3. Acquisitions

Woodstar Portfolio Acquisition

During the three months ended June 30, 2016, we acquired the final two of the 32 affordable housing communities which comprise our “Woodstar Portfolio.” During the three months ended March 31, 2016, we acquired 12 of the Woodstar Portfolio’s affordable housing communities. The Woodstar Portfolio in its entirety is comprised of 8,948 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas and is 98% occupied.

The two affordable housing communities acquired during the three months ended June 30, 2016 are comprised of 628 units with total assets of $48.9 million and assumed liabilities of $22.1 million, which includes state sponsored financing and other assumed debt. The 14 affordable housing communities acquired during the six months ended June 30, 2016 are comprised of 3,710 units with total assets of $276.3 million and assumed liabilities of $170.4 million, which includes federal, state and county sponsored financing and other assumed debt. Refer to Note 9 for further discussion of these assumed debt facilities.

For the 14 affordable housing communities acquired during 2016, we recognized revenues of $14.6 million and net income of $5.0 million during the six months ended June 30, 2016. Such net income includes (i) bargain purchase gains of $8.4 million, (ii) depreciation and amortization expense of $9.0 million and (iii) one-time acquisition-related costs, such as legal and due diligence costs, of approximately $0.8 million.

No goodwill was recognized in connection with the Woodstar Portfolio acquisition as the purchase price did not exceed the fair value of the net assets acquired. During the three months ended June 30, 2016, a bargain purchase gain of $8.4 million was recognized within other income, net in our condensed consolidated statements of operations as the fair value of the net assets acquired during the three months ended June 30, 2016 exceeded the purchase price due to favorable changes in net asset fair values occurring between the date the purchase price was negotiated and the closing date.

Investing and Servicing Segment Property Portfolio

During the three and six months ended June 30, 2016, our Investing and Servicing Segment acquired controlling interests in commercial real estate properties as well as a non-performing loan from CMBS trusts for $58.0 million and $87.8 million, respectively. In addition, during the three months ended June 30, 2016, we foreclosed on a non-performing loan that was previously acquired from a CMBS trust for $8.2 million. These properties, aggregated with the controlling interests in 14 U.S. commercial real estate properties acquired from CMBS trusts during the year ended December 31, 2015 for $138.7 million, comprise the Investing and Servicing Segment Property Portfolio (the “REO Portfolio”). When the properties are acquired from CMBS trusts that are consolidated as VIEs on our balance sheet, the acquisitions are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows. No goodwill or bargain purchase gain was recognized in connection with the REO Portfolio acquisitions as the purchase price equaled the fair value of the net assets acquired.

Ireland Portfolio Acquisition

During 2015, we acquired 12 net leased fully occupied office properties and one multi-family property all located in Dublin, Ireland. Collectively, these 13 properties comprise our “Ireland Portfolio”.

The Ireland Portfolio, which collectively is comprised of approximately 600,000 square feet, included total assets of $518.2 million and assumed debt of $283.0 million at acquisition. Following our acquisition, all assumed debt was immediately extinguished and replaced with new financing of $328.6 million from the Ireland Portfolio Mortgage (as set forth in Note 9). All properties within the Ireland Portfolio were acquired from entities controlled by the same third party investment fund. No goodwill or bargain purchase gain was recognized in connection with the Ireland Portfolio acquisition as the purchase price equaled the fair value of the net assets acquired.

Purchase Price Allocations of Acquisitions

We applied the provisions of ASC 805, Business Combinations, in accounting for our acquisitions of the Woodstar Portfolio, the REO Portfolio and the Ireland Portfolio. In doing so, we have recorded all identifiable assets acquired and liabilities assumed at fair value as of the respective acquisition dates. These amounts for the Woodstar Portfolio and certain properties within the REO Portfolio are provisional and may be adjusted during the measurement period, which expires no later than one year from the acquisition dates, if new information is obtained that, if known, would have affected the amounts recognized as of the acquisition dates.

The following table summarizes the identified assets acquired and liabilities assumed at the respective acquisition dates (amounts in thousands):


	2016				2015
	Woodstar		REO		Woodstar		REO		Ireland
Assets acquired:	Portfolio		Portfolio		Portfolio		Portfolio		Portfolio
Cash and cash equivalents	$	6,254	$	—	$	—	$	—	$	—
Restricted cash		—		—		—		—		10,829
Properties		245,430		68,096		339,040		128,218		445,369
Intangible assets		8,174		25,387		11,337		19,381		59,529
Other assets		16,417		2,858		652		4,973		2,508
Total assets acquired		276,275		96,341		351,029		152,572		518,235
Liabilities assumed:
Accounts payable, accrued expenses and other liabilities		19,666		3,063		18,030		6,998		17,552
Secured financing agreements		150,763		—		8,982		—		283,010
Total liabilities assumed		170,429		3,063		27,012		6,998		300,562
Non-controlling interests		—		5,492		—		6,904		—
Net assets acquired	$	105,846	$	87,786	$	324,017	$	138,670	$	217,673

Pro-Forma Operating Data

The pro-forma revenues and net income attributable to the Company for the three and six months ended June 30, 2016 and 2015, assuming all the properties acquired within the Woodstar Portfolio, REO Portfolio and the Ireland Portfolio were acquired on January 1, 2014 for the 2015 acquisitions and January 1, 2015 for the 2016 acquisitions, are as follows (amounts in thousands, except per share amounts):


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Revenues	$	202,304	$	212,251	$	405,577	$	428,261
Net income attributable to STWD		102,983		115,354		131,819		237,563
Net income per share - Basic		0.43		0.49		0.55		1.03
Net income per share - Diluted		0.43		0.48		0.55		1.02

Pro-forma net income was adjusted to include the following estimated incremental management fees the combined entity would have incurred (amounts in thousands):


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Management fee expense addition	$	175	$	1,966	$	663	$	4,335