Goodwill and Intangibles

6 Months Ended

Jun. 30, 2019

Goodwill and Intangibles

Goodwill and Intangibles

8. Goodwill and Intangibles

Goodwill

Infrastructure Lending Segment

The Infrastructure Lending Segment’s goodwill of $119.4 million at both June 30, 2019 and December 31, 2018 represents the excess of consideration transferred over the fair value of net assets acquired on September 19, 2018 and October 15, 2018. The goodwill recognized is attributable to value embedded in the acquired Infrastructure Lending Segment’s lending platform.

LNR Property LLC (“LNR”)

The Investing and Servicing Segment’s goodwill of $140.4 million at both June 30, 2019 and December 31, 2018 represents the excess of consideration transferred over the fair value of net assets of LNR acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR’s existing platform, which includes a network of commercial real estate asset managers, work-out specialists, underwriters and administrative support professionals as well as proprietary historical performance data on commercial real estate assets.

Intangible Assets

Servicing Rights Intangibles

In connection with the LNR acquisition, we identified domestic servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. At both June 30, 2019 and December 31, 2018, the balance of the domestic servicing intangible was net of $24.1 million, which was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of June 30, 2019 and December 31, 2018, the domestic servicing intangible had a balance of $43.0 million and $44.6 million, respectively, which represents our economic interest in this asset.

Lease Intangibles

In connection with our acquisitions of commercial real estate, we recognized in-place lease intangible assets and favorable lease intangible assets associated with certain non-cancelable operating leases of the acquired properties.

The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of June 30, 2019 and December 31, 2018 (amounts in thousands):

	As of June 30, 2019						As of December 31, 2018
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Value		Amortization		Value		Value		Amortization		Value
Domestic servicing rights, at fair value	$	18,874	$	—	$	18,874	$	20,557	$	—	$	20,557
In-place lease intangible assets		196,644		(111,271)		85,373		198,220		(100,873)		97,347
Favorable lease intangible assets		36,645		(11,415)		25,230		36,895		(9,766)		27,129
Total net intangible assets	$	252,163	$	(122,686)	$	129,477	$	255,672	$	(110,639)	$	145,033

The following table summarizes the activity within intangible assets for the six months ended June 30, 2019 (amounts in thousands):

	Domestic		In-place Lease		Favorable Lease
	Servicing		Intangible		Intangible
	Rights		Assets		Assets		Total
Balance as of January 1, 2019	$	20,557	$	97,347	$	27,129	$	145,033
Amortization		—		(10,680)		(1,728)		(12,408)
Foreign exchange loss		—		(241)		(65)		(306)
Impairment (1)		—		(1,053)		(106)		(1,159)
Changes in fair value due to changes in inputs and assumptions		(1,683)		—		—		(1,683)
Balance as of June 30, 2019	$	18,874	$	85,373	$	25,230	$	129,477

(1) Impairment of intangible lease assets is recognized within other expense in our condensed consolidated statements of operations.

The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands):

2019 (remainder of)	$	10,350
2020		17,004
2021		14,716
2022		12,208
2023		8,976
Thereafter		47,349
Total	$	110,603