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Loans and Preferred Equity Held for Investment, net and Loans Held for Sale (Tables)
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Loans and Preferred Equity Held for Investment, net
The following table provides a summary of the Company’s loans and preferred equity held for investment, net (dollars in thousands):
June 30, 2020December 31, 2019
Unpaid Principal Balance
Carrying
Value
Weighted Average Coupon(1)
Weighted Average Maturity in YearsUnpaid Principal Balance
Carrying
Value
Weighted Average Coupon(1)
Weighted Average Maturity in Years
Fixed rate
Mezzanine loans$135,389  $134,654  12.8 %4.5$223,395  $222,503  12.8 %4.2
Preferred equity interests118,715  118,696  12.5 %6.4115,384  115,313  12.5 %6.9
Other loans(2)
13,898  13,800  15.0 %3.912,572  12,448  15.0 %4.4
268,002  267,150  351,351  350,264  
Variable rate
Senior loans1,011,334  1,008,062  5.4 %3.61,462,467  1,457,738  6.0 %3.8
Securitized loans(3)
1,007,152  1,004,301  5.1 %3.81,006,495  1,002,696  5.2 %4.2
Mezzanine loans15,462  15,582  10.1 %2.238,110  38,258  11.4 %2.0
2,033,948  2,027,945  2,507,072  2,498,692  
2,301,950  2,295,095  2,858,423  2,848,956  
Allowance for loan lossesNA(52,521) NA(272,624) 
Loans and preferred equity held for investment, net$2,301,950  $2,242,574  $2,858,423  $2,576,332  
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(1)Calculated based on contractual interest rate.
(2)Includes one corporate term loan secured by the borrower’s limited partnership interests in a fund at June 30, 2020 and December 31, 2019.
(3)Represents loans transferred into securitization trusts that are consolidated by the Company.
Schedule of Mortgage Loans on Real Estate
Activity relating to the Company’s loans and preferred equity held for investment, net was as follows (dollars in thousands):
Carrying Value
Balance at January 1, 2020$2,576,332  
Acquisitions/originations/additional funding66,722  
Loan maturities/principal repayments(176,021) 
Transfer to loans held for sale(154,370) 
Discount accretion/premium amortization4,289  
Capitalized interest6,382  
Provision for loan losses(1)
(75,200) 
Effect of CECL adoption(2)
(21,093) 
Charge-off15,533  
Balance at June 30, 2020$2,242,574  
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(1)Provision for loan losses includes $5.2 million for a loan that was subsequently transferred to held for sale during the second quarter. Provision for loan losses excludes a reversal of $0.1 million determined by the Company’s PD/LGD model for unfunded commitments reported on the consolidated statement of operations, with a corresponding offset to other liabilities recorded on the Company’s consolidated balance sheets.
(2)Calculated by the Company’s PD/LGD model upon CECL adoption on January 1, 2020. See Note 2, “Summary of Significant Accounting Polices” for further details.
Aging Summary of Loans
The following table provides an aging summary of loans and preferred equity held for investment at carrying values before allowance for loan losses, if any (dollars in thousands):
Current or Less Than 30 Days Past Due
30-59 Days Past Due(1)
60-89 Days Past Due
90 Days or More Past Due(1)(2)
Total Loans
June 30, 2020$2,265,249  $—  $—  $29,846  $2,295,095  
December 31, 20192,558,505  32,322  —  258,129  2,848,956  
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(1)At December 31, 2019, 30-59 days past due includes one loan (Midwest Hospitality) that was placed on nonaccrual status during the fourth quarter of 2019 following a borrower default. At June 30, 2020, the Midwest Hospitality loan was 90 days or more past due. Subsequent to June 30, 2020, Midwest Hospitality was repaid in a discounted payoff at which time the Company provided a bridge loan totaling $19.5 million to a new borrower.
(2)At December 31, 2019, 90 days or more past due loans includes four NY hospitality loans to the same borrower and secured by the same collateral with combined carrying value before allowance for loan losses of $258.1 million on nonaccrual status. All other loans in this table remain current on interest payments. The Company completed a discounted payoff of the four NY hospitality loans in April 2020.
Impaired Loans The following table presents impaired loans at December 31, 2019 (dollars in thousands):
Unpaid Principal Balance(1)
Gross Carrying Value
With Allowance for Loan Losses(2)
Without Allowance for Loan Losses
Total(2)
Allowance for Loan Losses
December 31, 2019$408,058  $377,421  $32,322  $409,743  $272,624  
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(1)Includes four NY hospitality loans to the same borrower and secured by the same collateral with combined unpaid principal balance of $257.2 million and gross carrying value of $258.1 million on nonaccrual status. All other loans included in this table remain current on interest payments. The Company completed a discounted payoff of the four NY hospitality loans in April 2020.
(2)Includes unpaid principal balance plus any applicable exit fees less net deferred loan fees.
Upon adoption of ASU 2016-13 the incurred loss model has been replaced with a lifetime current expected credit loss model for the Company’s loans carried at amortized cost, and as such all loans in the Company’s portfolio maintain an allowance for loan losses at June 30, 2020. See Note 2 “Summary of Significant Accounting Policies—Accounting Standards Adopted in 2020—Credit Losses” for further details.
The average carrying value and interest income recognized on impaired loans for the three and six months ended June 30, 2019 were as follows (dollars in thousands):
Three Months Ended June 30,Six Months Ended June 30,
20192019
Average carrying value before allowance for loan losses$320,934  $389,500  
Interest income1,305  2,651  
Allowance for Loan Losses
Changes in allowance for loan losses on loans are presented below (dollars in thousands):
Six Months Ended June 30,
20202019
Allowance for loan losses at beginning of period$272,624  $109,328  
Effect of CECL adoption(1)
21,093  —  
Provision for loan losses(2)
75,200  110,258  
Charge-off(15,533) (46,692) 
Transfer to loans held for sale(300,863) —  
Allowance for loan losses at end of period(3)
$52,521  $172,894  
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(1)Calculated by the Company’s PD/LGD model upon CECL adoption on January 1, 2020. See Note 2, “Summary of Significant Accounting Policies” for further details.
(2)Provision for loan losses includes $5.2 million for a loan that was subsequently transferred to held for sale during the second quarter of 2020. Provision for loan losses excludes a reversal of $0.1 million determined by the Company’s PD/LGD model for unfunded commitments reported on the consolidated statement of operations, with a corresponding offset to other liabilities recorded on the Company’s consolidated balance sheets.
(3)At June 30, 2020, includes $29.3 million related to the Company’s PD/LGD model, $20.9 million relating to the Northeast Office Portfolio and $2.3 million related to the Midwest Hospitality loan, both of which were evaluated individually. See further discussion in “Nonaccrual and Past Due Loans and Preferred Equity.”
Schedule of Assets Held for Sale Related to Loans and Preferred Equity
The following table summarizes the Company’s assets held for sale related to loans and preferred equity (dollars in thousands):
June 30, 2020December 31, 2019
Assets
Loans and preferred equity held for investment, net$104,900  $5,016  
Total assets held for sale$104,900  $5,016  
Summary of Loans and Preferred Equity Held for Investment by Year of Origination and Credit Quality Risk Ranking
The following table provides a summary by carrying values before any allowance for loan losses of the Company’s loans and preferred equity held for investment by year of origination and credit quality risk ranking (dollars in thousands). Refer to Note 2, “Summary of Significant Accounting Policies—Accounting Standards Adopted in 2020—Credit Losses” for loans risk ranking definitions.
20202019201820172016PriorTotal
Senior loans
  Risk Rankings:
3$—  $265,249  $296,631  $33,581  $—  $—  $595,461  
4—  924,265  462,795  —  —  —  1,387,060  
5—  —  —  —  —  29,846  29,846  
Total Senior loans—  1,189,514  759,426  33,581  —  29,846  2,012,367  
Mezzanine loans
Risk Rankings:
3—  —  —  —  —  —  —  
4—  79,053  54,534  12,120  —  4,529  150,236  
Total Mezzanine loans—  79,053  54,534  12,120  —  4,529  150,236  
Preferred equity interests and other
Risk Rankings:
4—  13,800  18,007  —  —  —  31,807  
5—  —  100,685  —  —  —  100,685  
Total Preferred equity interests and other—  13,800  118,692  —  —  —  132,492  
Total Loans and preferred equity held for investment$—  $1,282,367  $932,652  $45,701  $—  $34,375  $2,295,095