to $1.9 million for the three months ended September 30, 2016 from $2.5 million for the three months ended September 30, 2015. The decrease is primarily attributable to a decrease of $0.6 million of property management fee income due to the timing of leasing commissions and $0.2 million of reduced application fee income from our lending business.

Expenses

Interest expense. Interest expense decreased $1.4 million, or 10%, to $13.3 million for the three months ended September 30, 2016 from $14.7 million for the three months ended September 30, 2015. The decrease is attributable to reductions in recourse debt including $29.2 million of 7% convertible senior notes that were redeemed and $19.6 million of senior notes that was repurchased during the three months ended June 30, 2016.

Real estate operating expense. Real estate operating expense decreased $0.4 million to $14.6 million for the three months ended September 30, 2016 from $15.0 million for the three months ended September 30, 2015. The decrease is attributable to $3.2 million of real estate operating expense related to 18 properties disposed of or deconsolidated in or after the three months ended September 30, 2015. The decrease was partially offset by a $3.0 million increase of real estate operating expenses from 15 properties acquired since September 30, 2015.

Compensation expense. Compensation expense increased $0.7 million to $6.2 million for the three months ended September 30, 2016 from $5.5 million for the three months ended September 30, 2015. This is primarily due to less compensation expense being deferred as direct loan origination costs due to a lower volume of loan originations during 2016. This increase was partially offset by a decrease in stock compensation expense for the three months ended September 30, 2016 as compared to the same period in 2015.

General and administrative expense. General and administrative expense remained consistent for the three months ended September 30, 2016 and for the three months ended September 30, 2015.

Acquisition expense. Acquisition expense remained consistent for the three months ended September 30, 2016 and for the three months ended September 30, 2015.

Provision for loan losses. Provision for loan losses decreased $0.3 million to $1.5 million for the three months ended September 30, 2016 from $1.8 million for the three months ended September 30, 2015.

Depreciation and amortization expense. Depreciation and amortization expenseincreased$1.0 million to $11.5 million for the three months ended September 30, 2016 from $10.5 million for the three months ended September 30, 2015. The increase is attributable to $2.6 million of depreciation and amortization expense from 15 new properties acquired or consolidated since September 30, 2015. The increase was partially offset by a decrease of $2.2 million of depreciation and amortization expense related to 18 properties disposed or deconsolidated in or after the three months ended September 30, 2015.

Other income (expense)

Gains (losses) on assets. During the three months ended September 30, 2016, four multi-family properties were sold resulting in gains of $18.2 million.  

Asset impairment. During the three months ended September 30, 2016, we recognized impairment of $8.9 million on three multi-family properties that are expected to be sold.  We also recognized impairment of $10.0 million on ten of our industrial properties because they are expected to be disposed of at a loss before the end of their useful lives.  Our exposure to this industrial portfolio began with a mezzanine loan originated in 2006 which we converted to real estate owned in late 2015.

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Change in fair value of financial instruments. During the three months ended September 30, 2016, the change in fair value of financial instruments decreasedour net income by $1.4 million. The fair value adjustments we recorded were as follows (dollars in thousands):

Description	For the Three Months Ended September 30, 2016			For the Three Months Ended September 30, 2015
Change in fair value of junior subordinated notes	$	(735	)	$	1,673
Change in fair value of derivatives		160			(644	)
Change in fair value of warrants and investor SARs		(800	)		(409	)
Change in fair value of financial instruments	$	(1,375	)	$	620

The changes in the fair value for the CDO notes payable and other liabilities for which the fair value option was elected for the three months ended September 30, 2015 was primarily attributable to changes in instrument specific credit risks. The changes in the fair value of derivatives for the three months ended September 30, 2016 and 2015 was mainly due to changes in interest rates. The change in fair value of the warrants and investor SARs was due to changes in the reference stock price and volatility.

Income tax benefit (provision). During the three months ended September 30, 2016, the income tax benefit was driven by the partial release of a valuation allowance against our net deferred tax assets as a result of expected taxable income from the IRT internalization.  Conversely, during the three months ended September 30, 2015, the income tax (provision) was driven by gains on CMBS loan sales and the related taxable income at that taxable REIT subsidiary.

Income (loss) from discontinued operations. During the three months ended September 30, 2016, income (loss) from discontinued operations reflected recurring activity from our discontinued operations.  During the three months ended September 30, 2015, income (loss) from discontinued operations reflected recurring activity from our discontinued operations as well as IRT’s gain on the TSRE merger, net of acquisition expenses and other expenses related to the TSRE merger.

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Nine Months Ended September 30, 2016 Compared to the Nine Months Ended September 30, 2015

The following table sets forth information regarding our consolidated results of operations for the nine months ended September 30, 2016 and 2015.

	For the Nine Months Ended September 30,
	2016			2015			$ Variance			% Variance
Revenue:
Investment interest income	$	69,510		$	71,823		$	(2,313	)		-3	%
Investment interest expense		(26,957	)		(22,517	)		(4,440	)		20	%
Net interest margin		42,553			49,306			(6,753	)		-14	%
Property income		89,335			94,401			(5,066	)		-5	%
Fee and other income		5,974			14,760			(8,786	)		-60	%
Total revenue		137,862			158,467			(20,605	)		-13	%
Expenses:
Interest expense		43,135			46,259			(3,124	)		-7	%
Real estate operating expense		43,810			47,804			(3,994	)		-8	%
Compensation expense		17,367			15,648			1,719			11	%
General and administrative expense		12,007			12,762			(755	)		-6	%
Acquisition expense		376			1,392			(1,016	)		-73	%
Provision for loan losses		4,202			5,850			(1,648	)		-28	%
Depreciation and amortization expense		39,273			34,622			4,651			13	%
Total expenses		160,170			164,337			(4,167	)		-3	%
Operating (Loss) Income		(22,308	)		(5,870	)		(16,438	)		280	%
Interest and other income (expense), net		30			(1,035	)		1,065			-103	%
Gains (losses) on assets		23,811			24,711			(900	)		-4	%
Gains (losses) on extinguishments of debt		998			-			998		N/M*
Asset impairment		(26,658	)		(7,250	)		(19,408	)		268	%
Change in fair value of financial instruments		(7,055	)		13,466			(20,521	)		-152	%
Income (loss) before taxes		(31,182	)		24,022			(55,204	)		-230	%
Income tax benefit (provision)		18,051			(1,320	)		19,371			-1468	%
Income from continuing operations		(13,131	)		22,702			(35,833	)		-158	%
Discontinued operations:
Income (loss) from discontinued operations		38,473			28,831			9,642			33	%
Net income (loss)		25,342			51,533			(26,191	)		-51	%
(Income) loss allocated to preferred shares		(25,850	)		(24,383	)		(1,467	)		6	%
(Income) loss allocated to noncontrolling interests		(24,920	)		(21,823	)		(3,097	)		14	%
Net income (loss) allocable to common shares	$	(25,428	)	$	5,327		$	(30,755	)		-577	%

*N/M – Not Meaningful

Revenue

Net interest margin. Net interest margin decreased$6.8 million, or 14%, to $42.5 million for the nine months ended September 30, 2016 from $49.3 million for the nine months ended September 30, 2015. Investment interest income decreased $2.3 million driven by lower mezzanine loan interest income from loan payoffs. Investment interest expense increased $4.4 million due to the RAIT FL5 securitization issued in December 2015 and increases in LIBOR partially offset by a decrease in interest expense due to a reduction in securitization-related indebtedness due to repayments of the underlying loans.

Property income. Property income decreased $5.1 million to $89.3 million for the nine months ended September 30, 2016 from $94.4 million for the nine months ended September 30, 2015. The decrease is attributable to $19.2 million of property income related to 24 properties disposed of or deconsolidated after December 31, 2014. The decrease was partially offset by $12.8 million of property income from 15 new properties acquired or consolidated since September 30, 2015 and $1.3 million of property income from improved occupancy and rental rates in 2016 as compared to 2015 in the remaining properties.

Fee and other income. Fee and other income decreased $8.8 million to $6.0 million for the nine months ended September 30, 2016 from $14.8 million for the nine months ended September 30, 2015. The decrease is primarily attributable to a decrease of $2.9

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million of property management fee income primarily due to the timing of leasing commissions, a decrease in CMBS income of $5.2 million, and $0.7 million of reduced application fee income from our lending business during the nine months ended September 30, 2016 as compared to the same period in 2015.

Expenses

Interest expense. Interest expense decreased $3.1 million, or 7%, to $43.2 million for the nine months ended September 30, 2016 from $46.3 million for the nine months ended September 30, 2015. This decrease is primarily attributable to a $2.1 million decrease in interest expense and a $0.8 million decrease in loan discount amortization primarily driven by the 7% convertible notes that were redeemed during the three months ended June 30, 2016.

Real estate operating expense. Real estate operating expense decreased $4.0 million to $43.8 million for the nine months ended September 30, 2016 from $47.8 million for the nine months ended September 30, 2015. The decrease is attributable to $11.1 million of real estate operating expenses related to 24 properties disposed of or deconsolidated after December 31, 2014. The increase was partially offset by $7.2 million of real estate operating expenses from 15 properties acquired since September 30, 2015.

Compensation expense. Compensation expense increased $1.7 million to $17.4 million for the nine months ended September 30, 2016 from $15.7 million for the nine months ended September 30, 2015. This is primarily due to less compensation expense being deferred as direct loan origination costs due to a lower volume of loan originations during 2016.

General and administrative expense. General and administrative expense decreased $0.8 million to $12.0 million for the nine months ended September 30, 2016 from $12.8 million for the nine months ended September 30, 2015. This decrease is primarily due to a $0.3 million decrease in legal expenses and a $0.5 million decrease in professional fees related to loan originations due to a lower volume of loan originations during 2016.

Acquisition expense. Acquisition expense decreased $1.0 million to $0.4 million for the nine months ended September 30, 2016 from $1.4 million for the nine months ended September 30, 2015. This decrease was primarily attributable to a $1.0 million decrease in dead deal costs for the nine months ended September 30, 2016 as compared to the same period in 2015.

Provision for loan losses. Provision for loan losses decreased $1.6 million to $4.2 million for the nine months ended September 30, 2016 from $5.8 million for the nine months ended September 30, 2015.

Depreciation and amortization expense. Depreciation and amortization expenseincreased$4.7 million to $39.3 million for the nine months ended September 30, 2016 from $34.6 million for the nine months ended September 30, 2015. The increase is attributable to $8.5 million of depreciation and amortization expense from 15 new properties acquired or consolidated since September 30, 2015 and $2.6 million of accelerated amortization expense on our customer relationships intangible assets. The increase was partially offset by a decrease of $6.8 million of depreciation and amortization expense related to 24 properties that were disposed of or deconsolidated after December 31, 2014.

Other income (expense)

Gains (losses) on assets. During the nine months ended September 30, 2016, ten multi-family properties, one office building and one parcel of land were sold resulting in a gain of $23.8 million.  

Gain on extinguishment of debt.  During the nine months ended September 30, 2016, we recognized a gain on extinguishment of debt of $1.0 million.  This includes a $2.3 million gain on the extinguishment of the mortgage indebtedness on three of our multi-family properties upon their sale as they were sold for less than their outstanding indebtedness and the outstanding indebtedness has been satisfied. This was offset by a loss on the extinguishment of debt of $1.3 million related to repurchases and redemptions of our indebtedness, primarily driven by the write-off of the unamortized deferred financing costs associated with the indebtedness.

Asset impairment. During the nine months ended September 30, 2016, we recognized impairment of $14.1 million on one office building and four multi-family properties that are expected to be sold.  We also expensed tenant improvements and straight-line rent receivables aggregating $1.7 million associated with tenants that vacated our properties early.  We also recognized a loss on our retail property management subsidiary’s investment in an unconsolidated entity of $0.9 million and recognized impairment of $10.0 million on ten of our industrial properties because they are expected to be disposed of at a loss before the end of their useful lives.  Our exposure to this industrial portfolio began with a mezzanine loan originated in 2006 which we converted to real estate owned in late 2015.

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Change in fair value of financial instruments. During the nine months ended September 30, 2016, the change in fair value of financial instruments decreasedour net income by $7.1 million. The fair value adjustments we recorded were as follows (dollars in thousands):

Description	For the Nine Months Ended September 30, 2016			For the Nine Months Ended September 30, 2015
Change in fair value of trading securities and security-related    receivables	$	—		$	(173	)
Change in fair value of junior subordinated notes		(1,020	)		1,909
Change in fair value of derivatives		(2,135	)		(1,064	)
Change in fair value of warrants and investor SARs		(3,900	)		12,794
Change in fair value of financial instruments	$	(7,055	)	$	13,466

The changes in the fair value for the trading securities and security-related receivables, CDO notes payable, and other liabilities for which the fair value option was elected for the nine months ended September 30, 2015 was primarily attributable to changes in instrument specific credit risks.  The changes in the fair value of derivatives for the nine months ended September 30, 2016 and 2015 was mainly due to changes in interest rates. The change in fair value of the warrants and investor SARs was due to changes in the reference stock price and volatility.

Income tax benefit (provision). During the nine months ended September 30, 2016, the income tax benefit was driven by the partial release of a valuation allowance against our net deferred tax assets as a result of expected taxable income from the IRT internalization.  Conversely, during the nine months ended September 30, 2015, the income tax (provision) was driven by gains on CMBS loan sales and the related taxable income at that taxable REIT subsidiary.

Income (loss) from discontinued operations. During the nine months ended September 30, 2016, income (loss) from discontinued operations reflected recurring activity from our discontinued operations as well as IRT’s gains on the sales of three of its real estate assets.  During the nine months ended September 30, 2015, income (loss) from discontinued operations reflected recurring activity from our discontinued operations as well as IRT’s gain on the TSRE merger, net of acquisition expenses and other expenses related to the TSRE merger.

Non-GAAP Financial Measures

Cash Available for Distribution

Cash available for distribution, or CAD, is a non-GAAP financial measure. We believe that CAD provides investors and management with a meaningful indicator of operating performance. Management also uses CAD, among other measures, to evaluate profitability and our board of trustees considers CAD in determining our quarterly cash distributions. The compensation committee used CAD as a performance metric in establishing performance-based compensation awards for 2015 for some of our executive officers.  We also believe that CAD is useful because it adjusts for a variety of noncash items (such as depreciation and amortization, equity-based compensation, realized gain (loss) on assets, provision for loan losses and non-cash interest income and expense items).

We calculate CAD by subtracting from or adding to net income (loss) attributable to common shareholders the following items: depreciation and amortization items including depreciation and amortization, straight-line rental income or expense, amortization of in place leases, amortization of deferred financing costs, amortization of discount on financings and equity-based compensation; changes in the fair value of our financial instruments; realized gains (losses) on assets; provision for loan losses; asset impairments; acquisition gains or losses and transaction costs; certain fee income eliminated in consolidation that is attributable to third parties; and one-time events pursuant to changes in GAAP and certain other non-recurring items.

In the quarter ended March 31, 2016, we changed our method of calculating CAD to exclude the impact of real property sales from CAD.  We made this change in response to investor feedback to focus CAD on our core business activities.  In addition, we provide guidance regarding our expected CAD in future periods and this change removes variability resulting from the ultimate timing of future property sales.  We have amended our comparable prior period disclosures to conform with the current period presentation for this change.

CAD should not be considered as an alternative to net income (loss) or cash generated from operating activities, determined in accordance with GAAP, as an indicator of operating performance. For example, CAD does not adjust for the accrual of income and expenses that may not be received or paid in cash during the associated periods. Please refer to our consolidated financial statements prepared in accordance with GAAP in Part I, Item 1. In addition, our methodology for calculating CAD may differ from the

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methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies.

Set forth below is a reconciliation of CAD to net income (loss) allocable to common shares for the three months ended September 30, 2016 and 2015 (dollars in thousands, except share information):

	For the Three Months Ended September 30, 2016						For the Three Months Ended September 30, 2015
	Amount			Per Share(1)			Amount			Per Share(2)
Cash Available for Distribution:
Net income (loss) allocable to common shares	$	(4	)	$	—		$	(6,532	)	$	(0.07	)
Adjustments:
Depreciation and amortization expense		11,466			0.13			10,482			0.12
Change in fair value of financial instruments		1,375			0.02			(620	)		(0.01	)
(Gains) losses on assets		(18,194	)		(0.20	)		(7,430	)		(0.09	)
(Gains) losses on extinguishment of debt		6			—			—			—
Deferred income tax (benefit) provision		(15,249	)		(0.17	)		—			—
Straight-line rental adjustments		(622	)		(0.01	)		(78	)		—
Share-based compensation		819			0.01			941			0.01
Acquisition and integration expenses		197			—			153			-
Origination fees and other deferred items		8,536			0.09			10,353			0.12
Provision for losses		1,533			0.02			1,850			0.02
Asset impairment		18,872			0.21			7,250			0.08
Discontinued operations and noncontrolling interest effect of certain adjustments		1,885			0.02			1,017			0.02
Cash Available for Distribution	$	10,619		$	0.12		$	17,386			0.20

(1) Based on 91,201,784 weighted-average shares outstanding for the three months ended September 30, 2016.

(2) Based on 87,110,958 weighted-average shares outstanding for the three months ended September 30, 2015.

Set forth below is a reconciliation of CAD to net income (loss) allocable to common shares for the nine months ended September 30, 2016 and 2015 (dollars in thousands, except share information):

	For the Nine Months Ended September 30, 2016						For the Nine Months Ended September 30, 2015
	Amount			Per Share (1)			Amount			Per Share (2)
Cash Available for Distribution:
Net income (loss) allocable to common shares	$	(25,428	)	$	(0.28	)	$	5,327		$	0.06
Adjustments:
Depreciation and amortization expense		39,273			0.43			34,622			0.41
Change in fair value of financial instruments		7,055			0.08			(13,466	)		(0.16	)
(Gains) losses on assets		(23,811	)		(0.26	)		(24,711	)		(0.29	)
(Gains) losses on extinguishment of debt		(998	)		(0.01	)		—			—
Deferred income tax (benefit) provision		(18,090	)		(0.20	)		—			—
Straight-line rental adjustments		(1,182	)		(0.01	)		(53	)		—
Share-based compensation		2,841			0.03			3,256			0.04
Acquisition Expenses		376			-			1,392			0.02
Origination fees and other deferred items		21,377			0.23			25,360			0.30
Provision for losses		4,202			0.05			5,850			0.07
Asset impairment		26,658			0.29			7,250			0.09
Discontinued operations and noncontrolling interest effect of certain adjustments		1,762			0.02			4,242			0.05
Cash Available for Distribution	$	34,035		$	0.37		$	49,070		$	0.59

(1) Based on 91,137,041 weighted-average shares outstanding for the nine months ended September 30, 2016.

(2) Based on 83,799,244 weighted-average shares outstanding for the nine months ended September 30, 2015.

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As stated above, we changed our method of calculating CAD in the quarter ended March 31, 2016 to exclude the impact of real property sales.  Set forth below is our reconciliation of CAD to net income (loss) allocable to common shares for the years ended December 31, 2015, 2014 and 2013 below (dollars in thousands, except share information) which reflects such new method and is intended to supersede the corresponding chart previously reported in our annual report:

	For the Year Ended December 31, 2015						For the Year Ended December 31, 2014						For the Year Ended December 31, 2013
	Amount			Per Share (1)			Amount			Per Share (2)			Amount			Per Share (3)
Cash Available for Distribution:
Net income (loss) allocable to common shares	$	7,158		$	0.08		$	(318,504	)	$	(3.92	)	$	(308,008	)	$	(4.54	)
Adjustments:
Depreciation and amortization expense		73,868			0.87			56,784			0.70			36,093			0.53
Change in fair value of financial instruments		(11,638	)		(0.14	)		98,752			1.21			344,426			5.09
(Gains) losses on assets		(43,514	)		(0.51	)		5,370			0.07			2,266			0.03
TSRE financing extinguishment and employee separation expenses		27,508			0.32			—			—			—			—
(Gain) loss on IRT merger with TSRE		(64,604	)		(0.76	)		—			—			—			—
(Gains) losses on deconsolidation of VIEs		—			—			215,804			2.66			—			—
(Gains) losses on extinguishment of debt		—			—			(2,421	)		(0.03	)		1,275			0.02
T8 and T9 securitizations, net effect		—			—			(26,931	)		(0.33	)		(33,268	)		(0.49	)
Straight-line rental adjustments		95			—			1,111			0.01			(1,322	)		(0.02	)
Share-based compensation		4,466			0.05			4,407			0.05			3,441			0.05
Acquisition and integration expenses		16,527			0.19			—			—			—			—
Origination fees and other deferred items		34,834			0.41			21,954			0.27			10,475			0.15
Provision for losses		8,300			0.10			5,500			0.07			3,000			0.04
Asset impairment		8,179			0.10			—			—			—			—
Noncontrolling interest effect of certain    adjustments		4,967			0.06			(4,302	)		(0.05	)		(940	)		(0.01	)
Cash Available for Distribution	$	66,146		$	0.77		$	57,524		$	0.71		$	57,438		$	0.85

(1) Based on 85,524,073 weighted-average shares outstanding for the year ended December 31, 2015.

(2) Based on 81,328,129 weighted-average shares outstanding for the year ended December 31, 2014.

(3) Based on 67,814,316 weighted-average shares outstanding for the year ended December 31, 2013.

Funds from Operations

We believe that funds from operations, or FFO, which is a non-GAAP measure, is an additional appropriate measure of the operating performance of a REIT. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles. Our management utilizes FFO as a measure of our operating performance. FFO is not an equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. FFO should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

In the quarter ended September 30, 2016, we changed our method of calculating FFO to exclude the impact of asset impairment.  We have amended our comparable prior period disclosures to conform with the current period presentation for this change.

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Set forth below is a reconciliation of FFO to net income (loss) allocable to common shares for the three months ended September 30, 2016 and 2015 (dollars in thousands, except share information):

	For the Three Months Ended September 30, 2016						For the Three Months Ended September 30, 2015
	Amount			Per Share (1)			Amount			Per Share (2)
Funds From Operations:
Net income (loss) allocable to common shares	$	(4	)	$	—		$	(6,532	)	$	(0.07	)
Adjustments:
Real estate depreciation and amortization		8,884			0.10			8,712			0.10
(Gains) losses on the sale of real estate		(18,194	)		(0.20	)		(7,430	)		(0.09	)
Asset impairment		18,872		0.21				7,250			0.08
Adjustments related to discontinued operations		1,195		0.01				909			0.01
Funds From Operations allocable to common shares	$	10,753		$	0.12		$	2,909		$	0.03

(1) Based on 91,201,784 weighted-average shares outstanding for the three months ended September 30, 2016.

(2) Based on 87,110,958 weighted-average shares outstanding for the three months ended September 30, 2015.

Set forth below is a reconciliation of FFO to income (loss) allocable to common shares for the nine months ended September 30, 2016 and 2015 (dollars in thousands, except share information):

	For the Nine Months Ended September 30, 2016						For the Nine Months Ended September 30, 2015
	Amount			Per Share (1)			Amount			Per Share (2)
Funds From Operations:
Net income (loss) allocable to common shares	$	(25,428	)	$	(0.28	)	$	5,327		$	0.06
Adjustments:
Real estate depreciation and amortization	$	28,539			0.32			28,228			0.34
(Gains) losses on the sale of real estate	$	(24,301	)		(0.27	)		(24,711	)		(0.29	)
Asset impairment	$	26,658		0.29				7,250			0.09
Adjustments related to discontinued operations	$	(1,322	)		(0.01	)		2,847			0.03
Funds From Operations allocable to common shares	$	4,146		$	0.05		$	18,941		$	0.23

(1) Based on 91,137,041 weighted-average shares outstanding for the nine months ended September 30, 2016.

(2) Based on 83,799,244 weighted-average shares outstanding for the nine months ended September 30, 2015.

As stated above, we changed our method of calculating FFO in the quarter ended September 30, 2016 to exclude the impact of asset impairment.  Set forth below is our reconciliation of FFO to net income (loss) allocable to common shares for the years ended December 31, 2015, 2014, and 2013 (dollars in thousands, except share information) which reflects such new method and is intended to supersede the corresponding chart previously reported in our annual report.

	For the Year Ended December 31, 2015						For the Year Ended December 31, 2014						For the Year Ended December 31, 2013
	Amount			Per Share (1)			Amount			Per Share (2)			Amount			Per Share (2)
Funds From Operations:
Net income (loss) allocable to common shares	$	7,158		$	0.08		$	(318,504	)	$	(3.92	)	$	(308,008	)	$	(4.54	)
Adjustments:
Real estate depreciation and amortization		41,096			0.48			38,620			0.48			33,538			0.50
(Gains) losses on the sale of real estate		(43,514	)		(0.51	)		319			—			3,724			0.05
Asset impairment		8,179			0.10			—			—			—			—
Funds From Operations allocable to common shares	$	12,919		$	0.15		$	(279,565	)	$	(3.44	)	$	(270,746	)	$	(3.99	)

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(1) Based on 85,524,073 weighted-average shares outstanding for the year ended December 31, 2015.

(2) Based on 81,328,129 weighted-average shares outstanding for the year ended December 31, 2014.

(3) Based on 67,814,316 weighted-average shares outstanding for the year ended December 31, 2013.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments, pay dividends and other general business needs.

We believe our available cash and restricted cash balances, other financing arrangements, and cash flows from operations will be sufficient to fund our liquidity requirements for the next 12 months and the foreseeable future. Due to volatility in the capital markets referenced above in “Overview,” we expect our ability to raise capital in the public markets through sales of our equity and debt securities to be limited this year. We expect to rely to a greater degree on the other sources of liquidity identified below.

Our primary cash requirements are as follows:

• to make investments and fund the associated costs;

• to repay, repurchase or redeem our indebtedness;

• to pay our expenses, including compensation to our employees;

• to pay U.S. federal, state, and local taxes of our taxable REIT subsidiaries; and

• to distribute a minimum of 90% of our REIT taxable income and to make investments in a manner that enables us to maintain our qualification as a REIT.

We intend to meet these liquidity requirements primarily through the following:

• the use of our cash and cash equivalent balances of $36.0 million as of September 30, 2016;

• cash generated from operating activities, including net investment income from our investment portfolio, and fee income generated by our commercial real estate platform;

• proceeds from the sales of assets, including property sales and proceeds we receive as a result of the IRT stock repurchase and the IRT management internalization transactions;

• proceeds from future borrowings, including our CMBS facilities and loan participations;

• proceeds from alternative sources of financing, such as joint ventures or sales of our retained interests in securitizations we sponsor; and

• proceeds from future offerings of our securities, including those through our DRSPP and ATM programs.

In the quarter ended September 30, 2016, we redeemed the current aggregate principal balance outstanding of the investment grade senior notes issued by RAIT FL2 in accordance with their terms. Also, we continue to monitor market conditions to make opportunistic repurchases on the open market from time to time of our outstanding recourse indebtedness.  In this regard, we repurchased $19.5 million aggregate principal amount of our outstanding debt for an aggregate purchase price of $17.3 million during the nine months ended September 30, 2016.  We also redeemed $33.2 million of our recourse indebtedness during the nine months ended September 30, 2016.  

During the fourth quarter of 2016, we expect to generate approximately $85.3 million of cash from property sales, the IRT stock repurchase and the IRT management internalization transactions.

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Cash Flows

As of September 30, 2016 and 2015, we maintained cash and cash equivalents of approximately $36.0 million and $92.7 million, respectively. Our cash and cash equivalents were generated from the following activities (dollars in thousands):

	For the Nine Months Ended September 30,
	2016			2015
Cash flow from operating activities	$	98,998		$	59,781
Cash flow from investing activities		357,923			(296,352	)
Cash flow from financing activities		(517,388	)		207,497
Net change in cash and cash equivalents		(60,467	)		(29,074	)
Net change in cash and cash equivalents from discontinuing operations		8,905			(2,181	)
Cash and cash equivalents at beginning of period		87,581			106,963
Cash and cash equivalents at end of period	$	36,019		$	75,708

Cash flow from operating activities for the nine months ended September 30, 2016, as compared to the same period in 2015, increased $39.2 million primarily due to the timing of payments for various accounts payable, accrued expenses and other liabilities, and a decrease in accrued interest receivable that related to the payoff of loans whose accrual of interest accrual terms differed from their current payment terms.  The remaining increase in cash flow from operating activities was primarily related to IRT’s growth in its real estate investments.

The cash inflow for investing activities for the nine months ended September 30, 2016 was substantially due to proceeds from property dispositions of $212.6 million as well as loan repayments of $308.3 million outpacing new investments in loans of $82.4 million.  The cash outflow for investing activities for the nine months ended September 30, 2015 was substantially due to new investments in loans of $362.3 million which exceeded loan repayments of $169.6 million and IRT’s acquisition of TSRE of $137.1 million.  

The cash outflow from our financing activities during the nine months ended September 30, 2016 was primarily due to repayments and repurchases of indebtedness of $763.1 million and distributions to shareholders and noncontrolling interests of $70.8 million exceeding proceeds from the issuance of indebtedness of $246.8 million.  The cash inflow from our financing activities during the nine months ended September 30, 2015 was primarily due to proceeds from debt issuance of $670.0 million exceeding repayments of indebtedness of $502.8 million and distributions to shareholders and noncontrolling interests of $79.3 million.

As a REIT, we evaluate our dividend coverage based on our cash flow from operating activities, excluding acquisition and integration expenses, the origination and sale of conduit loans, and changes in assets and liabilities. During the nine months ended September 30, 2016, we paid distributions to our preferred shareholders, common shareholders, and non-controlling interests of $70.8 million and generated cash flows from operating activities, before acquisition expenses, origination and sale of conduit loans, and changes in assets and liabilities of $71.6 million.  

Capitalization

Refer to Note 5: Indebtedness, Note 9: Series D Preferred Shares, and Note 10: Shareholders’ Equity in the Notes to Consolidated Financial Statements, for information regarding our capitalization.

Off-Balance Sheet Arrangements and Commitments

There have been no material changes in off-balance sheet arrangements or commitments during the nine months ended September 30, 2016 from the disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Critical Accounting Estimates and Policies

Our Annual Report on Form 10-K for the year ended December 31, 2015 contains a discussion of our critical accounting policies. On January 1, 2016 we adopted three new accounting pronouncements and revised our accounting policies. See Note 2 in the Notes to Consolidated Financial Statements. Management discusses our critical accounting policies and management’s judgments and estimates with the audit committee of our board of trustees.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in quantitative and qualitative market risks during the nine months ended September 30, 2016 from the disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our chief executive officer and chief financial officer and with the participation of our disclosure committee, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting or in other factors during the quarter ended September 30, 2016, that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

General

We are involved from time to time in litigation on various matters, including disputes with tenants of owned properties, disputes arising out of agreements to purchase or sell properties and disputes arising out of our loan portfolio. Given the nature of our business activities, these lawsuits are considered routine to the conduct of our business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. We do not expect that the liabilities, if any, that may ultimately result from such routine legal actions will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Item 1A. Risk Factors

There have not been any material changes from the risk factors previously disclosed in Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 except as noted below.

We cannot assure you that we will be able to complete the IRT Management Internalization, which could materially adversely affect our business, financial condition and results of operations.

We cannot assure you that we will be able to close on the IRT management internalization pursuant to the IRT management internalization agreement. The IRT management internalization is subject to the satisfaction of closing conditions, including obtaining third party consents. There can be no guarantee that any of these closing conditions will be satisfied and the transactions consummated. Failure to complete the transactions could materially adversely delay our strategy of simplifying our business and focus on our core strategy, commercial real estate lending, and adversely affect our liquidity because we would not receive the expected proceeds of the IRT management internalization. These consequences could materially adversely affect our business, financial condition and results of operations.

If the IRT management internalization occurs, we expect to make substantial changes to our management and incur significant expenses related thereto which could materially adversely affect our business, financial condition and results of operations.

The IRT management internalization contemplates the following changes to our management: Scott F. Schaeffer is expected to resign as our CEO. Scott L. N. Davidson, currently RAIT’s President, is expected to be elevated to the office of our CEO. James J. Sebra, our CFO, is expected to resign from such position upon the later to occur of March 31, 2017 or the filing of RAIT’s Form 10-K for the fiscal year ending December 31, 2016 with the SEC. We may not successfully implement these changes, which would adversely affect RAIT’s performance and stock price. Our stock price may be adversely affected by market uncertainty concerning our management transition. We may incur substantial severance and recruitment costs. We will be required to provide and receive services under a shared services agreement with IRT and may be adversely affected if we do not provide or receive services at the levels required. Our general and administrative expenses after the IRT management internalization could be higher than our current expectations. Any of these foregoing risks could materially adversely affect our business, financial condition and results of operations.

We expect the IRT management internalization and IRT Stock Repurchase to have significant impact on our GAAP and Non-GAAP financial measures and operating metrics which may materially adversely affect our business, financial condition and results of operations.

If the IRT management internalization occurs, we expect it to have a significant impact on our GAAP and Non-GAAP financial measures and operating metrics. We deconsolidated IRT in connection with the IRT stock repurchase. This resulted in removing the contribution of IRT to our operating results which have historically been disclosed in the IRT segment disclosure in our financial statements and significantly reduce our assets and liabilities consolidated from IRT which have historically been disclosed in the supplemental information packages we furnish to the SEC with our earnings releases. We expect our leverage to increase from historical levels because IRT’s historical leverage was lower than RAIT’s and the net effect on RAIT may not be offset entirely by debt repayments RAIT made from the proceeds of the IRT stock repurchase. Our cash available for distribution, or CAD, may be reduced from historic levels by the amount of IRT’s contribution to CAD. We expect our assets under management to be significantly reduced by IRT’s assets and the value of RAIT’s multifamily properties managed by the property management business transferred to IRT in the IRT management internalization.

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We may not manage the IRT management internalization effectively or realize its anticipated benefits.

We intend for the IRT management internalization to be part of our long term strategy of focusing on our core strategy of commercial real estate lending and reallocating capital to the higher yielding lending business and reducing leverage. We may not be able to identify suitable investments for a period of time which may reduce our operating performance. We may not manage the IRT management internalization effectively. The IRT management internalization could be a time-consuming and costly process. Following the IRT management internalization, we expect to be reliant on IRT for certain transitional services such as CFO and identified legal services for a period of time after the closing. If we are unable to internalize or find other providers for these services within a reasonable time period, we may not achieve all of the expected benefits of the IRT management internalization. The failure to manage the IRT management internalization effectively, including failure to smoothly transition services or retain employees, could result in the anticipated benefits of the IRT management internalization not being realized in the timeframe currently anticipated or at all or may require incurring higher expenses than we currently anticipate.

The IRT management internalization was negotiated between a special committee of the board of trustees comprised solely of independent trustees, or the special committee, and a special committee of the IRT board of directors comprised solely of independent directors, or the IRT special committee, to address potential conflicts of interest among executive officers shared by RAIT and IRT.

The IRT management internalization was negotiated by the special committee on behalf of RAIT with the IRT special committee on behalf of IRT in order for RAIT and IRT to address potential conflicts of interest among executive officers shared by RAIT and IRT, including the following: (i) Mr. Schaeffer’s service as CEO of both RAIT and IRT and as chairman of the board of the board of trustees and as chairman of the IRT board of directors; and (ii) Mr. Sebra’s service as CFO and treasurer of both RAIT and IRT. As a result, the affiliated officers may have had different interests than we do with respect to the IRT management internalization and the future conduct of the businesses of the companies. While the special committee was responsible for negotiating on behalf of RAIT to address potential conflicts of interest related to the IRT management internalization, including those of the affiliated officers, these potential conflicts would not exist in the case of a transaction negotiated with unaffiliated third parties.

The representations, warranties, covenants and indemnities in the IRT internalization agreement and related agreements are subject to limitations and qualifiers, which may limit our ability to enforce any remedy under these agreements.

The representations, warranties, covenants and indemnities in the IRT internalization agreement, the related shared services agreement and other agreements related to the IRT management internalization are subject to limitations and qualifiers, which may limit our ability to enforce any remedy under these agreements.  These include, without limitation, limitations on liability and materiality qualifiers on certain representations and covenants.

Actions of activist shareholders with respect to RAIT could be disruptive and potentially costly and the possibility that activist shareholders may contest, or seek changes that conflict with, our strategic direction could cause uncertainty about the strategic direction of our business.

Activist shareholders may from time to time attempt to effect changes in our strategic direction and, in furtherance thereof, may seek changes in how RAIT is governed.  While our Board of Trustees and management team strive to maintain constructive, ongoing communications with all of RAIT’s shareholders, including activist shareholders, and welcomes their views and opinions with the goal of working together constructively to enhance value for all shareholders, activist campaigns that contest, or conflict with, our strategic direction could have an adverse effect on us because: (i) responding to actions by activist shareholders can disrupt our operations, be costly and time-consuming, and divert the attention of our Board and senior management from the pursuit of business strategies, which could adversely affect our results of operations and financial condition; (ii) perceived uncertainties as to our future direction may lead to the perception of a change in the direction of the business, instability or lack of continuity which may be exploited by our competitors, cause concern to our current or potential customers, may result in the loss of potential business opportunities and make it more difficult to attract and retain qualified personnel and business partners; and (iii) these types of actions could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

Item 6. Exhibits

(a) Exhibits

The exhibits filed as part of this quarterly report on Form 10-Q are identified in the exhibit index immediately following the signature page of this Report. Such Exhibit Index is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RAIT FINANCIAL TRUST (Registrant)
Date: November 9, 2016	By:	/s/ Scott F. Schaeffer
		Scott F. Schaeffer, Chief Executive Officer
		(On behalf of the registrant and as its Principal Executive Officer)
Date: November 9, 2016	By:	/s/ James J. Sebra
		James J. Sebra, Chief Financial Officer and Treasurer
		(On behalf of the registrant and as its Principal Financial Officer)

Date: November 9, 2016	By:	/s/ Alfred J. Dilmore
		Alfred J. Dilmore, Chief Accounting Officer
		(On behalf of the registrant and as its Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit Number	Description of Documents
3.1.1	Amended and Restated Declaration of Trust of RAIT Financial Trust (“RAIT”). Incorporated by reference to RAIT’s Registration Statement on Form S-11 (Registration No. 333-35077).
3.1.2	Articles of Amendment to Amended and Restated Declaration of Trust of RAIT. Incorporated by reference to RAIT’s Registration Statement on Form S-11 (Registration No. 333-53067).
3.1.3	Articles of Amendment to Amended and Restated Declaration of Trust of RAIT. Incorporated by reference to RAIT’s Registration Statement on Form S-2 (Registration No. 333-55518).
3.1.4	Certificate of Correction to the Amended and Restated Declaration of Trust of RAIT. Incorporated by reference to RAIT’s Form 10-Q for the Quarterly Period ended March 31, 2002 (File No. 1-14760).
3.1.5	Articles of Amendment to Amended and Restated Declaration of Trust of RAIT. Incorporated by reference to RAIT’s Form 8-K as filed with the Securities and Exchange Commission (“SEC”) on December 15, 2006 (File No. 1-14760).
3.1.6	Articles of Amendment to Amended and Restated Declaration of Trust of RAIT. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on July, 1 2011 (File No. 1-14760).
3.1.7	Articles Supplementary (the “Series A Articles Supplementary”) relating to the 7.75% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series A Preferred Shares”) of RAIT. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on March 18, 2004 (File No. 1-14760).
3.1.8	Certificate of Correction to the Series A Articles Supplementary. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on March 18, 2004 (File No. 1-14760).
3.1.9	Articles Supplementary relating to the 8.375% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest, (the “Series B Preferred Shares”) of RAIT. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 1, 2004 (File No. 1-14760).
3.1.10	Articles Supplementary relating to the 8.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, (the “Series C Preferred Shares”) of RAIT. Incorporated by reference to RAIT’s Form 8-A as filed with the SEC on June 29, 2007 (File No. 1-14760).
3.1.11	Articles Supplementary relating to Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on May 25, 2012 (File No. 1-14760).
3.1.12	Certificate of Correction relating to Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares. Incorporated by reference to RAIT’s Form 10-Q for the quarterly period ended June 30, 2012 (File No. 1-14760).
3.1.13	Articles Supplementary (the “Series D Articles Supplementary”) relating to the Series D Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series D Preferred Shares”) of RAIT. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 4, 2012 (File No. 1-14760).
3.1.14	Articles Supplementary relating to the Series E Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series E Preferred Shares”) of RAIT. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 4, 2012 (File No.1-14760).
3.1.15	Amendment dated November 30, 2012 to the Series D Articles Supplementary. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 4, 2012 (File No.1-14760).
3.1.16	Articles Supplementary relating to the Series A Preferred Shares. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on June 13, 2014 (File No. 1-14760).
3.2.1	By-laws of RAIT. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 19, 2009 (File No. 1-14760).
3.2.2	First Amendment to the Bylaws of RAIT. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on April 6, 2015 (File No. 1-14760).
4.1.1	Form of Certificate for Common Shares of Beneficial Interest. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on July 1, 2011 (File No. 1-14760).

67

Exhibit Number	Description of Documents
4.1.2	Form of Certificate for the Series A Preferred Shares. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on March 22, 2004 (File No. 1-14760).
4.1.3	Form of Certificate for the Series B Preferred Shares. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 1, 2004 (File No. 1-14760).
4.1.4	Form of Certificate for the Series C Preferred Shares. Incorporated by reference to RAIT’s Form 8-A as filed with the SEC on June 29, 2007 (File No. 1-14760).
4.1.5	Form of Certificate for the Series D Preferred Shares. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 23, 2012 (File No. 1-14760).
4.1.6	Form of Certificate for the Series E Preferred Shares. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 23, 2012 (File No. 1-14760).
4.2.1	Base Indenture dated as of December 10, 2013 between RAIT, as issuer, and Wells Fargo Bank, National Association., as trustee. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 13, 2013 (File No. 1-14760).
4.2.2	Supplemental Indenture dated as of December 10, 2013 between RAIT, as issuer, and Wells Fargo Bank, National Association., as trustee. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 13, 2013 (File No. 1-14760).
4.2.3	Form of RAIT 4.00% Convertible Senior Note due 2033 (included in Exhibit 4.2.2). Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 13, 2013 (File No. 1-14760).
4.3.1	Base Indenture dated as of March 21, 2011 between RAIT, as issuer, and Wells Fargo Bank, National Association., as trustee. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on March 22, 2011 (File No. 1-14760).
4.3.2	Supplemental Indenture dated as of March 21, 2011 between RAIT, as issuer, and Wells Fargo Bank, National Association., as trustee. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on March 22, 2011 (File No. 1-14760).
4.4	Indenture dated as of October 5, 2011 between RAIT and Wilmington Trust, National Association, as trustee. Incorporated by reference to RAIT’s Form 10-Q for the quarterly period ended September 30, 2011 (File No. 1-14760).
4.5.1	Registration Rights Agreement dated as of October 1, 2012 by and among RAIT and ARS VI Investor I, LLC (“ARS VI”). Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 4, 2012 (File No. 1-14760).
4.5.2	Amendment No. 1 to Registration Rights Agreement dated as of April 25, 2014 by and among RAIT and ARS VI. Incorporated by reference to RAIT’s Registration Statement on Form S-3 (Registration No. 333-195547).
4.5.3	Common Share Purchase Warrant No.1 dated October 17, 2012 issued by RAIT to ARS VI. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 23, 2012 (File No. 1-14760).
4.5.4	Common Share Appreciation Right No.1 dated October 17, 2012 issued by RAIT to ARS VI. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 23, 2012 (File No. 1-14760).
4.5.5	Common Share Purchase Warrant No. 2 dated November 15, 2012 issued by RAIT to ARS VI. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on November 21, 2012 (File No.1-14760).
4.5.6	Common Share Appreciation Right No. 2 dated November 15, 2012 issued by RAIT to ARS VI. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on November 21, 2012 (File No.1-14760).
4.5.7	Common Share Purchase Warrant No. 3 dated December 18, 2012 issued by RAIT to ARS VI. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 18, 2012 (File No.1-14760).
4.5.8	Common Share Appreciation Right No. 3 dated December 18, 2012 issued by RAIT to ARS VI. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 18, 2012 (File No.1-14760).
4.5.9	Common Share Purchase Warrant No. 4 dated March 27, 2014 issued by RAIT Financial Trust to ARS VI. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on March 27, 2014 (File No. 1-14760).
4.5.10	Common Share Appreciation Right No. 4 dated March 27, 2014 issued by RAIT Financial Trust to ARS VI. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on March 27, 2014 (File No. 1-14760).

68

Exhibit Number	Description of Documents
4.6.1	Base Indenture dated as of December 10, 2013 between RAIT, as issuer, and Wells Fargo Bank, National Association., as trustee. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 13, 2013 (File No. 1-14760).
4.6.2	Supplemental Indenture dated as of December 10, 2013 between RAIT, as issuer, and Wells Fargo Bank, National Association., as trustee. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 13, 2013 (File No. 1-14760).
4.6.3	Form of RAIT 4.00% Convertible Senior Note due 2033 (included in Exhibit 4.6.2). Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on December 13, 2013 (File No. 1-14760).
4.6.4	Second Supplemental Indenture, dated as of April 14, 2014, between RAIT Financial Trust, as issuer, and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to RAIT’s Form 8-A as filed with the SEC on April 14, 2014. (File No. 1-14760).
4.6.5	Form of 7.625% Senior Notes due 2024 (included as Exhibit A to Exhibit 4.6.4 hereto).
4.6.6	Third Supplemental Indenture, dated as of August 14, 2014, between RAIT, as Issuer, and Wells Fargo Bank, National Association, as trustee. Incorporated by reference to RAIT’s Form 8-A as filed with the SEC on August 14, 2014.
4.6.7	Form of 7.125% Senior Notes due 2019 (included as Exhibit A to Exhibit 4.6.6 hereto).
	Certain Instruments defining the rights of holders of long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.
10.1	Terms of 2015 Annual Incentive Compensation Plan (the “2015 AICP”) and the 2015 Long Term Incentive Plan (the “2015 LTIP”) and the 2015 awards made thereunder adopted under the RAIT 2012 Incentive Award Plan (“IAP”).  Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on April 6, 2016 (File No. 1-14760).
10.2	Terms of the 2015 AICP and the 2015 LTIP and the 2016 LTIP and the 2016 awards made thereunder adopted under the IAP. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on April 28, 2016 (File No. 1-14760).
10.3	RAIT 2016 Annual Incentive Compensation Plan Form of Target Cash Bonus Award Grant Agreement adopted under the RAIT 2012 Incentive Award Plan (“IAP”). Incorporated by reference to RAIT’s Form 10-Q for the quarterly period ended June 30, 2016 (File No. 1-14760).
10.4	RAIT 2016 Long Term Incentive Plan Form of Performance Share Unit Award Grant Agreement adopted under the IAP. Incorporated by reference to RAIT’s Form 10-Q for the quarterly period ended June 30, 2016 (File No. 1-14760).
10.5	Amendment 2016-1 to RAIT 2015 Long Term Incentive Plan Form of Performance Share Unit Award Grant Agreement adopted under the IAP. Incorporated by reference to RAIT’s Form 10-Q for the quarterly period ended June 30, 2016 (File No. 1-14760).
10.6	Share Award Grant Agreement dated as of May 23, 2016 from RAIT Financial Trust to Scott L.N. Davidson under the terms of the RAIT Financial Trust 2012 Incentive Award Plan.  Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on May 25, 2016.
10.7	Second Amendment dated as of July 28, 2016 among RAIT CMBS Conduit I, LLC (“Seller I”) and RAIT CRE Conduit III, LLC (“Seller III”), RAIT Financial Trust (to reaffirm its guaranty of the Citi MRA (defined below)) and Citibank, N.A. (“Citibank”) to the Amended and Restated Master Repurchase Agreement, dated as of July 28, 2014 among Seller I, Seller III and Citibank (the “Citi MRA”).  Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on July 29, 2016
10.8	Securities and Asset Purchase Agreement among RAIT Financial Trust, Jupiter Communities, LLC, RAIT TRS, LLC, the RAIT selling stockholders named therein, IRT and IROP dated September 27, 2016.  Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on September 27, 2016.
10.9	Binding Memorandum of Understanding, dated September 26, 2016, by and between RAIT Financial Trust and Scott F. Schaeffer. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on September 27, 2016.
10.10	Binding Memorandum of Understanding, dated September 26, 2016, by and between RAIT Financial Trust and Scott L.N. Davidson.  Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on September 27, 2016.
10.11	Binding Memorandum of Understanding, dated September 26, 2016, by and between RAIT Financial Trust and James J. Sebra.     Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on September 27, 2016.

69

Exhibit Number	Description of Documents
10.12	Assignment and Amendment No. 6 to Master Repurchase Agreement and Assignment and Amendment No. 4 to Pricing Letter, dated October 20, 2016 among RAIT CRE Conduit II, LLC, as seller, UBS Real Estate Securities Inc., as assignor, UBS AG, as assignee, and RAIT Financial Trust, as guarantor. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 24, 2016.
10.13	Assignment and Reaffirmation of Guaranty, dated October 20, 2016 among UBS Real Estate Securities Inc., as assignor, UBS AG, as assignee, and RAIT Financial Trust, as guarantor.  Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on October 24, 2016.
10.14	Employment Agreement dated November 1, 2016 between RAIT Financial Trust and Scott L.N. Davidson. Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on November 7, 2016.
12.1	Statements regarding computation of ratios as of September 30, 2016, filed herewith.
31.1	Rule 13a-14(a) Certification by the Chief Executive Officer of RAIT, filed herewith.
31.2	Rule 13a-14(a) Certification by the Chief Financial Officer of RAIT, filed herewith.
32.1	Section 1350 Certification by the Chief Executive Officer of RAIT, filed herewith.
32.2	Section 1350 Certification by the Chief Financial Officer of RAIT, filed herewith.
99.1	Material U.S. Federal Income Tax Considerations.  Incorporated by reference to RAIT’s Form 8-K as filed with the SEC on July 29, 2016.
101	Pursuant to Rule 405 of Regulation S-T, the following financial information from RAIT’s Quarterly Report on Form 10-Q for the period ended September 30, 2016 is formatted in XBRL interactive data files: (i) Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015; (ii) Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015; (iii) Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and 2015; (iv) Consolidated Statement of Changes in Equity for the nine months ended September 30, 2016; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015; and (vi) Notes to Unaudited Consolidated Financial Statements, filed herewith.

70

EX-12.1

Exhibit 12.1

RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED SHARE DIVIDENDS

Our ratio of earnings to fixed charges and our ratio of earnings to fixed charges and preferred share dividends for the periods indicated are set forth below. For purposes of calculating the ratios set forth below, earnings represent net income (loss) from our consolidated statements of operations, as adjusted for fixed charges; fixed charges represent interest expense and preferred share dividends represent income or loss allocated to preferred shares from our consolidated statements of operations.

The following table presents our ratio of earnings to fixed charges and our ratio of earnings to fixed charges and preferred share dividends for the nine-month period ended September 30, 2016 and for the five years ended December 31, 2015 (dollars in thousands):

	For the Nine-Month
	Period Ended			For the Years Ended December 31
	September 30, 2016			2015			2014					2013				2012				2011
Net income (loss)	$	(13,131	)	$	63,493		$	(289,975	)			$	(285,364	)		$	(168,341	)		$	(38,457	)
Add back fixed charges:
Interest expense		70,092			113,588			85,701			#		70,892				75,317				89,649
Earnings before fixed charges and preferred share dividends	$	56,961		$	177,081		$	(204,274	)			$	(214,472	)			(93,024	)			51,192
Fixed charges and preferred share dividends:
Interest expense		70,092			113,588			85,701					70,892				75,317				89,649
Preferred share dividends		25,850			32,830			28,993					22,616				14,660				13,649
Total fixed charges and preferred share dividends	$	95,942		$	146,418		$	114,694			#	$	93,508			$	89,977			$	103,298
Ratio of earnings to fixed charges		0.8	x		1.6	x	—			(1)		—			(1)	—			(1)	—			(1)
Ratio of earnings to fixed charges and preferred share dividends		0.6	x		1.2	x	—			(2)		—			(2)	—			(2)	—			(2)

(1) The dollar amount of the deficiency for the years ended December 31, 2014, 2013, 2012 and 2011 is $290.0 million, $285.4 million, $168.3 million and $38.5 million, respectively.

(2) The dollar amount of the deficiency for the years ended December 31, 2014, 2013, 2012 and 2011 is $319.0 million, $308.0 million, $183.0 million and $52.1 million, respectively.

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES

EXCHANGE ACT OF 1934, AS AMENDED

I, Scott F. Schaeffer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of RAIT Financial Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2016		/s/ Scott F. Schaeffer
	Name:	Scott F. Schaeffer
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES

EXCHANGE ACT OF 1934, AS AMENDED

I, James J. Sebra, certify that:

1. I have reviewed this quarterly report on Form 10-Q of RAIT Financial Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2016		/s/ James J. Sebra
	Name:	James J. Sebra
	Title:	Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of RAIT Financial Trust (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott F. Schaeffer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Scott F. Schaeffer

Scott F. Schaeffer

Chief Executive Officer

Date: November 9, 2016

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of RAIT Financial Trust (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James J. Sebra, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James J. Sebra

James J. Sebra

Chief Financial Officer and Treasurer

Date: November 9, 2016

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 07, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	RAS
Entity Registrant Name	RAIT FINANCIAL TRUST
Entity Central Index Key	0001045425
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		92,177,079

XML

Consolidated Balance Sheets - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Investment in mortgages and loans:
Commercial mortgages, mezzanine loans, and preferred equity interests		$ 1,373,615	$ 1,623,583
Allowance for loan losses		(18,655)	(17,097)
Total investment in mortgages and loans, net (including $1,074,583 and $1,428,961 held by consolidated VIEs, respectively)		1,354,960	1,606,486
Investments in real estate, net of accumulated depreciation of $156,613 and $158,688, respectively (including $192,765 and $252,376 held by consolidated VIEs, respectively)	[1]	808,749	986,942
Cash and cash equivalents		36,019	87,581
Restricted cash		229,957	207,599
Accrued interest receivable		41,603	47,343
Other assets		81,546	67,566
Intangible assets, net of accumulated amortization of $19,308 and $13,234, respectively		23,165	28,864
Assets of discontinued operations (See Note 16)		1,306,532	1,383,547
Total assets		3,882,531	4,415,928
Liabilities and Equity
Indebtedness, net of unamortized discounts, premiums and deferred financing costs of $36,719 and $53,092, respectively (including $1,326,212 and $1,762,672 held by consolidated VIEs, respectively)		1,975,863	2,399,475
Accrued interest payable		10,464	8,595
Accounts payable and accrued expenses		20,082	22,557
Derivative liabilities		1,748	4,727
Deferred taxes, borrowers’ escrows and other liabilities		168,692	197,908
Liabilities of discontinued operations (see Note 16)		906,225	952,530
Total liabilities		3,083,074	3,585,792
Series D cumulative redeemable preferred shares, $0.01 par value per share, 4,000,000 shares authorized, 4,000,000 and 4,000,000 shares issued and outstanding, respectively		90,728	85,395
Shareholders’ equity:
Common shares, $0.03 par value per share, 200,000,000 shares authorized 92,174,644 and 91,586,767 issued and outstanding, respectively, including 960,795 and 742,764 unvested restricted common share awards, respectively		2,766	2,748
Additional paid in capital		2,090,210	2,087,137
Accumulated other comprehensive income (loss)		(112)	(4,699)
Retained earnings (deficit)		(1,731,141)	(1,680,751)
Total shareholders’ equity		361,816	404,528
Noncontrolling interests - continuing operations		5,386	3,948
Noncontrolling interests - discontinued operations		341,527	336,265
Total noncontrolling interests		346,913	340,213
Total equity		708,729	744,741
Total liabilities and equity		3,882,531	4,415,928
7.75% Series A Cumulative Redeemable Preferred Stock
Shareholders’ equity:
Preferred shares, $0.01 par value per share		53	53
Total equity		53	53
8.375% Series B Cumulative Redeemable Preferred Stock
Shareholders’ equity:
Preferred shares, $0.01 par value per share		23	23
Total equity		23	23
8.875% Series C Cumulative Redeemable Preferred Stock
Shareholders’ equity:
Preferred shares, $0.01 par value per share		17	17
Total equity		17	17
Series E Cumulative Redeemable Preferred Stock
Shareholders’ equity:
Preferred shares, $0.01 par value per share

[1] As of September 30, 2016, two of our multifamily properties, with a carrying amount of $34,450, and two of our parcels of land, with a carrying amount of $12,556, were considered held-for-sale.

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Investment in mortgages and loans, net		$ 1,354,960	$ 1,606,486
Real estate, accumulated depreciation		156,613	158,688
Investments in real estate, net of accumulated depreciation	[1]	808,749	986,942
Intangible assets, accumulated amortization		19,308	13,234
Indebtedness, unamortized discounts, premiums and deferred financing costs		36,719	53,092
Indebtedness, net of unamortized discounts, premiums and deferred financing costs		$ 1,975,863	$ 2,399,475
Preferred shares, authorized		25,000,000	25,000,000
Common shares, par value		$ 0.03	$ 0.03
Common shares, shares authorized		200,000,000	200,000,000
Common shares, shares issued		92,174,644	91,586,767
Common shares, shares outstanding		92,174,644	91,586,767
Unvested restricted common share awards		960,795	742,764
VIE
Investment in mortgages and loans, net		$ 1,074,583	$ 1,428,961
Real estate, accumulated depreciation		29,770	26,398
Investments in real estate, net of accumulated depreciation		192,765	252,376
Intangible assets, accumulated amortization		3,304	1,446
Indebtedness, net of unamortized discounts, premiums and deferred financing costs		$ 1,326,212	$ 1,762,672
Series D Cumulative Redeemable Preferred Stock
Series D cumulative redeemable preferred shares, par value		$ 0.01	$ 0.01
Series D cumulative redeemable preferred shares, shares authorized		4,000,000	4,000,000
Series D cumulative redeemable preferred shares, shares issued		4,000,000	4,000,000
Series D cumulative redeemable preferred shares, shares outstanding		4,000,000	4,000,000
7.75% Series A Cumulative Redeemable Preferred Stock
Preferred shares, authorized		8,069,288	8,069,288
Preferred shares, dividend rate		7.75%	7.75%
Cumulative redeemable preferred shares, liquidation preference		$ 25.00	$ 25.00
Cumulative redeemable preferred shares, shares issued		5,344,353	5,306,084
Cumulative redeemable preferred shares, shares outstanding		5,344,353	5,306,084
Preferred shares, par value		$ 0.01	$ 0.01
8.375% Series B Cumulative Redeemable Preferred Stock
Preferred shares, authorized		4,300,000	4,300,000
Preferred shares, dividend rate		8.375%	8.375%
Cumulative redeemable preferred shares, liquidation preference		$ 25.00	$ 25.00
Cumulative redeemable preferred shares, shares issued		2,340,969	2,340,969
Cumulative redeemable preferred shares, shares outstanding		2,340,969	2,340,969
Preferred shares, par value		$ 0.01	$ 0.01
8.875% Series C Cumulative Redeemable Preferred Stock
Preferred shares, authorized		3,600,000	3,600,000
Preferred shares, dividend rate		8.875%	8.875%
Cumulative redeemable preferred shares, liquidation preference		$ 25.00	$ 25.00
Cumulative redeemable preferred shares, shares issued		1,640,425	1,640,425
Cumulative redeemable preferred shares, shares outstanding		1,640,425	1,640,425
Preferred shares, par value		$ 0.01	$ 0.01
Series E Cumulative Redeemable Preferred Stock
Preferred shares, authorized		4,000,000	4,000,000
Preferred shares, par value		$ 0.01	$ 0.01

[1] As of September 30, 2016, two of our multifamily properties, with a carrying amount of $34,450, and two of our parcels of land, with a carrying amount of $12,556, were considered held-for-sale.

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Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Investment interest income	$ 20,189	$ 24,468	$ 69,510	$ 71,823
Investment interest expense	(8,512)	(8,021)	(26,957)	(22,517)
Net interest margin	11,677	16,447	42,553	49,306
Property income	29,614	29,968	89,335	94,401
Fee and other income	1,946	2,537	5,974	14,760
Total revenue	43,237	48,952	137,862	158,467
Expenses:
Interest expense	13,298	14,723	43,135	46,259
Real estate operating expense	14,635	14,991	43,810	47,804
Compensation expense	6,245	5,541	17,367	15,648
General and administrative expense	3,708	3,769	12,007	12,762
Acquisition expense	197	153	376	1,392
Provision for loan losses	1,533	1,850	4,202	5,850
Depreciation and amortization expense	11,466	10,482	39,273	34,622
Total expenses	51,082	51,509	160,170	164,337
Operating (Loss) Income	(7,845)	(2,557)	(22,308)	(5,870)
Interest and other income (expense), net	(70)	(398)	30	(1,035)
Gains (losses) on assets	18,194	7,430	23,811	24,711
Gains (losses) on extinguishments of debt	(6)		998
Asset impairment	(18,872)	(7,250)	(26,658)	(7,250)
Change in fair value of financial instruments	(1,375)	620	(7,055)	13,466
Income (loss) before taxes	(9,974)	(2,155)	(31,182)	24,022
Income tax benefit (provision)	15,302	(23)	18,051	(1,320)
Income from continuing operations	5,328	(2,178)	(13,131)	22,702
Discontinued operations:
Income (loss) from discontinued operations	4,112	27,004	38,473	28,831
Net income (loss)	9,440	24,826	25,342	51,533
(Income) loss allocated to preferred shares	(8,715)	(8,303)	(25,850)	(24,383)
(Income) loss allocated to noncontrolling interests	(729)	(23,055)	(24,920)	(21,823)
Net income (loss) allocable to common shares	(4)	(6,532)	(25,428)	5,327
Amount attributable to common shares
Net income (loss) available to common shares from continuing operations	(2,048)	(10,009)	(35,526)	24
Net income (loss) available to common shares from discontinued operations	2,044	3,477	10,098	5,303
Net income (loss)	$ (4)	$ (6,532)	$ (25,428)	$ 5,327
Earnings (loss) per share-Basic:
Earnings (loss) per share from continuing operations	$ (0.02)	$ (0.11)	$ (0.39)
Earnings (loss) per share from discontinued operations	$ 0.02	0.04	0.11	$ 0.06
Earnings (loss) per share-Basic		$ (0.07)	$ (0.28)	$ 0.06
Weighted-average shares outstanding-Basic	91,201,784	87,110,958	91,137,041	83,799,244
Earnings (loss) per share-Diluted:
Earnings (loss) per share from continuing operations	$ (0.02)	$ (0.11)	$ (0.39)
Earnings (loss) per share from discontinued operations	$ 0.02	0.04	0.11	$ 0.06
Earnings (loss) per share-Diluted		$ (0.07)	$ (0.28)	$ 0.06
Weighted average shares outstanding-Diluted	91,201,784	87,110,958	91,137,041	85,645,609

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ 9,440	$ 24,826	$ 25,342	$ 51,533
Other comprehensive income (loss):
Change in fair value of interest rate hedges	3	(248)	(133)	(430)
Realized (gains) losses on interest rate hedges reclassified to earnings	785	3,831	4,824	13,196
Total other comprehensive income from continuing operations	788	3,583	4,691	12,766
Discontinued operations:
Other comprehensive income (loss) from discontinued operations	468		(719)
Total other comprehensive income	1,256	3,583	3,972	12,766
Comprehensive income (loss) before allocation to noncontrolling interests	10,696	28,409	29,314	64,299
(Income) loss allocated to noncontrolling interests	(729)	(23,055)	(24,920)	(21,823)
Allocation to noncontrolling interests - other comprehensive (income) loss	(396)		615
Comprehensive income (loss)	$ 9,571	$ 5,354	$ 5,009	$ 42,476

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Consolidated Statement of Changes in Equity - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands	Total	7.75% Series A Cumulative Redeemable Preferred Stock	8.375% Series B Cumulative Redeemable Preferred Stock	8.875% Series C Cumulative Redeemable Preferred Stock	Common Shares	Additional Paid In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Deficit)	Total Shareholders' Equity	Total Shareholders' Equity Preferred Series D	Noncontrolling Interests
Beginning Balance at Dec. 31, 2015	$ 744,741	$ 53	$ 23	$ 17	$ 2,748	$ 2,087,137	$ (4,699)	$ (1,680,751)	$ 404,528		$ 340,213
Beginning Balance (in shares) at Dec. 31, 2015		5,306,084	2,340,969	1,640,425	91,586,767
Net income (loss)	25,342							422	422		24,920
Preferred shares issued, net	610					610			610
Preferred shares issued, net (shares)		38,269
Preferred dividends	(20,517)							(20,517)	(20,517)
Preferred Series D discount amortization	(5,333)							(5,333)		$ (5,333)
Common dividends declared	(24,962)							(24,962)	(24,962)
Other comprehensive income (loss), net	3,972						4,587		4,587		(615)
Share-based compensation	2,867				$ 26	2,841			2,867
Share-based compensation (in shares)					877,814
Issuance of noncontrolling interests	689										689
Distribution to noncontrolling interests	(23,248)										(23,248)
Derecognition of noncontrolling interests	4,954										4,954
Common shares activity related to equity compensation	(386)				$ (8)	(378)			(386)
Common shares activity related to equity compensation (in shares)					(296,745)
Common shares issued, net (in shares)					6,808
Ending Balance at Sep. 30, 2016	$ 708,729	$ 53	$ 23	$ 17	$ 2,766	$ 2,090,210	$ (112)	$ (1,731,141)	$ 361,816		$ 346,913
Ending Balance (in shares) at Sep. 30, 2016		5,344,353	2,340,969	1,640,425	92,174,644

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating activities:
Net income (loss)	$ 25,342	$ 51,533
Adjustments to reconcile net income (loss) to cash flow from operating activities:
Provision for loan losses	4,202	5,850
Share-based compensation expense	3,673	3,553
Depreciation and amortization	66,332	51,190
Amortization of deferred financing costs and debt discounts	16,202	13,103
Deferral of loan origination costs, net	(1,537)	(2,716)
Amortization of above/below market leases	(1,336)	(44)
(Gains) losses on assets	(56,074)	(24,711)
(Gains) losses on extinguishment of debt	(440)
TSRE financing extinguishment expenses		23,219
(Gains) on IRT merger with TSRE	(732)	(64,012)
Asset impairment	26,658	7,250
Change in fair value of financial instruments	7,055	(13,466)
Provision (benefit) for deferred taxes	(18,090)	851
Changes in assets and liabilities:
Decrease (increase) in accrued interest receivable	5,702	(2,305)
Decrease (increase) in other assets	(4,567)	482
Increase in accrued interest payable	3,300	3,409
(Decrease) increase in accounts payable and accrued expenses	516	(19,453)
Increase in other liabilities	1,415	3,660
Origination of conduit loans	(13,800)	(317,154)
Sales of conduit loans	35,177	339,542
Net conduit loans (originated) sold	21,377	22,388
Cash flows provided by (used in) operating activities	98,998	59,781
Investing activities:
Proceeds from sales or repayments of other securities		31,241
Origination of loans for investment	(82,416)	(362,574)
Principal repayments on loans	308,254	169,611
Investments in real estate	(23,613)	(44,079)
IRT's acquisition of TSRE, net of cash acquired		(137,094)
Proceeds from the disposition of real estate	212,580	40,089
(Increase) decrease in restricted cash	(56,882)	6,454
Cash flows provided by (used in) investing activities	357,923	(296,352)
Financing activities:
Repayments on secured credit facilities and loans payable on real estate	(243,854)	(273,872)
Proceeds from secured credit facilities, term loans and loans payable on real estate	199,480	488,725
Repayments and repurchase of CDO notes payable and floating rate transactions	(465,622)	(222,955)
Proceeds from issuance of senior notes from floating rate CMBS transactions	22,559	181,215
Repurchase of convertible notes and senior notes	(47,614)
Repayments of senior secured notes	(6,000)	(6,000)
Net proceeds (repayments) related to conduit loan repurchase agreements	(30,153)	(27,242)
Net proceeds (repayments) related to floating rate loan repurchase agreements	102,635	126,389
Proceeds from issuance of joint venture interests accounted for as indebtedness	24,796
Distribution to noncontrolling interests	(23,246)	(15,577)
Issuance of noncontrolling interests	689
TSRE financing extinguishment expenses		(23,219)
Payments for deferred costs and convertible senior note hedges	(2,903)	(10,935)
Preferred share issuance, net of costs incurred	610	13,061
Common share issuance, net of costs incurred	(1,192)	41,657
Distributions paid to preferred shareholders	(22,643)	(19,445)
Distributions paid to common shareholders	(24,930)	(44,305)
Cash flows (used in) provided by financing activities	(517,388)	207,497
Net change in cash and cash equivalents	(60,467)	(29,074)
'Net change in cash and cash equivalents from discontinued operations	(8,905)	2,181
'Net change in cash and cash equivalents from continuing operations	(51,562)	(31,255)
Cash and cash equivalents at the beginning of the period	87,581	106,963
Cash and cash equivalents at the end of the period	$ 36,019	$ 75,708

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THE COMPANY

9 Months Ended

Sep. 30, 2016

Nature Of Operations [Abstract]

THE COMPANY

NOTE 1: THE COMPANY

RAIT Financial Trust is a multi-strategy commercial real estate company that is a self-managed and self-advised Maryland real estate investment trust, or REIT.  References to “RAIT”, “we”, “us”, and “our” refer to RAIT Financial Trust and its subsidiaries, unless the context otherwise requires. We invest in and manage a portfolio of real estate-related assets, including direct ownership of real estate properties, and provide a comprehensive set of debt financing options to the real estate industry. We have used our vertically integrated platform to originate commercial real estate loans, acquire commercial real estate properties and invest in, manage and service commercial real estate assets.

We finance a substantial portion of our investments through borrowing and securitization strategies seeking to match the maturities and terms of our financings with the maturities and terms of those investments, and to mitigate interest rate risk through derivative instruments.

On September 27, 2016, we entered into a securities and asset purchase agreement, or the IRT internalization agreement, with one of our consolidated variable interest entities, Independence Realty Trust, Inc. or IRT, pursuant to which IRT will complete a management internalization, or the IRT management internalization, and separation from us.  The IRT management internalization consists of two parts: (i) the acquisition of Independence Realty Advisors, LLC, or the IRT advisor, which is our subsidiary and IRT’s external advisor, and (ii) the acquisition of certain assets and the assumption of certain liabilities relating to our multifamily property management business which we refer to as RAIT Residential, including property management contracts relating to apartment properties owned by ourselves, IRT, and third parties.  The purchase price to be paid by IRT for the IRT management internalization is $43.0 million, subject to certain pro rations at closing.  The internalization agreement provides that the closing of the management internalization will occur no earlier than December 20, 2016.  As part of the same agreement, we also agreed to sell up to all of the 7,269,719 shares of IRT’s common stock owned by certain of our subsidiaries, subject to market conditions.  See Note 16: Discontinued Operations and Note 17: Subsequent Events for further information.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with U.S. generally accepted accounting principles, or GAAP. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2015 included in our Annual Report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position and consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

The Consolidated Statement of Operations for the nine-month period ended September 30, 2016 includes the impact of correcting the reporting of certain activity that occurred in the three-month period ended March 31, 2016. Specifically, the correction adjusts a clerical error made in the determination of the amount of investment interest expense by increasing investment interest expense and decreasing interest expense by $1,424 for the three-month period ended March 31, 2016. This correction had no impact to any other periods. We will also correct this error in our Consolidated Statement of Operations for the three months ended March 31, 2016 when it is presented in our filing on Form 10-Q for the quarter ended March 31, 2017.

We evaluated this correction and determined, based on quantitative and qualitative factors, that the change was not material to the consolidated financial statements taken as a whole for any previously filed consolidated financial statements.

As of September 30, 2016, certain entities or distinguishable components of RAIT have been presented as discontinued operations. See Note 16: Discontinued Operations for further information.

b. Principles of Consolidation

The consolidated financial statements reflect our accounts and the accounts of our majority-owned and/or controlled subsidiaries. We also consolidate entities that are variable interest entities, or VIEs, where we have determined that we are the primary beneficiary of such entities. The portions of these entities that we do not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements. All intercompany accounts and transactions have been eliminated in consolidation.

Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 810, “Consolidation”, the determination of whether to consolidate a VIE is based on the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance together with either the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. We define the power to direct the activities that most significantly impact the VIE’s economic performance as the ability to buy, sell, refinance, or recapitalize assets or entities, and solely control other material operating events or items of the entity. For our commercial mortgages, mezzanine loans, and preferred equity investments, certain rights we hold are protective in nature and would preclude us from having the power to direct the activities that most significantly impact the VIE’s economic performance. Assuming both criteria are met, we would be considered the primary beneficiary and would consolidate the VIE. We will continually assess our involvement with VIEs and consolidate the VIEs when we are the primary beneficiary. During the second quarter of 2016, we began presenting our floating rate securitizations as VIEs and corrected the prior period disclosure.  In addition, we began presenting assets and liabilities of consolidated VIEs in a parenthetical disclosure on the consolidated balance sheets.  As of September 30, 2016, we corrected the parenthetical disclosure on the consolidated balance sheet as of December 31, 2015, as certain indebtedness that eliminated in consolidation was excluded from this disclosure.  After adjusting for liabilities related to discontinued operations, this decreased the amount of liabilities held by variable interest entities by $481,865.  See Note 8: Variable Interest Entities for additional disclosures pertaining to VIEs and Note 16: Discontinued Operations for additional disclosures pertaining to discontinued operations.

For entities that we do not consolidate, we account for our investment in them either under the equity method pursuant to ASC Topic 323, “Investments-Equity Method and Joint Ventures” or cost method pursuant to ASC Topic 325, “Investments – Other”. During the nine months ended September 30, 2016, we wrote off $864 of our retail property management subsidiary’s investment in an entity because it no longer held the investment. The charge was reported in asset impairment in the consolidated statements of operations.

c. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The items that include significant estimates are fair value of financial instruments and allowance for loan losses. Actual results could differ from those estimates.

d. Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and highly liquid investments with maturities of three months or less when purchased.  Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250 per institution.  We mitigate credit risk by placing cash and cash equivalents with major financial institutions.  To date, we have not experienced any losses on cash and cash equivalents.

e. Restricted Cash

Restricted cash consists primarily of tenant escrows and borrowers’ funds held by us to fund certain expenditures or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans.  As of September 30, 2016 and December 31, 2015, we had $126,896 and $160,453, respectively, of tenant escrows and borrowers’ funds.

Restricted cash also includes proceeds from the issuance of securitization notes that are restricted for the purpose of funding additional investments in securities subsequent to the balance sheet date.  As of September 30, 2016 and December 31, 2015, we had $103,061 and $47,146, respectively, of restricted cash held by securitizations.

f. Investments in Commercial Mortgage Loans, Mezzanine Loans and Preferred Equity Interests

We invest in commercial mortgage loans, mezzanine loans and preferred equity interests. We account for our investments in commercial mortgage loans, mezzanine loans and preferred equity interests at amortized cost. The carrying value of these investments is adjusted for origination discounts/premiums, nonrefundable fees and direct costs for originating loans which are amortized into income on a level yield basis over the terms of the loans.

g. Allowance for Loan Losses, Impaired Loans and Non-accrual Status

We maintain an allowance for loan losses on our investments in commercial mortgage loans, mezzanine loans and preferred equity interests. Management’s periodic evaluation of the adequacy of the allowance is based upon expected and inherent risks in the portfolio, the estimated value of underlying collateral, and current economic conditions. The credit quality of our loans is monitored via quantitative and qualitative metrics.  Quantitatively we evaluate items such as the current debt service coverage ratio and annual net operating income of the underlying property.  Qualitatively we evaluate items such as recent operating performance of the underlying property and history of the borrower’s ability to provide financial support.  These items together are considered in developing our view of each loan’s risk rating which are categorized as either watchlist/impaired or satisfactory. Management reviews loans for impairment and establishes specific reserves when a loss is probable under the provisions of FASB ASC Topic 310, “Receivables.” A loan is impaired when it is probable that we may not collect all principal and interest payments according to the contractual terms. As part of the detailed loan review, we consider many factors about the specific loan, including payment history, asset performance, borrower’s financial capability and other characteristics. Management evaluates loans for non-accrual status each reporting period. A loan is placed on non-accrual status when the loan payment deficiencies exceed 90 days unless it is well secured and in the process of collection, or if the collection of principal and interest in full is not probable. Payments received for non-accrual loans are applied to accrued interest receivable. Past due interest is recognized on non-accrual loans when they are removed from non-accrual status and are making current interest payments. The allowance for loan losses is increased by the provision for loan losses and decreased by charge-offs (net of recoveries). We charge off a loan when we determine that all commercially reasonable means of recovering the loan balance have been exhausted.  This may occur at a variety of times, including when we receive cash or other assets in a pre-foreclosure sale or take control of the underlying collateral in full satisfaction of the loan upon foreclosure. We consider circumstances such as these to indicate that the loan collection process has ceased and that a loan is uncollectible.

h. Investments in Real Estate

Investments in real estate are shown net of accumulated depreciation. We capitalize those costs that have been determined to improve the real property and depreciate those costs on a straight-line basis over the useful life of the asset. We depreciate real property using the following useful lives: buildings and improvements—30 to 40 years; furniture, fixtures, and equipment—5 to 10 years; and tenant improvements—shorter of the lease term or the life of the asset. Costs for ordinary maintenance and repairs are charged to expense as incurred.

Acquisitions of real estate assets and any related intangible assets are recorded initially at fair value under FASB ASC Topic 805, “Business Combinations.” Fair value is determined by management based on market conditions and inputs at the time the asset is acquired. The fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases for acquired in-place leases and the value of tenant relationships, based in each case on their fair values. Purchase accounting is applied to assets and liabilities associated with the real estate acquired. Transaction costs and fees incurred related to acquisitions are expensed as incurred.

Upon the acquisition of properties, we estimate the fair value of acquired tangible assets (consisting of land, building and improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases and tenant relationships), and assumed debt at the date of acquisition, based on the evaluation of information and estimates available at that date. In determining the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the differences between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease. The capitalized above-market lease values and the capitalized below-market lease values are amortized as an adjustment to property income over the lease term.

The aggregate value of in-place leases is determined by evaluating various factors, including an estimate of carrying costs during the expected lease-up periods, current market conditions and similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, legal and other related costs. The value assigned to this intangible asset is amortized over the assumed lease up period.

Management reviews our investments in real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on an estimate of the future undiscounted cash flows (excluding interest charges) expected to result from the long-lived asset’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a long-lived asset, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property.

i. Revenue Recognition

1) Interest income—We recognize interest income from investments in commercial mortgage loans, mezzanine loans, and preferred equity interests on a yield to maturity basis. Certain of our commercial mortgage loans, mezzanine loans and preferred equity interests provide for the accrual of interest at specified rates which differ from current payment terms. Interest income is recognized on such loans at the accrual rate subject to management’s determination that accrued interest and outstanding principal are ultimately collectible. Management will cease accruing interest on these loans when it determines that the interest income may not be collectible based on the ultimate value of the underlying collateral using discounted cash flow models and market based assumptions. The accrued interest receivable associated with these loans as of September 30, 2016 and December 31, 2015 was $28,782 and $34,132, respectively.  These loans are considered to be impaired when the total amount owed exceeds the estimated value of the underlying collateral.  None of these loans were considered to be impaired as of September 30, 2016 and December 31, 2015.

Origination fees and direct loan origination costs on our investments in commercial mortgages, mezzanine loans and preferred equity interests are deferred and amortized to investment interest income, using the effective interest method, over the contractual life of the underlying loan security or loan, in accordance with FASB ASC Topic 310, “Receivables.”

2) Property income—We generate property income from tenant rent and other tenant-related activities at our consolidated real estate properties. For multi-family real estate properties, property income is recorded when due from residents and recognized monthly as it is earned and realizable, under lease terms which are generally for periods of one year or less. For retail and office real estate properties, property income is recognized on a straight-line basis from the later of the date of the commencement of the lease or the date of acquisition of the property subject to existing leases, which averages minimum rents over the terms of the leases. For retail and office real estate properties, leases also typically provide for tenant reimbursement of a portion of common area maintenance and other operating expenses to the extent that a tenant’s pro rata share of expenses exceeds a base year level set in the lease.

3) Fee and other income—We generate fee and other income through our various subsidiaries by (a) funding conduit loans for sale into unaffiliated commercial mortgage-backed securities, or CMBS, securitizations, (b) providing or arranging to provide financing to our borrowers, (c) providing ongoing asset management services to investment portfolios under cancelable management agreements, and (d) providing property management services to third parties. We recognize revenue for these activities when the fees are fixed or determinable, are evidenced by an arrangement, collection is reasonably assured and the services under the arrangement have been provided. While we may receive asset management fees when they are earned, we eliminate earned asset management fee income from securitizations while such securitizations are consolidated. During the three and nine months ended September 30, 2016, we earned $340 and $1,118, respectively, of asset management fees, which were eliminated as they were associated with consolidated securitizations.  During the three and nine months ended September 30, 2015, we earned $427 and $1,485, respectively, of asset management fees, which were eliminated as they were associated with consolidated securitizations.

Also, during the three and nine months ended September 30, 2016 we earned $1,727 and $5,141 of asset management fees, respectively, and $206 and $350 of incentive fees, respectively, related to our advisory agreement with IRT.  During the three and nine months ended September 30, 2015 we earned $1,259 and $3,306 of asset management fees, respectively, and $0 and $425 of incentive fees, respectively, related to our advisory agreement with IRT. During the three and nine months ended September 30, 2016 we also earned $1,219 and $3,710, respectively, of property management and leasing fees related to our property management agreements with IRT’s properties.   During the three and nine months ended September 30, 2015 we also earned $861 and $2,381, respectively, of property management and leasing fees related to our property management agreements with IRT’s properties. As we consolidate IRT, these fees are eliminated in consolidation.

j. Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

• Level 1: Valuations are based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are equity securities listed in active markets. As such, valuations of these investments do not entail a significant degree of judgment.

• Level 2: Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

• Level 3: Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.  

The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of investment, whether the investment is new, whether the investment is traded on an active exchange or in the secondary market, and the current market condition. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that management believes market participants would use in pricing the asset or liability at the measurement date. We use prices and inputs that management believes are current as of the measurement

date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be transferred from Level 1 to Level 2 or Level 2 to Level 3.

Many financial instruments have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that buyers in the market are willing to pay for an asset. Ask prices represent the lowest price that sellers in the market are willing to accept for an asset. For financial instruments whose inputs are based on bid-ask prices, we do not require that fair value always be a predetermined point in the bid-ask range. Our policy is to allow for mid-market pricing and adjusting to the point within the bid-ask range that results in our best estimate of fair value.

Fair value for certain of our Level 3 financial instruments is derived using internal valuation models. These internal valuation models include discounted cash flow analyses developed by management using current interest rates, estimates of the term of the particular instrument, specific issuer information and other market data for securities without an active market. In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, the impact of our own credit spreads is also considered when measuring the fair value of financial assets or liabilities, including derivative contracts. Where appropriate, valuation adjustments are made to account for various factors, including bid-ask spreads, credit quality and market liquidity. These adjustments are applied on a consistent basis and are based on observable inputs where available. Management’s estimate of fair value requires significant management judgment and is subject to a high degree of variability based upon market conditions, the availability of specific issuer information and management’s assumptions.

k. Investments in Securities

During the first quarter of 2015, we sold all our remaining investments in securities with an aggregate fair value of $31,412 and we had no investments in securities as of September 30, 2016 and December 31, 2015.

l. Transfers of Financial Assets

We account for transfers of financial assets under FASB ASC Topic 860, “Transfers and Servicing”, as either sales or financings.  Transfers of financial assets that result in sales accounting are those in which (1) the transfer legally isolates the transferred assets from the transferor, (2) the transferee has the right to pledge or exchange the transferred assets and no condition both constrains the transferee’s right to pledge or exchange the assets and provides more than a trivial benefit to the transferor, and (3) the transferor does not maintain effective control over the transferred assets.  If the transfer does not meet these criteria, the transfer is accounted for as a financing.  Financial assets that are treated as sales are removed from our accounts with any realized gain (loss) reflected in earnings during the period of sale.  Financial assets that are treated as financings are maintained on the balance sheet with proceeds received from the legal transfer reflected as securitized borrowings or security-related receivables.

m. Deferred Financing Costs

Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method.

n. Intangible Assets

Intangible assets on our consolidated balance sheets represent identifiable intangible assets acquired in business acquisitions. We amortize identified intangible assets to expense over their estimated lives using the straight-line method. We evaluate intangible assets for impairment as events and circumstances change, in accordance with FASB ASC Topic 360, “Property, Plant, and Equipment.” The gross carrying amount for our customer relationships was $14,997 and $19,149 as of September 30, 2016 and December 31, 2015, respectively. The gross carrying amount for our customer relationships has decreased as $4,151 of these assets became fully amortized during the nine months ended September 30, 2016, $2,552 of which was due to the acceleration of amortization as a result of the cancellation of two customer relationships. The gross carrying amount for our in-place leases, above market leases, and ground lease was $25,976 and $23,047 as of September 30, 2016 and December 31, 2015, respectively. The gross carrying amount for Urban Retail’s trade name was $1,500 as of September 30, 2016 and December 31, 2015. The accumulated amortization for our intangible assets was $19,308 and $13,234 as of September 30, 2016 and December 31, 2015, respectively. We recorded amortization expense of $2,333 and $1,700 for the three months ended September 30, 2016 and 2015, respectively, and $10,105 and $5,707 for the nine months ended September 30, 2016 and 2015, respectively. Based on the intangible assets identified above, we expect to record amortization expense of intangible assets of $2,045 for the remainder of 2016, $5,327 for 2017, $3,605 for 2018, $3,023 for 2019, $2,528 for 2020 and $6,638 thereafter.  

o. Goodwill

Goodwill on our consolidated balance sheet represented the amounts paid in excess of the fair value of the net assets acquired from business acquisitions accounted for under FASB ASC Topic 805, “Business Combinations.” Pursuant to FASB ASC Topic 350, “Intangibles-Goodwill and Other”, goodwill is not amortized to expense but rather is analyzed for impairment. We evaluate goodwill for impairment on an annual basis and as events and circumstances change, in accordance with FASB ASC Topic 350. As of September 30, 2016 and December 31, 2015, we have $8,854 of goodwill that is included in Other Assets in the accompanying consolidated balance sheets.

p. Income Taxes

RAIT, Taberna Realty Finance Trust, or TRFT, and IRT have each elected to be taxed as a REIT and to comply with the related provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. Accordingly, we generally will not be subject to U.S. federal income tax to the extent of our dividends to shareholders and as long as certain asset, income and share ownership tests are met. If we were to fail to meet these requirements, we would be subject to U.S. federal income tax, which could have a material adverse impact on our results of operations and amounts available for dividends to our shareholders. Management believes that all of the criteria to maintain RAIT’s, TRFT’s, and IRT’s REIT qualification have been met for the applicable periods, but there can be no assurance that these criteria will continue to be met in subsequent periods.  

We maintain various taxable REIT subsidiaries, or TRSs, which may be subject to U.S. federal, state and local income taxes and foreign taxes. Current and deferred taxes are provided on the portion of earnings (losses) recognized by us with respect to our interest in domestic TRSs. Deferred income tax assets and liabilities are computed based on temporary differences between our GAAP consolidated financial statements and the federal and state income tax basis of assets and liabilities as of the consolidated balance sheet date. We evaluate the realizability of our deferred tax assets (e.g., net operating loss and capital loss carryforwards) and recognize a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of our deferred tax assets will not be realized. When evaluating the realizability of our deferred tax assets, we consider estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires management to forecast our business and general economic environment in future periods. Changes in estimate of deferred tax asset realizability, if any, are included in income tax expense on the consolidated statements of operations.

Our TRS entities generate taxable revenue from advisory fees for services provided to IRT and collateral management fees from consolidated securitizations. In consolidation, these fees are eliminated as IRT and securitizations are included in the consolidated group. Nonetheless, all income taxes are expensed and are paid by the TRSs in the year in which the revenue is received. These income taxes are not eliminated when the related revenue is eliminated in consolidation.

The TRS entities may be subject to tax laws that are complex and potentially subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws. Actual income taxes paid may vary from estimates depending upon changes in income tax laws, actual results of operations, and the final audit of tax returns by taxing authorities. Tax assessments may arise several years after tax returns have been filed. We review the tax balances of our TRS entities quarterly and, as new information becomes available, the balances are adjusted as appropriate.

During the three and nine months ended September 30, 2016, we recognized a deferred tax benefit of $15,302 related to the release of a valuation allowance on our deferred tax assets due to projected taxable income at our TRS entities emanating from the IRT internalization agreement described in Note 1: The Company. We expect to utilize this deferred tax benefit upon the closing of the IRT management internalization, which is expected to occur in December of 2016 as described in Note 16: Discontinued Operations.

q. Recent Accounting Pronouncements

Adopted within these Financial Statements

In February 2015, the FASB issued an accounting standard classified under FASB ASC Topic 810, “Consolidation”. This accounting standard amends the consolidation analysis required under GAAP and requires management to reevaluate all previous consolidation conclusions. This standard considers limited partnerships to be VIEs, unless the limited partners have either substantive kick-out or participating rights. The presumption that a general partner should consolidate a limited partnership has also been eliminated. The standard amends the effect that fees paid to a decision maker or service provider have on the consolidation analysis, as well as amends how variable interests held by a reporting entity’s related parties affect the consolidation conclusion. This standard also clarifies how to determine whether equity holders as a group have power over an entity. This standard was effective for interim and annual reporting periods beginning on or after December 15, 2015, with early adoption permitted. The adoption of this accounting standard did not have an impact on our previous conclusions with respect to the entities consolidated in our consolidated financial statements.

In April 2015, the FASB issued an accounting standard classified under FASB ASC Topic 835, “Interest”. This accounting standard amends existing guidance to change reporting requirements for debt issuance costs by requiring debt issuance costs to be presented on the balance sheet as a direct deduction from the debt liability. This standard was effective for interim and annual reporting periods beginning on or after December 15, 2015, with an early adoption permitted. Retrospective application to prior periods is required. The adoption of this accounting standard resulted in the reclassification of $31,368 of deferred costs, net of $33,769 of accumulated amortization, as of December 31, 2015 to total indebtedness on our consolidated balance sheet.

In September 2015, the FASB issued an accounting standard classified under FASB ASC Topic 805, “Business Combinations”.  This accounting standard amends existing guidance related to measurement period adjustments by requiring the adjustments to be recognized prospectively with disclosure of the impact of the adjustments had they been applied previously.  This standard was effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted.  As this standard only applies to measurement period adjustments that occur after the effective date, this standard did not have a material impact on our consolidated financial statements.

Not Yet Adopted Within These Financial Statements

In May 2014, the FASB issued an accounting standard classified under FASB ASC Topic 606, “Revenue from Contracts with Customers”. This accounting standard generally replaces existing guidance by requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This accounting standard applies to all contracts with customers, except those that are within the scope of other Topics in the FASB ASC. During 2016, the FASB issued three amendments to this accounting standard which provide further clarification to this accounting standard. These standards amending FASB ASC Topic 606 are currently effective for annual reporting periods beginning after December 15, 2017. Management is currently evaluating the impact that these standards may have on our consolidated financial statements.

In January 2016, the FASB issued an accounting standard classified under FASB ASC Topic 825, “Financial Instruments”. This accounting standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.  Among other things, the amendment (i) eliminates certain disclosure requirements for financial instruments measured at amortized cost; (ii) requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) requires separate presentation, in other comprehensive income, of the change in fair value of a liability, when the fair value option has been elected, resulting from a change in the instrument-specific credit risk; and (iv) requires separate presentation of financial instruments by measurement category and form.  This standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted for the separate presentation of changes in fair value due to changes in instrument-specific credit risk. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In February 2016, the FASB issued an accounting standard classified under FASB ASC Topic 842, “Leases”.  This accounting standard amends lease accounting by requiring the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases on the balance sheet and disclosing key information about leasing arrangements.  This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years.  Early application of the amendments in this standard is permitted. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 815, “Derivatives and Hedging”.  This accounting standard clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met.  This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.  Management does not expect this standard to have a significant impact on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 815, “Derivatives and Hedging”. This accounting standard clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts.  This accounting standard clarifies what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative.  Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks.  This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period. Management does not expect this standard to have a significant impact on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 718, “Compensation – Stock Compensation”.  This accounting standard simplifies several aspects of the accounting for share-based payment award transactions, including: (i) income tax consequences; (ii) classification of awards as either equity or liabilities; and (iii) classification on the statement of cash flows.  This standard is effective for annual periods beginning after December 15, 2016, and interim period within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.  

In June 2016, the FASB issued an accounting standard classified under FASB ASC Topic 326, “Financial Instruments-Credit Losses”.  The amendments in this standard provide an approach based on expected losses to estimate credit losses on certain types of financial instruments.  The amendments also modify the impairment model for available for sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  The amendments in this standard expand the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses.  In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.  This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Management is currently evaluating the impact that this standard will have on our consolidated financial statements.

In August 2016, the FASB issued an accounting standard classified under FASB ASC Topic 230, “Statement of Cash Flows”.  This accounting standard provides guidance on eight specific cash flow issues; (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies; including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions; and (viii) separately identifiable cash flows and application of the predominance principle.  The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  Management is currently evaluating the impact that this standard may have on our consolidated statement of cash flows.

In October 2016, the FASB issued an accounting standard classified under FASB ASC Topic 740, “Income Taxes”.  The amendments in this accounting standard provide that the current and deferred income tax consequences of an intra-entity transfer of an asset other than inventory should be recognized when the transfer occurs rather than when the asset has been sold to an outside party.   Two common examples of assets included in the scope of this accounting standard are intellectual property and property, plant, and equipment.  The amendments in this standard are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods.  Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued.  The amendments in this accounting standard should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In October 2016, the FASB issued an accounting standard classified under FASB ASC Topic 810, “Consolidation”.  The amendments in this accounting standard provide guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE.  The amendments in this accounting standard do not change the characteristics of a primary beneficiary in current GAAP.  A primary beneficiary of a VIE has both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.  If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a VIE), the amendments in this accounting standard require that the reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interest in a VIE and, on a proportionate basis, its indirect variable interest in a VIE held through related parties, including related parties that are under common control with the reporting entity.  If after performing that assessment, a reporting entity that is the single decision maker of a VIE concludes that it does not have the characteristics of a primary beneficiary, the amendments continue to require that the reporting entity evaluate whether it and one or more of its related parties under common control, as a group, have the characteristics of a primary beneficiary.  The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

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INVESTMENTS IN LOANS

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

INVESTMENTS IN LOANS

NOTE 3: INVESTMENTS IN LOANS

Investments in Commercial Mortgage Loans, Mezzanine Loans, and Preferred Equity Interests

The following table summarizes our investments in commercial mortgage loans, mezzanine loans and preferred equity interests as of September 30, 2016:

	Unpaid Principal Balance			Unamortized (Discounts) Premiums			Carrying Amount			Number of Loans		Weighted- Average Coupon (1)			Range of Maturity Dates (2)
Commercial Real Estate (CRE)
Commercial mortgage loans (3)	$	1,228,732		$	(902	)	$	1,227,830			100		5.7	%	Oct. 2016 - Dec. 2025
Mezzanine loans		110,055			(219	)		109,836			34		9.3	%	Oct. 2016 - Jun. 2027
Preferred equity interests		36,828			(1	)		36,827			14		7.2	%	Jan. 2017 - Jan. 2029
Total CRE		1,375,615			(1,122	)		1,374,493			148		6.0	%
Deferred fees, net		(878	)		-			(878	)
Total	$	1,374,737		$	(1,122	)	$	1,373,615

(1) Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

(2) Does not include the maturity dates of four loans all of which had maturity dates prior to September 30, 2016 and have been identified as impaired.  These loans are 90 days or more past due.   

(3) Commercial mortgage loans includes three conduit loans with an unpaid principal balance and carrying amount of $27,570, a weighted-average coupon of 4.8% and maturity dates ranging from June 2025 through December 2025. These commercial mortgage loans are accounted for as loans held for sale.    

The following table summarizes our investments in commercial mortgage loans, mezzanine loans and preferred equity interests as of December 31, 2015:

	Unpaid Principal Balance			Unamortized (Discounts) Premiums			Carrying Amount			Number of Loans		Weighted- Average Coupon (1)			Range of Maturity Dates (2)
Commercial Real Estate (CRE)
Commercial mortgage loans (3)	$	1,427,328		$	(1,049	)	$	1,426,279			124		5.2	%	Mar.2016 to Jan. 2029
Mezzanine loans		169,556			(218	)		169,338			57		10.0	%	Jan. 2016 to May 2025
Preferred equity interests		30,237			(1	)		30,236			7		6.9	%	Feb. 2016 to Aug. 2025
Total CRE		1,627,121			(1,268	)		1,625,853			188		6.1	%
Deferred fees, net		(2,270	)		—			(2,270	)
Total	$	1,624,851		$	(1,268	)	$	1,623,583

(1) Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

(2) Does not include the maturity dates of three mezzanine loans that were 90 days or more past due which had contractual maturity dates prior to December 31, 2015.

(3) Commercial mortgage loans includes six conduit loans with an unpaid principal balance and carrying amount of $49,239, a weighted-average coupon of 4.8% and maturity dates ranging from December 2020 through January 2026. These commercial mortgage loans are accounted for as loans held for sale.

The following table summarizes the delinquency statistics of our commercial real estate loans as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016
Delinquency Status	Current		30 to 59 days		60 to 89 days		90 days or more		In foreclosure or bankruptcy proceedings		Total		Non-accrual (1)
Commercial mortgage loans	$	1,153,931	$	—	$	—		74,800	$	—	$	1,228,731	$	92,035
Mezzanine loans		100,503		—		—		9,553		—		110,056	$	9,553
Preferred equity interests		36,828		—		—		—		—		36,828	$	7,880
Total	$	1,291,262	$	—	$	—	$	84,353	$	—	$	1,375,615	$	109,468

(1) Includes four loans that were current, but are on non-accrual due to uncertainty over whether we will fully collect principal and interest.

	As of December 31, 2015
Delinquency Status	Current		30 to 59 days		60 to 89 days		90 days or more		In foreclosure or bankruptcy proceedings (1)		Total		Non-Accrual (2)
Commercial mortgage loans	$	1,427,328	$	—	$	—	$	—	$	—	$	1,427,328	$	15,645
Mezzanine loans		167,145		—		—		1,163		1,248		169,556		12,346
Preferred equity interests		30,237		—		—		—		—		30,237		7,946
Total	$	1,624,710	$	—	$	—	$	1,163	$	1,248	$	1,627,121	$	35,937

(1) These loans were on non-accrual due to uncertainty over whether we will fully collect principal and interest.

(2) Includes six loans that were current in accordance with their terms, but are on non-accrual due to uncertainty over whether we will fully collect principal and interest.

As of September 30, 2016 and December 31, 2015, all of our commercial mortgage loans, mezzanine loans and preferred equity interests that were 90 days or more past due or in foreclosure were on non-accrual status.  As of September 30, 2016 and December 31, 2015, $109,468 and $35,937, respectively, of our commercial real estate loans were on non-accrual status and had a weighted-average interest rate of 5.4% and 4.6%, respectively. Also, as of September 30, 2016 and December 31, 2015, four and two loans, respectively, with an unpaid principal balance of $28,933 and $13,002, respectively, and a weighted average interest rate of 12.6% and 11.6%, respectively, were recognizing interest on the cash basis. Additionally, as of September 30, 2016 and December 31, 2015, one loan, with an unpaid principal balance of $18,500, which had previously been restructured in a troubled debt restructuring, or TDR, did not accrue interest in accordance with its restructured terms as it has the option to be prepaid at par.

We are in the process of completing a restructuring of a $74,800 loan, which was greater than 90 days past due as of September 30, 2016.  This restructuring, which would be considered a TDR, involves separating the loan into seven individual loans that will be cross-collateralized, capitalizing past due interest and advances, extending the maturity date and reducing the contractual interest rate.  The probable incurred losses of $1,933 related to this restructuring was recognized as provision for loan losses as of September 30, 2016.  

Allowance For Loan Losses And Impaired Loans

We closely monitor our loans which require evaluation for loan loss in two categories: satisfactory and watchlist/impaired. Loans classified as watchlist/impaired are generally loans which have credit weaknesses or in which the credit quality of the collateral has deteriorated. This is determined by evaluating quantitative factors including debt service coverage ratios, net operating income of the underlying collateral and qualitative factors such as current performance of the underlying collateral.  As of September 30, 2016 and December 31, 2015 we have classified our investment in loans by credit risk category as follows:

	As of September 30, 2016
Credit Status	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Satisfactory	$	1,136,697	$	82,002	$	28,948	$	1,247,647
Watchlist / Impaired		92,035		28,053		7,880		127,968
Total	$	1,228,732	$	110,055	$	36,828	$	1,375,615

	As of December 31, 2015
Credit Status	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Satisfactory	$	1,336,883	$	135,710	$	22,291		$	1,494,884
Watchlist / Impaired		90,445		33,846		7,946			132,237
Total	$	1,427,328	$	169,556	$	30,237		$	1,627,121

The following tables provide roll-forwards of our allowance for loan losses for our commercial mortgage loans, mezzanine loans and preferred equity interests for the three months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30, 2016
	Commercial Mortgage Loans			Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	4,397		$	10,861		$	2,979		$	18,237
Provision for loan losses		1,957			(394	)		(30	)		1,533
Charge-offs, net of recoveries		(10	)		(1,105	)		—			(1,115	)
Ending balance	$	6,344		$	9,362		$	2,949		$	18,655

	For the Three Months Ended September 30, 2015
	Commercial Mortgage Loans		Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	—	$	11,470		$	1,326		$	12,796
Provision for loan losses		3,154		(1,255	)		(49	)		1,850
Charge-offs, net of recoveries		—		0			—			-
Ending balance	$	3,154	$	10,215		$	1,277		$	14,646

The following tables provide roll-forwards of our allowance for loan losses for our commercial mortgages, mezzanine loans and preferred equity interests for the nine months ended September 30, 2016 and 2015:

	For the Nine Months Ended September 30, 2016
	Commercial Mortgage Loans			Mezzanine Loans			Preferred Equity		Total
Beginning balance	$	3,154		$	12,139		$	1,804	$	17,097
Provision for loan losses		3,200			(143	)		1,145		4,202
Charge-offs, net of recoveries		(10	)		(2,634	)		—		(2,644	)
Ending balance	$	6,344		$	9,362		$	2,949	$	18,655

	For the Nine Months Ended September 30, 2015
	Commercial Mortgage Loans		Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	—	$	7,892		$	1,326		$	9,218
Provision for loan losses		3,154		2,745			(49	)		5,850
Charge-offs, net of recoveries		—		(422	)		—			(422	)
Ending balance	$	3,154	$	10,215		$	1,277		$	14,646

Information related to those loans on our watchlist or considered to be impaired was as follows:

	As of September 30, 2016
Watchlist/Impaired Loans	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Watchlist/Impaired loans expecting full recovery	$	—	$	18,500	$	—	$	18,500
Watchlist/Impaired loans with reserves		92,035		9,553		7,880		109,468
Total Watchlist/Impaired Loans (1)	$	92,035	$	28,053	$	7,880	$	127,968
Allowance for loan losses	$	6,344	$	9,362	$	2,949	$	18,655

(1) As of September 30, 2016, there was no unpaid principal relating to previously identified TDRs that are on accrual status.

	As of December 31, 2015
Watchlist/Impaired Loans	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Watchlist/Impaired loans expecting full recovery	$	74,800	$	3,000	$	—	$	77,800
Watchlist/Impaired loans with reserves		15,645		30,846		7,946		54,437
Total Watchlist/Impaired Loans (1)	$	90,445	$	33,846	$	7,946	$	132,237
Allowance for loan losses	$	3,154	$	12,139	$	1,804	$	17,097

(1) As of December 31, 2015, there was no unpaid principal relating to previously identified TDRs that are on accrual status.

The average unpaid principal balance and recorded investment of total watchlist/impaired loans was $128,485 and $78,680 during the three months ended September 30, 2016 and 2015, respectively, and $130,299 and $79,791 during the nine months ended September 30, 2016 and 2015, respectively. We recorded interest income of $193 and $1,129 on loans that were watchlist/impaired for the three months ended September 30, 2016 and 2015, respectively. We recorded interest income of $2,715 and $2,882 on loans that were watchlist/impaired for the nine months ended September 30, 2016 and 2015, respectively.

We have evaluated restructurings of our commercial real estate loans to determine if the restructuring constitutes a TDR under FASB ASC Topic 310, “Receivables”. During the nine months ended September 30, 2016, we have determined that a restructuring of one commercial real estate loan with an unpaid principal balance of $15,645 constituted a TDR as the interest payment rate was decreased, although interest will continue to accrue on the original contractual rate, subject to management’s determination that it is collectible, and will be owed upon maturity. During the nine months ended September 30, 2015, there were no restructurings of our commercial real estate loans that constituted a TDR. As of September 30, 2016, there were no TDRs that subsequently defaulted for restructurings that had been entered into within the previous 12 months.

Loan-to-Real Estate Conversion

During the three months ended September 30, 2016, we did not convert any commercial real estate loans to owned real estate property.    

During the nine months ended September 30, 2016, we completed the conversion of one mezzanine loan with a carrying value of $332 to real estate owned property. The conversion resulted in approximately $18,380 of real estate-related assets and $17,696 of debt being reflected on our consolidated balance sheets. We recognized a charge-off of $1,203 upon conversion.

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INVESTMENTS IN REAL ESTATE

9 Months Ended

Sep. 30, 2016

Banking And Thrift [Abstract]

INVESTMENTS IN REAL ESTATE

NOTE 4: INVESTMENTS IN REAL ESTATE

The table below summarizes our investments in real estate:

	Book Value
	As of September 30, 2016			As of December 31, 2015
Multi-family real estate properties	$	284,529		$	470,689
Office real estate properties		401,989			395,224
Industrial real estate properties		93,462			94,938
Retail real estate properties		134,824			134,331
Parcels of land		50,558			50,448
Subtotal		965,362			1,145,630
Less: Accumulated depreciation and amortization		(156,613	)		(158,688	)
Investments in real estate (1)	$	808,749		$	986,942

(1) As of September 30, 2016, two of our multifamily properties, with a carrying amount of $34,450, and two of our parcels of land, with a carrying amount of $12,556, were considered held-for-sale.

As of September 30, 2016 and December 31, 2015, our investments in real estate were comprised of land of $191,035 and $225,122, respectively, and buildings and improvements of $774,327 and $920,508, respectively.

As of September 30, 2016, our investments in real estate of $965,362 were financed through $230,679 of mortgage loans or other debt held by third parties and $760,182 of mortgage loans held by our RAIT I and RAIT II CDO securitizations. As of December 31, 2015, our investments in real estate of $1,145,630 were financed through $269,790 of mortgages held by third parties and $851,711 of mortgage loans held by our RAIT I and RAIT II CDO securitizations. Together, along with commercial real estate loans held by RAIT I and RAIT II, these mortgage loans serve as collateral for the CDO notes payable issued by the RAIT I and RAIT II CDO securitizations. All intercompany balances and interest charges are eliminated in consolidation.

Acquisitions:

During the first quarter of 2016, we received additional information regarding estimates we had made for certain assets including cash related to tenant security deposits related to our October 2015 acquisition of 10 industrial properties through our conversion of a mezzanine loan to real estate owned property.  This information led to an increase in fair value of the net assets acquired of $437, which we recognized within interest income, as the converted loan was on non-accrual and the fair value of the net assets acquired exceeded the amount of the converted loan plus previously accrued interest.

During the first quarter of 2016, we received additional information regarding estimates we had made as part of the purchase price allocation related to our December 2015 acquisition of Erieview Tower & Parking.  This information, which related to an allocation of the estimated costs required to stabilize this property and an adjacent property to which we have rights to as collateral secured by a first mortgage, led to an increase in fair value of the net assets acquired of $1,499.  This was offset by a decrease of $1,499 to the previously discussed collateral which is reported within investment in mortgage loans, mezzanine loans and preferred equity interests on our consolidated balance sheets.  The $1,499 increase in the net assets acquired was related to an increase in investments in real estate of $3,351, a decrease in intangible assets of $57 and an increase in intangible liabilities of $1,795.  The cumulative catch up effect of the allocation (based on the different useful lives) was an increase to net income of $11.

As discussed in Note 3, we completed the conversion of one mezzanine loan with a carrying value of $332 to real estate owned property in April 2016.  The conversion resulted in approximately $18,380 of real estate assets and $17,696 of debt being reflected on our consolidated balance sheets.  We have performed fair value analyses for the assets acquired and liabilities assumed. We expect to complete the purchase accounting process as soon as practicable, but no later than one year from the date of acquisition.

The following table summarizes the aggregate estimated fair value of the assets and liabilities associated with the properties acquired during the nine months ended September 30, 2016, on the date of acquisition, for the real estate accounted for under FASB ASC Topic 805.

Description	Fair Value of Assets Acquired During the Nine Months Ended September 30, 2016
Assets acquired:
Investments in real estate	$	16,652
Cash and cash equivalents		66
Restricted cash		221
Accounts receivable and other assets		5
Intangible assets		2,610
Total assets acquired		19,554
Liabilities assumed:
Indebtedness, net		17,696
Accounts payable and accrued expenses		448
Other liabilities		1,068
Total liabilities assumed		19,212
Estimated fair value of net assets acquired	$	342

The following table summarizes the consideration transferred to acquire the real estate properties and the amounts of identified assets acquired and liabilities assumed at the respective acquisition date:

Description	Total Estimated Fair Value
Fair value of consideration transferred:
Investments in loans, accrued interest receivable and other assets (net of allowance for loan losses of $1,213)	$	332
Total	$	332

The table below presents the revenue and net income (loss) for the properties acquired during the nine months ended September 30, 2016 as reported in our consolidated financial statements.

	For the Three Months Ended September 30, 2016					For the Nine Months Ended September 30, 2016
Property	Total Revenue		Net income (loss) allocable to common shares			Total Revenue		Net income (loss) allocable to common shares
Indiana Portfolio	$	731	$	(245	)	$	1,277	$	(563	)
Total	$	731	$	(245	)	$	1,277	$	(563	)

The tables below present the revenue, net income and earnings per share effect of the acquired properties on a pro forma basis as if the acquisitions occurred on January 1, 2015.  These pro forma results are not necessarily indicative of the results which actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods.

	For the Three Months ended September 30,						For the Nine Months ended September 30,
Description	2016			2015			2016			2015
Pro forma total revenue (unaudited)	$	43,237		$	49,579		$	138,439		$	160,349
Pro forma net income (loss) allocable to common shares (unaudited)		(4	)		(6,561	)		(25,386	)		5,241
Earnings (loss) per share attributable to common shareholders
Basic-as pro forma (unaudited)		(0.00	)		(0.08	)		(0.28	)		0.06
Diluted-as pro forma (unaudited)		(0.00	)		(0.08	)		(0.28	)		0.06

Dispositions:

During the nine months ended September 30, 2016, we disposed of ten multifamily real estate properties, one office property and one parcel of land.  We also recognized $5 of loss on sale related to properties sold in the prior year as we settled remaining amounts with the buyers. The below table summarizes the current year dispositions and also presents each property’s contribution to net income (loss) allocable to common shares, excluding the impact of the gain (loss) on sale:

								Net income (loss) allocable to common shares
Property Name	Property Type	Date of Sale	Sale Price		Gain (loss) on sale			For the Three Months Ended September 30, 2016			For the Nine Months Ended September 30, 2016
Mineral/Lincoln	Office	03/25/2016		7,949		(374	)		1			—
Ventura	Multifamily	03/30/2016		8,750		115			9			45
Saxony	Land	04/06/2016		1,500		(12	)		—			(4	)
Desert Wind (1)	Multifamily	05/18/2016		8,750		(2,032	)		2			52
Las Vistas (1)	Multifamily	05/18/2016		10,500		(61	)		9			122
Penny Lane (1)	Multifamily	05/18/2016		10,000		3,248			31			121
Sandal Ridge (1)	Multifamily	05/18/2016		12,250		3,482			29			162
Silversmith	Multifamily	06/03/2016		6,200		1,227			(3	)		95
Coles Crossing (2)	Multifamily	09/20/2016		43,750		(3,965	)		345			90
Eagle Ridge and Grand Terrace	Multifamily	09/21/2016		44,650		11,757			275			534
Augusta	Multifamily	09/28/2016		37,500		10,431			321			871
Total			$	191,799	$	23,816		$	1,019		$	2,088

(1) These properties were disposed of as a group of assets in a portfolio sale on May 18, 2016.

(2) The loss on sale related to this property primarily results from a defeasance premium of $1,318 and the write off of the noncontrolling interest of $2,518.

In November of 2016, we sold two multifamily real estate properties for a combined sales price of $43,400.  We expect to recognize gains on the sale of these assets.

Impairment:

During the three and nine months ended September 30, 2016, we recognized impairment of real estate assets of $16,442 and $21,661, respectively, as it was more likely than not we would dispose of the assets before the end of their previously estimated useful lives and a portion of our recorded investment in these assets was determined to not be recoverable. During the nine months ended September 30, 2016, we expensed tenant improvements and straight-line rent receivables aggregating $1,703 associated with tenants who vacated our properties early. We also recognized a loss on our retail property management subsidiary’s investment in an unconsolidated entity of $864.

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INDEBTEDNESS

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

INDEBTEDNESS

NOTE 5: INDEBTEDNESS

We maintain various forms of short-term and long-term financing arrangements. Generally, these financing agreements are collateralized by assets within securitizations.

The following table summarizes our total recourse and non-recourse indebtedness as of September 30, 2016:

Description	Unpaid Principal Balance		Unamortized Discount/Premium and Deferred Financing Costs			Carrying Amount		Weighted- Average Interest Rate			Contractual Maturity
Recourse indebtedness:
7.0% convertible senior notes (1)	$	871	$	(27	)	$	844		7.0	%	Apr. 2031
4.0% convertible senior notes (2)		126,098		(6,215	)		119,883		4.0	%	Oct. 2033
7.625% senior notes		57,287		(1,747	)		55,540		7.6	%	Apr. 2024
7.125% senior notes		70,731		(1,545	)		69,186		7.1	%	Aug. 2019
Senior secured notes		64,000		(4,560	)		59,440		7.0	%	Apr. 2017 to Apr. 2019
Junior subordinated notes, at fair value (3)		18,671		(7,147	)		11,524		4.6	%	Mar. 2035
Junior subordinated notes, at amortized cost		25,100		(208	)		24,892		3.3	%	Apr. 2037
CMBS facilities		169,550		(921	)		168,629		2.8	%	Nov.2016 to Jul. 2018
Total recourse indebtedness		532,308		(22,370	)		509,938		4.8	%
Non-recourse indebtedness:
CDO notes payable, at amortized cost (4)(5)		728,362		(9,165	)		719,197		1.4	%	2045 to 2046
CMBS securitizations (6)		496,913		(4,420	)		492,493		3.1	%	Jan. 2031 to Dec. 2031
Loans payable on real estate (8)		230,678		(858	)		229,820		5.8	%	June 2016 to April 2026
Total non-recourse indebtedness		1,455,953		(14,443	)		1,441,510		2.7	%
Other indebtedness (7)		24,321		94			24,415		—			—
Total indebtedness	$	2,012,582	$	(36,719	)	$	1,975,863		3.2	%

(1) Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2021, and April 2026.

(2) Our 4.0% convertible senior notes are redeemable at par, at the option of the holder, in October 2018, October 2023, and October 2028.

(3) Relates to liabilities which we elected to record at fair value under FASB ASC Topic 825.

(4)     Excludes CDO notes payable purchased by us which are eliminated in consolidation.

(5) Collateralized by $1,107,924 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $641,118 of which eliminates in consolidation.  These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(6) Collateralized by $618,494 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(7) Represents a 40% interest issued to an unaffiliated third party in a venture to which we contributed the junior notes and equity of a floating rate securitization.  We retained a 60% interest in this venture, and, as a result of our controlling financial interest, we consolidated the venture.  We received approximately $24,796 of proceeds as a result of issuing this 40% interest, which has an unpaid principal balance of $24,321.  This 40% interest has no stated maturity date and does not provide for its mandatory redemption or any required return or interest payment.  The venture interests allocate the distributions on such junior notes and equity when made between the parties to the venture.

(8) Certain loans payable on real estate had maturity dates of June 2016. These loans payable on real estate are currently in the process of being refinanced with the lenders.           

The following table summarizes our total recourse and non-recourse indebtedness as of December 31, 2015:

Description	Unpaid Principal Balance		Unamortized Discount and Deferred Finance Costs			Carrying Amount		Weighted- Average Interest Rate			Contractual Maturity
Recourse indebtedness:
7.0% convertible senior notes (1)	$	30,048	$	(1,180	)	$	28,868		7.0	%	Apr. 2031
4.0% convertible senior notes (2)		141,750		(8,711	)		133,039		4.0	%	Oct. 2033
7.625% senior notes		60,000		(2,048	)		57,952		7.6	%	Apr. 2024
7.125% senior notes		71,905		(2,156	)		69,749		7.1	%	Aug. 2019
Senior secured notes		70,000		(6,955	)		63,045		7.0	%	Apr. 2017 to Apr. 2019
Junior subordinated notes, at fair value (3)		18,671		(8,167	)		10,504		4.3	%	Mar. 2035
Junior subordinated notes, at amortized cost		25,100		(216	)		24,884		2.7	%	Apr. 2037
CMBS facilities		97,067		(344	)		96,723		2.4	%	Jul. 2016 to Jan. 2018
Total recourse indebtedness		514,541		(29,777	)		484,764		5.1	%
Non-recourse indebtedness:
CDO notes payable, at amortized cost (4)(5)		950,981		(13,412	)		937,569		0.9	%	Jun. 2045 to Nov. 2046
CMBS securitizations (6)		717,255		(8,745	)		708,510		2.4	%	May 2031 to Dec. 2031
Loans payable on real estate		269,790		(1,158	)		268,632		5.6	%	Apr. 2016 to Apr. 2026
Total non-recourse indebtedness		1,938,026		(23,315	)		1,914,711		2.1	%
Total indebtedness	$	2,452,567	$	(53,092	)	$	2,399,475		2.7	%

(1) Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2016, April 2021, and April 2026.

(2) Our 4.0% convertible senior notes are redeemable at par, at the option of the holder, in October 2018, October 2023, and October 2028.

(3) Relates to liabilities which we elected to record at fair value under FASB ASC Topic 825.

(4) Excludes CDO notes payable purchased by us which are eliminated in consolidation.

(5) Collateralized by $1,388,194 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $815,745 of which eliminates in consolidation. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(6) Collateralized by 885,055 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

Recourse indebtedness refers to indebtedness that is recourse to our general assets, including the loans payable on real estate that are guaranteed by us. Non-recourse indebtedness consists of indebtedness of consolidated VIEs (e.g., securitization vehicles) and loans payable on real estate which is recourse only to specific assets pledged as collateral to the lenders. The creditors of each consolidated VIE have no recourse to our general credit.

The current status or activity in our financing arrangements occurring as of or during the nine months ended September 30, 2016 is as follows:

Recourse Indebtedness

7.0% convertible senior notes. The 7.0% convertible senior notes are convertible at the option of the holder at a current conversion rate of 190.2627 common shares per $1 principal amount of 7.0% convertible senior notes (equivalent to a current conversion price of $5.26 per common share).

On April 1, 2016, we redeemed $29,177 of the 7.0% convertible senior notes at a redemption price equal to the principal amount

plus accrued and unpaid interest. As of September 30, 2016, $871 of the 7.0% convertible notes remain outstanding.

4.0% convertible senior notes. The 4.0% convertible senior notes are convertible at the option of the holder at a current conversion rate of 108.5803 common shares per $1 principal amount of 4.0% convertible senior notes (equivalent to a current conversion price of $9.21 per common share).

During the second quarter of 2016, we repurchased $15,652 in principal amount of the 4.0% convertible senior notes for $14,075. As of September 30, 2016, $126,098 of the 4.0% convertible senior notes remain outstanding.

7.625% senior notes. During the second quarter of 2016, we repurchased $2,713 in principal amount of the 7.625% senior notes for $2,172.  As of September 30, 2016, $57,287 of the 7.625% senior notes remain outstanding.

7.125% senior notes. During the second quarter of 2016, we repurchased $1,174 in principal amount of the 7.125% senior notes for $1,081.  As of September 30, 2016, $70,731 of the 7.125% senior notes remain outstanding.

Senior secured notes. During the nine months ended September 30, 2016, we prepaid $6,000 of the senior secured notes. As of September 30, 2016, we have $64,000 of outstanding senior secured notes.  

Junior subordinated notes, at fair value. At issuance, we elected to record the current $18,671 junior subordinated note at fair value under FASB ASC Topic 825, with all subsequent changes in fair value recorded in earnings. As of September 30, 2016, the fair value of this indebtedness was $11,524.

Junior subordinated notes, at amortized cost.  During the nine months ended September 30, 2016, there was no activity other than recurring interest during the current period.

CMBS facilities. As of September 30, 2016, we had $0 of outstanding CMBS borrowings and $77,264 of outstanding commercial mortgage borrowings under the amended and restated master repurchase agreement, or the Amended MRA.  The Amended MRA had a capacity of $200,000 with a limit of $100,000 for floating rate loans.  In July of 2016, this facility was amended decreasing the capacity to $150,000 and extending the maturity date to July of 2018.  As of September 30, 2016, we were in compliance with all financial covenants contained in the Amended MRA.

 As of September 30, 2016, we had $6,770 of outstanding borrowings under the $150,000 CMBS facility. As of September 30, 2016, we were in compliance with all financial covenants contained in the $150,000 CMBS facility.

As of September 30, 2016, we had $48,276 of outstanding borrowings under the $75,000 commercial mortgage facility. As of September 30, 2016, we were in compliance with all financial covenants contained in the $75,000 commercial mortgage facility.

As of September 30, 2016, we had $37,240 of outstanding borrowings under the $150,000 commercial mortgage facility. As of September 30, 2016, we were in compliance with all financial covenants contained in the $150,000 commercial mortgage facility.

Non-Recourse Indebtedness

CDO notes payable, at amortized cost. CDO notes payable at amortized cost represent notes issued by consolidated CDO securitizations which are used to finance the acquisition of commercial mortgage loans, mezzanine loans, and other loans in our commercial real estate portfolio. Generally, CDO notes payable are comprised of various classes of notes payable, with each class bearing interest at variable or fixed rates. Both RAIT I and RAIT II are meeting all of their over collateralization, or OC, and interest coverage, or IC, trigger tests as of September 30, 2016.

During the third quarter of 2016, we repurchased $5,880 in principal amount of the CDO notes payable. The aggregate purchase price was $4,988 and we recorded a gain on extinguishment of debt of $682.

CMBS securitizations.  During the third quarter of 2016, RAIT exercised its right to unwind RAIT FL2, thereby repaying all of the outstanding notes. As a result, as of September 30, 2016, RAIT FL2 had $0 of total collateral at par value.

As of September 30, 2016, our subsidiary, RAIT 2014-FL3 Trust, or RAIT FL3, had $115,878 of total collateral at par value, none of which is defaulted. RAIT FL3 had classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $78,491 to investors. We currently own the unrated classes of junior notes, including a class with an aggregate principal balance of $37,387, and the equity, or the retained interests, of RAIT FL3. RAIT FL3 does not have OC triggers or IC triggers.

As of September 30, 2016, our subsidiary, RAIT 2015-FL4 Trust, or RAIT FL4, had $173,888 of total collateral at par value, none of which is defaulted. This includes $18,000 of collateral repayments which were passed through to investors subsequent to September 30, 2016. RAIT FL4 had classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $132,498 to investors. We currently own the unrated classes of junior notes, including a class with an aggregate principal balance of $41,390, and the equity, or the retained interests, of RAIT FL4. RAIT FL4 does not have OC triggers or IC triggers.

As of September 30, 2016, our subsidiary, RAIT 2015-FL5 Trust, or RAIT FL5, has $346,728 of total collateral at par value, none of which is defaulted. RAIT FL5 had classes of investment grade senior notes with an aggregate principal balance outstanding of approximately $285,924 to investors.  Upon closing, we retained $23,019 of investment grade notes and all of the unrated classes of junior notes and equity. In February 2016, we contributed the unrated classes of junior notes and equity of RAIT FL5 to a venture. We retained a 60% interest in the venture, and, as a result of our controlling financial interest, we consolidated the venture.  We received approximately $24,796 of proceeds as a result of this contribution. RAIT FL5 does not have OC triggers or IC triggers.  In April 2016, we sold the $23,019 of investment grade notes that we retained upon closing.

Loans payable on real estate. As of September 30, 2016 and December 31, 2015, we had $230,678 and $269,790, respectively, of other indebtedness outstanding relating to loans payable on consolidated real estate. These loans are secured by specific consolidated real estate and commercial loans included in our consolidated balance sheets.

During the nine months ended September 30, 2016, we repaid $55,441 of mortgage indebtedness as part of four property dispositions.

During the nine months ended September 30, 2016, we assumed a first mortgage on our investments in real estate related to the acquisition of the Indiana portfolio that had a total principal balance of $17,987.

Maturity of Indebtedness

Generally, the majority of our indebtedness is payable in full upon the maturity or termination date of the underlying indebtedness.  The following table displays the aggregate contractual maturities of our indebtedness on or before December 31 by year:

	Recourse indebtedness		Non-recourse indebtedness
2016	$	44,010	$	90,479
2017		32,000		33,439
2018		141,540		16,453
2019		86,731		1,512
2020		-		10,236
Thereafter (1)		228,027		1,303,834
Total	$	532,308	$	1,455,953

(1) Includes $871 of our 7.0% convertible senior notes which are redeemable at par at the option of the holders in April 2021, and April 2026.  Includes $126,098 of our 4.0% convertible senior notes which are redeemable at par at the option of the holders in October 2018, October 2023, and October 2028.  

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DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 6: DERIVATIVE FINANCIAL INSTRUMENTS

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions.  While these instruments may impact our periodic cash flows, they benefit us by minimizing the risks and/or costs previously described.  The counterparties to these contractual arrangements are major financial institutions with which we and our affiliates may also have other financial relationships. In the event of nonperformance by the counterparties, we are potentially exposed to credit loss. However, because of the high credit ratings of the counterparties, we do not anticipate that any of the counterparties will fail to meet their obligations.

Interest Rate Swaps and Caps

We have entered into various interest rate swap contracts to hedge interest rate exposure on floating rate indebtedness.

We designate interest rate hedge agreements at inception and determine whether or not the interest rate hedge agreement is highly effective in offsetting interest rate fluctuations associated with the identified indebtedness. At designation, certain of these interest rate swaps had a fair value not equal to zero. However, we concluded, at designation, that these hedging arrangements were highly effective during their term using regression analysis and determined that the hypothetical derivative method would be used in measuring any ineffectiveness. At each reporting period, we update our regression analysis and, we concluded that these hedging arrangements were highly effective during their remaining term and used the hypothetical derivative method in measuring the ineffective portions of these hedging arrangements. As of September 30, 2016, all of our cash flow hedge interest rate swaps had reached maturity.    

The following table summarizes the aggregate notional amount and estimated net fair value of our derivative instruments as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016							As of December 31, 2015
	Notional		Fair Value of Assets		Fair Value of Liabilities			Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges:
Interest rate swaps	$	-	$	-	$	-		$	243,816	$	-	$	(4,672	)
Interest rate cap		-		-		-			-		-		-
Other interest rate swaps & caps		60,235		52		(1,748	)		37,325		182		(55	)
Net fair value	$	60,235	$	52	$	(1,748	)	$	281,141	$	182	$	(4,727	)

Effective interest rate swaps and caps are reported in accumulated other comprehensive income and the fair value of these hedge agreements is included in other assets or derivative liabilities.

For interest rate swaps and caps that are considered effective hedges, we reclassified realized losses of $785 and $3,831, respectively, to interest expense for the three months ended September 30, 2016 and 2015 and $4,824 and $13,196 for the nine months ended September 30, 2016 and 2015.

Changes in the fair value of our other interest rate swaps and caps are reported in change in fair value of financial instruments in the Consolidated Statements of Operations.  

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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

FASB ASC Topic 825, “Financial Instruments” requires disclosure of the fair value of financial instruments for which it is practicable to estimate that value. The fair value of investments in mortgages and loans, investments in securities, CDO notes payable, convertible senior notes, junior subordinated notes, warrants and investor share appreciation rights, or SARs and derivative assets and liabilities is based on significant observable and unobservable inputs. The fair value of cash and cash equivalents, restricted cash, secured credit facilities, CMBS facilities, commercial mortgage facilities and other indebtedness approximates cost due to the nature of these instruments.

The following table summarizes the carrying amount and the fair value of our financial instruments as of September 30, 2016:

Financial Instrument	Carrying Amount		Estimated Fair Value
Assets
Total investment in mortgages and loans, net	$	1,354,960	$	1,321,940
Cash and cash equivalents		36,019		36,019
Restricted cash		229,957		229,957
Derivative assets		52		52
Liabilities
Recourse indebtedness:
7.0% convertible senior notes		844		951
4.0% convertible senior notes		119,883		117,271
7.625% senior notes		55,540		51,329
7.125% senior notes		69,186		69,062
Senior secured notes		59,440		64,596
Junior subordinated notes, at fair value		11,524		11,524
Junior subordinated notes, at amortized cost		24,892		12,262
CMBS facilities		168,629		169,550
Non-recourse indebtedness:
CDO notes payable, at amortized cost		719,197		639,060
CMBS securitizations		492,493		494,264
Loans payable on real estate		229,820		238,856
Other indebtedness		24,415		24,321
Derivative liabilities		1,748		1,748
Warrants and investor SARs		30,100		30,100

The following table summarizes the carrying amount and the fair value of our financial instruments as of December 31, 2015:

Financial Instrument	Carrying Amount		Estimated Fair Value
Assets
Total investment in mortgages and loans, net	$	1,606,486	$	1,537,086
Cash and cash equivalents		125,886		125,886
Restricted cash		213,012		213,012
Derivative assets		206		206
Liabilities
Recourse indebtedness:
7.0% convertible senior notes		28,868		27,795
4.0% convertible senior notes		133,039		104,184
7.625% senior notes		57,952		46,560
7.125% senior notes		69,749		62,471
Senior secured notes		63,045		66,725
Junior subordinated notes, at fair value		10,504		10,504
Junior subordinated notes, at amortized cost		24,884		11,221
CMBS facilities		96,723		97,067
Non-recourse indebtedness:
CDO notes payable, at amortized cost		937,569		801,289
CMBS securitizations		708,510		709,001
Loans payable on real estate		268,632		281,840
Derivative liabilities		4,727		4,727
Warrants and investor SARs		26,200		26,200

Fair Value Measurements

The following tables summarize information about our assets and liabilities measured at fair value on a recurring basis as of September 30, 2016, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:

Assets:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of September 30, 2016
Derivative assets	$	—	$	52	$	—	$	52
Total assets	$	—	$	52	$	—	$	52

Liabilities:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of September 30, 2016
Junior subordinated notes, at fair value	$	—	$	—	$	11,524	$	11,524
Derivative liabilities		—		1,748		—		1,748
Warrants and investor SARs		—		—		30,100		30,100
Total liabilities	$	—	$	1,748	$	41,624	$	43,372

(a) During the nine months ended September 30, 2016, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

The following tables summarize information about our assets and liabilities measured at fair value on a recurring basis as of December 31, 2015, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:

Assets:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of December 31, 2015
Derivative assets	$	—	$	206	$	—	$	206
Total assets	$	—	$	206	$	—	$	206

Liabilities:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of December 31, 2015
Junior subordinated notes, at fair value	$	—	$	—	$	10,504	$	10,504
Derivative liabilities		—		4,727		—		4,727
Warrants and investor SARs		—		—		26,200		26,200
Total liabilities	$	—	$	4,727	$	36,704	$	41,431

(a) During the year ended December 31, 2015, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

When estimating the fair value of our Level 3 financial instruments, management uses various observable and unobservable inputs. These inputs include yields, credit spreads, duration, effective dollar prices and overall market conditions on not only the exact financial instrument for which management is estimating the fair value, but also financial instruments that are similar or issued by the same issuer when such inputs are unavailable. Generally, an increase in the yields, credit spreads or estimated duration will decrease the fair value of our financial instruments. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value, as determined by management, may fluctuate from period to period and any ultimate liquidation or sale of the investment may result in proceeds that may be significantly different than fair value.  

For the fair value of our junior subordinated notes, at fair value, and warrant and investor SARs classified as Level 3 liabilities, we estimate the fair value of these financial instruments using significant unobservable inputs.  For the junior subordinated notes, at fair value, we use a discounted cash flow model as the valuation technique and the significant unobservable inputs as of December 31, 2015 include discount rates ranging from 12.9% to 13.3% and as of September 30, 2016 include discount rates ranging from 10.8% to 11.1%.  For the warrants and investor SARs, we utilized a third party valuation firm who used a binomial model as the valuation technique and the significant unobservable inputs as of September 30, 2016 and December 31, 2015 include 52.0% and 61.0%, respectively, for the annual volatility of our common shares of beneficial interest over the term of the warrants and investor SARs, 10.0% and 12.0%, respectively, for the credit adjusted discount rate on our unsecured debt issued that may be issued in satisfaction of the warrants and investor SARs, and 9.80% and 10.6%, respectively, for the dividend rate and future dividend rate on our common shares of beneficial interest.

The following table summarizes additional information about assets and liabilities that are measured at fair value on a recurring basis for which we have utilized level 3 inputs to determine fair value for the nine months ended September 30, 2016:

Liabilities	Warrants and investor SARS		Junior Subordinated Notes, at Fair Value		Total Level 3 Liabilities
Balance, as of December 31, 2015	$	26,200	$	10,504	$	36,704
Change in fair value of financial instruments		3,900		1,020		4,920
Purchases		—		—		—
Principal Repayments		—		—		—
Balance, as of September 30, 2016	$	30,100	$	11,524	$	41,624

The following table summarizes additional information about assets and liabilities that are measured at fair value on a recurring basis for which we have utilized level 3 inputs to determine fair value for the three months ended September 30, 2016:

Liabilities	Warrants and investor SARS		Junior Subordinated Notes, at Fair Value		Total Level 3 Liabilities
Balance, as of June 30, 2016	$	29,300	$	10,789	$	40,089
Change in fair value of financial instruments		800		735		1,535
Purchases		—		—		—
Principal Repayments		—		—		—
Balance, as of September 30, 2016	$	30,100	$	11,524	$	41,624

Non-Recurring Fair Value Measurements

As of March 31, 2016, we measured a real estate asset at a fair value of $6,386 in our consolidated balance sheets as it was impaired.  The fair value was based on an executed letter of intent to sell the real estate asset and was classified within Level 2 of the fair value hierarchy.  The significant input was the purchase price derived by the potential buyer.

As of June 30, 2016, we measured a real estate asset at a fair value of $43,313 in our consolidated balance sheets as it was impaired.  The fair value was based on an executed purchase and sale agreement and was classified within Level 2 of the fair value hierarchy.  The significant input was the purchase price included in the purchase and sale agreement.

As of September 30, 2016, we measured three of our multifamily real estate assets at a fair value of $41,615 in our consolidated balance sheets as they were impaired.  The fair values were based on an executed purchase and sale agreement, bids, and an executed letter of intent to sell the real estate asset and were classified within Level 2 of the fair value hierarchy.  The significant inputs were the purchase price derived by the potential buyers and the purchase price included in the purchase and sale agreement.

As of September 30, 2016, we measured ten of our industrial real estate assets at a fair value of $83,973 in our consolidated balance sheets as they were impaired. The valuation technique was discounted cash flows and was classified in Level 3 of the fair value hierarchy. The terminal capitalization rates and discount rates are the significant inputs to the valuations and ranged from 8.2% to 11.0% and 8.3% to 11.5%, respectively.

Our other non-recurring fair value measurements relate primarily to our commercial real estate loans that are considered impaired and for which we maintain an allowance for loss. In determining the allowance for losses, we estimate the fair value of the respective commercial real estate loan and compare that fair value to our total investment in the loan. When estimating the fair value of the commercial real estate loan, management uses discounted cash flow analyses and capitalization rates on the underlying property’s net operating income. The discounted cash flow analyses and capitalization rates are based on market information and comparable sales of similar properties.  These methodologies are classified in Level 3 of the fair value hierarchy.

The following tables summarize the valuation technique and the level of the fair value hierarchy for financial instruments that are not fair valued in the accompanying consolidated balance sheets but for which fair value is required to be disclosed. The fair value of cash and cash equivalents, restricted cash, secured credit facilities, CMBS facilities, commercial mortgage facilities and other indebtedness approximates cost due to the nature of these instruments and are not included in the tables below.

	Carrying Amount as of September 30, 2016		Estimated Fair Value as of September 30, 2016		Valuation Technique	Level in Fair Value Hierarchy
Total investment in mortgages and loans, net	$	1,354,960	$	1,321,940	Discountedcash flows	Three
7.0% convertible senior notes		844		951	Trading price	One
4.0% convertible senior notes		119,883		117,271	Trading price	One
7.625% senior notes		55,540		51,329	Trading price	One
7.125% senior notes		69,186		69,062	Trading price	One
Senior secured notes		59,440		64,596	Discounted cash flows	Three
Junior subordinated notes, at amortized cost		24,892		12,262	Discounted cash flows	Three
CDO notes payable, at amortized cost		719,197		639,060	Discounted cash flows	Three
CMBS securitizations		492,493		494,264	Discounted cash flows	Three
Loans payable on real estate		229,820		238,856	Discounted cash flows	Three

	Carrying Amount as of December 31, 2015		Estimated Fair Value as of December 31, 2015		Valuation Technique	Level in Fair Value Hierarchy
Total investment in mortgages and loans, net	$	1,606,486	$	1,537,086	Discountedcash flows	Three
7.0% convertible senior notes		28,868		27,795	Trading price	One
4.0% convertible senior notes		133,039		104,184	Trading price	One
7.625% senior notes		57,952		46,560	Trading price	One
7.125% senior notes		69,749		62,471	Trading price	One
Senior secured notes		63,045		66,725	Discounted cash flows	Three
Junior subordinated notes, at amortized cost		24,884		11,221	Discounted cash flows	Three
CDO notes payable, at amortized cost		937,569		801,289	Discounted cash flows	Three
CMBS securitization		708,510		709,001	Discounted cash flows	Three
Loans payable on real estate		268,632		281,840	Discounted cash flows	Three

Change in Fair Value of Financial Instruments

The following table summarizes realized and unrealized gains and losses on assets and liabilities for which we elected the fair value option of FASB ASC Topic 825, “Financial Instruments” and derivatives as reported in change in fair value of financial instruments in the accompanying consolidated statements of operations:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
Description	2016			2015			2016			2015
Change in fair value of trading securities and    security-related receivables	$	—		$	—		$	—		$	(173	)
Change in fair value of junior subordinated notes		(735	)		1,673			(1,020	)		1,909
Change in fair value of derivatives		160			(644	)		(2,135	)		(1,064	)
Change in fair value of warrants and investors SARs		(800	)		(409	)		(3,900	)		12,794
Change in fair value of financial instruments	$	(1,375	)	$	620		$	(7,055	)	$	13,466

The changes in the fair value for the trading securities and security-related receivables, and junior subordinated notes for which the fair value option was elected for the three and nine months ended September 30, 2016 and 2015 was primarily attributable to changes in instrument specific credit risks. The changes in the fair value of derivatives for which the fair value option was elected for the three and nine months ended September 30, 2016 and 2015 were mainly due to changes in interest rates. The changes in fair value of the warrants and investor SARs for the three and nine months ended September 30, 2016 and 2015 were due to changes in the reference stock price and volatility.

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VARIABLE INTEREST ENTITIES

9 Months Ended

Sep. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

NOTE 8: VARIABLE INTEREST ENTITIES

The determination of when to consolidate a VIE is based on the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance together with either the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. On January 1, 2016, we adopted a new accounting standard related to consolidation.  Refer to NOTE 2: Summary of Significant Accounting Policies for further information.  We evaluated our investments and determined that, as of September 30, 2016, our consolidated VIEs were: RAIT I, RAIT II, our floating rate securitizations, IRT, RAIT VIE Properties (Willow Grove, Cherry Hill, South Terrace, McDowell, and our ten industrial properties) and the venture described in Note 5: Indebtedness (RAIT Venture VIE).  As of December 31, 2015, our consolidated VIEs were: RAIT I, RAIT II, our floating rate securitizations, IRT, and RAIT VIE Properties (Willow Grove, Cherry Hill, South Terrace, Cole’s Crossing, McDowell, and our ten industrial properties).  Previously, we had not disclosed our floating rate securitizations as VIEs and have corrected the prior period disclosure.  

We consolidate the securitizations that we sponsor as we have retained interests in these entities and control the significant decisions regarding the collateral in these entities, such as the approval of loan workouts.  As of September 30, 2016, we consolidate IRT as we own 15.4% of IRT’s common stock and control the significant decisions of IRT through our advisory agreement.  As of September 30, 2016, we consolidate the VIE properties as we own a majority of these entities and control the significant capital and operating decisions regarding the properties. As of September 30, 2016, we consolidate the Venture VIE (which consolidates a floating rate securitization) as we own a majority of this entity and control a majority of the significant decisions regarding the collateral in this entity, such as the approval of loan workouts.

The following tables present the assets and liabilities of our consolidated VIEs as of each respective date. Certain amounts included in the tables below are eliminated upon consolidation with our other subsidiaries that maintain investments in the debt or equity securities issued by these entities.

	As of September 30, 2016
	RAIT Securitizations		IRT		RAIT VIE Properties			RAIT Joint Venture VIE			Total
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and    preferred equity interests	$	1,352,591	$	—	$	—		$	345,843		$	1,698,434
Allowance for losses		—		—		—			—			0
Total investments in mortgages and loans		1,352,591		—		—			345,843			1,698,434
Investments in real estate
Investments in real estate		—		—		222,535			—			222,535
Accumulated depreciation		—		—		(29,770	)		—			(29,770	)
Total investments in real estate		—		—		192,765			—			192,765
Cash and cash equivalents		—		—		2,788			1			2,789
Restricted cash		10,309		—		1,770			4			12,083
Accrued interest receivable		69,315		—		—			1,516			70,831
Other assets		513		—		11,218			—			11,731
Intangible assets
Intangible assets		—		—		5,616			—			5,616
Accumulated amortization		—		—		(3,304	)		—			(3,304	)
Total intangible assets		—		—		2,312			—			2,312
Assets of discontinued operations		—		1,306,242		—			—			1,306,242
Total assets	$	1,432,728	$	1,306,242	$	210,853		$	347,364		$	3,297,187
Liabilities and Equity
Indebtedness, net	$	1,220,413	$	—	$	231,744		$	343,970		$	1,796,127
Accrued interest payable		975	$	—		13,602			827			15,404
Accounts payable and accrued expenses		2		—		5,991			—			5,993
Derivative liabilities		—		—		—			—			—
Deferred taxes, borrowers’ escrows and other liabilities		—		—		2,339			—			2,339
Liabilities of discontinued operations		—		906,103		—			—			906,103
Total liabilities		1,221,390		906,103		253,676			344,797			1,819,863
Equity:
Shareholders’ equity:
Accumulated other comprehensive income (loss)		—		—		—			—			—
RAIT investment		36,079		55,271		39,398			2,869			133,617
Retained earnings (deficit)		175,259		—		(84,080	)		(302	)		90,877
Total shareholders’ equity		211,338		55,271		(44,682	)		2,567			224,494
Noncontrolling Interests		—		344,868		1,859			—			346,727
Total liabilities and equity	$	1,432,728	$	1,306,242	$	210,853		$	347,364		$	3,297,187

	As of December 31, 2015
	RAIT Securitizations			IRT		RAIT VIE Properties			Total
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and    preferred equity interests	$	2,242,416		$	—	$	—		$	2,242,416
Allowance for losses		—			—		—			—
Total investments in mortgages and loans		2,242,416			—		—			2,242,416
Investments in real estate
Investments in real estate		—			—		278,774			278,774
Accumulated depreciation		—			—		(26,398	)		(26,398	)
Total investments in real estate		—			—		252,376			252,376
Cash and cash equivalents		—			—		1,589			1,589
Restricted cash		14,944			—		2,859			17,803
Accrued interest receivable		77,130			—		—			77,130
Other assets		479			—		13,740			14,219
Intangible assets
Intangible assets		—			—		5,245			5,245
Accumulated amortization		—			—		(1,446	)		(1,446	)
Total intangible assets		—			—		3,799			3,799
Assets of discontinued operations					1,383,188					1,383,188
Total assets	$	2,334,969		$	1,383,188	$	274,363		$	3,992,520
Liabilities and Equity
Indebtedness, net	$	2,058,739		$	—	$	273,766		$	2,332,505
Accrued interest payable		2,207			—		13,997			16,204
Accounts payable and accrued expenses		8			—		6,000			6,008
Derivative liabilities		4,672			—		—			4,672
Deferred taxes, borrowers’ escrows and other liabilities		176			—		3,842			4,018
Liabilities of discontinued operations		—			952,406		—			952,406
Total liabilities		2,065,802			952,406		297,605			3,315,813
Equity:
Shareholders’ equity:
Accumulated other comprehensive income (loss)		(4,691	)		—		—			(4,691	)
RAIT investment		118,174			54,389		35,792			208,355
Retained earnings (deficit)		155,684			—		(59,454	)		96,230
Total shareholders’ equity		269,167			54,389		(23,662	)		299,894
Noncontrolling Interests		—			376,393		420			376,813
Total liabilities and equity	$	2,334,969		$	1,383,188	$	274,363		$	3,992,520

The assets of the VIEs can only be used to settle obligations of the VIEs and are not available to our creditors. The amounts that eliminate in consolidation include $623,851 of total investments in mortgage loans and $469,915 of indebtedness as of September 30, 2016 and $813,455 of total investments in mortgage loans, $569,833 of indebtedness and $38,075 of liabilities of discontinued operations as of December 31, 2015. As of September 30, 2016, we corrected this December 31, 2015 disclosure as it excluded certain indebtedness that eliminated in consolidation. We do not have any contractual obligation to provide the VIEs listed above with any financial support. We have not and do not intend to provide financial support to these VIEs that we were not previously contractually required to provide.

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SERIES D PREFERRED SHARES

9 Months Ended

Sep. 30, 2016

Temporary Equity Disclosure [Abstract]

SERIES D PREFERRED SHARES

NOTE 9: SERIES D PREFERRED SHARES

On October 1, 2012, we entered into a Securities Purchase Agreement, or the purchase agreement, with ARS VI Investor I, LLC, or the investor, an affiliate of Almanac Realty Investors, LLC, or Almanac. During the period from the effective date of the purchase agreement through September 30, 2016, we sold to the investor on a private placement basis in four sales between October 2012 and March 2014 for an aggregate purchase price of $100,000, or the total commitment, the following securities: (i) 4,000,000 Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share, of us, or the Series D Preferred Shares, (ii) common share purchase warrants, or the warrants, exercisable for 9,931,000 of our common shares, or the common shares (which have subsequently adjusted to 11,035,875 shares), and (iii) common share appreciation rights, or the investor SARs, with respect to up to 6,735,667 common shares (which have subsequently adjusted to 7,485,045 shares).

In September 2015, we amended the Securities Purchase Agreement with Almanac related to the Series D Preferred Shares.  This amendment changed two of the covenants therein.  As consideration for this amendment, we paid Almanac $450.  We accounted for this amendment as a modification of the Series D Preferred Shares.

The warrants and investor SARs had an initial strike price of $6.00 per common share, subject to adjustment. As of the filing of this report, the strike price has adjusted to $5.40.

The warrants and investor SARs were both determined to be classified as liabilities and had a combined fair value of $30,100 as of September 30, 2016. The initial fair value of the warrants and investor SARs are recorded as a liability and re-measured at each reporting period until the warrants and investor SARs are settled. Changes in fair value will be recorded in earnings as a component of the change in fair value of financial instruments in the consolidated statement of operations.

The following table summarizes the sales activity of the Series D Preferred Shares from the effective date of the agreement through September 30, 2016:

Aggregate purchase price			$	100,000
Initial value of warrants and investor SARs issued to-date	(21,805	)
Costs incurred	(6,834	)
Total discount				(28,639	)
Discount amortization to-date				19,367
Carrying amount of Series D Preferred Shares			$	90,728

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SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

SHAREHOLDERS' EQUITY

NOTE 10: SHAREHOLDERS’ EQUITY

Preferred Shares

Dividends:

The following table summarizes the dividends we declared and paid on the preferred shares for the nine months ended September 30, 2016:

	March 31, 2016		June 30, 2016		September 30, 2016
Series A Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	2,570	$	2,570	$	2,589
Series B Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	1,225	$	1,225	$	1,225
Series C Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	910	$	910	$	910
Series D Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	2,125	$	2,125	$	2,125

At Market Issuance Sales Agreement (ATM):

On June 13, 2014, we entered into an At Market Issuance Sales Agreement, or the 2014 Preferred ATM agreement, with MLV & Co. LLC, or MLV, providing that, from time to time during the term of the 2014 Preferred ATM agreement, on the terms and subject to the conditions set forth therein, we may issue and sell through MLV up to $150,000 aggregate amount of preferred shares.

With respect to each series of preferred shares, the maximum amount issuable is as follows: 4,000,000 Series A Preferred Shares, 1,000,000 Series B Preferred Shares, and 1,000,000 Series C Preferred Shares. Unless the 2014 Preferred ATM agreement is earlier terminated by MLV or us, the 2014 Preferred ATM agreement automatically terminates upon the issuance and sale of all of the Series A Preferred Shares, Series B Preferred Shares, and Series C Preferred Shares.

During the three and nine months ended September 30, 2016, we issued a total of 38,269 Series A Preferred Shares pursuant to the ATM agreement at a weighted average price of $20.94 and we received $777 of net proceeds.

As of September 30, 2016, 2,724,935 Series A Preferred Shares, 947,496 Series B Preferred Shares, and 999,675 Series C Preferred Shares remain available for issuance under the 2014 Preferred ATM agreement.

Common Shares

Dividends:

On March 14, 2016, the board of trustees declared a $0.09 dividend on our common shares to holders of record as of April 8, 2016. The dividend was paid on April 29, 2016 and totaled $8,200. During the three months ended March 31, 2016, we also paid $348 of dividends on restricted common share awards that vested in this period.

On June 15, 2016, the board of trustees declared a $0.09 dividend on our common shares to holders of record as of July 8, 2016. The dividend was paid on July 29, 2016 and totaled $8,202. During the nine months ended September 30, 2016, we also paid $10 of dividends on restricted common share awards that vested as of March 31, 2016.

On September 19, 2016, the board of trustees declared a $0.09 dividend on our common shares to holders of record as of October 7, 2016. The dividend was paid on October 31, 2016 and totaled $8,202.  

Equity Compensation:

On February 23, 2016, the compensation committee awarded 168,776 common shares, valued at $400 using our closing stock price of $2.37, to the board’s non-management trustees. These awards vested immediately. On February 22, 2016, the compensation committee awarded 367,000 restricted common shares, valued at $873 using our closing stock price of $2.38, to our non-executive officer employees. These awards generally vest over a three-year period.

On February 22, 2016, the compensation committee awarded 895,000 SARs, valued at $206 based on a Black-Scholes option pricing model at the date of grant, to our non-executive officer employees. The SARs vest over a three-year period and may be exercised between the date of vesting and February 22, 2021, the expiration date of the SARs.

On March 31, 2015, the compensation committee adopted a 2015 Long Term Incentive Plan, or the LTIP, and made awards, or the 2015 awards, to the eligible officers setting forth the basis on which the eligible officers could earn equity compensation for the years 2015 through 2018. Pursuant to the LTIP, each eligible officer was granted an initial long term equity award, consisting of both a performance share unit award for a three year performance period and an annual restricted share award vesting over a four year period. See Note 13 to the consolidated financial statements in the 2015 Annual Report on Form 10-K for further details regarding these awards. For the three and nine months ended September 30, 2016, we recorded $122 and $366, respectively, of compensation expense related to the LTIP.

On April 22, 2016, the compensation committee made awards, or the 2016 awards, to the eligible executives pursuant to the LTIP.  The LTIP awards consist of both a performance share unit award for a three year performance period commencing January 1, 2016 and ending December 31, 2018 and an annual restricted share award vesting over a four year period. Three components of the performance share unit award have market conditions and had grant date fair values of $1.55, $1.44 and $1.07 per share. Both the annual cash bonus plan and the LTIP were adopted pursuant to our 2012 Incentive Award Plan.  For the three and nine months ended September 30, 2016, we recorded $120 and $240, respectively, of compensation expense related to the LTIP plan.

For 2016, compensation awarded under the LTIP is based on predefined performance for 75% of the awards. Performance measures and weighting for the performance component of the 2016 through 2018 awards are based on the following objective performance measures relating to our total shareholder return, or TSR, as compared to a peer group of public companies over the same period for 40% of the award, TSR as compared to the TSR for the NAREIT Mortgage Index for 30% of the award, and our absolute TSR for 30% of the award.  The remaining 25% of the compensation award is time-based vesting over four years.

On May 23, 2016, the compensation committee awarded 161,290 common share awards, valued at $500, using our closing stock price of $3.10, to our President, under the terms of the 2012 Incentive Award Plan.  The common shares subject to the award vest 25% on the date of grant and 25% per year on the first three anniversaries of the date of grant and also vest upon the President’s separation from service for “Good Reason” as defined in the award.

Dividend Reinvestment and Share Purchase Plan (DRSPP):

We have a dividend reinvestment and share purchase plan, or DRSPP, under which we registered and reserved for issuance, in the aggregate, 10,500,000 common shares. During the nine months ended September 30, 2016, we issued a total of 6,808 common shares pursuant to the DRSPP at a weighted-average price of $2.94 per share and we received $20 of net proceeds. As of September 30, 2016, 7,754,914 common shares, in the aggregate, remain available for issuance under the DRSPP.

Capital on Demand™ Sales Agreement (COD):

On November 21, 2012, we entered into a Capital on Demand™ Sales Agreement, or the COD sales agreement, with JonesTrading Institutional Services LLC, or JonesTrading, pursuant to which we may issue and sell up to 10,000,000 of our common shares from time to time through JonesTrading acting as agent and/or principal, subject to the terms and conditions of the COD sales agreement. Unless the COD sales agreement is earlier terminated by JonesTrading or us, the COD sales agreement automatically terminates upon the issuance and sale of all of the common shares subject to the COD sales agreement. During the nine months ended September 30, 2016, we did not issue any common shares pursuant to this agreement. As of September 30, 2016, 7,918,919 common shares, in the aggregate, remain available for issuance under the COD sales agreement.

Noncontrolling Interests

During the three months ended September 30, 2016, we derecognized the noncontrolling interest of $2,518 related to Cole’s Crossing as the property was sold.  During the three months ended September 30, 2016, we derecognized the noncontrolling interest of $2,436 related to ten of our industrial properties as they were impaired.  See Note 4: Investments in Real Estate for further discussion regarding impairment on our real estate assets.

As of September 30, 2016 and December 31, 2015, we held 7,269,719 shares of IRT common stock representing 15.4% and 15.5%, respectively, of the outstanding shares of IRT common stock.  We consolidate IRT as it is a VIE and we are the primary beneficiary. See Note 8 for additional disclosures pertaining to VIEs.

On October 5, 2016, IRT repurchased all 7,269,719 shares of IRT common stock that were owned by us at a purchase price of $8.55 per share. See Note 16: Discontinued Operations for further information regarding the impact of this transaction and Note 17: Subsequent Events for further information regarding activities that occurred after September 30, 2016.

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EARNINGS (LOSS) PER SHARE

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

NOTE 11: EARNINGS (LOSS) PER SHARE

The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Income (loss) from continuing operations	$	5,328		$	(2,178	)	$	(13,131	)	$	22,702
(Income) loss allocated to preferred shares		(8,715	)		(8,303	)		(25,850	)		(24,383	)
(Income) loss allocated to noncontrolling interests		1,339			472			3,455			1,705
Income (loss) from continuing operations allocable to common shares		(2,048	)		(10,009	)		(35,526	)		24
Income (loss) from discontinued operations		4,112			27,004			38,473			28,831
(Income) loss from discontinued operations allocated to noncontrolling interests		(2,068	)		(23,527	)		(28,375	)		(23,528	)
Income (loss) from discontinued operations allocable to common shares		2,044			3,477			10,098			5,303
Net income (loss) allocable to common shares	$	(4	)	$	(6,532	)	$	(25,428	)	$	5,327
Weighted-average shares outstanding—Basic		91,201,784			87,110,958			91,137,041			83,799,244
Dilutive securities		—			—			—			1,846,365
Weighted-average shares outstanding—Diluted		91,201,784			87,110,958			91,137,041			85,645,609
Earnings (loss) per share—Basic:
Continuing operations	$	(0.02	)	$	(0.11	)	$	(0.39	)	$	-
Discontinued operations		0.02			0.04			0.11			0.06
Earnings (loss) per share—Basic	$	—		$	(0.07	)	$	(0.28	)	$	0.06
Earnings (loss) per share—Diluted:
Continuing operations	$	(0.02	)	$	(0.11	)	$	(0.39	)	$	-
Discontinued operations		0.02			0.04			0.11			0.06
Earnings (loss) per share—Diluted	$	—		$	(0.07	)	$	(0.28	)	$	0.06

For the three and nine months ended September 30, 2016, securities convertible into 26,648,284 and 26,449,861 common shares, respectively, were excluded from the earnings (loss) per share computations because their effect would have been anti-dilutive. For the three and nine months ended September 30, 2015, securities convertible into 21,143,824 and 20,720,300 common shares, respectively, were excluded from the earnings (loss) per share computations because their effect would have been anti-dilutive.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 12: RELATED PARTY TRANSACTIONS

In the ordinary course of our business operations, we have ongoing relationships and have engaged in transactions with the related entities described below. All of these relationships and transactions were approved or ratified by our audit committee as being on terms comparable to those available on an arm’s-length basis from an unaffiliated third party or otherwise not creating a conflict of interest.

Andrew M. Silberstein serves as a trustee on our board of trustees, as designated pursuant to the purchase agreement. Mr. Silberstein is an equity owner of Almanac and an officer of the investor and holds indirect equity interests in the investor. The transactions pursuant to the purchase agreement are described above in Note 9.

As discussed in Note 17: Subsequent Events, we deconsolidated IRT from our consolidated financial statements as of October 5, 2016.  As a result, the IRT management internalization as described in Note 1: The Company, which will occur no earlier than December 20, 2016 will be a related party transaction.

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SUPPLEMENTAL DISCLOSURE TO STATEMENT OF CASH FLOWS

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL DISCLOSURE TO STATEMENT OF CASH FLOWS

NOTE 13: SUPPLEMENTAL DISCLOSURE TO STATEMENT OF CASH FLOWS

The following are supplemental disclosures to the statements of cash flows for the nine months ended September 30, 2016 and 2015:

	For the Nine Months Ended September 30,
	2016			2015
Cash paid for interest	$	79,848		$	51,839
Cash paid (refunds received) for taxes		311			283
Non-cash increase (decrease) in investments in real estate, intangible assets and other liabilities from conversion of loans		(1,499	)		—
Non-cash increase (decrease) in indebtedness from the assumption of debt from property acquisitions		—			121,885

For a discussion of the non-cash decrease in investments in real estate, intangible assets and other liabilities that occurred during the nine months ended September 30, 2016, see Note 4.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 14: SEGMENT REPORTING

As a group, our executive officers act as the Chief Operating Decision Maker (“CODM”). The CODM reviews operating results of our reportable segments to make decisions about investments and resources and to assess performance for each of these reportable segments.

Historically, we have conducted our business through the following reportable segments:

• Our real estate lending, owning and managing segment concentrates on lending, owning and managing commercial real estate assets throughout the United States. The form of our investment may range from first mortgage loans to equity ownership of a commercial real estate property. We manage our investments internally through our asset management and property management professionals.

• Our IRT segment concentrates on the ownership of apartment properties in opportunistic markets throughout the United States.

As discussed in Note 16: Discontinued Operations, as of September 30, 2016, IRT is a discontinued operation.  As a result, we only have one reportable segment that relates to our continuing operations.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15: COMMITMENTS AND CONTINGENCIES

We are involved from time to time in litigation on various matters, including disputes with tenants of owned properties, disputes arising out of agreements to purchase or sell properties and disputes arising out of our loan portfolio. Given the nature of our business activities, these lawsuits are considered routine to the conduct of our business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. We do not expect that the liabilities, if any, that may ultimately result from such routine legal actions will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

On November 23, 2015, a shareholders’ derivative action, or the action, captioned Lobins v. Brown, et al., was filed in the Court of Common Pleas of Philadelphia County, or the court, (Civil Case No. 151103347) naming RAIT, as nominal defendant, and certain of our current and former executive officers and trustees as defendants, or the individual defendants.  The complaint in the action alleged that the individual defendants breached their fiduciary duties in connection with certain restructuring fees paid to TCM. These restructuring fees were the subject of the investigation by the staff of the SEC, the settlement of which was concluded on September 3, 2015.  The parties reached a settlement in the action consisting of our adoption of additions to our Trust Governance Guidelines and the creation of a Board-level Risk Management Committee.  On June 29, 2016, the court entered an order granting final approval of the settlement, which resolves the issues raised in the action and dismisses the action.

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DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2016

Discontinued Operations And Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 16: DISCONTINUED OPERATIONS

As discussed in Note 1: The Company, the IRT internalization agreement was entered into on September 27, 2016 which provides for us to sell: i) the IRT advisor, which is a subsidiary of ours; ii) certain assets and the assumption of certain liabilities relating to our multifamily property management business; and iii) up to all of the 7,269,719 shares of IRT’s common stock that we own.  The closing of the IRT management internalization is expected to occur in December of 2016, subject to the condition of the internalization agreement that it will occur no earlier than December 20, 2016.

As the IRT internalization agreement results in our probable disposal of our investment in IRT, our advisory agreement with IRT and our multifamily property management business as well as a strategic shift in our operations and financial results, we determined that these entities or distinguishable components of RAIT should be reported as discontinued operations as of September 30, 2016.  As discussed in Note 14: Segment Reporting, IRT was part of our IRT segment.  The IRT advisor and our multifamily property management business were parts of our real estate lending, owning and managing segment.

The table below presents the total assets and the total liabilities of these entities or distinguishable components of RAIT that are discontinued operations as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016		As of December 31, 2015
Assets
Investments in real estate, net	$	1,263,901	$	1,332,377
Cash and cash equivalents		29,400		38,305
Restricted cash		8,028		5,413
Other assets		5,203		3,641
Intangible assets, net		-		3,811
Total assets of discontinued operations	$	1,306,532	$	1,383,547
Liabilities
Indebtedness, net	$	880,643	$	928,607
Accrued interest payable		830		1,239
Accounts payable and accrued expenses		18,627		17,115
Derivative liabilities		696		—
Deferred taxes, borrowers’ escrows and other liabilities		5,429		5,569
Total liabilities of discontinued operations	$	906,225	$	952,530

The table below presents the statements of operations of these entities or distinguishable components of RAIT that are discontinued operations for the three and nine months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
Property income		38,353			25,491			115,252			69,866
Fee and other income		661			768			2,260			1,768
Total revenue		39,014			26,259			117,512			71,634
Expenses:
Interest expense		8,820			4,851			27,454			12,671
Real estate operating expense		16,107			11,090			47,588			30,184
Compensation expense		1,861			1,820			6,037			4,892
General and administrative expense		949			721			3,298			2,192
Acquisition expense		19			12,523			37			12,724
Depreciation and amortization expense		7,784			4,772			27,059			16,663
Total expenses		35,540			35,777			111,473			79,326
Operating (Loss) Income		3,474			(9,518	)		6,039			(7,692	)
Interest and other income (expense), net		(2	)		18			(2	)		19
Gains (losses) on assets		(1	)		—			32,262			—
Gain (loss) on IRT merger with TSRE		641			64,012			732			64,012
TSRE financing extinguishment and employee separation expenses		—			(27,508	)		—			(27,508	)
Gains (losses) on extinguishments of debt		—			—			(558	)		—
Net income (loss) from discontinued operations	$	4,112		$	27,004		$	38,473		$	28,831

The table below summarizes the cash flows provided by operating, financing and investing activities of these entities or distinguishable components of RAIT that are discontinued operations for the nine months ended September 30, 2016 and 2015

	For the Nine Months Ended September 30,
	2016			2015
Cash flow from operating activities from discontinued operations	$	32,993		$	4,972
Cash flow from investing activities from discontinued operations		29,522			(169,605	)
Cash flow from financing activities from discontinued operations		(71,420	)		166,814
Net change in cash and cash equivalents from discontinued operations		(8,905	)		2,181
Cash and cash equivalents at beginning of period - discontinued operations		38,305			14,763
Cash and cash equivalents at end of period - discontinued operations	$	29,400		$	16,944

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 17: SUBSEQUENT EVENTS

On October 5, 2016, the IRT stock repurchase closed and we sold 7,269,719 shares of IRT’s common stock to IRT at a price of $8.55 per share.  This price was equal to the price to the public in IRT’s October 2016 public offering of its common stock less underwriting discounts or commissions.  These shares represented all of the IRT common stock we owned.  We received $62,156 of proceeds from the IRT stock repurchase.  

On October 5, 2016, we used $43,703 of the proceeds of the IRT stock repurchase to repay indebtedness which was collateralized by the IRT shares.

As a result of the IRT stock repurchase on October 5, 2016, we no longer held any variable interests in IRT.  As a result, we concluded that we were not the primary beneficiary of IRT and deconsolidated IRT from our consolidated financial statements as of October 5, 2016.  

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

a. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with U.S. generally accepted accounting principles, or GAAP. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2015 included in our Annual Report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position and consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

The Consolidated Statement of Operations for the nine-month period ended September 30, 2016 includes the impact of correcting the reporting of certain activity that occurred in the three-month period ended March 31, 2016. Specifically, the correction adjusts a clerical error made in the determination of the amount of investment interest expense by increasing investment interest expense and decreasing interest expense by $1,424 for the three-month period ended March 31, 2016. This correction had no impact to any other periods. We will also correct this error in our Consolidated Statement of Operations for the three months ended March 31, 2016 when it is presented in our filing on Form 10-Q for the quarter ended March 31, 2017.

We evaluated this correction and determined, based on quantitative and qualitative factors, that the change was not material to the consolidated financial statements taken as a whole for any previously filed consolidated financial statements.

As of September 30, 2016, certain entities or distinguishable components of RAIT have been presented as discontinued operations. See Note 16: Discontinued Operations for further information.

Principles of Consolidation

b. Principles of Consolidation

The consolidated financial statements reflect our accounts and the accounts of our majority-owned and/or controlled subsidiaries. We also consolidate entities that are variable interest entities, or VIEs, where we have determined that we are the primary beneficiary of such entities. The portions of these entities that we do not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements. All intercompany accounts and transactions have been eliminated in consolidation.

Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 810, “Consolidation”, the determination of whether to consolidate a VIE is based on the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance together with either the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. We define the power to direct the activities that most significantly impact the VIE’s economic performance as the ability to buy, sell, refinance, or recapitalize assets or entities, and solely control other material operating events or items of the entity. For our commercial mortgages, mezzanine loans, and preferred equity investments, certain rights we hold are protective in nature and would preclude us from having the power to direct the activities that most significantly impact the VIE’s economic performance. Assuming both criteria are met, we would be considered the primary beneficiary and would consolidate the VIE. We will continually assess our involvement with VIEs and consolidate the VIEs when we are the primary beneficiary. During the second quarter of 2016, we began presenting our floating rate securitizations as VIEs and corrected the prior period disclosure.  In addition, we began presenting assets and liabilities of consolidated VIEs in a parenthetical disclosure on the consolidated balance sheets.  As of September 30, 2016, we corrected the parenthetical disclosure on the consolidated balance sheet as of December 31, 2015, as certain indebtedness that eliminated in consolidation was excluded from this disclosure.  After adjusting for liabilities related to discontinued operations, this decreased the amount of liabilities held by variable interest entities by $481,865.  See Note 8: Variable Interest Entities for additional disclosures pertaining to VIEs and Note 16: Discontinued Operations for additional disclosures pertaining to discontinued operations.

For entities that we do not consolidate, we account for our investment in them either under the equity method pursuant to ASC Topic 323, “Investments-Equity Method and Joint Ventures” or cost method pursuant to ASC Topic 325, “Investments – Other”. During the nine months ended September 30, 2016, we wrote off $864 of our retail property management subsidiary’s investment in an entity because it no longer held the investment. The charge was reported in asset impairment in the consolidated statements of operations.

Use of Estimates

c. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The items that include significant estimates are fair value of financial instruments and allowance for loan losses. Actual results could differ from those estimates.

Cash and Cash Equivalents

d. Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and highly liquid investments with maturities of three months or less when purchased.  Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250 per institution.  We mitigate credit risk by placing cash and cash equivalents with major financial institutions.  To date, we have not experienced any losses on cash and cash equivalents.

Restricted Cash

e. Restricted Cash

Restricted cash consists primarily of tenant escrows and borrowers’ funds held by us to fund certain expenditures or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans.  As of September 30, 2016 and December 31, 2015, we had $126,896 and $160,453, respectively, of tenant escrows and borrowers’ funds.

Restricted cash also includes proceeds from the issuance of securitization notes that are restricted for the purpose of funding additional investments in securities subsequent to the balance sheet date.  As of September 30, 2016 and December 31, 2015, we had $103,061 and $47,146, respectively, of restricted cash held by securitizations.

Investments in Commercial Mortgage Loans, Mezzanine Loans and Preferred Equity Interests

f. Investments in Commercial Mortgage Loans, Mezzanine Loans and Preferred Equity Interests

We invest in commercial mortgage loans, mezzanine loans and preferred equity interests. We account for our investments in commercial mortgage loans, mezzanine loans and preferred equity interests at amortized cost. The carrying value of these investments is adjusted for origination discounts/premiums, nonrefundable fees and direct costs for originating loans which are amortized into income on a level yield basis over the terms of the loans.

Allowance for Loan Losses, Impaired Loans and Non-accrual Status

g. Allowance for Loan Losses, Impaired Loans and Non-accrual Status

We maintain an allowance for loan losses on our investments in commercial mortgage loans, mezzanine loans and preferred equity interests. Management’s periodic evaluation of the adequacy of the allowance is based upon expected and inherent risks in the portfolio, the estimated value of underlying collateral, and current economic conditions. The credit quality of our loans is monitored via quantitative and qualitative metrics.  Quantitatively we evaluate items such as the current debt service coverage ratio and annual net operating income of the underlying property.  Qualitatively we evaluate items such as recent operating performance of the underlying property and history of the borrower’s ability to provide financial support.  These items together are considered in developing our view of each loan’s risk rating which are categorized as either watchlist/impaired or satisfactory. Management reviews loans for impairment and establishes specific reserves when a loss is probable under the provisions of FASB ASC Topic 310, “Receivables.” A loan is impaired when it is probable that we may not collect all principal and interest payments according to the contractual terms. As part of the detailed loan review, we consider many factors about the specific loan, including payment history, asset performance, borrower’s financial capability and other characteristics. Management evaluates loans for non-accrual status each reporting period. A loan is placed on non-accrual status when the loan payment deficiencies exceed 90 days unless it is well secured and in the process of collection, or if the collection of principal and interest in full is not probable. Payments received for non-accrual loans are applied to accrued interest receivable. Past due interest is recognized on non-accrual loans when they are removed from non-accrual status and are making current interest payments. The allowance for loan losses is increased by the provision for loan losses and decreased by charge-offs (net of recoveries). We charge off a loan when we determine that all commercially reasonable means of recovering the loan balance have been exhausted.  This may occur at a variety of times, including when we receive cash or other assets in a pre-foreclosure sale or take control of the underlying collateral in full satisfaction of the loan upon foreclosure. We consider circumstances such as these to indicate that the loan collection process has ceased and that a loan is uncollectible.

Investments in Real Estate

h. Investments in Real Estate

Investments in real estate are shown net of accumulated depreciation. We capitalize those costs that have been determined to improve the real property and depreciate those costs on a straight-line basis over the useful life of the asset. We depreciate real property using the following useful lives: buildings and improvements—30 to 40 years; furniture, fixtures, and equipment—5 to 10 years; and tenant improvements—shorter of the lease term or the life of the asset. Costs for ordinary maintenance and repairs are charged to expense as incurred.

Acquisitions of real estate assets and any related intangible assets are recorded initially at fair value under FASB ASC Topic 805, “Business Combinations.” Fair value is determined by management based on market conditions and inputs at the time the asset is acquired. The fair value of the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases for acquired in-place leases and the value of tenant relationships, based in each case on their fair values. Purchase accounting is applied to assets and liabilities associated with the real estate acquired. Transaction costs and fees incurred related to acquisitions are expensed as incurred.

Upon the acquisition of properties, we estimate the fair value of acquired tangible assets (consisting of land, building and improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases and tenant relationships), and assumed debt at the date of acquisition, based on the evaluation of information and estimates available at that date. In determining the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the differences between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease. The capitalized above-market lease values and the capitalized below-market lease values are amortized as an adjustment to property income over the lease term.

The aggregate value of in-place leases is determined by evaluating various factors, including an estimate of carrying costs during the expected lease-up periods, current market conditions and similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, legal and other related costs. The value assigned to this intangible asset is amortized over the assumed lease up period.

Management reviews our investments in real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on an estimate of the future undiscounted cash flows (excluding interest charges) expected to result from the long-lived asset’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a long-lived asset, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property.

Revenue Recognition

i. Revenue Recognition

1) Interest income—We recognize interest income from investments in commercial mortgage loans, mezzanine loans, and preferred equity interests on a yield to maturity basis. Certain of our commercial mortgage loans, mezzanine loans and preferred equity interests provide for the accrual of interest at specified rates which differ from current payment terms. Interest income is recognized on such loans at the accrual rate subject to management’s determination that accrued interest and outstanding principal are ultimately collectible. Management will cease accruing interest on these loans when it determines that the interest income may not be collectible based on the ultimate value of the underlying collateral using discounted cash flow models and market based assumptions. The accrued interest receivable associated with these loans as of September 30, 2016 and December 31, 2015 was $28,782 and $34,132, respectively.  These loans are considered to be impaired when the total amount owed exceeds the estimated value of the underlying collateral.  None of these loans were considered to be impaired as of September 30, 2016 and December 31, 2015.

Origination fees and direct loan origination costs on our investments in commercial mortgages, mezzanine loans and preferred equity interests are deferred and amortized to investment interest income, using the effective interest method, over the contractual life of the underlying loan security or loan, in accordance with FASB ASC Topic 310, “Receivables.”

2) Property income—We generate property income from tenant rent and other tenant-related activities at our consolidated real estate properties. For multi-family real estate properties, property income is recorded when due from residents and recognized monthly as it is earned and realizable, under lease terms which are generally for periods of one year or less. For retail and office real estate properties, property income is recognized on a straight-line basis from the later of the date of the commencement of the lease or the date of acquisition of the property subject to existing leases, which averages minimum rents over the terms of the leases. For retail and office real estate properties, leases also typically provide for tenant reimbursement of a portion of common area maintenance and other operating expenses to the extent that a tenant’s pro rata share of expenses exceeds a base year level set in the lease.

3) Fee and other income—We generate fee and other income through our various subsidiaries by (a) funding conduit loans for sale into unaffiliated commercial mortgage-backed securities, or CMBS, securitizations, (b) providing or arranging to provide financing to our borrowers, (c) providing ongoing asset management services to investment portfolios under cancelable management agreements, and (d) providing property management services to third parties. We recognize revenue for these activities when the fees are fixed or determinable, are evidenced by an arrangement, collection is reasonably assured and the services under the arrangement have been provided. While we may receive asset management fees when they are earned, we eliminate earned asset management fee income from securitizations while such securitizations are consolidated. During the three and nine months ended September 30, 2016, we earned $340 and $1,118, respectively, of asset management fees, which were eliminated as they were associated with consolidated securitizations.  During the three and nine months ended September 30, 2015, we earned $427 and $1,485, respectively, of asset management fees, which were eliminated as they were associated with consolidated securitizations.

Also, during the three and nine months ended September 30, 2016 we earned $1,727 and $5,141 of asset management fees, respectively, and $206 and $350 of incentive fees, respectively, related to our advisory agreement with IRT.  During the three and nine months ended September 30, 2015 we earned $1,259 and $3,306 of asset management fees, respectively, and $0 and $425 of incentive fees, respectively, related to our advisory agreement with IRT. During the three and nine months ended September 30, 2016 we also earned $1,219 and $3,710, respectively, of property management and leasing fees related to our property management agreements with IRT’s properties.   During the three and nine months ended September 30, 2015 we also earned $861 and $2,381, respectively, of property management and leasing fees related to our property management agreements with IRT’s properties. As we consolidate IRT, these fees are eliminated in consolidation.

Fair Value of Financial Instruments

j. Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

• Level 1: Valuations are based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are equity securities listed in active markets. As such, valuations of these investments do not entail a significant degree of judgment.

• Level 2: Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

• Level 3: Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.  

The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of investment, whether the investment is new, whether the investment is traded on an active exchange or in the secondary market, and the current market condition. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that management believes market participants would use in pricing the asset or liability at the measurement date. We use prices and inputs that management believes are current as of the measurement

date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be transferred from Level 1 to Level 2 or Level 2 to Level 3.

Many financial instruments have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that buyers in the market are willing to pay for an asset. Ask prices represent the lowest price that sellers in the market are willing to accept for an asset. For financial instruments whose inputs are based on bid-ask prices, we do not require that fair value always be a predetermined point in the bid-ask range. Our policy is to allow for mid-market pricing and adjusting to the point within the bid-ask range that results in our best estimate of fair value.

Fair value for certain of our Level 3 financial instruments is derived using internal valuation models. These internal valuation models include discounted cash flow analyses developed by management using current interest rates, estimates of the term of the particular instrument, specific issuer information and other market data for securities without an active market. In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, the impact of our own credit spreads is also considered when measuring the fair value of financial assets or liabilities, including derivative contracts. Where appropriate, valuation adjustments are made to account for various factors, including bid-ask spreads, credit quality and market liquidity. These adjustments are applied on a consistent basis and are based on observable inputs where available. Management’s estimate of fair value requires significant management judgment and is subject to a high degree of variability based upon market conditions, the availability of specific issuer information and management’s assumptions.

Investments in Securities

k. Investments in Securities

During the first quarter of 2015, we sold all our remaining investments in securities with an aggregate fair value of $31,412 and we had no investments in securities as of September 30, 2016 and December 31, 2015.

Transfers of Financial Assets

l. Transfers of Financial Assets

We account for transfers of financial assets under FASB ASC Topic 860, “Transfers and Servicing”, as either sales or financings.  Transfers of financial assets that result in sales accounting are those in which (1) the transfer legally isolates the transferred assets from the transferor, (2) the transferee has the right to pledge or exchange the transferred assets and no condition both constrains the transferee’s right to pledge or exchange the assets and provides more than a trivial benefit to the transferor, and (3) the transferor does not maintain effective control over the transferred assets.  If the transfer does not meet these criteria, the transfer is accounted for as a financing.  Financial assets that are treated as sales are removed from our accounts with any realized gain (loss) reflected in earnings during the period of sale.  Financial assets that are treated as financings are maintained on the balance sheet with proceeds received from the legal transfer reflected as securitized borrowings or security-related receivables.

Deferred Financing Costs

m. Deferred Financing Costs

Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method.

Intangible Assets

n. Intangible Assets

Intangible assets on our consolidated balance sheets represent identifiable intangible assets acquired in business acquisitions. We amortize identified intangible assets to expense over their estimated lives using the straight-line method. We evaluate intangible assets for impairment as events and circumstances change, in accordance with FASB ASC Topic 360, “Property, Plant, and Equipment.” The gross carrying amount for our customer relationships was $14,997 and $19,149 as of September 30, 2016 and December 31, 2015, respectively. The gross carrying amount for our customer relationships has decreased as $4,151 of these assets became fully amortized during the nine months ended September 30, 2016, $2,552 of which was due to the acceleration of amortization as a result of the cancellation of two customer relationships. The gross carrying amount for our in-place leases, above market leases, and ground lease was $25,976 and $23,047 as of September 30, 2016 and December 31, 2015, respectively. The gross carrying amount for Urban Retail’s trade name was $1,500 as of September 30, 2016 and December 31, 2015. The accumulated amortization for our intangible assets was $19,308 and $13,234 as of September 30, 2016 and December 31, 2015, respectively. We recorded amortization expense of $2,333 and $1,700 for the three months ended September 30, 2016 and 2015, respectively, and $10,105 and $5,707 for the nine months ended September 30, 2016 and 2015, respectively. Based on the intangible assets identified above, we expect to record amortization expense of intangible assets of $2,045 for the remainder of 2016, $5,327 for 2017, $3,605 for 2018, $3,023 for 2019, $2,528 for 2020 and $6,638 thereafter.  

Goodwill

o. Goodwill

Goodwill on our consolidated balance sheet represented the amounts paid in excess of the fair value of the net assets acquired from business acquisitions accounted for under FASB ASC Topic 805, “Business Combinations.” Pursuant to FASB ASC Topic 350, “Intangibles-Goodwill and Other”, goodwill is not amortized to expense but rather is analyzed for impairment. We evaluate goodwill for impairment on an annual basis and as events and circumstances change, in accordance with FASB ASC Topic 350. As of September 30, 2016 and December 31, 2015, we have $8,854 of goodwill that is included in Other Assets in the accompanying consolidated balance sheets.

Income Taxes

p. Income Taxes

RAIT, Taberna Realty Finance Trust, or TRFT, and IRT have each elected to be taxed as a REIT and to comply with the related provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. Accordingly, we generally will not be subject to U.S. federal income tax to the extent of our dividends to shareholders and as long as certain asset, income and share ownership tests are met. If we were to fail to meet these requirements, we would be subject to U.S. federal income tax, which could have a material adverse impact on our results of operations and amounts available for dividends to our shareholders. Management believes that all of the criteria to maintain RAIT’s, TRFT’s, and IRT’s REIT qualification have been met for the applicable periods, but there can be no assurance that these criteria will continue to be met in subsequent periods.  

We maintain various taxable REIT subsidiaries, or TRSs, which may be subject to U.S. federal, state and local income taxes and foreign taxes. Current and deferred taxes are provided on the portion of earnings (losses) recognized by us with respect to our interest in domestic TRSs. Deferred income tax assets and liabilities are computed based on temporary differences between our GAAP consolidated financial statements and the federal and state income tax basis of assets and liabilities as of the consolidated balance sheet date. We evaluate the realizability of our deferred tax assets (e.g., net operating loss and capital loss carryforwards) and recognize a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of our deferred tax assets will not be realized. When evaluating the realizability of our deferred tax assets, we consider estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires management to forecast our business and general economic environment in future periods. Changes in estimate of deferred tax asset realizability, if any, are included in income tax expense on the consolidated statements of operations.

Our TRS entities generate taxable revenue from advisory fees for services provided to IRT and collateral management fees from consolidated securitizations. In consolidation, these fees are eliminated as IRT and securitizations are included in the consolidated group. Nonetheless, all income taxes are expensed and are paid by the TRSs in the year in which the revenue is received. These income taxes are not eliminated when the related revenue is eliminated in consolidation.

The TRS entities may be subject to tax laws that are complex and potentially subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws. Actual income taxes paid may vary from estimates depending upon changes in income tax laws, actual results of operations, and the final audit of tax returns by taxing authorities. Tax assessments may arise several years after tax returns have been filed. We review the tax balances of our TRS entities quarterly and, as new information becomes available, the balances are adjusted as appropriate.

During the three and nine months ended September 30, 2016, we recognized a deferred tax benefit of $15,302 related to the release of a valuation allowance on our deferred tax assets due to projected taxable income at our TRS entities emanating from the IRT internalization agreement described in Note 1: The Company. We expect to utilize this deferred tax benefit upon the closing of the IRT management internalization, which is expected to occur in December of 2016 as described in Note 16: Discontinued Operations.

Recent Accounting Pronouncements

q. Recent Accounting Pronouncements

Adopted within these Financial Statements

In February 2015, the FASB issued an accounting standard classified under FASB ASC Topic 810, “Consolidation”. This accounting standard amends the consolidation analysis required under GAAP and requires management to reevaluate all previous consolidation conclusions. This standard considers limited partnerships to be VIEs, unless the limited partners have either substantive kick-out or participating rights. The presumption that a general partner should consolidate a limited partnership has also been eliminated. The standard amends the effect that fees paid to a decision maker or service provider have on the consolidation analysis, as well as amends how variable interests held by a reporting entity’s related parties affect the consolidation conclusion. This standard also clarifies how to determine whether equity holders as a group have power over an entity. This standard was effective for interim and annual reporting periods beginning on or after December 15, 2015, with early adoption permitted. The adoption of this accounting standard did not have an impact on our previous conclusions with respect to the entities consolidated in our consolidated financial statements.

In April 2015, the FASB issued an accounting standard classified under FASB ASC Topic 835, “Interest”. This accounting standard amends existing guidance to change reporting requirements for debt issuance costs by requiring debt issuance costs to be presented on the balance sheet as a direct deduction from the debt liability. This standard was effective for interim and annual reporting periods beginning on or after December 15, 2015, with an early adoption permitted. Retrospective application to prior periods is required. The adoption of this accounting standard resulted in the reclassification of $31,368 of deferred costs, net of $33,769 of accumulated amortization, as of December 31, 2015 to total indebtedness on our consolidated balance sheet.

In September 2015, the FASB issued an accounting standard classified under FASB ASC Topic 805, “Business Combinations”.  This accounting standard amends existing guidance related to measurement period adjustments by requiring the adjustments to be recognized prospectively with disclosure of the impact of the adjustments had they been applied previously.  This standard was effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted.  As this standard only applies to measurement period adjustments that occur after the effective date, this standard did not have a material impact on our consolidated financial statements.

Not Yet Adopted Within These Financial Statements

In May 2014, the FASB issued an accounting standard classified under FASB ASC Topic 606, “Revenue from Contracts with Customers”. This accounting standard generally replaces existing guidance by requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This accounting standard applies to all contracts with customers, except those that are within the scope of other Topics in the FASB ASC. During 2016, the FASB issued three amendments to this accounting standard which provide further clarification to this accounting standard. These standards amending FASB ASC Topic 606 are currently effective for annual reporting periods beginning after December 15, 2017. Management is currently evaluating the impact that these standards may have on our consolidated financial statements.

In January 2016, the FASB issued an accounting standard classified under FASB ASC Topic 825, “Financial Instruments”. This accounting standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.  Among other things, the amendment (i) eliminates certain disclosure requirements for financial instruments measured at amortized cost; (ii) requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) requires separate presentation, in other comprehensive income, of the change in fair value of a liability, when the fair value option has been elected, resulting from a change in the instrument-specific credit risk; and (iv) requires separate presentation of financial instruments by measurement category and form.  This standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted for the separate presentation of changes in fair value due to changes in instrument-specific credit risk. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In February 2016, the FASB issued an accounting standard classified under FASB ASC Topic 842, “Leases”.  This accounting standard amends lease accounting by requiring the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases on the balance sheet and disclosing key information about leasing arrangements.  This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years.  Early application of the amendments in this standard is permitted. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 815, “Derivatives and Hedging”.  This accounting standard clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met.  This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.  Management does not expect this standard to have a significant impact on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 815, “Derivatives and Hedging”. This accounting standard clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts.  This accounting standard clarifies what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative.  Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks.  This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period. Management does not expect this standard to have a significant impact on our consolidated financial statements.

In March 2016, the FASB issued an accounting standard classified under FASB ASC Topic 718, “Compensation – Stock Compensation”.  This accounting standard simplifies several aspects of the accounting for share-based payment award transactions, including: (i) income tax consequences; (ii) classification of awards as either equity or liabilities; and (iii) classification on the statement of cash flows.  This standard is effective for annual periods beginning after December 15, 2016, and interim period within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Management is currently evaluating the impact that this standard may have on our consolidated financial statements.  

In June 2016, the FASB issued an accounting standard classified under FASB ASC Topic 326, “Financial Instruments-Credit Losses”.  The amendments in this standard provide an approach based on expected losses to estimate credit losses on certain types of financial instruments.  The amendments also modify the impairment model for available for sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  The amendments in this standard expand the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses.  In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.  This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Management is currently evaluating the impact that this standard will have on our consolidated financial statements.

In August 2016, the FASB issued an accounting standard classified under FASB ASC Topic 230, “Statement of Cash Flows”.  This accounting standard provides guidance on eight specific cash flow issues; (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies; including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions; and (viii) separately identifiable cash flows and application of the predominance principle.  The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  Management is currently evaluating the impact that this standard may have on our consolidated statement of cash flows.

In October 2016, the FASB issued an accounting standard classified under FASB ASC Topic 740, “Income Taxes”.  The amendments in this accounting standard provide that the current and deferred income tax consequences of an intra-entity transfer of an asset other than inventory should be recognized when the transfer occurs rather than when the asset has been sold to an outside party.   Two common examples of assets included in the scope of this accounting standard are intellectual property and property, plant, and equipment.  The amendments in this standard are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods.  Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued.  The amendments in this accounting standard should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

In October 2016, the FASB issued an accounting standard classified under FASB ASC Topic 810, “Consolidation”.  The amendments in this accounting standard provide guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE.  The amendments in this accounting standard do not change the characteristics of a primary beneficiary in current GAAP.  A primary beneficiary of a VIE has both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.  If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a VIE), the amendments in this accounting standard require that the reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interest in a VIE and, on a proportionate basis, its indirect variable interest in a VIE held through related parties, including related parties that are under common control with the reporting entity.  If after performing that assessment, a reporting entity that is the single decision maker of a VIE concludes that it does not have the characteristics of a primary beneficiary, the amendments continue to require that the reporting entity evaluate whether it and one or more of its related parties under common control, as a group, have the characteristics of a primary beneficiary.  The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  Management is currently evaluating the impact that this standard may have on our consolidated financial statements.

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INVESTMENTS IN LOANS (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Investments in Loans

The following table summarizes our investments in commercial mortgage loans, mezzanine loans and preferred equity interests as of September 30, 2016:

	Unpaid Principal Balance			Unamortized (Discounts) Premiums			Carrying Amount			Number of Loans		Weighted- Average Coupon (1)			Range of Maturity Dates (2)
Commercial Real Estate (CRE)
Commercial mortgage loans (3)	$	1,228,732		$	(902	)	$	1,227,830			100		5.7	%	Oct. 2016 - Dec. 2025
Mezzanine loans		110,055			(219	)		109,836			34		9.3	%	Oct. 2016 - Jun. 2027
Preferred equity interests		36,828			(1	)		36,827			14		7.2	%	Jan. 2017 - Jan. 2029
Total CRE		1,375,615			(1,122	)		1,374,493			148		6.0	%
Deferred fees, net		(878	)		-			(878	)
Total	$	1,374,737		$	(1,122	)	$	1,373,615

(1) Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

(2) Does not include the maturity dates of four loans all of which had maturity dates prior to September 30, 2016 and have been identified as impaired.  These loans are 90 days or more past due.   

(3) Commercial mortgage loans includes three conduit loans with an unpaid principal balance and carrying amount of $27,570, a weighted-average coupon of 4.8% and maturity dates ranging from June 2025 through December 2025. These commercial mortgage loans are accounted for as loans held for sale.    

The following table summarizes our investments in commercial mortgage loans, mezzanine loans and preferred equity interests as of December 31, 2015:

	Unpaid Principal Balance			Unamortized (Discounts) Premiums			Carrying Amount			Number of Loans		Weighted- Average Coupon (1)			Range of Maturity Dates (2)
Commercial Real Estate (CRE)
Commercial mortgage loans (3)	$	1,427,328		$	(1,049	)	$	1,426,279			124		5.2	%	Mar.2016 to Jan. 2029
Mezzanine loans		169,556			(218	)		169,338			57		10.0	%	Jan. 2016 to May 2025
Preferred equity interests		30,237			(1	)		30,236			7		6.9	%	Feb. 2016 to Aug. 2025
Total CRE		1,627,121			(1,268	)		1,625,853			188		6.1	%
Deferred fees, net		(2,270	)		—			(2,270	)
Total	$	1,624,851		$	(1,268	)	$	1,623,583

(1) Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

(2) Does not include the maturity dates of three mezzanine loans that were 90 days or more past due which had contractual maturity dates prior to December 31, 2015.

(3) Commercial mortgage loans includes six conduit loans with an unpaid principal balance and carrying amount of $49,239, a weighted-average coupon of 4.8% and maturity dates ranging from December 2020 through January 2026. These commercial mortgage loans are accounted for as loans held for sale.

Delinquency Statistics of Commercial Real Estate Loan

The following table summarizes the delinquency statistics of our commercial real estate loans as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016
Delinquency Status	Current		30 to 59 days		60 to 89 days		90 days or more		In foreclosure or bankruptcy proceedings		Total		Non-accrual (1)
Commercial mortgage loans	$	1,153,931	$	—	$	—		74,800	$	—	$	1,228,731	$	92,035
Mezzanine loans		100,503		—		—		9,553		—		110,056	$	9,553
Preferred equity interests		36,828		—		—		—		—		36,828	$	7,880
Total	$	1,291,262	$	—	$	—	$	84,353	$	—	$	1,375,615	$	109,468

(1) Includes four loans that were current, but are on non-accrual due to uncertainty over whether we will fully collect principal and interest.

	As of December 31, 2015
Delinquency Status	Current		30 to 59 days		60 to 89 days		90 days or more		In foreclosure or bankruptcy proceedings (1)		Total		Non-Accrual (2)
Commercial mortgage loans	$	1,427,328	$	—	$	—	$	—	$	—	$	1,427,328	$	15,645
Mezzanine loans		167,145		—		—		1,163		1,248		169,556		12,346
Preferred equity interests		30,237		—		—		—		—		30,237		7,946
Total	$	1,624,710	$	—	$	—	$	1,163	$	1,248	$	1,627,121	$	35,937

(1) These loans were on non-accrual due to uncertainty over whether we will fully collect principal and interest.

(2) Includes six loans that were current in accordance with their terms, but are on non-accrual due to uncertainty over whether we will fully collect principal and interest.

Investment in Loans by Credit Risk Category

we have classified our investment in loans by credit risk category as follows:

	As of September 30, 2016
Credit Status	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Satisfactory	$	1,136,697	$	82,002	$	28,948	$	1,247,647
Watchlist / Impaired		92,035		28,053		7,880		127,968
Total	$	1,228,732	$	110,055	$	36,828	$	1,375,615

	As of December 31, 2015
Credit Status	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Satisfactory	$	1,336,883	$	135,710	$	22,291		$	1,494,884
Watchlist / Impaired		90,445		33,846		7,946			132,237
Total	$	1,427,328	$	169,556	$	30,237		$	1,627,121

Roll-Forwards of Allowance for Loan Losses for Commercial Mortgage Loans, Mezzanine Loans and Preferred Equity Interests

The following tables provide roll-forwards of our allowance for loan losses for our commercial mortgage loans, mezzanine loans and preferred equity interests for the three months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30, 2016
	Commercial Mortgage Loans			Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	4,397		$	10,861		$	2,979		$	18,237
Provision for loan losses		1,957			(394	)		(30	)		1,533
Charge-offs, net of recoveries		(10	)		(1,105	)		—			(1,115	)
Ending balance	$	6,344		$	9,362		$	2,949		$	18,655

	For the Three Months Ended September 30, 2015
	Commercial Mortgage Loans		Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	—	$	11,470		$	1,326		$	12,796
Provision for loan losses		3,154		(1,255	)		(49	)		1,850
Charge-offs, net of recoveries		—		0			—			-
Ending balance	$	3,154	$	10,215		$	1,277		$	14,646

The following tables provide roll-forwards of our allowance for loan losses for our commercial mortgages, mezzanine loans and preferred equity interests for the nine months ended September 30, 2016 and 2015:

	For the Nine Months Ended September 30, 2016
	Commercial Mortgage Loans			Mezzanine Loans			Preferred Equity		Total
Beginning balance	$	3,154		$	12,139		$	1,804	$	17,097
Provision for loan losses		3,200			(143	)		1,145		4,202
Charge-offs, net of recoveries		(10	)		(2,634	)		—		(2,644	)
Ending balance	$	6,344		$	9,362		$	2,949	$	18,655

	For the Nine Months Ended September 30, 2015
	Commercial Mortgage Loans		Mezzanine Loans			Preferred Equity			Total
Beginning balance	$	—	$	7,892		$	1,326		$	9,218
Provision for loan losses		3,154		2,745			(49	)		5,850
Charge-offs, net of recoveries		—		(422	)		—			(422	)
Ending balance	$	3,154	$	10,215		$	1,277		$	14,646

Loans Considered to be Impaired

Information related to those loans on our watchlist or considered to be impaired was as follows:

	As of September 30, 2016
Watchlist/Impaired Loans	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Watchlist/Impaired loans expecting full recovery	$	—	$	18,500	$	—	$	18,500
Watchlist/Impaired loans with reserves		92,035		9,553		7,880		109,468
Total Watchlist/Impaired Loans (1)	$	92,035	$	28,053	$	7,880	$	127,968
Allowance for loan losses	$	6,344	$	9,362	$	2,949	$	18,655

(1) As of September 30, 2016, there was no unpaid principal relating to previously identified TDRs that are on accrual status.

	As of December 31, 2015
Watchlist/Impaired Loans	Commercial Mortgage Loans		Mezzanine Loans		Preferred Equity		Total
Watchlist/Impaired loans expecting full recovery	$	74,800	$	3,000	$	—	$	77,800
Watchlist/Impaired loans with reserves		15,645		30,846		7,946		54,437
Total Watchlist/Impaired Loans (1)	$	90,445	$	33,846	$	7,946	$	132,237
Allowance for loan losses	$	3,154	$	12,139	$	1,804	$	17,097

(1) As of December 31, 2015, there was no unpaid principal relating to previously identified TDRs that are on accrual status.

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INVESTMENTS IN REAL ESTATE (Tables)

9 Months Ended

Sep. 30, 2016

Banking And Thrift [Abstract]

Summary of Investments in Real Estate

The table below summarizes our investments in real estate:

	Book Value
	As of September 30, 2016			As of December 31, 2015
Multi-family real estate properties	$	284,529		$	470,689
Office real estate properties		401,989			395,224
Industrial real estate properties		93,462			94,938
Retail real estate properties		134,824			134,331
Parcels of land		50,558			50,448
Subtotal		965,362			1,145,630
Less: Accumulated depreciation and amortization		(156,613	)		(158,688	)
Investments in real estate (1)	$	808,749		$	986,942

(1) As of September 30, 2016, two of our multifamily properties, with a carrying amount of $34,450, and two of our parcels of land, with a carrying amount of $12,556, were considered held-for-sale.

Aggregate Estimated Fair Value of Assets and Liabilities Acquired

The following table summarizes the aggregate estimated fair value of the assets and liabilities associated with the properties acquired during the nine months ended September 30, 2016, on the date of acquisition, for the real estate accounted for under FASB ASC Topic 805.

Description	Fair Value of Assets Acquired During the Nine Months Ended September 30, 2016
Assets acquired:
Investments in real estate	$	16,652
Cash and cash equivalents		66
Restricted cash		221
Accounts receivable and other assets		5
Intangible assets		2,610
Total assets acquired		19,554
Liabilities assumed:
Indebtedness, net		17,696
Accounts payable and accrued expenses		448
Other liabilities		1,068
Total liabilities assumed		19,212
Estimated fair value of net assets acquired	$	342

Consideration Transferred to Acquire Real Estate Properties

The following table summarizes the consideration transferred to acquire the real estate properties and the amounts of identified assets acquired and liabilities assumed at the respective acquisition date:

Description	Total Estimated Fair Value
Fair value of consideration transferred:
Investments in loans, accrued interest receivable and other assets (net of allowance for loan losses of $1,213)	$	332
Total	$	332

Schedule of Revenue and Net Income (Loss) for the Properties Acquired

The table below presents the revenue and net income (loss) for the properties acquired during the nine months ended September 30, 2016 as reported in our consolidated financial statements.

	For the Three Months Ended September 30, 2016					For the Nine Months Ended September 30, 2016
Property	Total Revenue		Net income (loss) allocable to common shares			Total Revenue		Net income (loss) allocable to common shares
Indiana Portfolio	$	731	$	(245	)	$	1,277	$	(563	)
Total	$	731	$	(245	)	$	1,277	$	(563	)

Consolidated Unaudited Pro Forma Information

The tables below present the revenue, net income and earnings per share effect of the acquired properties on a pro forma basis as if the acquisitions occurred on January 1, 2015.  These pro forma results are not necessarily indicative of the results which actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods.

	For the Three Months ended September 30,						For the Nine Months ended September 30,
Description	2016			2015			2016			2015
Pro forma total revenue (unaudited)	$	43,237		$	49,579		$	138,439		$	160,349
Pro forma net income (loss) allocable to common shares (unaudited)		(4	)		(6,561	)		(25,386	)		5,241
Earnings (loss) per share attributable to common shareholders
Basic-as pro forma (unaudited)		(0.00	)		(0.08	)		(0.28	)		0.06
Diluted-as pro forma (unaudited)		(0.00	)		(0.08	)		(0.28	)		0.06

Summary of Disposition and Each Property's Contribution

The below table summarizes the current year dispositions and also presents each property’s contribution to net income (loss) allocable to common shares, excluding the impact of the gain (loss) on sale:

								Net income (loss) allocable to common shares
Property Name	Property Type	Date of Sale	Sale Price		Gain (loss) on sale			For the Three Months Ended September 30, 2016			For the Nine Months Ended September 30, 2016
Mineral/Lincoln	Office	03/25/2016		7,949		(374	)		1			—
Ventura	Multifamily	03/30/2016		8,750		115			9			45
Saxony	Land	04/06/2016		1,500		(12	)		—			(4	)
Desert Wind (1)	Multifamily	05/18/2016		8,750		(2,032	)		2			52
Las Vistas (1)	Multifamily	05/18/2016		10,500		(61	)		9			122
Penny Lane (1)	Multifamily	05/18/2016		10,000		3,248			31			121
Sandal Ridge (1)	Multifamily	05/18/2016		12,250		3,482			29			162
Silversmith	Multifamily	06/03/2016		6,200		1,227			(3	)		95
Coles Crossing (2)	Multifamily	09/20/2016		43,750		(3,965	)		345			90
Eagle Ridge and Grand Terrace	Multifamily	09/21/2016		44,650		11,757			275			534
Augusta	Multifamily	09/28/2016		37,500		10,431			321			871
Total			$	191,799	$	23,816		$	1,019		$	2,088

(1) These properties were disposed of as a group of assets in a portfolio sale on May 18, 2016.

(2) The loss on sale related to this property primarily results from a defeasance premium of $1,318 and the write off of the noncontrolling interest of $2,518.

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INDEBTEDNESS (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Summary of Total Recourse and Non-Recourse Indebtedness

The following table summarizes our total recourse and non-recourse indebtedness as of September 30, 2016:

Description	Unpaid Principal Balance		Unamortized Discount/Premium and Deferred Financing Costs			Carrying Amount		Weighted- Average Interest Rate			Contractual Maturity
Recourse indebtedness:
7.0% convertible senior notes (1)	$	871	$	(27	)	$	844		7.0	%	Apr. 2031
4.0% convertible senior notes (2)		126,098		(6,215	)		119,883		4.0	%	Oct. 2033
7.625% senior notes		57,287		(1,747	)		55,540		7.6	%	Apr. 2024
7.125% senior notes		70,731		(1,545	)		69,186		7.1	%	Aug. 2019
Senior secured notes		64,000		(4,560	)		59,440		7.0	%	Apr. 2017 to Apr. 2019
Junior subordinated notes, at fair value (3)		18,671		(7,147	)		11,524		4.6	%	Mar. 2035
Junior subordinated notes, at amortized cost		25,100		(208	)		24,892		3.3	%	Apr. 2037
CMBS facilities		169,550		(921	)		168,629		2.8	%	Nov.2016 to Jul. 2018
Total recourse indebtedness		532,308		(22,370	)		509,938		4.8	%
Non-recourse indebtedness:
CDO notes payable, at amortized cost (4)(5)		728,362		(9,165	)		719,197		1.4	%	2045 to 2046
CMBS securitizations (6)		496,913		(4,420	)		492,493		3.1	%	Jan. 2031 to Dec. 2031
Loans payable on real estate (8)		230,678		(858	)		229,820		5.8	%	June 2016 to April 2026
Total non-recourse indebtedness		1,455,953		(14,443	)		1,441,510		2.7	%
Other indebtedness (7)		24,321		94			24,415		—			—
Total indebtedness	$	2,012,582	$	(36,719	)	$	1,975,863		3.2	%

(1) Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2021, and April 2026.

(2) Our 4.0% convertible senior notes are redeemable at par, at the option of the holder, in October 2018, October 2023, and October 2028.

(3) Relates to liabilities which we elected to record at fair value under FASB ASC Topic 825.

(4)     Excludes CDO notes payable purchased by us which are eliminated in consolidation.

(5) Collateralized by $1,107,924 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $641,118 of which eliminates in consolidation.  These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(6) Collateralized by $618,494 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(7) Represents a 40% interest issued to an unaffiliated third party in a venture to which we contributed the junior notes and equity of a floating rate securitization.  We retained a 60% interest in this venture, and, as a result of our controlling financial interest, we consolidated the venture.  We received approximately $24,796 of proceeds as a result of issuing this 40% interest, which has an unpaid principal balance of $24,321.  This 40% interest has no stated maturity date and does not provide for its mandatory redemption or any required return or interest payment.  The venture interests allocate the distributions on such junior notes and equity when made between the parties to the venture.

(8) Certain loans payable on real estate had maturity dates of June 2016. These loans payable on real estate are currently in the process of being refinanced with the lenders.           

The following table summarizes our total recourse and non-recourse indebtedness as of December 31, 2015:

Description	Unpaid Principal Balance		Unamortized Discount and Deferred Finance Costs			Carrying Amount		Weighted- Average Interest Rate			Contractual Maturity
Recourse indebtedness:
7.0% convertible senior notes (1)	$	30,048	$	(1,180	)	$	28,868		7.0	%	Apr. 2031
4.0% convertible senior notes (2)		141,750		(8,711	)		133,039		4.0	%	Oct. 2033
7.625% senior notes		60,000		(2,048	)		57,952		7.6	%	Apr. 2024
7.125% senior notes		71,905		(2,156	)		69,749		7.1	%	Aug. 2019
Senior secured notes		70,000		(6,955	)		63,045		7.0	%	Apr. 2017 to Apr. 2019
Junior subordinated notes, at fair value (3)		18,671		(8,167	)		10,504		4.3	%	Mar. 2035
Junior subordinated notes, at amortized cost		25,100		(216	)		24,884		2.7	%	Apr. 2037
CMBS facilities		97,067		(344	)		96,723		2.4	%	Jul. 2016 to Jan. 2018
Total recourse indebtedness		514,541		(29,777	)		484,764		5.1	%
Non-recourse indebtedness:
CDO notes payable, at amortized cost (4)(5)		950,981		(13,412	)		937,569		0.9	%	Jun. 2045 to Nov. 2046
CMBS securitizations (6)		717,255		(8,745	)		708,510		2.4	%	May 2031 to Dec. 2031
Loans payable on real estate		269,790		(1,158	)		268,632		5.6	%	Apr. 2016 to Apr. 2026
Total non-recourse indebtedness		1,938,026		(23,315	)		1,914,711		2.1	%
Total indebtedness	$	2,452,567	$	(53,092	)	$	2,399,475		2.7	%

(1) Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2016, April 2021, and April 2026.

(2) Our 4.0% convertible senior notes are redeemable at par, at the option of the holder, in October 2018, October 2023, and October 2028.

(3) Relates to liabilities which we elected to record at fair value under FASB ASC Topic 825.

(4) Excludes CDO notes payable purchased by us which are eliminated in consolidation.

(5) Collateralized by $1,388,194 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $815,745 of which eliminates in consolidation. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

(6) Collateralized by 885,055 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

Aggregate Contractual Maturities of Indebtedness by Year

The following table displays the aggregate contractual maturities of our indebtedness on or before December 31 by year:

	Recourse indebtedness		Non-recourse indebtedness
2016	$	44,010	$	90,479
2017		32,000		33,439
2018		141,540		16,453
2019		86,731		1,512
2020		-		10,236
Thereafter (1)		228,027		1,303,834
Total	$	532,308	$	1,455,953

(1) Includes $871 of our 7.0% convertible senior notes which are redeemable at par at the option of the holders in April 2021, and April 2026.  Includes $126,098 of our 4.0% convertible senior notes which are redeemable at par at the option of the holders in October 2018, October 2023, and October 2028.  

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Aggregate Notional Amount and Estimated Net Fair Value of Derivative Instruments

The following table summarizes the aggregate notional amount and estimated net fair value of our derivative instruments as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016							As of December 31, 2015
	Notional		Fair Value of Assets		Fair Value of Liabilities			Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges:
Interest rate swaps	$	-	$	-	$	-		$	243,816	$	-	$	(4,672	)
Interest rate cap		-		-		-			-		-		-
Other interest rate swaps & caps		60,235		52		(1,748	)		37,325		182		(55	)
Net fair value	$	60,235	$	52	$	(1,748	)	$	281,141	$	182	$	(4,727	)

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Carrying Amount and Fair Value of Financial Instruments

The following table summarizes the carrying amount and the fair value of our financial instruments as of September 30, 2016:

Financial Instrument	Carrying Amount		Estimated Fair Value
Assets
Total investment in mortgages and loans, net	$	1,354,960	$	1,321,940
Cash and cash equivalents		36,019		36,019
Restricted cash		229,957		229,957
Derivative assets		52		52
Liabilities
Recourse indebtedness:
7.0% convertible senior notes		844		951
4.0% convertible senior notes		119,883		117,271
7.625% senior notes		55,540		51,329
7.125% senior notes		69,186		69,062
Senior secured notes		59,440		64,596
Junior subordinated notes, at fair value		11,524		11,524
Junior subordinated notes, at amortized cost		24,892		12,262
CMBS facilities		168,629		169,550
Non-recourse indebtedness:
CDO notes payable, at amortized cost		719,197		639,060
CMBS securitizations		492,493		494,264
Loans payable on real estate		229,820		238,856
Other indebtedness		24,415		24,321
Derivative liabilities		1,748		1,748
Warrants and investor SARs		30,100		30,100

The following table summarizes the carrying amount and the fair value of our financial instruments as of December 31, 2015:

Financial Instrument	Carrying Amount		Estimated Fair Value
Assets
Total investment in mortgages and loans, net	$	1,606,486	$	1,537,086
Cash and cash equivalents		125,886		125,886
Restricted cash		213,012		213,012
Derivative assets		206		206
Liabilities
Recourse indebtedness:
7.0% convertible senior notes		28,868		27,795
4.0% convertible senior notes		133,039		104,184
7.625% senior notes		57,952		46,560
7.125% senior notes		69,749		62,471
Senior secured notes		63,045		66,725
Junior subordinated notes, at fair value		10,504		10,504
Junior subordinated notes, at amortized cost		24,884		11,221
CMBS facilities		96,723		97,067
Non-recourse indebtedness:
CDO notes payable, at amortized cost		937,569		801,289
CMBS securitizations		708,510		709,001
Loans payable on real estate		268,632		281,840
Derivative liabilities		4,727		4,727
Warrants and investor SARs		26,200		26,200

Information of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables summarize information about our assets and liabilities measured at fair value on a recurring basis as of September 30, 2016, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:

Assets:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of September 30, 2016
Derivative assets	$	—	$	52	$	—	$	52
Total assets	$	—	$	52	$	—	$	52

Liabilities:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of September 30, 2016
Junior subordinated notes, at fair value	$	—	$	—	$	11,524	$	11,524
Derivative liabilities		—		1,748		—		1,748
Warrants and investor SARs		—		—		30,100		30,100
Total liabilities	$	—	$	1,748	$	41,624	$	43,372

(a) During the nine months ended September 30, 2016, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

The following tables summarize information about our assets and liabilities measured at fair value on a recurring basis as of December 31, 2015, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:

Assets:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of December 31, 2015
Derivative assets	$	—	$	206	$	—	$	206
Total assets	$	—	$	206	$	—	$	206

Liabilities:	Quoted Prices in Active Markets for Identical Assets (Level 1) (a)		Significant Other Observable Inputs (Level 2) (a)		Significant Unobservable Inputs (Level 3) (a)		Balance as of December 31, 2015
Junior subordinated notes, at fair value	$	—	$	—	$	10,504	$	10,504
Derivative liabilities		—		4,727		—		4,727
Warrants and investor SARs		—		—		26,200		26,200
Total liabilities	$	—	$	4,727	$	36,704	$	41,431

(a) During the year ended December 31, 2015, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

Rollforward of Level 3 Liabilities

Liabilities	Warrants and investor SARS		Junior Subordinated Notes, at Fair Value		Total Level 3 Liabilities
Balance, as of December 31, 2015	$	26,200	$	10,504	$	36,704
Change in fair value of financial instruments		3,900		1,020		4,920
Purchases		—		—		—
Principal Repayments		—		—		—
Balance, as of September 30, 2016	$	30,100	$	11,524	$	41,624

Liabilities	Warrants and investor SARS		Junior Subordinated Notes, at Fair Value		Total Level 3 Liabilities
Balance, as of June 30, 2016	$	29,300	$	10,789	$	40,089
Change in fair value of financial instruments		800		735		1,535
Purchases		—		—		—
Principal Repayments		—		—		—
Balance, as of September 30, 2016	$	30,100	$	11,524	$	41,624

Fair Value Hierarchy for Financial Instruments Not Fair Valued but For Which Fair Value Is Required To Be Disclosed

The following tables summarize the valuation technique and the level of the fair value hierarchy for financial instruments that are not fair valued in the accompanying consolidated balance sheets but for which fair value is required to be disclosed. The fair value of cash and cash equivalents, restricted cash, secured credit facilities, CMBS facilities, commercial mortgage facilities and other indebtedness approximates cost due to the nature of these instruments and are not included in the tables below.

	Carrying Amount as of September 30, 2016		Estimated Fair Value as of September 30, 2016		Valuation Technique	Level in Fair Value Hierarchy
Total investment in mortgages and loans, net	$	1,354,960	$	1,321,940	Discountedcash flows	Three
7.0% convertible senior notes		844		951	Trading price	One
4.0% convertible senior notes		119,883		117,271	Trading price	One
7.625% senior notes		55,540		51,329	Trading price	One
7.125% senior notes		69,186		69,062	Trading price	One
Senior secured notes		59,440		64,596	Discounted cash flows	Three
Junior subordinated notes, at amortized cost		24,892		12,262	Discounted cash flows	Three
CDO notes payable, at amortized cost		719,197		639,060	Discounted cash flows	Three
CMBS securitizations		492,493		494,264	Discounted cash flows	Three
Loans payable on real estate		229,820		238,856	Discounted cash flows	Three

	Carrying Amount as of December 31, 2015		Estimated Fair Value as of December 31, 2015		Valuation Technique	Level in Fair Value Hierarchy
Total investment in mortgages and loans, net	$	1,606,486	$	1,537,086	Discountedcash flows	Three
7.0% convertible senior notes		28,868		27,795	Trading price	One
4.0% convertible senior notes		133,039		104,184	Trading price	One
7.625% senior notes		57,952		46,560	Trading price	One
7.125% senior notes		69,749		62,471	Trading price	One
Senior secured notes		63,045		66,725	Discounted cash flows	Three
Junior subordinated notes, at amortized cost		24,884		11,221	Discounted cash flows	Three
CDO notes payable, at amortized cost		937,569		801,289	Discounted cash flows	Three
CMBS securitization		708,510		709,001	Discounted cash flows	Three
Loans payable on real estate		268,632		281,840	Discounted cash flows	Three

Summary of Realized and Unrealized Gains and Losses on Assets and Liabilities

The following table summarizes realized and unrealized gains and losses on assets and liabilities for which we elected the fair value option of FASB ASC Topic 825, “Financial Instruments” and derivatives as reported in change in fair value of financial instruments in the accompanying consolidated statements of operations:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
Description	2016			2015			2016			2015
Change in fair value of trading securities and    security-related receivables	$	—		$	—		$	—		$	(173	)
Change in fair value of junior subordinated notes		(735	)		1,673			(1,020	)		1,909
Change in fair value of derivatives		160			(644	)		(2,135	)		(1,064	)
Change in fair value of warrants and investors SARs		(800	)		(409	)		(3,900	)		12,794
Change in fair value of financial instruments	$	(1,375	)	$	620		$	(7,055	)	$	13,466

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VARIABLE INTEREST ENTITIES (Tables)

9 Months Ended

Sep. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Assets and Liabilities of Consolidated Variable Interest Entities

The following tables present the assets and liabilities of our consolidated VIEs as of each respective date. Certain amounts included in the tables below are eliminated upon consolidation with our other subsidiaries that maintain investments in the debt or equity securities issued by these entities.

	As of September 30, 2016
	RAIT Securitizations		IRT		RAIT VIE Properties			RAIT Joint Venture VIE			Total
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and    preferred equity interests	$	1,352,591	$	—	$	—		$	345,843		$	1,698,434
Allowance for losses		—		—		—			—			0
Total investments in mortgages and loans		1,352,591		—		—			345,843			1,698,434
Investments in real estate
Investments in real estate		—		—		222,535			—			222,535
Accumulated depreciation		—		—		(29,770	)		—			(29,770	)
Total investments in real estate		—		—		192,765			—			192,765
Cash and cash equivalents		—		—		2,788			1			2,789
Restricted cash		10,309		—		1,770			4			12,083
Accrued interest receivable		69,315		—		—			1,516			70,831
Other assets		513		—		11,218			—			11,731
Intangible assets
Intangible assets		—		—		5,616			—			5,616
Accumulated amortization		—		—		(3,304	)		—			(3,304	)
Total intangible assets		—		—		2,312			—			2,312
Assets of discontinued operations		—		1,306,242		—			—			1,306,242
Total assets	$	1,432,728	$	1,306,242	$	210,853		$	347,364		$	3,297,187
Liabilities and Equity
Indebtedness, net	$	1,220,413	$	—	$	231,744		$	343,970		$	1,796,127
Accrued interest payable		975	$	—		13,602			827			15,404
Accounts payable and accrued expenses		2		—		5,991			—			5,993
Derivative liabilities		—		—		—			—			—
Deferred taxes, borrowers’ escrows and other liabilities		—		—		2,339			—			2,339
Liabilities of discontinued operations		—		906,103		—			—			906,103
Total liabilities		1,221,390		906,103		253,676			344,797			1,819,863
Equity:
Shareholders’ equity:
Accumulated other comprehensive income (loss)		—		—		—			—			—
RAIT investment		36,079		55,271		39,398			2,869			133,617
Retained earnings (deficit)		175,259		—		(84,080	)		(302	)		90,877
Total shareholders’ equity		211,338		55,271		(44,682	)		2,567			224,494
Noncontrolling Interests		—		344,868		1,859			—			346,727
Total liabilities and equity	$	1,432,728	$	1,306,242	$	210,853		$	347,364		$	3,297,187

	As of December 31, 2015
	RAIT Securitizations			IRT		RAIT VIE Properties			Total
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and    preferred equity interests	$	2,242,416		$	—	$	—		$	2,242,416
Allowance for losses		—			—		—			—
Total investments in mortgages and loans		2,242,416			—		—			2,242,416
Investments in real estate
Investments in real estate		—			—		278,774			278,774
Accumulated depreciation		—			—		(26,398	)		(26,398	)
Total investments in real estate		—			—		252,376			252,376
Cash and cash equivalents		—			—		1,589			1,589
Restricted cash		14,944			—		2,859			17,803
Accrued interest receivable		77,130			—		—			77,130
Other assets		479			—		13,740			14,219
Intangible assets
Intangible assets		—			—		5,245			5,245
Accumulated amortization		—			—		(1,446	)		(1,446	)
Total intangible assets		—			—		3,799			3,799
Assets of discontinued operations					1,383,188					1,383,188
Total assets	$	2,334,969		$	1,383,188	$	274,363		$	3,992,520
Liabilities and Equity
Indebtedness, net	$	2,058,739		$	—	$	273,766		$	2,332,505
Accrued interest payable		2,207			—		13,997			16,204
Accounts payable and accrued expenses		8			—		6,000			6,008
Derivative liabilities		4,672			—		—			4,672
Deferred taxes, borrowers’ escrows and other liabilities		176			—		3,842			4,018
Liabilities of discontinued operations		—			952,406		—			952,406
Total liabilities		2,065,802			952,406		297,605			3,315,813
Equity:
Shareholders’ equity:
Accumulated other comprehensive income (loss)		(4,691	)		—		—			(4,691	)
RAIT investment		118,174			54,389		35,792			208,355
Retained earnings (deficit)		155,684			—		(59,454	)		96,230
Total shareholders’ equity		269,167			54,389		(23,662	)		299,894
Noncontrolling Interests		—			376,393		420			376,813
Total liabilities and equity	$	2,334,969		$	1,383,188	$	274,363		$	3,992,520

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SERIES D PREFERRED SHARES (Tables)

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Sales Activity of Series D Preferred Shares

The following table summarizes the sales activity of the Series D Preferred Shares from the effective date of the agreement through September 30, 2016:

Aggregate purchase price			$	100,000
Initial value of warrants and investor SARs issued to-date	(21,805	)
Costs incurred	(6,834	)
Total discount				(28,639	)
Discount amortization to-date				19,367
Carrying amount of Series D Preferred Shares			$	90,728

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SHAREHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Dividends Declared and Paid on Preferred Shares

The following table summarizes the dividends we declared and paid on the preferred shares for the nine months ended September 30, 2016

	March 31, 2016		June 30, 2016		September 30, 2016
Series A Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	2,570	$	2,570	$	2,589
Series B Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	1,225	$	1,225	$	1,225
Series C Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	910	$	910	$	910
Series D Preferred Shares
Date declared	2/16/2016		5/19/2016		7/27/2016
Record date	3/1/2016		6/1/2016		9/1/2016
Date paid	3/31/2016		6/30/2016		9/30/2016
Total dividend amount	$	2,125	$	2,125	$	2,125

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EARNINGS (LOSS) PER SHARE (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Basic and Diluted Earnings (Loss) per Share

The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Income (loss) from continuing operations	$	5,328		$	(2,178	)	$	(13,131	)	$	22,702
(Income) loss allocated to preferred shares		(8,715	)		(8,303	)		(25,850	)		(24,383	)
(Income) loss allocated to noncontrolling interests		1,339			472			3,455			1,705
Income (loss) from continuing operations allocable to common shares		(2,048	)		(10,009	)		(35,526	)		24
Income (loss) from discontinued operations		4,112			27,004			38,473			28,831
(Income) loss from discontinued operations allocated to noncontrolling interests		(2,068	)		(23,527	)		(28,375	)		(23,528	)
Income (loss) from discontinued operations allocable to common shares		2,044			3,477			10,098			5,303
Net income (loss) allocable to common shares	$	(4	)	$	(6,532	)	$	(25,428	)	$	5,327
Weighted-average shares outstanding—Basic		91,201,784			87,110,958			91,137,041			83,799,244
Dilutive securities		—			—			—			1,846,365
Weighted-average shares outstanding—Diluted		91,201,784			87,110,958			91,137,041			85,645,609
Earnings (loss) per share—Basic:
Continuing operations	$	(0.02	)	$	(0.11	)	$	(0.39	)	$	-
Discontinued operations		0.02			0.04			0.11			0.06
Earnings (loss) per share—Basic	$	—		$	(0.07	)	$	(0.28	)	$	0.06
Earnings (loss) per share—Diluted:
Continuing operations	$	(0.02	)	$	(0.11	)	$	(0.39	)	$	-
Discontinued operations		0.02			0.04			0.11			0.06
Earnings (loss) per share—Diluted	$	—		$	(0.07	)	$	(0.28	)	$	0.06

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SUPPLEMENTAL DISCLOSURE TO STATEMENT OF CASH FLOWS (Tables)

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Elements [Abstract]

Schedule of Supplemental Disclosures to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the nine months ended September 30, 2016 and 2015:

	For the Nine Months Ended September 30,
	2016			2015
Cash paid for interest	$	79,848		$	51,839
Cash paid (refunds received) for taxes		311			283
Non-cash increase (decrease) in investments in real estate, intangible assets and other liabilities from conversion of loans		(1,499	)		—
Non-cash increase (decrease) in indebtedness from the assumption of debt from property acquisitions		—			121,885

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DISCONTINUED OPERATIONS (Tables)

9 Months Ended

Sep. 30, 2016

Summary of Disposition and Each Property's Contribution

The below table summarizes the current year dispositions and also presents each property’s contribution to net income (loss) allocable to common shares, excluding the impact of the gain (loss) on sale:

								Net income (loss) allocable to common shares
Property Name	Property Type	Date of Sale	Sale Price		Gain (loss) on sale			For the Three Months Ended September 30, 2016			For the Nine Months Ended September 30, 2016
Mineral/Lincoln	Office	03/25/2016		7,949		(374	)		1			—
Ventura	Multifamily	03/30/2016		8,750		115			9			45
Saxony	Land	04/06/2016		1,500		(12	)		—			(4	)
Desert Wind (1)	Multifamily	05/18/2016		8,750		(2,032	)		2			52
Las Vistas (1)	Multifamily	05/18/2016		10,500		(61	)		9			122
Penny Lane (1)	Multifamily	05/18/2016		10,000		3,248			31			121
Sandal Ridge (1)	Multifamily	05/18/2016		12,250		3,482			29			162
Silversmith	Multifamily	06/03/2016		6,200		1,227			(3	)		95
Coles Crossing (2)	Multifamily	09/20/2016		43,750		(3,965	)		345			90
Eagle Ridge and Grand Terrace	Multifamily	09/21/2016		44,650		11,757			275			534
Augusta	Multifamily	09/28/2016		37,500		10,431			321			871
Total			$	191,799	$	23,816		$	1,019		$	2,088

(1) These properties were disposed of as a group of assets in a portfolio sale on May 18, 2016.

(2) The loss on sale related to this property primarily results from a defeasance premium of $1,318 and the write off of the noncontrolling interest of $2,518.

Discontinued Operations of IRT

Summary of Disposition and Each Property's Contribution

The table below presents the total assets and the total liabilities of these entities or distinguishable components of RAIT that are discontinued operations as of September 30, 2016 and December 31, 2015:

	As of September 30, 2016		As of December 31, 2015
Assets
Investments in real estate, net	$	1,263,901	$	1,332,377
Cash and cash equivalents		29,400		38,305
Restricted cash		8,028		5,413
Other assets		5,203		3,641
Intangible assets, net		-		3,811
Total assets of discontinued operations	$	1,306,532	$	1,383,547
Liabilities
Indebtedness, net	$	880,643	$	928,607
Accrued interest payable		830		1,239
Accounts payable and accrued expenses		18,627		17,115
Derivative liabilities		696		—
Deferred taxes, borrowers’ escrows and other liabilities		5,429		5,569
Total liabilities of discontinued operations	$	906,225	$	952,530

The table below presents the statements of operations of these entities or distinguishable components of RAIT that are discontinued operations for the three and nine months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
Property income		38,353			25,491			115,252			69,866
Fee and other income		661			768			2,260			1,768
Total revenue		39,014			26,259			117,512			71,634
Expenses:
Interest expense		8,820			4,851			27,454			12,671
Real estate operating expense		16,107			11,090			47,588			30,184
Compensation expense		1,861			1,820			6,037			4,892
General and administrative expense		949			721			3,298			2,192
Acquisition expense		19			12,523			37			12,724
Depreciation and amortization expense		7,784			4,772			27,059			16,663
Total expenses		35,540			35,777			111,473			79,326
Operating (Loss) Income		3,474			(9,518	)		6,039			(7,692	)
Interest and other income (expense), net		(2	)		18			(2	)		19
Gains (losses) on assets		(1	)		—			32,262			—
Gain (loss) on IRT merger with TSRE		641			64,012			732			64,012
TSRE financing extinguishment and employee separation expenses		—			(27,508	)		—			(27,508	)
Gains (losses) on extinguishments of debt		—			—			(558	)		—
Net income (loss) from discontinued operations	$	4,112		$	27,004		$	38,473		$	28,831

The table below summarizes the cash flows provided by operating, financing and investing activities of these entities or distinguishable components of RAIT that are discontinued operations for the nine months ended September 30, 2016 and 2015

	For the Nine Months Ended September 30,
	2016			2015
Cash flow from operating activities from discontinued operations	$	32,993		$	4,972
Cash flow from investing activities from discontinued operations		29,522			(169,605	)
Cash flow from financing activities from discontinued operations		(71,420	)		166,814
Net change in cash and cash equivalents from discontinued operations		(8,905	)		2,181
Cash and cash equivalents at beginning of period - discontinued operations		38,305			14,763
Cash and cash equivalents at end of period - discontinued operations	$	29,400		$	16,944

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The Company - Additional Information (Detail) - IRT - USD ($) $ in Millions	Oct. 05, 2016	Sep. 27, 2016
Nature Of Operations [Line Items]
Purchase price to be paid by IRT		$ 43.0
Subsequent Event | Common Shares
Nature Of Operations [Line Items]
Number of shares sold to IRT	7,269,719

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Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Sep. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Sep. 30, 2016 USD ($) Customer	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Significant Accounting Policies [Line Items]
Investment interest expense	$ 8,512,000		$ 8,021,000		$ 26,957,000	$ 22,517,000
Federal deposit insurance corporation, insurance limit per institution	250,000				250,000
Restricted cash	229,957,000				229,957,000		$ 207,599,000
Accrued interest receivable	41,603,000				41,603,000		47,343,000
Earned asset management fees	340,000		427,000		1,118,000	1,485,000
Investment in securities	0				0		0
Investments in securities sold during the period				$ 31,412,000
Intangible assets, accumulated amortization	19,308,000				19,308,000		13,234,000
Intangible assets, amortization expenses	2,333,000		1,700,000		10,105,000	5,707,000
Expected amortization expense of intangible assets, remainder of 2016	2,045,000				2,045,000
Expected amortization expense of intangible assets in 2017	5,327,000				5,327,000
Expected amortization expense of intangible assets in 2018	3,605,000				3,605,000
Expected amortization expense of intangible assets in 2019	3,023,000				3,023,000
Expected amortization expense of intangible assets in 2020	2,528,000				2,528,000
Expected amortization expense of intangible assets thereafter	6,638,000				6,638,000
Goodwill	8,854,000				8,854,000		8,854,000
Deferred tax benefit					18,090,000	(851,000)
Deferred Costs, Net							31,368,000
Deferred financing costs, accumulated amortization							33,769,000
Customer relationships
Significant Accounting Policies [Line Items]
Intangible assets, gross carrying amount	14,997,000				14,997,000		19,149,000
Intangible assets, gross carrying amount, decreased					(4,151,000)
Intangible assets, accelerated amortization					$ 2,552,000
Number of cancelled customer relationships | Customer					2
In-place leases
Significant Accounting Policies [Line Items]
Intangible assets, gross carrying amount	25,976,000				$ 25,976,000		23,047,000
Trade name
Significant Accounting Policies [Line Items]
Intangible assets, gross carrying amount	1,500,000				1,500,000		1,500,000
IRT
Significant Accounting Policies [Line Items]
Earned asset management fees	1,727,000		1,259,000		5,141,000	3,306,000
Incentive fees	206,000		0		350,000	425,000
Property management and leasing fees	1,219,000		$ 861,000		3,710,000	$ 2,381,000
Loans and Finance Receivables
Significant Accounting Policies [Line Items]
Accrued interest receivable	28,782,000				28,782,000		34,132,000
Impairment of loans					$ 0		0
Building and Building Improvements | Minimum
Significant Accounting Policies [Line Items]
Property, useful lives					30 years
Building and Building Improvements | Maximum
Significant Accounting Policies [Line Items]
Property, useful lives					40 years
Furniture, fixtures, and equipment | Minimum
Significant Accounting Policies [Line Items]
Property, useful lives					5 years
Furniture, fixtures, and equipment | Maximum
Significant Accounting Policies [Line Items]
Property, useful lives					10 years
Tenant escrows and borrowers' funds
Significant Accounting Policies [Line Items]
Restricted cash	126,896,000				$ 126,896,000		160,453,000
Securitizations
Significant Accounting Policies [Line Items]
Restricted cash	103,061,000				103,061,000		47,146,000
Subsidiaries
Significant Accounting Policies [Line Items]
Write off of retail property investment					864,000
TRS
Significant Accounting Policies [Line Items]
Deferred tax benefit	15,302,000				15,302,000
VIE
Significant Accounting Policies [Line Items]
Restricted cash	12,083,000				12,083,000		17,803,000
Accrued interest receivable	70,831,000				70,831,000		77,130,000
Intangible assets, gross carrying amount	5,616,000				5,616,000		5,245,000
Intangible assets, accumulated amortization	$ 3,304,000				3,304,000		$ 1,446,000
VIE | Discontinued Operations
Significant Accounting Policies [Line Items]
Decrease in indebtedness amount					$ 481,865,000
Impact on Investment Interest Expense by Increasing Investment Interest Expense and Decreasing Interest Expense
Significant Accounting Policies [Line Items]
Investment interest expense		$ 1,424,000

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Investments in Loans (Detail) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($) Loan		Dec. 31, 2015 USD ($) Loan
Mortgage Loans On Real Estate [Line Items]
Number of Loans | Loan	1
Commercial Portfolio Segment
Mortgage Loans On Real Estate [Line Items]
Unpaid Principal Balance	$ 1,375,615		$ 1,627,121
Total investment in loans, Unamortized (Discounts) Premiums	(1,122)		(1,268)
Carrying Amount	$ 1,374,493		$ 1,625,853
Number of Loans | Loan	148		188
Weighted-Average Coupon	6.00%	[1]	6.10%	[2]
Deferred fees	$ (878)		$ (2,270)
Total investments in loans, Unpaid Principal Balance	1,374,737		1,624,851
Commercial mortgages, mezzanine loans and other loans, Carrying Amount	1,373,615		1,623,583
Commercial mortgage loans | Commercial Portfolio Segment
Mortgage Loans On Real Estate [Line Items]
Unpaid Principal Balance	1,228,732	[3]	1,427,328	[4]
Total investment in loans, Unamortized (Discounts) Premiums	(902)	[3]	(1,049)	[4]
Carrying Amount	$ 1,227,830	[3]	$ 1,426,279	[4]
Number of Loans | Loan	100	[3]	124	[4]
Weighted-Average Coupon	5.70%	[1],[3]	5.20%	[2],[4]
Range of Maturity Dates, Minimum	Oct. 31, 2016	[3],[5]	Mar. 31, 2016	[4],[6]
Range of Maturity Dates, Maximum	Dec. 31, 2025	[3],[5]	Jan. 01, 2029	[4],[6]
Mezzanine Loans | Commercial Portfolio Segment
Mortgage Loans On Real Estate [Line Items]
Unpaid Principal Balance	$ 110,055		$ 169,556
Total investment in loans, Unamortized (Discounts) Premiums	(219)		(218)
Carrying Amount	$ 109,836		$ 169,338
Number of Loans | Loan	34		57
Weighted-Average Coupon	9.30%	[1]	10.00%	[2]
Range of Maturity Dates, Minimum	Oct. 31, 2016	[5]	Jan. 31, 2016	[6]
Range of Maturity Dates, Maximum	Jun. 30, 2027	[5]	May 01, 2025	[6]
Preferred Equity Interests | Commercial Portfolio Segment
Mortgage Loans On Real Estate [Line Items]
Unpaid Principal Balance	$ 36,828		$ 30,237
Total investment in loans, Unamortized (Discounts) Premiums	(1)		(1)
Carrying Amount	$ 36,827		$ 30,236
Number of Loans | Loan	14		7
Weighted-Average Coupon	7.20%	[1]	6.90%	[2]
Range of Maturity Dates, Minimum	Jan. 31, 2017	[5]	Feb. 29, 2016	[6]
Range of Maturity Dates, Maximum	Jan. 31, 2029	[5]	Aug. 01, 2025	[6]

[1] Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

[2] Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

[3] Commercial mortgage loans includes three conduit loans with an unpaid principal balance and carrying amount of $27,570, a weighted-average coupon of 4.8% and maturity dates ranging from June 2025 through December 2025. These commercial mortgage loans are accounted for as loans held for sale.

[4] Commercial mortgage loans includes six conduit loans with an unpaid principal balance and carrying amount of $49,239, a weighted-average coupon of 4.8% and maturity dates ranging from December 2020 through January 2026. These commercial mortgage loans are accounted for as loans held for sale.

[5] Does not include the maturity dates of four loans all of which had maturity dates prior to September 30, 2016 and have been identified as impaired.  These loans are 90 days or more past due.

[6] Does not include the maturity dates of three mezzanine loans that were 90 days or more past due which had contractual maturity dates prior to December 31, 2015.

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Investments in Loans (Parenthetical) (Detail) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($) Loan		Dec. 31, 2015 USD ($) Loan		Jun. 30, 2016 USD ($)
Mortgage Loans On Real Estate [Line Items]
Number of Loans	1
90 days or more | Commercial mortgage loans
Mortgage Loans On Real Estate [Line Items]
Number of Loans	7
90 days or more | Mezzanine Loans
Mortgage Loans On Real Estate [Line Items]
Number of Loans			3
Commercial Portfolio Segment
Mortgage Loans On Real Estate [Line Items]
Number of Loans	148		188
Unpaid Principal Balance | $	$ 1,375,615		$ 1,627,121
Weighted-Average Coupon	6.00%	[1]	6.10%	[2]
Commercial Portfolio Segment | Commercial mortgage loans
Mortgage Loans On Real Estate [Line Items]
Number of Loans	100	[3]	124	[4]
Unpaid Principal Balance | $	$ 1,228,732	[3]	$ 1,427,328	[4]
Weighted-Average Coupon	5.70%	[1],[3]	5.20%	[2],[4]
Commercial Portfolio Segment | Mezzanine Loans
Mortgage Loans On Real Estate [Line Items]
Number of Loans	34		57
Unpaid Principal Balance | $	$ 110,055		$ 169,556
Weighted-Average Coupon	9.30%	[1]	10.00%	[2]
Commercial Portfolio Segment | Conduit Loans | Commercial mortgage loans
Mortgage Loans On Real Estate [Line Items]
Number of Loans	3		6
Unpaid Principal Balance | $			$ 49,239		$ 27,570
Weighted-Average Coupon	4.80%		4.80%
Commercial Portfolio Segment | Financing Receivable Past Due
Mortgage Loans On Real Estate [Line Items]
Number of Loans	4

[1] Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

[2] Weighted-average coupon is calculated on the unpaid principal balance, which does not necessarily correspond to the carrying amount.

[3] Commercial mortgage loans includes three conduit loans with an unpaid principal balance and carrying amount of $27,570, a weighted-average coupon of 4.8% and maturity dates ranging from June 2025 through December 2025. These commercial mortgage loans are accounted for as loans held for sale.

[4] Commercial mortgage loans includes six conduit loans with an unpaid principal balance and carrying amount of $49,239, a weighted-average coupon of 4.8% and maturity dates ranging from December 2020 through January 2026. These commercial mortgage loans are accounted for as loans held for sale.

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Delinquency Statistics of Commercial Real Estate Loan (Detail) - USD ($) $ in Thousands		Sep. 30, 2016		Dec. 31, 2015
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		$ 1,375,615		$ 1,627,121
Current
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		1,291,262		1,624,710
90 days or more
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		84,353		1,163
In foreclosure or bankruptcy proceedings
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total	[1]			1,248
Non-Accrual
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		109,468	[2]	35,937	[3]
Commercial mortgage loans
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		1,228,731		1,427,328
Commercial mortgage loans | Current
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		1,153,931		1,427,328
Commercial mortgage loans | 90 days or more
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		74,800
Commercial mortgage loans | Non-Accrual
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		92,035	[2]	15,645	[3]
Mezzanine Loans
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		110,056		169,556
Mezzanine Loans | Current
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		100,503		167,145
Mezzanine Loans | 90 days or more
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		9,553		1,163
Mezzanine Loans | In foreclosure or bankruptcy proceedings
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total	[1]			1,248
Mezzanine Loans | Non-Accrual
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		9,553	[2]	12,346	[3]
Preferred Equity Interests
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		36,828		30,237
Preferred Equity Interests | Current
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		36,828		30,237
Preferred Equity Interests | Non-Accrual
Mortgage Loans On Real Estate [Line Items]
Delinquency statistics, Total		$ 7,880	[2]	$ 7,946	[3]

[1] These loans were on non-accrual due to uncertainty over whether we will fully collect principal and interest.

[2] Includes four loans that were current, but are on non-accrual due to uncertainty over whether we will fully collect principal and interest.

[3] Includes six loans that were current in accordance with their terms, but are on non-accrual due to uncertainty over whether we will fully collect principal and interest.

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Investments in Loans - Additional Information (Detail) $ in Thousands	1 Months Ended	3 Months Ended			9 Months Ended			12 Months Ended
	Apr. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)		Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Loan		Sep. 30, 2015 USD ($) Loan	Dec. 31, 2015 USD ($) Loan
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan					1
Delinquency statistics, Total		$ 1,375,615			$ 1,375,615			$ 1,627,121
Average impaired loans watchlist/unpaid balance		128,485		$ 78,680	130,299		$ 79,791
Interest income from watchlist/impaired loans		193		$ 1,129	2,715		$ 2,882
Carrying Value, Transfer of commercial real estate loan to real estate owned	$ 332
Real estate related assets	18,380
Indebtedness	$ 17,696	1,975,863			1,975,863			2,399,475
Charge off upon the conversion					1,203
Commercial mortgage loans
Accounts Notes And Loans Receivable [Line Items]
Delinquency statistics, Total		1,228,731			1,228,731			1,427,328
Commercial mortgage loans | Watchlist
Accounts Notes And Loans Receivable [Line Items]
Unpaid principal balance constituted a TDR		15,645			15,645
Mezzanine Loans
Accounts Notes And Loans Receivable [Line Items]
Delinquency statistics, Total		110,056			110,056			$ 169,556
Carrying Value, Transfer of commercial real estate loan to real estate owned					332
Real estate related assets		18,380			18,380
Indebtedness		17,696			$ 17,696
Commercial Portfolio Segment
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan					148			188
Commercial real estate loans on non-accrual status		1,375,615			$ 1,375,615			$ 1,627,121
Modification troubled debt restructuring, subsequently defaulted, number of loans | Loan							0
Modification troubled debt restructuring, number of loans | Loan					0
Commercial Portfolio Segment | Watchlist
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate loans on non-accrual status		127,968			$ 127,968			$ 132,237
Commercial Portfolio Segment | Commercial mortgage loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan					100	[1]		124	[2]
Commercial real estate loans on non-accrual status		1,228,732	[1]		$ 1,228,732	[1]		$ 1,427,328	[2]
Commercial Portfolio Segment | Commercial mortgage loans | Watchlist
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate loans on non-accrual status		92,035			$ 92,035			$ 90,445
Commercial Portfolio Segment | Mezzanine Loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan					34			57
Commercial real estate loans on non-accrual status		110,055			$ 110,055			$ 169,556
Commercial Portfolio Segment | Mezzanine Loans | Watchlist
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate loans on non-accrual status		28,053			$ 28,053			$ 33,846
Minimum | Commercial Portfolio Segment
Accounts Notes And Loans Receivable [Line Items]
Loan maturity					90 days			90 days
90 days or more
Accounts Notes And Loans Receivable [Line Items]
Delinquency statistics, Total		84,353			$ 84,353			$ 1,163
90 days or more | Commercial mortgage loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan					7
Delinquency statistics, Total		74,800			$ 74,800
Probable incurred losses related to restructuring loan					(1,933)
90 days or more | Mezzanine Loans
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan								3
Delinquency statistics, Total		9,553			9,553			$ 1,163
90 days or more | Commercial Portfolio Segment
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate loans on non-accrual status		$ 109,468			$ 109,468			$ 35,937
Weighted-average interest rate		5.40%			5.40%			4.60%
Recognizing interest on the cash basis | Commercial Portfolio Segment
Accounts Notes And Loans Receivable [Line Items]
Weighted-average interest rate		12.60%			12.60%			11.60%
Number of Loans | Loan					4			2
Commercial real estate loans on non-accrual status		$ 28,933			$ 28,933			$ 13,002
Troubled Debt Restructured Loans | Commercial Portfolio Segment
Accounts Notes And Loans Receivable [Line Items]
Number of Loans | Loan					1			1
Commercial real estate loans on non-accrual status		$ 18,500			$ 18,500			$ 18,500

[1] Commercial mortgage loans includes three conduit loans with an unpaid principal balance and carrying amount of $27,570, a weighted-average coupon of 4.8% and maturity dates ranging from June 2025 through December 2025. These commercial mortgage loans are accounted for as loans held for sale.

[2] Commercial mortgage loans includes six conduit loans with an unpaid principal balance and carrying amount of $49,239, a weighted-average coupon of 4.8% and maturity dates ranging from December 2020 through January 2026. These commercial mortgage loans are accounted for as loans held for sale.

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Investment in Loans by Credit Risk Category (Detail) - Commercial Portfolio Segment - USD ($) $ in Thousands	Sep. 30, 2016		Dec. 31, 2015
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	$ 1,375,615		$ 1,627,121
Commercial mortgage loans
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	1,228,732	[1]	1,427,328	[2]
Mezzanine Loans
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	110,055		169,556
Preferred Equity Interests
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	36,828		30,237
Satisfactory
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	1,247,647		1,494,884
Satisfactory | Commercial mortgage loans
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	1,136,697		1,336,883
Satisfactory | Mezzanine Loans
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	82,002		135,710
Satisfactory | Preferred Equity Interests
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	28,948		22,291
Watchlist
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	127,968		132,237
Watchlist | Commercial mortgage loans
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	92,035		90,445
Watchlist | Mezzanine Loans
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	28,053		33,846
Watchlist | Preferred Equity Interests
Financing Receivable Recorded Investment [Line Items]
Unpaid Principal Balance	$ 7,880		$ 7,946

[1] Commercial mortgage loans includes three conduit loans with an unpaid principal balance and carrying amount of $27,570, a weighted-average coupon of 4.8% and maturity dates ranging from June 2025 through December 2025. These commercial mortgage loans are accounted for as loans held for sale.

[2] Commercial mortgage loans includes six conduit loans with an unpaid principal balance and carrying amount of $49,239, a weighted-average coupon of 4.8% and maturity dates ranging from December 2020 through January 2026. These commercial mortgage loans are accounted for as loans held for sale.

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Roll-Forwards of Allowance for Loan Losses for Commercial Mortgage Loans, Mezzanine Loans and Preferred Equity Interests (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Mortgage Loans On Real Estate [Line Items]
Beginning balance	$ 18,237	$ 12,796	$ 17,097	$ 9,218
Provision for loan losses	1,533	1,850	4,202	5,850
Charge-offs, net of recoveries	(1,115)		(2,644)	(422)
Ending balance	18,655	14,646	18,655	14,646
Commercial mortgage loans
Mortgage Loans On Real Estate [Line Items]
Beginning balance	4,397		3,154
Provision for loan losses	1,957	3,154	3,200	3,154
Charge-offs, net of recoveries	(10)		(10)
Ending balance	6,344	3,154	6,344	3,154
Mezzanine Loans
Mortgage Loans On Real Estate [Line Items]
Beginning balance	10,861	11,470	12,139	7,892
Provision for loan losses	(394)	(1,255)	(143)	2,745
Charge-offs, net of recoveries	(1,105)	0	(2,634)	(422)
Ending balance	9,362	10,215	9,362	10,215
Preferred Equity Interests
Mortgage Loans On Real Estate [Line Items]
Beginning balance	2,979	1,326	1,804	1,326
Provision for loan losses	(30)	(49)	1,145	(49)
Ending balance	$ 2,949	$ 1,277	$ 2,949	$ 1,277

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Loans on Watchlist or Considered to be Impaired (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Jun. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Impaired [Line Items]
Allowance for loan losses	$ 18,655		$ 18,237	$ 17,097		$ 14,646	$ 12,796	$ 9,218
Commercial mortgage loans
Financing Receivable Impaired [Line Items]
Allowance for loan losses	6,344		4,397	3,154		3,154
Mezzanine Loans
Financing Receivable Impaired [Line Items]
Allowance for loan losses	9,362		10,861	12,139		10,215	11,470	7,892
Preferred Equity Interests
Financing Receivable Impaired [Line Items]
Allowance for loan losses	2,949		$ 2,979	1,804		$ 1,277	$ 1,326	$ 1,326
Watchlist
Financing Receivable Impaired [Line Items]
Watchlist/Impaired loans expecting full recovery	18,500			77,800
Watchlist/Impaired loans with reserves	109,468			54,437
Total Watchlist/Impaired Loans	127,968	[1]		132,237	[2]
Watchlist | Commercial mortgage loans
Financing Receivable Impaired [Line Items]
Watchlist/Impaired loans expecting full recovery				74,800
Watchlist/Impaired loans with reserves	92,035			15,645
Total Watchlist/Impaired Loans	92,035	[1]		90,445	[2]
Watchlist | Mezzanine Loans
Financing Receivable Impaired [Line Items]
Watchlist/Impaired loans expecting full recovery	18,500			3,000
Watchlist/Impaired loans with reserves	9,553			30,846
Total Watchlist/Impaired Loans	28,053	[1]		33,846	[2]
Watchlist | Preferred Equity Interests
Financing Receivable Impaired [Line Items]
Watchlist/Impaired loans with reserves	7,880			7,946
Total Watchlist/Impaired Loans	$ 7,880	[1]		$ 7,946	[2]

[1] As of September 30, 2016, there was no unpaid principal relating to previously identified TDRs that are on accrual status.

[2] As of December 31, 2015, there was no unpaid principal relating to previously identified TDRs that are on accrual status.

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Loans on Watchlist or Considered to be Impaired (Parenthetical) (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Receivables [Abstract]
Unpaid principal relating to previously identified TDRs that are on accrual status	$ 0	$ 0

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Summary of Investments in Real Estate (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Real Estate Properties [Line Items]
Investments in real estate, Book Value		$ 965,362	$ 1,145,630
Less: Accumulated depreciation and amortization		(156,613)	(158,688)
Investments in real estate, net, Book Value	[1]	808,749	986,942
Multifamily
Real Estate Properties [Line Items]
Investments in real estate, Book Value		284,529	470,689
Office real estate properties
Real Estate Properties [Line Items]
Investments in real estate, Book Value		401,989	395,224
Industrial real estate properties
Real Estate Properties [Line Items]
Investments in real estate, Book Value		93,462	94,938
Retail real estate properties
Real Estate Properties [Line Items]
Investments in real estate, Book Value		134,824	134,331
Parcels of land
Real Estate Properties [Line Items]
Investments in real estate, Book Value		$ 50,558	$ 50,448

[1] As of September 30, 2016, two of our multifamily properties, with a carrying amount of $34,450, and two of our parcels of land, with a carrying amount of $12,556, were considered held-for-sale.

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Summary of Investments in Real Estate (Parenthetical) (Detail) $ in Thousands	Sep. 30, 2016 USD ($) Property
Multifamily
Real Estate Properties [Line Items]
Carrying value of asset held for sale | $	$ 34,450
Number of real estate properties held for sale | Property	2
Parcels of land
Real Estate Properties [Line Items]
Carrying value of asset held for sale | $	$ 12,556
Number of real estate properties held for sale | Property	2

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Investments in Real Estate - Additional Information (Detail) $ in Thousands		1 Months Ended		3 Months Ended	9 Months Ended	12 Months Ended
		Nov. 30, 2016 USD ($) Property	Apr. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2016 USD ($) Property	Dec. 31, 2015 USD ($)	Mar. 31, 2016 USD ($) Property
Real Estate Properties [Line Items]
Investments in real estate, net, Book Value	[1]			$ 808,749	$ 808,749	$ 986,942
Investments in real estate				965,362	965,362	1,145,630
Mortgages loans or other debt held by third parties				230,679	230,679	269,790
Mortgages loans held by consolidated securitizations				760,182	760,182	851,711
Business acquisitions purchase price allocation subsequent adjustments							$ 11
Transfer of commercial real estate loan to real estate owned			$ 332
Real estate related assets			18,380
Indebtedness			$ 17,696	1,975,863	$ 1,975,863	2,399,475
Number of parcel land disposed | Property					1
Impairment of real estate assets				16,442	$ 21,661
Tenant improvements and straight-line rent receivables expensed due to vacated tenants					1,703
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations
Real Estate Properties [Line Items]
Gain (loss) on sale					23,816	(5)
Sales price					191,799
Multifamily
Real Estate Properties [Line Items]
Investments in real estate				284,529	$ 284,529	470,689
Number of real estate properties disposed | Property					10
Office real estate properties
Real Estate Properties [Line Items]
Investments in real estate				401,989	$ 401,989	395,224
Number of real estate properties disposed | Property					1
Multifamily real estate | Scenario, Forecast
Real Estate Properties [Line Items]
Number of real estate properties disposed | Property		2
Sales price		$ 43,400
Unconsolidated Entity
Real Estate Properties [Line Items]
Gain (loss) on sale					$ 864
October 2015 Acquisition
Real Estate Properties [Line Items]
Number of industrial properties acquired | Property							10
Increase in fair value of net assets acquired							$ 437
Erieview Tower And Parking
Real Estate Properties [Line Items]
Increase in fair value of net assets acquired							1,499
Increase in investments of real estate							3,351
Decrease in intangible assets							57
Increase in intangible liabilities							$ 1,795
Land
Real Estate Properties [Line Items]
Investments in real estate, net, Book Value				191,035	191,035	225,122
Building and Building Improvements
Real Estate Properties [Line Items]
Investments in real estate, net, Book Value				$ 774,327	$ 774,327	$ 920,508

[1] As of September 30, 2016, two of our multifamily properties, with a carrying amount of $34,450, and two of our parcels of land, with a carrying amount of $12,556, were considered held-for-sale.

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Aggregate Estimated Fair Value of Assets and Liabilities Acquired (Detail) - Series of Individually Immaterial Business Acquisitions $ in Thousands	Sep. 30, 2016 USD ($)
Assets acquired:
Investments in real estate	$ 16,652
Cash and cash equivalents	66
Restricted cash	221
Accounts receivable and other assets	5
Intangible assets	2,610
Total assets acquired	19,554
Liabilities assumed:
Indebtedness, net	17,696
Accounts payable and accrued expenses	448
Other liabilities	1,068
Total liabilities assumed	19,212
Estimated fair value of net assets acquired	$ 342

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Consideration Transferred to Acquire Real Estate Properties (Detail) - Series of Individually Immaterial Business Acquisitions $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Fair value of consideration transferred:
Investments in loans, accrued interest receivable and other assets (net of allowance for loan losses of $1,213)	$ 332
Total	$ 332

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Consideration Transferred to Acquire Real Estate Properties (Parenthetical) (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Allowance for loan losses	$ 18,655	$ 18,237	$ 17,097	$ 14,646	$ 12,796	$ 9,218
Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Allowance for loan losses	$ 1,213

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Schedule of Revenue and Net Income (Loss) for the Properties Acquired (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Real Estate Properties [Line Items]
Total Revenue	$ 29,614	$ 29,968	$ 89,335	$ 94,401
Net income (loss) allocable to common shares	(4)	$ (6,532)	(25,428)	$ 5,327
Properties Acquired
Real Estate Properties [Line Items]
Total Revenue	731		1,277
Net income (loss) allocable to common shares	(245)		(563)
Properties Acquired | Indiana Portfolio
Real Estate Properties [Line Items]
Total Revenue	731		1,277
Net income (loss) allocable to common shares	$ (245)		$ (563)

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Consolidated Unaudited Pro Forma Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Business Combinations [Abstract]
Pro forma total revenue (unaudited)	$ 43,237	$ 49,579	$ 138,439	$ 160,349
Pro forma net income (loss) allocable to common shares (unaudited)	$ (4)	$ (6,561)	$ (25,386)	$ 5,241
Basic-as pro forma (unaudited)	$ 0.00	$ (0.08)	$ (0.28)	$ 0.06
Diluted-as pro forma (unaudited)	$ 0.00	$ (0.08)	$ (0.28)	$ 0.06

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Summary of Disposition and Each Property's Contribution (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Real Estate Properties [Line Items]
Net income (loss) allocable to common shares		$ (4)	$ (6,532)	$ (25,428)	$ 5,327
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations
Real Estate Properties [Line Items]
Sale Price				191,799
Gain (loss) on sale				23,816		$ (5)
Net income (loss) allocable to common shares		1,019		$ 2,088
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Office real estate properties | Mineral Or Lincoln
Real Estate Properties [Line Items]
Date of Sale				Mar. 25, 2016
Sale Price				$ 7,949
Gain (loss) on sale				$ (374)
Net income (loss) allocable to common shares		1
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Ventura
Real Estate Properties [Line Items]
Date of Sale				Mar. 30, 2016
Sale Price				$ 8,750
Gain (loss) on sale				115
Net income (loss) allocable to common shares		9		$ 45
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Desert Wind
Real Estate Properties [Line Items]
Date of Sale	[1]			May 18, 2016
Sale Price	[1]			$ 8,750
Gain (loss) on sale	[1]			(2,032)
Net income (loss) allocable to common shares	[1]	2		$ 52
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Las Vistas
Real Estate Properties [Line Items]
Date of Sale	[1]			May 18, 2016
Sale Price	[1]			$ 10,500
Gain (loss) on sale	[1]			(61)
Net income (loss) allocable to common shares	[1]	9		$ 122
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Penny Lane
Real Estate Properties [Line Items]
Date of Sale	[1]			May 18, 2016
Sale Price	[1]			$ 10,000
Gain (loss) on sale	[1]			3,248
Net income (loss) allocable to common shares	[1]	31		$ 121
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Sandal Ridge
Real Estate Properties [Line Items]
Date of Sale	[1]			May 18, 2016
Sale Price	[1]			$ 12,250
Gain (loss) on sale	[1]			3,482
Net income (loss) allocable to common shares	[1]	29		$ 162
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Silversmith
Real Estate Properties [Line Items]
Date of Sale				Jun. 03, 2016
Sale Price				$ 6,200
Gain (loss) on sale				1,227
Net income (loss) allocable to common shares		(3)		$ 95
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Coles Crossing
Real Estate Properties [Line Items]
Date of Sale	[2]			Sep. 20, 2016
Sale Price	[2]			$ 43,750
Gain (loss) on sale	[2]			(3,965)
Net income (loss) allocable to common shares	[2]	345		$ 90
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Eagle Ridge and Grand Terrace
Real Estate Properties [Line Items]
Date of Sale				Sep. 21, 2016
Sale Price				$ 44,650
Gain (loss) on sale				11,757
Net income (loss) allocable to common shares		275		$ 534
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Multi family | Augusta
Real Estate Properties [Line Items]
Date of Sale				Sep. 28, 2016
Sale Price				$ 37,500
Gain (loss) on sale				10,431
Net income (loss) allocable to common shares		$ 321		$ 871
Disposal Group Held For Sale Or Disposed Of By Sale Not Discontinued Operations | Land | Saxony
Real Estate Properties [Line Items]
Date of Sale				Apr. 06, 2016
Sale Price				$ 1,500
Gain (loss) on sale				(12)
Net income (loss) allocable to common shares				$ (4)

[1] These properties were disposed of as a group of assets in a portfolio sale on May 18, 2016.

[2] The loss on sale related to this property primarily results from a defeasance premium of $1,318 and the write off of the noncontrolling interest of $2,518.

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Summary of Disposition and Each Property's Contribution (Parenthetical) (Detail) - Coles Crossing $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Real Estate Properties [Line Items]
Defeasance premium	$ 1,318
Write off of non controlling interest	$ 2,518

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Summary of Total Recourse and Non-Recourse Indebtedness (Detail) - USD ($) $ in Thousands		9 Months Ended		12 Months Ended
		Sep. 30, 2016		Dec. 31, 2015		Apr. 30, 2016
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 2,012,582		$ 2,452,567
Unamortized Discount/Premium and Deferred Financing Costs		(36,719)		(53,092)
Indebtedness		$ 1,975,863		$ 2,399,475		$ 17,696
Weighted-Average Interest Rate		3.20%		2.70%
Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 532,308		$ 514,541
Unamortized Discount/Premium and Deferred Financing Costs		(22,370)		(29,777)
Indebtedness		$ 509,938		$ 484,764
Weighted-Average Interest Rate		4.80%		5.10%
Non-recourse indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 1,455,953		$ 1,938,026
Unamortized Discount/Premium and Deferred Financing Costs		(14,443)		(23,315)
Indebtedness		$ 1,441,510		$ 1,914,711
Weighted-Average Interest Rate		2.70%		2.10%
7.0% convertible senior notes | Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 871	[1]	$ 30,048	[2]
Unamortized Discount/Premium and Deferred Financing Costs		(27)	[1]	(1,180)	[2]
Indebtedness		$ 844	[1]	$ 28,868	[2]
Weighted-Average Interest Rate		7.00%	[1]	7.00%	[2]
Contractual Maturity, month and year		2031-04	[1]	2031-04	[2]
4.0% convertible senior notes | Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance	[3]	$ 126,098		$ 141,750
Unamortized Discount/Premium and Deferred Financing Costs	[3]	(6,215)		(8,711)
Indebtedness	[3]	$ 119,883		$ 133,039
Weighted-Average Interest Rate	[3]	4.00%		4.00%
Contractual Maturity, month and year	[3]	2033-10		2033-10
7.625% senior notes due 2024 | Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 57,287		$ 60,000
Unamortized Discount/Premium and Deferred Financing Costs		(1,747)		(2,048)
Indebtedness		$ 55,540		$ 57,952
Weighted-Average Interest Rate		7.60%		7.60%
Contractual Maturity, month and year		2024-04		2024-04
7.125% Senior Notes due 2019 | Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 70,731		$ 71,905
Unamortized Discount/Premium and Deferred Financing Costs		(1,545)		(2,156)
Indebtedness		$ 69,186		$ 69,749
Weighted-Average Interest Rate		7.10%		7.10%
Contractual Maturity, month and year		2019-08		2019-08
Senior Secured Notes | Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 64,000		$ 70,000
Unamortized Discount/Premium and Deferred Financing Costs		(4,560)		(6,955)
Indebtedness		$ 59,440		$ 63,045
Weighted-Average Interest Rate		7.00%		7.00%
Senior Secured Notes | Minimum | Recourse Indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year		2017-04		2017-04
Senior Secured Notes | Maximum | Recourse Indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year		2019-04		2019-04
Junior Subordinated Notes, at Fair Value | Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance	[4]	$ 18,671		$ 18,671
Unamortized Discount/Premium and Deferred Financing Costs	[4]	(7,147)		(8,167)
Indebtedness	[4]	$ 11,524		$ 10,504
Weighted-Average Interest Rate	[4]	4.60%		4.30%
Contractual Maturity, month and year	[4]	2035-03		2035-03
Junior subordinated notes, at amortized cost | Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 25,100		$ 25,100
Unamortized Discount/Premium and Deferred Financing Costs		(208)		(216)
Indebtedness		$ 24,892		$ 24,884
Weighted-Average Interest Rate		3.30%		2.70%
Contractual Maturity, month and year		2037-04		2037-04
CMBS Facilities | Recourse Indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 169,550		$ 97,067
Unamortized Discount/Premium and Deferred Financing Costs		(921)		(344)
Indebtedness		$ 168,629		$ 96,723
Weighted-Average Interest Rate		2.80%		2.40%
CMBS Facilities | Minimum | Recourse Indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year		2016-11		2016-07
CMBS Facilities | Maximum | Recourse Indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year		2018-07		2018-01
CDO notes payable, at amortized cost | Non-recourse indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance	[6]	$ 728,362	[5]	$ 950,981	[7]
Unamortized Discount/Premium and Deferred Financing Costs	[6]	(9,165)	[5]	(13,412)	[7]
Indebtedness	[6]	$ 719,197	[5]	$ 937,569	[7]
Weighted-Average Interest Rate	[6]	1.40%	[5]	0.90%	[7]
CDO notes payable, at amortized cost | Minimum | Non-recourse indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year	[6],[7]			2045-06
Contractual Maturity, year	[5],[6]	2045
CDO notes payable, at amortized cost | Maximum | Non-recourse indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year	[6],[7]			2046-11
Contractual Maturity, year	[5],[6]	2046
Loans payable on real estate | Non-recourse indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		$ 230,678	[8]	$ 269,790
Unamortized Discount/Premium and Deferred Financing Costs		(858)	[8]	(1,158)
Indebtedness		$ 229,820	[8]	$ 268,632
Weighted-Average Interest Rate		5.80%	[8]	5.60%
Loans payable on real estate | Minimum | Non-recourse indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year		2016-06	[8]	2016-04
Loans payable on real estate | Maximum | Non-recourse indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year		2026-04	[8]	2026-04
Other indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance	[9]	$ 24,321
Unamortized Discount/Premium and Deferred Financing Costs	[9]	94
Indebtedness	[9]	24,415
CMBS securitizations | Non-recourse indebtedness
Debt Instrument [Line Items]
Unpaid Principal Balance		496,913	[10]	$ 717,255	[11]
Unamortized Discount/Premium and Deferred Financing Costs		(4,420)	[10]	(8,745)	[11]
Indebtedness		$ 492,493	[10]	$ 708,510	[11]
Weighted-Average Interest Rate		3.10%	[10]	2.40%	[11]
CMBS securitizations | Minimum | Non-recourse indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year		2031-01	[10]	2031-05	[11]
CMBS securitizations | Maximum | Non-recourse indebtedness
Debt Instrument [Line Items]
Contractual Maturity, month and year		2031-12	[10]	2031-12	[11]

[1] Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2021, and April 2026.

[2] Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2016, April 2021, and April 2026.

[3] Our 4.0% convertible senior notes are redeemable at par, at the option of the holder, in October 2018, October 2023, and October 2028.

[4] Relates to liabilities which we elected to record at fair value under FASB ASC Topic 825.

[5] Collateralized by $1,107,924 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $641,118 of which eliminates in consolidation. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

[6] Excludes CDO notes payable purchased by us which are eliminated in consolidation.

[7] Collateralized by $1,388,194 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $815,745 of which eliminates in consolidation. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

[8] Certain loans payable on real estate had maturity dates of June 2016. These loans payable on real estate are currently in the process of being refinanced with the lenders.

[9] Represents a 40% interest issued to an unaffiliated third party in a venture to which we contributed the junior notes and equity of a floating rate securitization. We retained a 60% interest in this venture, and, as a result of our controlling financial interest, we consolidated the venture. We received approximately $24,796 of proceeds as a result of issuing this 40% interest, which has an unpaid principal balance of $24,321. This 40% interest has no stated maturity date and does not provide for its mandatory redemption or any required return or interest payment. The venture interests allocate the distributions on such junior notes and equity when made between the parties to the venture.

[10] Collateralized by $618,494 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

[11] Collateralized by 885,055 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

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Summary of Total Recourse and Non-Recourse Indebtedness (Parenthetical) (Detail) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Proceeds from issuance of joint venture interests accounted for as indebtedness		$ 24,796
Unpaid Principal Balance		2,012,582	$ 2,452,567
CMBS securitizations
Debt Instrument [Line Items]
Underlying collateral		618,494	885,055
Consolidation Eliminations
Debt Instrument [Line Items]
Underlying collateral		$ 641,118	$ 815,745
7.0% convertible senior notes
Debt Instrument [Line Items]
Stated interest rate		7.00%	7.00%
4.0% convertible senior notes
Debt Instrument [Line Items]
Stated interest rate		4.00%	4.00%
CDO notes payable, at amortized cost
Debt Instrument [Line Items]
Underlying collateral		$ 1,107,924	$ 1,388,194
Other indebtedness
Debt Instrument [Line Items]
Percentage of interest issued to unaffiliated third party		40.00%
Proceeds from issuance of joint venture interests accounted for as indebtedness		$ 24,796
Unpaid Principal Balance	[1]	$ 24,321
Interest owned in joint venture		60.00%

[1] Represents a 40% interest issued to an unaffiliated third party in a venture to which we contributed the junior notes and equity of a floating rate securitization. We retained a 60% interest in this venture, and, as a result of our controlling financial interest, we consolidated the venture. We received approximately $24,796 of proceeds as a result of issuing this 40% interest, which has an unpaid principal balance of $24,321. This 40% interest has no stated maturity date and does not provide for its mandatory redemption or any required return or interest payment. The venture interests allocate the distributions on such junior notes and equity when made between the parties to the venture.

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Indebtedness - Additional Information (Detail)			1 Months Ended	3 Months Ended		9 Months Ended
		Oct. 17, 2016 USD ($)	Feb. 29, 2016 USD ($)	Sep. 30, 2016 USD ($) $ / shares		Sep. 30, 2016 USD ($) Property $ / shares		Sep. 30, 2015 USD ($)	Jul. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)	Apr. 30, 2016 USD ($)	Apr. 01, 2016 USD ($)	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Payment of notes						$ 243,854,000		$ 273,872,000
Indebtedness				$ 1,975,863,000		1,975,863,000					$ 17,696,000		$ 2,399,475,000
Gains (losses) on extinguishments of debt				(6,000)		998,000
Unpaid Principal Balance				2,012,582,000		2,012,582,000							2,452,567,000
R A I T F L Three | Equity Securities
Debt Instrument [Line Items]
Owned unrated classes of junior notes				37,387,000		37,387,000
R A I T F L Four | Investors | Subsequent Event
Debt Instrument [Line Items]
Collateral repayments		$ 18,000,000
R A I T F L Four | Junior Notes
Debt Instrument [Line Items]
Owned unrated classes of junior notes				41,390,000		41,390,000
R A I T F L Five
Debt Instrument [Line Items]
Percentage of ownership in joint venture			60.00%
Proceeds from contribution of junior notes			$ 24,796,000
CMBS securitizations
Debt Instrument [Line Items]
Underlying collateral				618,494,000		618,494,000							$ 885,055,000
CMBS securitizations | R A I T F L Two
Debt Instrument [Line Items]
Underlying collateral				0		0
CMBS securitizations | R A I T F L Three
Debt Instrument [Line Items]
Underlying collateral				115,878,000		115,878,000
CMBS securitizations | R A I T F L Four
Debt Instrument [Line Items]
Underlying collateral				173,888,000		173,888,000
CMBS securitizations | R A I T F L Five
Debt Instrument [Line Items]
Underlying collateral				$ 346,728,000		$ 346,728,000
7.0% convertible senior notes
Debt Instrument [Line Items]
Stated interest rate				7.00%		7.00%							7.00%
4.0% convertible senior notes
Debt Instrument [Line Items]
Stated interest rate				4.00%		4.00%							4.00%
CDO notes payable, at amortized cost
Debt Instrument [Line Items]
Underlying collateral				$ 1,107,924,000		$ 1,107,924,000							$ 1,388,194,000
Loans payable on real estate
Debt Instrument [Line Items]
Line of credit facility, repayments						$ 55,441,000
Number of real estate properties disposed | Property						4
Recourse Indebtedness
Debt Instrument [Line Items]
Indebtedness				509,938,000		$ 509,938,000							484,764,000
Unpaid Principal Balance				532,308,000		532,308,000							$ 514,541,000
Recourse Indebtedness | Floating Rate Loans
Debt Instrument [Line Items]
Line of credit facility, borrowing capacity				100,000,000		100,000,000
Recourse Indebtedness | CMBS securitizations | One Hundred Fifty Thousand CMF One [Member]
Debt Instrument [Line Items]
Indebtedness				77,264,000		77,264,000
Line of credit facility, borrowing capacity									$ 150,000,000
Recourse Indebtedness | CMBS securitizations | Seventy Five Thousand CMF [Member]
Debt Instrument [Line Items]
Indebtedness				48,276,000		48,276,000
Line of credit facility, borrowing capacity				75,000,000		$ 75,000,000
Debt instrument, financial covenant compliance						As of September 30, 2016, we were in compliance with all financial covenants contained in the $75,000 commercial mortgage facility.
Recourse Indebtedness | CMBS securitizations | One Hundred Fifty Thousand CMF Two [Member]
Debt Instrument [Line Items]
Indebtedness				37,240,000		$ 37,240,000
Line of credit facility, borrowing capacity				$ 150,000,000		$ 150,000,000
Debt instrument, financial covenant compliance						As of September 30, 2016, we were in compliance with all financial covenants contained in the $150,000 commercial mortgage facility.
Recourse Indebtedness | 7.0% convertible senior notes
Debt Instrument [Line Items]
Stated interest rate				7.00%		7.00%							7.00%
Convertible note conversion rate						190.2627
Principal amount of convertible note, conversion rate				$ 1,000		$ 1,000
Initial conversion price | $ / shares				$ 5.26		$ 5.26
Debt instrument redemption amount												$ 29,177,000
Convertible notes outstanding				$ 871,000		$ 871,000
Aggregate principal amount of notes issued													$ 871,000
Indebtedness				844,000	[1]	844,000	[1]						28,868,000	[2]
Unpaid Principal Balance				$ 871,000	[1]	$ 871,000	[1]						$ 30,048,000	[2]
Recourse Indebtedness | 4.0% convertible senior notes
Debt Instrument [Line Items]
Stated interest rate				4.00%		4.00%							4.00%
Convertible note conversion rate						108.5803
Principal amount of convertible note, conversion rate				$ 1,000		$ 1,000
Initial conversion price | $ / shares				$ 9.21		$ 9.21
Convertible notes outstanding				$ 126,098,000		$ 126,098,000
Principal amount repurchase convertible senior notes										$ 15,652,000
Consideration from repurchase convertible senior notes										$ 14,075,000
Aggregate principal amount of notes issued													$ 126,098,000
Indebtedness	[3]			119,883,000		119,883,000							133,039,000
Unpaid Principal Balance	[3]			126,098,000		126,098,000							141,750,000
Recourse Indebtedness | 7.625% senior notes due 2024
Debt Instrument [Line Items]
Stated interest rate										7.625%
Principal amount repurchase convertible senior notes										$ 2,713,000
Consideration from repurchase convertible senior notes										$ 2,172,000
Senior notes, outstanding				57,287,000		57,287,000
Indebtedness				55,540,000		55,540,000							57,952,000
Unpaid Principal Balance				57,287,000		57,287,000							60,000,000
Recourse Indebtedness | 7.125% Senior Notes due 2019
Debt Instrument [Line Items]
Stated interest rate										7.125%
Principal amount repurchase convertible senior notes										$ 1,174,000
Consideration from repurchase convertible senior notes										$ 1,081,000
Senior notes, outstanding				70,731,000		70,731,000
Indebtedness				69,186,000		69,186,000							69,749,000
Unpaid Principal Balance				70,731,000		70,731,000							71,905,000
Recourse Indebtedness | Senior Secured Notes
Debt Instrument [Line Items]
Senior notes, outstanding				64,000,000		64,000,000
Payment of notes						6,000,000
Indebtedness				59,440,000		59,440,000							63,045,000
Unpaid Principal Balance				64,000,000		64,000,000							70,000,000
Recourse Indebtedness | Junior subordinated notes, at fair value
Debt Instrument [Line Items]
Aggregate principal amount of notes issued				18,671,000		18,671,000
Fair value of indebtedness				11,524,000		11,524,000
Recourse Indebtedness | Two Year CMBS Facilities
Debt Instrument [Line Items]
Indebtedness				0		$ 0
Extended maturity term						2018-07
Debt instrument, financial covenant compliance						As of September 30, 2016, we had $0 of outstanding CMBS borrowings and $77,264 of outstanding commercial mortgage borrowings under the amended and restated master repurchase agreement, or the Amended MRA.
Recourse Indebtedness | Amended Master Repurchase Agreement
Debt Instrument [Line Items]
Line of credit facility, borrowing capacity				200,000,000		$ 200,000,000
Recourse Indebtedness | One Year CMBS Facilities | CMBS securitizations
Debt Instrument [Line Items]
Indebtedness				6,770,000		6,770,000
Line of credit facility, borrowing capacity				150,000,000		$ 150,000,000
Debt instrument, financial covenant compliance						As of September 30, 2016, we were in compliance with all financial covenants contained in the $150,000 CMBS facility.
Non-recourse indebtedness
Debt Instrument [Line Items]
Indebtedness				1,441,510,000		$ 1,441,510,000							1,914,711,000
Unpaid Principal Balance				1,455,953,000		1,455,953,000							1,938,026,000
Non-recourse indebtedness | R A I T F L Three
Debt Instrument [Line Items]
Outstanding principal balance of classes of investment grade senior notes				78,491,000		78,491,000
Non-recourse indebtedness | R A I T F L Four
Debt Instrument [Line Items]
Outstanding principal balance of classes of investment grade senior notes				132,498,000		132,498,000
Non-recourse indebtedness | R A I T F L Five
Debt Instrument [Line Items]
Outstanding principal balance of classes of investment grade senior notes				285,924,000		285,924,000
Non-recourse indebtedness | CMBS securitizations
Debt Instrument [Line Items]
Indebtedness				492,493,000	[4]	492,493,000	[4]						708,510,000	[5]
Unpaid Principal Balance				496,913,000	[4]	496,913,000	[4]						717,255,000	[5]
Non-recourse indebtedness | CDO notes payable, at amortized cost
Debt Instrument [Line Items]
Principal amount repurchase convertible senior notes				5,880,000		5,880,000
Consideration from repurchase convertible senior notes				4,988,000		4,988,000
Indebtedness	[7]			719,197,000	[6]	719,197,000	[6]						937,569,000	[8]
Gains (losses) on extinguishments of debt				682,000
Unpaid Principal Balance	[7]			728,362,000	[6]	728,362,000	[6]						950,981,000	[8]
Non-recourse indebtedness | Loans payable on real estate
Debt Instrument [Line Items]
Indebtedness				229,820,000	[9]	229,820,000	[9]						268,632,000
Unpaid Principal Balance				230,678,000	[9]	230,678,000	[9]						$ 269,790,000
Non-recourse indebtedness | Loans payable on real estate | First Mortgage | Mortgage Loan One
Debt Instrument [Line Items]
Unpaid Principal Balance				17,987,000		17,987,000
Investment Grade Senior Notes | R A I T F L Five
Debt Instrument [Line Items]
Outstanding principal balance of classes of investment grade senior notes				$ 23,019,000		$ 23,019,000					$ 23,019,000

[1] Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2021, and April 2026.

[2] Our 7.0% convertible senior notes are redeemable at par, at the option of the holder, in April 2016, April 2021, and April 2026.

[3] Our 4.0% convertible senior notes are redeemable at par, at the option of the holder, in October 2018, October 2023, and October 2028.

[4] Collateralized by $618,494 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

[5] Collateralized by 885,055 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

[6] Collateralized by $1,107,924 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $641,118 of which eliminates in consolidation. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

[7] Excludes CDO notes payable purchased by us which are eliminated in consolidation.

[8] Collateralized by $1,388,194 principal amount of commercial mortgage loans, mezzanine loans, other loans and preferred equity interests, $815,745 of which eliminates in consolidation. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

[9] Certain loans payable on real estate had maturity dates of June 2016. These loans payable on real estate are currently in the process of being refinanced with the lenders.

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Aggregate Contractual Maturities of Indebtedness by Year (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Extinguishment Of Debt [Line Items]
Total		$ 2,012,582	$ 2,452,567
Recourse Indebtedness
Extinguishment Of Debt [Line Items]
2016		44,010
2017		32,000
2018		141,540
2019		86,731
Thereafter	[1]	228,027
Total		532,308	514,541
Non-recourse indebtedness
Extinguishment Of Debt [Line Items]
2016		90,479
2017		33,439
2018		16,453
2019		1,512
2020		10,236
Thereafter	[1]	1,303,834
Total		$ 1,455,953	$ 1,938,026

[1] Includes $871 of our 7.0% convertible senior notes which are redeemable at par at the option of the holders in April 2021, and April 2026. Includes $126,098 of our 4.0% convertible senior notes which are redeemable at par at the option of the holders in October 2018, October 2023, and October 2028.

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Aggregate Contractual Maturities of Indebtedness by Year (Parenthetical) (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
7.0% convertible senior notes
Extinguishment Of Debt [Line Items]
Convertible senior notes interest rate	7.00%	7.00%
7.0% convertible senior notes | Recourse Indebtedness
Extinguishment Of Debt [Line Items]
Aggregate principal amount of notes issued		$ 871
Convertible senior notes interest rate	7.00%	7.00%
4.0% convertible senior notes
Extinguishment Of Debt [Line Items]
Convertible senior notes interest rate	4.00%	4.00%
4.0% convertible senior notes | Recourse Indebtedness
Extinguishment Of Debt [Line Items]
Aggregate principal amount of notes issued		$ 126,098
Convertible senior notes interest rate	4.00%	4.00%

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Aggregate Notional Amount and Estimated Net Fair Value of Derivative Instruments (Detail) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Derivative [Line Items]
Notional amount	$ 60,235,000	$ 281,141,000
Fair Value of Assets	52,000	182,000
Fair Value of Liabilities	(1,748,000)	(4,727,000)
Interest rate swaps
Derivative [Line Items]
Notional amount		243,816,000
Fair Value of Liabilities		(4,672,000)
Other interest rate swaps & caps
Derivative [Line Items]
Notional amount	60,235,000	37,325,000
Fair Value of Assets	52,000	182,000
Fair Value of Liabilities	$ (1,748,000)	$ (55,000)

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Derivative Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Realized losses	$ 785	$ 3,831	$ 4,824	$ 13,196

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Carrying Amount and Fair Value of Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Apr. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Dec. 31, 2014
Assets
Total investment in mortgages and loans, net	$ 1,354,960			$ 1,606,486
Cash and cash equivalents	36,019			87,581		$ 75,708	$ 106,963
Restricted cash	229,957			207,599
Derivative assets	52			206
Liabilities
Indebtedness	1,975,863		$ 17,696	2,399,475
Derivative liabilities	1,748			4,727
Junior subordinated notes	11,524			10,504
Warrants and investor SARs	30,100			26,200
Recourse Indebtedness
Liabilities
Indebtedness	509,938			484,764
Non-recourse indebtedness
Liabilities
Indebtedness	1,441,510			1,914,711
CMBS securitizations | Non-recourse indebtedness
Liabilities
Indebtedness	492,493	[1]		708,510	[2]
Carrying Amount
Assets
Total investment in mortgages and loans, net	1,354,960			1,606,486
Cash and cash equivalents	36,019			125,886
Restricted cash	229,957			213,012
Derivative assets	52			206
Liabilities
Indebtedness				63,045
Carrying Amount | 7.0% convertible senior notes
Liabilities
Indebtedness	844			28,868
Carrying Amount | 4.0% convertible senior notes
Liabilities
Indebtedness	119,883			133,039
Carrying Amount | 7.625% senior notes due 2024
Liabilities
Indebtedness	55,540			57,952
Carrying Amount | 7.125% Senior Notes due 2019
Liabilities
Indebtedness	69,186			69,749
Carrying Amount | Senior Secured Notes
Liabilities
Indebtedness	59,440			63,045
Carrying Amount | Junior subordinated notes, at amortized cost
Liabilities
Indebtedness	24,892			24,884
Carrying Amount | CDO notes payable, at amortized cost
Liabilities
Indebtedness	719,197			937,569
Carrying Amount | Loans payable on real estate
Liabilities
Indebtedness	229,820			268,632
Carrying Amount | Derivative Liabilities
Liabilities
Derivative liabilities	1,748			4,727
Carrying Amount | Warrants and investor SARs
Liabilities
Warrants and investor SARs	30,100			26,200
Carrying Amount | Recourse Indebtedness | 7.0% convertible senior notes
Liabilities
Indebtedness	844			28,868
Carrying Amount | Recourse Indebtedness | 4.0% convertible senior notes
Liabilities
Indebtedness	119,883			133,039
Carrying Amount | Recourse Indebtedness | 7.625% senior notes due 2024
Liabilities
Indebtedness	55,540			57,952
Carrying Amount | Recourse Indebtedness | 7.125% Senior Notes due 2019
Liabilities
Indebtedness	69,186			69,749
Carrying Amount | Recourse Indebtedness | Senior Secured Notes
Liabilities
Indebtedness	59,440
Carrying Amount | Recourse Indebtedness | Junior subordinated notes, at amortized cost
Liabilities
Indebtedness	24,892			24,884
Carrying Amount | Recourse Indebtedness | CMBS Facilities
Liabilities
Indebtedness	168,629			96,723
Carrying Amount | Non-recourse indebtedness | CDO notes payable, at amortized cost
Liabilities
Indebtedness	719,197			937,569
Carrying Amount | Non-recourse indebtedness | Loans payable on real estate
Liabilities
Indebtedness	229,820			268,632
Carrying Amount | Other indebtedness
Liabilities
Indebtedness	24,415
Carrying Amount | CMBS securitizations
Liabilities
Indebtedness	492,493			708,510
Carrying Amount | CMBS securitizations | Non-recourse indebtedness
Liabilities
Indebtedness	492,493			708,510
Estimated Fair Value
Assets
Total investment in mortgages and loans,net	1,321,940			1,537,086
Cash and cash equivalents	36,019			125,886
Restricted cash	229,957			213,012
Derivative assets	52			206
Estimated Fair Value | Derivative Liabilities
Liabilities
Derivative liabilities	1,748			4,727
Estimated Fair Value | Warrants and investor SARs
Liabilities
Warrants and investor SARs	30,100			26,200
Estimated Fair Value | Recourse Indebtedness | 7.0% convertible senior notes
Liabilities
Convertible senior notes, Estimated Fair Value	951			27,795
Estimated Fair Value | Recourse Indebtedness | 4.0% convertible senior notes
Liabilities
Convertible senior notes, Estimated Fair Value	117,271			104,184
Estimated Fair Value | Recourse Indebtedness | 7.625% senior notes due 2024
Liabilities
Senior notes, Estimated Fair Value	51,329			46,560
Estimated Fair Value | Recourse Indebtedness | 7.125% Senior Notes due 2019
Liabilities
Senior notes, Estimated Fair Value	69,062			62,471
Estimated Fair Value | Recourse Indebtedness | Senior Secured Notes
Liabilities
Senior notes, Estimated Fair Value	64,596			66,725
Estimated Fair Value | Recourse Indebtedness | Junior subordinated notes, at amortized cost
Liabilities
Junior subordinated notes	12,262			11,221
Estimated Fair Value | Recourse Indebtedness | CMBS Facilities
Liabilities
Indebtedness	169,550			97,067
Estimated Fair Value | Non-recourse indebtedness | CDO notes payable, at amortized cost
Liabilities
Notes payable, Estimated Fair Value	639,060			801,289
Estimated Fair Value | Non-recourse indebtedness | Loans payable on real estate
Liabilities
Loans payable on real estate, Estimated Fair Value	238,856			281,840
Estimated Fair Value | Other indebtedness
Liabilities
Indebtedness	24,321
Estimated Fair Value | CMBS securitizations | Non-recourse indebtedness
Liabilities
Notes payable, Estimated Fair Value	494,264			709,001
Junior subordinated notes, at fair value | Carrying Amount | Recourse Indebtedness
Liabilities
Indebtedness	11,524			10,504
Junior subordinated notes, at fair value | Estimated Fair Value | Recourse Indebtedness
Liabilities
Junior subordinated notes	$ 11,524			$ 10,504

[1] Collateralized by $618,494 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

[2] Collateralized by 885,055 principal amount of commercial mortgage loans and participation interests. These obligations were issued by separate legal entities and consequently the assets of the special purpose entities that collateralize these obligations are not available to our creditors.

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Information of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Dec. 31, 2015
Assets:
Derivative assets	$ 52		$ 206
Total assets	52		206
Liabilities:
Junior subordinated notes, at fair value	11,524		10,504
Derivative liabilities	1,748		4,727
Warrants and investor SARs	30,100		26,200
Total liabilities	43,372		41,431
Significant Other Observable Inputs (Level 2)
Assets:
Derivative assets	52	[1]	206	[2]
Total assets	52	[1]	206	[2]
Liabilities:
Derivative liabilities	1,748	[1]	4,727	[2]
Total liabilities	1,748	[1]	4,727	[2]
Significant Unobservable Inputs (Level 3)
Liabilities:
Junior subordinated notes, at fair value	11,524	[1]	10,504	[2]
Warrants and investor SARs	30,100	[1]	26,200	[2]
Total liabilities	$ 41,624	[1]	$ 36,704	[2]

[1] During the nine months ended September 30, 2016, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

[2] During the year ended December 31, 2015, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

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Information of Assets and Liabilities Measured at Fair Value on Recurring Basis (Parenthetical) (Detail) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Fair value, assets, Level 1 to Level 2 transfers, amount	$ 0	$ 0
Fair value, liabilities, Level 1 to Level 2 transfers, amount	0	0
Fair value, assets and liabilities, Level 3 into and out transfers, amount	$ 0	$ 0

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Fair Value of Financial Instruments - Additional Information (Detail) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($) Property		Dec. 31, 2015 USD ($)		Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Disclosure	$ 52		$ 206
Significant Unobservable Inputs (Level 3)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Volatility rate	52.00%		61.00%
Credit adjusted discount rate	10.00%		12.00%
Dividend rate	9.80%		10.60%
Significant Unobservable Inputs (Level 3) | Non-Recurring Fair Value Measurements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Disclosure	$ 83,973
Significant Unobservable Inputs (Level 3) | Non-Recurring Fair Value Measurements | Industrial real estate properties
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Number real estate asset | Property	10
Significant Unobservable Inputs (Level 3) | Minimum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate	10.80%		12.90%
Significant Unobservable Inputs (Level 3) | Minimum | Non-Recurring Fair Value Measurements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate	8.30%
Terminal capitalization rate	8.20%
Significant Unobservable Inputs (Level 3) | Maximum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate	11.10%		13.30%
Significant Unobservable Inputs (Level 3) | Maximum | Non-Recurring Fair Value Measurements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate	11.50%
Terminal capitalization rate	11.00%
Significant Other Observable Inputs (Level 2)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Disclosure	$ 52	[1]	$ 206	[2]
Significant Other Observable Inputs (Level 2) | Non-Recurring Fair Value Measurements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Disclosure	$ 41,615				$ 43,313	$ 6,386
Significant Other Observable Inputs (Level 2) | Non-Recurring Fair Value Measurements | Multifamily
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Number real estate asset | Property	3

[1] During the nine months ended September 30, 2016, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

[2] During the year ended December 31, 2015, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

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Additional Information about Assets and Liabilities That Are Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 40,089	$ 36,704
Change in fair value of financial instruments	1,535	4,920
Ending Balance	41,624	41,624
Warrants and investor SARs
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	29,300	26,200
Change in fair value of financial instruments	800	3,900
Ending Balance	30,100	30,100
Junior Subordinated Notes, at Fair Value
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	10,789	10,504
Change in fair value of financial instruments	735	1,020
Ending Balance	$ 11,524	$ 11,524

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Fair Value Hierarchy for Financial Instruments Not Fair Valued but For Which Fair Value Is Required To Be Disclosed (Detail) - USD ($) $ in Thousands	Sep. 30, 2016		Apr. 30, 2016	Dec. 31, 2015
Fair Value Measurement Inputs Disclosure [Line Items]
Total investment in mortgages and loans, net	$ 1,354,960			$ 1,606,486
Indebtedness	1,975,863		$ 17,696	2,399,475
Junior subordinated notes	11,524			10,504
Significant Unobservable Inputs (Level 3)
Fair Value Measurement Inputs Disclosure [Line Items]
Junior subordinated notes	11,524	[1]		10,504	[2]
Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Total investment in mortgages and loans, net	1,354,960			1,606,486
Indebtedness				63,045
Estimated Fair Value
Fair Value Measurement Inputs Disclosure [Line Items]
Total investment in mortgages and loans,net	1,321,940			1,537,086
Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Fair Value Measurement Inputs Disclosure [Line Items]
Total investment in mortgages and loans,net	1,321,940			1,537,086
CMBS securitizations | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	492,493			708,510
CMBS securitizations | Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Fair Value Measurement Inputs Disclosure [Line Items]
Notes payable, Estimated Fair Value	494,264			709,001
7.0% convertible senior notes | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	844			28,868
7.0% convertible senior notes | Estimated Fair Value | Level in Fair Value Hierarchy, One
Fair Value Measurement Inputs Disclosure [Line Items]
Convertible senior notes, Estimated Fair Value	951			27,795
4.0% convertible senior notes | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	119,883			133,039
4.0% convertible senior notes | Estimated Fair Value | Level in Fair Value Hierarchy, One
Fair Value Measurement Inputs Disclosure [Line Items]
Convertible senior notes, Estimated Fair Value	117,271			104,184
7.625% senior notes due 2024 | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	55,540			57,952
7.625% senior notes due 2024 | Estimated Fair Value | Level in Fair Value Hierarchy, One
Fair Value Measurement Inputs Disclosure [Line Items]
Senior notes, Estimated Fair Value	51,329			46,560
7.125% Senior Notes due 2019 | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	69,186			69,749
7.125% Senior Notes due 2019 | Estimated Fair Value | Level in Fair Value Hierarchy, One
Fair Value Measurement Inputs Disclosure [Line Items]
Senior notes, Estimated Fair Value	69,062			62,471
Senior Secured Notes | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	59,440			63,045
Senior Secured Notes | Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Fair Value Measurement Inputs Disclosure [Line Items]
Senior notes, Estimated Fair Value	64,596			66,725
Junior subordinated notes, at amortized cost | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	24,892			24,884
Junior subordinated notes, at amortized cost | Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Fair Value Measurement Inputs Disclosure [Line Items]
Junior subordinated notes	12,262			11,221
CDO notes payable, at amortized cost | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	719,197			937,569
CDO notes payable, at amortized cost | Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Fair Value Measurement Inputs Disclosure [Line Items]
Notes payable, Estimated Fair Value	639,060			801,289
Loans payable on real estate | Carrying Amount
Fair Value Measurement Inputs Disclosure [Line Items]
Indebtedness	229,820			268,632
Loans payable on real estate | Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Fair Value Measurement Inputs Disclosure [Line Items]
Loans payable on real estate, Estimated Fair Value	$ 238,856			$ 281,840

[1] During the nine months ended September 30, 2016, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

[2] During the year ended December 31, 2015, there were no transfers between Level 1 and Level 2, and there were no transfers into and/or out of Level 3.

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Realized and Unrealized Gains and Losses on Assets and Liabilities (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Fair Value Assets And Liabilities Measured On Unobservable Inputs [Line Items]
Change in fair value of financial instruments, Liabilities	$ 1,535		$ 4,920
Change in fair value of financial instruments	(1,375)	$ 620	(7,055)	$ 13,466
Trading securities and security-related receivables
Fair Value Assets And Liabilities Measured On Unobservable Inputs [Line Items]
Change in fair value of financial instruments, Assets				(173)
Junior subordinated notes
Fair Value Assets And Liabilities Measured On Unobservable Inputs [Line Items]
Change in fair value of financial instruments, Liabilities	(735)	1,673	(1,020)	1,909
Derivative
Fair Value Assets And Liabilities Measured On Unobservable Inputs [Line Items]
Change in fair value of financial instruments, Liabilities	160	(644)	(2,135)	(1,064)
Warrants and investor SARs
Fair Value Assets And Liabilities Measured On Unobservable Inputs [Line Items]
Change in fair value of financial instruments, Liabilities	800		3,900
Fair Value, Measurements, Recurring | Warrants and investor SARs
Fair Value Assets And Liabilities Measured On Unobservable Inputs [Line Items]
Change in fair value of financial instruments, Liabilities	$ (800)	$ (409)	$ (3,900)	$ 12,794

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Variable Interest Entities - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Apr. 30, 2016	Dec. 31, 2015
Variable Interest Entity [Line Items]
Total investment in mortgages and loans, net	$ 1,354,960		$ 1,606,486
Indebtedness	1,975,863	$ 17,696	2,399,475
Liabilities of discontinued operations (see Note 16)	906,225		952,530
VIE
Variable Interest Entity [Line Items]
Total investment in mortgages and loans, net	1,074,583		1,428,961
Indebtedness	1,326,212		1,762,672
Liabilities of discontinued operations (see Note 16)	906,103		952,406
VIE | Consolidation Eliminations
Variable Interest Entity [Line Items]
Total investment in mortgages and loans, net	623,851		813,455
Indebtedness	$ 469,915		569,833
Liabilities of discontinued operations (see Note 16)			38,075
VIE | IRT
Variable Interest Entity [Line Items]
Variable interest entity, ownership percentage	15.40%
Liabilities of discontinued operations (see Note 16)	$ 906,103		$ 952,406

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Assets and Liabilities of Consolidated Variable Interest Entities (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests		$ 1,373,615		$ 1,623,583
Allowance for loan losses		(18,655)	$ (18,237)	(17,097)	$ (14,646)	$ (12,796)	$ (9,218)
Investments in real estate
Investments in real estate		965,362		1,145,630
Accumulated depreciation		(156,613)		(158,688)
Total investments in real estate	[1]	808,749		986,942
Cash and cash equivalents		36,019		87,581	$ 75,708		$ 106,963
Restricted cash		229,957		207,599
Accrued interest receivable		41,603		47,343
Other assets		81,546		67,566
Intangible assets
Accumulated amortization		(19,308)		(13,234)
Total intangible assets		23,165		28,864
Assets of discontinued operations		1,306,532		1,383,547
Total assets		3,882,531		4,415,928
Liabilities and Equity
Accrued interest payable		10,464		8,595
Accounts payable and accrued expenses		20,082		22,557
Derivative liabilities		1,748		4,727
Deferred taxes, borrowers’ escrows and other liabilities		168,692		197,908
Liabilities of discontinued operations		906,225		952,530
Total liabilities		3,083,074		3,585,792
Shareholders’ equity:
Accumulated other comprehensive income (loss)		(112)		(4,699)
Retained earnings (deficit)		(1,731,141)		(1,680,751)
Total shareholders’ equity		361,816		404,528
Noncontrolling Interests		346,913		340,213
Total liabilities and equity		3,882,531		4,415,928
VIE
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests		1,698,434		2,242,416
Allowance for loan losses		0
Total investments in mortgages and loans		1,698,434		2,242,416
Investments in real estate
Investments in real estate		222,535		278,774
Accumulated depreciation		(29,770)		(26,398)
Total investments in real estate		192,765		252,376
Cash and cash equivalents		2,789		1,589
Restricted cash		12,083		17,803
Accrued interest receivable		70,831		77,130
Other assets		11,731		14,219
Intangible assets
Intangible assets		5,616		5,245
Accumulated amortization		(3,304)		(1,446)
Total intangible assets		2,312		3,799
Assets of discontinued operations		1,306,242		1,383,188
Total assets		3,297,187		3,992,520
Liabilities and Equity
Indebtedness, net		1,796,127		2,332,505
Accrued interest payable		15,404		16,204
Accounts payable and accrued expenses		5,993		6,008
Derivative liabilities				4,672
Deferred taxes, borrowers’ escrows and other liabilities		2,339		4,018
Liabilities of discontinued operations		906,103		952,406
Total liabilities		1,819,863		3,315,813
Shareholders’ equity:
Accumulated other comprehensive income (loss)				(4,691)
RAIT investment		133,617		208,355
Retained earnings (deficit)		90,877		96,230
Total shareholders’ equity		224,494		299,894
Noncontrolling Interests		346,727		376,813
Total liabilities and equity		3,297,187		3,992,520
VIE | RAIT Securitizations
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests		1,352,591		2,242,416
Total investments in mortgages and loans		1,352,591		2,242,416
Investments in real estate
Restricted cash		10,309		14,944
Accrued interest receivable		69,315		77,130
Other assets		513		479
Intangible assets
Total assets		1,432,728		2,334,969
Liabilities and Equity
Indebtedness, net		1,220,413		2,058,739
Accrued interest payable		975		2,207
Accounts payable and accrued expenses		2		8
Derivative liabilities				4,672
Deferred taxes, borrowers’ escrows and other liabilities				176
Total liabilities		1,221,390		2,065,802
Shareholders’ equity:
Accumulated other comprehensive income (loss)				(4,691)
RAIT investment		36,079		118,174
Retained earnings (deficit)		175,259		155,684
Total shareholders’ equity		211,338		269,167
Total liabilities and equity		1,432,728		2,334,969
VIE | IRT
Intangible assets
Assets of discontinued operations		1,306,242		1,383,188
Total assets		1,306,242		1,383,188
Liabilities and Equity
Liabilities of discontinued operations		906,103		952,406
Total liabilities		906,103		952,406
Shareholders’ equity:
RAIT investment		55,271		54,389
Total shareholders’ equity		55,271		54,389
Noncontrolling Interests		344,868		376,393
Total liabilities and equity		1,306,242		1,383,188
VIE | RAIT VIE Properties
Investments in real estate
Investments in real estate		222,535		278,774
Accumulated depreciation		(29,770)		(26,398)
Total investments in real estate		192,765		252,376
Cash and cash equivalents		2,788		1,589
Restricted cash		1,770		2,859
Other assets		11,218		13,740
Intangible assets
Intangible assets		5,616		5,245
Accumulated amortization		(3,304)		(1,446)
Total intangible assets		2,312		3,799
Total assets		210,853		274,363
Liabilities and Equity
Indebtedness, net		231,744		273,766
Accrued interest payable		13,602		13,997
Accounts payable and accrued expenses		5,991		6,000
Deferred taxes, borrowers’ escrows and other liabilities		2,339		3,842
Total liabilities		253,676		297,605
Shareholders’ equity:
RAIT investment		39,398		35,792
Retained earnings (deficit)		(84,080)		(59,454)
Total shareholders’ equity		(44,682)		(23,662)
Noncontrolling Interests		1,859		420
Total liabilities and equity		210,853		$ 274,363
VIE | RAIT Joint Venture VIE
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests		345,843
Total investments in mortgages and loans		345,843
Investments in real estate
Cash and cash equivalents		1
Restricted cash		4
Accrued interest receivable		1,516
Intangible assets
Total assets		347,364
Liabilities and Equity
Indebtedness, net		343,970
Accrued interest payable		827
Total liabilities		344,797
Shareholders’ equity:
RAIT investment		2,869
Retained earnings (deficit)		(302)
Total shareholders’ equity		2,567
Total liabilities and equity		$ 347,364

[1] As of September 30, 2016, two of our multifamily properties, with a carrying amount of $34,450, and two of our parcels of land, with a carrying amount of $12,556, were considered held-for-sale.

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Series D Preferred Shares - Additional Information (Detail) $ / shares in Units, $ in Thousands	Sep. 30, 2016 USD ($) $ / shares shares	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($) Covenant	Oct. 01, 2012 USD ($) $ / shares shares
Temporary Equity [Line Items]
Aggregate purchase price under Securities Purchase Agreement | $	$ 100,000
Stock Appreciation Rights				6,735,667
Warrants and investor SARs | $	$ 30,100	$ 26,200
Adjusted
Temporary Equity [Line Items]
Warrants exercisable for common shares	11,035,875
Stock Appreciation Rights	7,485,045
ARS VI
Temporary Equity [Line Items]
Aggregate purchase price under Securities Purchase Agreement | $				$ 100,000
Preferred Series D
Temporary Equity [Line Items]
Preferred shares with warrants				9,931,000
Warrants Exercise Price | $ / shares				$ 6.00
Preferred Series D | Adjusted
Temporary Equity [Line Items]
Warrants Exercise Price | $ / shares	$ 5.40
Preferred Series D | ARS VI
Temporary Equity [Line Items]
Cumulative redeemable preferred shares, shares issued				4,000,000
Cumulative Redeemable Preferred Shares, par value | $ / shares				$ 0.01
Number of covenants | Covenant			2
Consideration paid under Securities Purchase Agreement | $			$ 450

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Sales Activity of Series D Preferred Shares (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Temporary Equity Disclosure [Abstract]
Aggregate purchase price	$ 100,000
Initial value of warrants and investor SARs issued to-date	(21,805)
Costs incurred	(6,834)
Total discount	(28,639)
Discount amortization to-date	19,367
Carrying amount of Series D Preferred Shares	$ 90,728	$ 85,395

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Dividends Declared and Paid on Preferred Shares (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
	Mar. 31, 2016	Jun. 30, 2016	Sep. 30, 2016
Dividends [Line Items]
Total dividend amount			$ 20,517
Preferred Stock | 7.75% Series A Cumulative Redeemable Preferred Stock
Dividends [Line Items]
Date declared	Feb. 16, 2016	May 19, 2016	Jul. 27, 2016
Record date	Mar. 01, 2016	Jun. 01, 2016	Sep. 01, 2016
Date paid	Mar. 31, 2016	Jun. 30, 2016	Sep. 30, 2016
Total dividend amount	$ 2,570	$ 2,570	$ 2,589
Preferred Stock | 8.375% Series B Cumulative Redeemable Preferred Stock
Dividends [Line Items]
Date declared	Feb. 16, 2016	May 19, 2016	Jul. 27, 2016
Record date	Mar. 01, 2016	Jun. 01, 2016	Sep. 01, 2016
Date paid	Mar. 31, 2016	Jun. 30, 2016	Sep. 30, 2016
Total dividend amount	$ 1,225	$ 1,225	$ 1,225
Preferred Stock | 8.875% Series C Cumulative Redeemable Preferred Stock
Dividends [Line Items]
Date declared	Feb. 16, 2016	May 19, 2016	Jul. 27, 2016
Record date	Mar. 01, 2016	Jun. 01, 2016	Sep. 01, 2016
Date paid	Mar. 31, 2016	Jun. 30, 2016	Sep. 30, 2016
Total dividend amount	$ 910	$ 910	$ 910
Preferred Stock | Series D cumulative redeemable preferred shares
Dividends [Line Items]
Date declared	Feb. 16, 2016	May 19, 2016	Jul. 27, 2016
Record date	Mar. 01, 2016	Jun. 01, 2016	Sep. 01, 2016
Date paid	Mar. 31, 2016	Jun. 30, 2016	Sep. 30, 2016
Total dividend amount	$ 2,125	$ 2,125	$ 2,125

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Shareholders' Equity - Additional Information (Detail)												3 Months Ended			6 Months Ended	9 Months Ended
	Oct. 31, 2016 USD ($)	Oct. 05, 2016 $ / shares shares	Sep. 19, 2016 $ / shares	Jul. 29, 2016 USD ($)	Jun. 15, 2016 $ / shares	May 23, 2016 USD ($) $ / shares shares	Apr. 29, 2016 USD ($)	Apr. 22, 2016 $ / shares	Mar. 14, 2016 $ / shares	Feb. 23, 2016 USD ($) $ / shares shares	Feb. 22, 2016 USD ($) $ / shares shares	Sep. 30, 2016 USD ($) Property $ / shares shares	Mar. 31, 2016 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2016	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($)	Sep. 27, 2016 shares	Dec. 31, 2015 shares	Jun. 13, 2014 USD ($) shares	Nov. 21, 2012 shares
Class of Stock [Line Items]
Common stock, dividend declared | $ / shares			$ 0.09		$ 0.09				$ 0.09
Common stock, dividend paid | $				$ 8,202,000			$ 8,200,000									$ 24,962,000
Annual incentive compensation plan description																On March 31, 2015, the compensation committee adopted a 2015 Long Term Incentive Plan, or the LTIP, and made awards, or the 2015 awards, to the eligible officers setting forth the basis on which the eligible officers could earn equity compensation for the years 2015 through 2018. Pursuant to the LTIP, each eligible officer was granted an initial long term equity award, consisting of both a performance share unit award for a three year performance period and an annual restricted share award vesting over a four year period. See Note 13 to the consolidated financial statements in the 2015 Annual Report on Form 10-K for further details regarding these awards. For the three and nine months ended September 30, 2016, we recorded $122 and $366, respectively, of compensation expense related to the LTIP.
Compensation expense | $												$ 6,245,000		$ 5,541,000		$ 17,367,000	$ 15,648,000
Common shares pursuant to the DRSPP																6,808
Net proceeds received | $																$ 20,000
Common shares remaining available under the DRSPP												7,754,914				7,754,914
Impairment of derecognized noncontrolling interest of industrial property | $												$ 2,436,000
Number Of Derecognized Industrial Properties | Property												10
IRT
Class of Stock [Line Items]
Shares outstanding												7,269,719				7,269,719			7,269,719
Ownership percentage												15.40%				15.40%			15.50%
Coles Crossing
Class of Stock [Line Items]
Derecognized noncontrolling interest | $												$ 2,518,000				$ 2,518,000
Jones Trading Institutional Services LLC
Class of Stock [Line Items]
Common shares, shares issued																0
Common shares remaining available for issuance																7,918,919
Jones Trading Institutional Services LLC | Maximum
Class of Stock [Line Items]
Common shares to be issued and sold																					10,000,000
Long Term Incentive Compensation Plan Ltip
Class of Stock [Line Items]
Compensation expense | $												122,000				$ 366,000
LTIP | Peer Group of Public Companies Over The Same Period
Class of Stock [Line Items]
Equity award target percentage															40.00%
LTIP | TSR for the NAREIT Mortgage Index
Class of Stock [Line Items]
Equity award target percentage															30.00%
LTIP | Absolute TSR
Class of Stock [Line Items]
Equity award target percentage															30.00%
Non-management trustees
Class of Stock [Line Items]
Number of shares awarded, share										168,776
Number of shares awarded, value | $										$ 400,000
Closing stock price | $ / shares										$ 2.37
Vesting period										3 years
President | 2012 Incentive Award Plan
Class of Stock [Line Items]
Number of shares awarded, share						161,290
Number of shares awarded, value | $						$ 500,000
Closing stock price | $ / shares						$ 3.10
President | 2012 Incentive Award Plan | Share Based Compensation Award Vesting on Grant Date
Class of Stock [Line Items]
Vesting percentage						25.00%
President | 2012 Incentive Award Plan | Share-based Compensation Award, Tranche One
Class of Stock [Line Items]
Vesting percentage						25.00%
President | 2012 Incentive Award Plan | Share-based Compensation Award, Tranche Two
Class of Stock [Line Items]
Vesting percentage						25.00%
President | 2012 Incentive Award Plan | Share-based Compensation Award, Tranche Three
Class of Stock [Line Items]
Vesting percentage						25.00%
Subsequent Event
Class of Stock [Line Items]
Common stock, dividend paid | $	$ 8,202,000
Restricted Stock
Class of Stock [Line Items]
Common stock, dividend paid | $													$ 348,000
Vesting period								4 years
Restricted Stock | Non Executive Officer
Class of Stock [Line Items]
Number of shares awarded, share											367,000
Number of shares awarded, value | $											$ 873,000
Closing stock price | $ / shares											$ 2.38
Vesting period											3 years
Stock Appreciation Rights (SARs) | Non Executive Officer
Class of Stock [Line Items]
Number of shares awarded, share											895,000
Number of shares awarded, value | $											$ 206,000
Vesting period											3 years
Expiration date											Feb. 22, 2021
Performance Shares
Class of Stock [Line Items]
Performance period								3 years
Performance period earliest date								Jan. 01, 2016
Performance period latest date								Dec. 31, 2018
Performance Shares | Long Term Incentive Compensation Plan Ltip
Class of Stock [Line Items]
Compensation expense | $												$ 120,000				$ 240,000
Performance Shares Component One | Long Term Incentive Compensation Plan Ltip
Class of Stock [Line Items]
Grant date fair value per share | $ / shares								$ 1.55
Performance Shares Component Two | Long Term Incentive Compensation Plan Ltip
Class of Stock [Line Items]
Grant date fair value per share | $ / shares								1.44
Performance Shares Component Three | Long Term Incentive Compensation Plan Ltip
Class of Stock [Line Items]
Grant date fair value per share | $ / shares								$ 1.07
Performance Based Awards | LTIP
Class of Stock [Line Items]
Compensation awarded, Percentage of awards															75.00%
Time Based Awards | LTIP
Class of Stock [Line Items]
Vesting period															4 years
Compensation awarded, Percentage of awards															25.00%
Dividend Reinvestment And Share Purchase Plan
Class of Stock [Line Items]
Registered and reserved common shares												10,500,000				10,500,000
Weighted-average price per shares | $ / shares												$ 2.94				$ 2.94
7.75% Series A Cumulative Redeemable Preferred Stock
Class of Stock [Line Items]
Cumulative redeemable preferred shares, shares issued												5,344,353				5,344,353			5,306,084
8.375% Series B Cumulative Redeemable Preferred Stock
Class of Stock [Line Items]
Cumulative redeemable preferred shares, shares issued												2,340,969				2,340,969			2,340,969
8.875% Series C Cumulative Redeemable Preferred Stock
Class of Stock [Line Items]
Cumulative redeemable preferred shares, shares issued												1,640,425				1,640,425			1,640,425
Preferred Stock
Class of Stock [Line Items]
Preferred shares aggregate amount to be issued and sold | $																				$ 150,000,000
Preferred Stock | 7.75% Series A Cumulative Redeemable Preferred Stock
Class of Stock [Line Items]
Preferred shares authorized to be issued under agreement																				4,000,000
Cumulative redeemable preferred shares, shares issued												38,269				38,269
Net proceeds received from the issuance of shares | $												$ 777,000				$ 777,000
Dividend payment date													Mar. 31, 2016		Jun. 30, 2016	Sep. 30, 2016
Dividend record date													Mar. 01, 2016		Jun. 01, 2016	Sep. 01, 2016
Preferred Stock | 8.375% Series B Cumulative Redeemable Preferred Stock
Class of Stock [Line Items]
Preferred shares authorized to be issued under agreement																				1,000,000
Dividend payment date													Mar. 31, 2016		Jun. 30, 2016	Sep. 30, 2016
Dividend record date													Mar. 01, 2016		Jun. 01, 2016	Sep. 01, 2016
Preferred Stock | 8.875% Series C Cumulative Redeemable Preferred Stock
Class of Stock [Line Items]
Preferred shares authorized to be issued under agreement																				1,000,000
Dividend payment date													Mar. 31, 2016		Jun. 30, 2016	Sep. 30, 2016
Dividend record date													Mar. 01, 2016		Jun. 01, 2016	Sep. 01, 2016
Preferred Stock | 7.75% Series A cumulative redeemable preferred shares
Class of Stock [Line Items]
Aggregate of Series A,B,C Preferred Shares available for issuance												2,724,935				2,724,935
Preferred Stock | 8.375% Series B cumulative redeemable preferred shares
Class of Stock [Line Items]
Aggregate of Series A,B,C Preferred Shares available for issuance												947,496				947,496
Preferred Stock | 8.875% Series C cumulative redeemable preferred shares
Class of Stock [Line Items]
Aggregate of Series A,B,C Preferred Shares available for issuance												999,675				999,675
Common Shares
Class of Stock [Line Items]
Dividend payment date			Oct. 31, 2016		Jul. 29, 2016				Apr. 29, 2016
Dividend record date			Oct. 07, 2016		Jul. 08, 2016				Apr. 08, 2016
Common shares, shares issued																6,808
Common Shares | IRT
Class of Stock [Line Items]
Shares outstanding																		7,269,719
Common Shares | Subsequent Event | IRT
Class of Stock [Line Items]
Number of shares sold to IRT		7,269,719
Sale of common stock price per share | $ / shares		$ 8.55
Restricted Common Shares
Class of Stock [Line Items]
Common stock, dividend paid | $																$ 10,000

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Reconciliation of Basic and Diluted Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Income (loss) from continuing operations	$ 5,328	$ (2,178)	$ (13,131)	$ 22,702
(Income) loss allocated to preferred shares	(8,715)	(8,303)	(25,850)	(24,383)
(Income) loss allocated to noncontrolling interests	1,339	472	3,455	1,705
Income (loss) from continuing operations allocable to common shares	(2,048)	(10,009)	(35,526)	24
Income (loss) from discontinued operations	4,112	27,004	38,473	28,831
(Income) loss from discontinued operations allocated to noncontrolling interests	(2,068)	(23,527)	(28,375)	(23,528)
Income (loss) from discontinued operations allocable to common shares	2,044	3,477	10,098	5,303
Net income (loss) allocable to common shares	$ (4)	$ (6,532)	$ (25,428)	$ 5,327
Weighted-average shares outstanding-Basic	91,201,784	87,110,958	91,137,041	83,799,244
Dilutive securities				1,846,365
Weighted-average shares outstanding—Diluted	91,201,784	87,110,958	91,137,041	85,645,609
Earnings (loss) per share-Basic:
Continuing operations	$ (0.02)	$ (0.11)	$ (0.39)
Discontinued operations	0.02	0.04	0.11	$ 0.06
Earnings (loss) per share-Basic		(0.07)	(0.28)	0.06
Earnings (loss) per share-Diluted:
Continuing operations	(0.02)	(0.11)	(0.39)
Discontinued operations	$ 0.02	0.04	0.11	0.06
Earnings (loss) per share-Diluted		$ (0.07)	$ (0.28)	$ 0.06

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Earnings (Loss) Per Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Anti-dilutive shares not included in computation of earnings per common share	26,648,284	21,143,824	26,449,861	20,720,300

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Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Supplemental Cash Flow Elements [Abstract]
Cash paid for interest	$ 79,848	$ 51,839
Cash paid (refunds received) for taxes	311	283
Non-cash increase (decrease) in investments in real estate, intangible assets and other liabilities from conversion of loans	$ (1,499)
Non-cash increase (decrease) in indebtedness from the assumption of debt from property acquisitions		$ 121,885

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Segment Reporting - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2016 Segment
Segment Reporting [Abstract]
Number of reportable segment	1

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Discontinued Operations - Additional Information (Detail) - IRT - shares	Sep. 30, 2016	Sep. 27, 2016	Dec. 31, 2015
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Common stock own, shares	7,269,719		7,269,719
Common Stock
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Common stock own, shares		7,269,719

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Total Assets and Liabilities of Discontinued Operations (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets
Investments in real estate, net	$ 1,263,901	$ 1,332,377
Cash and cash equivalents	29,400	38,305
Restricted cash	8,028	5,413
Other assets	5,203	3,641
Intangible assets, net		3,811
Total assets of discontinued operations	1,306,532	1,383,547
Liabilities
Indebtedness, net	880,643	928,607
Accrued interest payable	830	1,239
Accounts payable and accrued expenses	18,627	17,115
Derivative liabilities	696
Deferred taxes, borrowers’ escrows and other liabilities	5,429	5,569
Total liabilities of discontinued operations	$ 906,225	$ 952,530

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Statements of Operations of Discontinued Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Property income	$ 38,353	$ 25,491	$ 115,252	$ 69,866
Fee and other income	661	768	2,260	1,768
Total revenue	39,014	26,259	117,512	71,634
Expenses:
Interest expense	8,820	4,851	27,454	12,671
Real estate operating expense	16,107	11,090	47,588	30,184
Compensation expense	1,861	1,820	6,037	4,892
General and administrative expense	949	721	3,298	2,192
Acquisition expense	19	12,523	37	12,724
Depreciation and amortization expense	7,784	4,772	27,059	16,663
Total expenses	35,540	35,777	111,473	79,326
Operating (Loss) Income	3,474	(9,518)	6,039	(7,692)
Interest and other income (expense), net	(2)	18	(2)	19
Gains (losses) on assets	(1)		32,262
Gain (loss) on IRT merger with TSRE	641	64,012	732	64,012
TSRE financing extinguishment and employee separation expenses		(27,508)		(27,508)
Gains (losses) on extinguishments of debt			(558)
Net income (loss) from discontinued operations	$ 4,112	$ 27,004	$ 38,473	$ 28,831

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Summary of Cash Flows of Discontinued Operations (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Discontinued Operations And Disposal Groups [Abstract]
Cash flow from operating activities from discontinued operations	$ 32,993	$ 4,972
Cash flow from investing activities from discontinued operations	29,522	(169,605)
Cash flow from financing activities from discontinued operations	(71,420)	166,814
Net change in cash and cash equivalents from discontinued operations	(8,905)	2,181
Cash and cash equivalents at beginning of period - discontinued operations	38,305	14,763
Cash and cash equivalents at end of period - discontinued operations	$ 29,400	$ 16,944

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Subsequent Events - Additional Information (Detail) - Subsequent Event - IRT $ / shares in Units, $ in Thousands	Oct. 05, 2016 USD ($) $ / shares shares
Subsequent Event [Line Items]
Proceeds for Repurchases to Repayment of Indebtedness Under Collateralized	$ 43,703
Common Stock
Subsequent Event [Line Items]
Number of shares sold to IRT | shares	7,269,719
Sale of common stock price per share | $ / shares	$ 8.55
Proceeds from sale of shares	$ 62,156