Note 15 — Variable Interest Entities

Our involvement with VIEs primarily affects our financial performance and cash flows through amounts recorded in interest income, interest expense, provision for loan losses and through activity associated with our derivative instruments.

Consolidated VIEs. We have determined that our operating partnership, ARLP, and our CLO and Debt Fund entities, which we consolidate, are VIEs. ARLP is already consolidated in our financial statements, therefore, the identification of this entity as a VIE had no impact on our consolidated financial statements.

Our CLO and Debt Fund consolidated entities invest in real estate and real estate-related securities and are financed by the issuance of debt securities. We, or one of our affiliates, are named collateral manager, servicer, and special servicer for all collateral assets held in CLOs, which we believe gives us the power to direct the most significant economic activities of those entities. We also have exposure to losses to the extent of our equity interests and also have rights to waterfall payments in excess of required payments to bond investors. As a result of consolidation, equity interests have been eliminated, and the consolidated balance sheets reflect both the assets held and debt issued by the CLOs and Debt Fund to third parties. Our operating results and cash flows include the gross amounts related to CLO and Debt Fund assets and liabilities as opposed to our net economic interests in those entities.

The assets and liabilities related to these consolidated CLOs and Debt Fund are as follows (in thousands):

	March 31, 2018		December 31, 2017

Assets:
Restricted cash	$	130,656	$	138,736
Loans and investments, net	1,838,860		1,836,744
Other assets	15,211		14,011

Total assets	$	1,984,727	$	1,989,491


Liabilities:
Collateralized loan obligations	$	1,419,838	$	1,418,422
Debt fund	68,176		68,084
Other liabilities	3,187		2,046

Total liabilities	$	1,491,201	$	1,488,552

Assets held by the CLOs and Debt Fund are restricted and can only be used to settle obligations of the CLOs and Debt Fund, respectively. The liabilities of the CLOs and Debt Fund are non-recourse to us and can only be satisfied from each respective asset pool. See Note 10—Debt Obligations for details. We are not obligated to provide, have not provided, and do not intend to provide financial support to any of the consolidated CLOs or Debt Fund.

Unconsolidated VIEs. We determined that we are not the primary beneficiary of 22 VIEs in which we have a variable interest as of March 31, 2018 because we do not have the ability to direct the activities of the VIEs that most significantly impact each entity’s economic performance.

The following is a summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of March 31, 2018 (in thousands):

Type	Carrying Amount (1)
Loans	$	355,086
B Piece bonds	36,764
Agency interest only strips	3,862
Equity investments	2,168

Total	$	397,880

(1) Represents the carrying amount of loans and investments before reserves. At March 31, 2018, $162.2 million of loans to VIEs had corresponding loan loss reserves of $61.4 million. See Note 3 — Loans and Investments for details. In addition, the maximum loss exposure as of March 31, 2018 would not exceed the carrying amount of our investment.

These unconsolidated VIEs have exposure to real estate debt of approximately $2.64 billion at March 31, 2018.