7. LOAN PARTICIPATIONS SOLD

The financing of a loan by the non-recourse sale of a senior interest in the loan through a participation agreement generally does not qualify as a sale under GAAP. Therefore, in the instance of such sales, we present the whole loan as an asset and the loan participation sold as a liability on our consolidated balance sheet until the loan is repaid. The obligation to pay principal and interest on these liabilities is solely based on the performance of the related loan obligation, except in one instance where we entered into a related guarantee agreement for £24.0 million which was translated to $34.5 million as of March 31, 2016. The gross presentation of loan participations sold does not impact stockholders’ equity or net income.

The following table details statistics for our loan participations sold ($ in thousands):


	March 31, 2016						December 31, 2015
	Participations			Underlying			Participations			Underlying
	Sold⁽¹⁾			Loans			Sold⁽¹⁾			Loans
Number of loans		3			3			3			3
Principal balance⁽²⁾	$	478,661		$	583,589		$	498,992		$	608,554
Book value⁽²⁾	$	476,894		$	579,742		$	497,032		$	604,321
Weighted-average cash coupon⁽³⁾		L+2.38	%		L+3.93	%		L+2.38	%		L+3.93	%
Weighted-average cost / all-in yield⁽³⁾		L+2.49	%		L+4.16	%		L+2.49	%		L+4.15	%

(1)	During the three months ended March 31, 2016 and 2015, we recorded $3.6 million and $4.3 million, respectively, of interest expense related to our loan participations sold, of which $3.5 million and $4.0 million, respectively, was paid in cash.

(2)	The difference between principal balance and book value of loan participations sold is due to deferred financing costs of $1.8 million and $2.0 million as of March 31, 2016 and December 31, 2015, respectively.

(3)

Our floating rate loans and related liabilities were indexed to the various benchmark rates relevant in each arrangement in terms of currency and payment frequency. Therefore the net exposure to each benchmark rate is in direct proportion to our net assets indexed to that rate. In addition to cash coupon, cost / all-in yield includes the amortization of deferred origination fees / financing costs.