3. LOANS HELD FOR INVESTMENT

As of March 31, 2013, the Company has originated or co-originated 17 loans secured by CRE middle market properties. The aggregate originated commitment under these loans at closing was approximately $470.2 million, of which $413.0 million in total principal remained outstanding as of March 31, 2013. During the three months ended March 31, 2013, the Company funded approximately $56.3 million and received repayments of $56 thousand on its net $470.2 million of commitments at closing as described in more detail in the tables below. Such investments are referred to herein as the Company’s investment portfolio. References to LIBOR are to 30-day LIBOR (unless otherwise specifically stated).

The following table presents an overview of the Company’s current investment portfolio, based on information available as of March 31, 2013.

(amounts in millions, except percentages)

Loan Type	Location	Total Commitment (at closing)			Outstanding Principal (1)			Carrying Amount (1)			Interest Rate		LIBOR Floor	Unleveraged Effective Yield (2)	Maturity Date (3)	Payment Terms (4)

Transitional Senior Mortgage Loans

Apartment	Brandon, FL	$	49.6		$	44.2		$	43.8		L+4.80%		0.5%	5.9%	Jan 2016	I/O

Office	Austin, TX	38.0			31.4			31.1			L+5.75%-L+5.25%	(5)	1.0%	7.6%	Mar 2015	I/O

Apartment	New York, NY	36.1			32.2			31.9			L+5.00%		0.8%	6.3%	Oct 2017	I/O

Office	Cincinnati, OH	35.5			27.0			26.9			L+5.35%- L+5.00%	(6)	0.3%	6.1%	Nov 2015	I/O

Apartment	New York, NY	26.3			23.0			22.8			L+5.75%-L+5.00%	(7)	0.2%	6.7%	Dec 2015	I/O

Office	Overland Park, KS	25.5			24.4			24.1			L+5.00%		0.3%	5.9%	Mar 2016	I/O

Apartment	Avondale, AZ	22.1			20.7			20.6			L+4.25%		1.0%	5.8%	Sep 2015	I/O

Apartment	New York, NY	21.9			18.7			18.6			L+5.75%-L+5.00%	(7)	0.2%	6.7%	Dec 2015	I/O

Apartment	New York, NY	21.8			18.8			18.7			L+5.75%-L+5.00%	(7)	0.2%	6.7%	Dec 2015	I/O

Office	Denver, CO	11.0			9.7			9.6			L+5.50%		1.0%	7.3%	Jan 2015	I/O

Stretch Senior Mortgage Loans

Office	Miami, FL	47.0			47.0		(8)	46.9		(9)	L+5.25%		1.0%	6.6%	Apr 2014	I/O

Office	Boston, MA	35.0			34.8			34.5			L+5.65%		0.7%	6.8%	Mar 2015	P&I

Apartment	Arlington, VA	13.4			13.4			13.3			L+5.15%		0.3%	6.2%	Dec 2014	I/O

Subordinated Debt Investments

Apartment	Atlanta, GA	39.0			26.7			26.5			L+10.70%	(10)	0.5%	12.1%	Apr 2016	I/O

Apartment	Rocklin, CA	18.7			18.7		(11)	18.5			L+6.40%	(11)	1.0%	9.9%	Dec 2013	I/O

Office	Fort Lauderdale, FL	15.0		(12)	8.0			7.9			L+10.75%-L+8.18%	(12)	0.8%	12.7%	Feb 2015	I/O

Office	Atlanta, GA	14.3			14.3			14.2			10.50%	(13)	—	11.0%	Aug 2017	I/O



Total/Average		$	470.2		$	413.0		$	409.9					7.0%

(1) The difference between the carrying amount and the outstanding principal face amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults.

(3) The Boston, Arlington and Miami loans are subject to one 12-month extension option. The Atlanta loan with a Maturity Date of April 2016, Austin, Avondale, Brandon, Cincinnati, New York loans with a Maturity Date of December 2015 and Fort Lauderdale loans are subject to two 12-month extension options. The Rocklin loan is subject to one 6-month extension option. Certain extension options may be subject to performance based or other conditions as stipulated in the loan agreement.

(4) P&I = principal and interest; I/O = interest only.

(5) The initial interest rate for this loan of L+5.75% steps down based on performance hurdles to L+5.25%.

(6) The initial interest rate for this loan of L+5.35% steps down based on performance hurdles to L+5.00%.

(7) The initial interest rate for this loan of L+5.75% steps down based on performance hurdles to L+5.00%.

(8) On March 8, 2013, the Company entered into a loan assumption transaction with a new sponsor group to facilitate the purchase of a Class B office building in Miami, FL that was collateralized by the Company’s existing $47.0 million first mortgage loan.

(9) The Carrying Amount of this loan is above 10%, but less than 20%, of total assets of the Company.

(10) This loan was co-originated with a third party using an A/B structure, with a cumulative interest rate of L + 4.95% and a LIBOR Floor of 0.50%. The A-Note (held by a third party) has an interest rate of L + 2.70% with no LIBOR Floor and the Company’s B-Note receives the full benefit of the LIBOR Floor on the full combined balance of the A-Note and B-Note. At the initial respective funded amounts of the A-Note and B-Note (as of March 31, 2013), the interest rate on the Company’s B-Note is L + 10.70% subject to a 0.50% LIBOR floor (with the benefit of any difference between actual LIBOR and the LIBOR floor on the A-Note and B-Note accruing to the B-Note). Accordingly, the interest rate on the Company’s B-Note would be 12.50% if LIBOR is equal to 0.0% and L + 10.70% if LIBOR is equal to or greater than 0.50%. As the Company funds additional proceeds on the loan under the B-Note up to the full $39 million level, the interest rate will decrease and the B-Note will have an interest rate of L +8.90% subject to a 0.50% LIBOR floor (with the benefit of any difference between actual LIBOR and the LIBOR floor on the A-Note and B-Note accruing to the B-Note). Accordingly, the interest rate on the Company’s fully funded loan under the B-Note would be 10.30% if LIBOR is equal to 0.0% and L + 8.90% if LIBOR is equal to or greater than 0.50%.

(11) This loan was co-originated with a third party using an A/B structure, with a cumulative interest rate of L + 4.10% and a LIBOR Floor of 1.00%. The fully funded A-Note (held by a third party) has an interest rate of L + 2.75% with no LIBOR Floor and the Company’s B-Note receives the full benefit of the LIBOR Floor on the full $50.5 million balance of the loan. The interest rate on the Company’s B-Note is L + 6.40% subject to a 1.00% LIBOR floor (with the benefit of any difference between actual LIBOR and the LIBOR floor on the A-Note and B-Note accruing to the B-Note). Accordingly, the interest rate on the Company’s B-Note would be 9.10% if LIBOR is equal to 0.0% and L + 6.40% if LIBOR is equal to or greater than 1.00%.

(12) The total commitment the Company co-originated was a $37.0 million first mortgage, of which a $22.0 million A-Note was fully funded by Citibank, N.A., with a cumulative interest rate of L + 5.25% and a LIBOR floor of 0.75%. The Company committed to a $15.0 million B-Note. The fully funded A-Note (held by a third party) has an interest rate of L + 3.25% with the LIBOR Floor, resulting in an initial interest rate on the Company’s B-Note of L + 10.75% with the LIBOR Floor. As the Company funds additional proceeds on the B-Note, the interest rate will decrease and the fully committed B-Note ($15.0 million) will have an interest rate of LIBOR + 8.18% with the LIBOR Floor.

(13) The interest rate for this loan increases to 11.0% on September 1, 2014.

The Company’s investments in mortgages and loans held for investment are accounted for at amortized cost. The following tables summarize our loans held for investment as of March 31, 2013:

	March 31, 2013
$ in thousands	Carrying Amount		Outstanding Principal		Weighted Average Interest Rate	Weighted Average Unleveraged Effective Yield	Weighted Average Remaining Life (Years)
Senior mortgage loans	$	342,766	$	345,343	5.9%	6.5%	2.6
Subordinated and mezzanine loans	67,177		67,650		8.3%	10.9%	2.5
Total	$	409,943	$	412,993	6.3%	7.0%	2.6

For the three months ended March 31, 2013, the activity in our loan portfolio was as follows ($ in thousands):

Balance at December 31, 2012	$	353,500
Initial funding	50,999
Receipt of origination fee, net of costs	(539)
Additional funding	5,300
Amortizing payments	(56)
Origination fee accretion	739
Balance at March 31, 2013	$	409,943

No impairment charges have been recognized as of March 31, 2013 or as of December 31, 2012.