7. Borrowings

The following table presents borrowings as of March 31, 2013 and December 31, 2012 (dollars in thousands):

				March 31, 2013				December 31, 2012

	Type	Final Maturity	Contractual Interest Rate(1)	Principal Amount		Carrying Value		Principal Amount		Carrying Value
*Securitization bonds payable*
Securitization 2012-1	Non-recourse	Aug-29	1.87%	$	124,659	$	124,559	$	124,659	$	124,491

Subtotal securitization bonds payable					124,659		124,559		124,659		124,491
*Credit facilities*
Loan Facility 1	Partial Recourse(2)	Feb-16(3)	2.95%(4)		32,836		32,836		32,836		32,836
Loan Facility 2	Partial Recourse(5)	Jul-17(6)	3.45%(7)		100,000		100,000		54,950		54,950
Loan Facility 3	Non-recourse	Jul-18(8)	4.91%(9)		35,850		35,850		26,850		26,850
Loan Facility 4	Partial Recourse(10)	(11)	(12)		—		—		—		—
CMBS Facilities	Recourse	(13)	1.57%		11,685		11,685		11,685		11,685

Subtotal credit facilities					180,371		180,371		126,321		126,321

Grand Total				$	305,030	$	304,930	$	250,980	$	250,812

(1): Represents the weighted average as of March 31, 2013.
(2): Recourse solely with respect to 25% of "core" assets and 100% of "flex" assets, which may only represent 25% of the total credit facility, as such terms are defined in the governing documents.

(3): The initial maturity date is February 28, 2014, with two, one-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the agreement.
(4): The contractual interest rate depends upon asset type, subject to adjustment, and ranges from one-month LIBOR plus 2.5% to 3.0%. The Company has also incurred an immaterial amount of non-utilization fees.
(5): Recourse solely with respect to 25% of the repurchase price for purchased assets with a debt yield equal to or greater than 10% at the time of financing plus 100% of the repurchase price for purchased assets with a debt yield less than 10% at the time of financing.
(6): The initial maturity date is July 18, 2014, with three, one-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the agreement.
(7): The contractual interest rate depends upon asset type and characteristic and ranges from one-month LIBOR plus 2.0% to 4.0%.
(8): The initial maturity date is July 30, 2015, with three, one-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the agreement.
(9): The contractual interest rate depends upon asset type and characteristic and ranges from one-month LIBOR plus 3.95% to 5.95%.
(10): Recourse solely with respect to the greater of: (i) 25% of the financed amount of stabilized loans plus the financed amount of transitional loans; or (ii) the lesser of $25.0 million or the aggregate financed amount of all loans.
(11): The initial maturity date is March 11, 2014, with four, one-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the agreement.
(12): The contractual interest rate depends upon asset type and characteristics and ranges from one-month LIBOR plus 2.5% to 3.0%.
(13): The maturity dates on the CMBS Facilities is dependent upon asset type and will typically range from two to three months.

Scheduled principal on borrowings, based on final maturity, is as follows as of March 31, 2013 (dollars in thousands):

	Total		Securitization Bonds Payable		Credit Facilities

April 1 - December 31, 2013	$	11,685	$	—	$	11,685
Years Ending December 31:
2014		—		—		—
2015		—		—		—
2016		32,836		—		32,836
2017		100,000		—		100,000
Thereafter		160,509		124,659		35,850

Total	$	305,030	$	124,659	$	180,371

Securitization Financing Transaction

In November 2012, the Company entered into a $351.4 million securitization financing transaction ("Securitization Financing Transaction") collateralized by CRE debt investments originated by the Company and the Sponsor. The Company contributed nine CRE debt investments with a $199.2 million aggregate principal amount and retained an equity interest of $70.0 million. A total of $227.5 million of securitization bonds were issued, of which $129.5 million financed the CRE debt investments contributed by the Company, representing an advance rate of 65% and a weighted average coupon of LIBOR plus 1.63%. The Company expects to generate an approximate 15% return on invested equity, including fees and estimated transaction expenses. There is no assurance the Company will realize this expected return on its retained equity interest over the term of these investments. The Company's actual return on retained equity could vary significantly from its expectations. The Company used the proceeds to repay $117.7 million of borrowings on three of its term loan facilities.

The retained equity interests of the Company and the Sponsor are held by a general partnership and both the Company and the Sponsor are the general partners ("Financing JV"). Both the Securitization Financing Transaction and the Financing JV are not VIEs and are considered voting interest entities due to shared power of the activities that most significantly impact the performance of the respective entities and therefore, the entities were not consolidated by the Company. The transferred debt investments failed sale treatment under U.S. GAAP as the Company maintains effective control of its contributed assets. The Company, therefore, continues to record its respective CRE debt investments transferred to the Securitization Financing Transaction and reflects its respective securitization bonds payable on its consolidated balance sheets.

Term Loan Facilities

In February 2012, an indirect wholly-owned subsidiary of the Company entered into a master repurchase and securities contract ("Loan Facility 1") of $100.0 million to finance the origination of first mortgage loans secured by commercial real estate. In connection with Loan Facility 1, the Company entered into a guaranty agreement, under which the Company guarantees certain obligations under Loan Facility 1. Additionally, the OP provided a pledge and security agreement over its interests in the borrowing subsidiary of the Company. Loan Facility 1 and related agreements contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. The Company has agreed to guarantee certain customary obligations under Loan Facility 1 if the Company or an affiliate of the Company engage in certain customary bad acts. Loan Facility 1 contains a liquidity covenant that requires the borrowing subsidiary of the Company to maintain at least $5.0 million and a maximum of $15.0 million in unrestricted cash or cash equivalents at all times during the term of Loan Facility 1. In addition, Loan Facility 1 requires the maintenance of a loan-to-collateral value ratio that may require the Company to provide additional collateral or make cash payments. As of March 31, 2013, the Company was not required to post additional collateral or make cash payments to maintain such ratio.

In July 2012, an indirect wholly-owned subsidiary of the Company entered into a master repurchase agreement ("Loan Facility 2") of $50.0 million to finance first mortgage loans and senior loan participations secured by commercial real estate. In November 2012, Loan Facility 2 was increased to $100.0 million. In connection with Loan Facility 2, the Company agreed to guarantee certain obligations of Loan Facility 2 if the Company or an affiliate of the Company engage in certain customary bad acts. Loan Facility 2, and its related agreements, contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. More specifically, the borrowing subsidiary of the Company must maintain at least $3.8 million and a maximum of $15.0 million in unrestricted cash at all times during the term of Loan Facility 2.

In July 2012, an indirect wholly-owned subsidiary of the Company entered into a credit and security agreement ("Loan Facility 3") of $40.0 million on a non-recourse basis, subject to certain exceptions, to finance first mortgage loans and senior loan participations secured by commercial real estate. In connection with Loan Facility 3, the OP agreed to guarantee interest payments and the customary obligations under Loan Facility 3 if the Company or an affiliate of the Company engage in certain customary bad acts. In addition, the OP pledged its interests in the borrowing subsidiary as collateral. Loan Facility 3 and related agreements contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. More specifically, the OP must maintain at least $3.8 million and as much as $7.5 million in unrestricted cash or other eligible investments, at all times during the term of Loan Facility 3.

In March 2013, an indirect wholly-owned subsidiary of the Company entered into a master repurchase agreement ("Loan Facility 4") of $200.0 million to finance first mortgage loans and senior interests secured by commercial real estate. Loan Facility 4 has an initial maturity of March 2014 with four one-year extensions. In connection with Loan Facility 4, the Company and the OP entered into a guaranty agreement, under which the Company and the OP guaranty certain of the obligations under Loan Facility 4. Loan Facility 4 is recourse solely with respect to certain types of loans as defined in the governing documents. Loan Facility 4, and related agreements, contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. More specifically, the Company must maintain at least $20.0 million in unrestricted cash or cash equivalents at all times during the term of Loan Facility 4. In addition, the Company has agreed to guarantee certain customary obligations under Loan Facility 4 if the Company or an affiliate of the Company engage in certain customary bad acts. As of March 31, 2013, the Company had no borrowings on Loan Facility 4.

As of March 31, 2013, the Company had $304.1 million principal amount of CRE debt investments, financed with $168.7 million under three secured term loan facilities ("Term Loan Facilities").

During the initial term, all of the Term Loan Facilities act as revolving credit facilities that can be paid down as assets payoff and re-drawn upon for new investments. As of March 31, 2013, the Company was in compliance with all of its financial covenants.

CMBS Facilities

In September 2012, the Company entered into two master repurchase agreements ("CMBS Facilities") to finance CMBS investments. The CMBS Facilities contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of this type. As of March 31, 2013, the Company had $16.6 million principal amount of CRE securities, financed with $11.7 million under its CMBS Facilities.