Investment in Unconsolidated Entities

9 Months Ended

Sep. 30, 2013

Investment in Unconsolidated Entities

Investment in Unconsolidated Entities

8. Investment in Unconsolidated Entities

In connection with our acquisition of LNR, we acquired a 50% interest in a joint venture which holds an investment in a privately-held commercial real estate services provider. We account for our interest in the joint venture under the equity method of accounting.  The investment is reflected at a balance of $55.8 million as of September 30, 2013.

In connection with our acquisition of LNR, we acquired a 50% interest in a venture which holds investments in real estate, real estate-related income-bearing debt instruments and other forms of real estate related income bearing securities consisting of, but not limited to CMBS, B-notes, mezzanine debt and distressed debt products across Europe. The investment, which is accounted for under the equity method, is reflected at a balance of $23.8 million as of September 30, 2013.

In connection with our acquisition of LNR, we acquired a 50% interest in a venture which originates small balance real estate loans to commercial customers.  The investment, which is accounted for under the equity method, is reflected at a balance of $21.1 million as of September 30, 2013.

In June 2011, we acquired a non-controlling 49% interest in a privately-held limited liability company (“LLC”) for $25.5 million, which is accounted for under the equity method. In December 2011 we sold 20% of this investment for an amount that approximated our carrying amount. The LLC owns a mezzanine loan participation, and our share of earnings for the three and nine months ended September 30, 2013 was $0.7 million and $2.2 million, respectively, which is included in earnings from unconsolidated entities in our condensed consolidated statements of operations. Our share of earnings for the three and nine months ended September 30, 2012 was $0.6 million and $1.7 million, respectively. As of September 30, 2013 and December 31, 2012, our carrying value was $24.0 million and $24.3 million, respectively.

Prior to 2011, we had committed $9.7 million to acquire at least a 5% interest in a privately-held limited liability company formed to acquire assets of a commercial real estate debt management and servicing business primarily for the opportunity to participate in debt opportunities arising from the venture’s special servicing business (the “Participation Right”). As of September 30, 2013, we had funded $8.0 million of our commitment. As of both September 30, 2013, and December 31, 2012, the cost basis was $8.0 million, and we recognized $0.2 million and $1.3 million of income from distributions during the three and nine months ended September 30, 2013, respectively, related to this investment, which is included in earnings from unconsolidated entities in our condensed consolidated statements of operations. We recognized $0.2 million and $1.0 million income from distributions during the three and nine months ended September 30, 2012, respectively, related to this investment.