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MORTGAGE LOAN RECEIVABLES
 12 Months Ended
Dec. 31, 2015
Mortgage Loans on Real Estate [Abstract]  
MORTGAGE LOAN RECEIVABLES
3. MORTGAGE LOAN RECEIVABLES
 
December 31, 2015 ($ in thousands)
 
 
Outstanding
Face Amount
 
Carrying
Value
 
Weighted
Average
Yield (1)
 
Remaining
Maturity
(years)
 
 
 
 
 
 
 
 
Mortgage loan receivables held for investment, at amortized cost
$
1,749,556

 
$
1,742,345

 
7.56
%
 
1.38
Provision for loan losses
N/A

 
(3,700
)
 
 
 
 
Total mortgage loan receivables held for investment, at amortized cost
1,749,556

 
1,738,645

 
 
 
 
Mortgage loan receivables held for sale
571,638

 
571,764

 
4.56
%
 
6.20
Total
$
2,321,194

 
$
2,310,409

 
 

 
 
 
(1)         December 31, 2015 London Interbank Offered Rate (“LIBOR”) rates are used to calculate weighted average yield for floating rate loans.

As of December 31, 2015, $343.2 million, or 19.7%, of the carrying value of our mortgage loan receivables held for investment, at amortized cost, were at fixed interest rates and $1.4 billion, or 80.3%, of the carrying value of our mortgage loan receivables held for investment, at amortized cost, were at variable interest rates, linked to LIBOR, some of which include interest rate floors. As of December 31, 2015, $571.8 million, or 100.0%, of the carrying value of our mortgage loan receivables held for sale, were at fixed interest rates.
 
December 31, 2014 ($ in thousands)
 
 
Outstanding
Face Amount
 
Carrying
Value
 
Weighted
Average
Yield (1)
 
Remaining
Maturity
(years)
 
 
 
 
 
 
 
 
Mortgage loan receivables held for investment, at amortized cost
$
1,536,923

 
$
1,524,153

 
7.33
%
 
1.96
Provision for loan losses
N/A

 
(3,100
)
 
 
 
 
Total mortgage loan receivables held for investment, at amortized cost
1,536,923

 
1,521,053

 
 
 
 
Mortgage loan receivables held for sale
417,955

 
417,955

 
4.31
%
 
9.72
Total
1,954,878

 
1,939,008

 
 

 
 
 
(1)         December 31, 2014 LIBOR rates are used to calculate weighted average yield for floating rate loans.
 
As of December 31, 2014, $231.9 million, or 15.2%, of the carrying value of our mortgage loan receivables held for investment, at amortized cost, were at fixed interest rates and $1.3 billion, or 84.8%, of the carrying value of our mortgage loan receivables held for investment, at amortized cost, were at variable interest rates, linked to LIBOR, some of which include interest rate floors. As of December 31, 2014, $418.0 million, or 100%, of the carrying value of our mortgage loan receivables held for sale, were at fixed interest rates.

The following table summarizes mortgage loan receivables by loan type ($ in thousands):
 
 
December 31, 2015
 
December 31, 2014
 
Outstanding
Face Amount
 
Carrying
Value
 
Outstanding
Face Amount
 
Carrying
Value
 
 
 
 
 
 
 
 
Mortgage loan receivables held for sale
 

 
 

 
 

 
 

First mortgage loans
$
571,638

 
$
571,764

 
$
417,955

 
$
417,955

Total mortgage loan receivables held for sale
571,638

 
571,764

 
417,955

 
417,955

Mortgage loan receivables held for investment, at amortized cost
 

 
 

 
 

 
 

First mortgage loans
1,462,228

 
1,456,212

 
1,373,476

 
1,361,754

Mezzanine loans
287,328

 
286,133

 
163,447

 
162,399

Total mortgage loan receivables held for investment, at amortized cost
1,749,556

 
1,742,345

 
1,536,923

 
1,524,153

 
 
 
 
 
 
 
 
Provision for loan losses
N/A

 
(3,700
)
 
N/A

 
(3,100
)
Total
$
2,321,194

 
$
2,310,409

 
$
1,954,878

 
$
1,939,008


 
For the years ended December 31, 2015, 2014 and 2013, the activity in our loan portfolio was as follows ($ in thousands):

 
Mortgage loan
receivables held
for investment, at
amortized cost
 
Mortgage loan 
receivables held
for sale
 
 
 
 
Balance, December 31, 2014
$
1,521,053

 
$
417,955

Origination of mortgage loan receivables
963,023

 
2,594,141

Repayment of mortgage loan receivables
(752,452
)
 
(2,308
)
Proceeds from sales of mortgage loan receivables
—

 
(2,509,090
)
Non-cash disposition of loans
(4,620
)
 
—

Realized gain on sale of mortgage loan receivables
—

 
71,066

Accretion/amortization of discount, premium and other fees
12,241

 
—

Loan loss provision
(600
)
 
—

Balance, December 31, 2015
$
1,738,645

 
$
571,764


 
Mortgage loan
receivables held
for investment, at
amortized cost
 
Mortgage loan
receivables held
for sale
 
 
 
 
Balance, December 31, 2013
$
539,078

 
$
440,490

Origination of mortgage loan receivables
1,201,968

 
3,345,372

Repayment of mortgage loan receivables
(214,511
)
 
(1,293
)
Proceeds from sales of mortgage loan receivables
—

 
(3,523,689
)
Realized gain on sale of mortgage loan receivables
—

 
145,275

Transfer between held for investment and held for sale
(11,800
)
 
11,800

Accretion/amortization of discount, premium and other fees
6,918

 
—

Loan loss provision
(600
)
 
—

Balance, December 31, 2014
$
1,521,053

 
$
417,955


 
Mortgage loan
receivables held
for investment, at
amortized cost
 
Mortgage loan
receivables held
for sale
 
 
 
 
Balance, December 31, 2012
$
326,318

 
$
623,333

Origination of mortgage loan receivables
486,072

 
2,013,674

Repayment of mortgage loan receivables
(268,093
)
 
(5,840
)
Proceeds from sales of mortgage loan receivables
—

 
(2,345,705
)
Realized gain on sale of mortgage loan receivables
—

 
146,708

Transfer between held for investment and held for sale
(8,320
)
 
8,320

Accretion/amortization of discount, premium and other fees
3,701

 
—

Loan loss provision
(600
)
 
—

Balance, December 31, 2013
$
539,078

 
$
440,490



During the years ended December 31, 2015 and 2014, the transfers of financial assets via sales of loans have been treated as sales under ASC Topic 860 — Transfers and Servicing. During the year ended December 31, 2013, transfers of financial assets via sales of loans have been treated as sales by us under ASC 860 with the exception of one asset with a book value of $1.0 million in which the Company retains effective control that would preclude sales accounting. The transfer is considered to be a secured borrowing in which the asset remains on the Company’s combined consolidated balance sheets in mortgage loan receivables held for investment at amortized cost and the sale proceeds are recognized in other liabilities and held as secured borrowings.

At December 31, 2015 and 2014, there was $0.7 million and $4.2 million, respectively, of unamortized discounts included in our mortgage loan receivables held for investment, at amortized cost on our combined consolidated balance sheets. 

The Company evaluates each of its loans for potential losses at least quarterly. Its loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, as well as the financial and operating capability of the borrower. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property’s liquidation value.  The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management personnel, who utilize various data sources, including (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers’ business plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and other market data. As a result of this analysis, the Company has concluded that none of its loans are individually impaired as of December 31, 2015 and 2014.

However, based on the inherent risks shared among the loans as a group, it is probable that the loans had incurred an impairment due to common characteristics and inherent risks in the portfolio. Therefore, the Company has recorded a reserve, based on a targeted percentage level which it seeks to maintain over the life of the portfolio, as disclosed in the tables below. Historically, the Company has not incurred losses on any originated loans.

At December 31, 2015 there were no loans on non-accrual status. At December 31, 2014, there was one loan on non-accrual status with an amortized cost of $5.5 million and an unamortized discount of $2.6 million included in our mortgage loan receivables held for investment, at amortized cost on our combined consolidated balance sheets. This loan was not originated by the Company. Instead, it was credit impaired at the time of acquisition, which was reflected in Ladder’s purchase price. During the year ended December 31, 2015, the Company acquired, via foreclosure, title to real estate, which had a total fair value of $6.7 million and previously served as collateral for the mortgage loan receivable discussed above. The acquisition was accounted for in real estate, net, at fair value on the date of foreclosure. A gain of $0.8 million on disposition of loan, representing the difference between the fair value of the property and the $5.9 million carrying value of the loan on the date of foreclosure, is included in fee and other income in the Company’s combined consolidated statement of income for the year ended December 31, 2015.
 
Provision for Loan Losses ($ in thousands)
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
 
 
 
 
 
Provision for loan losses at beginning of period
$
3,100

 
$
2,500

 
$
1,900

Provision for loan losses
600

 
600

 
600

Provision for loan losses at end of period
$
3,700

 
$
3,100

 
$
2,500