Loans (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of investments in mortgages and loans by subordination class

The following tables summarize our investments in mortgages and loans by subordination class as of June 30, 2014 and December 31, 2013 (amounts in thousands):

	Carrying Value			Face Amount		Weighted Average Coupon		Weighted Average Life (“WAL”) (years)(2)
June 30, 2014
First mortgages	$	3,259,428		$	3,317,358	5.4	%	3.9
Subordinated mortgages(1)	355,561			388,449		8.6	%	4.1
Mezzanine loans	1,275,207			1,281,518		10.6	%	3.3
Total loans held-for-investment	4,890,196			4,987,325
Loans held-for-sale, fair value option elected	154,412			153,724		4.7	%	9.8
Loans transferred as secured borrowings	142,867			142,883		5.5	%	2.8
Total gross loans	5,187,475			5,283,932
Loan loss allowance (loans held-for-investment)	(4,342		)	—
Total net loans	$	5,183,133		$	5,283,932

December 31, 2013
First mortgages	$	2,714,512		$	2,766,217	5.5	%	4.3
Subordinated mortgages(1)	407,462			442,475		9.7	%	4.2
Mezzanine loans	1,245,728			1,246,841		11.7	%	3.5
Total loans held-for-investment	4,367,702			4,455,533
Loans held-for-sale, fair value option elected	206,672			209,099		5.3	%	9.6
Loans transferred as secured borrowings	180,414			180,483		5.4	%	2.9
Total gross loans	4,754,788			4,845,115
Loan loss allowance (loans held-for-investment)	(3,984		)	—
Total net loans	$	4,750,804		$	4,845,115

(1) Subordinated mortgages include B-notes and junior participations in first mortgages where we do not own the senior A-note or senior participation. If we own both the A-note and B-note we categorize the loan as a first mortgage loan.

(2) Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated as a fraction, the numerator of which is the sum of the timing (in years) of each expected future principal payment multiplied by the balance of the respective payment, and with a denominator equal to the sum of the expected principal payments using the contractually extended maturity dates of the assets. Assumptions for the calculation of the WAL are adjusted as necessary for changes in projected principal repayments and/or maturity dates of the loan.

Schedule of investments in floating rate loans

As of June 30, 2014, approximately $3.9 billion, or 74.8%, of the loans were variable rate and paid interest principally at LIBOR plus a weighted-average spread of 5.65%. The following table summarizes our investments in floating rate loans (amounts in thousands):

	June 30, 2014			December 31, 2013
Index	Base Rate	Carrying Value		Base Rate	Carrying Value
1 Month LIBOR	0.1552%	$	137,092	0.1677%	$	150,076
3 Month LIBOR	0.5525%	406,392		0.5253%	392,950
LIBOR Floor	0.15% - 3.00%(1)	3,333,849		0.19% - 3.00%(1)	2,688,308
Total		$	3,877,333		$	3,231,334

(1) The weighted-average LIBOR Floor was 0.36% and 0.49% as of June 30, 2014 and December 31, 2013, respectively.

Schedule of risk ratings by class of loan

As of June 30, 2014, the risk ratings for loans subject to our rating system, which are described in our Form 10-K and excludes loans on the cost recovery method and loans for which the fair value option has been elected, by class of loan were as follows (amounts in thousands):

	Balance Sheet Classification
	Loans Held-For-Investment										Loans
Risk Rating Category	First Mortgages		Subordinated Mortgages		Mezzanine Loans		Cost Recovery Loans		Loans Held- For-Sale		Transferred As Secured Borrowings		Total
1	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2	101,875		104,821		209,690		—		—		12,971		429,357
3	3,010,516		218,685		950,268		—		—		129,896		4,309,365
4	142,166		32,055		115,249		—		—		—		289,470
5	—		—		—		—		—		—		—
N/A	455		—		—		4,416		154,412		—		159,283
	$	3,255,012	$	355,561	$	1,275,207	$	4,416	$	154,412	$	142,867	$	5,187,475

As of December 31, 2013, the risk ratings for loans subject to our rating system by class of loan were as follows (amounts in thousands):

	Balance Sheet Classification
	Loans Held-For-Investment										Loans
Risk Rating Category	First Mortgages		Subordinated Mortgages		Mezzanine Loans		Cost Recovery Loans		Loans Held- For-Sale		Transferred As Secured Borrowings		Total
1	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2	94,981		103,369		153,119		—		—		13,022		364,491
3	2,452,763		272,375		1,012,674		—		—		167,392		3,905,204
4	153,987		31,718		79,935		—		—		—		265,640
5	—		—		—		—		—		—		—
N/A	—		—		—		12,781		206,672		—		219,453
	$	2,701,731	$	407,462	$	1,245,728	$	12,781	$	206,672	$	180,414	$	4,754,788

Schedule of activity in allowance for loan losses

The following table presents the activity in our allowance for loan losses (amounts in thousands):

	For the Six Months Ended June 30,
	2014			2013
Allowance for loan losses at January 1	$	3,984		$	2,061
Provision for loan losses	577			755
Charge-offs	—			—
Recoveries	(219		)	—
Allowance for loan losses at June 30	$	4,342		$	2,816
Recorded investment in loans related to the allowance for loan loss	$	289,470		$	160,893

Schedule of activity in loan portfolio

The activity in our loan portfolio was as follows (amounts in thousands):

	For the Six Months Ended June 30,
	2014			2013
Balance at January 1	$	4,750,804		$	3,000,335
Acquisitions/originations/additional funding	1,860,026			1,308,602
Capitalized interest(1)	19,022			5,279
Basis of loans sold(2)	(868,804		)	(573,825		)
Loan maturities/principal repayments	(633,425		)	(140,596		)
Discount accretion/premium amortization	10,147			14,243
Changes in fair value	32,501			458
Unrealized foreign currency remeasurement gain (loss)	16,462			(4,572		)
Capitalized costs written off	—			(1,517		)
Loan loss allowance, net	(358		)	(755		)
Transfer to other assets	(3,242		)	—
Balance at June 30	$	5,183,133		$	3,607,652

(1) Represents accrued interest income on loans whose terms do not require current payment of interest.

(2) See Note 10 for additional disclosure on these transactions.