SEGMENT REPORTING

6 Months Ended

Jun. 30, 2019

19. SEGMENT REPORTING

The Company has determined that it has three reportable segments based on how the chief operating decision maker reviews and manages the business. These reportable segments include loans, securities, and real estate. The loans segment includes mortgage loan receivables held for investment (balance sheet loans) and mortgage loan receivables held for sale (conduit loans). The securities segment is composed of all of the Company’s activities related to commercial real estate securities, which include investments in CMBS, U.S. Agency Securities, corporate bonds and equity securities. The real estate segment includes net leased properties, office buildings, a student housing portfolio, industrial buildings, a shopping center and condominium units. Corporate/other includes the Company’s investments in joint ventures, other asset management activities and operating expenses.

The Company evaluates performance based on the following financial measures for each segment ($ in thousands):



	Loans			Securities			Real Estate(1)			Corporate/Other(2)				Company Total

Three months ended June 30, 2019
Interest income	$	69,794		$	15,210		$	7		$	311			$	85,322
Interest expense	(14,224		)	(4,130		)	(9,091		)	(24,924		)		(52,369		)
Net interest income (expense)	55,570			11,080			(9,084		)	(24,613		)		32,953
Provision for loan losses	(300		)	—			—			—				(300		)
Net interest income (expense) after provision for loan losses	55,270			11,080			(9,084		)	(24,613		)		32,653

Operating lease income	—			—			27,780			—				27,780
Sale of loans, net	20,264			—			—			—				20,264
Realized gain (loss) on securities	—			4,464			—			—				4,464
Unrealized gain (loss) on equity securities	—			(990		)	—			—				(990		)
Unrealized gain (loss) on Agency interest-only securities	—			11			—			—				11
Realized gain on sale of real estate, net	—			—			(1,124		)	—				(1,124		)
Fee and other income	5,947			333			—			916				7,196
Net result from derivative transactions	(8,518		)	(6,939		)	—			—				(15,457		)
Earnings (loss) from investment in unconsolidated joint ventures	—			—			1,564			—				1,564
Total other income (loss)	17,693			(3,121		)	28,220			916				43,708

Salaries and employee benefits	—			—			—			(14,907		)		(14,907		)
Operating expenses	—			—			—			(6,012		)	(3)	(6,012		)
Real estate operating expenses	—			—			(6,032		)	—				(6,032		)
Fee expense	(1,058		)	(87		)	(38		)	—				(1,183		)
Depreciation and amortization	—			—			(9,910		)	(25		)		(9,935		)
Total costs and expenses	(1,058		)	(87		)	(15,980		)	(20,944		)		(38,069		)

Income Tax (expense) benefit	—			—			—			(2,219		)		(2,219		)
Segment profit (loss)	$	71,905		$	7,872		$	3,156		$	(46,860	)		$	36,073

Total assets as of June 30, 2019	$	3,213,334		$	1,788,415		$	1,042,128		$	362,898			$	6,406,775



	Loans			Securities			Real Estate(1)			Corporate/Other(2)				Company Total

Three months ended June 30, 2018
Interest income	$	76,485		$	8,662		$	5		$	78			$	85,230
Interest expense	(15,488		)	(1,085		)	(8,732		)	(23,112		)		(48,417		)
Net interest income (expense)	60,997			7,577			(8,727		)	(23,034		)		36,813
Provision for loan losses	(300		)	—			—			—				(300		)
Net interest income (expense) after provision for loan losses	60,697			7,577			(8,727		)	(23,034		)		36,513

Operating lease income	—			—			26,171			—				26,171
Sale of loans, net	6,144			—			—			—				6,144
Realized gain (loss) on securities	—			(1,243		)	—			—				(1,243		)
Unrealized gain (loss) on Agency interest-only securities	—			110			—			—				110
Realized gain on sale of real estate, net	—			—			1,628			—				1,628
Fee and other income	3,866			72			1,634			905				6,477
Net result from derivative transactions	3,886			3,195			—			—				7,081
Earnings (loss) from investment in unconsolidated joint ventures	—			—			13			—				13
Total other income (loss)	13,896			2,134			29,446			905				46,381

Salaries and employee benefits	—			—			—			(13,866		)		(13,866		)
Operating expenses	(86		)	—			—			(5,511		)	(3)	(5,597		)
Real estate operating expenses	—			—			(7,836		)	—				(7,836		)
Fee expense	(615		)	(96		)	(88		)	—				(799		)
Depreciation and amortization	—			—			(10,637		)	(19		)		(10,656		)
Total costs and expenses	(701		)	(96		)	(18,561		)	(19,396		)		(38,754		)

Income Tax (expense) benefit	—			—			—			(573		)		(573		)
Segment profit (loss)	$	73,892		$	9,615		$	2,158		$	(42,098	)		$	43,567

Total assets as of December 31, 2018	$	3,482,929		$	1,410,126		$	1,038,376		$	341,441			$	6,272,872



	Loans			Securities			Real Estate(1)			Corporate/Other(2)				Company Total

Six months ended June 30, 2019
Interest income	$	142,947		$	28,329		$	15		$	498			$	171,789
Interest expense	(28,981		)	(6,618		)	(17,973		)	(50,046		)		(103,618		)
Net interest income (expense)	113,966			21,711			(17,958		)	(49,548		)		68,171
Provision for loan losses	(600		)	—			—			—				(600		)
Net interest income (expense) after provision for loan losses	113,366			21,711			(17,958		)	(49,548		)		67,571

Operating lease income	—			—			56,701			—				56,701
Sale of loans, net	27,342			—			—			—				27,342
Realized gain (loss) on securities	—			7,329			—			—				7,329
Unrealized gain (loss) on equity securities	—			1,088			—			—				1,088
Unrealized gain (loss) on Agency interest-only securities	—			22			—			—				22
Realized gain on sale of real estate, net	—			—			(1,119		)	—				(1,119		)
Impairment of real estate	—			—			(1,350		)	—				(1,350		)
Fee and other income	9,257			737			7			1,881				11,882
Net result from derivative transactions	(13,716		)	(12,775		)	—			—				(26,491		)
Earnings (loss) from investment in unconsolidated joint ventures	—			—			2,522			—				2,522
Gain (loss) on extinguishment of debt	—			—			(1,070		)	—				(1,070		)
Total other income (loss)	22,883			(3,599		)	55,691			1,881				76,856

Salaries and employee benefits	—			—			—			(38,481		)		(38,481		)
Operating expenses	—			—			—			(11,413		)	(3)	(11,413		)
Fee expense	(2,252		)	(187		)	(456		)	—				(2,895		)
Depreciation and amortization	—			—			(20,112		)	(50		)		(20,162		)
Total costs and expenses	(2,252		)	(187		)	(32,074		)	(49,944		)		(84,457		)

Income Tax (expense) benefit	—			—			—			634				634
Segment profit (loss)	$	133,997		$	17,925		$	5,659		$	(96,977	)		$	60,604

Total assets as of June 30, 2019	$	3,213,334		$	1,788,415		$	1,042,128		$	362,898			$	6,406,775



	Loans			Securities			Real Estate(1)			Corporate/Other(2)				Company Total

Six months ended June 30, 2018
Interest income	$	146,494		$	16,676		$	10		$	257			$	163,437
Interest expense	(29,054		)	(1,941		)	(16,586		)	(45,549		)		(93,130		)
Net interest income (expense)	117,440			14,735			(16,576		)	(45,292		)		70,307
Provision for loan losses	(3,300		)	—			—			—				(3,300		)
Net interest income (expense) after provision for loan losses	114,140			14,735			(16,576		)	(45,292		)		67,007

Operating lease income	—			—			54,310			—				54,310
Sale of loans, net	11,032			—			—			—				11,032
Realized gain (loss) on securities	—			(2,342		)	—			—				(2,342		)
Unrealized gain (loss) on Agency interest-only securities	—			313			—			—				313
Realized gain on sale of real estate, net	—			—			32,637			—				32,637
Fee and other income	6,929			72			3,416			2,311				12,728
Net result from derivative transactions	10,774			11,266			—			—				22,040
Earnings (loss) from investment in unconsolidated joint ventures	—			—			65			—				65
Gain (loss) on extinguishment of debt	(69		)	—			—			—				(69		)
Total other income (loss)	28,666			9,309			90,428			2,311				130,714

Salaries and employee benefits	—			—			—			(30,962		)		(30,962		)
Operating expenses	—			—			—			(11,144		)	(3)	(11,144		)
Real estate operating expenses	—			—			(16,654		)					(16,654		)
Fee expense	(1,232		)	(206		)	(203		)	—				(1,641		)
Depreciation and amortization	—			—			(21,441		)	(38		)		(21,479		)
Total costs and expenses	(1,232		)	(206		)	(38,298		)	(42,144		)		(81,880		)

Income Tax (expense) benefit	—			—			—			(4,476		)		(4,476		)
Segment profit (loss)	$	141,574		$	23,838		$	35,554		$	(89,601	)		$	111,365

Total assets as of December 31, 2018	$	3,482,929		$	1,410,126		$	1,038,376		$	341,441			$	6,272,872


(1)	Includes the Company’s investment in unconsolidated joint ventures that held real estate of $57.8 million and $40.4 million as of June 30, 2019 and December 31, 2018, respectively.

(2)

Corporate/Other represents all corporate level and unallocated items including any intercompany eliminations necessary to reconcile to consolidated Company totals. This segment also includes the Company’s investment in unconsolidated joint ventures and strategic investments that are not related to the other reportable segments above, including the Company’s investment in FHLB stock of $61.6 million and $57.9 million as of June 30, 2019 and December 31, 2018, respectively, the Company’s deferred tax asset (liability) of $(4.1) million and $2.3 million as of June 30, 2019 and December 31, 2018, respectively and the Company’s senior unsecured notes of $1.2 billion as of June 30, 2019 and December 31, 2018.

(3)

Includes $3.6 million and $6.1 million of professional fees for the three and six months ended June 30, 2019, respectively. Includes $2.8 million and $5.7 million of professional fees for the three and six months ended June 30, 2018, respectively.