Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 08, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | ARBOR REALTY TRUST INC | |
Entity Central Index Key | 1,253,986 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 51,401,295 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Assets: | ||
Cash and cash equivalents | $ 71,613,974 | $ 188,708,687 |
Restricted cash | 176,615,179 | 48,301,244 |
Loans and investments, net | 1,656,748,937 | 1,450,334,341 |
Loans held-for-sale, net | 310,252,600 | |
Capitalized mortgage servicing rights, net | 224,297,210 | |
Available-for-sale securities, at fair value | 5,214,998 | 2,022,030 |
Investments in equity affiliates | 41,962,338 | 30,870,235 |
Real estate owned, net | 19,762,787 | 60,845,509 |
Real estate held-for-sale, net | 8,669,203 | |
Due from related party | 493,412 | 8,082,265 |
Goodwill and other intangible assets | 99,932,986 | |
Other assets | 43,326,307 | 29,558,430 |
Total assets | 2,650,220,728 | 1,827,391,944 |
Liabilities and Equity: | ||
Credit facilities and repurchase agreements | 431,060,399 | 136,252,135 |
Collateralized loan obligations | 1,007,736,720 | 758,899,661 |
Senior unsecured notes | 94,330,797 | 93,764,994 |
Junior subordinated notes to subsidiary trust issuing preferred securities | 157,662,855 | 157,117,130 |
Mortgage note payable - real estate owned | 27,155,000 | |
Related party financing | 50,000,000 | |
Due to related party | 18,583,192 | 3,428,333 |
Due to borrowers | 50,823,894 | 34,629,595 |
Allowance for loss sharing obligations | 31,113,413 | |
Other liabilities | 83,477,916 | 51,054,321 |
Total liabilities | 1,924,789,186 | 1,262,301,169 |
Commitments and contingencies (Note 17) | ||
Arbor Realty Trust, Inc. stockholders' equity: | ||
Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized; special voting preferred shares; 21,230,769 shares issued and outstanding and no shares issued and outstanding, respectively; 8.25% Series A; 7.75% Series B; 8.50% Series C | 89,508,213 | 89,295,905 |
Common stock, $0.01 par value: 500,000,000 shares authorized; 51,401,295 and 50,962,516 shares issued and outstanding, respectively | 514,013 | 509,625 |
Additional paid-in capital | 619,179,982 | 616,244,196 |
Accumulated deficit | (137,441,120) | (136,118,001) |
Accumulated other comprehensive loss | (1,142,053) | (4,840,950) |
Total Arbor Realty Trust, Inc. stockholder' equity | 570,619,035 | 565,090,775 |
Noncontrolling interest | 154,812,507 | |
Total equity | 725,431,542 | 565,090,775 |
Total liabilities and equity | $ 2,650,220,728 | $ 1,827,391,944 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 51,401,295 | 50,962,516 |
Common stock, shares outstanding (in shares) | 51,401,295 | 50,962,516 |
Special voting preferred shares | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | |
Preferred stock, shares issued (in shares) | 21,230,769 | 0 |
Preferred stock, shares outstanding (in shares) | 21,230,769 | 0 |
8.25% Series A preferred stock | ||
Preferred stock, dividend rate (as a percent) | 8.25% | 8.25% |
Preferred stock, aggregate liquidation preference | $ 38,787,500 | $ 38,787,500 |
Preferred stock, shares issued (in shares) | 1,551,500 | 1,551,500 |
Preferred stock, shares outstanding (in shares) | 1,551,500 | 1,551,500 |
7.75% Series B preferred stock | ||
Preferred stock, dividend rate (as a percent) | 7.75% | 7.75% |
Preferred stock, aggregate liquidation preference | $ 31,500,000 | $ 31,500,000 |
Preferred stock, shares issued (in shares) | 1,260,000 | 1,260,000 |
Preferred stock, shares outstanding (in shares) | 1,260,000 | 1,260,000 |
8.50% Series C preferred stock | ||
Preferred stock, dividend rate (as a percent) | 8.50% | 8.50% |
Preferred stock, aggregate liquidation preference | $ 22,500,000 | $ 22,500,000 |
Preferred stock, shares issued (in shares) | 900,000 | 900,000 |
Preferred stock, shares outstanding (in shares) | 900,000 | 900,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||
Interest income | $ 29,636,227 | $ 26,025,709 | $ 83,424,190 | $ 79,575,689 |
Other interest income, net | 2,539,274 | 7,884,344 | ||
Interest expense | 16,966,228 | 11,885,363 | 42,958,329 | 37,405,492 |
Net interest income | 12,669,999 | 14,140,346 | 43,005,135 | 50,054,541 |
Other revenue: | ||||
Fee-based services, including gain on sales, net | 9,693,822 | 9,693,822 | ||
Mortgage servicing rights | 15,968,067 | 15,968,067 | ||
Servicing revenue, net | 5,885,884 | 5,885,884 | ||
Property operating income | 2,960,940 | 7,202,851 | 12,719,027 | 22,855,028 |
Other income, net | 359,546 | 51,633 | 663,977 | 164,449 |
Total other revenue | 34,868,259 | 7,254,484 | 44,930,777 | 23,019,477 |
Other expenses: | ||||
Employee compensation and benefits | 14,216,679 | 4,877,059 | 22,856,433 | 14,133,403 |
Selling and administrative | 5,903,031 | 2,063,408 | 10,277,844 | 7,442,979 |
Acquisition costs | 6,406,258 | 1,116,126 | 10,261,902 | 1,542,169 |
Property operating expenses | 2,819,004 | 6,028,585 | 10,991,823 | 18,381,317 |
Depreciation and amortization | 1,808,765 | 1,250,761 | 3,129,410 | 4,137,080 |
Impairment loss on real estate owned | 11,200,000 | |||
Provision for loss sharing | 1,316,862 | 1,316,862 | ||
Provision for loan losses (net of recoveries) | (54,000) | 277,464 | (24,995) | 2,353,688 |
Management fee - related party | 3,325,000 | 2,725,000 | 8,875,000 | 8,075,000 |
Total other expenses | 35,741,599 | 18,338,403 | 78,884,279 | 56,065,636 |
Income before gain on acceleration of deferred income, loss on termination of swaps, gain on sale of real estate, income from equity affiliates and provision for income taxes | 11,796,659 | 3,056,427 | 9,051,633 | 17,008,382 |
Gain on acceleration of deferred income | 8,162,720 | 19,171,882 | ||
Loss on termination of swaps | (340,197) | (4,629,647) | ||
Gain on sale of real estate | 11,630,687 | 3,984,364 | ||
Income from equity affiliates | 4,929,375 | 6,353,239 | 11,193,918 | 10,983,177 |
Provision for income taxes | (300,000) | (300,000) | ||
Net income | 16,426,034 | 17,232,189 | 31,576,238 | 46,518,158 |
Preferred stock dividends | 1,888,430 | 1,888,430 | 5,665,290 | 5,665,290 |
Net income attributable to noncontrolling interest | 3,649,432 | 3,649,432 | ||
Net income attributable to common stockholders | $ 10,888,172 | $ 15,343,759 | $ 22,261,516 | $ 40,852,868 |
Basic earnings per common share (in dollars per share) | $ 0.21 | $ 0.30 | $ 0.43 | $ 0.80 |
Diluted earnings per common share (in dollars per share) | $ 0.21 | $ 0.30 | $ 0.43 | $ 0.80 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 51,390,467 | 50,962,516 | 51,272,795 | 50,822,444 |
Diluted (in shares) | 70,271,796 | 50,962,516 | 51,627,550 | 50,917,442 |
Dividends declared per common share (in dollars per share) | $ 0.16 | $ 0.15 | $ 0.46 | $ 0.43 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | ||||
Net income | $ 16,426,034 | $ 17,232,189 | $ 31,576,238 | $ 46,518,158 |
Unrealized gain (loss) on securities available-for-sale, at fair value | (88,184) | (176,368) | (117,579) | 246,973 |
Unrealized loss on derivative financial instruments, net | 66,254 | (349,012) | (195,981) | (1,255,739) |
Reclassification of net realized loss on derivatives designated as cash flow hedges into loss on termination of swaps | 340,197 | 4,626,192 | ||
Reclassification of net realized loss on derivatives designated as cash flow hedges into earnings | 1,316,157 | 1,467,673 | 4,012,457 | 4,709,173 |
Comprehensive income | 17,720,261 | 18,514,679 | 35,275,135 | 54,844,757 |
Less: | ||||
Comprehensive income attributable to noncontrolling interest | 3,974,327 | 3,974,327 | ||
Preferred stock dividends | 1,888,430 | 1,888,430 | 5,665,290 | 5,665,290 |
Comprehensive income attributable to common stockholders | $ 11,857,504 | $ 16,626,249 | $ 25,635,518 | $ 49,179,467 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated DeficitPrivate REIT preferred stock | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Arbor Realty Trust, Inc. Stockholders' EquityPrivate REIT preferred stock | Total Arbor Realty Trust, Inc. Stockholders' Equity | Redeemable Noncontrolling Interest | Private REIT preferred stock | Total |
Balance at Dec. 31, 2015 | $ 89,295,905 | $ 509,625 | $ 616,244,196 | $ (136,118,001) | $ (4,840,950) | $ 565,090,775 | $ 565,090,775 | ||||
Balance (in shares) at Dec. 31, 2015 | 3,711,500 | 50,962,516 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Issuance of special voting preferred shares and operating partnership units | $ 212,308 | 212,308 | $ 154,559,998 | 154,772,306 | |||||||
Issuance of special voting preferred shares and operating partnership units (in shares) | 21,230,769 | ||||||||||
Stock-based compensation | $ 4,398 | 2,935,776 | 2,940,174 | 2,940,174 | |||||||
Stock-based compensation (in shares) | 439,780 | ||||||||||
Forfeiture of unvested restricted stock | $ (10) | 10 | |||||||||
Forfeiture of unvested restricted stock (in shares) | (1,001) | ||||||||||
Distributions - common stock | (23,573,786) | (23,573,786) | (23,573,786) | ||||||||
Distributions - preferred stock | $ (10,849) | (5,665,290) | $ (10,849) | (5,665,290) | $ (10,849) | (5,665,290) | |||||
Distributions - noncontrolling interest | (3,396,923) | (3,396,923) | |||||||||
Net income | 27,926,806 | 27,926,806 | 3,649,432 | 31,576,238 | |||||||
Unrealized loss on securities available-for-sale | (117,579) | (117,579) | (117,579) | ||||||||
Unrealized loss on derivative financial instruments, net | (195,981) | (195,981) | (195,981) | ||||||||
Reclassification of net realized loss on derivatives designated as cash flow hedges into earnings | 4,012,457 | 4,012,457 | 4,012,457 | ||||||||
Balance at Sep. 30, 2016 | $ 89,508,213 | $ 514,013 | $ 619,179,982 | $ (137,441,120) | $ (1,142,053) | $ 570,619,035 | $ 154,812,507 | $ 725,431,542 | |||
Balance (in shares) at Sep. 30, 2016 | 24,942,269 | 51,401,295 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||
Net income | $ 31,576,238 | $ 46,518,158 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 3,129,410 | 4,137,080 |
Stock-based compensation | 2,940,174 | 2,890,581 |
Amortization and accretion of interest, fees and intangible assets, net | 2,539,980 | 1,709,609 |
Amortization of capitalized mortgage servicing rights | 7,586,524 | |
Originations of loans held-for-sale | (853,935,531) | |
Proceeds from sales of loans held-for-sale, net of gain on sale | 975,969,372 | |
Mortgage servicing rights | (15,968,067) | |
Write-off of capitalized mortgage servicing rights from payoffs | 1,669,081 | |
Impairment loss on real estate owned | 11,200,000 | |
Provision for loan losses (net of recoveries) | (24,995) | 2,353,688 |
Provision for loss sharing (net of recoveries) | 1,316,862 | |
Gain on acceleration of deferred income | (19,171,882) | |
Allowance for loss-sharing obligations (net of charge-offs) | (2,131,178) | |
Loss on termination of swaps | 4,629,647 | |
Gain on sale of real estate | (11,630,687) | (3,984,364) |
Gain on sale of securities | (15,491) | |
Income from equity affiliates | (11,193,918) | (10,983,177) |
Change in fair value of available-for-sale securities | 46,021 | |
Changes in operating assets and liabilities | 5,894,972 | 7,500,170 |
Net cash provided by operating activities | 148,968,767 | 35,599,510 |
Investing Activities: | ||
Loans and investments funded, originated and purchased, net | (725,025,857) | (734,651,094) |
Payoffs and paydowns of loans and investments | 531,874,076 | 698,138,074 |
Acquisition of the Agency Business, net of cash acquired | (68,356,323) | |
Deferred fees | 7,412,018 | 3,707,798 |
Principal collection on securities, net | 2,100,000 | |
Investments in real estate, net | (611,497) | (2,025,366) |
Contributions to equity affiliates | (4,641,973) | (17,017,972) |
Distributions from equity affiliates | 731,942 | |
Proceeds from sale of real estate | 49,029,780 | 18,482,352 |
Proceeds from sale of available-for-sale securities | 1,567,207 | |
Due to borrowers and reserves | 128,492 | |
Net cash used in investing activities | (207,892,135) | (31,266,208) |
Financing activities: | ||
Proceeds from repurchase agreements, credit facilities and notes payable | 1,681,492,236 | 555,589,837 |
Paydowns and payoffs of repurchase agreements, loan participations and credit facilities | (1,807,884,108) | (612,512,543) |
Proceeds from mortgage note payable - real estate owned | 27,155,000 | |
Paydowns and payoffs of mortgage note payable - real estate owned | (27,155,000) | (30,984,357) |
Proceeds from collateralized loan obligations | 250,250,000 | 486,625,000 |
Payoffs and paydowns of collateralized debt obligations | (312,071,055) | |
Payoffs and paydowns of collateralized loan obligations | (177,000,000) | |
Change in restricted cash | (123,982,753) | 159,223,507 |
Payments on swaps and margin calls to counterparties | (290,000) | |
Receipts on swaps and returns of margin calls from counterparties | 3,440,049 | 3,330,000 |
Distributions paid on common stock | (23,573,786) | (21,850,942) |
Distributions paid on preferred stock | (5,665,290) | (5,665,290) |
Distributions paid on preferred stock of private REIT | (10,849) | (10,566) |
Payment of deferred financing costs | (5,081,844) | (10,676,809) |
Net cash (used in) provided by financing activities | (58,171,345) | 60,861,782 |
Net (decrease) increase in cash and cash equivalents | (117,094,713) | 65,195,084 |
Cash and cash equivalents at beginning of period | 188,708,687 | 50,417,745 |
Cash and cash equivalents at end of period | 71,613,974 | 115,612,829 |
Supplemental cash flow information: | ||
Cash used to pay interest | 36,287,261 | 32,665,815 |
Cash used for taxes | 298,654 | 385,932 |
Supplemental schedule of non-cash investing and financing activities: | ||
Related party financing | 50,000,000 | |
Payment due on the acquisition of the Agency Business | 11,416,610 | |
Working capital adjustment on the acquisition of the Agency Business | 7,982,584 | |
Issuance of special voting preferred shares and operating partnership units in connection with the Acquisition | 154,772,306 | |
Investments transferred from real estate owned, net to real estate held-for-sale, net | 17,516,488 | |
Loan transferred to real estate owned, net | 5,900,000 | |
Satisfaction of participation loan | 1,300,000 | |
Retirement of participation liability | 1,300,000 | |
8.25% Series A preferred stock | ||
Supplemental schedule of non-cash investing and financing activities: | ||
Distributions accrued on preferred shares | 266,664 | 266,664 |
7.75% Series B preferred stock | ||
Supplemental schedule of non-cash investing and financing activities: | ||
Distributions accrued on preferred shares | 203,438 | 203,438 |
8.50% Series C preferred stock | ||
Supplemental schedule of non-cash investing and financing activities: | ||
Distributions accrued on preferred shares | 159,375 | $ 159,375 |
Special voting preferred shares | ||
Supplemental schedule of non-cash investing and financing activities: | ||
Distributions accrued on preferred shares | $ 3,396,923 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
8.25% Series A preferred stock | |||
Preferred stock, dividend rate (as a percent) | 8.25% | 8.25% | 8.25% |
7.75% Series B preferred stock | |||
Preferred stock, dividend rate (as a percent) | 7.75% | 7.75% | 7.75% |
8.50% Series C preferred stock | |||
Preferred stock, dividend rate (as a percent) | 8.50% | 8.50% | 8.50% |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2016 | |
Description Of Business | |
Description of Business | Note 1 — Description of Business Arbor Realty Trust, Inc. (the “Company,” “we,” “us,” or “our”) is a Maryland corporation that was formed in 2003 and is externally managed and advised by Arbor Commercial Mortgage, LLC (“ACM” or our “Manager”). We invest in a diversified portfolio of structured finance assets in the multifamily and commercial real estate markets, primarily consisting of bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity. In addition, we may also directly acquire real property and invest in real estate-related notes and certain mortgage-related securities. We refer to this platform as our Structured Loan Origination and Investment Business, or “Structured Business.” As a result of the acquisition of the agency platform of our Manager on July 14, 2016 (the “Acquisition”), we also now originate, sell and service a range of multifamily finance products through the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac,” and together with Fannie Mae, the government-sponsored enterprises, or the “GSEs”), the Government National Mortgage Association (“GNMA”), Federal Housing Authority (“FHA”) and the U.S. Department of Housing and Urban Development ( together with GNMA and FHA, “HUD”) and the conduit/commercial mortgage-backed securities (“CMBS”) programs. We retain the servicing rights and asset management responsibilities on substantially all loans we originate and sell under the GSE and HUD programs. We are approved as a Fannie Mae Delegated Underwriting and Servicing (“DUS”) lender nationally, a Freddie Mac Multifamily Conventional Loan lender, seller/servicer, in New York, New Jersey and Connecticut, a Freddie Mac affordable, manufactured housing, senior housing and small balance loan (“SBL”) lender, seller/servicer, nationally and a HUD Map and Lean senior housing/healthcare lender nationally. We refer to this platform as our Agency Loan Origination and Servicing Business, or “Agency Business.” See Note 3 — Acquisition of Our Manager’s Agency Platform for further details about the Acquisition. Substantially all of our operations are conducted through our operating partnership, Arbor Realty Limited Partnership (“ARLP”), and ARLP’s subsidiaries. We organize and conduct our operations to qualify as a real estate investment trust (“REIT”) for federal income tax purposes. As a result of the Acquisition, we operate in two segments: Structured Business and Agency Business. See Note 23 — Segment Information for further details. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation | |
Basis of Presentation | Note 2 — Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), for interim financial statements and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of our financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2015 Annual Report, which was filed with the SEC. The accompanying unaudited consolidated financial statements include our financial statements, our wholly owned subsidiaries, and partnerships or other joint ventures in which we own a voting interest of greater than 50 percent, and variable interest entities (“VIEs”) of which we are the primary beneficiary. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Current accounting guidance requires us to present (a) assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE, and (b) liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary. Entities in which we have significant influence are accounted for primarily under the equity method. As a REIT, we are generally not subject to U.S. federal income tax to the extent of our distributions to stockholders and as long as certain asset, income, distribution, ownership and administrative tests are met. To maintain our qualification as a REIT, we must annually distribute at least 90% of our REIT taxable income to our stockholders and meet certain other requirements. We may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on our undistributed taxable income. If we were to fail to meet these requirements, we would be subject to U.S. federal income tax, which could have a material adverse impact on our results of operations and amounts available for distributions to our stockholders. We believe that all of the criteria to maintain our REIT qualification have been met for the applicable periods, but there can be no assurance that these criteria will continue to be met in subsequent periods. The Agency Business is operated through a taxable REIT subsidiary (“TRS”), which is a part of our TRS consolidated group (the “TRS Consolidated Group”) and may be subject to U.S. federal, state and local income taxes. In general, our TRS entities may hold assets that the REIT cannot hold directly and may engage in real estate or non-real estate-related business. Our TRS Consolidated Group has federal net operating losses from prior years which will be applied against the income from the Agency Business. In the third quarter of 2016, we recorded a tax provision of $0.3 million related to state income tax liability. Current and deferred taxes are recorded on the portion of earnings (losses) recognized by us with respect to our interest in TRSs. Deferred income tax assets and liabilities are calculated based on temporary differences between our U.S. GAAP consolidated financial statements and the federal, state, local tax basis of assets and liabilities as of the consolidated balance sheets. We recorded a deferred tax liability of $14.8 million in connection with the Acquisition, which is included in Other liabilities on the consolidated balance sheets. The deferred tax liability is primarily attributable to the seller financing portion of the consideration paid for the Acquisition. We evaluate the realizability of our deferred tax assets (e.g., net operating loss and capital loss carryforwards) and recognize a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of our deferred tax assets will not be realized. When evaluating the realizability of our deferred tax assets, we consider estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available and the general and industry specific economic outlook. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that could materially affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant Accounting Policies See Item 8 — Financial Statements and Supplementary Data in our 2015 Annual Report for a description of our significant accounting policies. In connection with the Acquisition, we have adopted the following additional significant accounting policies. Loans Held-for-Sale, Net Loans held-for-sale, net represents commercial real estate loans originated in our Agency Business, which are generally transferred or sold within 60 days from the date that the mortgage loan is funded. Such loans are reported at the lower of cost or market on an aggregate basis and include the value allocated to the associated future mortgage servicing rights. During the period prior to its sale, interest income on a loan held-for-sale is calculated in accordance with the terms of the individual loan and the loan origination fees and direct loan origination costs are deferred until the loan is sold. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated, put presumptively beyond the reach of the entity, even in bankruptcy, (2) the transferee (or if the transferee is an entity whose sole purpose is to engage in securitization and the entity is constrained from pledging or exchanging the assets it receives, each third-party holder of its beneficial interests) has the right to pledge or exchange the transferred financial assets, and (3) we or our agents does not maintain effective control over the transferred financial assets or third-party beneficial interest related to those transferred assets through an agreement to repurchase them before their maturity. We have determined that all loans sold have met these specific conditions and accounts for all transfers of mortgage loans as completed sales. Capitalized Mortgage Servicing Rights We recognize, as separate assets, rights to service mortgage loans for others, including such rights that are created by the origination of mortgage loans that are sold with the servicing rights retained by the originator. Income from mortgage servicing rights (“MSRs”) is recognized when we record a derivative asset upon the commitment to originate a loan with a borrower and sell the loan to an investor. This commitment asset is recognized at fair value, which reflects the estimated fair value of the expected net cash flows associated with the servicing of the loan. When a mortgage loan is sold, we retain the right to service the loan and recognize the MSR at the initial capitalized valuation. We amortize MSRs using the amortization method, which requires the MSRs to be amortized in proportion to and over the period of estimated net servicing income or net servicing loss and that the servicing assets or liabilities be assessed for impairment, or increased obligation, based on the fair value at each reporting date. Amortization of MSRs is recorded as a reduction of servicing revenues, net on the consolidated statements of income. The following assumptions were used in calculating each loan’s MSR for the periods presented: Key rates: We used discount rates ranging from 8% to 18%, representing a weighted average discount rate of 13%, based on management’s best estimate of market discount rates to determine the present value of MSRs. The inflation rate used for adequate compensation was 3%. Servicing Cost: The estimated future cost to service the loan for the estimated life of the MSR is subtracted from the estimated future cash flows. Estimated Life: We estimate the life of our MSRs based upon the stated yield maintenance and/or prepayment protection term of the underlying loan and may be reduced by 6 to 12 months based upon the expiration of various types of prepayment penalty and/or lockout provisions prior to that stated maturity date. We carry MSRs at the lower of amortized cost or fair value and evaluate the carrying value for impairment on a portfolio basis quarterly. Fair values are estimated considering market prices for similar MSRs, when available, and by estimating the present value of the future net cash flows of the capitalized MSRs, net of adequate compensation for servicing. Adequate compensation is based on the market rate of similar servicing contracts. We estimate the terms of commercial servicing for each loan by assuming that servicing would not end prior to the yield maintenance date, if applicable, at which point the prepayment penalty expires. MSRs are amortized in proportion to and over the period of estimated net servicing income. We engage an independent third party to assist in determining an estimated fair value of our MSR portfolio on a quarterly basis. We measure the impairment of MSRs based on the difference between the aggregate carrying amount of the MSRs and their aggregate fair value. For purposes of impairment evaluation, the MSRs are stratified based on predominant risk characteristics of the underlying loans, which we have identified as loan type, note rate and yield maintenance provisions. To the extent that the carrying value of the MSRs exceeds fair value, a valuation allowance is established. We record write-offs of MSRs related to the loans that were repaid prior to the expected maturity and loans that have defaulted and determined to be unrecoverable. When this occurs, the write-off is recorded as a direct write-down to the carrying value of MSRs and is included as a component of servicing revenue, net on the statements of income. This direct write-down permanently reduces the carrying value of the MSRs, precluding recognition of subsequent recoveries. Derivative Assets and Liabilities Our rate lock and forward sales commitments associated with the Agency Business meet the definition of a derivative and are recorded at fair value in our consolidated balance sheets. The estimated fair value of rate lock commitments includes the effects of interest rate movements as well as the fair value of the expected net cash flows associated with the servicing of the loan which is recorded as income from mortgage servicing rights on the consolidated statements of income. The estimated fair value of forward sale commitments includes the effects of interest rate movements between the trade date and balance sheet date. Adjustments to the fair value are reflected as a component of other income, net on the consolidated statements of income. Business Combinations Business combinations are accounted for under the acquisition method of accounting, under which the purchase price is allocated to the fair value of the assets acquired and liabilities assumed at the acquisition date. The excess of the purchase price over the amount allocated to the assets acquired and liabilities assumed is recorded as goodwill. Adjustments to the assets acquired and liabilities assumed made during the measurement period are recorded in the period in which the adjustment is identified, with a corresponding adjustment to goodwill. If any adjustments are made subsequent to the measurement period, which could be up to one year after the acquisition date, these adjustments are recorded to the consolidated statements of income. Acquisition related costs are expensed as incurred. Goodwill and Other Intangible Assets Significant judgement is required to estimate the fair value of intangible assets and in assigning their respective estimated useful lives. Accordingly, we typically seek the assistance of independent third party valuation specialists for significant intangible assets. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management. We generally use an income based valuation method to estimate the fair value of intangible assets, which discounts expected future cash flows to present value using estimates and assumptions determined and deemed reasonable by management. For intangible assets related to acquired technology, we use the replacement cost method to determine fair value. Determining the estimated useful lives of intangible assets also requires judgment. Certain intangible assets, such as GSE licenses, have been deemed to have indefinite lives while other intangible assets, such as broker and borrower relationships, above/below market rent and acquired technology have been deemed to have finite lives. Our assessment as to which intangible assets are deemed to have finite or indefinite lives is based on several factors including economic barriers of entry for the acquired product lines, scarcity of available GSE licenses, technology life cycles, retention trends and our operating plans, among other factors. Goodwill and indefinite-lived intangible assets are not amortized, while finite-lived intangible assets are amortized over the estimated useful lives of the assets on a straight-line basis. Indefinite-lived intangible assets, including goodwill, are tested for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. In addition, with respect to goodwill, an impairment analysis is performed at least annually. We have elected to make the first day of our fiscal fourth quarter the annual impairment assessment date for goodwill. We first assess qualitative factors to determine whether it is more likely than not that the fair value is less than the carrying value. If, based on that assessment, we believe it is more likely than not that the fair value is less than the carrying value, then a two-step goodwill impairment test is performed. Allowance for Loss-Sharing Obligations When a loan is sold under the Fannie Mae DUS program, we undertake an obligation to partially guarantee the performance of the loan. Generally, we are responsible for losses equal to the first 5% of the unpaid principal balance (“UPB”) and a portion of any additional losses to an overall maximum of 20% of the original principal balance. Fannie Mae bears any remaining loss. In addition, under the terms of the master loss-sharing agreement with Fannie Mae, we are responsible for funding 100% of mortgage delinquencies (principal and interest) and servicing advances (taxes, insurance and foreclosure costs) until the amounts advanced exceeds 5% of the UPB at the date of default. Thereafter, we may request interim loss-sharing adjustments which allow us to fund 25% of such advances until final settlement. At inception, a liability for the fair value of the obligation undertaken in issuing the guaranty is recognized. In determining the fair value of the guaranty obligation, we consider the risk profile of the collateral and the historical loss experience in our portfolio. The guaranty obligation is removed only upon either the expiration or settlement of the guaranty. We evaluate the allowance for loss-sharing obligations by monitoring the performance of each loss-sharing loan for events or conditions which may signal a potential default. Historically, initial loss recognition occurs at or before a loan becomes 60 days delinquent. In instances where payment under the guaranty on a specific loan is determined to be probable and estimable (as the loan is probable of foreclosure or is in foreclosure), we record a liability for the estimated allowance for loss-sharing (a “specific reserve”) by transferring the guarantee obligation recorded on the loan to the specific reserve with any adjustments to this reserve amount recorded in provision for loss sharing in the statements of income, along with a write-off of the associated loan-specific MSR. The amount of the allowance considers our assessment of the likelihood of repayment by the borrower or key principal(s), the risk characteristics of the loan, the loan’s risk rating, historical loss experience, adverse situations affecting individual loans, the estimated disposition value of the underlying collateral, and the level of risk sharing. We regularly monitor the specific reserves on all applicable loans and update loss estimates as current information is received. Revenue Recognition Fee-based services related to our Agency Business includes commitment fees, broker fees, loan assumption fees, loan origination fees and gains on sale of loans. In some instances, the borrower pays an additional amount of interest at the time the loan is closed, an origination fee, net of any direct loan origination costs incurred, which is recognized upon sale of the loan. Revenue recognition occurs when the related services are performed, unless significant contingencies exist, and for the sale of loans, when all the incidence of ownership passes to the buyer. Interest income is recognized on the accrual basis as it is earned from loans held-for-sale. Recently Issued Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) amended its guidance to reflect eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for us beginning in the first quarter of 2018 and requires adoption on a retrospective basis, unless it is impracticable for us to apply, in which case, we would be required to apply the amendment prospectively as of the earliest date practicable. We are currently evaluating the impact this guidance may have on our consolidated statement of cash flows. In June 2016, the FASB issued updated guidance which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will be required to use forward-looking information to better form their credit loss estimates. This updated guidance also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. The guidance is effective for us beginning in the first quarter of 2020, and early adoption is permitted beginning in the first quarter of 2019. We are currently evaluating the impact this guidance may have on our consolidated financial statements. In March 2016, the FASB amended its guidance on stock compensation, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for the first quarter of 2017 and we do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In March 2016, the FASB amended its guidance on accounting for equity method investments. Among other things, the amended guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The guidance is effective for the first quarter of 2017 and we do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB amended its guidance on accounting for leases that requires an entity to recognize balance sheet assets and liabilities for leases with terms of more than 12 months and also requires disclosure of key information about an entity’s leasing arrangements. The guidance is effective for the first quarter of 2019 with early adoption permitted. A modified retrospective approach is required. We are currently evaluating the impact this guidance may have on our consolidated financial statements. In January 2016, the FASB amended its guidance on the recognition and measurement of financial assets and liabilities. The amended guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update also, among other things, eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The guidance is effective for the first quarter of 2018 and we are currently evaluating the impact it may have on our consolidated financial statements. In May 2014, the FASB amended its revenue recognition guidance. Among other things, the amended guidance outlines a framework for a single comprehensive model that entities can use when accounting for revenue and supersedes most current revenue recognition guidance, including that which pertains to specific industries such as homebuilding (e.g., sales of real estate, etc.). The core principle states that an entity should recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods and services. It also requires expanded quantitative and qualitative disclosures that will enable the users of an entity’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance is effective for the first quarter of 2018. We are currently evaluating the impact this guidance may have on our consolidated financial statements. Recently Adopted Accounting Pronouncements In September 2015, the FASB amended its guidance on measurement-period adjustments arising from business combinations. The guidance was effective for the first quarter of 2016 and it did not have an impact on our consolidated financial statements. In February 2015, the FASB amended its guidance on the consolidation analysis of VIEs. The guidance was effective for the first quarter of 2016 and it did not have a material impact on our consolidated financial statements. See Note 15 — Variable Interest Entities for further details. |
Acquisition of Our Manager's Ag
Acquisition of Our Manager's Agency Platform | 9 Months Ended |
Sep. 30, 2016 | |
Acquisition of Our Manager's Agency Platform | |
Acquisition of Our Manager's Agency Platform | Note 3 — Acquisition of Our Manager’s Agency Platform On July 14, 2016, we completed the previously announced Acquisition pursuant to an asset purchase agreement (“Purchase Agreement”) dated February 25, 2016. The aggregate purchase price was $275.8 million, which was paid with $138.0 million in stock, $87.8 million in cash and with the issuance of a $50.0 million seller financing instrument. The equity component of the purchase price was paid with 21,230,769 operating partnership units (“OP Units”), which was based on a stock price of $6.50 per share. The closing price of our common stock on the day of the Acquisition was $7.29 per share; therefore, the estimated fair value of the total consideration given to our Manager was $292.5 million. Each of these OP Units are paired with one share of our Special Voting Preferred Shares, which provides ACM with one vote per share on any matter submitted to a vote of our stockholders. The OP Units are entitled to receive distributions if and when our Board of Directors authorizes and declares future common stock distributions. The OP Units are also redeemable for cash, or at our option, for shares of our common stock on a one-for-one basis. See Note 12 — Debt Obligations for further details about the seller financing and Note 18 — Equity for further details about the OP Units. All ACM employees directly related to the Agency Business (approximately 235) have become our employees as of the Acquisition date. In addition, pursuant to the Purchase Agreement, we have a two year option to purchase the existing management agreement and fully internalize our management structure for $25.0 million (increasing to $27.0 million in the second year). The exercise of this option is at the discretion of the special committee of our Board of Directors, which has no obligation to exercise its option. We performed a preliminary allocation of the purchase price to the underlying assets acquired and liabilities assumed based on their estimated fair values as of the Acquisition date, with the excess of the purchase price allocated to goodwill. We have not finalized the analysis of certain acquired assets and liabilities assumed. However, we are continuing our review of these items during the measurement period and any further changes to the preliminary purchase price allocation will be recognized as the valuations are finalized, which could change the amount of the purchase price allocated to goodwill. The preliminary purchase price allocations are summarized as follows: Purchase Price: Issuance of 21,230,769 OP Units at $7.29 per share $ Cash on hand Borrowings from seller financing - related party Total consideration $ Allocated to: Cash and cash equivalents $ Restricted cash Loans held-for-sale, net Available-for-sale securities, at fair value Capitalized mortgage servicing rights, net Fixed assets Other assets Finite-lived intangible assets Infinite-lived intangible assets Credit facilities and repurchase agrements ) Allowance for loss-sharing obligations ) Other liabilities ) Goodwill Net assets acquired $ In connection with the Acquisition, we recorded goodwill as a result of the total consideration exceeding the fair value of the assets acquired and liabilities assumed. The Goodwill was attributed to our Agency Business as it relates to the assets we acquired in the Acquisition. See Note 4 — Goodwill and Other Intangible Assets for further details about the identified intangible assets. The total revenues and pre-tax income associated with the Agency Business from the date of Acquisition, which is included in the consolidated statements of income for both the three and nine months ended September 30, 2016, were $34.5 million and $14.3 million, respectively. The following unaudited pro forma financial information presents the revenues and earnings of the combined entity, as if the Acquisition occurred as of January 1, 2015. The unaudited pro forma financial information is not intended to represent or be indicative of the consolidated financial results of operations that would have been reported had the Acquisition been completed as of January 1, 2015 and should not be taken as indicative of our future consolidated results of operations. Nine Months Ended September 30, Supplementary Pro Forma Information 2016 2015 Revenues $ $ Net income attributable to noncontrolling interest $ $ Net income attributable to common stockholders $ $ Diluted earnings per common share $ $ In connection with the Acquisition, we incurred legal and advisory fees totaling $6.4 million and $10.3 million during the three and nine months ended September 30, 2016, respectively, and fees totaling $14.7 million to date. We do not expect to recognize any significant additional fees in connection with the Acquisition. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | Note 4 — Goodwill and Other Intangible Assets Goodwill The following table sets forth the goodwill activity for the nine months ended September 30, 2016: As of and for the Beginning balance $ — Additions from the Acquisition Impairment — Ending balance $ Other Intangible Assets The following table sets forth the other intangible assets activity for the nine months ended September 30, 2016: Gross Carrying Value Accumulated Amortization December 31, Additions September 30, December 31, Additions September 30, Finite-lived intangible assets: Broker relationships $ — $ $ $ — $ $ Borrower relationships — — Below market leases — — Acquired technology — — Infinite-lived intangible assets: Fannie Mae DUS license — — — — Freddie Mac Program Plus license — — — — FHA license — — — — $ — $ $ $ — $ $ The finite-lived intangible assets recorded in connection with the Acquisition have the following useful lives: broker relationships — 8 years; borrower relationships — 10 years; below market leases — 3.5-10.6 years and acquired technology — 3 years. The weighted average remaining lives of our amortizable finite-lived intangible assets as of September 30, 2016 and the estimated amortization expense for each of the succeeding five years are as follows: Weighted Estimated Amortization Expense Average Three Months Years Ending December 31, Life (in years) 2016 2017 2018 2019 2020 2021 Finite-lived intangible assets: Broker relationships $ $ $ $ $ $ Borrower relationships Below market leases Acquired technology — — $ $ $ $ $ $ |
Loans and Investments
Loans and Investments | 9 Months Ended |
Sep. 30, 2016 | |
Loans and Investments | |
Loans and Investments | Note 5 — Loans and Investments The following tables set forth the composition of our structured loan and investment portfolio: September 30, 2016 Percent of Loan Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg. Bridge loans $ % % % % Mezzanine loans % % % % Junior participation loans % % % % Preferred equity investments % % % % % % % % Unearned revenue ) Allowance for loan losses ) Loans and investments, net $ December 31, 2015 Percent of Loan Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg. Bridge loans $ % % % % Mezzanine loans % % % % Junior participation loans % % % % Preferred equity investments % % % % % % % % Unearned revenue ) Allowance for loan losses ) Loans and investments, net $ (1) “Weighted Average Pay Rate” is a weighted average, based on the UPB of each loan in our portfolio, of the interest rate that is required to be paid monthly as stated in the individual loan agreements. Certain loans and investments that require an additional rate of interest “Accrual Rate” to be paid at the maturity are not included in the weighted average pay rate as shown in the table. (2) The “First Dollar LTV Ratio” is calculated by comparing the total of our senior most dollar and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will absorb a total loss of our position. (3) The “Last Dollar LTV Ratio” is calculated by comparing the total of the carrying value of our loan and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will initially absorb a loss. During the first quarter of 2015, we acquired a $116.0 million defaulted first mortgage, at par, that paid off in the subsequent quarter resulting in the recognition of income totaling $6.7 million, net of fees and expenses. The $6.7 million of income consisted of other interest income totaling $7.9 million, partially offset by $1.2 million of expenses related to this transaction that were recorded in employee compensation and benefits. In the second quarter of 2016, additional funds held in escrow from the note payoff were released following an arbitration proceeding and we recognized income totaling $1.9 million, net of fees and expenses. The $1.9 million of income consisted of other interest income totaling $2.5 million, partially offset by $0.6 million of expenses related to the transaction that were recorded in employee compensation and benefits. Concentration of Credit Risk Commercial mortgage loans and investments can potentially subject us to concentrations of credit risk. We are subject to concentration risk in that, at September 30, 2016, the UPB related to 34 loans with five different borrowers represented 18% of total assets. At December 31, 2015, the UPB related to 22 loans with five different borrowers represented 22% of total assets. We measure our relative loss position for our mezzanine loans, junior participation loans, and preferred equity investments by determining the point where we will be exposed to losses based on our position in the capital stack as compared to the fair value of the underlying collateral. We determine our loss position on both a first dollar loan-to-value (“LTV”) and a last dollar LTV basis. We assign a credit risk rating to each loan and investment. Individual ratings range from one to five, with one being the lowest risk and five being the highest. Each credit risk rating has benchmark guidelines that pertain to debt-service coverage ratios, LTV ratios, borrower strength, asset quality, and funded cash reserves. Other factors such as guarantees, market strength, remaining loan term, and borrower equity are also reviewed and factored into determining the credit risk rating assigned to each loan. This metric provides a helpful snapshot of portfolio quality and credit risk. Given our asset management approach, however, the risk rating process does not result in differing levels of diligence contingent upon credit rating. That is because all portfolio assets are subject to the level of scrutiny and ongoing analysis consistent with that of a “high-risk” loan. Assets are subject to, at minimum, a thorough quarterly financial evaluation in which historical operating performance and forward-looking projections are reviewed. Generally speaking, given our typical loan and investment profile, a risk rating of three suggests that we expect the loan to make both principal and interest payments according to the contractual terms of the loan agreement, and is not considered impaired. A risk rating of four indicates we anticipate that the loan will require a modification of some kind. A risk rating of five indicates we expect the loan to underperform over its term, and there could be loss of interest and/or principal. Ratings of 3.5 and 4.5 generally indicate loans that have characteristics of both the immediately higher and lower classifications. Further, while the above are the primary guidelines used in determining a certain risk rating, subjective items such as borrower strength, condition of the market of the underlying collateral, additional collateral or other credit enhancements, or loan terms, may result in a rating that is higher or lower than might be indicated by any risk rating matrix. As a result of the loan review process at September 30, 2016 and December 31, 2015, we identified loans and investments that we consider higher-risk loans that had a carrying value, before loan loss reserves, of $152.1 million and $154.7 million, respectively, and a weighted average last dollar LTV ratio of 94% and 99%, respectively. A summary of the loan portfolio’s weighted average internal risk ratings and LTV ratios by asset class is as follows: September 30, 2016 Asset Class Unpaid Principal Percentage of Wtd. Avg. Wtd. Avg. Wtd. Avg. Multifamily $ % % % Office % % % Land % % % Hotel % % % Other % % % Total $ % % % December 31, 2015 Multifamily $ % % % Office % % % Land % % % Hotel % % % Other % % % Total $ % % % Geographic Concentration Risk As of September 30, 2016, 26%, 15%, 15% and 13% of the outstanding balance of our loan and investment portfolio had underlying properties in New York, Florida, California and Texas, respectively. As of December 31, 2015, 34%, 14%, 14% and 12% of the outstanding balance of our loan and investment portfolio had underlying properties in New York, Florida, California and Texas, respectively. Impaired Loans and Allowance for Loan Losses We perform an evaluation of the loan portfolio quarterly to assess the performance of our loans and whether a reserve for impairment should be recorded. We consider a loan impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due for both principal and accrued interest according to the contractual terms of the loan agreement. A summary of the changes in the allowance for loan losses is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Allowance at beginning of period $ $ $ $ Provision for loan losses — Charge-offs — ) ) ) Charge-off on loan reclassification to real estate owned, net — ) — ) Recoveries of reserves ) ) ) ) Allownace at end of period $ $ $ $ During the second quarter of 2016, we received a $1.8 million discounted payoff on an impaired bridge loan with an aggregate carrying value before reserves of $4.8 million, resulting in the recognition of an additional provision for loan losses of $0.1 million and a charge-off of $3.0 million. The provision for loan losses recorded in the three and nine months ended September 30, 2015 was comprised of two loans and four loans, respectively, with aggregate carrying values before reserves of $117.2 million and $130.2 million, respectively. The provision for loan losses recorded in the nine month period included a loan that was transferred to real estate owned with a carrying value before reserves of $8.3 million. During the three and nine months ended September 30, 2015, we charged-off $32.0 million of previously recorded reserves due to the write-off of a fully reserved junior participation loan. We also charged-off $2.5 million in connection with the transfer of an office building by deed in lieu of foreclosure to real estate owned, net. A summary of charge-offs and recoveries by asset class are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Charge-offs: Hotel $ — $ $ — $ Office — — Multifamily — — — Total $ — $ $ $ Recoveries: Multifamily $ ) $ ) $ ) $ ) Total $ ) $ ) $ ) $ ) Net Recoveries (Charge-offs) $ $ ) $ ) $ ) Ratio of net recoveries (charge-offs) during the period to average loans and investments outstanding during the period % )% )% )% There were no loans for which the fair value of the collateral securing the loan was less than the carrying value of the loan for which we had not recorded a provision for loan loss as of September 30, 2016 and 2015. We have six loans with a carrying value totaling $120.2 million at September 30, 2016, which mature in September 2017, that are collateralized by a land development project. The loans do not carry a current pay rate of interest, but five of the loans with a carrying value totaling $110.9 million entitle us to a weighted average accrual rate of interest of 8.18%. We suspended the recording of the accrual rate of interest on these loans, as these loans were impaired and we deemed the collection of this interest to be doubtful. We have recorded cumulative allowances for loan losses of $49.1 million related to these loans as of September 30, 2016. The loans are subject to certain risks associated with a development project including, but not limited to, availability of construction financing, increases in projected construction costs, demand for the development’s outputs upon completion of the project, and litigation risk. Additionally, these loans were not classified as non-performing as the borrower is in compliance with all of the terms and conditions of the loans. A summary of our impaired loans by asset class is as follows: September 30, 2016 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Asset Class Unpaid Carrying Value Allowance for Average Recorded Interest Income Average Recorded Interest Income Multifamily $ $ $ $ $ $ $ Office Land — — Hotel Commercial — — Total $ $ $ $ $ $ $ December 31, 2015 Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Multifamily $ $ $ $ $ $ $ Office Land — — Hotel Commercial — — — — Total $ $ $ $ $ $ $ (1) Represents the UPB of impaired loans less unearned revenue and other holdbacks and adjustments by asset class and was comprised of nine loans at both September 30, 2016 and December 31, 2015. (2) Represents an average of the beginning and ending UPB of each asset class. As of September 30, 2016, four loans with an aggregate net carrying value of $1.7 million, net of related loan loss reserves on the loans of $22.9 million, were classified as non-performing. As of December 31, 2015, three loans with an aggregate net carrying value of less than $0.1 million, net of related loan loss reserves on the loans of $22.9 million, were classified as non-performing. Income from non-performing loans is generally recognized on a cash basis only to the extent it is received. Full income recognition will resume when the loan becomes contractually current and performance has recommenced. A summary of our non-performing loans by asset class is as follows: September 30, 2016 December 31, 2015 Asset Class Carrying Less Than 90 Greater Than Carrying Less Than 90 Greater Than Multifamily $ $ — $ $ $ — $ Office — — Commercial — — Total $ $ — $ $ $ — $ At September 30, 2016, we did not have any loans contractually past due 90 days or more that are still accruing interest. A summary of loan modifications, refinancings and/or extensions by asset class that we considered to be troubled debt restructurings were as follows: Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Asset Class Number Original Original Extended Extended Number Original Original Extended Extended Multifamily $ % $ % $ % $ % Office % % % % Total $ % $ % $ % $ % Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Multifamily — $ — — $ — — $ % $ % Office % % % % Total $ % $ % $ % $ % There were no loans in which we considered the modifications to be troubled debt restructurings that were subsequently considered non-performing as of September 30, 2016 and 2015 and no additional loans were considered to be impaired due to our troubled debt restructuring analysis for the three and nine months ended September 30, 2016 and 2015. These loans were modified to increase the total recovery of the combined principal and interest from the loan. Given the transitional nature of some of our real estate loans, we may require funds to be placed into an interest reserve, based on contractual requirements, to cover debt service costs. As of September 30, 2016, we had total interest reserves of $19.0 million on 74 loans with an aggregate UPB of $953.3 million. |
Loans Held-for-Sale, Net
Loans Held-for-Sale, Net | 9 Months Ended |
Sep. 30, 2016 | |
Loans Held-for-Sale, Net | |
Loans Held-for-Sale, Net | Note 6 — Loans Held-for-Sale, Net Loans held-for-sale, net consists of the following: September 30, 2016 Fannie Mae $ Freddie Mac FHA Fair value of future MSR Unearned discount Loans held-for-sale, net $ Our loans held-for-sale, net are typically sold within 60 days of the origination date. At September 30, 2016, there were no loans that were 90 days or more past due, and there were no loans that were placed on a non-accrual status. In both the three and nine months ended September 30, 2016, we sold $551.8 million of loans held-for-sale, excluding $418.2 million of sales related to loans that were acquired on July 14, 2016 as part of the Acquisition, and recorded gains on sale of $9.0 million, which in included in Fee-based services, including gain on sales, net on the consolidated statements of income. |
Available-for-Sale Securities
Available-for-Sale Securities | 9 Months Ended |
Sep. 30, 2016 | |
Available-for-Sale Securities | |
Available-for-Sale Securities | Note 7 — Available-for-Sale Securities Our available-for-sale securities generally consist of equity securities and agency commercial mortgage interest-only securities (“Agency IOs”) from loans sold and securitized under the Freddie Mac Small Balance Loan Program (“SBL Program”). Equity Securities We own common stock of CV Holdings, Inc., formerly Realty Finance Corporation, which is a commercial real estate specialty finance company. In addition, we purchased a federal home loan mortgage corporation security at a premium for $1.6 million in the fourth quarter of 2015. This security bore interest at a fixed rate of 3.241% with a scheduled maturity in 2024. We sold this security in January 2016 for $1.6 million and recognized a gain of less than $0.1 million. These securities are classified as available-for-sale and are carried at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive loss. The following is a summary of the equity securities classified as available-for-sale: September 30, 2016 Face Value Amortized Cummulative Carrying Value / 2,939,465 common shares of CV Holdings, Inc $ — $ $ $ December 31, 2015 Federal Home Loan Mortgage Corporation $ $ $ — $ 2,939,465 common shares of CV Holdings, Inc — Total available-for-sale securities $ $ $ $ Agency IOs In connection with the Acquisition, we are now an approved seller/servicer under the SBL Program and we originate and sell loans to Freddie Mac, which are then pooled and securitized. Prior to the Acquisition and upon securitization of SBL Program loans, we received Agency IOs under the SBL Program that are classified as available-for-sale. We elected the fair value option for the Agency IOs, which requires changes in fair value to be recognized through earnings. We record such gains and losses to Fee-based services, including gain on sales, net on the consolidated statements of income. As a result of recent changes in the Freddie Mac SBL Program, we do not expect to receive Agency IOs from future securitizations. A summary of our Agency IOs activity is as follows: Three and Nine Balance at beginning of period $ — Additions from the Acquisition Settlements ) Balance at end of period $ Additionally, as part of the SBL Program securitizations, we are required to purchase the bottom tranche bond, generally referred to as “the B Piece,” that represents the bottom 10%, or highest risk of the securitization. We have an agreement in place whereby a third party investor agreed to purchase the B Piece from the SBL Program securitization, at par, upon issuance of all securitizations related to us, resulting in the transfer of the risk to the purchaser of the bond. |
Investments in Equity Affiliate
Investments in Equity Affiliates | 9 Months Ended |
Sep. 30, 2016 | |
Investments in Equity Affiliates | |
Investments in Equity Affiliates | Note 8 — Investments in Equity Affiliates We account for all investments in equity affiliates under the equity method. The following is a summary of our investments in equity affiliates: Investments in Equity Affiliates at UPB of Loans to Equity Affiliates September 30, 2016 December 31, 2015 September 30, 2016 Arbor Residential Investor LLC $ $ $ — West Shore Café Lightstone Value Plus REIT L.P — Issuers of Junior Subordinated Notes — JT Prime — East River Portfolio Lexford Portfolio — Ritz-Carlton Club — — — Total $ $ $ Arbor Residential Investor LLC (“ARI”) — In the first quarter of 2015, we invested $9.6 million for 50% of our Manager’s indirect interest in a joint venture with a third party that was formed to invest in a residential mortgage banking business. As a result of this transaction, we had an initial indirect interest of 22.5% in the mortgage banking business, which is subject to dilution upon attaining certain profit hurdles of the business. During the three and nine months ended September 30, 2016, we recorded $3.9 million and $8.5 million, respectively, and during the three and nine months ended September 30, 2015, we recorded $1.3 million and $5.9 million, respectively, to income from equity affiliates in our consolidated statements of income related to this investment. In the first quarter of 2015, we invested $1.7 million through ARI for a 50% non-controlling interest in a joint venture that invests in non-qualified residential mortgages purchased from the mortgage banking business’s origination platform. We also funded $7.9 million and $4.6 million of additional mortgage purchases during 2015 and the nine months ended September 30, 2016, respectively, for a total investment of $14.2 million as of September 30, 2016. During the three and nine months ended September 30, 2016, we received cash distributions of $1.3 million and $2.5 million, respectively, which were classified as returns of capital. During the three and nine months ended September 30, 2016, we recorded income of $0.3 and $0.4 million, respectively, and, during the three and nine months ended September 30, 2015, we recorded a gain and loss of less than $0.1 million, respectively, to income from equity affiliates in our consolidated statements of income related to this investment. The summarized statements of operations for our investment in ARI are as follows: Three Months Ended September 30, Nine Months Ended September 30, Statements of Operations: 2016 2015 2016 2015 Revenue: Total revenues $ $ $ $ Total expenses Net income $ $ $ $ Arbor’s share of income $ $ $ $ Lexford Portfolio — In the three and nine months ended September 30, 2016, we received distributions from this equity investment and recognized income of $0.7 million and $2.1 million, respectively. In the third quarter of 2015, we received a distribution from this equity investment and recognized income of $3.9 million, net of expenses. The $3.9 million of income was comprised of income from equity affiliates of $4.9 million, partially offset by $1.0 million of expenses related to this distribution that were recorded in employee compensation and benefits. See Note 21 — Agreements and Transactions with Related Parties for further details. |
Real Estate Owned and Held-For-
Real Estate Owned and Held-For-Sale | 9 Months Ended |
Sep. 30, 2016 | |
Real Estate Owned and Held-For-Sale | |
Real Estate Owned and Held-For-Sale | Note 9 — Real Estate Owned and Held-For-Sale Our real estate assets were comprised of one hotel property and an office building at September 30, 2016 and three multifamily properties, two hotel properties and an office building at December 31, 2015. Real Estate Owned September 30, 2016 December 31, 2015 Hotel Property Office Total Multifamily Hotel Office Total Land $ $ $ $ $ $ $ Building and intangible assets Less: Impairment loss ) — ) — — — — Less: Accumulated depreciation and amortization ) ) ) ) ) ) ) Real estate owned, net $ $ $ $ $ $ $ For the nine months ended September 30, 2016 and 2015, our hotel properties had a weighted average occupancy rate of approximately 59% for each period, a weighted average daily rate of approximately $101 and $93, respectively, and a weighted average revenue per available room of approximately $60 and $55, respectively. The operation of a hotel property is seasonal with the majority of revenues earned in the first two quarters of the calendar year. During the second quarter of 2016, through site visits and discussion with market participants, we determined that the hotel property owned exhibited indicators of impairment and performed an impairment analysis. As a result of this impairment analysis, we recorded an impairment loss of $11.2 million. At both September 30, 2016 and December 31, 2015, our office building was fully occupied. Our real estate assets had restricted cash balances totaling $0.9 million and $1.6 million as of September 30, 2016 and December 31, 2015, respectively, due to escrow requirements. Real Estate Held-For-Sale In the second quarter of 2016, we sold the three remaining multifamily properties for $41.0 million and recognized a gain of $11.0 million. A portion of the sales proceeds were used to payoff the outstanding debt on these properties of $27.1 million. See Note 12 — Debt Obligations for further details. In the first quarter of 2016, we sold one of our hotel properties for $9.7 million and recognized a gain of $0.6 million. In the first quarter of 2015, we sold a multifamily property and a hotel property classified as held-for-sale for a total of $18.8 million and recognized a gain of $4.0 million. The results of operations for properties classified as held-for-sale are summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue: Property operating income $ — $ $ $ Expenses: Property operating expenses — Depreciation — Net income $ — $ $ $ |
Capitalized Mortgage Servicing
Capitalized Mortgage Servicing Rights | 9 Months Ended |
Sep. 30, 2016 | |
Capitalized Mortgage Servicing Rights. | |
Capitalized Mortgage Servicing Rights | Note 10 — Capitalized Mortgage Servicing Rights Our capitalized MSRs presented below reflect commercial real estate MSRs derived from loans sold in our Agency Business. The weighted average estimated life remaining of our MSRs was 6.3 years at September 30, 2016. A summary of our capitalized MSR activity is as follows: Three and Nine Balance at beginning of period $ — Additions Amortization ) Write-downs and payoffs ) Balance at end of period $ During both the three and nine months ended September 30, 2016, we recorded $1.7 million of write-offs relating to specific MSRs, primarily due to prepayments of certain loans. Prepayment fees totaling $1.5 million were collected in the three and nine months ended September 30, 2016 and are included as a component of servicing revenue, net on the statements of income. As of September 30, 2016, we had no valuation allowance recorded on any of our MSRs. The components of the net carrying value of our acquired and originated MSRs are as follows: September 30, 2016 Gross Accumulated Write-Downs Net Carrying Acquired MSRs $ $ ) $ ) $ Originated MSRs ) — Total $ $ ) $ ) $ The expected amortization of the capitalized MSRs recorded as of September 30, 2016 is shown in the table below. Actual amortization may vary from these estimates. Year Amortization 2016 (three months ended 12/31/2016) $ 2017 2018 2019 2020 2021 Thereafter Total $ |
Mortgage Servicing
Mortgage Servicing | 9 Months Ended |
Sep. 30, 2016 | |
Mortgage Servicing | |
Mortgage Servicing | Note 11 — Mortgage Servicing At September 30, 2016, our weighted average servicing fee was 48 basis points on commercial loans with an aggregate UPB of approximately $12.6 billion. We held cash in escrow for these loans totaling $403.6 million at September 30, 2016, which is not reflected in the accompanying consolidated balance sheets. These escrows are maintained in separate accounts at two federally insured depository institutions, which may exceed FDIC insured limits. An analysis of the product and geographic concentrations that impact our servicing revenue is shown in the following tables. The UPB of loans by product and by geographic area in our fee-based servicing portfolio as of September 30, 2016 is as follows: Product Concentrations Percent of Product UPB Total Fannie Mae $ % Freddie Mac % FHA % Total $ % Geographic Concentrations Percent of State Total Texas % New York % California % North Carolina % Florida % All other states % Total % No other state accounted for more than 5% of UPB and related servicing revenues. We do not have any operations outside of the United States. |
Debt Obligations
Debt Obligations | 9 Months Ended |
Sep. 30, 2016 | |
Debt Obligations | |
Debt Obligations | Note 12 — Debt Obligations We utilize various forms of short-term and long-term financing agreements to finance certain of our loans and investments, as well as other general business needs. Borrowings underlying these arrangements are primarily secured by a significant amount of our loans and investments, as well as substantially all of our loans held-for-sale. Credit Facilities and Repurchase Agreements The following table outlines borrowings under our credit facilities and repurchase agreements: September 30, 2016 December 31, 2015 Debt Principal Debt Carrying Collateral Weighted Debt Principal Debt Carrying Collateral Weighted Structured Business $150 million repurchase facility $ $ $ % $ $ $ % $100 million credit facility % % $75 million credit facility % % $75 million credit facility — — — — — — — — $50 million credit facility % % $50 million credit facility — — — — — — — — $16.5 million term credit facility — — — — % $3 million master security agreement — % — — — — Total $ $ $ % $ $ $ % Agency Business (assumed in the Acquisition) $400 million multifamily ASAP agreement $ $ $ % $150 million credit facility $ % $150 million credit facility $ % $100 million credit facility $ % Total $ $ $ % Consolidated total $ $ $ % Structured Business At September 30, 2016 and December 31, 2015, the weighted average interest rate for our credit facilities and repurchase agreements for the Structured Business, noted in the above table, was 2.78% and 2.69%, respectively. Including certain fees and costs, such as structuring, commitment, non-use and warehousing fees, the weighted average interest rate was 3.59% and 3.42% at September 30, 2016 and December 31, 2015, respectively. The leverage on our loans and investment portfolio, excluding the $3.0 million master security agreement used to finance leasehold improvements to our corporate office, was 68% and 64% at September 30, 2016 and December 31, 2015, respectively. There were no interest rate swaps on these facilities at September 30, 2016 and December 31, 2015. We have a $150.0 million repurchase facility with a financial institution initially used to finance the unwind of a significant portion of two collateralized debt obligation (“CDO”) vehicles in the first quarter of 2015. See “Collateralized Debt Obligations” below. The facility bears interest at a rate of 225 basis points over LIBOR on senior mortgage loans, 350 basis points over LIBOR on junior mortgage loans and matures in October 2018 with a one-year extension option. If the estimated market value of the loans financed in this facility decrease, we may be required to pay down borrowings under this facility. Debt carrying value is net of $0.2 million and $0.7 million of deferred financing fees at September 30, 2016 and December 31, 2015, respectively. We have a $100.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties that bears interest at a rate of 215 basis points over LIBOR and matures in May 2017 with a one-year extension option, subject to certain conditions. The facility has a maximum advance rate of 75%. Debt carrying value is net of $0.3 million and $0.3 million of deferred financing fees at September 30, 2016 and December 31, 2015, respectively. We have a $75.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties that bears interest at a rate of 212.5 basis points over LIBOR, includes a $25.0 million sublimit to finance healthcare related loans and the commitment matured in October 2016. We are currently in negotiations to renew the facility. The healthcare related loans will have an interest rate ranging from 225 basis points to 250 basis points over LIBOR depending on the type of healthcare facility financed. The facility has a maximum advance rate of 75%. Debt carrying value is net of $0.1 million of deferred financing fees at December 31, 2015. We have another $75.0 million credit facility with a financial institution to finance first mortgage loans on multifamily and commercial properties that bears interest at a rate of 200 basis points over LIBOR and matures in May 2017. The facility has a maximum advance rate of 75% and 70%, depending on the property type. We have a $50.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties. The facility bears interest at a rate of 200 basis points over LIBOR and matures in February 2017 with two one-year extension options, subject to certain conditions. Debt carrying value is net of less than $0.1 million of deferred financing fees at both September 30, 2016 and December 31, 2015. In September 2016, we entered into a $50.0 million credit facility with a financial institution to finance first mortgage loans on healthcare facilities that bears an interest rate ranging from 250 basis points to 325 basis points over LIBOR, depending on the type of healthcare facility financed, and matures in September 2019. The facility includes two one-year extension options and has a maximum advance rate of 80%. In September 2015, we entered into a $16.5 million term facility with a financial institution to finance a first mortgage loan. The facility bore interest at a rate of 275 basis points over LIBOR and was scheduled to mature in December 2016. In the second quarter of 2016, the loan paid off and we repaid this facility in full. We have two notes payable under a master security agreement with a financial institution which was used to finance leasehold improvements to our corporate office, which were assumed as part of the Acquisition. The two notes bear interest at a weighted average fixed rate of 3.21%, require monthly amortization payments and mature in 2020. Agency Business In connection with the Acquisition, we assumed the following debt obligations used to finance the loans held-for-sale on our Agency Business. We have a $400.0 million Multifamily As Soon as Pooled Plus (“ASAP”) agreement with Fannie Mae. The agreement has no commitment amount or expiration date and bears interest at a rate of 105 basis points over LIBOR (with a LIBOR Floor of 0.35%). ASAP provides us with a warehousing credit facility for mortgage loans that are to be sold to Fannie Mae and serviced under the Fannie Mae DUS program. We have a $150.0 million credit facility with a financial institution to warehouse agency loans, and as collateral, the financial institution has a security interest in the underlying mortgage notes. The facility bears interest at a rate of 140 basis points over LIBOR and matures in November 2016. We are currently in negotiations to renew the facility. We have a $150.0 million credit facility with a financial institution to warehouse agency loans, and as collateral, the financial institution has a security interest in the underlying mortgage notes. The facility bears interest at a rate of 140 basis points over LIBOR and matures in July 2017. Debt carrying value is net of $0.1 million of deferred financing fees at September 30, 2016. We have a $100.0 million credit facility with a financial institution to warehouse agency loans, and as collateral, the financial institution has a security interest in the underlying mortgage notes. The facility bears interest at a rate of 135 basis points over LIBOR and matures in June 2017. We have a letter of credit facility of up to $40.0 million with a financial institution pursuant to which letters of credit have been issued to secure obligations under the Fannie Mae DUS program and the Freddie Mac SBL Program. The letter of credit facility bears interest at a fixed rate of 3.00%, matures in October 2018 and is primarily collateralized by our servicing revenue as approved by Fannie Mae and Freddie Mac. The letter of credit facility includes a sublimit of $5.0 million pertaining to letters of credit securing obligations under the Freddie Mac SBL Program. At September 30, 2016, the letters of credit outstanding include a $35.0 million letter of credit for the Fannie Mae DUS program and a $5.0 million letter of credit for the Freddie Mac SBL Program. Collateralized Loan Obligations (CLOs) In August 2016, we completed a collateralized securitization vehicle (“CLO VI”), issuing to third party investors three tranches of investment grade CLOs through two newly-formed wholly-owned subsidiaries totaling $250.3 million. As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $275.4 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio. The financing has a three year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance will be reduced as loans are repaid. Initially, the proceeds of the issuance of the securities also included $49.6 million for the purpose of acquiring additional loan obligations for a period of up to 120 days from the closing date of the CLO. In October 2016, the additional proceeds were fully utilized resulting in the issuer owning loan obligations with a face value of $325.0 million. We retained a residual interest in the portfolio with a notional amount of $74.8 million. The notes have an initial weighted average interest rate of 2.48% plus one-month LIBOR and interest payments on the notes are payable monthly. Including certain fees and costs, the initial weighted average note rate was 3.44%. In August 2015, we completed a collateralized securitization vehicle (“CLO V”), issuing to third party investors three tranches of investment grade CLOs through two newly-formed wholly-owned subsidiaries totaling $267.8 million, of which we purchased $12.5 million of Class C notes that we subsequently sold at par for $12.5 million. As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $302.6 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio. The financing has an approximate three year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance will be reduced as loans are repaid. Initially, the proceeds of the issuance of the securities also included $47.4 million for the purpose of acquiring additional loan obligations for a period of up to 120 days from the closing date of the CLO. In September 2015, the additional proceeds were fully utilized resulting in the issuer owning loan obligations with a face value of $350.0 million. We retained a residual interest in the portfolio with a notional amount of $82.3 million. The notes have an initial weighted average interest rate of 2.44% plus one-month LIBOR and interest payments on the notes are payable monthly. Including certain fees and costs, the initial weighted average note rate was 3.07%. In March 2015, we completed the unwinding of CLO II, redeeming $177.0 million of our outstanding notes which were repaid primarily from the refinancing of the remaining assets within our new and existing financing facilities as well as with cash held by the CLO and expensed $1.5 million of deferred fees in the first quarter of 2015 into interest expense on the consolidated statements of income. In February 2015, we completed a collateralized securitization vehicle (“CLO IV”), issuing to third party investors three tranches of investment grade CLOs through two newly-formed wholly-owned subsidiaries totaling $219.0 million. At closing, the notes were secured by a portfolio of loan obligations with a face value of $250.0 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio, as well as $50.0 million for the purpose of acquiring additional loan obligations. The financing has an approximate 2.5 year replacement period from closing that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance will be reduced as loans are repaid. We retained a residual interest in the portfolio with a notional amount of $81.0 million. The notes had an initial weighted average interest rate of 2.24% plus one-month LIBOR and interest payments on the notes are payable monthly. Including certain fees and costs, the initial weighted average note rate was 2.96%. The following table outlines borrowings and the corresponding collateral under our CLOs: Debt Collateral (1) Loans Cash Face Value Carrying Value Unpaid Principal Carrying Value Restricted September 30, 2016 CLO III $ $ $ $ $ CLO IV CLO V CLO VI Total CLOs $ $ $ $ $ December 31, 2015 CLO III $ $ $ $ $ CLO IV CLO V Total CLOs $ $ $ $ $ (1) As of September 30, 2016 and December 31, 2015, there was no collateral at risk of default or deemed to be a “credit risk” as defined by the CLO indenture. (2) Represents restricted cash held for principal repayments as well as for reinvestment in the CLOs. Does not include restricted cash related to interest payments, delayed fundings and expenses. CLO III — Issued three investment grade tranches in April 2014 with a replacement period through October 2016 and a stated maturity date in May 2024. Interest is variable based on one-month LIBOR; the weighted average note rate was 2.97% and 2.86% at September 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $1.1 million and $2.1 million of deferred financing fees at September 30, 2016 and December 31, 2015, respectively. CLO IV — Issued three investment grade tranches in February 2015 with a replacement period through September 2017 and a stated maturity date in March 2025. Interest is variable based on one-month LIBOR; the weighted average note rate was 2.81% and 2.71% at September 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $2.2 million and $3.0 million of deferred financing fees at September 30, 2016 and December 31, 2015, respectively. CLO V — Issued three investment grade tranches in August 2015 with a replacement period through September 2018 and a stated maturity date in September 2025. Interest is variable based on one-month LIBOR; the weighted average note rate was 3.01% and 2.91% at September 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $3.2 million and $3.8 million of deferred financing fees at September 30, 2016 and December 31, 2015, respectively. CLO VI — Issued three investment grade tranches in August 2016 with a replacement period through August 2019 and a stated maturity date in September 2026. Interest is variable based on one-month LIBOR; the weighted average note rate was 3.05% at September 30, 2016. Debt carrying value is net of $4.1 million of deferred financing fees at September 30, 2016. At September 30, 2016 and December 31, 2015, the aggregate weighted average note rate for our CLOs was 2.97% and 2.84%, respectively. Including certain fees and costs, the weighted average note rate was 3.36% and 3.24% at September 30, 2016 and December 31, 2015, respectively. We account for our CLO transactions on our consolidated balance sheet as financing facilities. Our CLOs are VIEs for which we are the primary beneficiary and are consolidated in our financial statements accordingly. The investment grade tranches are treated as secured financings, and are non-recourse to us. Collateralized Debt Obligations (CDOs) In July 2015, we completed the unwind of CDO III, our last remaining CDO vehicle, redeeming $71.1 million of our outstanding notes. The notes were repaid primarily from proceeds received from the refinancing of CDO III’s remaining assets within our existing financing facilities, as well as with cash held by the CDO. We also terminated a related interest rate swap in the third quarter of 2015. CDO III had a $100.0 million revolving note class that provided a revolving note facility, which was paid off in the first quarter of 2015. In January 2015, we completed the unwind of CDO I and CDO II, redeeming $167.9 million of our outstanding notes. The notes were repaid primarily from proceeds received from the refinancing of CDO I and II’s remaining assets within a new $150.0 million warehouse repurchase facility and our existing financing facilities, as well as with cash held by each CDO. As a result of this transaction, we generated approximately $30.0 million in cash equity and reduced the balance of estimated interest by $11.0 million, which resulted in recording a gain on acceleration of deferred income in the consolidated statements of income, in the first quarter of 2015. We also terminated the related basis and interest rate swaps, which resulted in a loss of $4.3 million, and expensed $0.5 million of deferred fees in the first quarter of 2015. See Note 14 — Derivative Financial Instruments for additional details. In 2010, we re-issued our own CDO bonds we had acquired throughout 2009 with an aggregate face amount of $42.8 million as part of an exchange for the retirement of $114.1 million of our junior subordinated notes. This transaction resulted in the recording of $65.2 million of additional CDO debt, of which $42.3 million represents the portion of our CDO bonds that were exchanged and $22.9 million represents the estimated interest due on the reissued bonds through their maturity. In January 2015, we unwound our CDO I and CDO II vehicles and reduced the balance of estimated interest by $11.0 million and in July 2015, we unwound our CDO III vehicle and reduced the remaining balance of estimated interest by $8.2 million, recording a gain on acceleration of deferred income in the consolidated statements of income. Senior Unsecured Notes During 2014, we issued $90.0 million aggregate principal amount of 7.375% senior unsecured notes due in 2021 in an underwritten public offering for net proceeds of $85.4 million after deducting the issuance and underwriting discounts and offering expenses. In connection with this offering, the underwriters exercised a portion of their overallotment option for a $7.8 million aggregate principal amount providing additional net proceeds of $7.4 million. The notes can be redeemed by us after May 15, 2017. The interest is paid quarterly in February, May, August and November. Including certain fees and costs, the weighted average note rate was 8.15% and 8.12% at September 30, 2016 and December 31, 2015, respectively. The debt carrying value of $94.3 million and $93.8 million at September 30, 2016 and December 31, 2015, respectively, is net of $3.6 million and $4.1 million, respectively, of deferred financing fees. We used the net proceeds to make investments, to repurchase or pay liabilities and for general corporate purposes. Junior Subordinated Notes The carrying value of borrowings under our junior subordinated notes was $157.7 million and $157.1 million at September 30, 2016 and December 31, 2015, respectively, which is net of a deferred amount of $15.0 million and $15.5 million, respectively, that is being amortized into interest expense over the life of the notes and $3.2 million and $3.3 million, respectively, of deferred financing fees. These notes have maturities ranging from March 2034 through April 2037, pay interest quarterly at a fixed or floating rate of interest based on three-month LIBOR and were not redeemable for the first two years. The current weighted average note rate was 3.67% and 3.43% at September 30, 2016 and December 31, 2015, respectively. Including certain fees and costs, the weighted average note rate was 3.79% and 3.55% at September 30, 2016 and December 31, 2015, respectively. The entities that issued the junior subordinated notes have been deemed VIEs. See Note 15 — Variable Interest Entities for further details. Mortgage Note Payable — Real Estate Owned In the first quarter of 2015, we made required paydowns of $10.3 million and repaid the $20.7 million mortgage related to our multifamily properties, replacing it with two new notes payable totaling $27.2 million. In the second quarter of 2016, we sold the remaining multifamily properties and these notes payable were paid in full. Related Party Financing In connection with the Acquisition, we entered into a $50.0 million preferred equity interest financing agreement with our Manager to finance a portion of the aggregate purchase price. The debt has a five year term with a preferred return of 7% through December 31, 2016, increasing by 1% per annum thereafter, with a maximum rate of 12%. In addition, after eighteen months, the principal balance due is scheduled to increase over time with $62.5 million due if the debt remained outstanding until the end of the five-year term. Interest expense associated with this financing is recorded using the effective yield method. As of September 30, 2016, the outstanding principal balance was $50.0 million and, during both the three and nine months ended September 30, 2016, we recorded interest expense of $0.8 million. Debt Covenants Credit Facilities and Repurchase Agreements The credit facilities and repurchase agreements also contain various financial covenants related to the Company and/or its subsidiaries, including, but not limited to, minimum liquidity requirements, minimum net worth requirements, as well as certain other debt service coverage ratios, debt to equity ratios and minimum servicing portfolio tests. We were in compliance with all financial covenants and restrictions at September 30, 2016. CLOs Our CLO vehicles contain interest coverage and asset overcollateralization covenants that must be met as of the waterfall distribution date in order for us to receive such payments. If we fail these covenants in any of our CLOs, all cash flows from the applicable CLO would be diverted to repay principal and interest on the outstanding CLO bonds and we would not receive any residual payments until that CLO regained compliance with such tests. Our CLOs were in compliance with all such covenants as of September 30, 2016, as well as on the most recent determination dates in October 2016. In the event of a breach of the CLO covenants that could not be cured in the near-term, we would be required to fund our non-CLO expenses, including management fees and employee costs, distributions required to maintain our REIT status, debt costs, and other expenses with (i) cash on hand, (ii) income from any CLO not in breach of a covenant test, (iii) income from real property and loan assets, (iv) sale of assets, or (v) or accessing the equity or debt capital markets, if available. We have the right to cure covenant breaches which would resume normal residual payments to us by purchasing non-performing loans out of the CLOs. However, we may not have sufficient liquidity available to do so at such time. A summary of our CLO compliance tests as of the most recent determination dates in October 2016 is as follows: Cash Flow Triggers CLO III CLO IV CLO V CLO VI Overcollateralization (1) Current % % % % . Limit % % % % Pass / Fail Pass Pass Pass Pass Interest Coverage (2) Current % % % % Limit % % % % Pass / Fail Pass Pass Pass Pass (1) The overcollateralization ratio divides the total principal balance of all collateral in the CLO by the total principal balance of the bonds associated with the applicable ratio. To the extent an asset is considered a defaulted security, the asset’s principal balance for purposes of the overcollateralization test is the lesser of the asset’s market value or the principal balance of the defaulted asset multiplied by the asset’s recovery rate which is determined by the rating agencies. Rating downgrades of CLO collateral will generally not have a direct impact on the principal balance of a CLO asset for purposes of calculating the CLO overcollateralization test unless the rating downgrade is below a significantly low threshold (e.g. CCC-) as defined in each CLO vehicle. (2) The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by us. A summary of our CLO overcollateralization ratios as of the determination dates subsequent to each quarter is as follows: Determination (1) CLO III CLO IV CLO V CLO VI October 2016 % % % % July 2016 % % % — April 2016 % % % — January 2016 % % % — October 2015 % % % — (1) The table above represents the quarterly trend of our overcollateralization ratio, however, the CLO determination dates are monthly and we were in compliance with this test for all periods presented. The ratio will fluctuate based on the performance of the underlying assets, transfers of assets into the CLOs prior to the expiration of their respective replenishment dates, purchase or disposal of other investments, and loan payoffs. No payment due under the junior subordinated indentures may be paid if there is a default under any senior debt and the senior lender has sent notice to the trustee. The junior subordinated indentures are also cross-defaulted with each other. Convertible Unsecured Senior Notes (Subsequent Event) In October 2016, we issued $86.25 million aggregate principal amount of 6.50% convertible unsecured senior notes (the “Notes”), including the underwriter’s $11.25 million over-allotment option. The Notes mature on October 1, 2019, unless earlier converted or repurchased by the holders pursuant to their terms. We received proceeds of $82.8 million, net of transaction fees, from the offering which is intended to be used to make investments in our business and for general corporate purposes. The Notes pay interest semiannually in arrears at a rate of 6.50% per year. We do not have the right to redeem the Notes prior to maturity. The Notes are convertible into, at our election, cash, shares of our common stock or a combination of both, subject to the satisfaction of certain conditions and during specified periods. The Notes have a conversion rate of 119.3033 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $8.38 per share of common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events and the holders may require us to repurchase all or any portion of their Notes for cash equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if we undergo a fundamental change as specified in the agreement. |
Allowance for Loss-Sharing Obli
Allowance for Loss-Sharing Obligations | 9 Months Ended |
Sep. 30, 2016 | |
Allowance for Loss-Sharing Obligations | |
Allowance for Loss-Sharing Obligations | Note 13 — Allowance for Loss-Sharing Obligations A summary of our allowance for loss-sharing obligations related to the Fannie Mae DUS program is as follows: Three and Nine Beginning balance $ — Allowance for loss-sharing obligations assumed in the Acquisition Provisions for loss sharing Charge-offs, net ) Ending balance When we settle a loss under the DUS loss-sharing model, the net loss is charged-off against the previously recorded loss-sharing obligation. The settled loss is often net of any previously advanced principal and interest payments in accordance with the DUS program, which are reflected as reductions to the proceeds needed to settle losses. At September 30, 2016, we had outstanding advances of $0.7 million, which were netted against the allowance for loss-sharing obligations. At September 30, 2016, the maximum quantifiable liability associated with our guarantees under the Fannie Mae DUS agreement was $1.9 billion. The maximum quantifiable liability is not representative of the actual loss we would incur. We would be liable for this amount only if all of the loans we service for Fannie Mae, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | Note 14 — Derivative Financial Instruments Structured Business The following is a summary of the derivative financial instruments held by our Structured Business (dollars in thousands): Notional Value Balance Fair Value Designation/ Derivative Count September 30, Count December 31, Expiration Sheet September 30, December 31, Qualifying LIBOR Caps 2 $ 2 $ 2017 Other Assets $ — $ Qualifying Interest Rate Swaps 4 $ 5 $ 2016 - 2017 Other Liabilities $ ) $ ) The changes in the fair value of qualifying interest rate swap cash flow hedges are recorded in accumulated other comprehensive loss on the consolidated balance sheets. These swap agreements must be effective in reducing the variability of cash flows of the hedged items in order to qualify for the aforementioned hedge accounting treatment. These interest rate swaps are used to hedge the variable cash flows associated with existing variable-rate debt, and amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the nine months ended September 30, 2016, one interest rate swap matured with a notional value of $1.7 million. As of September 30, 2016, we expect to reclassify $(1.3) million of other comprehensive loss from qualifying cash flow hedges to interest expense over the next twelve months assuming interest rates on that date are held constant. During the nine months ended September 30, 2015, CDO I and CDO II were unwound and the related interest rate swaps with an aggregate notional value of $134.6 million and an aggregate fair value of $(4.3) million were terminated and recorded as a loss in the first quarter of 2015. See Note 12 — Debt Obligations for further details. Also during the nine months ended September 30, 2015, we entered into a qualifying LIBOR cap hedge due to a CLO agreement requiring a LIBOR cap of 2% with a notional value of $43.5 million. Gains and losses on terminated swaps are being deferred and recognized in earnings over the original life of the hedged item. As of September 30, 2016 and December 31, 2015, we had a net deferred loss of $0.2 million and $0.6 million, respectively, in accumulated other comprehensive loss related to these terminated swap agreements. We recorded $0.2 million as additional interest expense related to the amortization of the loss for both the three months ended September 30, 2016 and 2015, and less than $0.1 million as a reduction to interest expense related to the accretion of the net gains for both the three months ended September 30, 2016 and 2015. We recorded $0.5 million as additional interest expense related to the amortization of the loss for both the nine months ended September 30, 2016 and 2015, and $0.1 million as a reduction to interest expense related to the accretion of the net gains for both the nine months ended September 30, 2016 and 2015. We expect to record approximately $0.2 million of net deferred loss to interest expense over the next twelve months. Non-qualifying basis swap hedges were used to manage our exposure to interest rate movements and other identified risks but do not meet hedge accounting requirements. During the nine months ended September 30, 2015, our remaining basis swap with a notional value of $3.0 million and a fair value of less than $0.1 million was terminated as part of the CDO II unwind and a loss was recorded in the nine months September 30, 2015. The following table presents the effect of our derivative financial instruments on the statements of income (dollars in thousands): Designation / Amount of Loss Amount of Loss Amount of Loss Amount of Loss Cash Flow Derivative 2016 2015 2016 2015 2016 2015 2016 2015 Non-Qualifying Basis Swaps $ — $ — $ — $ — $ — $ — $ — $ ) Qualifying Interest Rate Swaps/Cap $ $ $ ) $ ) $ — $ ) $ — $ — The cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as qualifying hedges as of September 30, 2016 and December 31, 2015 of $(1.4) million and $(5.3) million, respectively, is a combination of the fair value of qualifying cash flow hedges of $(1.2) million and $(4.7) million, respectively, and net deferred losses on terminated interest rate swaps of $(0.2) million and $(0.6) million, respectively. We have agreements with certain of our derivative counterparties that contain a provision where if we default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. As of September 30, 2016 and December 31, 2015, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, was $(1.1) million and $(4.6) million, respectively. As of September 30, 2016 and December 31, 2015, we had minimum collateral posting thresholds with certain of our derivative counterparties and had posted collateral of $1.6 million and $5.0 million, respectively, which is recorded in other assets in our consolidated balance sheets. Agency Business The following is a summary of the derivative financial instruments held by our Agency Business (dollars in thousands): Notional Value Fair Value September 30, 2016 Designation/Cash Derivative Count September 30, Balance Sheet Derivative Derivative Non-Qualifying Rate Lock Commitments $ Other Assets/ Other Liabilities $ $ ) Non-Qualifying Forward Sale Commitments Other Assets/ Other Liabilities ) $ $ $ ) We enter into contractual commitments to originate and sell mortgage loans at fixed prices with fixed expiration dates. The commitments become effective when the borrower “rate locks” a specified interest rate within time frames established by us. All potential borrowers are evaluated for creditworthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the rate lock by the borrower and the sale date of the loan to an investor. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, we enter into a forward sale commitment with the investor simultaneous with the rate lock commitment with the borrower. The forward sale contract with the investor locks in an interest rate and price for the sale of the loan. The terms of the contract with the investor and the rate lock with the borrower are matched in substantially all respects, with the objective of eliminating interest rate risk to the extent practical. Sale commitments with the investors have an expiration date that is longer than our related commitments to the borrower to allow, among other things, for the closing of the loan and processing of paperwork to deliver the loan into the sale commitment. For the three months ended September 30, 2016, we recorded $0.2 million of net gains from changes in the fair value of these derivatives in other income, net and $16.0 million of income from mortgage servicing rights which were reflected on the consolidated statements of income. See Note 16 – Fair Value for additional information related to our derivative financial instruments. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2016 | |
Variable Interest Entities | |
Variable Interest Entities | Note 15 — Variable Interest Entities We have evaluated our loans and investments, mortgage related securities, investments in equity affiliates, senior unsecured notes, junior subordinated notes, operating partnership, CLOs and Agency IOs, in order to determine if they qualify as VIEs or as variable interests in VIEs. This evaluation resulted in determining that our bridge loans, junior participation loans, mezzanine loans, preferred equity investments, investments in equity affiliates, junior subordinated notes, operating partnership, CLOs, Agency IOs and investments in mortgage related securities are potential VIEs. Our involvement with VIEs primarily affects our financial performance and cash flows through amounts recorded in interest income, interest expense, provision for loan losses and through activity associated with our derivative instruments. Consolidated VIEs In the first quarter of 2016, we adopted the amended guidance on the consolidation of VIEs, modifying the analysis we must perform to determine whether we should consolidate certain types of legal entities. Under the revised guidance, our operating partnership, ARLP, was determined to be a VIE. As this operating partnership is already consolidated in our financial statements, the identification of this entity as a VIE has no impact on our consolidated financial statements, as all of our assets and liabilities are held in this consolidated VIE. Our CLO subsidiaries, of which we are the primary beneficiary and qualify as VIEs, are owned by our operating partnership ARLP, which is consolidated in our financial statements. These CLOs invest in real estate and real estate-related securities and are financed by the issuance of CLO debt securities. We, or one of our affiliates, are named collateral manager, servicer, and special servicer for all CLO collateral assets which we believe gives us the power to direct the most significant economic activities of the entity. We also have exposure to CLO losses to the extent of our equity interests and also have rights to waterfall payments in excess of required payments to CLO bond investors. As a result of consolidation, equity interests in these CLOs have been eliminated, and the consolidated balance sheets reflect both the assets held and debt issued by the CLOs to third parties. Our operating results and cash flows include the gross amounts related to CLO assets and liabilities as opposed to our net economic interests in the CLO entities. The assets and liabilities related to these consolidated CLOs are as follows: September 30, 2016 December 31, 2015 Assets: Restricted cash $ $ Loans and investments, net Due from related party Other assets Total assets $ $ Liabilities: Collateralized loan obligations $ $ Due to related party — Other liabilities Total liabilities $ $ Assets held by the CLOs are restricted and can be used only to settle obligations of the CLOs. The liabilities of the CLOs are non-recourse to us and can only be satisfied from each CLOs respective asset pool. See Note 12 — Debt Obligations for further details. We are not obligated to provide, have not provided, and do not intend to provide financial support to any of the consolidated CLOs. Unconsolidated VIEs We determined that we are not the primary beneficiary of 22 VIEs in which we have a variable interest as of September 30, 2016 because we do not have the ability to direct the activities of the VIEs that most significantly impact each entity’s economic performance. VIEs, of which we are not the primary beneficiary, have an aggregate carrying amount of $277.5 million and exposure to real estate debt of approximately $2.5 billion at September 30, 2016. The following is a summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of September 30, 2016: Type Carrying Amount Maximum Loans $ $ Agency IOs Equity investments Junior subordinated notes (3) Total $ $ (1) Represents the carrying amount of loans and investments before reserves. At September 30, 2016, $149.6 million of loans to VIEs had corresponding loan loss reserves of $77.6 million. See Note 5 — Loans and Investments for further details. (2) Our maximum exposure to loss as of September 30, 2016 would not exceed the carrying amount of its investment. (3) It is not appropriate to consolidate these entities as equity interests are variable interests only to the extent that the investment is considered to be at risk. Since our investments were funded by the entities that issued the junior subordinated notes, it is not considered to be at risk. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value | |
Fair Value | Note 16 — Fair Value Fair Value of Financial Instruments Fair value estimates are dependent upon subjective assumptions and involve significant uncertainties resulting in variability in estimates with changes in assumptions. The following table summarizes the principal amounts, carrying values and the estimated fair values of our financial instruments: September 30, 2016 December 31, 2015 Principal / Carrying Value Estimated Fair Principal / Carrying Value Estimated Fair Financial assets: Loans and investments $ $ $ $ $ $ Loans held-for-sale, net — — — Capitalized mortgage servicing rights, net n/a — — — Available-for-sale securities Derivative financial instuments Financial liabilities: Credit and repurchase facilities $ $ $ $ $ $ Collateralized loan obligations Senior unsecured notes Junior subordinated notes Mortgage note payable - real estate owned — — — Related party financing — — — Derivative financial instruments Fair Value Measurement Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. Assets and liabilities disclosed at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities are as follows: Level 1 — Inputs are unadjusted and quoted prices exist in active markets for identical assets or liabilities at the measurement date, such as government and agency securities and equities listed in active markets. Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 2 inputs include quoted market prices in markets that are not active for an identical or similar asset or liability, and quoted market prices in active markets for a similar asset or liability. Examples of Level 2 assets and liabilities include non-government securities, certain mortgage and asset-backed securities, certain corporate debt and certain derivative instruments. Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. These valuations are based on significant unobservable inputs that require a considerable amount of judgment and assumptions. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Examples of Level 3 assets and liabilities include certain mortgage and asset-backed securities, certain corporate debt and certain derivative instruments. Determining which category an asset or liability falls within the hierarchy requires significant judgment and we evaluate our hierarchy disclosures each quarter. The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy. Loans held-for-sale, net: Consists of originated loans that are generally transferred or sold within 60 days from the date that a mortgage loan is funded, and are valued using pricing models that incorporate observable inputs from current market assumptions (Level 2). Fair values of loans held-for-sale include the fair value allocated to the associated future mortgage servicing rights and is calculated pursuant to the valuation techniques described below for capitalized mortgage servicing rights, net (Level 3). Loans and investments, net: Fair values of loans and investments that are not impaired are estimated using Level 3 inputs based on discounted cash flow methodology, using discount rates, which, in the opinion of management, best reflect current market interest rates that would be offered for loans with similar characteristics and credit quality. Fair values of loans and investments that are impaired are estimated using Level 3 inputs by us that require significant judgments, which include assumptions regarding discount rates, capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by management. Available-for-sale securities: Fair values are approximated based on current market quotes received from active markets or financial sources that trade such securities. The fair values of available-for-sale equity securities traded in active markets are approximated using Level 1 inputs, while the fair values of available-for-sale debt securities that are approximated using recent purchase price and subsequent sales price of the securities, were valued using Level 2 inputs. The fair value of our Agency IOs were approximated using Level 3 inputs and are derived from third party proprietary models using discounted cash flows based on the underlying contractual cash flows and require significant judgements, including assumptions on discount rates and constant prepayment rates. Derivative financial instruments: Fair values of interest rate and basis swap derivatives and LIBOR caps are approximated using Level 2 inputs based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well recognized financial principles including counterparty risks, credit spreads and interest rate projections, as well as reasonable estimates about relevant future market conditions. Fair values of rate lock and forward sale commitments are approximated using valuation techniques, which include internally-developed models developed based on changes in the U.S. Treasury rate and other observable market data (Level 2). The fair value of rate lock commitments includes the fair value of the expected net cash flows associated with the servicing of the loan, see capitalized mortgage servicing rights, net below for further details on the applicable valuation technique (Level 3). We also consider the impact of counterparty non-performance risk when measuring the fair value of these derivatives. Given the credit quality of our counterparties, the short duration of interest rate lock commitments and forward sale contracts, and our historical experience, the risk of nonperformance by our counterparties is not significant. Capitalized mortgage servicing rights, net : Fair values are estimated using Level 3 inputs based on discounted future net cash flow methodology. The fair value of MSRs carried at amortized cost are estimated using a process that involves the use of independent third-party valuation experts, supported by commercially available discounted cash flow models and analysis of current market data to arrive at an estimate of fair value. The key inputs used in estimating fair value of MSRs include the contractually specified servicing fees, prepayment speed of the underlying loans, discount rate, annual per loan cost to service loans, delinquency rates, late charges and other economic factors. Credit facilities, repurchase agreements and mortgage notes payable: Fair values of the credit facilities and repurchase agreements for the Structured Business are estimated at Level 3 using discounted cash flow methodology, using discount rates, which, in the opinion of management, best reflect current market interest rates for financing with similar characteristics and credit quality. The majority of our credit facilities for the Agency Business bear interest at rates that are similar to those available in the market currently and the fair values are estimated using Level 2 inputs. For these facilities, the fair values approximate the carrying values reported in the balance sheets. Related party financing: Fair values are estimated at Level 3 based on broker quotations, representing the discounted expected future cash flows at a yield that reflects current market interest rates and credit spreads. Collateralized loan obligations: Fair values are estimated at Level 3 based on broker quotations, representing the discounted expected future cash flows at a yield that reflects current market interest rates and credit spreads. Senior unsecured notes: Fair values are estimated at Level 1 based on current market quotes received from active markets. Junior subordinated notes: Fair values are estimated at Level 3 based on broker quotations, representing the discounted expected future cash flows at a yield that reflects current market interest rates and credit spreads. We measure certain financial assets and financial liabilities at fair value on a recurring basis. The fair value of these financial assets and liabilities was determined using the following input levels as of September 30, 2016: Carrying Fair Value Measurements Using Fair Value Fair Value Level 1 Level 2 Level 3 Financial assets: Available-for-sale securities $ $ $ $ — $ Derivative financial instruments — Financial liabilities: Derivative financial instruments $ $ $ — $ $ — See Note 7 — Available-for-Sale Securities for a roll-forward of our available-for-sale securities fair valued using Level 3 inputs. We measure certain financial assets at fair value on a nonrecurring basis. The fair values of these financial assets were determined using the following input levels as of September 30, 2016: Net Carrying Fair Value Measurements Using Fair Value Fair Value Level 1 Level 2 Level 3 Financial assets: Impaired loans, net (1 ) $ $ $ — $ — $ (1) We had an allowance for loan losses of $83.8 million relating to eight loans with an aggregate carrying value, before loan loss reserves, of $186.5 million at September 30, 2016. Loan impairment assessments: Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and net of the allowance for loan losses, when such loan or investment is deemed to be impaired. We consider a loan impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement. We perform evaluations of our loans to determine if the value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan, which may result in an allowance and corresponding charge to the provision for loan losses. These valuations require significant judgments, which include assumptions regarding capitalization and discount rates, revenue growth rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by management. The table above includes all impaired loans, regardless of the period in which the impairment was recognized. Quantitative information about Level 3 fair value measurements were as follows: September 30, 2016 Valuation Fair Value Techniques Significant Unobservable Inputs Financial assets: Impaired loans (1): Discount rate % Office $ Discounted cash flows Capitalization rate % Revenue growth rate % Discount rate % Land Discounted cash flows Capitalization rate % Revenue growth rate % Discount rate % Hotel Discounted cash flows Capitalization rate % Revenue growth rate % Derivative financial instruments: Rate lock commitments Discounted cash flows W/A discount rate % (1) Includes all impaired loans regardless of the period in which a loan loss provision was recorded. The derivative financial instruments using Level 3 inputs are outstanding for short periods of time (generally less than 60 days). A roll forward of Level 3 derivative instruments were as follows: Fair Value Measurements Using Derivative assets and liabilities, net Balance at beginning of period $ — Additions from the Acquisition Settlements ) Realized gains recorded in earnings Unrealized gains recorded in earnings Balance at end of period $ The following table presents the components of fair value and other relevant information associated with our rate lock commitments, forward sales commitments and the estimated fair value of cash flows from servicing on loans held-for-sale. Notional/ Fair Value of Interest Rate Total Fair Value September 30, 2016 Rate lock commitments $ $ $ ) $ Forward sale commitments — Loans held-for-sale, net (1) — Total $ $ $ (1) Loans held-for-sale, net are recorded at the lower of cost or market on an aggregate basis and includes fair value adjustments related to estimated cash flows from mortgage servicing rights. We measure certain assets and liabilities for which fair value is only disclosed. The fair value of these assets and liabilities was determined using the following input levels as of September 30, 2016: Fair Value Measurements Using Fair Value Hierarchy Carrying Value Fair Value Level 1 Level 2 Level 3 Financial assets: Loans and investments, net $ $ $ — $ — $ Loans held-for-sale, net — — Capitalized mortgage servicing rights, net — — Financial liabilities: Credit facilities and repurchase agreements $ $ $ — $ $ Collateralized loan obligations — — Senior unsecured notes — — Junior subordinated notes — — Related party financing — — |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 17 — Commitments and Contingencies Agency Business Commitments The Agency Business is subject to supervision by certain regulatory agencies. Among other things, these agencies require us to meet certain minimum net worth, operational liquidity and restricted liquidity collateral requirements, and compliance with reporting requirements. Our adjusted net worth and liquidity required by the agencies for all periods presented exceeded these requirements. As of September 30, 2016, we were required to maintain at least $10.4 million of liquid assets in one of our subsidiaries to meet our operational liquidity requirements for Fannie Mae and we had operational liquidity in excess of this requirement. We are generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program and are required to secure this obligation by assigning restricted cash balances and/or a letter of credit to Fannie Mae. The amount of collateral required by Fannie Mae is a formulaic calculation at the loan level by a Fannie Mae assigned tier which considers the balance of the loan, the risk level of the loan, the age of the loan and the level of risk-sharing. Fannie Mae requires restricted liquidity for Tier 2 loans of 75 basis points, 15 basis points for Tier 3 loans and 5 basis points for Tier 4 loans, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. A significant portion of our Fannie Mae DUS serviced loans for which we have risk sharing are Tier 2 loans. As of September 30, 2016, we met the restricted liquidity requirement with a $35.0 million letter of credit and $2.0 million of cash collateral. As of September 30, 2016, reserve requirements for the September 30, 2016 Fannie Mae DUS loan portfolio will require us to fund $21.0 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at-risk portfolio. Fannie Mae periodically reassesses these collateral requirements and may make changes to these requirements in the future. We generate sufficient cash flow from our operations to meet these capital standards and do not expect any changes to have a material impact on our future operations; however, future changes to collateral requirements may adversely impact our available cash. We are subject to various capital requirements in connection with seller/servicer agreements that we have entered into with secondary market investors. Failure to maintain minimum capital requirements could result in our inability to originate and service loans for the respective investor and, therefore, could have a direct material effect on our consolidated financial statements. As of September 30, 2016, we met all of Fannie Mae’s quarterly capital requirements. As of September 30, 2016, our Fannie Mae adjusted net worth was in excess of the required net worth. We are not subject to capital requirements on a quarterly basis for GNMA or FHA, as such requirements for these investors are only required on an annual basis. As an approved designated seller/servicer under Freddie Mac’s SBL Program, we are required to post collateral to ensure that we are able to meet certain purchase and loss obligations required by this program. Under the SBL Program, we are required to post collateral equal to $5.0 million, which we utilize letters of credit to fund. At September 30, 2016, we had an outstanding letter of credit of $5.0 million in satisfaction of our requirements under this program. See Note 12 — Debt Obligations for additional details about the $40.0 million letter of credit agreement we entered into for our restricted cash requirements for the Fannie Mae DUS and Freddie Mac SBL Programs. We enter into contractual commitments with borrowers providing rate lock commitments while simultaneously entering into forward sale commitments with investors. These commitments are outstanding for short periods of time (generally less than 60 days) and are described in further detail in Note 14 – Derivative Financial Instruments and Note 16 – Fair Value. Debt Obligations and Operating Leases As of September 30, 2016, the maturities of our credit facilities and debt obligations, as well as the minimum annual operating lease payments under leases with a term in excess of one year, were as follows: Year Debt Minimum Annual Total 2016 (three months ended December 31, 2016) $ $ $ 2017 2018 2019 2020 2021 Thereafter Total $ $ $ (1) Represents office leases assumed in connection with the Acquisition. Unfunded CLO Commitments In accordance with certain loans and investments, we have outstanding unfunded commitments of $32.3 million as of September 30, 2016 that we are obligated to fund as the borrowers meet certain requirements. Of this total, we have $1.9 million in restricted cash which was available to fund all of the unfunded commitments for loans financed by our CLO vehicles. Specific requirements include, but are not limited to, property renovations, building construction, and building conversions based on criteria met by the borrower in accordance with the loan agreements. Litigation We currently are neither subject to any material litigation nor, to our knowledge, are any material litigation currently threatened against us other than the following: On June 15, 2011, three related lawsuits were filed by the Extended Stay Litigation Trust (the “Trust”), a post-bankruptcy litigation trust alleged to have standing to pursue claims that previously had been held by Extended Stay, Inc. and the Homestead Village L.L.C. family of companies (together “ESI”) (formerly Chapter 11 debtors, together the “Debtors”) that have emerged from bankruptcy. Two of the lawsuits were filed in the U.S. Bankruptcy Court for the Southern District of New York, and the third in the Supreme Court of the State of New York, New York County. There were 73 defendants in the three lawsuits, including 55 corporate and partnership entities and 18 individuals. A subsidiary of ours and certain other entities that are affiliates of ours are included as defendants. The New York State Court action has been removed to the Bankruptcy Court. Our affiliates filed a motion to dismiss the three lawsuits. The lawsuits all allege, as a factual basis and background certain facts surrounding the June 2007 leveraged buyout of ESI from affiliates of Blackstone Capital. Our subsidiary, Arbor ESH II, LLC, had a $115.0 million investment in the Series A1 Preferred Units of a holding company of Extended Stay, Inc. The New York State Court action and one of the two federal court actions name as defendants, Arbor ESH II, LLC, Arbor Commercial Mortgage, LLC and ABT-ESI LLC, an entity in which we have a membership interest, among the broad group of defendants. These two actions were commenced by substantially identical complaints. The defendants are alleged in these complaints, among other things, to have breached fiduciary and contractual duties by causing or allowing the Debtors to pay illegal dividends or other improper distributions of value at a time when the Debtors were insolvent. These two complaints also allege that the defendants aided and abetted, induced, or participated in breaches of fiduciary duty, waste, and unjust enrichment (“Fiduciary Duty Claims”) and name a director of ours, and a former general counsel of Arbor Commercial Mortgage, LLC, each of whom had served on the Board of Directors of ESI for a period of time. We are defending these two defendants and paying the costs of such defense. On the basis of the foregoing allegations, the Trust has asserted claims under a number of common law theories, seeking the return of assets transferred by the Debtors prior to the Debtors’ bankruptcy filing. In the third action, filed in Bankruptcy Court, the same plaintiff, the Trust, has named Arbor Commercial Mortgage, LLC and ABT-ESI LLC, together with a number of other defendants and asserts claims, including constructive and fraudulent conveyance claims under state and federal statutes, as well as a claim under the Federal Debt Collection Procedure Act. On June 28, 2013, the Trust filed a motion to amend the lawsuits, to, among other things, (i) consolidate the lawsuits into one lawsuit, (ii) remove 47 defendants, none of whom are related to us, from the lawsuits so that there are 26 remaining defendants, including 16 corporate and partnership entities and 10 individuals, and (iii) reduce the counts within the lawsuits from over 100 down to 17. The remaining counts in the amended complaint against our affiliates are principally state law claims for breach of fiduciary duties, waste, unlawful dividends and unjust enrichment, and claims under the Bankruptcy Code for avoidance and recovery actions, among others. The bankruptcy court granted the motion and the amended complaint has been filed. The amended complaint seeks approximately $139.0 million in the aggregate from director designees, portions of which are also sought from our affiliates as well as from unaffiliated defendants. We have moved to dismiss the referenced actions and intend to vigorously defend against the claims asserted therein. During a status conference held on March 18, 2014, the Court heard oral argument on the motion to dismiss and adjourned the case pending a ruling. We have not made a loss accrual for this litigation because we believe that it is not probable that a loss has been incurred and an amount cannot be reasonably estimated. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2016 | |
Equity | |
Equity | Note 18 — Equity Preferred Stock The Series A, B and C preferred stock may not be redeemed by us before February 2018, May 2018 and February 2019, respectively. Noncontrolling Interest The noncontrolling interest relates to the 21,230,769 OP Units issued to ACM to satisfy a portion of the aggregate purchase price of the Acquisition. The value of these OP units at the Acquisition date was $154.8 million. Each of these OP Units are paired with one share of our Special Voting Preferred Shares having a par value of $0.01 per share and is entitled to one vote each on any matter submitted for stockholder approval, which represents approximately 29.2% of the voting power of our outstanding stock at September 30, 2016. The OP Units are entitled to receive distributions if and when our Board of Directors authorizes and declares future common stock distributions. The OP Units are also redeemable for cash, or at our option, for shares of our common stock on a one-for-one basis. Common Stock In August 2016, we amended the equity distribution agreement, dated February 13, 2014, with JMP Securities LLC. In accordance with the terms of the amendment, we may offer and sell up to 7,500,000 common shares in “At-The-Market” equity offerings with JMP Securities LLC. We have not sold any shares under this agreement during the three months ended September 30, 2016. In July 2016, we filed, and the SEC declared effective, a new shelf registration statement for $500.0 million of debt securities, common stock, preferred stock, depositary shares and warrants. Distributions The following table presents dividends declared (on a per share basis) for the nine months ended September 30, 2016: Common Stock Preferred Stock Dividend (1) Declaration Date Dividend Declaration Date Series A Series B Series C February 24, 2016 $ February 1, 2016 $ $ $ May 4, 2016 $ May 2, 2016 $ $ $ August 3, 2016 $ August 1, 2016 $ $ $ (1) The dividend declared on February 1, 2016 for the Series A, B and C preferred stock was for the period December 1, 2015 through February 29, 2016. The dividend declared on May 2, 2016 for the Series A, B and C preferred stock was for the period March 1, 2016 through May 31, 2016. The dividend declared on August 1, 2016 for the Series A, B and C preferred stock was for the period June 1, 2016 through August 31, 2016. Common Stock — On November 17, 2016, the Board of Directors declared a cash dividend of $0.16 per share of common stock. The dividend is payable on November 30, 2016 to common stockholders of record as of the close of business on November 21, 2016. Preferred Stock — On November 2, 2016, the Board of Directors declared a cash dividend of $0.515625 per share of 8.25% Series A preferred stock; a cash dividend of $0.484375 per share of 7.75% Series B preferred stock; and a cash dividend of $0.53125 per share of 8.50% Series C preferred stock. These amounts reflect dividends from September 1, 2016 through November 30, 2016 and are payable on November 30, 2016 to preferred stockholders of record on November 15, 2016. Deferred Compensation In March 2016, we issued 282,405 shares of restricted common stock under the 2014 Omnibus Stock Incentive Plan (the “2014 Plan”) to certain employees of ours and our Manager with a total grant date fair value of $1.9 million and recorded $0.2 million to employee compensation and benefits and $0.5 million to selling and administrative expense in our consolidated statements of income. One third of the shares vested as of the date of grant, one third will vest in March 2017, and the remaining third will vest in March 2018. In March 2016, we also issued 67,260 shares of fully vested common stock to the independent members of the Board of Directors under the 2014 Plan and recorded $0.4 million to selling and administrative expense in our consolidated statements of income. During the first quarter of 2016, we issued 70,225 shares of restricted common stock to Mr. Ivan Kaufman, our chairman and chief executive officer, under his 2015 annual incentive agreement with a grant date fair value of $0.5 million and recorded $0.1 million to employee compensation and benefits in our consolidated statements of income. One quarter of the shares vested as of the date of grant and one quarter will vest on each of the first, second and third anniversaries of the date of grant. Mr. Kaufman was also granted up to 421,348 performance-based restricted stock units that vest at the end of a four-year performance period based on our achievement of certain total stockholder return objectives. The restricted stock units had a grant date fair value of $0.9 million and we recorded less than $0.1 million to employee compensation and benefits in our consolidated statements of income. To date under his 2015 annual incentive agreement, Mr. Kaufman was granted in the aggregate up to 867,113 performance-based restricted stock units. As of September 30, 2016, unvested restricted stock consisted of 202,037 shares granted to our employees with a grant date fair value of $1.4 million and 195,139 shares granted to employees of our Manager with a grant date fair value of $1.3 million, which is subject to re-measurement each reporting period. Expense is recognized ratably over the vesting period in our consolidated statements of income in employee compensation and benefits expense and selling and administrative expense, respectively. During the three months ended September 30, 2016 and 2015, we recorded the ratable portion of the unvested restricted stock to employees as employee compensation and benefits for $0.2 million and $0.2 million, respectively, and for non-employees to selling and administrative expense for $0.2 million and $0.1 million, respectively. During the nine months ended September 30, 2016 and 2015, we recorded the ratable portion of the unvested restricted stock to employees as employee compensation and benefits for $0.5 million and $0.7 million, respectively, and for non-employees to selling and administrative expense for $0.7 million and $0.5 million, respectively. During the first quarter of 2016, a total of 1,001 shares of unvested restricted stock with a grant date value of less than $0.1 million were forfeited. Vesting of restricted shares is dependent on a service requirement. Dividends paid on restricted shares are recorded as dividends on shares of our common stock whether or not they are vested. For accounting purposes, we measure the compensation costs for these shares as of the date of the grant, with subsequent re-measurement for any unvested shares granted to non-employees of ours with such amounts expensed against earnings, at the grant date (for the portion that vest immediately) or ratably over the respective vesting periods. Accumulated Other Comprehensive Loss At September 30, 2016, accumulated other comprehensive loss was $1.1 million and consisted of $1.2 million of net unrealized losses on derivatives designated as cash flow hedges and $0.2 million of net deferred losses on terminated interest swaps, partially offset by a $0.3 million unrealized gain related to available-for-sale securities. At December 31, 2015, accumulated other comprehensive loss was $4.8 million and consisted of $4.7 million of net unrealized losses on derivatives designated as cash flow hedges, and $0.6 million of net deferred losses on terminated interest swaps, less a $0.4 million unrealized gain related to available-for-sale securities. Reclassifications out of accumulated other comprehensive loss is as follows: Nine Months Ended September 30, 2016 2015 Statement of Income Caption Net realized losses on derivatives designated as cash flow hedges: Interest rate swaps $ ) $ ) Interest expense (1) Termination of interest rate swaps $ — $ ) Loss on termination of swaps (1) (1) See Note 14 — Derivative Financial Instruments for additional details. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share | |
Earnings Per Share | Note 19 — Earnings Per Share Basic EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period inclusive of unvested restricted stock with full dividend participation rights. Diluted EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect of common stock equivalents during each period using the treasury stock method. Our common stock equivalents are comprised of the weighted average dilutive effect of performance-based restricted stock units granted to our chief executive officer in the first quarter of 2016 and 2015 and OP Units issued in connection with the Acquisition. The following is a reconciliation of the numerator and denominator of the basic and diluted EPS computations: Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Basic Diluted Basic Diluted Net income attributable to common stockholders (1) $ $ $ $ Net income attributable to noncontrolling interest — — — Net income attributable to common stockholders and nocontrolling interest $ $ $ $ Weighted average shares outstanding Dilutive effect of OP Units (2) — — — Dilutive effect of restricted stock units (3) — — — Weighted average shares outstanding Net income per common share (1) $ $ $ $ Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Net income attributable to common stockholders (1) $ $ $ $ Net income attributable to noncontrolling interest — — — — Net income attributable to common stockholders and nocontrolling interest $ $ $ $ Weighted average shares outstanding Dilutive effect of OP Units (2) — — — — Dilutive effect of restricted stock units (3) — — Weighted average shares outstanding Net income per common share (1) $ $ $ $ (1) Net of preferred stock dividends. (2) We consider OP Units to be common stock equivalents as the holder has voting rights, the right to distributions and the right to redeem the OP Units for the cash value of a corresponding number of shares of common stock or a corresponding number of shares of common stock, at our election. For the nine months ended September 30, 2016, the OP Units were considered anti-dilutive and excluded from diluted EPS. (3) Mr. Kaufman was granted restricted stock units in 2016 and 2015 which vest at the end of a four-year performance period based upon our achievement of total shareholder return objectives. See Note 18 — Equity for further details. |
Employee Benefits
Employee Benefits | 9 Months Ended |
Sep. 30, 2016 | |
Employee Benefits | |
Employee Benefits | Note 20 — Employee Benefits In connection with the Acquisition, we assumed a 401(k) defined contribution plan (the “ 401(k) Plan ”) and a non-qualified deferred compensation plan ( the “Deferred Comp Plan ”). The 401(k) Plan is available to all employees who have completed six months of continuous service. The 401(k) Plan matches 25% of the first 6% of each employee’s contribution. We have the option to increase the employer match based on our operating results. In both the three and nine months ended September 30, 2016, we recorded $0.2 million of expenses associated with the 401(k) Plan. The Deferred Comp Plan is offered to certain full-time employees and is subject to the rules of section 409(a) of the Internal Revenue Code. Under the Deferred Comp Plan, which can be modified or discontinued at any time, participating employees may defer a portion of their compensation and we are contractually obligated to match the contribution, as specified in the Deferred Comp Plan, and fund such amounts upon vesting and an election by participants to redeem their interests. All employee deferrals vest immediately and matching contributions vest over a nine year period beginning after year five. For both the three and nine months ended September 30, 2016, there were $0.4 million of employee deferrals. As of September 30, 2016, we had recorded liabilities totaling $3.2 million and other assets of $2.6 million related to the Deferred Comp Plan. |
Agreements and Tansactions with
Agreements and Tansactions with Related Parties | 9 Months Ended |
Sep. 30, 2016 | |
Agreements and Transactions with Related Parties | |
Agreements and Transactions with Related Parties | Note 21 — Agreements and Transactions with Related Parties Management Agreement We, ARLP and Arbor Realty SR, Inc. have a management agreement with our Manager, pursuant to which our Manager provides certain services and we pay our Manager a base management fee and under certain circumstances, an annual incentive fee. The base management fee is an arrangement whereby we reimburse our Manager for its actual costs incurred in managing our business based on the parties’ agreement in advance on an annual budget with subsequent quarterly true-ups to actual costs. The incentive management fee is measured on an annual basis and is calculated pursuant to the terms of the management agreement. The minimum return, or incentive fee hurdle to be reached before an incentive fee is earned, is a percentage applied on a per share basis to the greater of $10.00 or the average gross proceeds per share. In addition, 60% of any loan loss and other reserve recoveries are eligible to be included in the incentive fee calculation, which recoveries are spread over a three year period. The management agreement also allows us to consider, from time to time, the payment of additional “success-based” fees to our Manager for accomplishing certain specified corporate objectives; has a termination fee of $10.0 million; and is renewable automatically for successive one-year terms, unless terminated with six months prior written notice. If we terminate or elect not to renew the management agreement without cause, we are required to pay the termination fee of $10.0 million. We have a two year option to purchase the existing management agreement and fully internalize our management structure for $25.0 million (increasing to $27.0 million in the second year). See Note 3 — Acquisition of Our Manager’s Agency Platform for further details. The following table sets forth our base management fees and incentive fees: Three Months Ended Nine Months Ended September 30, September 30, Management Fees: 2016 2015 2016 2015 Base $ $ $ $ Incentive — — — — Total management fee $ $ $ $ For the three and nine months ended September 30, 2016 and 2015, no “success-based” fees were incurred. Other Related Party Transactions Due from related party was $0.5 million and $8.1 million at September 30, 2016 and December 31, 2015, respectively, and consisted primarily of paydowns to be remitted and escrows held by our Manager and its affiliates related to real estate transactions. Due to related party was $18.6 million at September 30, 2016 and consisted primarily of $11.4 million of cash due to ACM in connection with an acquisition purchase price adjustment, $3.4 million of dividends due to ACM from the OP Units issued in connection with the Acquisition and $3.0 million of base management fees due to our Manager, of which $15.4 million is expected to be remitted by us in the following quarter. At December 31, 2015, due to related party was $3.4 million and consisted primarily of base management fees due to our Manager that we remitted in the following quarter. In September 2016, we originated $48.0 million of bridge loans on six multifamily properties owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman and our Manager, who together own interests ranging from approximately 7.8% to 9.0% in the borrowing entities. The loans have an interest rate of LIBOR plus 4.50% with a LIBOR floor of 0.25% and mature in September 2019. Interest income recorded from these loans totaled $0.1 million for both the three and nine months ended September 30, 2016. In January 2016, we originated a $12.7 million bridge loan and a $5.2 million preferred equity investment on two multifamily properties owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 50% in the borrowing entity. The bridge loan has an interest rate of one-month LIBOR plus 4.50% with a LIBOR floor of 0.25% and matures in January 2019. The preferred equity investment has a fixed interest rate of 10% and a maturity date of April 2016, which was extended as of right to November 2016. Interest income recorded from these loans totaled $0.3 million and $0.9 million for the three and nine months ended September 30, 2016, respectively. In January 2016, we originated a $19.0 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 7.5% in the borrowing entity. The loan has an interest rate of one-month LIBOR plus 4.50% with a LIBOR floor of 0.25% and matures in January 2019. Interest income recorded from this loan totaled $0.3 million and $0.7 million for the three and nine months ended September 30, 2016, respectively. In November 2015, we originated a $7.1 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 7.5% in the borrowing entity. The loan has an interest rate of LIBOR plus 4.50% with a LIBOR floor of 0.25% and matures in November 2018 with two one-year extension options. Interest income recorded from this loan totaled $0.1 million and $0.3 million for the three and nine months ended September 30, 2016, respectively. In October 2015, we originated two bridge loans totaling $16.7 million secured by multifamily properties acquired by a third party investor. The properties had been owned and were sold by a consortium of investors, consisting of certain of our officers, including Mr. Kaufman, certain other related parties and certain unaffiliated persons. The loans have an interest rate of LIBOR plus 5.00% with a LIBOR floor of 0.25% and mature in October 2017. Interest income recorded from these loans totaled $0.3 million and $0.8 million for the three and nine months ended September 30, 2016, respectively. In April 2015, we originated a $6.3 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman and our Manager, who together own an interest of approximately 90% in the borrowing entity. The loan has an interest rate of LIBOR plus 4.50% with a LIBOR floor of 0.25% and matures in April 2018. Interest income recorded from this loan totaled $0.1million and $0.2 million for the three and nine months ended September 30, 2016, respectively, and $0.1 million for both the three and nine months ended September 30, 2015. In February 2015, we modified an $18.0 million preferred equity investment, increasing our balance to $23.0 million with a fixed interest rate of 10% and a maturity date in February 2018. In order to accomplish the modification, we formed a joint venture with a consortium of investors consisting of certain of our officers, including Mr. Kaufman, and other related parties, to invest in an additional $2.0 million preferred equity investment that is generally subordinate to ours. During the second quarter of 2016, the preferred equity investment was repaid in full and we received proceeds of $1.0 million, which was allocated to the consortium of investors. Interest income recorded from this loan was $1.0 million for the nine months ended September 30, 2016, respectively, and $0.6 million and $1.7 million for the three and nine months ended September 30, 2015, respectively. In the first quarter of 2015, we invested $9.6 million for 50% of our Manager’s indirect interest in a joint venture with a third party that was formed to invest in a residential mortgage banking business. As a result of this transaction, we had an initial indirect interest of 22.5% in this entity. In 2015, we also invested a total of $9.7 million through this joint venture in non-qualified residential mortgages purchased from the mortgage banking business’s origination platform. During the nine months ended September 30, 2016, we funded an additional $4.6 million, net into these non-qualified residential mortgages. We recorded income of $4.2 million and $8.9 million from these investments during the three and nine months ended September 30, 2016, respectively, and $1.4 million and $5.9 million for the three and nine months ended September 30, 2015, respectively. See Note 8 — Investment in Equity Affiliates for further details. In 2014, we invested $0.1 million for a 5% interest in a joint venture that owns two multifamily properties. The joint venture consists of a consortium of investors consisting of certain of our officers, including Mr. Kaufman, and other related parties, who together own an interest of approximately 95%. In 2014, we originated two bridge loans totaling $5.0 million to the joint venture with an interest rate of 5.5% over one-month LIBOR and a maturity date extended as of right to September 2016. During the third quarter of 2016, one of the loans was repaid in full and we received proceeds of $3.3 million, which was allocated to the consortium of investors, and the remaining loan was extended as of right to December 2016. Interest income recorded from these loans was $0.1 million and $0.2 million for the three and nine months ended September 30, 2016, respectively, and $0.1 million and $0.2 million for the three and nine months ended September 30, 2015. In 2014, we originated a $30.4 million bridge loan for an office property owned by a consortium of investors, including Mr. Kaufman and his affiliates, who together own an interest of approximately 24% in the borrowing entity. The loan has an interest rate of LIBOR plus 7.90% with a LIBOR floor of 0.50% and a maturity date that was extended to July 2017. In January 2016, we also originated a $4.6 million mezzanine loan to this entity that has a fixed interest rate of 12% and a maturity date that was extended to July 2017. Interest income recorded from these loans was $0.9 million and $2.6 million for the three and nine months ended September 30, 2016, respectively, and $0.7 million and $2.1 million for the three and nine months ended September 30, 2015, respectively. In 2014, our Manager purchased a property subject to two loans originated by us, a first mortgage of $14.6 million and a second mortgage of $5.1 million, both with maturity dates of April 2016 and an interest rate of LIBOR plus 4.80%. During the first quarter of 2016, the $5.1 million second mortgage was repaid in full by our Manager. The $14.6 million first mortgage was extended as of right to March 2017. Interest income recorded from these loans totaled $0.2 million and $0.7 million for the three and nine months ended September 30, 2016, respectively, and $0.2 million and $0.6 million for the three and nine months ended September 30, 2015, respectively. In June 2013, our Board of Directors formed a special committee consisting of independent directors in connection with the acquisition of our Manager’s Agency Business, as well as the option to internalize the management of our current business. In February 2016, we entered into a Purchase Agreement and on July 14, 2016 we completed the Acquisition for $275.8 million. See Note 3 — Acquisition of Our Manager’s Agency Platform for further details. In 2011, we restructured a preferred equity investment on the Lexford Portfolio (“Lexford”), which is a portfolio of multifamily assets. In connection with this restructuring, we, along with an executive officer of ours and a consortium of independent outside investors, made an additional preferred and direct equity investment. Both of our preferred equity investments were repaid in full by the third quarter of 2015. Interest income recorded from such preferred equity investments were $0.1 million and $0.2 million for the three and nine months ended September 30, 2015, respectively. As a result of the direct equity investment, which was also repaid in the third quarter of 2015, we received distributions totaling $5.5 million during 2015 and additional distributions of $0.7 million and $2.1 million in the three and nine months ended September 30, 2016, respectively, which were recorded as income from equity affiliates. In addition, under the terms of the restructuring, Lexford’s first mortgage lender required a change of property manager for the underlying assets. The new management company is owned primarily by a consortium of affiliated investors including Mr. Kaufman and an executive officer of ours, and has a contract with the new entity for 7.5 years and is entitled to 4.75% of gross revenues of the underlying properties, along with the potential to share in the proceeds of a sale or refinancing of the debt should the management company remain engaged by the new entity at the time of such capital event. We have provided limited (“bad boy”) guarantees for certain debt controlled by Lexford. The bad boy guarantees may become a liability for us upon standard “bad” acts such as fraud or a material misrepresentation by Lexford or us. At September 30, 2016, this debt had an aggregate outstanding balance of $848.2 million and is scheduled to mature between 2017 and 2025. We are dependent upon our Manager with whom we have a conflict of interest, to provide services to us that are vital to our operations. Our chairman, chief executive officer and president, Mr. Ivan Kaufman, is also the chief executive officer and president of our Manager, and, our chief financial officer and treasurer, Mr. Paul Elenio, is the chief financial officer of our Manager. In addition, Mr. Kaufman and his affiliated entities (“the Kaufman Entities”) together beneficially own approximately 92% of the outstanding membership interests of our Manager and certain of our employees and directors also hold an ownership interest in our Manager. Furthermore, one of our former directors is general counsel to our Manager and another of our directors also serves as the trustee of one of the Kaufman Entities that holds a majority of the outstanding membership interests in our Manager and co-trustee of another Kaufman Entity that owns an equity interest in our Manager. Our Manager holds 5,349,053 of our common shares, and upon the closing of the Acquisition in July 2016, our Manager was issued 21,230,769 OP Units, each paired with one share of our Special Voting Preferred Shares which in total represents approximately 36.6% of the voting power of our outstanding stock. Our Board of Directors approved a resolution under our charter allowing Mr. Kaufman and our Manager, (which Mr. Kaufman has a controlling equity interest in), to own more than the 5% ownership interest limit of our common stock as stated in our charter as amended. |
Due to Borrowers
Due to Borrowers | 9 Months Ended |
Sep. 30, 2016 | |
Due to Borrowers | |
Due to Borrowers | Note 22 — Due to Borrowers Due to borrowers represents borrowers’ funds held by us to fund certain expenditures or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans. While retained, these balances earn interest in accordance with the specific loan terms they are associated with. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information | |
Segment Information | Note 23 — Segment Information As a result of the Acquisition, we currently evaluate our results from operations from two major business segments — our Structured Business and our Agency Business. See Note 1 — Description of Business for a detailed description of each segment. The summarized statements of income and balance sheet data, as well as certain other data, by segment are included in the following tables. Specifically identifiable costs are recorded directly to each business segment. For items not specifically identifiable, costs have been allocated between the business segments using the most meaningful allocation methodologies, which was predominately direct labor costs (i.e., time spent working on each business segment). Such costs include, but are not limited to, compensation and employee related costs, selling and administrative expenses, management fees and stock-based compensation. All amounts are before amounts allocated to noncontrolling interest. Three Months Ended September 30, 2016 Structured Agency Other / Consolidated Interest income $ $ $ — $ Interest expense Net interest income ) Other revenue: Fee-based services, including gain on sales, net — — Mortgage servicing rights — — Servicing revenue, net — — Property operating income — — Other income, net — Total other revenue — Other expenses: Employee compensation and benefits — Selling and administrative — Acquisition costs — — Property operating expenses — — Depreciation and amortization — Provision for loss sharing — — Provision for loan losses (net of recoveries) ) — — ) Management fee - related party — Total other expenses Income before income from equity affiliates and provision for income taxes ) Income from equity affiliates — — Provision for income taxes — ) — ) Net income $ $ $ ) $ Three Months Ended September 30, 2015 Structured Agency Other / Consolidated Interest income $ $ — $ — $ Interest expense — — Net interest income — — Other revenue: Property operating income — — Other income, net — — Total other revenue — — Other expenses: Employee compensation and benefits — — Selling and administrative — — Acquisition costs — — Property operating expenses — — Depreciation and amortization — — Provision for loan losses (net of recoveries) — — Management fee - related party — — Total other expenses — Income before gain on acceleration of deferred income, loss on termination of swaps and income from equity affiliates — ) Gain on acceleration of deferred income — — Loss on termination of swaps ) — — ) Income from equity affiliates — — Net income $ $ — $ ) $ Nine Months Ended September 30, 2016 Structured Agency Other / Consolidated Interest income $ $ $ — $ Other interest income, net — — Interest expense Net interest income ) Other revenue: Fee-based services, including gain on sales, net — — Mortgage servicing rights — — Servicing revenue, net — — Property operating income — — Other income, net — Total other revenue — Other expenses: Employee compensation and benefits — Selling and administrative — Acquisition costs — — Property operating expenses — — Depreciation and amortization — Impairment loss on real estate owned — — Provision for loss sharing — — Provision for loan losses (net of recoveries) ) — — ) Management fee - related party — Total other expenses Income before gain on sale of real estate, income from equity affiliates and provision for income taxes ) Gain on sale of real estate — — Income from equity affiliates — — Provision for income taxes — ) — ) Net income $ $ $ ) $ Nine Months Ended September 30, 2015 Structured Agency Other / Consolidated Interest income $ $ — $ — $ Other interest income, net — — Interest expense — — Net interest income — — Other revenue: Property operating income — — Other income, net — — Total other revenue — — Other expenses: Employee compensation and benefits — — Selling and administrative — — Acquisition costs — — Property operating expenses — — Depreciation and amortization — — Provision for loan losses (net of recoveries) — — Management fee - related party — — Total other expenses — Income before gain on acceleration of deferred income, loss on termination of swaps, gain on sale of real estate and income from equity affiliates — ) Gain on acceleration of deferred income — — Loss on termination of swaps ) — — ) Gain on sale of real estate — — Income from equity affiliates — — Net income $ $ — $ ) $ September 30, 2016 Structured Business Agency Business Other / Eliminations Consolidated Assets: Cash and cash equivalents $ $ $ — $ Restricted cash — Loans and investments, net — — Loans held-for-sale, net — — Capitalized mortgage servicing rights, net — — Investments in equity affiliates — — Goodwill and other intangible assets — — Other assets — Total assets $ $ $ — $ Liabilities: Debt obligations $ $ $ $ Allowance for loss-sharing obligations — — Other liabilities Total liabilities $ $ $ $ December 31, 2015 Structured Business Agency Business Other / Eliminations Consolidated Assets: Cash and cash equivalents $ $ — $ — $ Restricted cash — — Loans and investments, net — — Investments in equity affiliates — — Other assets — — Total assets $ $ — $ — $ Liabilities: Debt obligations $ $ — $ — $ Other liabilities — Total liabilities $ $ — $ $ Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended Origination Data: Structured Business New loan originations $ $ $ $ Loan payoffs / paydowns Agency Business Origination Volumes by Investor: Fannie Mae $ $ Freddie Mac FHA Total $ $ Total loan commitment volume $ $ Loan Sales Data: Agency Business Fannie Mae $ $ Freddie Mac FHA Total $ (1) $ (1) Sales margin (fee-based services as a % of loan sales) % % MSR rate (MSR income as a % of loan commitments) % % (1) Loan sales were $970.0 million for the three and nine months ended September 30, 2016, including loans that were acquired as part of the Acquisition. September 30, 2016 UPB of Servicing Weighted Average Weighted Average Life Key Servicing Metrics for Agency Business: Fannie Mae $ Freddie Mac FHA Total $ |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation | |
Loans Held-for-Sale, Net | Loans Held-for-Sale, Net Loans held-for-sale, net represents commercial real estate loans originated in our Agency Business, which are generally transferred or sold within 60 days from the date that the mortgage loan is funded. Such loans are reported at the lower of cost or market on an aggregate basis and include the value allocated to the associated future mortgage servicing rights. During the period prior to its sale, interest income on a loan held-for-sale is calculated in accordance with the terms of the individual loan and the loan origination fees and direct loan origination costs are deferred until the loan is sold. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated, put presumptively beyond the reach of the entity, even in bankruptcy, (2) the transferee (or if the transferee is an entity whose sole purpose is to engage in securitization and the entity is constrained from pledging or exchanging the assets it receives, each third-party holder of its beneficial interests) has the right to pledge or exchange the transferred financial assets, and (3) we or our agents does not maintain effective control over the transferred financial assets or third-party beneficial interest related to those transferred assets through an agreement to repurchase them before their maturity. We have determined that all loans sold have met these specific conditions and accounts for all transfers of mortgage loans as completed sales. |
Capitalized Mortgage Servicing Rights | Capitalized Mortgage Servicing Rights We recognize, as separate assets, rights to service mortgage loans for others, including such rights that are created by the origination of mortgage loans that are sold with the servicing rights retained by the originator. Income from mortgage servicing rights (“MSRs”) is recognized when we record a derivative asset upon the commitment to originate a loan with a borrower and sell the loan to an investor. This commitment asset is recognized at fair value, which reflects the estimated fair value of the expected net cash flows associated with the servicing of the loan. When a mortgage loan is sold, we retain the right to service the loan and recognize the MSR at the initial capitalized valuation. We amortize MSRs using the amortization method, which requires the MSRs to be amortized in proportion to and over the period of estimated net servicing income or net servicing loss and that the servicing assets or liabilities be assessed for impairment, or increased obligation, based on the fair value at each reporting date. Amortization of MSRs is recorded as a reduction of servicing revenues, net on the consolidated statements of income. The following assumptions were used in calculating each loan’s MSR for the periods presented: Key rates: We used discount rates ranging from 8% to 18%, representing a weighted average discount rate of 13%, based on management’s best estimate of market discount rates to determine the present value of MSRs. The inflation rate used for adequate compensation was 3%. Servicing Cost: The estimated future cost to service the loan for the estimated life of the MSR is subtracted from the estimated future cash flows. Estimated Life: We estimate the life of our MSRs based upon the stated yield maintenance and/or prepayment protection term of the underlying loan and may be reduced by 6 to 12 months based upon the expiration of various types of prepayment penalty and/or lockout provisions prior to that stated maturity date. We carry MSRs at the lower of amortized cost or fair value and evaluate the carrying value for impairment on a portfolio basis quarterly. Fair values are estimated considering market prices for similar MSRs, when available, and by estimating the present value of the future net cash flows of the capitalized MSRs, net of adequate compensation for servicing. Adequate compensation is based on the market rate of similar servicing contracts. We estimate the terms of commercial servicing for each loan by assuming that servicing would not end prior to the yield maintenance date, if applicable, at which point the prepayment penalty expires. MSRs are amortized in proportion to and over the period of estimated net servicing income. We engage an independent third party to assist in determining an estimated fair value of our MSR portfolio on a quarterly basis. We measure the impairment of MSRs based on the difference between the aggregate carrying amount of the MSRs and their aggregate fair value. For purposes of impairment evaluation, the MSRs are stratified based on predominant risk characteristics of the underlying loans, which we have identified as loan type, note rate and yield maintenance provisions. To the extent that the carrying value of the MSRs exceeds fair value, a valuation allowance is established. We record write-offs of MSRs related to the loans that were repaid prior to the expected maturity and loans that have defaulted and determined to be unrecoverable. When this occurs, the write-off is recorded as a direct write-down to the carrying value of MSRs and is included as a component of servicing revenue, net on the statements of income. This direct write-down permanently reduces the carrying value of the MSRs, precluding recognition of subsequent recoveries. |
Derivative Assets and Liabilities | Derivative Assets and Liabilities Our rate lock and forward sales commitments associated with the Agency Business meet the definition of a derivative and are recorded at fair value in our consolidated balance sheets. The estimated fair value of rate lock commitments includes the effects of interest rate movements as well as the fair value of the expected net cash flows associated with the servicing of the loan which is recorded as income from mortgage servicing rights on the consolidated statements of income. The estimated fair value of forward sale commitments includes the effects of interest rate movements between the trade date and balance sheet date. Adjustments to the fair value are reflected as a component of other income, net on the consolidated statements of income. |
Business Combinations | Business Combinations Business combinations are accounted for under the acquisition method of accounting, under which the purchase price is allocated to the fair value of the assets acquired and liabilities assumed at the acquisition date. The excess of the purchase price over the amount allocated to the assets acquired and liabilities assumed is recorded as goodwill. Adjustments to the assets acquired and liabilities assumed made during the measurement period are recorded in the period in which the adjustment is identified, with a corresponding adjustment to goodwill. If any adjustments are made subsequent to the measurement period, which could be up to one year after the acquisition date, these adjustments are recorded to the consolidated statements of income. Acquisition related costs are expensed as incurred. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Significant judgement is required to estimate the fair value of intangible assets and in assigning their respective estimated useful lives. Accordingly, we typically seek the assistance of independent third party valuation specialists for significant intangible assets. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management. We generally use an income based valuation method to estimate the fair value of intangible assets, which discounts expected future cash flows to present value using estimates and assumptions determined and deemed reasonable by management. For intangible assets related to acquired technology, we use the replacement cost method to determine fair value. Determining the estimated useful lives of intangible assets also requires judgment. Certain intangible assets, such as GSE licenses, have been deemed to have indefinite lives while other intangible assets, such as broker and borrower relationships, above/below market rent and acquired technology have been deemed to have finite lives. Our assessment as to which intangible assets are deemed to have finite or indefinite lives is based on several factors including economic barriers of entry for the acquired product lines, scarcity of available GSE licenses, technology life cycles, retention trends and our operating plans, among other factors. Goodwill and indefinite-lived intangible assets are not amortized, while finite-lived intangible assets are amortized over the estimated useful lives of the assets on a straight-line basis. Indefinite-lived intangible assets, including goodwill, are tested for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. In addition, with respect to goodwill, an impairment analysis is performed at least annually. We have elected to make the first day of our fiscal fourth quarter the annual impairment assessment date for goodwill. We first assess qualitative factors to determine whether it is more likely than not that the fair value is less than the carrying value. If, based on that assessment, we believe it is more likely than not that the fair value is less than the carrying value, then a two-step goodwill impairment test is performed. |
Allowance for Loss-Sharing Obligations | Allowance for Loss-Sharing Obligations When a loan is sold under the Fannie Mae DUS program, we undertake an obligation to partially guarantee the performance of the loan. Generally, we are responsible for losses equal to the first 5% of the unpaid principal balance (“UPB”) and a portion of any additional losses to an overall maximum of 20% of the original principal balance. Fannie Mae bears any remaining loss. In addition, under the terms of the master loss-sharing agreement with Fannie Mae, we are responsible for funding 100% of mortgage delinquencies (principal and interest) and servicing advances (taxes, insurance and foreclosure costs) until the amounts advanced exceeds 5% of the UPB at the date of default. Thereafter, we may request interim loss-sharing adjustments which allow us to fund 25% of such advances until final settlement. At inception, a liability for the fair value of the obligation undertaken in issuing the guaranty is recognized. In determining the fair value of the guaranty obligation, we consider the risk profile of the collateral and the historical loss experience in our portfolio. The guaranty obligation is removed only upon either the expiration or settlement of the guaranty. We evaluate the allowance for loss-sharing obligations by monitoring the performance of each loss-sharing loan for events or conditions which may signal a potential default. Historically, initial loss recognition occurs at or before a loan becomes 60 days delinquent. In instances where payment under the guaranty on a specific loan is determined to be probable and estimable (as the loan is probable of foreclosure or is in foreclosure), we record a liability for the estimated allowance for loss-sharing (a “specific reserve”) by transferring the guarantee obligation recorded on the loan to the specific reserve with any adjustments to this reserve amount recorded in provision for loss sharing in the statements of income, along with a write-off of the associated loan-specific MSR. The amount of the allowance considers our assessment of the likelihood of repayment by the borrower or key principal(s), the risk characteristics of the loan, the loan’s risk rating, historical loss experience, adverse situations affecting individual loans, the estimated disposition value of the underlying collateral, and the level of risk sharing. We regularly monitor the specific reserves on all applicable loans and update loss estimates as current information is received. |
Revenue Recognition | Revenue Recognition Fee-based services related to our Agency Business includes commitment fees, broker fees, loan assumption fees, loan origination fees and gains on sale of loans. In some instances, the borrower pays an additional amount of interest at the time the loan is closed, an origination fee, net of any direct loan origination costs incurred, which is recognized upon sale of the loan. Revenue recognition occurs when the related services are performed, unless significant contingencies exist, and for the sale of loans, when all the incidence of ownership passes to the buyer. Interest income is recognized on the accrual basis as it is earned from loans held-for-sale. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) amended its guidance to reflect eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for us beginning in the first quarter of 2018 and requires adoption on a retrospective basis, unless it is impracticable for us to apply, in which case, we would be required to apply the amendment prospectively as of the earliest date practicable. We are currently evaluating the impact this guidance may have on our consolidated statement of cash flows. In June 2016, the FASB issued updated guidance which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will be required to use forward-looking information to better form their credit loss estimates. This updated guidance also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. The guidance is effective for us beginning in the first quarter of 2020, and early adoption is permitted beginning in the first quarter of 2019. We are currently evaluating the impact this guidance may have on our consolidated financial statements. In March 2016, the FASB amended its guidance on stock compensation, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for the first quarter of 2017 and we do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In March 2016, the FASB amended its guidance on accounting for equity method investments. Among other things, the amended guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The guidance is effective for the first quarter of 2017 and we do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB amended its guidance on accounting for leases that requires an entity to recognize balance sheet assets and liabilities for leases with terms of more than 12 months and also requires disclosure of key information about an entity’s leasing arrangements. The guidance is effective for the first quarter of 2019 with early adoption permitted. A modified retrospective approach is required. We are currently evaluating the impact this guidance may have on our consolidated financial statements. In January 2016, the FASB amended its guidance on the recognition and measurement of financial assets and liabilities. The amended guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update also, among other things, eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The guidance is effective for the first quarter of 2018 and we are currently evaluating the impact it may have on our consolidated financial statements. In May 2014, the FASB amended its revenue recognition guidance. Among other things, the amended guidance outlines a framework for a single comprehensive model that entities can use when accounting for revenue and supersedes most current revenue recognition guidance, including that which pertains to specific industries such as homebuilding (e.g., sales of real estate, etc.). The core principle states that an entity should recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods and services. It also requires expanded quantitative and qualitative disclosures that will enable the users of an entity’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance is effective for the first quarter of 2018. We are currently evaluating the impact this guidance may have on our consolidated financial statements. Recently Adopted Accounting Pronouncements In September 2015, the FASB amended its guidance on measurement-period adjustments arising from business combinations. The guidance was effective for the first quarter of 2016 and it did not have an impact on our consolidated financial statements. In February 2015, the FASB amended its guidance on the consolidation analysis of VIEs. The guidance was effective for the first quarter of 2016 and it did not have a material impact on our consolidated financial statements. See Note 15 — Variable Interest Entities for further details. |
Acquisition of Our Manager's 33
Acquisition of Our Manager's Agency Platform (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Acquisition of Our Manager's Agency Platform | |
Schedule of purchase price allocations | Purchase Price: Issuance of 21,230,769 OP Units at $7.29 per share $ Cash on hand Borrowings from seller financing - related party Total consideration $ Allocated to: Cash and cash equivalents $ Restricted cash Loans held-for-sale, net Available-for-sale securities, at fair value Capitalized mortgage servicing rights, net Fixed assets Other assets Finite-lived intangible assets Infinite-lived intangible assets Credit facilities and repurchase agrements ) Allowance for loss-sharing obligations ) Other liabilities ) Goodwill Net assets acquired $ |
Schedule of supplementary pro forma information | Nine Months Ended September 30, Supplementary Pro Forma Information 2016 2015 Revenues $ $ Net income attributable to noncontrolling interest $ $ Net income attributable to common stockholders $ $ Diluted earnings per common share $ $ |
Goodwill and Other Intangible34
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Other Intangible Assets | |
Schedule of goodwill activity | As of and for the Beginning balance $ — Additions from the Acquisition Impairment — Ending balance $ |
Other Intangible Assets | |
Goodwill and Other Intangible Assets | |
Schedule of other intangible assets | Gross Carrying Value Accumulated Amortization December 31, Additions September 30, December 31, Additions September 30, Finite-lived intangible assets: Broker relationships $ — $ $ $ — $ $ Borrower relationships — — Below market leases — — Acquired technology — — Infinite-lived intangible assets: Fannie Mae DUS license — — — — Freddie Mac Program Plus license — — — — FHA license — — — — $ — $ $ $ — $ $ |
Schedule of estimated amortization expense for each of the succeeding five years | Weighted Estimated Amortization Expense Average Three Months Years Ending December 31, Life (in years) 2016 2017 2018 2019 2020 2021 Finite-lived intangible assets: Broker relationships $ $ $ $ $ $ Borrower relationships Below market leases Acquired technology — — $ $ $ $ $ $ |
Loans and Investments (Tables)
Loans and Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Loans and Investments | |
Schedule of composition of structured loan and investment portfolio | September 30, 2016 Percent of Loan Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg. Bridge loans $ % % % % Mezzanine loans % % % % Junior participation loans % % % % Preferred equity investments % % % % % % % % Unearned revenue ) Allowance for loan losses ) Loans and investments, net $ December 31, 2015 Percent of Loan Wtd. Avg. Wtd. Avg. Wtd. Avg. Wtd. Avg. Bridge loans $ % % % % Mezzanine loans % % % % Junior participation loans % % % % Preferred equity investments % % % % % % % % Unearned revenue ) Allowance for loan losses ) Loans and investments, net $ (1) “Weighted Average Pay Rate” is a weighted average, based on the UPB of each loan in our portfolio, of the interest rate that is required to be paid monthly as stated in the individual loan agreements. Certain loans and investments that require an additional rate of interest “Accrual Rate” to be paid at the maturity are not included in the weighted average pay rate as shown in the table. (2) The “First Dollar LTV Ratio” is calculated by comparing the total of our senior most dollar and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will absorb a total loss of our position. (3) The “Last Dollar LTV Ratio” is calculated by comparing the total of the carrying value of our loan and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will initially absorb a loss. |
Summary of the loan and investment portfolio's weighted average internal risk ratings and LTV ratios by asset class | September 30, 2016 Asset Class Unpaid Principal Percentage of Wtd. Avg. Wtd. Avg. Wtd. Avg. Multifamily $ % % % Office % % % Land % % % Hotel % % % Other % % % Total $ % % % December 31, 2015 Multifamily $ % % % Office % % % Land % % % Hotel % % % Other % % % Total $ % % % |
Summary of the changes in the allowance for loan losses | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Allowance at beginning of period $ $ $ $ Provision for loan losses — Charge-offs — ) ) ) Charge-off on loan reclassification to real estate owned, net — ) — ) Recoveries of reserves ) ) ) ) Allownace at end of period $ $ $ $ |
Summary of charge-offs and recoveries by asset class | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Charge-offs: Hotel $ — $ $ — $ Office — — Multifamily — — — Total $ — $ $ $ Recoveries: Multifamily $ ) $ ) $ ) $ ) Total $ ) $ ) $ ) $ ) Net Recoveries (Charge-offs) $ $ ) $ ) $ ) Ratio of net recoveries (charge-offs) during the period to average loans and investments outstanding during the period % )% )% )% |
Summary of the company's impaired loans by asset class | September 30, 2016 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Asset Class Unpaid Carrying Value Allowance for Average Recorded Interest Income Average Recorded Interest Income Multifamily $ $ $ $ $ $ $ Office Land — — Hotel Commercial — — Total $ $ $ $ $ $ $ December 31, 2015 Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Multifamily $ $ $ $ $ $ $ Office Land — — Hotel Commercial — — — — Total $ $ $ $ $ $ $ (1) Represents the UPB of impaired loans less unearned revenue and other holdbacks and adjustments by asset class and was comprised of nine loans at both September 30, 2016 and December 31, 2015. (2) Represents an average of the beginning and ending UPB of each asset class. |
Summary of the company's non-performing loans by asset class | September 30, 2016 December 31, 2015 Asset Class Carrying Less Than 90 Greater Than Carrying Less Than 90 Greater Than Multifamily $ $ — $ $ $ — $ Office — — Commercial — — Total $ $ — $ $ $ — $ |
Summary of loan modifications, refinancings and/or extensions by asset class that the entity considered to be troubled debt restructurings by asset class | Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Asset Class Number Original Original Extended Extended Number Original Original Extended Extended Multifamily $ % $ % $ % $ % Office % % % % Total $ % $ % $ % $ % Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Multifamily — $ — — $ — — $ % $ % Office % % % % Total $ % $ % $ % $ % |
Loans Held-for-Sale, Net (Table
Loans Held-for-Sale, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Loans Held-for-Sale, Net | |
Summary of loans held-for-sale, net | September 30, 2016 Fannie Mae $ Freddie Mac FHA Fair value of future MSR Unearned discount Loans held-for-sale, net $ |
Available-for-Sale Securities (
Available-for-Sale Securities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Available-for-Sale Securities | |
Summary of the equity securities classified as available-for-sale | September 30, 2016 Face Value Amortized Cummulative Carrying Value / 2,939,465 common shares of CV Holdings, Inc $ — $ $ $ December 31, 2015 Federal Home Loan Mortgage Corporation $ $ $ — $ 2,939,465 common shares of CV Holdings, Inc — Total available-for-sale securities $ $ $ $ |
Summary of Agency IOs activity | Three and Nine Balance at beginning of period $ — Additions from the Acquisition Settlements ) Balance at end of period $ |
Investments in Equity Affilia38
Investments in Equity Affiliates (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments in Equity Affiliates | |
Summary of the company's investments in equity affiliates | Investments in Equity Affiliates at UPB of Loans to Equity Affiliates September 30, 2016 December 31, 2015 September 30, 2016 Arbor Residential Investor LLC $ $ $ — West Shore Café Lightstone Value Plus REIT L.P — Issuers of Junior Subordinated Notes — JT Prime — East River Portfolio Lexford Portfolio — Ritz-Carlton Club — — — Total $ $ $ |
Summary of statements of operations for the Company's investments in ARI | Three Months Ended September 30, Nine Months Ended September 30, Statements of Operations: 2016 2015 2016 2015 Revenue: Total revenues $ $ $ $ Total expenses Net income $ $ $ $ Arbor’s share of income $ $ $ $ |
Real Estate Owned and Held-Fo39
Real Estate Owned and Held-For-Sale (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Real Estate Owned and Held-For-Sale | |
Schedule of real estate owned | September 30, 2016 December 31, 2015 Hotel Property Office Total Multifamily Hotel Office Total Land $ $ $ $ $ $ $ Building and intangible assets Less: Impairment loss ) — ) — — — — Less: Accumulated depreciation and amortization ) ) ) ) ) ) ) Real estate owned, net $ $ $ $ $ $ $ |
Schedule of results of operations for properties classified as held-for-sale | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue: Property operating income $ — $ $ $ Expenses: Property operating expenses — Depreciation — Net income $ — $ $ $ |
Capitalized Mortgage Servicin40
Capitalized Mortgage Servicing Rights (Tables) - MSRs | 9 Months Ended |
Sep. 30, 2016 | |
Capitalized Mortgage Servicing Rights | |
Summary of capitalized MSR activity | Three and Nine Balance at beginning of period $ — Additions Amortization ) Write-downs and payoffs ) Balance at end of period $ |
Schedule of UPB of loans in our fee-based servicing portfolio, by product | September 30, 2016 Gross Accumulated Write-Downs Net Carrying Acquired MSRs $ $ ) $ ) $ Originated MSRs ) — Total $ $ ) $ ) $ |
Schedule of the remaining future amortization of capitalized MSR balances | Year Amortization 2016 (three months ended 12/31/2016) $ 2017 2018 2019 2020 2021 Thereafter Total $ |
Mortgage Servicing (Tables)
Mortgage Servicing (Tables) - MSRs | 9 Months Ended |
Sep. 30, 2016 | |
Mortgage Servicing | |
Schedules of Concentration of Risk, by Risk Factor [Table Text Block] | Product Concentrations Percent of Product UPB Total Fannie Mae $ % Freddie Mac % FHA % Total $ % |
Schedule of Percentage of UPB of Properties Collateralizing the Loans in Servicing Assets by Geographical Area [Table Text Block] | Geographic Concentrations Percent of State Total Texas % New York % California % North Carolina % Florida % All other states % Total % |
Debt Obligations (Tables)
Debt Obligations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Credit Facilities and Repurchase Agreements | |
Debt Obligations | |
Schedule of borrowings | September 30, 2016 December 31, 2015 Debt Principal Debt Carrying Collateral Weighted Debt Principal Debt Carrying Collateral Weighted Structured Business $150 million repurchase facility $ $ $ % $ $ $ % $100 million credit facility % % $75 million credit facility % % $75 million credit facility — — — — — — — — $50 million credit facility % % $50 million credit facility — — — — — — — — $16.5 million term credit facility — — — — % $3 million master security agreement — % — — — — Total $ $ $ % $ $ $ % Agency Business (assumed in the Acquisition) $400 million multifamily ASAP agreement $ $ $ % $150 million credit facility $ % $150 million credit facility $ % $100 million credit facility $ % Total $ $ $ % Consolidated total $ $ $ % |
CLOs | |
Debt Obligations | |
Schedule of borrowings | Debt Collateral (1) Loans Cash Face Value Carrying Value Unpaid Principal Carrying Value Restricted September 30, 2016 CLO III $ $ $ $ $ CLO IV CLO V CLO VI Total CLOs $ $ $ $ $ December 31, 2015 CLO III $ $ $ $ $ CLO IV CLO V Total CLOs $ $ $ $ $ (1) As of September 30, 2016 and December 31, 2015, there was no collateral at risk of default or deemed to be a “credit risk” as defined by the CLO indenture. (2) Represents restricted cash held for principal repayments as well as for reinvestment in the CLOs. Does not include restricted cash related to interest payments, delayed fundings and expenses. |
Collateralized Debt Obligations and Collateralized Loan Obligations | |
Debt Obligations | |
Summary of the company's CLO compliance tests as of the most recent determination dates | A summary of our CLO compliance tests as of the most recent determination dates in October 2016 is as follows: Cash Flow Triggers CLO III CLO IV CLO V CLO VI Overcollateralization (1) Current % % % % . Limit % % % % Pass / Fail Pass Pass Pass Pass Interest Coverage (2) Current % % % % Limit % % % % Pass / Fail Pass Pass Pass Pass (1) The overcollateralization ratio divides the total principal balance of all collateral in the CLO by the total principal balance of the bonds associated with the applicable ratio. To the extent an asset is considered a defaulted security, the asset’s principal balance for purposes of the overcollateralization test is the lesser of the asset’s market value or the principal balance of the defaulted asset multiplied by the asset’s recovery rate which is determined by the rating agencies. Rating downgrades of CLO collateral will generally not have a direct impact on the principal balance of a CLO asset for purposes of calculating the CLO overcollateralization test unless the rating downgrade is below a significantly low threshold (e.g. CCC-) as defined in each CLO vehicle. (2) The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by us. |
Summary of the Company's CLO overcollateralization ratios | Determination (1) CLO III CLO IV CLO V CLO VI October 2016 % % % % July 2016 % % % — April 2016 % % % — January 2016 % % % — October 2015 % % % — (1) The table above represents the quarterly trend of our overcollateralization ratio, however, the CLO determination dates are monthly and we were in compliance with this test for all periods presented. |
Allowance for Loss-Sharing Ob43
Allowance for Loss-Sharing Obligations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Allowance for Loss-Sharing Obligations | |
Summary of allowance for loss-sharing obligations related to Fannie Mae DUS program | Three and Nine Beginning balance $ — Allowance for loss-sharing obligations assumed in the Acquisition Provisions for loss sharing Charge-offs, net ) Ending balance |
Derivative Financial Instrume44
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Schedule of derivative financial instruments held by the company | The following is a summary of the derivative financial instruments held by our Structured Business (dollars in thousands): Notional Value Balance Fair Value Designation/ Derivative Count September 30, Count December 31, Expiration Sheet September 30, December 31, Qualifying LIBOR Caps 2 $ 2 $ 2017 Other Assets $ — $ Qualifying Interest Rate Swaps 4 $ 5 $ 2016 - 2017 Other Liabilities $ ) $ ) |
Schedule of the effect of the company's derivative financial instruments on the statements of income | The following table presents the effect of our derivative financial instruments on the statements of income (dollars in thousands): Designation / Amount of Loss Amount of Loss Amount of Loss Amount of Loss Cash Flow Derivative 2016 2015 2016 2015 2016 2015 2016 2015 Non-Qualifying Basis Swaps $ — $ — $ — $ — $ — $ — $ — $ ) Qualifying Interest Rate Swaps/Cap $ $ $ ) $ ) $ — $ ) $ — $ — |
Agency Business | |
Schedule of derivative financial instruments held by the company | The following is a summary of the derivative financial instruments held by our Agency Business (dollars in thousands): Notional Value Fair Value September 30, 2016 Designation/Cash Derivative Count September 30, Balance Sheet Derivative Derivative Non-Qualifying Rate Lock Commitments $ Other Assets/ Other Liabilities $ $ ) Non-Qualifying Forward Sale Commitments Other Assets/ Other Liabilities ) $ $ $ ) |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Variable Interest Entities | |
Schedule of the assets and liabilities related to the consolidated CLOs | September 30, 2016 December 31, 2015 Assets: Restricted cash $ $ Loans and investments, net Due from related party Other assets Total assets $ $ Liabilities: Collateralized loan obligations $ $ Due to related party — Other liabilities Total liabilities $ $ |
Summary of the company's variable interests in identified VIEs, of which the company is not the primary beneficiary | The following is a summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of September 30, 2016: Type Carrying Amount Maximum Loans $ $ Agency IOs Equity investments Junior subordinated notes (3) Total $ $ (1) Represents the carrying amount of loans and investments before reserves. At September 30, 2016, $149.6 million of loans to VIEs had corresponding loan loss reserves of $77.6 million. See Note 5 — Loans and Investments for further details. (2) Our maximum exposure to loss as of September 30, 2016 would not exceed the carrying amount of its investment. (3) It is not appropriate to consolidate these entities as equity interests are variable interests only to the extent that the investment is considered to be at risk. Since our investments were funded by the entities that issued the junior subordinated notes, it is not considered to be at risk. |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value | |
Summary of the principal amounts, carrying values and the estimated fair values of the Company's financial instruments | September 30, 2016 December 31, 2015 Principal / Carrying Value Estimated Fair Principal / Carrying Value Estimated Fair Financial assets: Loans and investments $ $ $ $ $ $ Loans held-for-sale, net — — — Capitalized mortgage servicing rights, net n/a — — — Available-for-sale securities Derivative financial instuments Financial liabilities: Credit and repurchase facilities $ $ $ $ $ $ Collateralized loan obligations Senior unsecured notes Junior subordinated notes Mortgage note payable - real estate owned — — — Related party financing — — — Derivative financial instruments |
Schedule of certain financial assets and financial liabilities measured at fair value on a recurring basis | The fair value of these financial assets and liabilities was determined using the following input levels as of September 30, 2016: Carrying Fair Value Measurements Using Fair Value Fair Value Level 1 Level 2 Level 3 Financial assets: Available-for-sale securities $ $ $ $ — $ Derivative financial instruments — Financial liabilities: Derivative financial instruments $ $ $ — $ $ — |
Schedule of certain financial assets measured at fair value on a nonrecurring basis | The fair values of these financial assets were determined using the following input levels as of September 30, 2016: Net Carrying Fair Value Measurements Using Fair Value Fair Value Level 1 Level 2 Level 3 Financial assets: Impaired loans, net (1 ) $ $ $ — $ — $ (1) We had an allowance for loan losses of $83.8 million relating to eight loans with an aggregate carrying value, before loan loss reserves, of $186.5 million at September 30, 2016. |
Schedule of quantitative information about Level 3 fair value measurements on a non-recurring basis | September 30, 2016 Valuation Fair Value Techniques Significant Unobservable Inputs Financial assets: Impaired loans (1): Discount rate % Office $ Discounted cash flows Capitalization rate % Revenue growth rate % Discount rate % Land Discounted cash flows Capitalization rate % Revenue growth rate % Discount rate % Hotel Discounted cash flows Capitalization rate % Revenue growth rate % Derivative financial instruments: Rate lock commitments Discounted cash flows W/A discount rate % (1) Includes all impaired loans regardless of the period in which a loan loss provision was recorded. |
Schedule of roll forward of Level 3 derivative instruments | Fair Value Measurements Using Derivative assets and liabilities, net Balance at beginning of period $ — Additions from the Acquisition Settlements ) Realized gains recorded in earnings Unrealized gains recorded in earnings Balance at end of period $ |
Schedule of components of fair value and other relevant information | Notional/ Fair Value of Interest Rate Total Fair Value September 30, 2016 Rate lock commitments $ $ $ ) $ Forward sale commitments — Loans held-for-sale, net (1) — Total $ $ $ (1) Loans held-for-sale, net are recorded at the lower of cost or market on an aggregate basis and includes fair value adjustments related to estimated cash flows from mortgage servicing rights. |
Schedule of fair value of assets and liabilities | The fair value of these assets and liabilities was determined using the following input levels as of September 30, 2016: Fair Value Measurements Using Fair Value Hierarchy Carrying Value Fair Value Level 1 Level 2 Level 3 Financial assets: Loans and investments, net $ $ $ — $ — $ Loans held-for-sale, net — — Capitalized mortgage servicing rights, net — — Financial liabilities: Credit facilities and repurchase agreements $ $ $ — $ $ Collateralized loan obligations — — Senior unsecured notes — — Junior subordinated notes — — Related party financing — — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies | |
Schedule of maturities of debt obligations and operating lease payments | As of September 30, 2016, the maturities of our credit facilities and debt obligations, as well as the minimum annual operating lease payments under leases with a term in excess of one year, were as follows: Year Debt Minimum Annual Total 2016 (three months ended December 31, 2016) $ $ $ 2017 2018 2019 2020 2021 Thereafter Total $ $ $ (1) Represents office leases assumed in connection with the Acquisition. |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity | |
Schedule of dividends declared by the Company (on a per share basis) | The following table presents dividends declared (on a per share basis) for the nine months ended September 30, 2016: Common Stock Preferred Stock Dividend (1) Declaration Date Dividend Declaration Date Series A Series B Series C February 24, 2016 $ February 1, 2016 $ $ $ May 4, 2016 $ May 2, 2016 $ $ $ August 3, 2016 $ August 1, 2016 $ $ $ (1) The dividend declared on February 1, 2016 for the Series A, B and C preferred stock was for the period December 1, 2015 through February 29, 2016. The dividend declared on May 2, 2016 for the Series A, B and C preferred stock was for the period March 1, 2016 through May 31, 2016. The dividend declared on August 1, 2016 for the Series A, B and C preferred stock was for the period June 1, 2016 through August 31, 2016. |
Schedule of reclassifications out of accumulated other comprehensive loss | Nine Months Ended September 30, 2016 2015 Statement of Income Caption Net realized losses on derivatives designated as cash flow hedges: Interest rate swaps $ ) $ ) Interest expense (1) Termination of interest rate swaps $ — $ ) Loss on termination of swaps (1) (1) See Note 14 — Derivative Financial Instruments for additional details. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share | |
Reconciliation of the numerator and denominator of the basic and diluted EPS computations | Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Basic Diluted Basic Diluted Net income attributable to common stockholders (1) $ $ $ $ Net income attributable to noncontrolling interest — — — Net income attributable to common stockholders and nocontrolling interest $ $ $ $ Weighted average shares outstanding Dilutive effect of OP Units (2) — — — Dilutive effect of restricted stock units (3) — — — Weighted average shares outstanding Net income per common share (1) $ $ $ $ Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Net income attributable to common stockholders (1) $ $ $ $ Net income attributable to noncontrolling interest — — — — Net income attributable to common stockholders and nocontrolling interest $ $ $ $ Weighted average shares outstanding Dilutive effect of OP Units (2) — — — — Dilutive effect of restricted stock units (3) — — Weighted average shares outstanding Net income per common share (1) $ $ $ $ (1) Net of preferred stock dividends. (2) We consider OP Units to be common stock equivalents as the holder has voting rights, the right to distributions and the right to redeem the OP Units for the cash value of a corresponding number of shares of common stock or a corresponding number of shares of common stock, at our election. For the nine months ended September 30, 2016, the OP Units were considered anti-dilutive and excluded from diluted EPS. (3) Mr. Kaufman was granted restricted stock units in 2016 and 2015 which vest at the end of a four-year performance period based upon our achievement of total shareholder return objectives. See Note 18 — Equity for further details. |
Agreements and Transactions wit
Agreements and Transactions with Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Agreements and Transactions with Related Parties | |
Schedule of Company's base management fees and incentive fees | Three Months Ended Nine Months Ended September 30, September 30, Management Fees: 2016 2015 2016 2015 Base $ $ $ $ Incentive — — — — Total management fee $ $ $ $ |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information | |
Schedule of statement of income and balance sheet by segment | Three Months Ended September 30, 2016 Structured Agency Other / Consolidated Interest income $ $ $ — $ Interest expense Net interest income ) Other revenue: Fee-based services, including gain on sales, net — — Mortgage servicing rights — — Servicing revenue, net — — Property operating income — — Other income, net — Total other revenue — Other expenses: Employee compensation and benefits — Selling and administrative — Acquisition costs — — Property operating expenses — — Depreciation and amortization — Provision for loss sharing — — Provision for loan losses (net of recoveries) ) — — ) Management fee - related party — Total other expenses Income before income from equity affiliates and provision for income taxes ) Income from equity affiliates — — Provision for income taxes — ) — ) Net income $ $ $ ) $ Three Months Ended September 30, 2015 Structured Agency Other / Consolidated Interest income $ $ — $ — $ Interest expense — — Net interest income — — Other revenue: Property operating income — — Other income, net — — Total other revenue — — Other expenses: Employee compensation and benefits — — Selling and administrative — — Acquisition costs — — Property operating expenses — — Depreciation and amortization — — Provision for loan losses (net of recoveries) — — Management fee - related party — — Total other expenses — Income before gain on acceleration of deferred income, loss on termination of swaps and income from equity affiliates — ) Gain on acceleration of deferred income — — Loss on termination of swaps ) — — ) Income from equity affiliates — — Net income $ $ — $ ) $ Nine Months Ended September 30, 2016 Structured Agency Other / Consolidated Interest income $ $ $ — $ Other interest income, net — — Interest expense Net interest income ) Other revenue: Fee-based services, including gain on sales, net — — Mortgage servicing rights — — Servicing revenue, net — — Property operating income — — Other income, net — Total other revenue — Other expenses: Employee compensation and benefits — Selling and administrative — Acquisition costs — — Property operating expenses — — Depreciation and amortization — Impairment loss on real estate owned — — Provision for loss sharing — — Provision for loan losses (net of recoveries) ) — — ) Management fee - related party — Total other expenses Income before gain on sale of real estate, income from equity affiliates and provision for income taxes ) Gain on sale of real estate — — Income from equity affiliates — — Provision for income taxes — ) — ) Net income $ $ $ ) $ Nine Months Ended September 30, 2015 Structured Agency Other / Consolidated Interest income $ $ — $ — $ Other interest income, net — — Interest expense — — Net interest income — — Other revenue: Property operating income — — Other income, net — — Total other revenue — — Other expenses: Employee compensation and benefits — — Selling and administrative — — Acquisition costs — — Property operating expenses — — Depreciation and amortization — — Provision for loan losses (net of recoveries) — — Management fee - related party — — Total other expenses — Income before gain on acceleration of deferred income, loss on termination of swaps, gain on sale of real estate and income from equity affiliates — ) Gain on acceleration of deferred income — — Loss on termination of swaps ) — — ) Gain on sale of real estate — — Income from equity affiliates — — Net income $ $ — $ ) $ September 30, 2016 Structured Business Agency Business Other / Eliminations Consolidated Assets: Cash and cash equivalents $ $ $ — $ Restricted cash — Loans and investments, net — — Loans held-for-sale, net — — Capitalized mortgage servicing rights, net — — Investments in equity affiliates — — Goodwill and other intangible assets — — Other assets — Total assets $ $ $ — $ Liabilities: Debt obligations $ $ $ $ Allowance for loss-sharing obligations — — Other liabilities Total liabilities $ $ $ $ December 31, 2015 Structured Business Agency Business Other / Eliminations Consolidated Assets: Cash and cash equivalents $ $ — $ — $ Restricted cash — — Loans and investments, net — — Investments in equity affiliates — — Other assets — — Total assets $ $ — $ — $ Liabilities: Debt obligations $ $ — $ — $ Other liabilities — Total liabilities $ $ — $ $ |
Schedule of origination data and loan sales data | Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended Origination Data: Structured Business New loan originations $ $ $ $ Loan payoffs / paydowns Agency Business Origination Volumes by Investor: Fannie Mae $ $ Freddie Mac FHA Total $ $ Total loan commitment volume $ $ Loan Sales Data: Agency Business Fannie Mae $ $ Freddie Mac FHA Total $ (1) $ (1) Sales margin (fee-based services as a % of loan sales) % % MSR rate (MSR income as a % of loan commitments) % % (1) Loan sales were $970.0 million for the three and nine months ended September 30, 2016, including loans that were acquired as part of the Acquisition. |
Schedule of key servicing metrics for Agency Business | September 30, 2016 UPB of Servicing Weighted Average Weighted Average Life Key Servicing Metrics for Agency Business: Fannie Mae $ Freddie Mac FHA Total $ |
Description of Business (Detail
Description of Business (Details) | 9 Months Ended |
Sep. 30, 2016segment | |
Description Of Business | |
Number of business segments | 2 |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Loans Held-for-Sale, Net | |
Maximum number of days held-for-sale loans are generally transferred or sold | 60 days |
Allowance for Loss-Sharing Obligations | |
Period of a loan past due becomes delinquent | 60 days |
Fannie Mae | |
Allowance for Loss-Sharing Obligations | |
Percentage of loss obligation on UPB | 5.00% |
Obligated funding percentage of mortgage delinquencies | 100.00% |
Loss sharing funding percentage of advances until final settlement | 25.00% |
Maximum | Fannie Mae | |
Allowance for Loss-Sharing Obligations | |
Percentage of additional loss obligation on UPB | 20.00% |
MSRs | |
Mortgage Servicing Rights | |
Valuation allowance | $ 0 |
Write-offs due to prepayments | 1.7 |
Prepayment fees | $ 1.5 |
Commercial Loans | MSRs | |
Mortgage Servicing Rights | |
Inflation rate used for adequate compensation | 3.00% |
Commercial Loans | MSRs | Minimum | |
Mortgage Servicing Rights | |
Discount rates to determine the present value of MSRs (as a percent) | 8.00% |
Estimated life maybe reduced based upon the stated yield maintenance and/or prepayment protection term | 6 months |
Commercial Loans | MSRs | Maximum | |
Mortgage Servicing Rights | |
Discount rates to determine the present value of MSRs (as a percent) | 18.00% |
Estimated life maybe reduced based upon the stated yield maintenance and/or prepayment protection term | 12 months |
Commercial Loans | MSRs | Weighted average | |
Mortgage Servicing Rights | |
Discount rates to determine the present value of MSRs (as a percent) | 13.00% |
Agency Business | Other liabilities | |
Significant Accounting Policies | |
Deferred tax liability | $ 14.8 |
Acquisition of Our Manager's 54
Acquisition of Our Manager's Agency Platform (Details) | Jul. 14, 2016USD ($)employeeVoteitem$ / sharesshares | Sep. 30, 2016USD ($)shares |
Allocated to: | ||
Goodwill | $ 27,790,030 | |
ACM Acquisition | ||
Acquisition of Our Manager's Agency Platform | ||
Number of vote per OP Unit | Vote | 1 | |
OP Unit, redemption ratio for common share | item | 1 | |
Number of employees | employee | 235 | |
Period to exercise the option to purchase the existing management contract | 2 years | |
Consideration to purchase the existing management contract | $ 25,000,000 | |
Consideration to purchase the existing management contract second year | 27,000,000 | |
Purchase Price: | ||
Issuance of 21,230,769 OP Units at $7.29 per share (based on the closing stock price at the date of Acquisition) | $ 154,772,306 | |
Consideration in stock to be paid with operating partnership units (in shares) | shares | 21,230,769 | |
Acquisition share price per common share based on closing price on the day of the ACM Acquisition | $ / shares | $ 7.29 | |
Cash on hand | $ 87,755,517 | |
Borrowings from seller financing - related party | 50,000,000 | |
Total consideration | 292,527,823 | |
Allocated to: | ||
Cash and cash equivalents | 7,982,584 | |
Restricted cash | 5,000,000 | |
Loans held-for-sale | 424,796,318 | |
Available-for-sale securities, at fair value | 4,908,283 | |
Capitalized mortgage servicing rights, net | 221,647,421 | |
Fixed assets | 5,216,972 | |
Other assets | 10,752,173 | |
Finite-lived intangible assets | 44,310,000 | |
Infinite-lived intangible assets | 29,000,000 | |
Credit facilities and repurchase agreements | (420,889,886) | |
Allowance for loss-sharing obligations | (32,616,821) | |
Other liabilities | (35,369,251) | |
Goodwill | 27,790,030 | |
Net assets acquired | 292,527,823 | |
Operating Partnership | ACM Acquisition | ||
Purchase Price: | ||
Issuance of 21,230,769 OP Units at $7.29 per share (based on the closing stock price at the date of Acquisition) | $ 138,000,000 | |
Consideration in stock to be paid with operating partnership units (in shares) | shares | 21,230,769 | 21,230,769 |
Acquisition share price per common share based on closing price on the day of the ACM Acquisition | $ / shares | $ 6.50 | |
Cash on hand | $ 87,800,000 | |
Borrowings from seller financing - related party | 50,000,000 | |
Total consideration | $ 275,800,000 | |
Special voting preferred shares | Operating Partnership | ||
Acquisition of Our Manager's Agency Platform | ||
Number of preferred stock shares paired with each operating partnership units | shares | 1 | 1 |
Acquisition of Our Manager's 55
Acquisition of Our Manager's Agency Platform (Pro Forma Information) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Supplementary pro forma information | |||
Legal and advisory fees | $ 14,700,000 | ||
ACM Acquisition | |||
Acquisition of Our Manager's Agency Platform | |||
Revenues | $ 34,500,000 | 34,500,000 | |
Pre-tax income from operations | 14,300,000 | 14,300,000 | |
Supplementary pro forma information | |||
Revenues | 212,136,723 | $ 198,178,465 | |
Net income attributable to noncontrolling interest | 18,262,614 | 17,338,814 | |
Net income attributable to common stockholders | $ 40,329,043 | $ 41,543,271 | |
Diluted earnings per common share | $ 0.78 | $ 0.82 | |
Legal and advisory fees | $ 6,400,000 | $ 10,300,000 |
Goodwill and Other Intangible56
Goodwill and Other Intangible Assets, Goodwill (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Goodwill | |
Goodwill related to the ACM Acquisition | $ 27,790,030 |
Goodwill at end of period | $ 27,790,030 |
Goodwill and Other Intangible57
Goodwill and Other Intangible Assets, Other Intangibles (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Accumulated Amortization | |
Additions | $ 1,167,044 |
Accumulated Amortization, end of the period | 1,167,044 |
Gross Carrying Value | |
Additions | 73,310,000 |
Intangible assets, end of the period | 73,310,000 |
Fannie Mae DUS license | |
Gross Carrying Value | |
Additions | 17,100,000 |
Indefinite-lived intangible assets, end of the period | 17,100,000 |
Freddie Mac Program Plus license | |
Gross Carrying Value | |
Additions | 8,700,000 |
Indefinite-lived intangible assets, end of the period | 8,700,000 |
FHA License | |
Gross Carrying Value | |
Additions | 3,200,000 |
Indefinite-lived intangible assets, end of the period | 3,200,000 |
Broker relationships | |
Gross Carrying Value | |
Additions | 25,000,000 |
Finite-lived intangible assets, end of the period | 25,000,000 |
Accumulated Amortization | |
Additions | 651,042 |
Accumulated Amortization, end of the period | 651,042 |
Borrower relationships | |
Gross Carrying Value | |
Additions | 14,400,000 |
Finite-lived intangible assets, end of the period | 14,400,000 |
Accumulated Amortization | |
Additions | 300,000 |
Accumulated Amortization, end of the period | 300,000 |
Below market leases | |
Gross Carrying Value | |
Additions | 4,010,000 |
Finite-lived intangible assets, end of the period | 4,010,000 |
Accumulated Amortization | |
Additions | 153,502 |
Accumulated Amortization, end of the period | 153,502 |
Acquired technology | |
Gross Carrying Value | |
Additions | 900,000 |
Finite-lived intangible assets, end of the period | 900,000 |
Accumulated Amortization | |
Additions | 62,500 |
Accumulated Amortization, end of the period | $ 62,500 |
Goodwill and Other Intangible58
Goodwill and Other Intangible Assets, Estimated amortization expense (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Finite-lived intangible assets: | |
Weighted Average Remaining Life (in years) | 8 years 2 months 12 days |
Three Months Ended December 31,2016 | $ 1,400,453 |
2,017 | 5,601,811 |
2,018 | 5,601,811 |
2,019 | 5,464,311 |
2,020 | 5,249,137 |
2,021 | $ 4,691,118 |
Broker relationships | |
Finite-lived intangible assets: | |
Weighted Average Remaining Life (in years) | 7 years 9 months 18 days |
Three Months Ended December 31,2016 | $ 781,250 |
2,017 | 3,125,000 |
2,018 | 3,125,000 |
2,019 | 3,125,000 |
2,020 | 3,125,000 |
2,021 | $ 3,125,000 |
Borrower relationships | |
Finite-lived intangible assets: | |
Weighted Average Remaining Life (in years) | 9 years 9 months 18 days |
Three Months Ended December 31,2016 | $ 360,000 |
2,017 | 1,440,000 |
2,018 | 1,440,000 |
2,019 | 1,440,000 |
2,020 | 1,440,000 |
2,021 | $ 1,440,000 |
Below market leases | |
Finite-lived intangible assets: | |
Weighted Average Remaining Life (in years) | 6 years 3 months 18 days |
Three Months Ended December 31,2016 | $ 184,203 |
2,017 | 736,811 |
2,018 | 736,811 |
2,019 | 736,811 |
2,020 | 684,137 |
2,021 | $ 126,118 |
Acquired technology | |
Finite-lived intangible assets: | |
Weighted Average Remaining Life (in years) | 2 years 9 months 18 days |
Three Months Ended December 31,2016 | $ 75,000 |
2,017 | 300,000 |
2,018 | 300,000 |
2,019 | $ 162,500 |
Loans and Investments (Details)
Loans and Investments (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)item | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | |
Loans and Investments | |||||||||
Loans and investments, gross | $ 1,751,072,574 | $ 1,751,072,574 | $ 1,545,126,045 | ||||||
Unearned revenue | (10,507,062) | (10,507,062) | (8,030,129) | ||||||
Allowance for loan losses | (83,816,575) | $ (83,831,575) | $ (83,360,508) | (83,816,575) | $ (83,360,508) | (86,761,575) | $ (117,563,544) | $ (115,487,320) | |
Loans and investments, net | $ 1,656,748,937 | $ 1,656,748,937 | $ 1,450,334,341 | ||||||
Percent of Total | 100.00% | 100.00% | 100.00% | ||||||
Loan Count | item | 143 | 128 | |||||||
Wtd. Avg. Pay Rate (as a percent) | 5.47% | 5.63% | |||||||
Wtd. Avg. Remaining Months to Maturity | 17 months 6 days | 17 months 21 days | |||||||
Wtd. Avg. First Dollar LTV Ratio (as percent) | 6.00% | 6.00% | 7.00% | ||||||
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 75.00% | 75.00% | 76.00% | ||||||
Other interest income | $ 2,539,274 | 7,884,344 | |||||||
Employee compensation and benefits | $ 14,216,679 | $ 4,877,059 | 22,856,433 | $ 14,133,403 | |||||
First mortgage | |||||||||
Loans and Investments | |||||||||
Defaulted mortgage acquired | $ 116,000,000 | ||||||||
Gain on extinguishment of debt, net of fees and expenses | 1,900,000 | 6,700,000 | |||||||
Other interest income | 2,500,000 | 7,900,000 | |||||||
Employee compensation and benefits | $ 600,000 | $ 1,200,000 | |||||||
Higher credit risk | |||||||||
Loans and Investments | |||||||||
Carrying value of loans before loan loss reserves | $ 152,100,000 | $ 152,100,000 | $ 154,700,000 | ||||||
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 94.00% | 94.00% | 99.00% | ||||||
Credit risk concentration | |||||||||
Loans and Investments | |||||||||
Percent of Total | 100.00% | 100.00% | 100.00% | ||||||
Wtd. Avg. First Dollar LTV Ratio (as percent) | 6.00% | 6.00% | 7.00% | ||||||
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 75.00% | 75.00% | 76.00% | ||||||
Credit risk concentration | Minimum | |||||||||
Loans and Investments | |||||||||
Credit risk individual ratings | item | 1 | ||||||||
Credit risk concentration | Maximum | |||||||||
Loans and Investments | |||||||||
Credit risk individual ratings | item | 5 | ||||||||
Credit risk concentration | Risk rating, three | |||||||||
Loans and Investments | |||||||||
Credit risk individual ratings | item | 3 | ||||||||
Credit risk concentration | Risk rating, four | |||||||||
Loans and Investments | |||||||||
Credit risk individual ratings | item | 4 | ||||||||
Credit risk concentration | Risk rating, five | |||||||||
Loans and Investments | |||||||||
Credit risk individual ratings | item | 5 | ||||||||
Credit risk concentration | Risk rating, 3.5 | |||||||||
Loans and Investments | |||||||||
Credit risk individual ratings | item | 3.5 | ||||||||
Credit risk concentration | Risk rating, 4.5 | |||||||||
Loans and Investments | |||||||||
Credit risk individual ratings | item | 4.5 | ||||||||
Total assets | Credit risk concentration | |||||||||
Loans and Investments | |||||||||
Loan Count | item | 34 | 22 | |||||||
Number of different borrowers | item | 5 | 5 | |||||||
Concentration risk, percentage | 18.00% | 22.00% | |||||||
Bridge loans | |||||||||
Loans and Investments | |||||||||
Loans and investments, gross | $ 1,566,037,772 | $ 1,566,037,772 | $ 1,353,132,435 | ||||||
Percent of Total | 89.00% | 89.00% | 88.00% | ||||||
Loan Count | item | 120 | 105 | |||||||
Wtd. Avg. Pay Rate (as a percent) | 5.34% | 5.48% | |||||||
Wtd. Avg. Remaining Months to Maturity | 17 months 3 days | 16 months 21 days | |||||||
Wtd. Avg. First Dollar LTV Ratio (as percent) | 0.00% | 0.00% | 0.00% | ||||||
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 74.00% | 74.00% | 75.00% | ||||||
Mezzanine loans | |||||||||
Loans and Investments | |||||||||
Loans and investments, gross | $ 51,181,279 | $ 51,181,279 | $ 40,390,905 | ||||||
Percent of Total | 3.00% | 3.00% | 3.00% | ||||||
Loan Count | item | 11 | 11 | |||||||
Wtd. Avg. Pay Rate (as a percent) | 8.84% | 8.19% | |||||||
Wtd. Avg. Remaining Months to Maturity | 20 months 9 days | 32 months 27 days | |||||||
Wtd. Avg. First Dollar LTV Ratio (as percent) | 36.00% | 36.00% | 35.00% | ||||||
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 78.00% | 78.00% | 83.00% | ||||||
Junior participation loans | |||||||||
Loans and Investments | |||||||||
Loans and investments, gross | $ 62,256,582 | $ 62,256,582 | $ 62,256,582 | ||||||
Percent of Total | 4.00% | 4.00% | 4.00% | ||||||
Loan Count | item | 2 | 2 | |||||||
Wtd. Avg. Pay Rate (as a percent) | 4.50% | 4.50% | |||||||
Wtd. Avg. Remaining Months to Maturity | 7 months | 11 months 6 days | |||||||
Wtd. Avg. First Dollar LTV Ratio (as percent) | 83.00% | 83.00% | 85.00% | ||||||
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 84.00% | 84.00% | 87.00% | ||||||
Preferred equity investments | |||||||||
Loans and Investments | |||||||||
Loans and investments, gross | $ 71,596,941 | $ 71,596,941 | $ 89,346,123 | ||||||
Percent of Total | 4.00% | 4.00% | 5.00% | ||||||
Loan Count | item | 10 | 10 | |||||||
Wtd. Avg. Pay Rate (as a percent) | 6.79% | 7.52% | |||||||
Wtd. Avg. Remaining Months to Maturity | 26 months 12 days | 30 months 15 days | |||||||
Wtd. Avg. First Dollar LTV Ratio (as percent) | 43.00% | 43.00% | 43.00% | ||||||
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 92.00% | 92.00% | 80.00% |
Loans and Investments, Risk Rat
Loans and Investments, Risk Ratings and LTV Ratios (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016USD ($)item | Dec. 31, 2015USD ($)item | |
Loans and Investments | ||
Unpaid Principal Balance | $ 12,602,009,992 | |
Percentage of Portfolio | 100.00% | 100.00% |
Wtd. Avg. First Dollar LTV Ratio (as percent) | 6.00% | 7.00% |
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 75.00% | 76.00% |
Loans and investments portfolio | New York | ||
Loans and Investments | ||
Concentration risk, percentage | 26.00% | 34.00% |
Loans and investments portfolio | California | ||
Loans and Investments | ||
Concentration risk, percentage | 15.00% | 14.00% |
Loans and investments portfolio | Florida | ||
Loans and Investments | ||
Concentration risk, percentage | 15.00% | 14.00% |
Loans and investments portfolio | Texas | ||
Loans and Investments | ||
Concentration risk, percentage | 13.00% | 12.00% |
Credit risk concentration | ||
Loans and Investments | ||
Unpaid Principal Balance | $ 1,751,072,574 | $ 1,545,126,045 |
Percentage of Portfolio | 100.00% | 100.00% |
Wtd. Avg. Internal Risk Rating | item | 3 | 3.1 |
Wtd. Avg. First Dollar LTV Ratio (as percent) | 6.00% | 7.00% |
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 75.00% | 76.00% |
Credit risk concentration | Multifamily | ||
Loans and Investments | ||
Unpaid Principal Balance | $ 1,404,683,724 | $ 1,083,822,788 |
Percentage of Portfolio | 80.00% | 70.00% |
Wtd. Avg. Internal Risk Rating | item | 2.9 | 3 |
Wtd. Avg. First Dollar LTV Ratio (as percent) | 1.00% | 2.00% |
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 74.00% | 75.00% |
Credit risk concentration | Office | ||
Loans and Investments | ||
Unpaid Principal Balance | $ 135,716,939 | $ 198,829,086 |
Percentage of Portfolio | 8.00% | 13.00% |
Wtd. Avg. Internal Risk Rating | item | 3.4 | 3 |
Wtd. Avg. First Dollar LTV Ratio (as percent) | 44.00% | 27.00% |
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 71.00% | 75.00% |
Credit risk concentration | Land | ||
Loans and Investments | ||
Unpaid Principal Balance | $ 136,341,553 | $ 164,410,838 |
Percentage of Portfolio | 8.00% | 11.00% |
Wtd. Avg. Internal Risk Rating | item | 3.9 | 3.8 |
Wtd. Avg. First Dollar LTV Ratio (as percent) | 4.00% | 5.00% |
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 92.00% | 90.00% |
Credit risk concentration | Hotel | ||
Loans and Investments | ||
Unpaid Principal Balance | $ 55,592,025 | $ 66,250,000 |
Percentage of Portfolio | 3.00% | 4.00% |
Wtd. Avg. Internal Risk Rating | item | 3.8 | 3.5 |
Wtd. Avg. First Dollar LTV Ratio (as percent) | 38.00% | 32.00% |
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 81.00% | 80.00% |
Credit risk concentration | Other | ||
Loans and Investments | ||
Unpaid Principal Balance | $ 18,738,333 | $ 31,813,333 |
Percentage of Portfolio | 1.00% | 2.00% |
Wtd. Avg. Internal Risk Rating | item | 3.2 | 3.1 |
Wtd. Avg. First Dollar LTV Ratio (as percent) | 23.00% | 13.00% |
Wtd. Avg. Last Dollar LTV Ratio (as percent) | 72.00% | 67.00% |
Loans and Investments, Impaired
Loans and Investments, Impaired Loans (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)item | Jun. 30, 2016USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($)item | |
Loans and Investments | |||||
Number of impaired loans | item | 2 | 4 | |||
Carrying value of impaired loan | $ 4,800,000 | $ 117,200,000 | $ 8,300,000 | $ 130,200,000 | |
Number of loans for which no provision for loan loss made | item | 0 | 0 | 0 | 0 | |
Changes in allowance for loan losses | |||||
Allowance at beginning of the period | $ 83,831,575 | $ 117,563,544 | $ 86,761,575 | $ 115,487,320 | |
Provision for loan losses | 982,453 | 59,005 | 3,093,082 | ||
Charge-offs | (32,000,000) | (2,959,005) | (32,000,000) | ||
Charge-off on loan reclassified to real estate owned, net | (2,500,000) | (2,500,000) | |||
Recoveries of reserves | (15,000) | (685,489) | (45,000) | (719,894) | |
Allowance at end of the period | 83,816,575 | 83,831,575 | $ 83,360,508 | 83,816,575 | $ 83,360,508 |
Impaired bridge loans, paid off | $ 1,800,000 | ||||
Six loans collateralized by a land development project | Maturity date of September 2017 | |||||
Loans and Investments | |||||
Carrying value of impaired loan | $ 120,200,000 | ||||
Number of loans with unpaid principal balance | item | 6 | ||||
Five loans collateralized by a land development project | Maturity date of September 2017 | |||||
Loans and Investments | |||||
Carrying value of impaired loan | $ 110,900,000 | ||||
Number of loans with unpaid principal balance | item | 5 | ||||
Weighted average accrual rate of interest (as a percent) | 8.18% | ||||
Changes in allowance for loan losses | |||||
Allowance at end of the period | $ 49,100,000 | $ 49,100,000 |
Loans and Investments, Charge-o
Loans and Investments, Charge-offs and Recoveries (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)item | |
Loans and Investments | |||||
Charge-offs | $ 34,500,000 | $ 2,959,005 | $ 34,500,000 | ||
Recoveries of reserves | $ (15,000) | (685,489) | (45,000) | (719,894) | |
Net Recoveries (Charge-offs) | $ 15,000 | $ (33,814,511) | $ (2,914,005) | $ (33,780,106) | |
Ratio of net recoveries (charge-offs) during the period to average loans and investments outstanding during the period | 0.00% | (2.00%) | (0.20%) | (2.10%) | |
Unpaid Principal Balance | $ 196,676,766 | $ 196,676,766 | $ 198,861,364 | ||
Carrying value | 186,450,422 | 186,450,422 | 189,209,415 | ||
Allowance for Loan losses | 83,816,575 | 83,816,575 | $ 86,761,575 | ||
Average Recorded Investment | 196,686,516 | $ 214,742,877 | 197,769,065 | $ 213,636,965 | |
Interest Income Recognized | $ 338,080 | 1,599,890 | $ 1,061,364 | 2,818,944 | |
Number of impaired loans | item | 9 | 9 | 9 | ||
Multifamily | |||||
Loans and Investments | |||||
Charge-offs | $ 2,959,005 | ||||
Recoveries of reserves | $ (15,000) | (685,489) | (45,000) | (719,894) | |
Unpaid Principal Balance | 2,647,115 | 2,647,115 | $ 7,362,115 | ||
Carrying value | 2,555,618 | 2,555,618 | 7,350,764 | ||
Allowance for Loan losses | 2,560,653 | 2,560,653 | 5,505,653 | ||
Average Recorded Investment | 2,654,615 | 23,291,302 | 5,004,615 | 23,308,505 | |
Interest Income Recognized | 22,937 | 109,115 | 134,142 | 253,096 | |
Office | |||||
Loans and Investments | |||||
Charge-offs | 2,500,000 | 2,500,000 | |||
Unpaid Principal Balance | 27,567,082 | 27,567,082 | 27,580,582 | ||
Carrying value | 22,782,944 | 22,782,944 | 22,796,444 | ||
Allowance for Loan losses | 21,972,444 | 21,972,444 | 21,972,444 | ||
Average Recorded Investment | 27,569,332 | 31,835,832 | 27,573,832 | 31,835,832 | |
Interest Income Recognized | 23,601 | 1,225,877 | 69,763 | 1,782,922 | |
Land | |||||
Loans and Investments | |||||
Unpaid Principal Balance | 130,012,569 | 130,012,569 | 127,468,667 | ||
Carrying value | 125,011,860 | 125,011,860 | 122,875,774 | ||
Allowance for Loan losses | 53,883,478 | 53,883,478 | 53,883,478 | ||
Average Recorded Investment | 130,012,569 | 124,865,743 | 128,740,618 | 123,742,628 | |
Hotel | |||||
Loans and Investments | |||||
Charge-offs | 32,000,000 | 32,000,000 | |||
Unpaid Principal Balance | 34,750,000 | 34,750,000 | 34,750,000 | ||
Carrying value | 34,400,000 | 34,400,000 | 34,486,433 | ||
Allowance for Loan losses | 3,700,000 | 3,700,000 | 3,700,000 | ||
Average Recorded Investment | 34,750,000 | 34,750,000 | 34,750,000 | 34,750,000 | |
Interest Income Recognized | 291,542 | $ 264,898 | 857,459 | $ 782,926 | |
Commercial | |||||
Loans and Investments | |||||
Unpaid Principal Balance | 1,700,000 | 1,700,000 | 1,700,000 | ||
Carrying value | 1,700,000 | 1,700,000 | 1,700,000 | ||
Allowance for Loan losses | 1,700,000 | 1,700,000 | $ 1,700,000 | ||
Average Recorded Investment | $ 1,700,000 | $ 1,700,000 |
Loans and Investments, Non-perf
Loans and Investments, Non-performing Loans (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016USD ($)loanitem | Dec. 31, 2015USD ($)item | |
Non-performing loans by asset class | ||
Number of loans | item | 143 | 128 |
Carrying Value | $ 0 | |
Non-performing loans | ||
Non-performing loans by asset class | ||
Number of loans | item | 4 | 3 |
Carrying value of loans before loan loss reserves | $ 1,700,000 | |
Number of loans classified as non-performing which have loan loss reserve | loan | 3 | |
Loan loss reserves | $ 22,900,000 | $ 22,900,000 |
Carrying Value | 24,641,448 | 22,938,243 |
Non-performing loans | Maximum | ||
Non-performing loans by asset class | ||
Carrying value of loans before loan loss reserves | 100,000 | |
Greater Than 90 Days Past Due | ||
Non-performing loans by asset class | ||
Past Due, Non-performing Loans | 0 | |
Greater Than 90 Days Past Due | Non-performing loans | ||
Non-performing loans by asset class | ||
Past Due, Non-performing Loans | 24,641,448 | 22,938,243 |
Multifamily | Non-performing loans | ||
Non-performing loans by asset class | ||
Carrying Value | 770,653 | 765,799 |
Multifamily | Greater Than 90 Days Past Due | Non-performing loans | ||
Non-performing loans by asset class | ||
Past Due, Non-performing Loans | 770,653 | 765,799 |
Office | Non-performing loans | ||
Non-performing loans by asset class | ||
Carrying Value | 22,170,795 | 20,472,444 |
Office | Greater Than 90 Days Past Due | Non-performing loans | ||
Non-performing loans by asset class | ||
Past Due, Non-performing Loans | 22,170,795 | 20,472,444 |
Commercial | Non-performing loans | ||
Non-performing loans by asset class | ||
Carrying Value | 1,700,000 | 1,700,000 |
Commercial | Greater Than 90 Days Past Due | Non-performing loans | ||
Non-performing loans by asset class | ||
Past Due, Non-performing Loans | $ 1,700,000 | $ 1,700,000 |
Loans and Investments, Loan Mod
Loans and Investments, Loan Modifications, Refinancings and/or Extensions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($)item | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($)item | |
Troubled debt restructurings by asset class | ||||
Number of loans considered to be troubled debt restructurings | item | 2 | 1 | 2 | 6 |
Original Unpaid Principal Balance | $ 16,961,456 | $ 2,430,000 | $ 16,961,456 | $ 38,039,122 |
Original Weighted Average Rate of Interest (as a percent) | 5.15% | 3.69% | 5.15% | 5.03% |
Extended Unpaid Principal Balance | $ 16,961,456 | $ 2,430,000 | $ 16,961,456 | $ 38,039,122 |
Extended Weighted Average Rate of Interest (as a percent) | 5.15% | 3.69% | 5.15% | 5.03% |
Number of loans considered to be troubled debt restructurings that subsequently considered non-performing | item | 0 | 0 | 0 | 0 |
Number of additional loans considered to be troubled debt restructurings | item | 0 | 0 | 0 | 0 |
Multifamily | ||||
Troubled debt restructurings by asset class | ||||
Number of loans considered to be troubled debt restructurings | item | 1 | 1 | 5 | |
Original Unpaid Principal Balance | $ 14,646,456 | $ 14,646,456 | $ 35,609,122 | |
Original Weighted Average Rate of Interest (as a percent) | 5.33% | 5.33% | 5.12% | |
Extended Unpaid Principal Balance | $ 14,646,456 | $ 14,646,456 | $ 35,609,122 | |
Extended Weighted Average Rate of Interest (as a percent) | 5.33% | 5.33% | 5.12% | |
Office | ||||
Troubled debt restructurings by asset class | ||||
Number of loans considered to be troubled debt restructurings | item | 1 | 1 | 1 | 1 |
Original Unpaid Principal Balance | $ 2,315,000 | $ 2,430,000 | $ 2,315,000 | $ 2,430,000 |
Original Weighted Average Rate of Interest (as a percent) | 4.03% | 3.69% | 4.03% | 3.69% |
Extended Unpaid Principal Balance | $ 2,315,000 | $ 2,430,000 | $ 2,315,000 | $ 2,430,000 |
Extended Weighted Average Rate of Interest (as a percent) | 4.03% | 3.69% | 4.03% | 3.69% |
Loans and Investments, Interest
Loans and Investments, Interest Reserves (Details) $ in Millions | Sep. 30, 2016USD ($)item |
Loans and Investments | |
Total interest reserves | $ 19 |
Number of loans | item | 74 |
Aggregate unpaid principal balance | $ 953.3 |
Loans Held-for-Sale, Net (Detai
Loans Held-for-Sale, Net (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($) | |
Loans Held-for-Sale, Net | ||
Loans held-for-sale | $ 302,094,183 | $ 302,094,183 |
Fair value of future MSR | 7,909,431 | 7,909,431 |
Unearned discount | 248,986 | 248,986 |
Loans held-for-sale, net | 310,252,600 | $ 310,252,600 |
Maximum number of days held-for-sale loans are typically sold | 60 days | |
Loans with non-accrual status | 0 | $ 0 |
Sale of loans held-for-sale excluding acquired loans | 551,800,000 | 551,800,000 |
Sale of loans held-for-sale | 975,969,372 | |
Gain on sale of loans held-for-sale | 9,000,000 | 9,000,000 |
Greater Than 90 Days Past Due | ||
Loans Held-for-Sale, Net | ||
Loans past due | 0 | 0 |
ACM Acquisition | ||
Loans Held-for-Sale, Net | ||
Sale of loans held-for-sale | 418,200,000 | 418,200,000 |
Fannie Mae | ||
Loans Held-for-Sale, Net | ||
Loans held-for-sale, net | 238,273,732 | 238,273,732 |
Freddie Mac | ||
Loans Held-for-Sale, Net | ||
Loans held-for-sale, net | 52,697,000 | 52,697,000 |
FHA | ||
Loans Held-for-Sale, Net | ||
Loans held-for-sale, net | $ 11,123,451 | $ 11,123,451 |
Available-for-Sale Securities67
Available-for-Sale Securities (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Jan. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
Available-for-sale securities | |||
Amortized Cost | $ 1,610,505 | $ 58,789 | |
Available-for-sale securities | 2,022,030 | 5,214,998 | |
Proceeds from sale of securities | 1,567,207 | ||
Gain on sale of securities | 15,491 | ||
Available-for-sale Securities | |||
Available-for-sale securities | |||
Face Value | 1,500,000 | ||
Amortized Cost | 1,610,505 | ||
Cumulative Unrealized Gain | 411,525 | ||
Available-for-sale securities | $ 2,022,030 | ||
Available-for-sale Securities | Equity investments | |||
Available-for-sale securities | |||
Fixed interest rate (as a percent) | 3.241% | ||
Proceeds from sale of securities | $ 1,600,000 | ||
Available-for-sale Securities | Equity investments | Maximum | |||
Available-for-sale securities | |||
Gain on sale of securities | $ 100,000 | ||
Available-for-sale Securities | Federal Home Loan Mortgage Corporation | |||
Available-for-sale securities | |||
Face Value | $ 1,500,000 | ||
Amortized Cost | 1,551,716 | ||
Available-for-sale securities | 1,551,716 | ||
Available-for-sale Securities | Common Shares of CV Holdings, Inc. | |||
Available-for-sale securities | |||
Amortized Cost | 58,789 | 58,789 | |
Cumulative Unrealized Gain | 411,525 | 293,947 | |
Available-for-sale securities | $ 470,314 | $ 352,736 | |
Number of shares of common stock purchased | 2,939,465 | 2,939,465 |
Available-for-Sale Securities,
Available-for-Sale Securities, Agency IO (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Summary of our Agency IOs activity | |
Balance at beginning of period | $ 2,022,030 |
Balance at end of period | 5,214,998 |
Interest-only Securities (Agency IOs) under the SBL Program | |
Summary of our Agency IOs activity | |
Additions from the Acquisition | 4,908,283 |
Settlement | (46,021) |
Balance at end of period | $ 4,862,262 |
Investments in Equity Affilia69
Investments in Equity Affiliates, Summary (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Investment in Equity Affiliates | ||
Investment in Equity Affiliates | $ 41,962,338 | $ 30,870,235 |
Unpaid Principal Balance of Loans to Equity Affiliates | 3,393,438 | |
Arbor Residential Investor LLC | ||
Investment in Equity Affiliates | ||
Investment in Equity Affiliates | 36,961,286 | 25,923,679 |
West Shore Cafe | ||
Investment in Equity Affiliates | ||
Investment in Equity Affiliates | 2,015,932 | 1,955,933 |
Unpaid Principal Balance of Loans to Equity Affiliates | 1,687,500 | |
Lightstone Value Plus REIT L.P | ||
Investment in Equity Affiliates | ||
Investment in Equity Affiliates | 1,894,727 | 1,894,727 |
Issuers of Junior Subordinated Notes | ||
Investment in Equity Affiliates | ||
Investment in Equity Affiliates | 578,000 | 578,000 |
JT Prime | ||
Investment in Equity Affiliates | ||
Investment in Equity Affiliates | 425,000 | 425,000 |
East River Portfolio | ||
Investment in Equity Affiliates | ||
Investment in Equity Affiliates | 87,293 | 92,796 |
Unpaid Principal Balance of Loans to Equity Affiliates | 1,705,938 | |
Lexford Portfolio | ||
Investment in Equity Affiliates | ||
Investment in Equity Affiliates | $ 100 | $ 100 |
Investments in Equity Affilia70
Investments in Equity Affiliates, Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Investment in Equity Affiliates | ||||||
Income from equity affiliates | $ 4,929,375 | $ 6,353,239 | $ 11,193,918 | $ 10,983,177 | ||
Arbor Residential Investor LLC | Non-qualified Residential Mortgages | ||||||
Investment in Equity Affiliates | ||||||
Equity Investment | $ 1,700,000 | |||||
Ownership percentage | 50.00% | |||||
Income from equity affiliates | 300,000 | 400,000 | ||||
Proceeds from equity affiliates | 1,300,000 | 2,500,000 | ||||
Arbor Residential Investor LLC | Additional mortgage purchases | ||||||
Investment in Equity Affiliates | ||||||
Equity Investment | 4,600,000 | 4,600,000 | $ 7,900,000 | |||
Arbor Residential Investor LLC | Non Qualified and Additional Residential Mortgages | ||||||
Investment in Equity Affiliates | ||||||
Equity Investment | 14,200,000 | 14,200,000 | ||||
Arbor Residential Investor LLC | Non Qualified and Additional Residential Mortgages | Maximum | ||||||
Investment in Equity Affiliates | ||||||
Income from equity affiliates | 100,000 | 100,000 | ||||
Arbor Residential Investor LLC | Residential Mortgage Banking Company | ||||||
Investment in Equity Affiliates | ||||||
Equity Investment | $ 9,600,000 | |||||
Percentage of ownership interest of related party in the entity | 50.00% | |||||
Ownership percentage | 22.50% | |||||
Income from equity affiliates | 3,900,000 | 1,300,000 | 8,500,000 | $ 5,900,000 | ||
Lexford Portfolio | ||||||
Investment in Equity Affiliates | ||||||
Income from equity affiliates | $ 700,000 | 3,900,000 | $ 2,100,000 | |||
Proceeds from equity affiliates | 4,900,000 | |||||
Expenses related to distribution from equity investment | $ 1,000,000 |
Investments in Equity Affilia71
Investments in Equity Affiliates, Statements of Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue: | ||||
Total revenues | $ 71,040,665 | $ 36,449,536 | $ 172,929,878 | $ 107,434,730 |
Total expenses | 47,256,537 | 30,644,746 | 128,120,821 | 82,587,270 |
Net income | 23,784,128 | 5,804,790 | 44,809,057 | 24,847,460 |
Arbor's share of income | $ 4,167,233 | $ 1,331,908 | $ 8,885,528 | $ 5,839,163 |
Real Estate Owned and Held-Fo72
Real Estate Owned and Held-For-Sale, Portfolio (Details) | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2016USD ($)property | Mar. 31, 2016USD ($)property | Mar. 31, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)item | |
Real Estate Owned | ||||||
Less: Impairment loss | $ (11,200,000) | |||||
Real estate owned, net | 19,762,787 | $ 60,845,509 | ||||
Restricted cash due to escrow requirement | 176,615,179 | 48,301,244 | ||||
Real Estate Held-For-Sale | ||||||
Pay off outstanding debt | 27,155,000 | $ 30,984,357 | ||||
Multifamily and Hotel | Disposed of by sale | ||||||
Real Estate Held-For-Sale | ||||||
Proceeds from sale of properties | $ 18,800,000 | |||||
Gain on sale of property | $ 4,000,000 | |||||
Multifamily | Disposed of by sale | ||||||
Real Estate Held-For-Sale | ||||||
Number of properties reclassified from real estate owned to real estate held-for-sale | property | 3 | |||||
Proceeds from sale of properties | $ 41,000,000 | |||||
Gain on sale of property | 11,000,000 | |||||
Pay off outstanding debt | $ 27,100,000 | |||||
Hotel | Disposed of by sale | ||||||
Real Estate Held-For-Sale | ||||||
Number of properties reclassified from real estate owned to real estate held-for-sale | property | 1 | |||||
Proceeds from sale of properties | $ 9,700,000 | |||||
Gain on sale of property | $ 600,000 | |||||
Real Estate Owned | ||||||
Real Estate Owned | ||||||
Less: Impairment loss | (11,200,000) | |||||
Less: Accumulated depreciation and amortization | (8,900,424) | (16,869,757) | ||||
Real estate owned, net | 19,762,787 | 60,845,509 | ||||
Restricted cash due to escrow requirement | $ 900,000 | $ 1,600,000 | ||||
Real Estate Owned | Multifamily | ||||||
Real Estate Owned | ||||||
Number of properties | item | 3 | |||||
Less: Accumulated depreciation and amortization | $ (9,399,041) | |||||
Real estate owned, net | $ 28,783,692 | |||||
Real Estate Owned | Hotel | ||||||
Real Estate Owned | ||||||
Number of properties | item | 1 | 2 | ||||
Less: Impairment loss | $ (11,200,000) | |||||
Less: Accumulated depreciation and amortization | (8,502,735) | $ (7,329,615) | ||||
Real estate owned, net | $ 14,156,231 | 26,302,918 | ||||
Weighted average occupancy rate of properties (as a percent) | 59.00% | 59.00% | ||||
Amount of weighted average daily rate of properties | $ 101 | $ 93 | ||||
Amount of weighted average daily revenue of properties | 60 | $ 55 | ||||
Real Estate Owned | Office | ||||||
Real Estate Owned | ||||||
Less: Accumulated depreciation and amortization | (397,689) | (141,101) | ||||
Real estate owned, net | 5,606,556 | 5,758,899 | ||||
Real Estate Owned | Land | ||||||
Real Estate Owned | ||||||
Real estate owned, gross | 7,802,651 | 13,341,495 | ||||
Real Estate Owned | Land | Multifamily | ||||||
Real Estate Owned | ||||||
Real estate owned, gross | 5,538,844 | |||||
Real Estate Owned | Land | Hotel | ||||||
Real Estate Owned | ||||||
Real estate owned, gross | 3,293,651 | 3,293,651 | ||||
Real Estate Owned | Land | Office | ||||||
Real Estate Owned | ||||||
Real estate owned, gross | 4,509,000 | 4,509,000 | ||||
Real Estate Owned | Building and intangible assets | ||||||
Real Estate Owned | ||||||
Real estate owned, gross | 32,060,560 | 64,373,771 | ||||
Real Estate Owned | Building and intangible assets | Multifamily | ||||||
Real Estate Owned | ||||||
Real estate owned, gross | 32,643,889 | |||||
Real Estate Owned | Building and intangible assets | Hotel | ||||||
Real Estate Owned | ||||||
Real estate owned, gross | 30,565,315 | 30,338,882 | ||||
Real Estate Owned | Building and intangible assets | Office | ||||||
Real Estate Owned | ||||||
Real estate owned, gross | $ 1,495,245 | $ 1,391,000 |
Real Estate Owned and Held-Fo73
Real Estate Owned and Held-For-Sale, Results for Held-For-Sale (Details) - Held-For-Sale - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue: | |||
Property operating income | $ 1,879,427 | $ 2,845,231 | $ 6,792,334 |
Expenses: | |||
Property operating expense | 1,429,783 | 1,994,346 | 4,780,087 |
Depreciation | 112,692 | 334,631 | 774,089 |
Net income | $ 336,952 | $ 516,254 | $ 1,238,158 |
Capitalized Mortgage Servicin74
Capitalized Mortgage Servicing Rights (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Capitalized Mortgage Servicing Rights | |
Balance at end of period | $ 224,297,210 |
Net carrying value of our acquired and originated MSRs | |
Accumulated Amortization | (1,167,044) |
Remaining future amortization of capitalized MSR balances | |
2016 (three months ended 12/31/2016) | 1,400,453 |
2,017 | 5,601,811 |
2,018 | 5,464,311 |
2,019 | 5,249,137 |
2,020 | $ 4,691,118 |
MSRs | |
Capitalized Mortgage Servicing Rights | |
Weighted average estimated life remaining | 6 years 3 months 18 days |
Additions | $ 233,552,815 |
Amortization | (7,586,524) |
Write-downs and payoffs | (1,669,081) |
Balance at end of period | 224,297,210 |
Net carrying value of our acquired and originated MSRs | |
Gross Carrying Value | 233,552,815 |
Accumulated Amortization | (7,586,524) |
Write-Downs and Payoffs | (1,669,081) |
Net Carrying Value | 224,297,210 |
Remaining future amortization of capitalized MSR balances | |
2016 (three months ended 12/31/2016) | 7,422,547 |
2,017 | 29,476,039 |
2,018 | 28,470,605 |
2,019 | 27,158,566 |
2,020 | 24,930,653 |
2,021 | 22,476,404 |
Thereafter | 84,362,396 |
Total | 224,297,210 |
Write-offs due to prepayments | 1,700,000 |
Prepayment fees | 1,500,000 |
Valuation allowance | 0 |
Acquired MSRs | |
Net carrying value of our acquired and originated MSRs | |
Gross Carrying Value | 221,647,421 |
Accumulated Amortization | (7,358,639) |
Write-Downs and Payoffs | (1,669,081) |
Net Carrying Value | 212,619,701 |
Remaining future amortization of capitalized MSR balances | |
Total | 212,619,701 |
Originated MSRs | |
Net carrying value of our acquired and originated MSRs | |
Gross Carrying Value | 11,905,394 |
Accumulated Amortization | (227,885) |
Net Carrying Value | 11,677,509 |
Remaining future amortization of capitalized MSR balances | |
Total | $ 11,677,509 |
Mortgage Servicing (Details)
Mortgage Servicing (Details) | 9 Months Ended |
Sep. 30, 2016USD ($)stateitem | |
Mortgage Servicing | |
Unpaid principal balance of loans serviced | $ 12,602,009,992 |
MSRs | |
Mortgage Servicing | |
Weighted average servicing fee (as a percent) | 0.48% |
Number of federally insured depository institutions holding cash balance and related escrow liabilities for servicing mortgage | item | 2 |
MSRs | Fee-based servicing portfolio | |
Mortgage Servicing | |
Escrow Deposit | $ 403,600,000 |
Percentage of Total | 100.00% |
Number of states accounted for more than 5% of UPB and related servicing revenues | state | 0 |
MSRs | Fee-based servicing portfolio | Texas | |
Mortgage Servicing | |
Percentage of Total | 22.00% |
MSRs | Fee-based servicing portfolio | New York | |
Mortgage Servicing | |
Percentage of Total | 10.00% |
MSRs | Fee-based servicing portfolio | California | |
Mortgage Servicing | |
Percentage of Total | 10.00% |
MSRs | Fee-based servicing portfolio | North Carolina | |
Mortgage Servicing | |
Percentage of Total | 9.00% |
MSRs | Fee-based servicing portfolio | Florida | |
Mortgage Servicing | |
Percentage of Total | 6.00% |
MSRs | Fee-based servicing portfolio | All other states | |
Mortgage Servicing | |
Percentage of Total | 43.00% |
Fannie Mae | |
Mortgage Servicing | |
Unpaid principal balance of loans serviced | $ 10,520,107,177 |
Fannie Mae | MSRs | Fee-based servicing portfolio | |
Mortgage Servicing | |
Percentage of Total | 84.00% |
Freddie Mac | |
Mortgage Servicing | |
Unpaid principal balance of loans serviced | $ 1,660,940,595 |
Freddie Mac | MSRs | Fee-based servicing portfolio | |
Mortgage Servicing | |
Percentage of Total | 13.00% |
FHA | |
Mortgage Servicing | |
Unpaid principal balance of loans serviced | $ 420,962,220 |
FHA | MSRs | Fee-based servicing portfolio | |
Mortgage Servicing | |
Percentage of Total | 3.00% |
Debt Obligations, Credit Facili
Debt Obligations, Credit Facilities and Repurchase Agreements (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Mar. 31, 2015USD ($)item | Sep. 30, 2016USD ($)item | Dec. 31, 2015USD ($)item | Dec. 31, 2010USD ($) | |
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | $ 431,823,489 | $ 431,823,489 | $ 137,325,474 | |||
Debt Carrying Value, Total credit facilities and repurchase agreements | 431,060,399 | 431,060,399 | $ 136,252,135 | |||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 487,932,026 | $ 487,932,026 | ||||
Weighted Average Note Rate (as a percent) | 2.11% | 2.11% | ||||
Healthcare related loans | Minimum | ||||||
Debt Obligations | ||||||
Variable rate, spread (as a percent) | 2.25% | |||||
Healthcare related loans | Maximum | ||||||
Debt Obligations | ||||||
Variable rate, spread (as a percent) | 2.50% | |||||
Credit Facilities and Repurchase Agreements | ||||||
Debt Obligations | ||||||
Weighted Average Note Rate (as a percent) | 2.78% | 2.78% | 2.69% | |||
Weighted average note rate including certain fees and costs (as a percent) | 3.59% | 3.59% | 3.42% | |||
Leverage on loans and investment portfolio, excluding the $3.0 million master security agreement used to finance leasehold improvements to corporate office (as a percent) | 68.00% | 68.00% | 64.00% | |||
Number of interest rate swaps | item | 0 | 0 | 0 | |||
$150 million repurchase facility | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | $ 76,200,765 | $ 76,200,765 | $ 58,270,774 | |||
Debt Carrying Value, Total credit facilities and repurchase agreements | 75,949,173 | 75,949,173 | 57,610,463 | |||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 113,545,882 | $ 113,545,882 | $ 99,641,504 | |||
Weighted Average Note Rate (as a percent) | 2.84% | 2.84% | 2.70% | |||
Maximum borrowing capacity | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | ||
Extension of maturity date (in years) | 1 year | |||||
Deferred financing fees | 200,000 | $ 200,000 | 700,000 | |||
$150 million repurchase facility | Senior mortgage loans | ||||||
Debt Obligations | ||||||
Variable rate, spread (as a percent) | 2.25% | |||||
Variable interest rate, description | LIBOR | |||||
$150 million repurchase facility | Junior participation loans | ||||||
Debt Obligations | ||||||
Variable rate, spread (as a percent) | 3.50% | |||||
Variable interest rate, description | LIBOR | |||||
Collateralized Debt Obligations | ||||||
Debt Obligations | ||||||
Number of collateral debt obligation | item | 2 | |||||
Debt instrument - Principal/Notional Amount | $ 42,800,000 | |||||
$100 million credit facility | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | 3,960,000 | $ 3,960,000 | 24,582,200 | |||
Debt Carrying Value, Total credit facilities and repurchase agreements | 3,611,075 | 3,611,075 | 24,328,863 | |||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 6,600,000 | $ 6,600,000 | $ 38,000,000 | |||
Weighted Average Note Rate (as a percent) | 2.72% | 2.72% | 2.62% | |||
Maximum borrowing capacity | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | |||
Variable rate, spread (as a percent) | 2.15% | |||||
Variable interest rate, description | LIBOR | |||||
Extension of maturity date (in years) | 1 year | |||||
Deferred financing fees | 300,000 | $ 300,000 | 300,000 | |||
$100 million credit facility | Maximum | ||||||
Debt Obligations | ||||||
Advance rate (as a percent) | 75.00% | |||||
$75 million credit facility - one | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | 15,856,250 | $ 15,856,250 | 13,852,500 | |||
Debt Carrying Value, Total credit facilities and repurchase agreements | 15,856,250 | 15,856,250 | 13,766,445 | |||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 26,863,500 | $ 26,863,500 | $ 18,470,000 | |||
Weighted Average Note Rate (as a percent) | 2.85% | 2.85% | 2.59% | |||
Maximum borrowing capacity | $ 75,000,000 | $ 75,000,000 | $ 75,000,000 | |||
Variable rate, spread (as a percent) | 2.125% | |||||
Variable interest rate, description | LIBOR | |||||
Credit facility, sublimit to finance healthcare related loans | 25,000,000 | $ 25,000,000 | ||||
Deferred financing fees | 100,000 | |||||
$75 million credit facility - one | Maximum | ||||||
Debt Obligations | ||||||
Advance rate (as a percent) | 75.00% | |||||
$75 million credit facility - two | ||||||
Debt Obligations | ||||||
Maximum borrowing capacity | 75,000,000 | $ 75,000,000 | ||||
Variable rate, spread (as a percent) | 2.00% | |||||
Variable interest rate, description | LIBOR | |||||
$75 million credit facility - two | Minimum | ||||||
Debt Obligations | ||||||
Advance rate (as a percent) | 70.00% | |||||
$75 million credit facility - two | Maximum | ||||||
Debt Obligations | ||||||
Advance rate (as a percent) | 75.00% | |||||
$50 million credit facility - one | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | 31,120,000 | $ 31,120,000 | 24,120,000 | |||
Debt Carrying Value, Total credit facilities and repurchase agreements | 31,105,864 | 31,105,864 | 24,114,494 | |||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 38,900,000 | $ 38,900,000 | $ 30,200,000 | |||
Weighted Average Note Rate (as a percent) | 2.57% | 2.57% | 2.46% | |||
Maximum borrowing capacity | $ 50,000,000 | $ 50,000,000 | $ 50,000,000 | |||
Variable rate, spread (as a percent) | 2.00% | |||||
Variable interest rate, description | LIBOR | |||||
$50 million credit facility - two | ||||||
Debt Obligations | ||||||
Maximum borrowing capacity | $ 50,000,000 | $ 50,000,000 | 50,000,000 | |||
Variable interest rate, description | LIBOR | |||||
Number of one-year extension option | item | 2 | |||||
Extension of maturity date (in years) | 1 year | |||||
Advance rate (as a percent) | 80.00% | |||||
$50 million credit facility - two | Minimum | ||||||
Debt Obligations | ||||||
Variable rate, spread (as a percent) | 2.50% | |||||
$50 million credit facility - two | Maximum | ||||||
Debt Obligations | ||||||
Variable rate, spread (as a percent) | 3.25% | |||||
$16.5 million term credit facility | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | 16,500,000 | |||||
Debt Carrying Value, Total credit facilities and repurchase agreements | 16,431,870 | |||||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 29,750,000 | |||||
Weighted Average Note Rate (as a percent) | 3.22% | |||||
Maximum borrowing capacity | $ 16,500,000 | $ 16,500,000 | $ 16,500,000 | $ 16,500,000 | ||
Variable rate, spread (as a percent) | 2.75% | |||||
Variable interest rate, description | LIBOR | |||||
$3 million master security agreement | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | 2,663,830 | 2,663,830 | ||||
Debt Carrying Value, Total credit facilities and repurchase agreements | $ 2,663,830 | $ 2,663,830 | ||||
Weighted Average Note Rate (as a percent) | 3.21% | 3.21% | ||||
Number of loan agreements | item | 2 | |||||
$400 million multifamily as soon as pooled plus agreement | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | $ 76,351,972 | $ 76,351,972 | ||||
Debt Carrying Value, Total credit facilities and repurchase agreements | 76,351,972 | 76,351,972 | ||||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 76,351,972 | $ 76,351,972 | ||||
Weighted Average Note Rate (as a percent) | 1.56% | 1.56% | ||||
Maximum borrowing capacity | $ 400,000,000 | $ 400,000,000 | ||||
Variable rate, spread (as a percent) | 1.05% | |||||
Variable interest rate, description | LIBOR | |||||
Commitment amount | $ 0 | |||||
$400 million multifamily as soon as pooled plus agreement | Minimum | ||||||
Debt Obligations | ||||||
Variable rate, spread (as a percent) | 0.35% | |||||
$150 million credit facility - one | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | 85,315,272 | $ 85,315,272 | ||||
Debt Carrying Value, Total credit facilities and repurchase agreements | 85,315,272 | 85,315,272 | ||||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 85,315,272 | $ 85,315,272 | ||||
Weighted Average Note Rate (as a percent) | 1.91% | 1.91% | ||||
Maximum borrowing capacity | $ 150,000,000 | $ 150,000,000 | ||||
Variable rate, spread (as a percent) | 1.40% | |||||
Variable interest rate, description | LIBOR | |||||
Deferred financing fees | 100,000 | $ 100,000 | ||||
$150 million credit facility - two | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | 101,161,000 | 101,161,000 | ||||
Debt Carrying Value, Total credit facilities and repurchase agreements | 101,012,563 | 101,012,563 | ||||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 101,161,000 | $ 101,161,000 | ||||
Weighted Average Note Rate (as a percent) | 1.90% | 1.90% | ||||
Maximum borrowing capacity | $ 150,000,000 | $ 150,000,000 | ||||
Variable rate, spread (as a percent) | 1.40% | |||||
Variable interest rate, description | LIBOR | |||||
$100 million credit facility | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | 39,194,400 | $ 39,194,400 | ||||
Debt Carrying Value, Total credit facilities and repurchase agreements | 39,194,400 | 39,194,400 | ||||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 39,194,400 | $ 39,194,400 | ||||
Weighted Average Note Rate (as a percent) | 1.91% | 1.91% | ||||
Maximum borrowing capacity | $ 100,000,000 | $ 100,000,000 | ||||
Variable rate, spread (as a percent) | 1.35% | |||||
Variable interest rate, description | LIBOR | |||||
Letter of credit | ||||||
Debt Obligations | ||||||
Maximum borrowing capacity | $ 40,000,000 | $ 40,000,000 | ||||
Fixed interest rate (as a percent) | 3.00% | 3.00% | ||||
Structured Business | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | $ 129,800,845 | $ 129,800,845 | 137,325,474 | |||
Debt Carrying Value, Total credit facilities and repurchase agreements | 129,186,192 | 129,186,192 | 136,252,135 | |||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 185,909,382 | $ 185,909,382 | $ 216,061,504 | |||
Weighted Average Note Rate (as a percent) | 2.78% | 2.78% | 2.69% | |||
Agency Business | ||||||
Debt Obligations | ||||||
Debt Principal Balance, Total credit facilities and repurchase agreements | $ 302,022,644 | $ 302,022,644 | ||||
Debt Carrying Value, Total credit facilities and repurchase agreements | 301,874,207 | 301,874,207 | ||||
Collateral Carrying Value, Total credit facilities and repurchase agreements | $ 302,022,644 | $ 302,022,644 | ||||
Weighted Average Note Rate (as a percent) | 1.82% | 1.82% | ||||
Fannie Mae | Letter of credit | ||||||
Debt Obligations | ||||||
Outstanding letters of credit | $ 35,000,000 | $ 35,000,000 | ||||
Freddie Mac | Letter of credit | ||||||
Debt Obligations | ||||||
Outstanding letters of credit | $ 5,000,000 | $ 5,000,000 |
Debt Obligations, Collateralize
Debt Obligations, Collateralized Loan Obligations (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Aug. 31, 2016USD ($)item | Aug. 31, 2015USD ($)item | Feb. 28, 2015USD ($)item | Apr. 30, 2014item | Mar. 31, 2015USD ($) | Sep. 30, 2016USD ($) | Oct. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | |
Debt Obligations | |||||||||
Debt, Carrying Value | $ 1,007,736,720 | $ 758,899,661 | |||||||
Collateral Cash, Restricted Cash | $ 176,615,179 | 48,301,244 | |||||||
Weighted average note rate (as a percent) | 2.11% | ||||||||
CLOs | |||||||||
Debt Obligations | |||||||||
Debt, Face Value | $ 1,018,250,000 | 768,000,000 | |||||||
Debt, Carrying Value | 1,007,736,720 | 758,899,661 | |||||||
Collateral Loans, Unpaid Principal | 1,178,547,506 | 971,162,690 | |||||||
Collateral Loans, Carrying Value | 1,174,588,054 | 968,970,064 | |||||||
Collateral Cash, Restricted Cash | 169,589,260 | 42,992,023 | |||||||
Collateral-At-Risk | $ 0 | $ 0 | |||||||
Weighted average note rate (as a percent) | 2.97% | 2.84% | |||||||
Weighted average note rate including certain fees and costs (as a percent) | 3.36% | 3.24% | |||||||
CLO II | |||||||||
Debt Obligations | |||||||||
Debt instrument redemption value | $ 177,000,000 | ||||||||
Deferred fees expensed as interest expense | $ 1,500,000 | ||||||||
CLO III | |||||||||
Debt Obligations | |||||||||
Debt, Face Value | $ 281,250,000 | $ 281,250,000 | |||||||
Debt, Carrying Value | 280,115,665 | 279,129,518 | |||||||
Collateral Loans, Unpaid Principal | 322,175,047 | 339,019,221 | |||||||
Collateral Loans, Carrying Value | 321,164,566 | 338,034,689 | |||||||
Collateral Cash, Restricted Cash | $ 50,961,717 | $ 25,135,492 | |||||||
Number of investment grade tranches issued | item | 3 | ||||||||
Weighted average note rate (as a percent) | 2.97% | 2.86% | |||||||
Variable interest rate, description | one-month LIBOR | ||||||||
Deferred financing fees | $ 1,100,000 | $ 2,100,000 | |||||||
CLO IV | |||||||||
Debt Obligations | |||||||||
Debt, Face Value | 219,000,000 | 219,000,000 | |||||||
Debt, Carrying Value | $ 219,000,000 | 216,842,107 | 215,985,420 | ||||||
Collateral Loans, Unpaid Principal | 243,649,123 | 288,581,773 | |||||||
Collateral Loans, Carrying Value | $ 250,000,000 | 243,062,697 | 287,946,641 | ||||||
Collateral Cash, Restricted Cash | $ 56,350,878 | $ 11,418,227 | |||||||
Number of investment grade tranches issued | item | 3 | ||||||||
Number of newly-formed wholly-owned subsidiaries | item | 2 | ||||||||
Replacement period | 2 years 6 months | ||||||||
Proceeds from additional loan obligations | $ 50,000,000 | ||||||||
Notional amount of equity interest retained | $ 81,000,000 | ||||||||
Weighted average note rate (as a percent) | 2.24% | 2.81% | 2.71% | ||||||
Variable interest rate, description | one-month LIBOR | one-month LIBOR | |||||||
Weighted average note rate including certain fees and costs (as a percent) | 2.96% | ||||||||
Deferred financing fees | $ 2,200,000 | $ 3,000,000 | |||||||
CLO V | |||||||||
Debt Obligations | |||||||||
Debt, Face Value | $ 302,600,000 | 267,750,000 | 267,750,000 | $ 350,000,000 | |||||
Debt, Carrying Value | $ 267,800,000 | 264,589,738 | 263,784,723 | ||||||
Collateral Loans, Unpaid Principal | 319,005,836 | 343,561,696 | |||||||
Collateral Loans, Carrying Value | 318,061,806 | 342,988,734 | |||||||
Collateral Cash, Restricted Cash | $ 30,994,165 | $ 6,438,304 | |||||||
Number of investment grade tranches issued | item | 3 | ||||||||
Number of newly-formed wholly-owned subsidiaries | item | 2 | ||||||||
Replacement period | 3 years | ||||||||
Proceeds from additional loan obligations | $ 47,400,000 | ||||||||
Maximum period of additional loan obligations | 120 days | ||||||||
Notional amount of equity interest retained | $ 82,300,000 | ||||||||
Weighted average note rate (as a percent) | 2.44% | 3.01% | 2.91% | ||||||
Variable interest rate, description | one-month LIBOR | one-month LIBOR | |||||||
Weighted average note rate including certain fees and costs (as a percent) | 3.07% | ||||||||
Deferred financing fees | $ 3,200,000 | $ 3,800,000 | |||||||
CLO VI | |||||||||
Debt Obligations | |||||||||
Debt, Face Value | $ 275,400,000 | 250,250,000 | $ 325,000,000 | ||||||
Debt, Carrying Value | $ 250,300,000 | 246,189,210 | |||||||
Collateral Loans, Unpaid Principal | 293,717,500 | ||||||||
Collateral Loans, Carrying Value | 292,298,985 | ||||||||
Collateral Cash, Restricted Cash | $ 31,282,500 | ||||||||
Number of investment grade tranches issued | item | 3 | ||||||||
Number of newly-formed wholly-owned subsidiaries | item | 2 | ||||||||
Replacement period | 3 years | ||||||||
Proceeds from additional loan obligations | $ 49,600,000 | ||||||||
Maximum period of additional loan obligations | 120 days | ||||||||
Notional amount of equity interest retained | $ 74,800,000 | ||||||||
Weighted average note rate (as a percent) | 2.48% | 3.05% | |||||||
Variable interest rate, description | one-month LIBOR | one-month LIBOR | |||||||
Weighted average note rate including certain fees and costs (as a percent) | 3.44% | ||||||||
Deferred financing fees | $ 4,100,000 | ||||||||
Class C secured floating rate notes | |||||||||
Debt Obligations | |||||||||
Notes acquired | $ 12,500,000 | ||||||||
Net proceeds | $ 12,500,000 |
Debt Obligations, Collaterali78
Debt Obligations, Collateralized Debt Obligations (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jul. 31, 2015 | Mar. 31, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2010 | Jan. 31, 2015 | |
Collateralized Debt Obligations | ||||||
Debt Obligations | ||||||
Debt instrument redemption value | $ 71,100,000 | $ 167,900,000 | ||||
Debt instrument - Principal/Notional Amount | $ 42,800,000 | |||||
Additional debt | 65,200,000 | |||||
Portion of the entity's bonds that were exchanged | 42,300,000 | |||||
Estimated interest due on reissued bonds | 22,900,000 | 11,000,000 | ||||
Gain on extinguishment of debt | $ 8,200,000 | |||||
Revolving note class | ||||||
Debt Obligations | ||||||
Maximum borrowing capacity | $ 100,000,000 | |||||
$150 million warehouse repurchase facility | ||||||
Debt Obligations | ||||||
Cash equity generated | 30,000,000 | |||||
Deferred fees expensed as interest expense | 500,000 | |||||
Estimated interest due on reissued bonds | 11,000,000 | |||||
Loss on terminated derivative | $ 4,300,000 | |||||
Maximum borrowing capacity | $ 150,000,000 | |||||
Junior subordinated notes | ||||||
Debt Obligations | ||||||
Amount of debt extinguished | $ 114,100,000 | |||||
Deferred fees expensed as interest expense | $ 3,200,000 | $ 3,300,000 | ||||
Debt instrument - Principal/Notional Amount | $ 175,858,000 | $ 175,858,000 |
Debt Obligations, Senior Unsecu
Debt Obligations, Senior Unsecured Notes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Obligations | |||
Debt, Carrying Value | $ 1,007,736,720 | $ 758,899,661 | |
Senior Unsecured Notes | |||
Debt Obligations | |||
Debt, Face Value | $ 90,000,000 | $ 97,860,025 | $ 97,860,025 |
Interest rate (as a percent) | 7.375% | ||
Net proceeds | $ 85,400,000 | ||
Weighted average note rate including certain fees and costs (as a percent) | 8.15% | 8.12% | |
Debt, Carrying Value | $ 94,300,000 | $ 93,800,000 | |
Deferred financing fees | $ 3,600,000 | $ 4,100,000 | |
Senior Unsecured Notes | Over-Allotment Option | |||
Debt Obligations | |||
Debt, Face Value | 7,800,000 | ||
Net proceeds | $ 7,400,000 |
Debt Obligations, Junior Subord
Debt Obligations, Junior Subordinated Notes (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Obligations | ||
Debt Carrying Value | $ 157,662,855 | $ 157,117,130 |
Weighted average note rate (as a percent) | 2.11% | |
Junior subordinated notes | ||
Debt Obligations | ||
Debt Carrying Value | $ 157,700,000 | 157,100,000 |
Deferred amount Due at maturity | 15,000,000 | 15,500,000 |
Deferred fees expensed as interest expense | $ 3,200,000 | $ 3,300,000 |
Variable interest rate, description | three-month LIBOR | |
Nonredeemable period from issue date (in years) | 2 years | |
Weighted average note rate (as a percent) | 3.67% | 3.43% |
Weighted average note rate including certain fees and costs (as a percent) | 3.79% | 3.55% |
Debt Obligations, Mortgage Note
Debt Obligations, Mortgage Note Payable, Real Estate Owned and Held-For-Sale (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2015USD ($)item | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015item | |
Debt Obligations | ||||
Reduction in mortgage note payable | $ 27,155,000 | $ 30,984,357 | ||
Mortgage note paid - real estate held-for-sale | $ 853,935,531 | |||
Number of loans | item | 143 | 128 | ||
Mortgage Notes Payable - Real Estate Owned and Held-For-Sale | First mortgage | Multifamily | ||||
Debt Obligations | ||||
Reduction in mortgage note payable | $ 10,300,000 | |||
Mortgage note paid - real estate held-for-sale | $ 20,700,000 | |||
Number of loans | item | 2 | |||
Debt, Face Value | $ 27,200,000 |
Debt Obligations - Related Part
Debt Obligations - Related Party Financing (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($) | |
Debt Obligations | ||
Outstanding principal balance of related party financing | $ 50,000,000 | $ 50,000,000 |
Preferred equity interest financing agreement | ACM / Our "Manager" | ||
Debt Obligations | ||
Face amount | $ 50,000,000 | $ 50,000,000 |
Maturity period (in years) | 5 years | |
Interest rate (as a percent) | 7.00% | 7.00% |
Increasing of interest rate per annum thereafter (as a percent) | 1.00% | |
Period after which principal balance scheduled to increase | 18 months | |
Principal balance due if debt remained outstanding after the end of the five-year term | $ 62,500,000 | $ 62,500,000 |
Outstanding principal balance of related party financing | 50,000,000 | 50,000,000 |
Interest expense | $ 800,000 | $ 800,000 |
Preferred equity interest financing agreement | ACM / Our "Manager" | Maximum | ||
Debt Obligations | ||
Interest rate (as a percent) | 12.00% | 12.00% |
Debt Obligations, Debt Covenant
Debt Obligations, Debt Covenants (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||||||||
Oct. 31, 2016 | Jul. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2015 | Jul. 31, 2015 | Sep. 30, 2016 | Aug. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Aug. 31, 2015 | |
Debt Covenants | |||||||||||
Period by which loans become past due requiring full payment of an advance (in days) | 60 days | ||||||||||
CLO III | |||||||||||
Debt Covenants | |||||||||||
Current overcollateralization ratio for cash flow triggers (as a percent) | 133.33% | 133.33% | 133.33% | 133.33% | 133.33% | 133.33% | |||||
Limit overcollateralization ratio for cash flow triggers (as a percent) | 132.33% | ||||||||||
Current interest coverage ratio for cash flow triggers (as a percent) | 222.75% | ||||||||||
Limit interest coverage ratio for cash flow triggers (as a percent) | 120.00% | ||||||||||
Debt, Face Value | $ 281,250,000 | $ 281,250,000 | |||||||||
CLO IV | |||||||||||
Debt Covenants | |||||||||||
Current overcollateralization ratio for cash flow triggers (as a percent) | 136.99% | 136.99% | 136.99% | 136.99% | 136.99% | 136.99% | |||||
Limit overcollateralization ratio for cash flow triggers (as a percent) | 135.99% | ||||||||||
Current interest coverage ratio for cash flow triggers (as a percent) | 264.51% | ||||||||||
Limit interest coverage ratio for cash flow triggers (as a percent) | 120.00% | ||||||||||
Debt, Face Value | 219,000,000 | 219,000,000 | |||||||||
CLO V | |||||||||||
Debt Covenants | |||||||||||
Current overcollateralization ratio for cash flow triggers (as a percent) | 130.72% | 130.72% | 130.72% | 130.72% | 130.72% | 130.72% | |||||
Limit overcollateralization ratio for cash flow triggers (as a percent) | 129.72% | ||||||||||
Current interest coverage ratio for cash flow triggers (as a percent) | 212.20% | ||||||||||
Limit interest coverage ratio for cash flow triggers (as a percent) | 120.00% | ||||||||||
Debt, Face Value | 267,750,000 | 267,750,000 | $ 350,000,000 | $ 302,600,000 | |||||||
CLO VI | |||||||||||
Debt Covenants | |||||||||||
Current overcollateralization ratio for cash flow triggers (as a percent) | 129.87% | 129.87% | |||||||||
Limit overcollateralization ratio for cash flow triggers (as a percent) | 128.87% | ||||||||||
Current interest coverage ratio for cash flow triggers (as a percent) | 225.28% | ||||||||||
Limit interest coverage ratio for cash flow triggers (as a percent) | 120.00% | ||||||||||
Debt, Face Value | $ 325,000,000 | 250,250,000 | $ 275,400,000 | ||||||||
Junior subordinated notes | |||||||||||
Debt Covenants | |||||||||||
Amount payable on default of senior debt | 0 | ||||||||||
Debt, Face Value | $ 175,858,000 | $ 175,858,000 | |||||||||
Convertible Unsecured Senior Notes | |||||||||||
Debt Covenants | |||||||||||
Debt, Face Value | $ 86,250,000 | ||||||||||
Interest rate (as a percent) | 6.50% | ||||||||||
Proceeds received, net of transaction fees | $ 82,800,000 | ||||||||||
Conversion rate of the Notes to common stock | 119.3033 | ||||||||||
Initial conversion price per share of common stock | $ 8.38 | ||||||||||
Percentage of the Notes required to be repurchased if the agreement is fundamentally changed | 100.00% |
Allowance for Loss-Sharing Ob84
Allowance for Loss-Sharing Obligations (Details) - Loss-Sharing Obligation | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Roll forward of loss contingency accrual | |
Outstanding advances under the Fannie Mae DUS program | $ 700,000 |
Fannie Mae | |
Roll forward of loss contingency accrual | |
Allowance for loss-sharing obligations assumed in the Acquisition | 32,616,821 |
Provisions for loss sharing | 1,316,862 |
Charge-offs, net | (2,820,270) |
Ending balance | 31,113,413 |
Maximum quantifiable liability | $ 1,900,000 |
Derivative Financial Instrume85
Derivative Financial Instruments, Summary (Details) | 9 Months Ended | ||
Sep. 30, 2016USD ($)item | Dec. 31, 2015USD ($)item | Sep. 30, 2015USD ($) | |
Derivative Financial Instruments | |||
Derivative financial instruments, Notional Value, classified in Other Assets | $ 265,466,461 | $ 84,100,000 | |
Notional Value, classified in Other Liabilities | 312,030,247 | $ 107,820,995 | |
Interest Rate Swaps | |||
Derivative Financial Instruments | |||
Notional value of matured instruments | $ 1,700,000 | ||
Qualifying | LIBOR Caps | |||
Derivative Financial Instruments | |||
Count | item | 2 | 2 | |
Derivative financial instruments, Notional Value, classified in Other Assets | $ 84,100,000 | $ 84,100,000 | $ 43,500,000 |
Fair Value, classified in Other Assets | $ 3,000 | ||
Qualifying | Interest Rate Swaps | |||
Derivative Financial Instruments | |||
Count | item | 4 | 5 | |
Notional Value, classified in Other Liabilities | $ 106,141,000 | $ 107,821,000 | |
Fair Value, classified in Other Liabilities | $ (1,148,000) | $ (4,669,000) |
Derivative Financial Instrume86
Derivative Financial Instruments, Statements of Income (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Derivative Financial Instruments | |||||
Derivative financial instruments, Notional Value, classified in Other Assets | $ 265,466,461 | $ 265,466,461 | $ 84,100,000 | ||
Cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as qualifying hedges | (1,400,000) | (1,400,000) | (5,300,000) | ||
Cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as cash flow hedges attributable to fair value of qualifying cash flow hedges | (1,200,000) | (1,200,000) | (4,700,000) | ||
Cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as cash flow hedges attributable to deferred losses terminated interest swaps | (200,000) | (200,000) | (600,000) | ||
Fair value of derivatives in a net liability position | (1,100,000) | (1,100,000) | (4,600,000) | ||
Collateral posted | 1,600,000 | 1,600,000 | 5,000,000 | ||
Interest Rate Swaps | |||||
Derivative Financial Instruments | |||||
Net deferred loss in accumulated other comprehensive loss | 200,000 | 200,000 | 600,000 | ||
Additional interest expense related to the amortization of the loss | 200,000 | $ 200,000 | 500,000 | $ 500,000 | |
Reduction to interest expense related to the accretion of the net gains | 100,000 | 100,000 | |||
Amount of net deferred loss expected to be recorded to interest expense over the next twelve months | 200,000 | 200,000 | |||
Interest Rate Swaps | Maximum | |||||
Derivative Financial Instruments | |||||
Reduction to interest expense related to the accretion of the net gains | 100,000 | 100,000 | |||
Interest Rate Swaps | CDO I and II debt | |||||
Derivative Financial Instruments | |||||
Aggregate notional value | 134,600,000 | 134,600,000 | |||
Amount of Loss Recognized in Loss on Termination of Swaps (Ineffective Portion) | (4,300,000) | ||||
Forward Sale Commitments | |||||
Derivative Financial Instruments | |||||
Aggregate notional value | 344,674,546 | 344,674,546 | |||
Non-Qualifying | Basis Swaps | |||||
Derivative Financial Instruments | |||||
Derivative financial instruments, Notional Value, classified in Other Assets | 3,000,000 | 3,000,000 | |||
Amount of Loss Recognized in Loss on Termination of Swaps (Ineffective Portion) | (3,000) | ||||
Non-Qualifying | Basis Swaps | Maximum | |||||
Derivative Financial Instruments | |||||
Fair Value, classified in Other Assets | $ 100,000 | $ 100,000 | |||
Qualifying | Interest Rate Swaps | |||||
Derivative Financial Instruments | |||||
Interest expense expected to be reclassified from qualifying cash flow hedges over the next twelve months | (1,300,000) | (1,300,000) | |||
Qualifying | LIBOR Caps | |||||
Derivative Financial Instruments | |||||
Cap rate (as a percent) | 2.00% | 2.00% | |||
Derivative financial instruments, Notional Value, classified in Other Assets | 84,100,000 | $ 43,500,000 | 84,100,000 | $ 43,500,000 | 84,100,000 |
Fair Value, classified in Other Assets | $ 3,000 | ||||
Qualifying | Interest Rate Swaps / Caps | |||||
Derivative Financial Instruments | |||||
Amount of Loss Recognized In Other Comprehensive Loss (Effective Portion) | 196,000 | 1,256,000 | |||
Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Interest Expense (Effective Portion) | (4,012,000) | (4,709,000) | |||
Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Loss on Termination of Swaps (Ineffective Portion) | $ (4,626,000) | ||||
Qualifying | Forward Sale Commitments | |||||
Derivative Financial Instruments | |||||
Fair Value, classified in Other Assets | $ 918,252 | $ 918,252 |
Derivative Financial Instrume87
Derivative Financial Instruments, Agency Business (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016USD ($)item | Sep. 30, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Derivative Financial Instruments | |||
Derivative financial instruments, Notional Value, classified in Other Assets | $ 265,466,461 | $ 265,466,461 | $ 84,100,000 |
Notional Value, classified in Other Liabilities | 312,030,247 | 312,030,247 | $ 107,820,995 |
Net gains from changes in the fair value | 200,000 | ||
Income from mortgage servicing rights | 15,968,067 | 15,968,067 | |
Agency Business | |||
Derivative Financial Instruments | |||
Fair Value, classified in Other Assets | 1,600,134 | 1,600,134 | |
Aggregate notional value | 387,254,909 | 387,254,909 | |
Fair Value, classified in Other Liabilities | (669,742) | (669,742) | |
Rate Lock Commitments | |||
Derivative Financial Instruments | |||
Aggregate notional value | 42,580,363 | 42,580,363 | |
Forward Sale Commitments | |||
Derivative Financial Instruments | |||
Aggregate notional value | $ 344,674,546 | $ 344,674,546 | |
Non-Qualifying | Rate Lock Commitments | |||
Derivative Financial Instruments | |||
Count | item | 6 | 6 | |
Derivative financial instruments, Notional Value, classified in Other Assets | $ 42,580,363 | $ 42,580,363 | |
Fair Value, classified in Other Assets | 681,882 | 681,882 | |
Fair Value, classified in Other Liabilities | $ (219,001) | $ (219,001) | |
Qualifying | Forward Sale Commitments | |||
Derivative Financial Instruments | |||
Count | item | 66 | 66 | |
Notional Value, classified in Other Liabilities | $ 344,674,546 | $ 344,674,546 | |
Fair Value, classified in Other Assets | 918,252 | 918,252 | |
Fair Value, classified in Other Liabilities | $ (450,741) | $ (450,741) |
Variable Interest Entities (Det
Variable Interest Entities (Details) | 9 Months Ended | |||||
Sep. 30, 2016USD ($)item | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | |
Variable Interest Entities | ||||||
Loan loss reserves related to VIEs | $ 83,816,575 | $ 83,831,575 | $ 86,761,575 | $ 83,360,508 | $ 117,563,544 | $ 115,487,320 |
Assets: | ||||||
Restricted cash | 176,615,179 | 48,301,244 | ||||
Loans and investments, net | 1,656,748,937 | 1,450,334,341 | ||||
Due from related party | 493,412 | 8,082,265 | ||||
Other assets | 43,326,307 | 29,558,430 | ||||
Total assets | 2,650,220,728 | 1,827,391,944 | ||||
Liabilities: | ||||||
Collateralized loan obligations | 1,007,736,720 | 758,899,661 | ||||
Other liabilities | 83,477,916 | 51,054,321 | ||||
Total liabilities | 1,924,789,186 | 1,262,301,169 | ||||
Consolidated VIEs | CLOs | ||||||
Assets: | ||||||
Restricted cash | 173,646,789 | 46,695,819 | ||||
Loans and investments, net | 1,174,588,053 | 968,970,064 | ||||
Due from related party | 36,452 | 36,451 | ||||
Other assets | 8,356,923 | 6,969,201 | ||||
Total assets | 1,356,628,217 | 1,022,671,535 | ||||
Liabilities: | ||||||
Collateralized loan obligations | 1,007,736,720 | 758,899,661 | ||||
Due to related party | 83,786 | |||||
Other liabilities | 2,488,085 | 1,224,193 | ||||
Total liabilities | $ 1,010,308,591 | $ 760,123,854 | ||||
Unconsolidated VIEs | ||||||
Variable Interest Entities | ||||||
Number of VIEs where the reporting entity is not VIE's primary beneficiary | item | 22 | |||||
Carrying Amount | $ 277,514,529 | |||||
Exposure to real estate debt | 2,500,000,000 | |||||
Carrying value of loans before loan loss reserves | 149,600,000 | |||||
Loan loss reserves related to VIEs | 77,600,000 | |||||
Unconsolidated VIEs | Maximum | ||||||
Variable Interest Entities | ||||||
Exposure to loss | 277,514,529 | |||||
Unconsolidated VIEs | Loans | ||||||
Variable Interest Entities | ||||||
Carrying Amount | 270,058,235 | |||||
Unconsolidated VIEs | Loans | Maximum | ||||||
Variable Interest Entities | ||||||
Exposure to loss | 270,058,235 | |||||
Unconsolidated VIEs | Interest-only Securities (Agency IOs) under the SBL Program | ||||||
Variable Interest Entities | ||||||
Carrying Amount | 4,862,262 | |||||
Unconsolidated VIEs | Interest-only Securities (Agency IOs) under the SBL Program | Maximum | ||||||
Variable Interest Entities | ||||||
Exposure to loss | 4,862,262 | |||||
Unconsolidated VIEs | Equity investments | ||||||
Variable Interest Entities | ||||||
Carrying Amount | 2,016,032 | |||||
Unconsolidated VIEs | Equity investments | Maximum | ||||||
Variable Interest Entities | ||||||
Exposure to loss | 2,016,032 | |||||
Unconsolidated VIEs | Junior subordinated notes | ||||||
Variable Interest Entities | ||||||
Carrying Amount | 578,000 | |||||
Unconsolidated VIEs | Junior subordinated notes | Maximum | ||||||
Variable Interest Entities | ||||||
Exposure to loss | $ 578,000 |
Fair Value, Carrying Value and
Fair Value, Carrying Value and Estimated Fair Value (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2010 | |
Financial assets: | ||||
Loans and investments, net - Principal/Notional Amount | $ 1,751,072,574 | $ 1,545,126,045 | ||
Loans and investments, net | 1,656,748,937 | 1,450,334,341 | ||
Loans held-for-sale, net - Principal/Notional Amount | 310,003,614 | |||
Available-for-sale securities - Principal/Notional Amount | 58,789 | 1,610,505 | ||
Available-for-sale securities | 5,214,998 | 2,022,030 | ||
Derivative financial instruments - Principal/Notional Amount | 265,466,461 | 84,100,000 | ||
Financial liabilities: | ||||
Credit and repurchase facilities, Principal/Notional Amount | 431,823,489 | 137,325,474 | ||
Credit and repurchase facilities | 431,060,399 | 136,252,135 | ||
Collateralized loan obligations | 1,007,736,720 | 758,899,661 | ||
Senior unsecured notes | 94,330,797 | 93,764,994 | ||
Junior subordinated notes | 157,662,855 | 157,117,130 | ||
Mortgage note payable - real estate owned | 27,155,000 | |||
Related party financing | 50,000,000 | |||
Derivative financial instruments - Principal/Notional Amount | $ 312,030,247 | 107,820,995 | ||
Loans Held-for-Sale, Net | ||||
Maximum Period of Loans Held-for-Sale Sold | 60 days | |||
Carrying Value | ||||
Financial assets: | ||||
Loans and investments, net | $ 1,656,748,937 | 1,450,334,341 | ||
Loans held-for-sale, net | 310,252,600 | |||
Capitalized mortgage servicing rights, net | 224,297,210 | |||
Available-for-sale securities | 5,214,998 | 2,022,030 | ||
Derivative financial instruments | 1,600,134 | 3,345 | ||
Financial liabilities: | ||||
Credit and repurchase facilities | 431,060,399 | 136,252,135 | ||
Collateralized loan obligations | 1,007,736,720 | 758,899,661 | ||
Senior unsecured notes | 94,330,797 | 93,764,994 | ||
Junior subordinated notes | 157,662,855 | 157,117,130 | ||
Mortgage note payable - real estate owned | 27,155,000 | |||
Related party financing | 50,000,000 | |||
Derivative financial instruments | 1,817,651 | 4,669,273 | ||
Fair Value | ||||
Financial assets: | ||||
Loans and investments, net | 1,704,227,108 | 1,481,353,410 | ||
Loans held-for-sale, net | 314,793,263 | |||
Capitalized mortgage servicing rights, net | 228,137,137 | |||
Available-for-sale securities | 5,214,998 | 2,022,030 | ||
Derivative financial instruments | 1,600,134 | 3,345 | ||
Financial liabilities: | ||||
Credit and repurchase facilities | 416,453,483 | 137,072,691 | ||
Collateralized loan obligations | 1,005,334,175 | 766,065,400 | ||
Senior unsecured notes | 100,169,522 | 96,294,265 | ||
Junior subordinated notes | 105,253,090 | 104,073,847 | ||
Mortgage note payable - real estate owned | 27,111,231 | |||
Related party financing | 55,092,469 | |||
Derivative financial instruments | 1,817,651 | 4,669,273 | ||
CLOs | ||||
Financial liabilities: | ||||
Debt instrument - Principal/Notional Amount | 1,018,250,000 | 768,000,000 | ||
Collateralized loan obligations | 1,007,736,720 | 758,899,661 | ||
Collateralized Debt Obligations | ||||
Financial liabilities: | ||||
Debt instrument - Principal/Notional Amount | $ 42,800,000 | |||
Senior Unsecured Notes | ||||
Financial liabilities: | ||||
Debt instrument - Principal/Notional Amount | 97,860,025 | 97,860,025 | $ 90,000,000 | |
Collateralized loan obligations | 94,300,000 | 93,800,000 | ||
Junior subordinated notes | ||||
Financial liabilities: | ||||
Debt instrument - Principal/Notional Amount | 175,858,000 | 175,858,000 | ||
Junior subordinated notes | $ 157,700,000 | $ 157,100,000 |
Fair Value, Measurement on Recu
Fair Value, Measurement on Recurring Basis (Details) | 9 Months Ended | |
Sep. 30, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Financial assets: | ||
Available-for-sale securities, at fair value | $ 5,214,998 | $ 2,022,030 |
Allowance for Loan losses | $ 83,816,575 | 86,761,575 |
Number of impaired loans | item | 8 | |
Aggregate carrying value, before reserves | $ 186,450,422 | 189,209,415 |
Non-financial assets: | ||
Impairment loss on real estate owned | 11,200,000 | |
Carrying Value | ||
Financial assets: | ||
Available-for-sale securities, at fair value | 5,214,998 | 2,022,030 |
Derivative financial instruments | 1,600,134 | 3,345 |
Financial liabilities: | ||
Derivative financial instruments | 1,817,651 | 4,669,273 |
Fair Value | ||
Financial assets: | ||
Available-for-sale securities, at fair value | 5,214,998 | 2,022,030 |
Derivative financial instruments | 1,600,134 | 3,345 |
Financial liabilities: | ||
Derivative financial instruments | 1,817,651 | $ 4,669,273 |
Recurring basis | Carrying Value | ||
Financial assets: | ||
Available-for-sale securities, at fair value | 5,214,998 | |
Derivative financial instruments | 1,600,134 | |
Financial liabilities: | ||
Derivative financial instruments | 1,817,651 | |
Recurring basis | Fair Value | ||
Financial assets: | ||
Available-for-sale securities, at fair value | 5,214,998 | |
Derivative financial instruments | 1,600,134 | |
Financial liabilities: | ||
Derivative financial instruments | 1,817,651 | |
Nonrecurring basis | Carrying Value | ||
Financial assets: | ||
Impaired loans, net | 102,633,847 | |
Nonrecurring basis | Fair Value | ||
Financial assets: | ||
Impaired loans, net | 102,633,847 | |
Level 1 | Recurring basis | ||
Financial assets: | ||
Available-for-sale securities, at fair value | 352,736 | |
Level 2 | Recurring basis | ||
Financial assets: | ||
Derivative financial instruments | 918,252 | |
Financial liabilities: | ||
Derivative financial instruments | 1,817,651 | |
Level 3 | Recurring basis | ||
Financial assets: | ||
Available-for-sale securities, at fair value | 4,862,262 | |
Derivative financial instruments | 681,882 | |
Level 3 | Nonrecurring basis | ||
Financial assets: | ||
Impaired loans, net | $ 102,633,847 |
Fair Value, Measurement on Nonr
Fair Value, Measurement on Nonrecurring Basis (Details) - Level 3 | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Rate Lock Commitments | Discounted cash flows | |
Financial assets: | |
Impaired loans | $ 681,882 |
Nonrecurring basis | |
Financial assets: | |
Impaired loans | $ 102,633,847 |
Nonrecurring basis | Rate Lock Commitments | Discounted cash flows | |
Financial assets: | |
Discount rate (as a percent) | 13.51% |
Office | Discounted cash flows | |
Financial assets: | |
Impaired loans | $ 810,500 |
Discount rate (as a percent) | 11.00% |
Capitalization rate (as a percent) | 8.03% |
Revenue growth rate (as a percent) | 2.50% |
Office | Nonrecurring basis | |
Financial assets: | |
Discount rate (as a percent) | 11.00% |
Capitalization rate (as a percent) | 8.03% |
Revenue growth rate (as a percent) | 2.50% |
Land | Discounted cash flows | |
Financial assets: | |
Impaired loans | $ 71,123,347 |
Land | Nonrecurring basis | Discounted cash flows | |
Financial assets: | |
Discount rate (as a percent) | 15.00% |
Capitalization rate (as a percent) | 7.25% |
Revenue growth rate (as a percent) | 3.00% |
Hotel | Discounted cash flows | |
Financial assets: | |
Impaired loans | $ 30,700,000 |
Hotel | Nonrecurring basis | Discounted cash flows | |
Financial assets: | |
Discount rate (as a percent) | 9.25% |
Capitalization rate (as a percent) | 7.25% |
Revenue growth rate (as a percent) | 3.30% |
Fair Value, Level 3 Derivative
Fair Value, Level 3 Derivative Instruments (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Derivative assets and liabilities, net | |
Additions from the Acquisition | $ 4,528,640 |
Settlements | (15,286,185) |
Realized gains (losses) recorded in earnings | 10,757,545 |
Unrealized gains (losses) recorded in earnings | 681,882 |
Balance at end of period | $ 681,882 |
Fair Value, Components of fair
Fair Value, Components of fair value and other relevant information (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Unpaid Principal Balance | $ 12,602,009,992 |
Fair Value of Servicing Rights | 8,591,313 |
Interest Rate Movement Effect | 248,510 |
Total Fair Value Adjustment | 8,839,823 |
Rate Lock Commitments | |
Notional Amount | 42,580,363 |
Fair Value of Servicing Rights | 681,882 |
Interest Rate Movement Effect | (219,001) |
Total Fair Value Adjustment | 462,881 |
Forward Sale Commitments | |
Notional Amount | 344,674,546 |
Interest Rate Movement Effect | 467,511 |
Total Fair Value Adjustment | 467,511 |
Loans held-for-sale, net | |
Unpaid Principal Balance | 302,343,169 |
Fair Value of Servicing Rights | 7,909,431 |
Total Fair Value Adjustment | $ 7,909,431 |
Fair Value, Financial Assets an
Fair Value, Financial Assets and Liabilities (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Financial assets: | ||
Loans and investments, net | $ 1,656,748,937 | $ 1,450,334,341 |
Financial liabilities: | ||
Credit facilities and repurchase agreements | 431,060,399 | 136,252,135 |
Collateralized loan obligations | 1,007,736,720 | 758,899,661 |
Senior unsecured notes | 94,330,797 | 93,764,994 |
Junior subordinated notes | 157,662,855 | 157,117,130 |
Level 1 | ||
Financial liabilities: | ||
Senior unsecured notes | 100,169,522 | |
Level 2 | ||
Financial assets: | ||
Loans held-for-sale, net | 314,793,263 | |
Financial liabilities: | ||
Credit facilities and repurchase agreements | 301,874,207 | |
Level 3 | ||
Financial assets: | ||
Loans and investments, net | 1,704,227,108 | |
Capitalized mortgage servicing rights, net | 228,137,137 | |
Financial liabilities: | ||
Credit facilities and repurchase agreements | 114,579,276 | |
Collateralized loan obligations | 1,005,334,175 | |
Junior subordinated notes | 105,253,090 | |
Related party financing | 55,092,469 | |
Carrying Value | ||
Financial assets: | ||
Loans and investments, net | 1,656,748,937 | 1,450,334,341 |
Loans held-for-sale, net | 310,252,600 | |
Capitalized mortgage servicing rights, net | 224,297,210 | |
Financial liabilities: | ||
Credit facilities and repurchase agreements | 431,060,399 | 136,252,135 |
Collateralized loan obligations | 1,007,736,720 | 758,899,661 |
Senior unsecured notes | 94,330,797 | 93,764,994 |
Junior subordinated notes | 157,662,855 | 157,117,130 |
Related party financing | 50,000,000 | |
Fair Value | ||
Financial assets: | ||
Loans and investments, net | 1,704,227,108 | 1,481,353,410 |
Loans held-for-sale, net | 314,793,263 | |
Capitalized mortgage servicing rights, net | 228,137,137 | |
Financial liabilities: | ||
Credit facilities and repurchase agreements | 416,453,483 | 137,072,691 |
Collateralized loan obligations | 1,005,334,175 | 766,065,400 |
Senior unsecured notes | 100,169,522 | 96,294,265 |
Junior subordinated notes | 105,253,090 | $ 104,073,847 |
Related party financing | $ 55,092,469 |
Commitments and Contingencies,
Commitments and Contingencies, Contractual Commitments (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Agency Business Commitments | ||
Cash collateral | $ 176,615,179 | $ 48,301,244 |
Debt Obligations | ||
2016 (three months ended December 31, 2016) | 354,916,727 | |
2,017 | 245,338,252 | |
2,018 | 330,032,663 | |
2,019 | 232,083,602 | |
2,020 | 270,869,711 | |
2,021 | 160,360,025 | |
Thereafter | 192,690,500 | |
Long-term Debt, Total | 1,786,291,480 | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2016 (three months ended December 31, 2016) | 757,509 | |
2,017 | 3,082,615 | |
2,018 | 3,594,219 | |
2,019 | 3,325,682 | |
2,020 | 2,875,983 | |
2,021 | 1,464,918 | |
Thereafter | 7,793,604 | |
Total | 22,894,530 | |
Total | ||
2016 (three months ended December 31, 2016) | 355,674,236 | |
2,017 | 248,420,867 | |
2,018 | 333,626,882 | |
2,019 | 235,409,284 | |
2,020 | 273,745,694 | |
2,021 | 161,824,943 | |
Thereafter | 200,484,104 | |
Total | 1,809,186,010 | |
Letter of credit | ||
Agency Business Commitments | ||
Letter of credit agreement entered into for restricted cash requirements for the Fannie Mae DUS and Freddie Mac SBL programs | 40,000,000 | |
Cash collateral arrangement - purchase and loss obligations under Freddie Mac's SBL Program | ||
Agency Business Commitments | ||
Outstanding letters of credit | 5,000,000 | |
Cash collateral per securitization | $ 5,000,000 | |
Forward Sale Commitments | ||
Agency Business Commitments | ||
Period of contractual commitment | 60 days | |
Fannie Mae | ||
Agency Business Commitments | ||
Minimum liquid assets to be maintained to meet operational liquidity requirements | $ 10,400,000 | |
Period of funding for collateral requirement | 48 months | |
Unfunded CLO Commitments | ||
Unfunded commitments related to loans and investments | $ 32,300,000 | |
Available amount to fund unfunded commitments | 1,900,000 | |
Fannie Mae | Letter of credit | ||
Agency Business Commitments | ||
Outstanding letters of credit | 35,000,000 | |
Fannie Mae | Restricted liquidity arrangement - loans sold under the Fannie Mae DUS program | ||
Agency Business Commitments | ||
Letter of credit assigned | 35,000,000 | |
Cash collateral | 2,000,000 | |
Reserve required to fund additional restricted liquidity over the next 48 months | $ 21,000,000 | |
Period of additional funding for collateral requirement | 48 months |
Commitments and Contingencies96
Commitments and Contingencies, Litigation (Details) $ in Millions | Jun. 28, 2013USD ($)lawsuitdefendant | Jun. 15, 2011USD ($)lawsuitdefendant |
Arbor ESH II, LLC | ||
Litigation | ||
Investments in the Series A1 Preferred Units of a holding company of Extended Stay, Inc. | $ | $ 115 | |
Lawsuits filed by Extended Stay Litigation Trust (the Trust) | ||
Litigation | ||
Number of lawsuits or complaints filed | lawsuit | 3 | |
Number of lawsuits filed in United States Bankruptcy Court | lawsuit | 2 | |
Number of defendants | 73 | |
Number of defendants who are corporate and partnership entities | 55 | |
Number of defendants named in a legal action who are individuals | 18 | |
Lawsuits filed by Extended Stay Litigation Trust (the Trust) | Fiduciary Duty Claims | ||
Litigation | ||
Number of lawsuits or complaints filed | lawsuit | 2 | |
Number of defendants | 2 | |
Lawsuits filed by Extended Stay Litigation Trust (the Trust) | Motion to amend the lawsuits | ||
Litigation | ||
Number of lawsuits consolidated | lawsuit | 1 | |
Number of defendants removed due to consolidation of lawsuits | 47 | |
Number of defendants related to the entity | 0 | |
Number of defendants remaining due to consolidation of lawsuits | 26 | |
Number of defendants who are corporate and partnership entities | 16 | |
Number of defendants named in a legal action who are individuals | 10 | |
Number of lawsuits before amendment | lawsuit | 100 | |
Number of lawsuits after amendment | lawsuit | 17 | |
Aggregate amount which the Trust would be seeking from the affiliates of the entity | $ | $ 139 |
Equity, Disclosures (Details)
Equity, Disclosures (Details) $ / shares in Units, $ in Millions | Nov. 17, 2016$ / shares | Nov. 02, 2016$ / shares | Aug. 03, 2016$ / shares | Aug. 01, 2016$ / shares | Jul. 14, 2016shares | May 04, 2016$ / shares | May 02, 2016$ / shares | Feb. 24, 2016$ / shares | Feb. 01, 2016$ / shares | Mar. 31, 2016USD ($)shares | Sep. 30, 2016USD ($)$ / shares | Mar. 31, 2016USD ($)shares | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / shares | Dec. 31, 2015$ / shares | Mar. 31, 2016shares | Aug. 31, 2016shares | Jul. 31, 2016USD ($) |
Noncontrolling Interest | |||||||||||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||||||||||
Common stock | |||||||||||||||||||
Aggregate amount of securities for which the entity filed shelf registration statement | $ 500 | ||||||||||||||||||
Distributions | |||||||||||||||||||
Cash dividend declared (in dollars per share) | $ / shares | $ 0.16 | $ 0.15 | $ 0.46 | $ 0.43 | |||||||||||||||
Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Forfeited (in shares) | shares | 1,001 | ||||||||||||||||||
Restricted common stock | Maximum | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Total grant date fair value | $ 0.1 | ||||||||||||||||||
Operating Partnership | |||||||||||||||||||
Noncontrolling Interest | |||||||||||||||||||
Conversion ratio for operating partnership units to common stock shares | 1 | ||||||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Number of fully vested shares issued | shares | 70,225 | ||||||||||||||||||
Total grant date fair value | $ 0.5 | ||||||||||||||||||
Vesting percentage | 25.00% | ||||||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Restricted common stock | March, 2016 | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Vesting percentage | 25.00% | ||||||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Restricted common stock | March, 2017 | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Vesting percentage | 25.00% | ||||||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Restricted common stock | March, 2018 | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Vesting percentage | 25.00% | ||||||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Performance | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Granted (in shares) | shares | 421,348 | 867,113 | |||||||||||||||||
Vesting period | 4 years | 4 years | 4 years | ||||||||||||||||
Total grant date fair value | $ 0.9 | ||||||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Employee compensation and benefits | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Share-based compensation expense | 0.1 | ||||||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Employee compensation and benefits | Performance | Maximum | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Share-based compensation expense | $ 0.1 | ||||||||||||||||||
Employees of the company and a related party | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Number of fully vested shares issued | shares | 282,405 | ||||||||||||||||||
Total grant date fair value | $ 1.9 | ||||||||||||||||||
Vesting percentage | 33.00% | ||||||||||||||||||
Employees of the company and a related party | Restricted common stock | March, 2017 | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Vesting percentage | 33.00% | ||||||||||||||||||
Employees of the company and a related party | Restricted common stock | March, 2018 | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Vesting percentage | 33.00% | ||||||||||||||||||
Employees of the company and a related party | Employee compensation and benefits | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Share-based compensation expense | 0.2 | ||||||||||||||||||
Employees of the company and a related party | Selling and administrative expense | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Share-based compensation expense | $ 0.5 | ||||||||||||||||||
Non-employees | Selling and administrative expense | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Share-based compensation expense | $ 0.2 | $ 0.1 | $ 0.7 | $ 0.5 | |||||||||||||||
Non-employees | ACM / Our "Manager" | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Granted (in shares) | shares | 195,139 | ||||||||||||||||||
Total grant date fair value | $ 1.3 | ||||||||||||||||||
Employees | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Granted (in shares) | shares | 202,037 | ||||||||||||||||||
Total grant date fair value | $ 1.4 | ||||||||||||||||||
Employees | Employee compensation and benefits | Restricted common stock | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Share-based compensation expense | $ 0.2 | $ 0.2 | $ 0.5 | $ 0.7 | |||||||||||||||
Special voting preferred shares | |||||||||||||||||||
Noncontrolling Interest | |||||||||||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||||||||||||||
Voting power of outstanding stock (as a percent) | 29.20% | ||||||||||||||||||
Special voting preferred shares | Operating Partnership | |||||||||||||||||||
Noncontrolling Interest | |||||||||||||||||||
Number of preferred stock shares paired with each operating partnership units | shares | 1 | 1 | |||||||||||||||||
8.25% Series A preferred stock | |||||||||||||||||||
Preferred Stock | |||||||||||||||||||
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent) | 8.25% | 8.25% | 8.25% | ||||||||||||||||
7.75% Series B preferred stock | |||||||||||||||||||
Preferred Stock | |||||||||||||||||||
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent) | 7.75% | 7.75% | 7.75% | ||||||||||||||||
8.50% Series C preferred stock | |||||||||||||||||||
Preferred Stock | |||||||||||||||||||
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent) | 8.50% | 8.50% | 8.50% | ||||||||||||||||
Preferred Stock | |||||||||||||||||||
Common stock | |||||||||||||||||||
Issuance of common stock (in shares) | shares | 21,230,769 | ||||||||||||||||||
Preferred Stock | 8.25% Series A preferred stock | |||||||||||||||||||
Distributions | |||||||||||||||||||
Cash dividend declared on redeemable preferred stock (in dollars per share) | $ / shares | $ 0.515625 | $ 0.515625 | $ 0.515625 | $ 0.515625 | |||||||||||||||
Preferred Stock | |||||||||||||||||||
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent) | 8.25% | ||||||||||||||||||
Preferred Stock | 7.75% Series B preferred stock | |||||||||||||||||||
Distributions | |||||||||||||||||||
Cash dividend declared on redeemable preferred stock (in dollars per share) | $ / shares | $ 0.484375 | 0.484375 | 0.484375 | 0.484375 | |||||||||||||||
Preferred Stock | |||||||||||||||||||
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent) | 7.75% | ||||||||||||||||||
Preferred Stock | 8.50% Series C preferred stock | |||||||||||||||||||
Distributions | |||||||||||||||||||
Cash dividend declared on redeemable preferred stock (in dollars per share) | $ / shares | $ 0.53125 | $ 0.53125 | $ 0.53125 | $ 0.53125 | |||||||||||||||
Preferred Stock | |||||||||||||||||||
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent) | 8.50% | ||||||||||||||||||
Common Stock | |||||||||||||||||||
Common stock | |||||||||||||||||||
Number of shares available for sale through JMP | shares | 7,500,000 | ||||||||||||||||||
Distributions | |||||||||||||||||||
Cash dividend declared (in dollars per share) | $ / shares | $ 0.16 | $ 0.16 | $ 0.15 | $ 0.15 | |||||||||||||||
Common Stock | Non-management members of the Board of Directors | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Number of fully vested shares issued | shares | 67,260 | ||||||||||||||||||
Common Stock | Non-management members of the Board of Directors | Selling and administrative expense | |||||||||||||||||||
Deferred Compensation | |||||||||||||||||||
Share-based compensation expense | $ 0.4 | ||||||||||||||||||
ACM Acquisition | |||||||||||||||||||
Noncontrolling Interest | |||||||||||||||||||
Consideration in stock to be paid with operating partnership units (in shares) | shares | 21,230,769 | ||||||||||||||||||
ACM Acquisition | Operating Partnership | |||||||||||||||||||
Noncontrolling Interest | |||||||||||||||||||
Consideration in stock to be paid with operating partnership units (in shares) | shares | 21,230,769 | 21,230,769 | |||||||||||||||||
Value of operating partnership units issues as consideration | $ 154.8 | ||||||||||||||||||
ACM Acquisition | ACM / Our "Manager" | |||||||||||||||||||
Noncontrolling Interest | |||||||||||||||||||
Consideration in stock to be paid with operating partnership units (in shares) | shares | 21,230,769 | ||||||||||||||||||
Number of preferred stock shares paired with each operating partnership units | shares | 1 |
Equity, AOCI (Details)
Equity, AOCI (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Accumulated Other Comprehensive Loss | |||
Accumulated other comprehensive loss | $ 1,142,053 | $ 4,840,950 | |
Net unrealized losses on derivatives designated as cash flow hedges, net of deferred losses on terminated interest swaps | 1,200,000 | 4,700,000 | |
Deferred losses on terminated interest swaps | 200,000 | 600,000 | |
Unrealized gain related to available-for-sale securities | 300,000 | $ 400,000 | |
Distributions attributable to noncontrolling interest | 3,396,923 | ||
Interest expense | |||
Accumulated Other Comprehensive Loss | |||
Net realized losses on derivatives designated as cash flow hedges | $ (4,012,457) | $ (4,709,173) | |
Loss on termination of swaps | |||
Accumulated Other Comprehensive Loss | |||
Net realized losses on derivatives designated as cash flow hedges | $ (4,626,192) |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Basic | ||||||
Net income attributable to common stockholders | $ 10,888,172 | $ 15,343,759 | $ 22,261,516 | $ 40,852,868 | ||
Weighted average shares outstanding | 51,390,467 | 50,962,516 | 51,272,795 | 50,822,444 | ||
Net income per common share (in dollars per share) | $ 0.21 | $ 0.30 | $ 0.43 | $ 0.80 | ||
Diluted | ||||||
Net income attributable to noncontrolling interest | $ 3,649,432 | $ 3,649,432 | ||||
Net income attributable to common stockholders and noncontrolling interest | $ 14,537,604 | $ 15,343,759 | $ 22,261,516 | $ 40,852,868 | ||
Weighted average shares outstanding | 51,390,467 | 50,962,516 | 51,272,795 | 50,822,444 | ||
Dilutive effect of OP units | 18,230,769 | |||||
Dilutive effect of restricted stock units (in shares) | 650,560 | 354,755 | 94,998 | |||
Weighted average number of common shares outstanding | 70,271,796 | 50,962,516 | 51,627,550 | 50,917,442 | ||
Net income per common share (in dollars per share) | $ 0.21 | $ 0.30 | $ 0.43 | $ 0.80 | ||
Mr. Ivan Kaufman, chairman and chief executive officer | Performance | ||||||
Diluted | ||||||
Vesting period | 4 years | 4 years | 4 years |
Employee Benefits - 401(k) Plan
Employee Benefits - 401(k) Plan (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Employee Benefits | ||
Employer's match of the first 6% of employee contributions (as a a percent) | 25.00% | |
Percentage of eligible compensation, matched 25% by employer | 6.00% | |
Expense recorded under 401(k) plan | $ 0.2 | $ 0.2 |
Employee Benefits - Deferred Co
Employee Benefits - Deferred Comp Plan (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($) | |
Employee Benefits | ||
Deferred compensation expense | $ 0.4 | $ 0.4 |
Liabilities related to Deferred Comp Plan | 3.2 | 3.2 |
Assets related to Deferred Comp Plan | $ 2.6 | $ 2.6 |
Agreements and Transactions 102
Agreements and Transactions with Related Parties, Management Agreement (Details) - USD ($) | Jul. 14, 2016 | Feb. 25, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Management Fees: | ||||||
Base | $ 3,325,000 | $ 2,725,000 | $ 8,875,000 | $ 8,075,000 | ||
Total management fee | 3,325,000 | 2,725,000 | 8,875,000 | 8,075,000 | ||
Success-based fees incurred | $ 0 | $ 0 | $ 0 | $ 0 | ||
ACM Acquisition | ||||||
Agreements and transactions with related parties | ||||||
Period to exercise the option to purchase the existing management contract | 2 years | |||||
Consideration to purchase the existing management contract | $ 25,000,000 | |||||
Consideration to purchase the existing management contract second year | $ 27,000,000 | |||||
ACM / Our "Manager" | ||||||
Agreements and transactions with related parties | ||||||
Percentage of loan loss reserve recoveries used in calculation of incentive fee | 60.00% | |||||
Period during which the loan loss reserve recoveries are to be taken into consideration for calculation of incentive fee | 3 years | |||||
Multiplier used in computation of incentive fee | $ 10 | |||||
Termination fee | $ 10,000,000 | |||||
Automatically renewal period for management agreement | 1 year | |||||
Prior written notice period for termination | 6 months | |||||
ACM / Our "Manager" | ACM Acquisition | ||||||
Agreements and transactions with related parties | ||||||
Period to exercise the option to purchase the existing management contract | 2 years | |||||
Consideration to purchase the existing management contract | $ 25,000,000 | |||||
Consideration to purchase the existing management contract second year | $ 27,000,000 |
Agreements and Transactions 103
Agreements and Transactions with Related Parties, Other (Details) | Jul. 14, 2016USD ($)shares | Sep. 30, 2016USD ($)propertyshares | Jan. 31, 2016USD ($)property | Nov. 30, 2015USD ($)item | Oct. 31, 2015USD ($)loan | Apr. 30, 2015USD ($) | Feb. 28, 2015USD ($) | Sep. 30, 2016USD ($)propertyshares | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Sep. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Sep. 30, 2016USD ($)propertyshares | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($)loanitem |
Agreements and transactions with related parties | ||||||||||||||||
Due from related party | $ 493,412 | $ 493,412 | $ 493,412 | $ 8,082,265 | ||||||||||||
Due to related party | 18,583,192 | 18,583,192 | 18,583,192 | 3,428,333 | ||||||||||||
Income from equity affiliates | 4,929,375 | $ 6,353,239 | 11,193,918 | $ 10,983,177 | ||||||||||||
Investments in equity affiliates | 41,962,338 | 41,962,338 | 41,962,338 | 30,870,235 | ||||||||||||
Aggregate outstanding balance of related party debt | 1,786,291,480 | 1,786,291,480 | 1,786,291,480 | |||||||||||||
ACM Acquisition | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Acquisition purchase price | $ 292,527,823 | |||||||||||||||
OP units issued as part of acquisition | shares | 21,230,769 | |||||||||||||||
Maturity date of October 2017 | Bridge loans | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Base spread (as a percent) | 5.00% | |||||||||||||||
LIBOR floor (as a percentage) | 0.25% | |||||||||||||||
Loan due from related party | $ 16,700,000 | |||||||||||||||
Interest income recorded | 300,000 | 800,000 | ||||||||||||||
Number of mortgage loans secured by property purchased from related party | loan | 2 | |||||||||||||||
ACM / Our "Manager" | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Due from related party | 500,000 | 500,000 | 500,000 | 8,100,000 | ||||||||||||
Due to related party | 18,600,000 | 18,600,000 | 18,600,000 | 3,400,000 | ||||||||||||
Acquisition purchase price adjustment due to related party | 11,400,000 | 11,400,000 | 11,400,000 | |||||||||||||
Dividends due to ACM from the OP Units issued in connection with the Acquisition | 3,400,000 | 3,400,000 | 3,400,000 | |||||||||||||
Base management fees due to related party | $ 3,000,000 | 3,000,000 | 3,000,000 | |||||||||||||
Management fees to be remitted | 15,400,000 | |||||||||||||||
ACM / Our "Manager" | Residential Mortgage Banking Company | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Acquisition purchase price | $ 9,600,000 | |||||||||||||||
Noncontrolling interest in equity method investment acquired (as a percent) | 50.00% | |||||||||||||||
Indirect ownership percentage | 22.50% | |||||||||||||||
Income from equity affiliates | $ 4,200,000 | 1,400,000 | $ 8,900,000 | 5,900,000 | ||||||||||||
ACM / Our "Manager" | ACM Acquisition | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Acquisition purchase price | $ 275,800,000 | |||||||||||||||
Number of shares held by related party | shares | 5,349,053 | 5,349,053 | 5,349,053 | |||||||||||||
OP units issued as part of acquisition | shares | 21,230,769 | |||||||||||||||
Number of Preferred Stock Shares Paired With Each Operating Partnership Unit | shares | 1 | |||||||||||||||
Percentage of voting power held by related party | 36.60% | |||||||||||||||
ACM / Our "Manager" | Non-qualified Residential Mortgages | Residential Mortgage Banking Company | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Equity investment made | 9,700,000 | |||||||||||||||
Additional investment made by the company along with a consortium of independent outside investors | $ 4,600,000 | |||||||||||||||
ACM / Our "Manager" | Maturity date of April 2016 | Mortgage loans | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Base spread (as a percent) | 4.80% | |||||||||||||||
Interest income recorded | $ 200,000 | 200,000 | 700,000 | 600,000 | ||||||||||||
Number of mortgage loans secured by property purchased from related party | loan | 2 | |||||||||||||||
ACM / Our "Manager" | Maturity date of April 2016 | Mortgage loans | First mortgage | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Amount of mortgage loan secured by property, purchased by related party | $ 14,600,000 | |||||||||||||||
ACM / Our "Manager" | Maturity date of April 2016 | Mortgage loans | Second mortgage | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Proceeds from repayment in full | $ 5,100,000 | |||||||||||||||
Amount of mortgage loan secured by property, purchased by related party | 5,100,000 | |||||||||||||||
ACM / Our "Manager" | Maturity date March 2017, extended from April 2016 | Mortgage loans | First mortgage | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Amount of mortgage loan secured by property, purchased by related party | $ 14,600,000 | |||||||||||||||
Certain Officers | Maturity date of January 2019 | Bridge loan, two multifamily properties | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Principal loan amount | $ 12,700,000 | |||||||||||||||
Percentage of ownership interest of related party in the entity | 50.00% | |||||||||||||||
Variable interest rate, description | one-month LIBOR | |||||||||||||||
Base spread (as a percent) | 4.50% | |||||||||||||||
LIBOR floor (as a percentage) | 0.25% | |||||||||||||||
Interest income recorded | 300,000 | 900,000 | ||||||||||||||
Certain Officers | Maturity date of January 2019 | Bridge loan, one multifamily property | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Principal loan amount | $ 19,000,000 | |||||||||||||||
Percentage of ownership interest of related party in the entity | 7.50% | |||||||||||||||
Variable interest rate, description | one-month LIBOR | |||||||||||||||
Base spread (as a percent) | 4.50% | |||||||||||||||
LIBOR floor (as a percentage) | 0.25% | |||||||||||||||
Interest income recorded | 300,000 | 700,000 | ||||||||||||||
Certain Officers | Maturity date of November 2016, extended from April 2016 | Preferred equity investments | Multifamily | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Equity investment | $ 5,200,000 | |||||||||||||||
Fixed rate of interest (as a percent) | 10.00% | |||||||||||||||
Certain Officers | Maturity date of November 2016, extended from April 2016 | Bridge loan, two multifamily properties | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Number of properties owned | property | 2 | |||||||||||||||
Certain Officers | Maturity date of November 2018 | Bridge loans | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Percentage of ownership interest of related party in the entity | 7.50% | |||||||||||||||
Base spread (as a percent) | 4.50% | |||||||||||||||
LIBOR floor (as a percentage) | 0.25% | |||||||||||||||
Loan due from related party | $ 7,100,000 | |||||||||||||||
Number of one-year extension options | item | 2 | |||||||||||||||
Interest income recorded | $ 100,000 | $ 300,000 | ||||||||||||||
Extension period | 1 year | |||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Minimum | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Ownership interest allowed under company charter (as a percent) | 5.00% | 5.00% | 5.00% | |||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Maturity date of February 2018 | Preferred equity investments | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Principal loan amount | $ 23,000,000 | $ 18,000,000 | ||||||||||||||
Fixed rate of interest (as a percent) | 10.00% | |||||||||||||||
Proceeds from repayment in full | $ 1,000,000 | |||||||||||||||
Interest income recorded | 600,000 | $ 1,000,000 | 1,700,000 | |||||||||||||
Amount of ownership interest of related party in the entity | $ 2,000,000 | |||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Maturity date of July 2017 | Bridge loans | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Percentage of ownership interest of related party in the entity | 24.00% | |||||||||||||||
Base spread (as a percent) | 7.90% | |||||||||||||||
LIBOR floor (as a percentage) | 0.50% | |||||||||||||||
Amount of mortgage loan secured by property, purchased by related party | $ 30,400,000 | |||||||||||||||
Mr. Ivan Kaufman, chairman and chief executive officer | Maturity date of September 2016, extended from March 2016 | Bridge loan, two multifamily properties | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Number of properties owned | item | 2 | |||||||||||||||
Percentage of ownership interest of related party in the entity | 95.00% | |||||||||||||||
Base spread (as a percent) | 5.50% | |||||||||||||||
Proceeds from repayment in full | $ 3,300,000 | |||||||||||||||
Interest income recorded | 100,000 | 100,000 | 200,000 | 200,000 | ||||||||||||
Investments in equity affiliates | $ 100,000 | |||||||||||||||
Ownership interest (as a percent) | 5.00% | |||||||||||||||
Number of bridge loans originated | item | 2 | |||||||||||||||
Amount of mortgage loan secured by property, purchased by related party | $ 5,000,000 | |||||||||||||||
Lexford Portfolio | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Aggregate outstanding balance of related party debt | $ 848,200,000 | 848,200,000 | 848,200,000 | |||||||||||||
Lexford Portfolio | Preferred equity investments | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Interest income recorded | 100,000 | 200,000 | ||||||||||||||
Income from equity affiliates | 700,000 | $ 2,100,000 | $ 5,500,000 | |||||||||||||
Affiliate of Mr. Ivan Kaufman | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Contract period with the new entity | 7 years 6 months | |||||||||||||||
Fees as a percentage of gross revenues of the underlying properties | 4.75% | |||||||||||||||
Mr. Ivan Kaufman and his affiliates | Maturity date of July 2017 | Mezzanine loans | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Fixed rate of interest (as a percent) | 12.00% | |||||||||||||||
Interest income recorded | 900,000 | 700,000 | $ 2,600,000 | 2,100,000 | ||||||||||||
Amount of mortgage loan secured by property, purchased by related party | $ 4,600,000 | |||||||||||||||
Certain officers and our Manager | Maturity date of September 2019 | Bridge loan, six multifamily properties | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Principal loan amount | $ 48,000,000 | $ 48,000,000 | $ 48,000,000 | |||||||||||||
Number of properties owned | property | 6 | 6 | 6 | |||||||||||||
Variable interest rate, description | LIBOR | |||||||||||||||
Base spread (as a percent) | 4.50% | 4.50% | 4.50% | |||||||||||||
LIBOR floor (as a percentage) | 0.25% | |||||||||||||||
Interest income recorded | $ 100,000 | $ 100,000 | ||||||||||||||
Certain officers and our Manager | Maturity date of September 2019 | Bridge loan, six multifamily properties | Minimum | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Percentage of ownership interest of related party in the entity | 7.80% | |||||||||||||||
Certain officers and our Manager | Maturity date of September 2019 | Bridge loan, six multifamily properties | Maximum | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Percentage of ownership interest of related party in the entity | 9.00% | |||||||||||||||
Certain officers and our Manager | Maturity date of April 2018 | Bridge loans | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Percentage of ownership interest of related party in the entity | 90.00% | |||||||||||||||
Base spread (as a percent) | 4.50% | |||||||||||||||
Interest income recorded | $ 100,000 | $ 100,000 | $ 200,000 | $ 100,000 | ||||||||||||
Interest rate (as a percent) | 0.25% | |||||||||||||||
Amount of mortgage loan secured by property, purchased by related party | $ 6,300,000 | |||||||||||||||
ACM / Our "Manager" | Kaufman Entities | ||||||||||||||||
Agreements and transactions with related parties | ||||||||||||||||
Percentage of outstanding membership interest of related party in another related party | 92.00% | 92.00% | 92.00% |
Segment Information - General (
Segment Information - General (Details) | 9 Months Ended |
Sep. 30, 2016segment | |
Segment Information | |
Number of business segments | 2 |
Segment Information - Statement
Segment Information - Statements of Income (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Information | ||||
Interest income | $ 29,636,227 | $ 26,025,709 | $ 83,424,190 | $ 79,575,689 |
Other interest income, net | 2,539,274 | 7,884,344 | ||
Interest expense | 16,966,228 | 11,885,363 | 42,958,329 | 37,405,492 |
Net interest income | 12,669,999 | 14,140,346 | 43,005,135 | 50,054,541 |
Other revenue: | ||||
Fee-based services, including gain on sales, net | 9,693,822 | 9,693,822 | ||
Mortgage servicing rights | 15,968,067 | 15,968,067 | ||
Servicing revenue, net | 5,885,884 | 5,885,884 | ||
Property operating income | 2,960,940 | 7,202,851 | 12,719,027 | 22,855,028 |
Other income, net | 359,546 | 51,633 | 663,977 | 164,449 |
Total other revenue | 34,868,259 | 7,254,484 | 44,930,777 | 23,019,477 |
Other expenses: | ||||
Employee compensation and benefits | 14,216,679 | 4,877,059 | 22,856,433 | 14,133,403 |
Selling and administrative | 5,903,031 | 2,063,408 | 10,277,844 | 7,442,979 |
Acquisition costs | 6,406,258 | 1,116,126 | 10,261,902 | 1,542,169 |
Property operating expenses | 2,819,004 | 6,028,585 | 10,991,823 | 18,381,317 |
Depreciation and amortization | 1,808,765 | 1,250,761 | 3,129,410 | 4,137,080 |
Impairment loss on real estate owned | 11,200,000 | |||
Provision for loss sharing | 1,316,862 | 1,316,862 | ||
Provision for loan losses (net of recoveries) | (54,000) | 277,464 | (24,995) | 2,353,688 |
Management fee - related party | 3,325,000 | 2,725,000 | 8,875,000 | 8,075,000 |
Total other expenses | 35,741,599 | 18,338,403 | 78,884,279 | 56,065,636 |
Income before gain on acceleration of deferred income, loss on termination of swaps, and income from equity affiliates | 11,796,659 | 3,056,427 | 9,051,633 | 17,008,382 |
Gain on acceleration of deferred income | 8,162,720 | 19,171,882 | ||
Loss on termination of swaps | (340,197) | (4,629,647) | ||
Gain on sale of real estate | 11,630,687 | 3,984,364 | ||
Income from equity affiliates | 4,929,375 | 6,353,239 | 11,193,918 | 10,983,177 |
Provision for income taxes | (300,000) | (300,000) | ||
Net income | 16,426,034 | 17,232,189 | 31,576,238 | 46,518,158 |
Operating segments | Structured Transaction Business | ||||
Segment Information | ||||
Interest income | 26,893,151 | 26,025,709 | 80,681,114 | 79,575,689 |
Other interest income, net | 2,539,274 | 7,884,344 | ||
Interest expense | 14,455,058 | 11,885,363 | 40,447,159 | 37,405,492 |
Net interest income | 12,438,093 | 14,140,346 | 42,773,229 | 50,054,541 |
Other revenue: | ||||
Property operating income | 2,960,940 | 7,202,851 | 12,719,027 | 22,855,028 |
Other income, net | 111,036 | 51,633 | 415,467 | 164,449 |
Total other revenue | 3,071,976 | 7,254,484 | 13,134,494 | 23,019,477 |
Other expenses: | ||||
Employee compensation and benefits | 3,460,745 | 4,877,059 | 12,100,499 | 14,133,403 |
Selling and administrative | 2,182,406 | 2,063,408 | 6,557,219 | 7,442,979 |
Property operating expenses | 2,819,004 | 6,028,585 | 10,991,823 | 18,381,317 |
Depreciation and amortization | 641,721 | 1,250,761 | 1,962,366 | 4,137,080 |
Impairment loss on real estate owned | 11,200,000 | |||
Provision for loan losses (net of recoveries) | (54,000) | 277,464 | (24,995) | 2,353,688 |
Management fee - related party | 1,712,307 | 2,725,000 | 7,262,307 | 8,075,000 |
Total other expenses | 10,762,183 | 17,222,277 | 50,049,219 | 54,523,467 |
Income before gain on acceleration of deferred income, loss on termination of swaps, and income from equity affiliates | 4,747,886 | 4,172,553 | 5,858,504 | 18,550,551 |
Gain on acceleration of deferred income | 8,162,720 | 19,171,882 | ||
Loss on termination of swaps | (340,197) | (4,629,647) | ||
Gain on sale of real estate | 11,630,687 | 3,984,364 | ||
Income from equity affiliates | 4,929,375 | 6,353,239 | 11,193,918 | 10,983,177 |
Net income | 9,677,261 | 18,348,315 | 28,683,109 | 48,060,327 |
Operating segments | Agency Business | ||||
Segment Information | ||||
Interest income | 2,743,076 | 2,743,076 | ||
Interest expense | 1,680,561 | 1,680,561 | ||
Net interest income | 1,062,515 | 1,062,515 | ||
Other revenue: | ||||
Fee-based services, including gain on sales, net | 9,693,822 | 9,693,822 | ||
Mortgage servicing rights | 15,968,067 | 15,968,067 | ||
Servicing revenue, net | 5,885,884 | 5,885,884 | ||
Other income, net | 248,510 | 248,510 | ||
Total other revenue | 31,796,283 | 31,796,283 | ||
Other expenses: | ||||
Employee compensation and benefits | 10,755,934 | 10,755,934 | ||
Selling and administrative | 3,720,625 | 3,720,625 | ||
Depreciation and amortization | 1,167,044 | 1,167,044 | ||
Provision for loss sharing | 1,316,862 | 1,316,862 | ||
Management fee - related party | 1,612,693 | 1,612,693 | ||
Total other expenses | 18,573,158 | 18,573,158 | ||
Income before gain on acceleration of deferred income, loss on termination of swaps, and income from equity affiliates | 14,285,640 | 14,285,640 | ||
Provision for income taxes | (300,000) | (300,000) | ||
Net income | 13,985,640 | 13,985,640 | ||
Other / Eliminations | ||||
Segment Information | ||||
Interest expense | 830,609 | 830,609 | ||
Net interest income | (830,609) | (830,609) | ||
Other expenses: | ||||
Acquisition costs | 6,406,258 | 1,116,126 | 10,261,902 | 1,542,169 |
Total other expenses | 6,406,258 | 1,116,126 | 10,261,902 | 1,542,169 |
Income before gain on acceleration of deferred income, loss on termination of swaps, and income from equity affiliates | (7,236,867) | (1,116,126) | (11,092,511) | (1,542,169) |
Net income | $ (7,236,867) | $ (1,116,126) | $ (11,092,511) | $ (1,542,169) |
Segment Information - Balance S
Segment Information - Balance Sheet (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Assets: | ||||
Cash and cash equivalents | $ 71,613,974 | $ 188,708,687 | $ 115,612,829 | $ 50,417,745 |
Restricted cash | 176,615,179 | 48,301,244 | ||
Loans and investments, net | 1,656,748,937 | 1,450,334,341 | ||
Loans held-for-sale, net | 310,252,600 | |||
Capitalized mortgage servicing rights, net | 224,297,210 | |||
Investments in equity affiliates | 41,962,338 | 30,870,235 | ||
Goodwill and other intangible assets | 99,932,986 | |||
Other assets | 68,797,504 | 109,177,437 | ||
Total assets | 2,650,220,728 | 1,827,391,944 | ||
Liabilities: | ||||
Debt obligations | 1,740,790,771 | 1,173,188,920 | ||
Allowance for loss sharing obligations | 31,113,413 | |||
Other liabilities | 152,885,002 | 89,112,249 | ||
Total liabilities | 1,924,789,186 | 1,262,301,169 | ||
Other / Eliminations | ||||
Liabilities: | ||||
Debt obligations | 50,000,000 | |||
Other liabilities | 1,708,656 | 1,491,500 | ||
Total liabilities | 51,708,656 | 1,491,500 | ||
Structured Transaction Business | Operating segments | ||||
Assets: | ||||
Cash and cash equivalents | 41,562,243 | 188,708,687 | ||
Restricted cash | 174,583,396 | 48,301,244 | ||
Loans and investments, net | 1,656,748,937 | 1,450,334,341 | ||
Investments in equity affiliates | 41,962,338 | 30,870,235 | ||
Other assets | 53,677,419 | 109,177,437 | ||
Total assets | 1,968,534,333 | 1,827,391,944 | ||
Liabilities: | ||||
Debt obligations | 1,388,916,564 | 1,173,188,920 | ||
Other liabilities | 114,779,654 | 87,620,749 | ||
Total liabilities | 1,503,696,218 | $ 1,260,809,669 | ||
Agency Business | Operating segments | ||||
Assets: | ||||
Cash and cash equivalents | 30,051,731 | |||
Restricted cash | 2,031,783 | |||
Loans held-for-sale, net | 310,252,600 | |||
Capitalized mortgage servicing rights, net | 224,297,210 | |||
Goodwill and other intangible assets | 99,932,986 | |||
Other assets | 15,120,085 | |||
Total assets | 681,686,395 | |||
Liabilities: | ||||
Debt obligations | 301,874,207 | |||
Allowance for loss sharing obligations | 31,113,413 | |||
Other liabilities | 36,396,692 | |||
Total liabilities | $ 369,384,312 |
Segment Information - Originati
Segment Information - Origination Data (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Information | ||||
Origination volume | $ 714,820,818 | $ 714,820,818 | ||
Loan Sales Data: | ||||
Loan sales | $ 970,000,000 | $ 970,000,000 | ||
Sales margin (fee-based services as a % of loan sales) | 1.76% | 1.76% | ||
MSR rate (MSR income as a % of loan commitments) | 2.23% | 2.23% | ||
Structured Business | ||||
Segment Information | ||||
New loan origination | $ 266,599,500 | $ 189,780,000 | $ 654,967,500 | $ 632,333,000 |
Agency Business | ||||
Segment Information | ||||
Loan payoffs / paydowns | 118,346,618 | $ 145,045,792 | 418,433,132 | $ 580,031,790 |
Origination volume | 850,419,655 | 850,419,655 | ||
Loan Sales Data: | ||||
Loan sales | 551,834,215 | 551,834,215 | ||
Fannie Mae | Agency Business | ||||
Segment Information | ||||
Origination volume | 668,644,832 | 668,644,832 | ||
Loan Sales Data: | ||||
Loan sales | 430,371,100 | 430,371,100 | ||
Freddie Mac | Agency Business | ||||
Segment Information | ||||
Origination volume | 157,145,000 | 157,145,000 | ||
Loan Sales Data: | ||||
Loan sales | 104,448,000 | 104,448,000 | ||
FHA | Agency Business | ||||
Segment Information | ||||
Origination volume | 24,629,823 | 24,629,823 | ||
Loan Sales Data: | ||||
Loan sales | $ 17,015,115 | $ 17,015,115 |
Segment Information - Key Servi
Segment Information - Key Servicing Metrics (Details) - Agency Business - MSRs | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Segment Information | |
UPB of Servicing Portfolio | $ 12,602,009,992 |
Weighted Average Servicing Fee Rate | 48.00% |
Weighted Average Life of Servicing Portfolio | 7 years 3 months 18 days |
Fannie Mae | |
Segment Information | |
UPB of Servicing Portfolio | $ 10,520,107,177 |
Weighted Average Servicing Fee Rate | 53.00% |
Weighted Average Life of Servicing Portfolio | 6 years 4 months 24 days |
Freddie Mac | |
Segment Information | |
UPB of Servicing Portfolio | $ 1,660,940,595 |
Weighted Average Servicing Fee Rate | 23.00% |
Weighted Average Life of Servicing Portfolio | 10 years 3 months 18 days |
FHA | |
Segment Information | |
UPB of Servicing Portfolio | $ 420,962,220 |
Weighted Average Servicing Fee Rate | 18.00% |
Weighted Average Life of Servicing Portfolio | 19 years 3 months 18 days |