Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 30, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | STARWOOD PROPERTY TRUST, INC. | |
Entity Central Index Key | 1,465,128 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 237,672,948 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Assets: | ||
Cash and cash equivalents | $ 372,768 | $ 255,187 |
Restricted cash | 43,620 | 48,704 |
Loans held-for-investment, net | 5,814,886 | 5,779,238 |
Loans held-for-sale ($423,630 and $391,620 held at fair value) | 450,828 | 391,620 |
Loans transferred as secured borrowings | 142,456 | 129,427 |
Investment securities ($421,456 and $556,253 held at fair value) | 786,461 | 998,248 |
Properties, net | 530,438 | 39,854 |
Intangible assets ($123,892 and $132,303 held at fair value) | 191,080 | 144,152 |
Investment in unconsolidated entities | 199,171 | 193,983 |
Goodwill | 140,437 | 140,437 |
Derivative assets | 36,307 | 26,628 |
Accrued interest receivable | 36,042 | 40,102 |
Other assets | 137,296 | 95,652 |
Variable interest entity ("VIE") assets, at fair value | 82,937,617 | 107,816,065 |
Total Assets | 91,819,407 | 116,099,297 |
Liabilities: | ||
Accounts payable, accrued expenses and other liabilities | 137,786 | 144,516 |
Related-party payable | 22,804 | 40,751 |
Dividends payable | 115,191 | 108,189 |
Derivative liabilities | 14,901 | 5,476 |
Secured financing agreements, net | 3,682,274 | 3,137,789 |
Convertible senior notes, net | 1,320,207 | 1,418,022 |
Secured borrowings on transferred loans | 143,926 | 129,441 |
VIE liabilities, at fair value | 82,181,138 | 107,232,201 |
Total Liabilities | $ 87,618,227 | $ 112,216,385 |
Commitments and contingencies (Note 21) | ||
Starwood Property Trust, Inc. Stockholders' Equity: | ||
Preferred stock, $0.01 per share, 100,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.01 per share, 500,000,000 shares authorized, 240,665,588 issued and 237,658,615 outstanding as of September 30, 2015 and 224,752,053 issued and 223,538,303 outstanding as of December 31, 2014 | $ 2,407 | $ 2,248 |
Additional paid-in capital | 4,184,538 | 3,835,725 |
Treasury stock (3,006,973 shares and 1,213,750 shares) | (61,525) | (23,635) |
Accumulated other comprehensive income | 39,510 | 55,896 |
Retained earnings (accumulated deficit) | 5,843 | (9,378) |
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,170,773 | 3,860,856 |
Non-controlling interests in consolidated subsidiaries | 30,407 | 22,056 |
Total Equity | 4,201,180 | 3,882,912 |
Total Liabilities and Equity | $ 91,819,407 | $ 116,099,297 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Consolidated Balance Sheets | ||
Loans-held-for-sale held at fair value | $ 423,630 | $ 391,620 |
Investment securities held at fair value | 421,456 | 556,253 |
Intangible assets - servicing rights held at fair value | $ 123,892 | $ 132,303 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 240,665,588 | 224,752,053 |
Common stock, shares outstanding | 237,658,615 | 223,538,303 |
Treasury stock, shares | 3,006,973 | 1,213,750 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Interest income from loans | $ 120,598 | $ 110,669 | $ 357,319 | $ 321,034 |
Interest income from investment securities | 24,674 | 28,640 | 76,228 | 85,714 |
Servicing fees | 32,528 | 34,641 | 90,939 | 101,533 |
Rental income | 10,045 | 3,385 | 17,731 | 6,520 |
Other revenues | 4,300 | 4,033 | 7,437 | 9,296 |
Total revenues | 192,145 | 181,368 | 549,654 | 524,097 |
Costs and expenses: | ||||
Management fees | 28,082 | 24,943 | 82,871 | 77,849 |
Interest expense | 50,688 | 39,739 | 151,021 | 115,265 |
General and administrative | 38,693 | 47,640 | 115,361 | 136,835 |
Acquisition and investment pursuit costs | 3,682 | 759 | 9,735 | 1,924 |
Costs of rental operations | 2,352 | 1,783 | 5,261 | 3,889 |
Depreciation and amortization | 7,234 | 3,017 | 17,147 | 12,807 |
Loan allowance, net | (2,667) | 1,575 | 311 | 1,933 |
Other expense | 3 | 918 | 378 | 6,527 |
Total costs and expenses | 128,067 | 120,374 | 382,085 | 357,029 |
Income before other income, income taxes and non-controlling interests | 64,078 | 60,994 | 167,569 | 167,068 |
Other income: | ||||
Change in net assets related to consolidated VIEs | 49,665 | 87,778 | 153,399 | 190,810 |
Change in fair value of servicing rights | (4,217) | (7,897) | (8,411) | (18,671) |
Change in fair value of investment securities, net | 2,617 | 1,860 | 3,564 | 15,180 |
Change in fair value of mortgage loans held-for-sale, net | 19,082 | 15,517 | 51,044 | 48,018 |
Earnings from unconsolidated entities | 5,706 | 3,805 | 20,747 | 13,432 |
Gain on sale of investments and other assets, net | 3,348 | 1,332 | 20,755 | 12,965 |
Gain on derivative financial instruments, net | 2,230 | 29,275 | 7,323 | 11,619 |
Foreign currency loss, net | $ (17,782) | (21,466) | $ (27,235) | (16,212) |
Total other-than-temporary impairment ("OTTI") | (264) | (2,256) | ||
Noncredit portion of OTTI recognized in other comprehensive income | 264 | 1,246 | ||
Net impairment losses recognized in earnings | (1,010) | |||
Loss on extinguishment of debt | $ (5,921) | |||
Other income, net | $ 64 | 28 | 119 | 738 |
Total other income | 60,713 | 110,232 | 215,384 | 256,869 |
Income from continuing operations before income taxes | 124,791 | 171,226 | 382,953 | 423,937 |
Income tax provision | (7,675) | (3,836) | (27,418) | (13,733) |
Income from continuing operations | 117,116 | 167,390 | 355,535 | 410,204 |
Loss from discontinued operations, net of tax (Note 3) | (1,551) | |||
Net income | 117,116 | 167,390 | 355,535 | 408,653 |
Net income attributable to non-controlling interests | (381) | (2,346) | (1,289) | (5,140) |
Net income (loss) attributable to Starwood Property Trust, Inc. | $ 116,735 | $ 165,044 | $ 354,246 | $ 403,513 |
Basic: | ||||
Income from continuing operations (in dollars per share) | $ 0.49 | $ 0.73 | $ 1.51 | $ 1.89 |
Loss from discontinued operations (in dollars per share) | (0.01) | |||
Net income (in dollars per share) | 0.49 | 0.73 | 1.51 | 1.88 |
Diluted: | ||||
Income from continuing operations (in dollars per share) | 0.49 | 0.73 | 1.51 | 1.88 |
Loss from discontinued operations (in dollars per share) | (0.01) | |||
Net income (in dollars per share) | 0.49 | 0.73 | 1.51 | 1.87 |
Dividends declared per common share (in dollars per share) | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 117,116 | $ 167,390 | $ 355,535 | $ 408,653 |
Other comprehensive (loss) income (net change by component): | ||||
Cash flow hedges | (208) | 530 | (348) | 559 |
Available-for-sale securities | (9,095) | 3,954 | (18,915) | (2,166) |
Foreign currency remeasurement | 2,912 | (9,765) | 2,877 | (4,161) |
Other comprehensive loss | (6,391) | (5,281) | (16,386) | (5,768) |
Comprehensive income | 110,725 | 162,109 | 339,149 | 402,885 |
Less: Comprehensive income attributable to non-controlling interests | (381) | (2,346) | (1,289) | (5,140) |
Comprehensive income attributable to Starwood Property Trust, Inc. | $ 110,344 | $ 159,763 | $ 337,860 | $ 397,745 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Total Starwood Property Trust, Inc. Stockholders' Equity | Common stock | Additional Paid-In Capital | Treasury Stock | (Accumulated Deficit) Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interests | Total |
Balance at Dec. 31, 2013 | $ 4,282,528 | $ 1,961 | $ 4,300,479 | $ (10,642) | $ (84,719) | $ 75,449 | $ 44,605 | $ 4,327,133 |
Balance (in shares) at Dec. 31, 2013 | 196,139,045 | 625,850 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Proceeds from public offering of common stock | 564,695 | $ 253 | 564,442 | 564,695 | ||||
Proceeds from public offering of common stock (in shares) | 25,300,000 | |||||||
Proceeds from ATM Agreement | 18,346 | $ 8 | 18,338 | 18,346 | ||||
Proceeds from ATM Agreement (in shares) | 759,000 | |||||||
Proceeds from DRIP Plan | 58 | 58 | 58 | |||||
Proceeds from DRIP Plan (in shares) | 2,430 | |||||||
Equity offering costs | (1,623) | (1,623) | (1,623) | |||||
Common stock repurchased | (12,993) | $ (12,993) | (12,993) | |||||
Common stock repurchased (in shares) | 587,900 | |||||||
Share-based compensation | 21,501 | $ 10 | 21,491 | 21,501 | ||||
Share-based compensation (in shares) | 1,025,144 | |||||||
Manager incentive fee paid in stock | 8,990 | $ 4 | 8,986 | 8,990 | ||||
Manager incentive fee paid in stock (in shares) | 376,932 | |||||||
Net income | 403,513 | 403,513 | 5,140 | 408,653 | ||||
Dividends declared, $1.44 per share | (311,492) | (311,492) | (311,492) | |||||
Spin-off of Starwood Waypoint Residential Trust | (1,118,743) | (1,118,743) | (1,594) | (1,120,337) | ||||
Other comprehensive loss, net | (5,768) | (5,768) | (5,768) | |||||
VIE non-controlling interests | 382 | 382 | ||||||
Distribution to non-controlling interests | (33,582) | (33,582) | ||||||
Balance at Sep. 30, 2014 | 3,849,012 | $ 2,236 | 3,793,428 | $ (23,635) | 7,302 | 69,681 | 14,951 | 3,863,963 |
Balance (in shares) at Sep. 30, 2014 | 223,602,551 | 1,213,750 | ||||||
Balance at Dec. 31, 2014 | 3,860,856 | $ 2,248 | 3,835,725 | $ (23,635) | (9,378) | 55,896 | 22,056 | $ 3,882,912 |
Balance (in shares) at Dec. 31, 2014 | 224,752,053 | 1,213,750 | 224,752,053 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Proceeds from public offering of common stock | 326,142 | $ 138 | 326,004 | $ 326,142 | ||||
Proceeds from public offering of common stock (in shares) | 13,800,000 | |||||||
Proceeds from ATM Agreement (in shares) | 0 | |||||||
Proceeds from DRIP Plan | 219 | 219 | $ 219 | |||||
Proceeds from DRIP Plan (in shares) | 9,400 | |||||||
Equity offering costs | (945) | (945) | (945) | |||||
Common stock repurchased | (37,890) | $ (37,890) | $ (37,890) | |||||
Common stock repurchased (in shares) | 1,793,223 | 1,793,223 | ||||||
Equity component of 4.0% Convertible Senior Notes repurchase | (17,727) | (17,727) | $ (17,727) | |||||
Share-based compensation | 26,455 | $ 15 | 26,440 | 26,455 | ||||
Share-based compensation (in shares) | 1,484,879 | |||||||
Manager incentive fee paid in stock | 14,828 | $ 6 | 14,822 | 14,828 | ||||
Manager incentive fee paid in stock (in shares) | 619,256 | |||||||
Net income | 354,246 | 354,246 | 1,289 | 355,535 | ||||
Dividends declared, $1.44 per share | (339,025) | (339,025) | (339,025) | |||||
Other comprehensive loss, net | (16,386) | (16,386) | (16,386) | |||||
VIE non-controlling interests | 4,188 | 4,188 | ||||||
Contributions from non-controlling interests | 4,133 | 4,133 | ||||||
Distribution to non-controlling interests | (1,259) | (1,259) | ||||||
Balance at Sep. 30, 2015 | $ 4,170,773 | $ 2,407 | $ 4,184,538 | $ (61,525) | $ 5,843 | $ 39,510 | $ 30,407 | $ 4,201,180 |
Balance (in shares) at Sep. 30, 2015 | 240,665,588 | 3,006,973 | 240,665,588 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Equity (Parenthetical) - $ / shares | Aug. 04, 2015 | May. 05, 2015 | Feb. 25, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Consolidated Statements of Equity | |||||||
Dividends declared per common share (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows from Operating Activities: | ||
Net income | $ 355,535 | $ 408,653 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of deferred financing costs | 11,055 | 8,501 |
Amortization of convertible debt discount and deferred fees | 15,631 | 9,376 |
Accretion of net discount on investment securities | (20,312) | (17,174) |
Accretion of net deferred loan fees and discounts | (26,615) | (16,756) |
Amortization of net premium (discount) from secured borrowings on transferred loans | 4 | (862) |
Share-based compensation | 26,455 | 21,501 |
Share-based component of incentive fees | 14,828 | 8,990 |
Change in fair value of fair value option investment securities | (3,564) | (15,180) |
Change in fair value of consolidated VIEs | 17,438 | (71,105) |
Change in fair value of servicing rights | 8,411 | 18,671 |
Change in fair value of loans held-for-sale | (51,044) | (48,018) |
Change in fair value of derivatives | (12,765) | (14,595) |
Foreign currency loss, net | 27,372 | 15,767 |
Gain on sale of investments and other assets | (20,755) | (13,907) |
Other-than-temporary impairment | 1,010 | |
Loan allowance, net | 311 | 1,933 |
Depreciation and amortization | 15,873 | 13,178 |
Earnings from unconsolidated entities | (20,747) | (13,432) |
Distributions of earnings from unconsolidated entities | 18,665 | 9,354 |
Loss on extinguishment of debt | 5,921 | |
Originations of loans held-for-sale, net of principal collections | (1,424,837) | (1,159,058) |
Proceeds from sale of loans held-for-sale | 1,443,871 | 1,165,583 |
Changes in operating assets and liabilities: | ||
Related-party payable, net | (17,947) | 7,073 |
Accrued and capitalized interest receivable, less purchased interest | (48,310) | (29,770) |
Other assets | (29,576) | (6,192) |
Accounts payable, accrued expenses and other liabilities | (25,211) | (46,997) |
Net cash provided by operating activities | 259,687 | 236,544 |
Cash Flows from Investing Activities: | ||
Origination and purchase of loans held-for-investment | (1,670,124) | (2,123,947) |
Proceeds from principal collections on loans | 1,057,700 | 966,350 |
Proceeds from loans sold | 599,504 | 341,472 |
Purchase of investment securities | (163,018) | (67,230) |
Proceeds from sales of investment securities | 6,301 | 100,166 |
Proceeds from principal collections on investment securities | 348,090 | 40,999 |
Real estate business combinations, net of cash acquired | (239,933) | |
Proceeds from sale of properties | 33,056 | 1,784 |
Purchase of other assets | (309) | (18,731) |
Investment in unconsolidated entities | (32,063) | (21,973) |
Distribution of capital from unconsolidated entities | 29,003 | 38,946 |
Payments for purchase or termination of derivatives | (18,271) | (16,081) |
Proceeds from termination of derivatives | 30,194 | 5,611 |
Return of investment basis in purchased derivative asset | 260 | 1,222 |
Decrease in restricted cash, net | 9,404 | 8,890 |
Spin-off of Starwood Waypoint Residential Trust | (111,960) | |
Acquisition and improvement of single family homes | (61,901) | |
Proceeds from sale of non-performing loans | 1,153 | |
Net cash used in investing activities | (10,206) | (915,230) |
Cash Flows from Financing Activities: | ||
Borrowings under financing agreements | 3,423,328 | 2,917,281 |
Principal repayments on and repurchases of borrowings | (3,289,937) | (2,459,837) |
Payment of deferred financing costs | (13,876) | (11,536) |
Proceeds from common stock issuances | 326,361 | 583,099 |
Payment of equity offering costs | (945) | (1,623) |
Payment of dividends | (332,023) | (293,607) |
Distributions to non-controlling interests | (1,259) | (33,582) |
Purchase of treasury stock | (29,792) | |
Issuance of debt of consolidated VIEs | 9,132 | 88,412 |
Repayment of debt of consolidated VIEs | (246,230) | (129,724) |
Distributions of cash from consolidated VIEs | 26,690 | 32,601 |
Net cash (used in) provided by financing activities | (128,551) | 691,484 |
Net increase in cash and cash equivalents | 120,930 | 12,798 |
Cash and cash equivalents, beginning of period | 255,187 | 317,627 |
Effect of exchange rate changes on cash | (3,349) | (3,103) |
Cash and cash equivalents, end of period | 372,768 | 327,322 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 126,668 | 110,208 |
Income taxes paid | 27,256 | 19,040 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Fair value of assets acquired | 540,764 | |
Fair value of liabilities assumed | 300,831 | |
Assets acquired from consolidated VIEs | (39,506) | |
Unsettled common stock repurchased | 8,098 | 12,993 |
Dividends declared, but not yet paid | 115,191 | 108,056 |
Consolidation of VIEs (VIE asset/liability additions) | 8,067,859 | 27,094,681 |
Deconsolidation of VIEs (VIE asset/liability reductions) | $ (5,278,580) | 8,502,882 |
Net assets distributed in spin-off of Starwood Waypoint Residential Trust | $ 1,008,377 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2015 | |
Business and Organization | |
Business and Organization | 1. Business and Organizatio n Starwood Property Trust, Inc. (“STWD” together with its subsidiaries, “we” or the “Company”) is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering (“IPO”). We are focused primarily on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities (“CMBS”), and other commercial real estate investments in both the U.S. and Europe. We refer to the following as our target assets: commercial real estate mortgage loans, preferred equity interests, CMBS and other commercial real estate -related debt investments. Our target assets may also include residential mortgage-backed securities (“RMBS”), certain residential mortgage loans, distressed or non-performing commercial loans, commercial properties subject to net leases and equity interests in commercial real estate . As market conditions change over time, we may adjust our strategy to take advantage of changes in interest rates and credit spreads as well as economic and credit conditions. We have three reportable business segments as of September 30, 2015: · Real estate lending (the “Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, subordinated mortgages, mezzanine loans, preferred equity, CMBS, RMBS and other real estate and real estate-related debt investments in both the U.S. and Europe that are held-for-investment. · Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) servicing businesses in both the U.S. and Europe that manage and work out problem assets, (ii) an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, including subordinated interests of securitization and resecuritization transactions, (iii) a mortgage loan business which originates conduit loans for the primary purpose of selling these loans into securitization transactions, and (iv) an investment business that selectively acquires commercial real estate assets, including properties acquired from CMBS trusts. This segment excludes the consolidation of securitization variable interest entities (“VIEs”). · Real estate property (the “ Property Segment ”) —engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties , including multi-family properties, that are held for investment. On January 31, 2014, we completed the spin-off of our former single family residential (“SFR”) segment to our stockholders as discussed further in Note 3. We are organized and conduct our operations to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). As such, we will generally not be subject to U.S. federal corporate income tax on that portion of our net income that is distributed to stockholders if we distribute at least 90% of our taxable income to our stockholders by prescribed dates and comply with various other requirements. We are organized as a holding company and conduct our business primarily through our various wholly-owned subsidiaries. We are externally managed and advised by SPT Management, LLC (our “Manager”) pursuant to the terms of a management agreement. Our Manager is controlled by Barry Sternlicht, our Chairman and Chief Executive Officer. Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded and controlled by Mr. Sternlicht. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Balance Sheet Presentation of the Investing and Servicing Segment’s Variable Interest Entities As noted above, the Investing and Servicing Segment operates an investment business that acquires unrated, investment grade and non-investment grade rated CMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or “SPEs”). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America (“GAAP”), SPEs typically qualify as variable interest entities (“VIEs”). These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. Because the Investing and Servicing Segment often serves as the special servicer of the trusts in which it invests, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs. The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation. Refer to the segment data in Note 22 for a presentation of the Investing and Servicing Segment without consolidation of these VIEs. Basis of Accounting and Principles of Consolidation The accompanying condensed consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the operating results for the full year. Refer to our Form 10-K for a description of our recurring accounting policies. We have included disclosure in this Note 2 regarding principles of consolidation and other accounting policies that (i) are required to be disclosed quarterly, (ii) we view as critical, or (iii) became significant since December 31, 2014 due to a corporate action or increase in the significance of the underlying business activity. Variable Interest Entities We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation , defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We consider our variable interests as well as any variable interests of our related parties in making this determination. Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE. To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by us. Our purchased investment securities include CMBS , which are unrated and non-investment grade rated securities issued by CMBS trusts. In certain cases, we may contract to provide special servicing activities for these CMBS trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer, we do not have the power to direct activities that most significantly impact the trust’s economic performance. We evaluated all of our positions in such investments for consolidation. For VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, an allocable portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding allocable amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation. We perform ongoing reassessments of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change. We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our condensed consolidated statements of operations. The residual difference shown on our condensed consolidated statements of operations in the line item “Change in net assets related to consolidated VIEs” represents our beneficial interest in the VIEs. We separately present the assets and liabilities of our consolidated VIEs as individual line items on our consolidated balance sheets. The liabilities of our consolidated VIEs consist solely of obligations to the bondholders of the related CMBS trusts, and are thus presented as a single line item entitled “VIE liabilities.” The assets of our consolidated VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned (“REO”). These assets in the aggregate are likewise presented as a single line item entitled “VIE assets.” Loans comprise the vast majority of our VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to nonperformance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a CMBS trust, any existing REO would be consolidated at fair value. Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP. In addition to sharing a similar measurement method as the loans in a CMBS trust, the VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a CMBS trust. REO assets generally represent a very small percentage of the overall asset pool of a CMBS trust. In a new issue CMBS trust there are no REO assets. We estimate that REO assets constitute approximately 4% of our consolidated VIE assets, with the remaining 96% representing loans . However, it is important to note that the fair value of our VIE assets is determined by reference to our VIE liabilities as permitted under Accounting Standards Update (“ ASU ”) 2014-13 , Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity . In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually. Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities. For these reasons, the assets of our VIEs are presented in the aggregate. Convertible Senior Notes ASC 470, Debt , requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. The equity components of the convertible notes have been reflected within additional paid-in capital in our condensed consolidated balance sheets. The resulting debt discount is being amortized over the period during which the convertible notes are expected to be outstanding (the maturity date) as additional non-cash interest expense. Upon repurchase of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration , inclusive of transaction costs , amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component , including unamortized debt issuance costs , is recognized as gain (loss) on extinguishment of debt in our condensed consolidated statements of operations. The remaining settlement consideration allocated to the equity component is recognized as a reduction of additional paid-in capital in our condensed consolidated balance sheets. Discontinued Operations On January 31, 2014, we completed the spin-off of our former SFR segment to our stockholders as discussed in Note 3. In accordance with ASC 205, Presentation of Financial Statements, the results of the SFR segment are presented within discontinued operations in our condensed consolidated statements of operations for the nine months ended September 30, 2014. Fair Value Option The guidance in ASC 825, Financial Instruments , provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method. We have elected the fair value option for eligible financial assets and liabilities of our consolidated VIEs, loans held-for-sale originated by the Investing and Servicing Segment’s conduit platform, purchased CMBS issued by VIEs we could consolidate in the future and certain investments in marketable equity securities. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for mortgage loans held-for-sale originated by the Investing and Servicing Segment’s conduit platform were made due to the short-term nature of these instruments. The fair value elections for investments in marketable equity securities were made because the shares are listed on an exchange, which allows us to determine the fair value using a quoted price from an active market. Fair Value Measurements We measure our mortgage ‑backed securities, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. As discussed above, we measure the assets and liabilities of consolidated VIEs at fair value pursuant to our election of the fair value option. The VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the VIE, we maximize the use of observable inputs over unobservable inputs. We also acknowledge that our principal market for selling CMBS assets is the securitization market where the market participant is considered to be a CMBS trust or a collateralized debt obligation (“CDO”). This methodology results in the fair value of the assets of a static CMBS trust being equal to the fair value of its liabilities. Refer to Note 19 for further information regarding our fair value measurements. Loans Receivable and Provision for Loan Losses In our Lending Segment we purchase and originate commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost. We are required to periodically evaluate each of these loans for possible impairment. Impairment is indicated when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is determined to be impaired, we write down the loan through a charge to the provision for loan losses. Actual losses, if any, could ultimately differ from these estimates. We perform a quarterly review of our portfolio of loans. In connection with this review, we assess the performance of each loan and assign a risk rating based on several factors , including risk of loss, loan-to- collateral value ratio (“LTV”) , collateral performance, structure, exit plan, and sponsorship. Loans are rated “1” through “5”, from less risk to greater risk , in connection with this review. Intangible Lease Assets In accordance with ASC 805, Business Combinations , the acquirer in a business combination must recognize, with certain exceptions, the fair values of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. In connection with the Ireland portfolio acquisition (refer to Note 3 for further discussion) and certain properties acquired from CMBS trusts , we recognized intangible lease assets and liabilities associated with certain noncancelable operating leases of the acquired properties. These intangible lease assets and liabilities include in-place lease intangible assets, favorable lease intangible assets and unfavorable lease liabilities. In-place lease intangible assets reflect the acquired benefit of purchasing properties with in-place leases and are measured based on estimates of direct costs associated with leasing the property and lost rental income during projected lease-up and free rent periods , both of which are avoided due to the presence of in-place leases at the acquisition date. Favorable and unfavorable lease intangible assets and liabilities reflect the terms of in-place tenant leases being either favorable or unfavorable relative to market terms at the acquisition date. The estimated fair values of our favorable and unfavorable lease assets and liabilities at the respective acquisition dates represent the discounted cash flow differential between the contractual cash flows of such leases and the estimated cash flows that comparable leases at market terms would generate. Our intangible lease assets and liabilities are recognized within intangible assets and other liabilities, respectively, in our condensed consolidated balance sheet. Our in-place lease intangible assets are amortized to amortization expense while our favorable and unfavorable lease intangible assets and liabilities are amortized to rental income, both over the remaining noncancelable term of the respective leases on a straight-line basis. Properties Our properties consist of commercial real estate properties held-for-investment and are recorded at cost, less accumulated depreciation and impairments, if any. Properties consist primarily of land, buildings and improvements. Land is not depreciated, and buildings and improvements are depreciated on a straight-line basis over their estimated useful lives. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments are capitalized and depreciated on a straight-line basis over their estimated useful lives. We review properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing the carrying amount of the property to the undiscounted future net cash flows it is expected to generate. If such carrying amounts exceed the expected undiscounted future net cash flows, we adjust the carrying amount of the property to its estimated fair value. Revenue Recognition Rental Income Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease. In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. Acquisition and Investment Pursuit Costs Costs incurred in connection with acquiring properties, investments, loans and businesses, as well as in pursuing unsuccessful acquisitions and investments, are recorded within acquisition and investment pursuit costs in our condensed consolidated statements of operations when incurred. These costs reflect services performed by third parties and principally include due diligence and legal services. Earnings Per Share We present both basic and diluted earnings per share (“EPS”) amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested restricted stock (“RSAs”) and restricted stock units (“RSUs”), (ii) shares contingently issuable to our Manager, and (iii) the “in-the-money” conversion options associated with our outstanding convertible notes (see further discussion in Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. The Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the three and nine months ended September 30, 2015 and 2014, the two-class method resulted in the most dilutive EPS calculation. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our loans, investment securities and intangible assets, which has a significant impact on the amounts of interest income, credit losses (if any), and fair values that we record and/or disclose. In addition, the fair value of financial assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows. Reclassifications Certain prior period amounts have been reclassified to conform to our current period presentation. In that regard, we have reclassified $39.9 million of commercial real estate properties from other assets to properties, net on our condensed consolidated balance sheet as of December 31, 2014. Additionally, revenues of $3.4 million and $6.5 million previously reported in other revenue have been reclassified to rental income in our condensed consolidated statements of operations for the three and nine months ended September 30, 2014, respectively. Expenses of $1.8 million and $3.9 million previously reported in other expense have been reclassified to costs of rental operations in our condensed consolidated statements of operations for the three and nine months ended September 30, 2014, respectively. Recent Accounting Developments On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis , which amends the criteria for determining which entities are considered VIEs, amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2015. Early application is permitted. We are in the process of assessing what impact this ASU will have on the Company. On April 7, 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) , which requires entities to present debt issuance costs as a direct deduction from the carrying value of the related debt liability, consistent with debt discounts, rather than as a separate deferred asset as the previous guidance required. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2015. We do not expect the application of this ASU to materially impact the Company. On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which establishes key principles by which an entity determines the amount and timing of revenue recognized from customer contracts. At issuance, the ASU was effective for the first interim or annual period beginning after December 15, 2016. On August 12, 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which delay ed the effective date of ASU 2014-09 by one year, resulting in the ASU becoming effective for the first interim or annual period beginning after December 15, 2017. Early application, which was not permissible under the initial effectiveness timeline, is now permissible though no earlier than as of the first interim or annual period beginning after December 15, 2016. We do not expect the application of this ASU to materially impact the Company. On September 25 , 2 015, the FASB issued ASU 2015-16 , Business Combinations (T opic 8 0 5) – Simplifying the Accounting for Measurement-Period Adjustments , which requires that the acquirer in a business combination recognize any measurement period adjustments in the period in which the adjustments are identified rather than retrospectively as of the acquisition date, as current GAAP dictates. The ASU shall be applied prospectively and is effective for annual periods, and interim periods therein, beginning after December 15, 2015. Early application is permitted. We intend to early adopt this ASU by recognizing any future measurement period adjustments in the period identified. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2015 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | 3. Acquisitions and Divestitures Affordable Housing Portfolio Acquisition In August 2015, we entered into an agreement to acquire 29 affordable housing communities located throughout Florida (the “Affordable Housing Portfolio”) for an aggregate acquisition price of $524.1 million. The acquisition will be fully funded with existing cash on hand and debt totaling $362.8 million, including third party debt and the assumption of pre-existing federal, state and county sponsored financing. The Affordable Housing Portfolio is comprised of 7,870 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas. On October 26, 2015, we entered into an agreement to acquire a 450 -unit affordable housing community in Tampa, Florida for $29.1 million. On October 20, 2015, we acquired seven of the properties for $143.2 million. As of November 5, 2015, the initial accounting for these acquisitions was not sufficiently complete to allow for the inclusion of the ASC 805, Business Combinations, disclosures herein. The properties not yet acquired remain subject to customary closing conditions. Refer to Note 23 for further discussion. Ireland Portfolio Acquisition On July 24, 2015, we acquired a fully occupied net leased office property located in Dublin, Ireland for $121.9 million. This acquisition was partially financed with $80.7 million from the Lender 6 Mortgage facility. This property, along with the 11 net leased fully occupied o ffice properties and one multi-family property acquired in May 2015 , comprise the “Ireland Portfolio” . The aggregate cash purchase price for the Ireland Portfolio, which collectively comprise s approximately 600,000 square feet, was $226.6 million . In connection with the acquisition, we extinguished $283.0 million of debt assumed, and obtained new financings totaling $328.6 million from the Lender 6 Mortgage facility . Refer to Note 9 for further discussion of this facility. All properties within the Ireland Portfolio were acquired from entities controlled by the same third party investment fund. We applied the provisions of ASC 805, Business Combinations , in accounting for our acquisition of the Ireland Portfolio . In doing so, we have provisionally recorded all identifiable assets acquired and liabilities assumed at fair value as of the acquisition date. These provisional amounts may be adjusted during the measurement period, which expires no later than one year from the acquisition date, if new information is obtained that, if known, would have affected the amounts recognized as of the acquisition date. The following table summarizes the provisional estimates of identified assets acquired and liabilities assumed at the respective acquisition dates ( amounts in thousands): Assets acquired: Restricted cash $ Properties Intangible assets Other assets Total assets acquired Liabilities assumed: Accounts payable, accrued expenses and other liabilities Secured financing agreements Total liabilities assumed Net assets acquired/purchase price $ For the period from their respective acquisition dates through September 30, 2015, we have recognized revenues of $10.8 million and net loss of $4.1 million related to the Ireland Portfolio. Such net loss includes one-time acquisition-related costs, such as legal and due diligence costs, of approximately $3.3 million which are included in acquisition and investment pursuit costs within our condensed consolidated statements of operations. No goodwill was recognized in connection with the Ireland Portfolio acquisition as the purchase price equaled the fair value of the net assets acquired. The pro-forma revenues and net income attributable to STWD of the combined entity for the three and nine months ended September 30, 2015 and 2014, assuming the Ireland Portfolio acquisition occurred on January 1, 2014, are as follows (amounts in thousands, except per share amounts): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Revenues $ $ $ $ Net income attributable to STWD Net income per share - Basic Net income per share - Diluted Pro-forma net income was adjusted to include the following estimated management fees the combined entity would have incurred ( amounts in thousands ): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Management fee expense addition $ $ $ $ SFR Spin-off On January 31, 2014, we completed the spin-off of our former SFR segment to our stockholders. The real estate investment trust, Starwood Waypoint Residential Trust (“SWAY”), is listed on the New York Stock Exchange (“NYSE”) and trades under the ticker symbol “SWAY.” Our stockholders received one common share of SWAY for every five shares of our common stock held at the close of business on January 24, 2014. As part of the spin-off, we contributed $100 million to the unlevered balance sheet of SWAY to fund its growth and operations. As of January 31, 2014, SWAY held net assets of $1.1 billion. The net assets of SWAY consisted of approximately 7,200 units of single-family homes and residential non-performing mortgage loans as of January 31, 2014. In connection with the spin-off, 40.1 million shares of SWAY were issued. The results of operations for the SFR segment are presented within discontinued operations in our condensed consolidated sta tement of operations for the nine months ended September 30, 2014. We have no continuing involvement with the SFR segment following the spin-off. Subsequent to the spin-off, SWAY entered into a management agreement with an affiliate of our Manager. The following table presents the summarized consolidated results of discontinued operations for the SFR segment prior to the spin-off ( amounts in thousands): For the Three Months Ended For the Nine Months Ended September 30, 2014 September 30, 2014 Total revenues $ — $ Total costs and expenses — Loss before other income and income taxes — Total other income — Loss before income taxes — Income tax provision — — Net loss $ — $ |
Loans
Loans | 9 Months Ended |
Sep. 30, 2015 | |
Loans | |
Loans | 4. Loans Our loans held-for-investment are accounted for at amortized cost and our loans held-for-sale are accounted for at the lower of cost or fair value, unless we have elected the fair value option. The following tables summarize our investments in mortgages and loans by subordination class as of September 30, 2015 and December 31, 2014 (amounts in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) September 30, 2015 Value Amount Coupon (years)(3) First mortgages (1) $ $ % Subordinated mortgages (2) % Mezzanine loans (1) % Total loans held-for-investment Loans held-for-sale (carrying value of $423,630 under fair value option) % Loans transferred as secured borrowings % Total gross loans Loan loss allowance (loans held-for-investment) — Total net loans $ $ December 31, 2014 First mortgages (1) $ $ % Subordinated mortgages (2) % Mezzanine loans (1) % Total loans held-for-investment Loans held-for-sale, fair value option elected % Loans transferred as secured borrowings % Total gross loans Loan loss allowance (loans held-for-investment) — Total net loans $ $ (1) First mortgages include first mortgage loans and any contiguous mezzanine loan component s because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. T he application of this methodology resulted in mezzanine loans with carrying values of $892.3 million and $704.2 million being classified as first mortgages as of September 30, 2015 and December 31, 2014, respectively . (2) Subordinated mortgages include B-notes and junior participation in first mortgages where we do not own the senior A-note or senior participation. If we own both the A-note and B-note, we categorize the loan as a first mortgage loan. (3) Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination. As of September 30, 2015, approximately $ 4.8 billion, or 81.9% , of our loans held-for-investment were variable rate and paid interest principally at LIBOR plus a weighted-average spread of 6.1% . The following table summarizes our investments in floating rate loans (amounts in thousands): September 30, 2015 December 31, 2014 Carrying Carrying Index Base Rate Value Base Rate Value One-month LIBOR USD % $ % $ Three-month LIBOR GBP % % LIBOR floor 0.15 - 3.00 % (1) 0.15 - 3.00 % (1) Total $ $ (1) The weighted-average LIBOR Floor was 0.31% and 0.35% as of September 30, 2015 and December 31, 2014, respectively. Our loans are typically collateralized by real estate. As a result, we regularly evaluate the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, as well as the financial and operating capability of the borrower. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property’s liquidation value. We also evaluate the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, we consider the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including (i) periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and discussions with market participants. Our evaluation process as described above produces an internal risk rating between 1 and 5, which is a weighted average of the numerical ratings in the following categories: (i) sponsor capability and financial condition, (ii) loan and collateral performance relative to underwriting, (iii) quality and stability of collateral cash flows, and (iv) loan structure. We utilize the overall risk ratings as a concise means to monitor any credit migration on a loan as well as on the whole portfolio. While the overall risk rating is generally not the sole factor we use in determining whether a loan is impaired, a loan with a higher overall risk rating would tend to have more adverse indicators of impairment, and therefore would be more likely to experience a credit loss. The rating categories generally include the characteristics described below, but these are utilized as guidelines and therefore not every loan will have all of the characteristics described in each category: Rating Characteristics 1 Sponsor capability and financial condition—Sponsor is highly rated or investment grade or, if private, the equivalent thereof with significant management experience. Loan collateral and performance relative to underwriting—The collateral has surpassed underwritten expectations. Quality and stability of collateral cash flows—Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high quality tenant mix. Loan structure—LTV does not exceed 65% . The loan has structural features that enhance the credit profile. 2 Sponsor capability and financial condition—Strong sponsorship with experienced management team and a responsibly leveraged portfolio. Loan collateral and performance relative to underwriting—Collateral performance equals or exceeds underwritten expectations and covenants and performance criteria are being met or exceeded. Quality and stability of collateral cash flows—Occupancy is stabilized with a diverse tenant mix. Loan structure—LTV does not exceed 70% and unique property risks are mitigated by structural features. 3 Sponsor capability and financial condition—Sponsor has historically met its credit obligations, routinely pays off loans at maturity, and has a capable management team. Loan collateral and performance relative to underwriting—Property performance is consistent with underwritten expectations. Quality and stability of collateral cash flows—Occupancy is stabilized, near stabilized, or is on track with underwriting. Loan structure—LTV does not exceed 80% . 4 Sponsor capability and financial condition—Sponsor credit history includes missed payments, past due payment, and maturity extensions. Management team is capable but thin. Loan collateral and performance relative to underwriting—Property performance lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers. A sale of the property may be necessary in order for the borrower to pay off the loan at maturity. Quality and stability of collateral cash flows—Occupancy is not stabilized and the property has a large amount of rollover. Loan structure—LTV is 80% to 90% . 5 Sponsor capability and financial condition—Credit history includes defaults, deeds ‑in ‑lieu, foreclosures, and/or bankruptcies. Loan collateral and performance relative to underwriting—Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Sale proceeds would not be sufficient to pay off the loan at maturity. Quality and stability of collateral cash flows—The property has material vacancy and significant rollover of remaining tenants. Loan structure—LTV exceeds 90% . As of September 30, 2015, the risk ratings for loans subject to our rating system, which excludes loans on the cost recovery method and loans for which the fair value option has been elected, by class of loan were as follows (amounts in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Cost Transferred % of Risk Rating First Subordinated Mezzanine Recovery Loans Held- As Secured Total Category Mortgages Mortgages Loans Loans For-Sale Borrowings Total Loans 1 $ $ — $ — $ — $ — $ — $ — % 2 — — — % 3 — — % 4 — — — % 5 — — — — — — — — % N/A — — — — — % $ $ $ $ — $ $ $ % As of December 31, 2014, the risk ratings for loans subject to our rating system by class of loan were as follows (amounts in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Cost Transferred % of Risk Rating First Subordinated Mezzanine Recovery Loans Held- As Secured Total Category Mortgages Mortgages Loans Loans For-Sale Borrowings Total Loans 1 $ $ — $ — $ — $ — $ — $ — % 2 — — — % 3 — — % 4 — — — % 5 — — — — — % N/A — — — — % $ $ $ $ $ $ $ % As of September 30, 2015, the Lending Segment held a $61.0 million mezzanine loan on a luxury condominium project located in New York, of which $18.6 million is greater than 90 days past due . After completing our impairment evaluation process, we concluded that no impairment charges were required on this loan or any other individual loans held-for-investment as of September 30, 2015 or December 31, 2014 , as we expect to collect all outstanding principal and interest . During the three months ended September 30, 2015, the Investing and Servicing Segment received full repayments of its basis in the two remaining loan s held-for-investment which were greater than 90 days past due and were acquired as part of the acquisition of LNR Property LLC (“LNR”) in April 2013. None of our held-for-sale loans where we have elected the fair value option were 90 days or greater past due. In accordance with our policies, we record an allowance for loan losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4,” plus (ii) 5% of the aggregate carrying amount of loans rated as a “5.” The following table presents the activity in our allowance for loan losses (amounts in thousands): For the Nine Months Ended September 30, 2015 2014 Allowance for loan losses at January 1 $ $ Provision for loan losses Charge-offs — — Recoveries — — Allowance for loan losses at September 30 $ $ Recorded investment in loans related to the allowance for loan loss $ $ The activity in our loan portfolio was as follows (amounts in thousands): For the Nine Months Ended September 30, 2015 2014 Balance at January 1 $ $ Acquisitions/originations/additional funding Capitalized interest (1) Basis of loans sold (2) Loan maturities/principal repayments Discount accretion/premium amortization Changes in fair value Unrealized foreign currency remeasurement loss Change in loan loss allowance, net Transfer to/from other asset classifications Balance at September 30 $ $ (1) Represents accrued interest income on loans whose terms do not require current payment of interest. (2) See Note 11 for additional disclosure on these transactions. |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2015 | |
Investment Securities | |
Investment Securities | 5. Investment Securities Investment securities were comprised of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands): Carrying Value as of September 30, 2015 December 31, 2014 RMBS, available-for-sale $ $ Single-borrower CMBS, available-for-sale — CMBS, fair value option (1) Held-to-maturity (“HTM”) securities Equity security, fair value option Subtotal—Investment securities VIE eliminations (1) Total investment securities $ $ (1) Certain fair value option CMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810. Purchases, sales and principal collections for all investment securities were as follows (amounts in thousands): Available-for-sale CMBS, fair HTM Equity RMBS CMBS value option Securities Security Total Three Months Ended September 30, 2015 Purchases $ — $ — $ $ $ — $ Sales — — — — Principal collections — Three Months Ended September 30, 2014 Purchases $ — $ — $ $ — $ — $ Sales — — — — Principal collections — — Available-for-sale CMBS, fair HTM Equity RMBS CMBS value option Securities Security Total Nine Months Ended September 30, 2015 Purchases $ — $ — $ $ $ — $ Sales — — — — Principal collections — Nine Months Ended September 30, 2014 Purchases $ — $ — $ $ — $ — $ Sales — — — Principal collections — RMBS and Single-borrower CMBS, Available-for-Sale With the exception of six CMBS classified as HTM, the Company classified all of its RMBS and any CMBS investments where the fair value option has not been elected as available-for-sale as of September 30, 2015 and December 31, 2014. These RMBS and CMBS are reported at fair value in the balance sheet with changes in fair value recorded in accumulated other comprehensive income (“AOCI”). The tables below summarize various attributes of our investments in available-for-sale RMBS and single-borrower CMBS where the fair value option has not been elected as of September 30, 2015 and December 31, 2014 (amounts in thousands): Unrealized Gains or (Losses) Recognized in AOCI Purchase Recorded Gross Gross Net Amortized Credit Amortized Non-Credit Unrealized Unrealized Fair Value Cost OTTI Cost OTTI Gains Losses Adjustment Fair Value September 30, 2015 RMBS $ $ $ $ $ $ — $ $ Single-borrower CMBS — — — — — — — — Total $ $ $ $ $ $ — $ $ December 31, 2014 RMBS $ $ $ $ $ $ — $ $ Single-borrower CMBS — — — Total $ $ $ $ $ $ — $ $ Weighted Average Weighted Average Coupon(1) Rating (Standard & Poor’s) WAL (Years)(2) September 30, 2015 RMBS % B− Single-borrower CMBS — % — — December 31, 2014 RMBS % B− Single-borrower CMBS % BB+ (1) Calculated using the September 30, 2015 and December 31, 2014 one-month LIBOR rate of 0.193% and 0.171% , respectively, for floating rate securities. (2) Represents the WAL of each respective group of securities as of the respective balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments. As of September 30, 2015, there were no variable rate single-borrower CMBS. As of December 31, 2014, $0.2 million, or 0.2% , of the single-borrower CMBS were variable rate. As of September 30, 2015, approximately $128.4 million, or 69.5% , of the RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 0.43% . As of December 31, 2014, approximately $140.1 million, or 67.7% , of the RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 0.44% . We purchased all of the RMBS at a discount that will be accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of these discounts. The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS and single-borrower CMBS as of September 30, 2015 and December 31, 2014, excluding CMBS where we have elected the fair value option (amounts in thousands): September 30, 2015 December 31, 2014 RMBS CMBS RMBS CMBS Principal balance $ $ — $ $ Accretable yield — — Non-accretable difference — — Total discount — — Amortized cost $ $ — $ $ The principal balance of credit deteriorated RMBS was $205.2 million and $222.9 million as of September 30, 2015 and December 31, 2014, respectively. Accretable yield related to these securities totaled $61.9 million and $66.6 million as of September 30, 2015 and December 31, 2014, respectively. The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the three and nine months ended September 30, 2015 (amounts in thousands): Non-Accretable Three Months Ended September 30, 2015 Accretable Yield Difference Balance as of July 1, 2015 $ $ Accretion of discount — Principal write-downs — Purchases — — Sales — — OTTI — — Transfer to/from non-accretable difference Balance as of September 30, 2015 $ $ Nine Months Ended September 30, 2015 Balance as of January 1, 2015 $ $ Accretion of discount — Principal write-downs — Purchases — — Sales — — OTTI — — Transfer to/from non-accretable difference Balance as of September 30, 2015 $ $ Subject to certain limitations on durations, we have allocated an amount to invest in RMBS that cannot exceed 10% of our total assets excluding Investing and Servicing Segment VIEs. We have engaged a third party manager who specializes in RMBS to execute the trading of RMBS, the cost of which was $0.4 million for both the three months ended September 30, 2015 and 2014, and $1.1 million and $1.5 million for the nine months ended September 30, 2015 and 2014, respectively, which has been recorded as management fees in the accompanying condensed consolidated statements of operations. The following table presents the gross unrealized losses and estimated fair value of the available-for-sale securities (i) where we have not elected the fair value option, (ii) that were in an unrealized loss position as of September 30, 2015 and December 31, 2014, and (iii) for which OTTIs (full or partial) have not been recognized in earnings (amounts in thousands): Estimated Fair Value Unrealized Losses Securities with a Securities with a Securities with a Securities with a loss less than loss greater than loss less than loss greater than 12 months 12 months 12 months 12 months As of September 30, 2015 RMBS $ $ $ $ Single-borrower CMBS — — — — Total $ $ $ $ As of December 31, 2014 RMBS $ — $ $ — $ Single-borrower CMBS — — — — Total $ — $ $ — $ As of September 30, 2015 and December 31, 2014, there were two securities with unrealized losses reflected in the table above. After evaluating th e s e securit ies and recording adjustment s for credit-related ot her-than-temporary impairment, we concluded that the remaining unrealized losses reflected above were noncredit-related and would be recovered from the securit ie s ’ estimated future cash flows. We considered a number of factors in reaching this conclusion, including that we did not intend to sell the securi ties , it was not considered more likely than not that we would be forced to sell the securit ies prior to recovering our amortized cost, and there were no material credit events that would have caused us to otherwise conclude that we would not recover our cost. Credit losses, which represent most of the other-than-temporary impairments we record on securities, are calculated by comparing (i) the estimated future cash flows of each security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) our amortized cost basis. Significant judgment is used in projecting cash flows for our non-agency RMBS. As a result, actual income and/or impairments could be materially different from what is currently projected and/or reported. CMBS, Fair Value Option As discussed in the “Fair Value Option” section of Note 2 herein, we elect the fair value option for the Investing and Servicing Segment’s CMBS in an effort to eliminate accounting mismatches resulting from the current or potential consolidation of securitization VIEs. As of September 30, 2015, the fair value and unpaid principal balance of CMBS where we have elected the fair value option, before consolidation of securitization VIEs, were $ 927.3 million and $4.5 billion, respectively. These balances represent our economic interests in these assets. However, as a result of our consolidation of securitization VIEs, the vast majority of this fair value ($ 705.0 million at September 30, 2015) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option CMBS. During the three and nine months ended September 30, 2015, we purchased $115.0 million and $213.2 million of CMBS, respectively, for which we elected the fair value option. Due to our consolidation of securitization VIEs, $109.4 million and $198.6 million, respectively, of these amounts are eliminated and reflected primarily as repayment of debt of consolidated VIEs in our condensed consolidated statement of cash flows. As of September 30, 2015, none of our CMBS where we have elected the fair value option were variable rate. The table below summarizes various attributes of our investment in fair value option CMBS as of September 30, 2015 and December 31, 2014 (amounts in thousands): Weighted Weighted Average Average Rating WAL Coupon (Standard & Poor’s) (1) (Years)(2) September 30, 2015 CMBS, fair value option % CCC+ December 31, 2014 CMBS, fair value option % CCC− (1) As of September 30, 2015 and December 31, 2014, excludes $35.8 million and $41.7 million, respectively, in fair value option CMBS that are not rated. (2) The WAL of each security is calculated based on the period of time over which we expect to receive principal cash flows. Expected principal cash flows are based on contractual payments net of expected losses. HTM Securities The table below summarizes unrealized gains and losses of our investments in HTM securities as of September 30, 2015 and December 31, 2014 (amounts in thousands): Net Carrying Amount Gross Unrealized Gross Unrealized (Amortized Cost) Holding Gains Holding Losses Fair Value September 30, 2015 Preferred interests $ $ — $ $ CMBS Total $ $ $ $ December 31, 2014 Preferred interests $ $ — $ $ CMBS — — Total $ $ — $ $ The table below summarizes the maturities of our HTM preferred equity interests in limited liability companies that own commercial real estate and our HTM CMBS as of September 30, 2015 (amounts in thousands): Preferred Interests CMBS Total Less than one year $ — $ — $ — One to three years — Three to five years — Thereafter — Total $ $ $ Equity Security, Fair Value Option During 2012, we acquired 9,140,000 ordinary shares from a related-party (approximately a 4% interest) in Starwood European Real Estate Finance Limited (“SEREF”), a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange. We have elected to report the investment using the fair value option because the shares are listed on an exchange, which allows us to determine the fair value using a quoted price from an active market, and also due to potential lags in reporting resulting from differences in the respective regulatory requirements. The fair value of the investment remeasured in USD was $14.3 m illion and $15.1 million as of September 30, 2015 and December 31, 2014, respectively. |
Properties
Properties | 9 Months Ended |
Sep. 30, 2015 | |
Properties | |
Properties | 6 . Propertie s On July 24, 2015, we acquired a fully occupied net leased office property located in Dublin, Ireland for $121.9 million. This acquisition was partially financed with $80.7 million from the Lender 6 Mortgage facility (see Note 9 for facility terms). This property, with the 11 net leased fully oc cupied office properties and one multi-family property acqu ired in May 2015, comprise the Ireland Portfolio discussed in Note 3 . Also during the three and nine months ended September 30, 2015, our Investing and Servicing Segment acquired three and six commercial real estate properties, respectively, from CMBS trusts for $32.5 million and $65.9 million , respectively. These properties are generally acquired from CMBS trusts that are consolidated as VIEs on our balance sheet. As a result, the acquisitions are generally reflected as repayment of debt of consolidated VIEs in our condensed consolidated statement of cash flows. The below table summarizes our properties held as of September 30, 2015 and December 31, 2014 (dollar amounts in thousands): Depreciable Life September 30, 2015 December 31, 2014 Property Segment Land — $ $ — Buildings 30 years — Investing and Servicing Segment Land — Land improvements 5 – 15 years — Buildings 20 – 40 years Building improvements 5 – 10 years — Furniture & fixtures 3 years Properties, cost Less: accumulated depreciation Properties, net $ $ In March 2015, the Investing and Servicing Segment sold an operating property that we had previously acquired from a CMBS trust. The sale resulted in a $17.1 million gain, which is included in gain on sale of investments and other assets in our condensed consolidated statement of operations for the nine months ended September 30, 2015. |
Investment in Unconsolidated En
Investment in Unconsolidated Entities | 9 Months Ended |
Sep. 30, 2015 | |
Investment in Unconsolidated Entities | |
Investment in Unconsolidated Entities | 7. Investment in Unconsolidated Entities The below table summarizes our investments in unconsolidated entities as of September 30, 2015 and December 31, 2014 (dollar amounts in thousands): Participation / Carrying value as of Ownership %(1) September 30, 2015 December 31, 2014 Equity method: Retail Fund 33% $ $ Investor entity which owns equity in two real estate services providers 50% Equity interests in commercial real estate (2) 16% - 43% — Bridge loan venture (3) various — Various 25% - 50% Cost method: Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% Various 0% - 3% $ $ (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) During the nine months ended September 30, 2015, we acquired $28.0 million of equity interests in limited liability companies that own ten office and student housing properties throughout the U.S. (3) During the three months ended September 30, 2015, we sold our interest in the Bridge Loan Venture at par. There were no differences between the carr ying value of our investment in unconsolidated entities and the underlying equity in the net assets of the investee s as of September 30, 2015. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 8. Goodwil l and Intangible Assets Goodwill Goodwill at September 30, 2015 and December 31, 2014 represents the excess of consideration transferred over the fair value of net assets of LNR acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR’s existing platform, which includes an international network of commercial real estate asset managers, work-out specialists, underwriters and administrative support professionals as well as proprietary historical performance data on commercial real estate assets. Intangible Assets Servicing Rights Intangibles In connection with the LNR acquisition, we identified domestic and European servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. All of our servicing fees are specified by these Pooling and Servicing Agreements. At September 30, 2015 and December 31, 2014, the balance of the domestic servicing intangible was net of $27.9 million and $46.1 million, respectively, that was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of September 30, 2015 and December 31, 2014 the domestic servicing intangible had a balance of $151.8 million and $178.4 million, respectively, which represents our economic interest in this asset. Lease Intangibles In connection with our acquisition s of commercial real estate , we recognized in-place lease intangible assets and favorable lease intangible assets associated with certain noncancelable operating leases of the acquired properties. The weighted-average amortization periods for the in-place lease intangible as sets and the favorable lease intangible assets for the Ireland Portfolio at acquisition were 10.0 years and 11.2 years , respectively , as of September 30, 2015. The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of September 30, 2015 and December 31, 2014 ( amounts in thousands): As of September 30, 2015 As of December 31, 2014 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ $ — $ $ $ — $ European servicing rights (1) In-place lease intangible assets — — — Favorable lease intangible assets — — — Total net intangible assets $ $ $ $ $ $ (1) The fair value as of September 30, 2015 and December 31, 2014 was $7.7 million and $12.7 million, respectively. The following table summarizes the activity within intangible assets for the nine months ended September 30, 2015 (amounts in thousands): Domestic European In-place Lease Favorable Lease Servicing Servicing Intangible Intangible Rights Rights Assets Assets Total Balance as of January 1, 2015 $ $ $ — $ — $ Acquisition of Ireland Portfolio — — Properties acquired from CMBS trusts — — Amortization — Foreign exchange (loss) gain — Changes in fair value due to changes in inputs and assumptions — — — Balance as of September 30, 2015 $ $ $ $ $ The following table sets forth the estimated aggregate amortization of our European servicing rights, in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter ( amounts in thousands): 2015 (remainder of) $ 2016 2017 2018 2019 Thereafter Total $ |
Secured Financing Agreements
Secured Financing Agreements | 9 Months Ended |
Sep. 30, 2015 | |
Secured financing agreements | |
Secured Financing Agreements | |
Secured Financing Agreements | 9. Secured Financing Agreements The following table is a summary of our secured financing agreements in place as of September 30, 2015 and December 31, 2014 (dollars in thousands): Pledged Asset Maximum Carrying Value at Current Extended Carrying Facility September 30, December 31, Maturity Maturity(a) Pricing Value Size 2015 2014 Lender 1 Repo 1 (b) (b) LIBOR + 1.85% to 5.25% $ $ $ $ Lender 1 Repo 2 (c) N/A LIBOR + 1.90% Lender 2 Repo 1 Oct 2015 Oct 2018 LIBOR + 1.75% to 2.75% Lender 3 Repo 1 May 2017 May 2019 LIBOR + 2.85% Conduit Repo 1 Sep 2016 N/A LIBOR + 1.95% to 3.35% Conduit Repo 2 Nov 2015 Nov 2016 LIBOR + 2.10% Conduit Repo 3 Feb 2018 Feb 2019 LIBOR + 2.10% — Lender 4 Repo 1 Oct 2016 Oct 2017 LIBOR + 2.00% Lender 5 Repo 1 (d) N/A N/A — — — Lender 6 Repo 1 Aug 2018 N/A LIBOR + 2.50% to 3.00% Lender 6 Mortgage May 2020 N/A EURIBOR + 1.69% — Lender 7 Repo 1 Dec 2016 N/A LIBOR + 2.35% to 2.70% Investing and Servicing Segment Property Mortgages June 2018 to Nov 2024 N/A Various Lender 9 Repo 1 (e) (e) LIBOR + 1.40% to 1.85% — Borrowing Base Jul 2018 Jul 2019 LIBOR + 2.75% (f) (g) — Term Loan Apr 2020 N/A LIBOR + 2.75% (f) (h) (h) FHLB Advances N/A N/A Various — — — $ $ $ $ (a) Subject to certain conditions as defined in the respective facility agreement. (b) Maturity date for borrowings collateralized by loans of January 2017 before extension options and January 2019 assuming initial extension options. Borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions and not to exceed January 2023. (c) The date that is 180 days after the buyer delivers notice to seller, subject to a maximum date of March 2017. (d) Facility was terminated at our option in March 2015. (e) Facility carries a rolling twelve month term which may reset monthly with the lender’s consent. Current maturity is September 2016. Facility carries no maximum facility size. Amount herein reflects the outstanding balance as of September 30, 2015. (f) Subject to borrower ’s option to choose alternative benchmark based rates pursuant to the terms of the credit agreement. The Term Loan is also subject to a 75 basis point floor. (g) Subject to certain conditions defined in the facility agreement, the maximum facility size may be increased to $650.0 million. (h) Term loan outstanding balance is net of $1.8 million and $2.1 million of unamortized discount as of September 30, 2015 and December 31, 2014 , respectively . In the normal course of business, the Company is in discussions with its lenders to extend or amend any financing facilities which contain near term expirations. In February 2015, we executed a $150.0 million repurchase facility (“Conduit Repo 3”) with an existing lender for our Investing and Servicing Segment’s conduit platform. The facility carries a three year initial term with a one year extension option and an annual interest rate of LIBOR + 2.10% . In March 2015, we executed a repurchase facility (“Lender 9 Repo 1”) with a new lender to finance certain CMBS holdings, including CMBS holdings previously financed under the Lender 5 Repo 1 facility which was terminated at our option in March 2015. There is no maximum facility size specified under the facility as the lender will evaluate all eligible collateral on an individual basis. The facility carries a rolling twelve month term which may reset monthly with the lender’s consent and an annual interest rate of LIBOR +1.40% to LIBOR +1.85% depending on the CMBS collateral. In April 2015, we amended the Lender 4 Repo 1 facility to reduce pricing. In May 2015, we executed a €294.0 million mortgage facility (“Lender 6 Mortgage”) to finance the acquisition of the Ireland Portfolio , of which €73.5 million was drawn during the three months ended September 30, 2015 . The facility carries a five year term, an annual interest rate of EURIBOR + 1.69% and was fully funded as of September 30, 2015. Refer to Note 3 for further discussion of this acquisition. During the nine months ended September 30, 2015, we incurred deferred financing costs of $5.7 million associated with this facility. In July 2015, we exercised a one -year extension option on the Lender 6 Repo 1 facility , extending the maturity from August 2017 to August 2018. In July 2015, we amended the Borrowing Base facility to (i) permanently upsize available borrowings from $250.0 million to $450.0 million; (ii) extend the maturity date to July 2019 assuming exercise of a one -year extension option; and (iii) reduce pricing. In July 2015, we exercised a one -year extension option on the Lender 4 Repo 1 facility , extending the maturity from October 2015 to October 2016. In August 2015, we amended the Lender 1 Repo 1 facility to upsize available borrowings from $1.25 billion to $1.6 billion. During the nine months ended September 30, 2015, we executed two mortgage facilities with aggregate borrowings of $17.8 million to finance commercial real estate acquired by our Investing and Servicing Segment. At inception, these facilities carry a weighted average term of 4.2 years and weighted average interest rate of LIBOR + 2.41% . In September 2015, we were admitted as a member of the Federal Home Loan Bank (“FHLB”) of Des Moines, which provides us an additional financing source for various multifamily and commercial real estate loans and investment securities. As of September 30, 2015, we had no outstanding borrowings with the FHLB. Our secured financing agreements contain certain financial tests and covenants. Should we breach certain of these covenants, it may restrict our ability to pay dividends in the future. As of September 30, 2015, we were in compliance with all such covenants. The following table sets forth our five-year principal repayments schedule for secured financings, assuming no defaults and excluding loans transferred as secured borrowings. Our credit facilities generally require principal to be paid down prior to the facilities’ respective maturities if and when we receive principal payments on, or sell, the investment collateral that we have pledged. The amount reflected in each period includes principal repayments on our credit facilities that would be required if (i) we received the repayments that we expect to receive on the investments that have been pledged as collateral under the credit facilities, as applicable, and (ii) the credit facilities that are expected to have amounts outstanding at their current maturity dates are extended where extension options are available to us (amounts in thousands): Repurchase Other Secured Agreements Financing Total 2015 (remainder of) $ $ $ 2016 2017 2018 2019 Thereafter — (1) Total $ $ $ (1) Principal paydown of the Term Loan through 2020 excludes $1.8 million of discount amortization. Secured financing maturities for 2015 primarily relate to $287.3 million on the Conduit Repo facilities . As of September 30, 2015 and December 31, 2014, we had approximately $29.6 million and $26.5 million, respectively, of deferred financing costs from secured financing agreements, net of amortization, which is included in other assets on our condensed consolidated balance sheets. For the three and nine months ended September 30, 2015, approximately $3.8 million and $10.8 million, respectively, of amortization was included in interest expense on our condensed consolidated statements of operations. For the three and nine months ended September 30, 2014, approximately $2.9 million and $8.2 million, respectively, of amortization was included in interest expense on our condensed consolidated statements of operations. As of September 30, 2015 and December 31, 2014, the outstanding balance of our repurchase agreements related to the following asset collateral classes (amounts in thousands): Class of Collateral September 30, 2015 December 31, 2014 Loans held-for-investment $ $ Loans held-for-sale Investment securities $ $ We seek to mitigate risks associated with our repurchase agreements by managing risk related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value. The margin call provisions under the majority of our repurchase facilities, consisting of 76% of these agreements, do not permit valuation adjustments based on capital markets activity. Instead, margin calls on these facilities are limited to collateral-specific credit marks. To monitor credit risk associated with the performance and value of our loans and investments, our asset management team regularly reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. For repurchase agreements containing margin call provisions for general capital markets activity, approximately half of these pertain to our loans held-for-sale, for which we manage credit risk through the purchase of credit index instruments. We further seek to manage risks associated with our repurchase agreements by matching the maturities and interest rate characteristics of our loans with the related repurchase agreements. |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2015 | |
Convertible Senior Notes | |
Convertible Senior Notes | |
Convertible Senior Notes | 10. Convertible Senior Notes On October 8, 2014, we issued $431.3 million of 3.75% Convertible Senior Notes due 2017 (the “2017 Notes”). On February 15, 2013, we issued $600.0 million of 4.55% Convertible Senior Notes due 2018 (the “2018 Notes”). On July 3, 2013, we issued $460.0 million of 4.00% Convertible Senior Notes due 2019 (the “2019 Notes”). The following summarizes the unsecured convertible senior notes (collectively, the “Convertible Notes”) outstanding as of September 30, 2015 (amounts in thousands, except rates): Remaining Principal Coupon Effective Conversion Maturity Period of Amount Rate Rate(1) Rate(2) Date Amortization 2017 Notes $ % % 10/15/2017 years 2018 Notes $ % % 3/1/2018 years 2019 Notes $ % % 1/15/2019 years As of As of September 30, 2015 December 31, 2014 Total principal $ $ Net unamortized discount Carrying amount of debt components $ $ Carrying amount of conversion option equity components recorded in additional paid-in capital $ $ (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option, the value of which reduced the initial liability and was recorded in additional paid-in-capital. (2) The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of Convertible Notes converted, as adjusted in accordance with the applicable indentures as a result of the spin-off of the SFR segment and cash dividend payments. The if-conver ted values of the 2017 Notes, 2018 Notes and 2019 Notes were less than their principal amounts by $61.9 million , $35.0 million, and $0.3 million at September 30, 2015, respectively, since the closing market price of the Company’s common stock of $20.52 per share was less than the implicit conversion prices of $23.96 , $21.79 , and $20.54 , respectively. The Company has asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. As a result, conversion of this principal amount, totaling 62.2 million shares, was not included in the computation of diluted earnings per share (“EPS”). No dilution related to the 2017 Notes, 2018 Notes or 2019 Notes was included in the computation of diluted EPS for the three and nine months ended September 30, 2015 as these notes were not “in-the-money”. See further discussion at Note 17 . Under the repurchase program approved by our board of directors (refer to Note 16), we repurchased $118.6 million aggregate principal amount of our 2019 Notes during the nine months ended September 30, 2015 for $136.3 million plus transaction expenses of $ 0.1 million . The repurchase price was allocated between the fair value of the liability component and the fair value of the equity component of the convertible security. The portion of the repurchase price attributable to the equity component totaled $17.7 million and was recognized as a reduction of additional paid-in capital during the nine months ended September 30, 2015. The remaining repurchase price was attributable to the liability component. The difference between this amount and the net carrying amount of the liability and debt issuance costs was reflected as a loss on extinguishment of debt in our condensed consolidated statement of operations. For the nine months ended September 30, 2015, the loss on extinguishment of debt totaled $5.9 million , consisting principally of the write-off of unamortized debt discount. There were no repurchases of our outstanding Convertible Notes during the three months ended September 30, 2015. As of September 30, 2015 and December 31, 2014, we had approximately $1.6 million and $2.3 million, respectively, of deferred financing costs from our Convertible Senior Notes, net of amortization, which is included in other assets on our condensed consolidated balance sheets. Conditions for Conversion Prior to April 15, 2017 for the 2017 Notes, September 1, 2017 for the 2018 Notes and July 15, 2018 for the 2019 Notes, the Convertible Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company’s common stock is at least 110% for the 2017 Notes or 130% for the 2018 Notes and 2019 Notes of the conversion price of the respective Convertible Notes for at least 20 out of 30 trading days prior to the end of the preceding fiscal quarter, (2) the trading price of the Convertible Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company’s common stock during any five consecutive trading day period, (3) the Company issues certain equity instruments at less than the 10 -day average closing market price of its common stock or the per-share value of certain distributions exceeds the market price of the Company’s common stock by more than 10% or (4) other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur. On or after April 15, 2017 for the 2017 Notes, September 1, 2017 for the 2018 Notes and July 15, 2018 for the 2019 Notes, holders may convert each of their notes at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. |
Loan Securitization_Sale Activi
Loan Securitization/Sale Activities | 9 Months Ended |
Sep. 30, 2015 | |
Loan Securitization/Sale Activities | |
Loan Securitization/Sale Activities | 11. Loan Securitization/Sale Activities As described below, we regularly sell loans and notes under various strategies. We evaluate such sales as to whether they meet the criteria for treatment as a sale—legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint, and transfer of control. Within the Investing and Servicing Segment, we originate commercial mortgage loans with the intent to sell these mortgage loans to VIEs for the purposes of securitization. These VIEs then issue CMBS that are collateralized in part by these assets, as well as other assets transferred to the VIE. In certain instances, we retain a subordinated interest in the VIE and serve as special servicer for the VIE. The following summarizes the fair value and par value of loans sold from our conduit platform, as well as the amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with these loans for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Fair value of loans sold $ $ $ $ Par value of loans sold Repayment of repurchase agreements Within the Lending Segment, we originate or acquire loans and then subsequently sell a portion, which can be in various forms including first mortgages, A-Notes, senior participations and mezzanine loans. Typically, our motivation for entering into these transactions is to effectively create leverage on the subordinated position that we will retain and hold for investment. In certain instances, we continue to service the loan following its sale. The following table summarizes our loans sold and loans transferred as secured borrowings by the Lending Segment net of expenses ( amounts in thousands): Loan Transfers Loan Transfers Accounted Accounted for as Secured for as Sales Borrowings Face Amount Proceeds Face Amount Proceeds For the Three Months Ended September 30, 2015 $ $ $ — $ — 2014 — — For the Nine Months Ended September 30, 2015 $ $ $ $ 2014 — — During the three months ended September 30, 2015 and 2014, the Lending Segment recognized gains on sales of loans of $2.7 million and $0.8 million, respectively, within gain on sale of investments in our condensed consolidated statements of operations. During the nine months ended September 30, 2015 and 2014, the Lending Segment recognized gains on sales of loans of $3.0 million and $1.3 million, respectively. |
Derivatives and Hedging Activit
Derivatives and Hedging Activity | 9 Months Ended |
Sep. 30, 2015 | |
Derivatives and Hedging Activity | |
Derivatives and Hedging Activity | 12. Derivatives and Hedging Activity Risk Management Objective of Using Derivatives We are exposed to certain risks arising from both our business operations and economic conditions. Refer to Note 12 to the consolidated financial statements included in our Form 10-K for further discussion of our risk management objectives and policies. Designated Hedges Our objective in using interest rate derivatives is to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In connection with our repurchase agreements, we have entered into eight outstanding interest rate swaps that have been designated as cash flow hedges of the interest rate risk associated with forecasted interest payments. As of September 30, 2015, the aggregate notional amount of our interest rate swaps designated as cash flow hedges of interest rate risk totaled $87.5 million. Under these agreements, we will pay fixed monthly coupons at fixed rates ranging from 0.56% to 2.23% of the notional amount to the counterparty and receive floating rate LIBOR . Our interest rate swaps designated as cash flow hedges of interest rate risk have maturities ranging from November 2015 to May 2021 . The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in AOCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2015 and 2014 we did not recognize any hedge ineffectiveness in earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the associated variable-rate debt. Over the next twelve months, we estimate that an additional $0.4 million will be reclassified as an increase to interest expense. We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of 68 months. Non-designated Hedges Derivatives not designated as hedges are derivatives that do not meet the criteria for hedge accounting under GAAP or which we have not elected to designate as hedges. We do not use these derivatives for speculative purposes but instead they are used to manage our exposure to foreign exchange rates, interest rate changes, and certain credit spreads. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in gain (loss) on derivative financial instruments in our condensed consolidated statements of operations. We have entered into a series of forward contracts whereby we agreed to sell an amount of foreign currency for an agreed upon amount of USD at various dates through June 2020 . These forward contracts were executed to economically fix the USD amounts of foreign denominated cash flows expected to be received by us related to foreign denominated investments. The following table summarizes our foreign exchange (“Fx”) forwards, interest rate swaps, interest rate caps and credit index instruments as of September 30, 2015 (notional amounts in thousands): Aggregate Number Notional Notional Type of Derivative of Contracts Amount Currency Maturity Fx contracts – Sell Euros ("EUR") (1) EUR October 2015 – June 2020 Fx contracts – Sell Pounds Sterling ("GBP") GBP October 2015 – March 2018 Fx contracts – Sell Swedish Krona ("SEK") SEK December 2015 Fx contracts – Buy SEK SEK December 2015 Fx contracts – Sell Norwegian Krone ("NOK") NOK December 2015 Fx contracts – Sell Danish Krone ("DKK") DKK December 2015 Interest rate swaps – Paying fixed rates USD July 2016 – October 2025 Interest rate swaps – Receiving fixed rates USD October 2015 – September 2025 Interest rate caps EUR May 2020 Interest rate caps USD June 2018 Credit index instruments USD January 2047 Total (1) Includes 59 Fx contracts executed to hedge our Euro currency exposure created by our acquisition of the Ireland Portfolio. As of September 30, 2015, these contracts have an aggregate notional of €259.7 million and varying maturities through June 2020 . The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014 (amounts in thousands): Fair Value of Derivatives in an Fair Value of Derivatives in a Asset Position(1) As of Liability Position(2) As of September 30, 2015 December 31, 2014 September 30, 2015 December 31, 2014 Derivatives designated as hedging instruments: Interest rate swaps $ $ $ $ Total derivatives designated as hedging instruments Derivatives not designated as hedging instruments: Interest rate swaps and caps Foreign exchange contracts Credit index instruments — Total derivatives not designated as hedging instruments Total derivatives $ $ $ $ (1) Classified as derivative assets in our condensed consolidated balance sheets. (2) Classified as derivative liabilities in our condensed consolidated balance sheets. The tables below present the effect of our derivative financial instruments on the condensed consolidated statements of operations and of comprehensive income for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands): Gain (Loss) Gain (Loss) Reclassified Gain (Loss) Derivatives Designated as Recognized from AOCI Recognized Hedging Instruments in OCI into Income in Income Location of Gain (Loss) For the Three Months Ended September 30, (effective portion) (effective portion) (ineffective portion) Recognized in Income 2015 $ $ $ — Interest expense 2014 $ $ $ — Interest expense For the Nine Months Ended September 30, 2015 $ $ $ — Interest expense 2014 $ $ $ — Interest expense Amount of Gain (Loss) Amount of Gain (Loss) Recognized in Income for the Recognized in Income for the Derivatives Not Designated Location of Gain (Loss) Three Months Ended September 30, Nine Months Ended September 30, as Hedging Instruments Recognized in Income 2015 2014 2015 2014 Interest rate swaps and caps Gain on derivative financial instruments $ $ $ $ Foreign exchange contracts Gain on derivative financial instruments Credit index instruments Gain on derivative financial instruments $ $ $ $ |
Offsetting Assets and Liabiliti
Offsetting Assets and Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Offsetting Assets and Liabilities | |
Offsetting Assets and Liabilities | 13. Offsetting Assets and Liabilities The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet—Offsetting , which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands): (iv) Gross Amounts Not Offset in the Statement (ii) (iii) = (i) - (ii) of Financial Position Gross Amounts Net Amounts Cash (i) Offset in the Presented in Collateral Gross Amounts Statement of the Statement of Financial Received / (v) = (iii) - (iv) Recognized Financial Position Financial Position Instruments Pledged Net Amount As of September 30, 2015 Derivative assets $ $ — $ $ $ — $ Derivative liabilities $ $ — $ $ $ $ — Repurchase agreements — — — $ $ — $ $ $ $ — As of December 31, 2014 Derivative assets $ $ — $ $ $ — $ Derivative liabilities $ $ — $ $ $ $ — Repurchase agreements — — — $ $ — $ $ $ $ — |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2015 | |
Variable Interest Entities | |
Variable Interest Entities | 14. Variable Interest Entities Investment Securities As discussed in Note 2, we evaluate all of our investments and other interests in entities for consolidation, including our investments in CMBS and our retained interests in securitization transactions we initiated, all of which are generally considered to be variable interests in VIEs. The VIEs consolidated in accordance with ASC 810 are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. The assets and other instruments held by these securitization entities are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the securitization entities do not have any recourse to the general credit of any other consolidated entities, nor to us as the primary beneficiary. The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation. VIEs in which we are the Primary Beneficiary The inclusion of the assets and liabilities of VIEs in which we are deemed the primary beneficiary has no economic effect on us. Our exposure to the obligations of VIEs is generally limited to our investment in these entities. We are not obligated to provide, nor have we provided, any financial support for any of these consolidated structures. VIEs in which we are not the Primary Beneficiary In certain instances, we hold a variable interest in a VIE in the form of CMBS, but either (i) we are not appointed, or do not serve as, special servicer or (ii) an unrelated third party has the rights to unilaterally remove us as special servicer. In these instances, we do not have the power to direct activities that most significantly impact the VIE’s economic performance. In other cases, the variable interest we hold does not obligate us to absorb losses or provide us with the right to receive benefits from the VIE which could potentially be significant. For these structures, we are not deemed to be the primary beneficiary of the VIE, and we do not consolidate these VIEs. As of September 30, 2015, one of our CDO structures was in default, which pursuant to the underlying indentures, changes the rights of the variable interest holders. Upon default of a CDO, the trustee or senior note holders are allowed to exercise certain rights, including liquidation of the collateral, which at that time, is the activity which would most significantly impact the CDO’s economic performance. Further, when the CDO is in default, the collateral administrator no longer has the option to purchase securities from the CDO. In cases where the CDO is in default and we do not have the ability to exercise rights which would most significantly impact the CDO’s economic performance, we do not consolidate the VIE. As of September 30, 2015, this CDO structure was not consolidated. During the three months ended March 31, 2014, one of our CDOs, which was previously in default as of December 31, 2013, ceased to be in default. This event triggered the initial consolidation of the CDO and its underlying assets during the three months ended March 31, 2014. As noted above, we are not obligated to provide, nor have we provided, any financial support for any of our securitization VIEs, whether or not we are deemed to be the primary beneficiary. As such, the risk associated with our involvement in these VIEs is limited to the carrying value of our investment in the entity. As of September 30, 2015, our maximum risk of loss related to VIEs in which we were not the primary beneficiary was $222.4 million on a fair value basis. As of September 30, 2015, the securitization VIEs which we do not consolidate had debt obligations to beneficial interest holders with unpaid principal balances of $40.5 billion . The corresponding assets are comprised primarily of commercial mortgage loans with unpaid principal balances corresponding to the amounts of the outstanding debt obligations. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related-Party Transactions | |
Related-Party Transactions | 15. Related-Party Transaction s Management Agreement We are party to a management agreement (the “Management Agreement”) with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager’s personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks, provided that such costs and reimbursements are in amounts no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis. Refer to Note 15 to the consolidated financial statements included in our Form 10-K for further discussion of this agreement. Base Management Fee. For the three months ended September 30, 2015 and 2014, we recognized base management fees of $15.2 million and $13.8 million, respectively, within management fees in our condensed consolidated statements of operations . For the nine months ended September 30, 2015 and 2014, we recognized base management fees of $44.0 million and $40.7 million, respectively. As of September 30, 2015 and December 31, 2014, there were $15.2 million and $13.9 million, respectively, of unpaid base management fees within related-party payable in our condensed consolidated balance sheets. Incentive Fee. For the three months ended September 30, 2015 and 2014, we recognized incentive fees of $5.3 million and $4.3 million, respectively, within management fees in our condensed consolidated statements of operations . For the nine months ended September 30, 2015 and 2014, we recognized incentive fees of $16.1 million and $15.5 million, respectively. As of September 30, 2015 and December 31, 2014, $5.4 million and $18.9 million, respectively, of unpaid incentive fees were included within related-party payable in our condensed consolidated balance sheets. Expense Reimbursement. For both the three months ended September 30, 2015 and 2014, we recognized expense reimbursements for executive compensation and other reimbursable expenses of $1.7 million within general and administrative expenses in our condensed consolidated statements of operations . For the nine months ended September 30, 2015 and 2014, we recognized expense reimbursements for executive compensation and other reimbursable expenses of $4.6 million and $5.7 million, respectively. As of September 30, 2015 and December 31, 2014, approximately $2.1 million and $3.4 million, respectively, of unpaid reimbursable executive compensation and other expenses were included within related-party payable in our condensed consolidated balance sheets. Manager Equity Plan In May 2015, we granted 675,000 RSUs to our Manager under the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In January 2014, we granted 2,489,281 RSUs to our Manager under the Manager Equity Plan. In connection with these grants and prior similar grants, we recognized share-based compensation expense of $ 7.1 million and $6.3 million within management fees in our condensed consolidated statements of operations for the three months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, we recognized $21.4 million and $19.8 million, respectively, related to these awards. Refer to Note 16 herein for further discussion of these grants. Investments in Loans and Securities In March 2015, we purchased a subordinate single-borrower CMBS from a third party for $58.6 million which is secured by 85 U.S. hotel properties. The borrower is an affiliate of Starwood Distressed Opportunity Fund IX (“Fund IX”) , an affiliate of our Manager. In March 2015, we sold our entire interest, consisting of a $35 million participation, in a subordinate loan (the “Mammoth Loan”) at par to Mammoth Mezz Holdings, LLC, an affiliate of our Manager. We purchased the Mammoth Loan in April 2011 from an independent third party and a syndicate of financial institutions and other entities acting as subordinate lenders to Mammoth Mountain Ski Area, LLC (“Mammoth”). Mammoth is a single purpose, bankruptcy remote entity that is owned and controlled by Starwood Global Opportunity Fund VII ‑A, L.P., Starwood Global Opportunity Fund VII ‑B, L.P., Starwood U.S. Opportunity Fund VII ‑D, L.P. and Starwood U.S. Opportunity Fund VII ‑D ‑2, L.P. (collectively, the “Sponsors”). Each of the Sponsors is indirectly wholly ‑owned by Starwood Capital Group Global I, LLC and an affiliate of our Chief Executive Officer. In January 2015, a junior mezzanine loan, which we co-originated with SEREF and an unaffiliated third party in 2012, was restructured to reduce both our and SEREF’s participation interests and margin. We now hold a participation interest in the junior mezzanine loan of £18 million, which bears interest at three-month LIBOR plus 8.81% . Prior to the restructure, our participation interest was £30.0 million and carried an interest rate of three-month LIBOR plus 11.65% . The junior mezzanine loan is secured primarily by the ownership interest in entities that own a portfolio of three luxury hotels located in London, England. Other Related-Party Arrangements In connection with the LNR acquisition, we were required to cash collateralize certain obligations of LNR, including letters of credit and performance obligations. Fund IX funded $6.2 million of thi s obligation, but the account was within our name and was thus reflected within our restricted cash balance. As of December 31, 2014, we recognized a corresponding payable to Fund IX of $4.4 million within related-party payable in our condensed consolidated balance sheet. Our obligation was released in September 2015. Our Investing and Servicing Segment acquires properties from CMBS trusts , some of which are consolidated as VIEs on our balance sheet. Acquisitions from consolidated VIEs are reflected as repayment of debt of consolidated VIEs in our condensed consolidated statement of cash flows. During the three and nine months ended September 30, 2015, we acquired in aggregate $32.5 million and $65.9 million, respectively, of properties from both consolidated and unconsolidated CMBS trusts. Refer to Note 6 for further discussion of these acquisitions. During the three and nine months ended September 30, 2015, we provided due diligence services to an affiliate of Starwood Global Opportunity Fund X, an affiliate of our Manager, in which we received fees of $0.1 million and $0.4 million, respectively. In the normal course of business, the Investing and Servicing Segment’s conduit lending platform provides loans to consolidated subsidiaries of the Company which are subsequently securitized and sold to third parties. The loan, debt and applicable interest income and expense are eliminated in consolidation until such time as the loan is sold. During the three months ended September 30, 2015, our conduit lending platform originated a $10.4 million intercompany loan which was eliminated in consolidation as of September 30, 2015. Refer to Note 15 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity | |
Stockholders' Equity | 16. Stockholders’ Equity During the nine months ended September 30, 2015, our board of directors declared the following dividends: Declare Date Record Date Ex-Dividend Date Payment Date Amount Frequency 8/4/15 9/30/15 9/28/15 10/15/15 $ Quarterly 5/5/15 6/30/15 6/26/15 7/15/15 $ Quarterly 2/25/15 3/31/15 3/27/15 4/15/15 $ Quarterly On April 20, 2015, we issued 12.0 million shares of common stock for gross proceeds of $283.6 million. In connection with the offering, the underwriters had a 30 -day option to purchase an additional 1.8 million shares of common stock, which they exercised in full, resulting in additional gross proceeds of $42.5 million. During the nine months ended September 30, 2015, there were no shares issued under our At-The-Market Equity Offering Sales Agreement (the “ATM Agreement”). During the nine months ended September 30, 2015, shares issued under the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) were not material . In September 2014, our board of directors authorized and announced the repurchase of up to $250 million of our outstanding common stock over a period of one year. In December 2014, our board of directors amended the repurchase program to include the repurchase of our outstanding Convertible Notes. In June 2015, our board of directors amended the repurchase program to increase the authorized purchase amount to $450 million and provide for a one -year extension through June 2016. There were no repurchases of our outstanding Convertible Notes during the three months ended September 30, 2015. During the nine months ended September 30, 2015, we repurchased $118.6 million aggregate principal amount of our 2019 Notes for $136.3 million (refer to Note 10 ). Also during the three and nine months ended September 30, 2015 we repurchased 1,393,223 share s and 1,793,223 shares of common stock for $29.1 million and $ 37.9 million, respectively, under the repurchase program. As of September 30, 2015, we have $262.6 million of remaining capacity to repurchase common stock or Convertible Notes under the repurchase program. Equity Incentive Plans The Company currently maintains the Manager Equity Plan, the Starwood Property Trust, Inc. Equity Plan (the “Equity Plan”), and the Starwood Property Trust, Inc. Non-Executive Director Stock Plan (“Non-Executive Director Stock Plan”). Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further information regarding these plans. The table below summarizes our share awards granted under the Manager Equity Plan that were not fully vested as of September 30, 2015 (dollar amounts in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period May 2015 RSU $ 3 years January 2014 (1) RSU 3 years January 2014 RSU 3 years October 2012 RSU 3 years (1) As part of the spin-off of our SFR segment, all holders of the Company’s common stock and vested restricted common stock received one SWAY common share for every five shares of the Company’s common stock. At the time of the spin-off, the Manager held certain unvested RSUs that were not entitled to SWAY shares. Under the legal documentation governing the outstanding RSUs, the Manager was entitled to receive additional RSUs in an amount equal to the number of such outstanding RSUs times the amount received in the spin-off by a holder of a share of the Company’s common stock (i.e., the price per share of a SWAY common share divided by five) divided by the fair market value of a share of the Company’s common stock on the date of the spin-off. In order to prevent dilution of the rights of our equity plan participants resulting from this make-whole issuance, the Equity Plan and Manager Equity Plan provide for, and, on August 12, 2014, our board of directors authorized, an increase of 489,281 shares to the maximum number of shares available for issuance under the Equity Plan and Manager Equity Plan. During the three and nine months ended September 30, 2015, we granted 30,608 and 533,267 RSAs , respectively, under the Equity Plan to a select group of eligible participants which includes our employees and employees of our Manager who perform services for us. The awards were granted based on the market price of the Company’s common stock on the respective grant date and vest ratably over a three-year period. Expenses related to the vesting of these awards is reflected in general and administrative expenses in our condensed consolidated statements of operations. As of September 30, 2015, there were 2.7 million shares available for future grants under the Manager Equity Plan, the Equity Plan and the Non-Executive Director Stock Plan. Schedule of Non-Vested Shares and Share Equivalents Weighted Average Non-Executive Grant Date Director Manager Fair Value Stock Plan Equity Plan Equity Plan Total (per share) Balance as of January 1, 2015 $ Granted — Vested Forfeited — — Balance as of September 30, 2015 |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings per Share | |
Earnings per Share | 17. Earnings per Share The following table provides a reconciliation of net income from continuing operations and the number of shares of common stock used in the computations of basic EPS and diluted EPS ( amounts in thousands, except per share amounts): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Basic Earnings Continuing Operations: Income from continuing operations attributable to STWD common shareholders $ $ $ $ Less: Income attributable to unvested shares Basic — Income from continuing operations $ $ $ $ Discontinued Operations: Loss from discontinued operations $ — $ — $ — $ Basic — Net income attributable to STWD common shareholders after allocation to participating securities $ $ $ $ Diluted Earnings Continuing Operations: Basic — Income from continuing operations attributable to STWD common shareholders $ $ $ $ Less: Income attributable to unvested shares Add: Undistributed earnings to unvested shares Less: Undistributed earnings reallocated to unvested shares Diluted — Income from continuing operations $ $ $ $ Discontinued Operations: Basic — Loss from discontinued operations $ — $ — $ — $ Diluted — Net income attributable to STWD common shareholders after allocation to participating securities $ $ $ $ Number of Shares: Basic — Average shares outstanding Effect of dilutive securities — Convertible Notes — — Effect of dilutive securities — Contingently issuable shares Diluted — Average shares outstanding Earnings Per Share Attributable to STWD Common Stockholders: Basic: Income from continuing operations $ $ $ $ Loss from discontinued operations — — — Net income $ $ $ $ Diluted: Income from continuing operations $ $ $ $ Loss from discontinued operations — — — Net income $ $ $ $ Earnings per share for the nine months ended September 30, 2015 and 2014 may not equal the sum of each quarter’s earnings per share due to rounding and other computational factors. As of September 30, 2015 and 2014, unvested restricted shares of 2.2 million and 2.3 million, respectively, were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-class method used above. Also as of September 30, 2015, ther e were 62.2 million potential shares of common stock contingently issuable upon the conversion of the Convertible Notes. The Company has asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. As a result, this principal amount, representing 62.2 million shares at September 30, 2015, was not included in the computation of diluted EPS. A s discussed in Note 10, the conversion options ass ociated with the 2017 Notes, 2018 Notes and 2019 Notes are “out-of-the-money” because the if-converted values of those notes were less than their principal amounts by $61.9 million, $35.0 million and $0.3 million , respectively, at September 30, 2015. Therefore, there was no dilutive effect to EPS for the 2017 Notes, 2018 Notes and 2019 Notes during the three and nine months ended September 30, 2015. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income | |
Accumulated Other Comprehensive Income | 18. Accumulated Other Comprehensive Income The changes in AOCI by component are as follows ( amounts in thousands): Cumulative Unrealized Gain Effective Portion of (Loss) on Foreign Cumulative Loss on Available-for- Currency Cash Flow Hedges Sale Securities Translation Total Three Months Ended September 30, 2015 Balance at July 1, 2015 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — Net period OCI Balance at September 30, 2015 $ $ $ $ Three Months Ended September 30, 2014 Balance at July 1, 2014 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — Net period OCI Balance at September 30, 2014 $ $ $ $ Nine Months Ended September 30, 2015 Balance at January 1, 2015 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI Net period OCI Balance at September 30, 2015 $ $ $ $ Nine Months Ended September 30, 2014 Balance at January 1, 2014 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — Net period OCI Balance at September 30, 2014 $ $ $ $ The reclassifications out of AOCI impacted the condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 as follows ( amounts in thousands): Amounts Reclassified from Amounts Reclassified from AOCI during the Three Months AOCI during the Nine Months Affected Line Item Ended September 30, Ended September 30, in the Statements Details about AOCI Components 2015 2014 2015 2014 of Operations Losses on cash flow hedges: Interest rate contracts $ $ $ $ Interest expense Unrealized gains (losses) on available-for-sale securities: Interest realized upon collection — — — Interest income from investment securities Net realized gain on sale of investments — — Gain on sale of investments and other assets, net OTTI — — — OTTI Total — Foreign currency translation: Foreign currency loss from CMBS redemption — — Foreign currency loss, net Total reclassifications for the period $ $ $ $ |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value | |
Fair Value | 19. Fair Value GAAP establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below: Level I —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level II —Inputs (other than quoted prices included in Level I) 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 III —Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation Process We have valuation control processes in place to validate the fair value of the Company’s financial assets and liabilities measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. Refer to Note 20 to the consolidated financial statements included in our Form 10-K for further discussion of our valuation process. We determine the fair value of our assets and liabilities measured at fair value on a recurring and nonrecurring basis in accordance with the methodology described in our Form 10-K. The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the condensed consolidated balance sheets by their level in the fair value hierarchy as of September 30, 2015 and December 31, 2014 (amounts in thousands): September 30, 2015 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ $ — $ — $ RMBS — — CMBS — — Equity security — — Domestic servicing rights — Derivative assets — — VIE assets — — Total $ $ $ $ Financial Liabilities: Derivative liabilities $ $ — $ $ — VIE liabilities — Total $ $ — $ $ December 31, 2014 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ $ — $ — $ RMBS — — CMBS — — Equity security — — Domestic servicing rights — — Derivative assets — — VIE assets — — Total $ $ $ $ Financial Liabilities: Derivative liabilities $ $ — $ $ — VIE liabilities — Total $ $ — $ $ The changes in financial assets and liabilities classified as Level III were as follows for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands): Domestic Loans Servicing VIE Three Months Ended September 30, 2015 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2015 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — OTTI — — — — — — — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidations of VIEs — — — — Deconsolidations of VIEs — — — September 30, 2015 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2015 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Three Months Ended September 30, 2014 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2014 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — Transfers out of Level III — — — — — Consolidations of VIEs — — — — Deconsolidations of VIEs — — — September 30, 2014 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2014 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Nine Months Ended September 30, 2015 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2015 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — OTTI — — — — — — — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidations of VIEs — — — Deconsolidations of VIEs — — — September 30, 2015 balance $ $ $ $ $ $ $ Amount of total gains (losses) included in earnings attributable to assets still held at September 30, 2015 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Nine Months Ended September 30, 2014 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2014 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale OTTI — — — — — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — Transfers out of Level III — — Consolidations of VIEs — — — Deconsolidations of VIEs — — — September 30, 2014 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2014 $ $ $ $ $ $ $ Amounts were transferred from Level II to Level III due to a decrease in the observable relevant market activity and amounts were transferred from Level III to Level II due to an increase in the observable relevant market activity. The following table presents the fair values (all Level III) of our financial instruments not carried at fair value on the consolidated balance sheets (amounts in thousands): September 30, 2015 December 31, 2014 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings $ $ $ $ Securities, held-to-maturity European servicing rights Financial liabilities not carried at fair value: Secured financing agreements and secured borrowings on transferred loans $ $ $ Convertible senior notes The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollar amounts in thousands): Carrying Value at Valuation Unobservable Range as of (1) September 30, 2015 Technique Input September 30, 2015 December 31, 2014 Loans held-for-sale, fair value option $ Discounted cash flow Yield (b) 4.3% - 4.9% 4.2% - 4.9% Duration (c) 5.0 - 10.0 years 5.0 - 10.0 years RMBS Discounted cash flow Constant prepayment rate (a) 2.6% - 14.7% 1.2% - 15.9% Constant default rate (b) 0.9% - 9.1% 1.1% - 8.9% Loss severity (b) 9% - 79% (e) 15% - 80% (e) Delinquency rate (c) 2% - 29% 2% - 43% Servicer advances (a) 28% - 92% 14% - 75% Annual coupon deterioration (b) 0% - 0.5% 0% - 0.6% Putback amount per projected total collateral loss (d) 0% - 11% 0% - 11% CMBS Discounted cash flow Yield (b) 0% - 779.7% 0% - 421.4% Duration (c) 0 - 13.2 years 0 - 11.8 years Domestic servicing rights Discounted cash flow Debt yield (a) 8.25% 8.25% Discount rate (b) 15% 15% Control migration (b) 0% - 80% 0% - 80% VIE assets Discounted cash flow Yield (b) 0% - 907.4% 0% - 925.0% Duration (c) 0 - 18.6 years 0 - 21.0 years VIE liabilities Discounted cash flow Yield (b) 0% - 907.4% 0% - 925.0% Duration (c) 0 - 18.6 years 0 - 21.0 years (1) The ranges of significant unobservable inputs are represented in percentages and years. Sensitivity of the Fair Value to Changes in the Unobservable Inputs (a) Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement. (b) Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement. (c) Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (lower or higher) fair value measurement depending on the structural features of the security in question. (d) Any delay in the putback recovery date leads to a decrease in fair value, for the majority of securities in our RMBS portfolio. (e) 75% and 85% of the portfolio falls within a range of 45% - 80% as of September 30, 2015 and December 31, 2014, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | |
Income Taxes | 20. Income Taxes Certain of our subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit us to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code, and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, we will continue to maintain our qualification as a REIT. Our TRSs engage in various real estate related operations, including special servicing of commercial real estate, originating and securitizing commercial mortgage loans, and investing in entities which engage in real estate related operations. The majority of our TRSs are held within the Investing and Servicing Segment. As of September 30, 2015 and December 31, 2014, approximately $1.1 b illion and $1.0 billion, respectively, of the Investing and Servicing Segment’s assets were owned by TRS entities, including $129.6 million and $88.6 million in cash, respectively. Our TRSs are not consolidated for federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by us with respect to our interest in TRSs. Our income tax provision consisted of the following for the three and nine months ended September 30, 2015 and 2014 ( amounts in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Current Federal $ $ $ $ Foreign State Total current Deferred Federal Foreign State Total deferred Total income tax provision $ $ $ $ Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are presented net by tax jurisdiction and are reported in other assets and other liabilities, respectively. At September 30, 2015 and December 31, 2014 , our U.S. tax jurisdiction was in a net deferred tax asset position , while our European tax jurisdiction was in a net deferred tax liability position. The following table presents each of these tax jurisdictions and the tax effects of temporary differences on their respective net deferred tax assets and liabilities ( amounts in thousands): September 30, 2015 December 31, 2014 U.S. Deferred tax asset, net Reserves and accruals $ $ Domestic intangible assets Investment securities and loans Investment in unconsolidated entities Deferred income Net operating and capital loss carryforwards Valuation allowance Other U.S. temporary differences Europe Deferred tax liability, net European servicing rights Net operating and capital loss carryforwards Valuation allowance Other European temporary differences Net deferred tax assets $ $ Unrecognized tax benefits were not material as of and during the three and nine months ended September 30, 2015. The following table is a reconciliation of our federal income tax determined using our statutory federal tax rate to our reported income tax provision for the three and nine months ended September 30, 2015 and 2014 (dollar amounts in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 Federal statutory tax rate $ % $ % $ % $ % REIT and other non-taxable income % % % % State income taxes % % % % Federal benefit of state tax deduction % % % % Valuation allowance % % % % Other % % % % Effective tax rate $ % $ % $ % $ % |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 21. Commitments and Contingencie s As of September 30, 2015, we had future funding commitments on 55 loans totaling $1.7 billion , of which we expect to fund $1.5 billion . These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios or executions of new leases before advances are made to the borrower. In the ordinary course of business, we may provide various forms of guarantees. In limited instances, specifically involving construction loans, the Company has guaranteed the future funding obligations of certain third party lenders in the event that such third parties fail to fund their proportionate share of the obligation in a timely manner. We are currently unaware of any circumstances which would require us to make payments under any of these guarantees. Management is not aware of any other contractual obligations, legal proceedings, or any other contingent obligations incurred in the normal course of business that would have a material adverse effect on our condensed consolidated financial statements. |
Segment Data
Segment Data | 9 Months Ended |
Sep. 30, 2015 | |
Segment Data | |
Segment Data | 22. Segment Dat a In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating VIEs under ASC 810. The segment information within this note is reported on that basis. Effective January 1, 2015 , we established a separate presentation for corporate overhead , which includes our corporate debt facilities and the associated expenses, management fee expenses and general and administrative expenses not directly allocable to our segments. Also effective January 1, 2015 , we transferred a performing loan with a balance of $25.0 million as of December 31, 2014 from our Investing and Servicing Segment to our Lending Segment. Effective upon our Ireland Portfolio acquisition discussed in Note 3, we established a third business segment, the Property Segment, and transferred our existing equity method investment in four regional shopping malls (the “Retail Fund”) from our Lending Segment to our Property Segment. As of December 31, 2014, the carrying value of the Retail Fund was $129.5 million. We have retrospectively reclassified prior periods to conform to these changes in presentation. The table below presents our results of operations for the three months ended September 30, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Other expense — — — — Total costs and expenses Income (loss) before other income, income taxes and non-controlling interests Other income: Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — Gain (loss) on derivative financial instruments, net — — Foreign currency (loss) gain, net — — Other income, net — — — — Total other (loss) income — Income (loss) before income taxes Income tax provision — — — Net income (loss) Net income attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the three months ended September 30, 2014 by business segment (amounts in thousands): Investing Investing Lending and Servicing and Servicing Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ $ — $ Interest income from investment securities — Servicing fees — Rental income — — — Other revenues — Total revenues — Costs and expenses: Management fees Interest expense — General and administrative Acquisition and investment pursuit costs — — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — Other expense — — — Total costs and expenses Income (loss) before other income, income taxes and non-controlling interests Other income: Change in net assets related to consolidated VIEs — — — — Change in fair value of servicing rights — — Change in fair value of investment securities, net — Change in fair value of mortgage loans held-for-sale, net — — — Earnings from unconsolidated entities — Gain on sale of investments, net — — — Gain on derivative financial instruments, net — — Foreign currency loss, net — — Other income, net — — — Total other income — Income (loss) before income taxes Income tax benefit (provision) — — Net income (loss) Net income attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ — $ The table below presents our results of operations for the nine months ended September 30, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Other expense — — — — Total costs and expenses Income (loss) before other income, income taxes and non-controlling interests Other income: Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — Gain (loss) on derivative financial instruments, net — — Foreign currency (loss) gain, net — — Loss on extinguishment of debt — — — — Other income, net — — — Total other (loss) income Income (loss) before income taxes Income tax provision — — — Net income (loss) Net income attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the nine months ended September 30, 2014 by business segment (amounts in thousands): Investing Single Investing Lending and Servicing Family and Servicing Segment Segment Corporate Residential Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — — Other revenues — — Total revenues — — Costs and expenses: Management fees — Interest expense — — General and administrative — Acquisition and investment pursuit costs — — Costs of rental operations — — — — Depreciation and amortization — — — — Loan loss allowance, net — — — — Other expense — — — Total costs and expenses — Income (loss) before other income, income taxes and non-controlling interests — Other income: Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — — Gain on sale of investments, net — — — — Gain (loss) on derivative financial instruments, net — — — Foreign currency loss, net — — — OTTI — — — Other income, net — — — Total other income — — Income (loss) from continuing operations before income taxes — Income tax provision — — — Income (loss) from continuing operations — Loss from discontinued operations, net of tax — — — — Net income (loss) Net income attributable to non-controlling interests — — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our condensed consolidated balance sheet as of September 30, 2015 b y business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ $ $ — $ $ $ $ Restricted cash — — Loans held-for-investment, net — — — — Loans held-for-sale — — — Loans transferred as secured borrowings — — — — Investment securities — — Properties, net — — — Intangible assets — — Investment in unconsolidated entities — Goodwill — — — — Derivative assets — — Accrued interest receivable — — — Other assets VIE assets, at fair value — — — — — Total Assets $ $ $ $ $ $ $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ $ $ $ $ $ $ Related-party payable — — — Dividends payable — — — — Derivative liabilities — — Secured financing agreements, net — Convertible senior notes, net — — — — Secured borrowings on transferred loans — — — — VIE liabilities, at fair value — — — — — Total Liabilities Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — Additional paid-in capital — Treasury stock — — — — Accumulated other comprehensive income (loss) — — Retained earnings (accumulated deficit) — Total Starwood Property Trust, Inc. Stockholders’ Equity — Non-controlling interests in consolidated subsidiaries — — Total Equity Total Liabilities and Equity $ $ $ $ $ $ $ The table below presents our condensed consolidated balance sheet as of December 31, 2014 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ $ $ — $ $ $ $ Restricted cash — — — Loans held-for-investment, net — — — Loans held-for-sale — — — — Loans transferred as secured borrowings — — — — Investment securities — — Properties, net — — — — Intangible assets — — — Investment in unconsolidated entities — Goodwill — — — — Derivative assets — — — Accrued interest receivable — — — Other assets — VIE assets, at fair value — — — — — Total Assets $ $ $ $ $ $ $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ $ $ — $ $ $ $ Related-party payable — — — Dividends payable — — — — Derivative liabilities — — — Secured financing agreements, net — — Convertible senior notes, net — — — — Secured borrowings on transferred loans — — — — VIE liabilities, at fair value — — — — — Total Liabilities — Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — Additional paid-in capital — Treasury stock — — — — Accumulated other comprehensive income — — — Retained earnings (accumulated deficit) — Total Starwood Property Trust, Inc. Stockholders’ Equity — Non-controlling interests in consolidated subsidiaries — — — Total Equity Total Liabilities and Equity $ $ $ $ $ $ $ |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events | |
Subsequent Events | 23. Subsequent Events Our significant events subsequent to September 30, 2015 were as follows: Affordable Housing Property Acquisitions On October 20, 2015, we acquired seven of the properties comprising the Affordable Housing Portfolio for $143.2 million. These acquisitions were financed in part by newly established property specific debt facilities with an aggregate outstanding balance of $101.0 million, a 10 -year term and a fixed interest rate of 3.7% . The remaining 22 properties remain subject to customary closing conditions. On October 26, 2015, we entered into an agreement to acquire a 450 -unit affordable housing community in Tampa, Florida for $29.1 million. Secured Financing Agreements In October 2015 , we amended the Lender 2 Repo 1 facility to upsize available borrowings from $325.0 million to $500.0 million and extend the maturity from October 2018 to October 2020, assuming exercise of available extension options. In October 2015, we exercised a one -year extension option on the Conduit Repo 2 facility extending the maturity from November 2015 to November 2016. Dividend Declaration On November 5, 2015, our board of directors declared a dividend of $0 .48 per share for the fourth quarter of 2015, which is payable on January 15, 2016 to common stockholders of record as of December 31, 2015. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Balance Sheet Presentation of the Investing and Servicing Segment"s Variable Interest Entities | Balance Sheet Presentation of the Investing and Servicing Segment’s Variable Interest Entities As noted above, the Investing and Servicing Segment operates an investment business that acquires unrated, investment grade and non-investment grade rated CMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or “SPEs”). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America (“GAAP”), SPEs typically qualify as variable interest entities (“VIEs”). These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. Because the Investing and Servicing Segment often serves as the special servicer of the trusts in which it invests, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs. The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation. Refer to the segment data in Note 22 for a presentation of the Investing and Servicing Segment without consolidation of these VIEs. |
Basis of Accounting and Principles of Consolidation | Basis of Accounting and Principles of Consolidation The accompanying condensed consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the operating results for the full year. Refer to our Form 10-K for a description of our recurring accounting policies. We have included disclosure in this Note 2 regarding principles of consolidation and other accounting policies that (i) are required to be disclosed quarterly, (ii) we view as critical, or (iii) became significant since December 31, 2014 due to a corporate action or increase in the significance of the underlying business activity. |
Variable Interest Entities | Variable Interest Entities We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation , defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We consider our variable interests as well as any variable interests of our related parties in making this determination. Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE. To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by us. Our purchased investment securities include CMBS , which are unrated and non-investment grade rated securities issued by CMBS trusts. In certain cases, we may contract to provide special servicing activities for these CMBS trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer, we do not have the power to direct activities that most significantly impact the trust’s economic performance. We evaluated all of our positions in such investments for consolidation. For VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, an allocable portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding allocable amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation. We perform ongoing reassessments of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change. We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our condensed consolidated statements of operations. The residual difference shown on our condensed consolidated statements of operations in the line item “Change in net assets related to consolidated VIEs” represents our beneficial interest in the VIEs. We separately present the assets and liabilities of our consolidated VIEs as individual line items on our consolidated balance sheets. The liabilities of our consolidated VIEs consist solely of obligations to the bondholders of the related CMBS trusts, and are thus presented as a single line item entitled “VIE liabilities.” The assets of our consolidated VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned (“REO”). These assets in the aggregate are likewise presented as a single line item entitled “VIE assets.” Loans comprise the vast majority of our VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to nonperformance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a CMBS trust, any existing REO would be consolidated at fair value. Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP. In addition to sharing a similar measurement method as the loans in a CMBS trust, the VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a CMBS trust. REO assets generally represent a very small percentage of the overall asset pool of a CMBS trust. In a new issue CMBS trust there are no REO assets. We estimate that REO assets constitute approximately 4% of our consolidated VIE assets, with the remaining 96% representing loans . However, it is important to note that the fair value of our VIE assets is determined by reference to our VIE liabilities as permitted under Accounting Standards Update (“ ASU ”) 2014-13 , Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity . In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually. Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities. For these reasons, the assets of our VIEs are presented in the aggregate. |
Convertible Senior Notes | Convertible Senior Notes ASC 470, Debt , requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. The equity components of the convertible notes have been reflected within additional paid-in capital in our condensed consolidated balance sheets. The resulting debt discount is being amortized over the period during which the convertible notes are expected to be outstanding (the maturity date) as additional non-cash interest expense. Upon repurchase of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration , inclusive of transaction costs , amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component , including unamortized debt issuance costs , is recognized as gain (loss) on extinguishment of debt in our condensed consolidated statements of operations. The remaining settlement consideration allocated to the equity component is recognized as a reduction of additional paid-in capital in our condensed consolidated balance sheets. |
Discontinued Operations | Discontinued Operations On January 31, 2014, we completed the spin-off of our former SFR segment to our stockholders as discussed in Note 3. In accordance with ASC 205, Presentation of Financial Statements, the results of the SFR segment are presented within discontinued operations in our condensed consolidated statements of operations for the nine months ended September 30, 2014. |
Fair Value Option | Fair Value Option The guidance in ASC 825, Financial Instruments , provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method. We have elected the fair value option for eligible financial assets and liabilities of our consolidated VIEs, loans held-for-sale originated by the Investing and Servicing Segment’s conduit platform, purchased CMBS issued by VIEs we could consolidate in the future and certain investments in marketable equity securities. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for mortgage loans held-for-sale originated by the Investing and Servicing Segment’s conduit platform were made due to the short-term nature of these instruments. The fair value elections for investments in marketable equity securities were made because the shares are listed on an exchange, which allows us to determine the fair value using a quoted price from an active market. |
Fair Value Measurements | Fair Value Measurements We measure our mortgage ‑backed securities, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. As discussed above, we measure the assets and liabilities of consolidated VIEs at fair value pursuant to our election of the fair value option. The VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the VIE, we maximize the use of observable inputs over unobservable inputs. We also acknowledge that our principal market for selling CMBS assets is the securitization market where the market participant is considered to be a CMBS trust or a collateralized debt obligation (“CDO”). This methodology results in the fair value of the assets of a static CMBS trust being equal to the fair value of its liabilities. Refer to Note 19 for further information regarding our fair value measurements. |
Loans Receivable and Provision for Loan Losses | Loans Receivable and Provision for Loan Losses In our Lending Segment we purchase and originate commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost. We are required to periodically evaluate each of these loans for possible impairment. Impairment is indicated when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is determined to be impaired, we write down the loan through a charge to the provision for loan losses. Actual losses, if any, could ultimately differ from these estimates. We perform a quarterly review of our portfolio of loans. In connection with this review, we assess the performance of each loan and assign a risk rating based on several factors , including risk of loss, loan-to- collateral value ratio (“LTV”) , collateral performance, structure, exit plan, and sponsorship. Loans are rated “1” through “5”, from less risk to greater risk , in connection with this review. |
Intangible Lease Assets | Intangible Lease Assets In accordance with ASC 805, Business Combinations , the acquirer in a business combination must recognize, with certain exceptions, the fair values of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. In connection with the Ireland portfolio acquisition (refer to Note 3 for further discussion) and certain properties acquired from CMBS trusts , we recognized intangible lease assets and liabilities associated with certain noncancelable operating leases of the acquired properties. These intangible lease assets and liabilities include in-place lease intangible assets, favorable lease intangible assets and unfavorable lease liabilities. In-place lease intangible assets reflect the acquired benefit of purchasing properties with in-place leases and are measured based on estimates of direct costs associated with leasing the property and lost rental income during projected lease-up and free rent periods , both of which are avoided due to the presence of in-place leases at the acquisition date. Favorable and unfavorable lease intangible assets and liabilities reflect the terms of in-place tenant leases being either favorable or unfavorable relative to market terms at the acquisition date. The estimated fair values of our favorable and unfavorable lease assets and liabilities at the respective acquisition dates represent the discounted cash flow differential between the contractual cash flows of such leases and the estimated cash flows that comparable leases at market terms would generate. Our intangible lease assets and liabilities are recognized within intangible assets and other liabilities, respectively, in our condensed consolidated balance sheet. Our in-place lease intangible assets are amortized to amortization expense while our favorable and unfavorable lease intangible assets and liabilities are amortized to rental income, both over the remaining noncancelable term of the respective leases on a straight-line basis. |
Properties | Properties Our properties consist of commercial real estate properties held-for-investment and are recorded at cost, less accumulated depreciation and impairments, if any. Properties consist primarily of land, buildings and improvements. Land is not depreciated, and buildings and improvements are depreciated on a straight-line basis over their estimated useful lives. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments are capitalized and depreciated on a straight-line basis over their estimated useful lives. We review properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing the carrying amount of the property to the undiscounted future net cash flows it is expected to generate. If such carrying amounts exceed the expected undiscounted future net cash flows, we adjust the carrying amount of the property to its estimated fair value. |
Revenue Recognition | Revenue Recognition Rental Income Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease. In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. |
Acquisition and Investment Pursuit Costs | Acquisition and Investment Pursuit Costs Costs incurred in connection with acquiring properties, investments, loans and businesses, as well as in pursuing unsuccessful acquisitions and investments, are recorded within acquisition and investment pursuit costs in our condensed consolidated statements of operations when incurred. These costs reflect services performed by third parties and principally include due diligence and legal services. |
Earnings Per Share | Earnings Per Share We present both basic and diluted earnings per share (“EPS”) amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested restricted stock (“RSAs”) and restricted stock units (“RSUs”), (ii) shares contingently issuable to our Manager, and (iii) the “in-the-money” conversion options associated with our outstanding convertible notes (see further discussion in Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. The Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the three and nine months ended September 30, 2015 and 2014, the two-class method resulted in the most dilutive EPS calculation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our loans, investment securities and intangible assets, which has a significant impact on the amounts of interest income, credit losses (if any), and fair values that we record and/or disclose. In addition, the fair value of financial assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to our current period presentation. In that regard, we have reclassified $39.9 million of commercial real estate properties from other assets to properties, net on our condensed consolidated balance sheet as of December 31, 2014. Additionally, revenues of $3.4 million and $6.5 million previously reported in other revenue have been reclassified to rental income in our condensed consolidated statements of operations for the three and nine months ended September 30, 2014, respectively. Expenses of $1.8 million and $3.9 million previously reported in other expense have been reclassified to costs of rental operations in our condensed consolidated statements of operations for the three and nine months ended September 30, 2014, respectively. |
Recent Accounting Developments | Recent Accounting Developments On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis , which amends the criteria for determining which entities are considered VIEs, amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2015. Early application is permitted. We are in the process of assessing what impact this ASU will have on the Company. On April 7, 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) , which requires entities to present debt issuance costs as a direct deduction from the carrying value of the related debt liability, consistent with debt discounts, rather than as a separate deferred asset as the previous guidance required. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2015. We do not expect the application of this ASU to materially impact the Company. On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which establishes key principles by which an entity determines the amount and timing of revenue recognized from customer contracts. At issuance, the ASU was effective for the first interim or annual period beginning after December 15, 2016. On August 12, 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which delay ed the effective date of ASU 2014-09 by one year, resulting in the ASU becoming effective for the first interim or annual period beginning after December 15, 2017. Early application, which was not permissible under the initial effectiveness timeline, is now permissible though no earlier than as of the first interim or annual period beginning after December 15, 2016. We do not expect the application of this ASU to materially impact the Company. On September 25 , 2 015, the FASB issued ASU 2015-16 , Business Combinations (T opic 8 0 5) – Simplifying the Accounting for Measurement-Period Adjustments , which requires that the acquirer in a business combination recognize any measurement period adjustments in the period in which the adjustments are identified rather than retrospectively as of the acquisition date, as current GAAP dictates. The ASU shall be applied prospectively and is effective for annual periods, and interim periods therein, beginning after December 15, 2015. Early application is permitted. We intend to early adopt this ASU by recognizing any future measurement period adjustments in the period identified. |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Acquisitions and Divestitures | |
Summary of assets acquired and liabilities assumed from Ireland Portfolio acquisition | The following table summarizes the provisional estimates of identified assets acquired and liabilities assumed at the respective acquisition dates ( amounts in thousands): Assets acquired: Restricted cash $ Properties Intangible assets Other assets Total assets acquired Liabilities assumed: Accounts payable, accrued expenses and other liabilities Secured financing agreements Total liabilities assumed Net assets acquired/purchase price $ |
Schedule of unaudited pro forma revenue and net income assuming the business combination was consummated on January 1, 2014 | The pro-forma revenues and net income attributable to STWD of the combined entity for the three and nine months ended September 30, 2015 and 2014, assuming the Ireland Portfolio acquisition occurred on January 1, 2014, are as follows (amounts in thousands, except per share amounts): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Revenues $ $ $ $ Net income attributable to STWD Net income per share - Basic Net income per share - Diluted |
Schedule of adjustments related to pro forma revenue and net income | Pro-forma net income was adjusted to include the following estimated management fees the combined entity would have incurred ( amounts in thousands ): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Management fee expense addition $ $ $ $ |
Summary of consolidated results of discontinued operations for the SFR segment prior to the spin-off | The following table presents the summarized consolidated results of discontinued operations for the SFR segment prior to the spin-off ( amounts in thousands): For the Three Months Ended For the Nine Months Ended September 30, 2014 September 30, 2014 Total revenues $ — $ Total costs and expenses — Loss before other income and income taxes — Total other income — Loss before income taxes — Income tax provision — — Net loss $ — $ |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Loans | |
Summary of investments in mortgages and loans by subordination class | The following tables summarize our investments in mortgages and loans by subordination class as of September 30, 2015 and December 31, 2014 (amounts in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) September 30, 2015 Value Amount Coupon (years)(3) First mortgages (1) $ $ % Subordinated mortgages (2) % Mezzanine loans (1) % Total loans held-for-investment Loans held-for-sale (carrying value of $423,630 under fair value option) % Loans transferred as secured borrowings % Total gross loans Loan loss allowance (loans held-for-investment) — Total net loans $ $ December 31, 2014 First mortgages (1) $ $ % Subordinated mortgages (2) % Mezzanine loans (1) % Total loans held-for-investment Loans held-for-sale, fair value option elected % Loans transferred as secured borrowings % Total gross loans Loan loss allowance (loans held-for-investment) — Total net loans $ $ (1) First mortgages include first mortgage loans and any contiguous mezzanine loan component s because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. T he application of this methodology resulted in mezzanine loans with carrying values of $892.3 million and $704.2 million being classified as first mortgages as of September 30, 2015 and December 31, 2014, respectively . (2) Subordinated mortgages include B-notes and junior participation in first mortgages where we do not own the senior A-note or senior participation. If we own both the A-note and B-note, we categorize the loan as a first mortgage loan. (3) Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination. |
Summary of investments in floating rate loans | The following table summarizes our investments in floating rate loans (amounts in thousands): September 30, 2015 December 31, 2014 Carrying Carrying Index Base Rate Value Base Rate Value One-month LIBOR USD % $ % $ Three-month LIBOR GBP % % LIBOR floor 0.15 - 3.00 % (1) 0.15 - 3.00 % (1) Total $ $ The weighted-average LIBOR Floor was 0.31% and 0.35% as of September 30, 2015 and December 31, 2014, respectively. |
Schedule of internal rating categories | As of September 30, 2015, the risk ratings for loans subject to our rating system, which excludes loans on the cost recovery method and loans for which the fair value option has been elected, by class of loan were as follows (amounts in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Cost Transferred % of Risk Rating First Subordinated Mezzanine Recovery Loans Held- As Secured Total Category Mortgages Mortgages Loans Loans For-Sale Borrowings Total Loans 1 $ $ — $ — $ — $ — $ — $ — % 2 — — — % 3 — — % 4 — — — % 5 — — — — — — — — % N/A — — — — — % $ $ $ $ — $ $ $ % As of December 31, 2014, the risk ratings for loans subject to our rating system by class of loan were as follows (amounts in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Cost Transferred % of Risk Rating First Subordinated Mezzanine Recovery Loans Held- As Secured Total Category Mortgages Mortgages Loans Loans For-Sale Borrowings Total Loans 1 $ $ — $ — $ — $ — $ — $ — % 2 — — — % 3 — — % 4 — — — % 5 — — — — — % N/A — — — — % $ $ $ $ $ $ $ % |
Schedule of activity in allowance for loan losses | The following table presents the activity in our allowance for loan losses (amounts in thousands): For the Nine Months Ended September 30, 2015 2014 Allowance for loan losses at January 1 $ $ Provision for loan losses Charge-offs — — Recoveries — — Allowance for loan losses at September 30 $ $ Recorded investment in loans related to the allowance for loan loss $ $ |
Schedule of activity in loan portfolio | The activity in our loan portfolio was as follows (amounts in thousands): For the Nine Months Ended September 30, 2015 2014 Balance at January 1 $ $ Acquisitions/originations/additional funding Capitalized interest (1) Basis of loans sold (2) Loan maturities/principal repayments Discount accretion/premium amortization Changes in fair value Unrealized foreign currency remeasurement loss Change in loan loss allowance, net Transfer to/from other asset classifications Balance at September 30 $ $ (1) Represents accrued interest income on loans whose terms do not require current payment of interest. See Note 11 for additional disclosure on these transactions. |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of investment securities | Investment securities were comprised of the following as of September 30, 2015 and December 31, 2014 (amounts in thousands): Carrying Value as of September 30, 2015 December 31, 2014 RMBS, available-for-sale $ $ Single-borrower CMBS, available-for-sale — CMBS, fair value option (1) Held-to-maturity (“HTM”) securities Equity security, fair value option Subtotal—Investment securities VIE eliminations (1) Total investment securities $ $ (1) Certain fair value option CMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810. |
Schedule of purchases, sales and principal collections for all investment securities | Purchases, sales and principal collections for all investment securities were as follows (amounts in thousands): Available-for-sale CMBS, fair HTM Equity RMBS CMBS value option Securities Security Total Three Months Ended September 30, 2015 Purchases $ — $ — $ $ $ — $ Sales — — — — Principal collections — Three Months Ended September 30, 2014 Purchases $ — $ — $ $ — $ — $ Sales — — — — Principal collections — — Available-for-sale CMBS, fair HTM Equity RMBS CMBS value option Securities Security Total Nine Months Ended September 30, 2015 Purchases $ — $ — $ $ $ — $ Sales — — — — Principal collections — Nine Months Ended September 30, 2014 Purchases $ — $ — $ $ — $ — $ Sales — — — Principal collections — |
Summary of investments in available-for-sale RMBS and single-borrower CMBS where the fair value option has not been elected | The tables below summarize various attributes of our investments in available-for-sale RMBS and single-borrower CMBS where the fair value option has not been elected as of September 30, 2015 and December 31, 2014 (amounts in thousands): Unrealized Gains or (Losses) Recognized in AOCI Purchase Recorded Gross Gross Net Amortized Credit Amortized Non-Credit Unrealized Unrealized Fair Value Cost OTTI Cost OTTI Gains Losses Adjustment Fair Value September 30, 2015 RMBS $ $ $ $ $ $ — $ $ Single-borrower CMBS — — — — — — — — Total $ $ $ $ $ $ — $ $ December 31, 2014 RMBS $ $ $ $ $ $ — $ $ Single-borrower CMBS — — — Total $ $ $ $ $ $ — $ $ Weighted Average Weighted Average Coupon(1) Rating (Standard & Poor’s) WAL (Years)(2) September 30, 2015 RMBS % B− Single-borrower CMBS — % — — December 31, 2014 RMBS % B− Single-borrower CMBS % BB+ (1) Calculated using the September 30, 2015 and December 31, 2014 one-month LIBOR rate of 0.193% and 0.171% , respectively, for floating rate securities. (2) Represents the WAL of each respective group of securities as of the respective balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments. |
Reconciliation of aggregate principal balance to amortized cost for RMBS and single-borrower CMBS, excluding CMBS where the fair value option is elected | The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS and single-borrower CMBS as of September 30, 2015 and December 31, 2014, excluding CMBS where we have elected the fair value option (amounts in thousands): September 30, 2015 December 31, 2014 RMBS CMBS RMBS CMBS Principal balance $ $ — $ $ Accretable yield — — Non-accretable difference — — Total discount — — Amortized cost $ $ — $ $ |
Schedule of changes to accretable yield and non-accretable difference for RMBS and single-borrower CMBS, excluding CMBS where the fair value option is elected | The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the three and nine months ended September 30, 2015 (amounts in thousands): Non-Accretable Three Months Ended September 30, 2015 Accretable Yield Difference Balance as of July 1, 2015 $ $ Accretion of discount — Principal write-downs — Purchases — — Sales — — OTTI — — Transfer to/from non-accretable difference Balance as of September 30, 2015 $ $ Nine Months Ended September 30, 2015 Balance as of January 1, 2015 $ $ Accretion of discount — Principal write-downs — Purchases — — Sales — — OTTI — — Transfer to/from non-accretable difference Balance as of September 30, 2015 $ $ |
Schedule of gross unrealized losses and estimated fair value of securities in an unrealized loss position, excluding CMBS where the fair value option is elected | The following table presents the gross unrealized losses and estimated fair value of the available-for-sale securities (i) where we have not elected the fair value option, (ii) that were in an unrealized loss position as of September 30, 2015 and December 31, 2014, and (iii) for which OTTIs (full or partial) have not been recognized in earnings (amounts in thousands): Estimated Fair Value Unrealized Losses Securities with a Securities with a Securities with a Securities with a loss less than loss greater than loss less than loss greater than 12 months 12 months 12 months 12 months As of September 30, 2015 RMBS $ $ $ $ Single-borrower CMBS — — — — Total $ $ $ $ As of December 31, 2014 RMBS $ — $ $ — $ Single-borrower CMBS — — — — Total $ — $ $ — $ |
Schedule of investment in fair value option CMBS | The table below summarizes various attributes of our investment in fair value option CMBS as of September 30, 2015 and December 31, 2014 (amounts in thousands): Weighted Weighted Average Average Rating WAL Coupon (Standard & Poor’s) (1) (Years)(2) September 30, 2015 CMBS, fair value option % CCC+ December 31, 2014 CMBS, fair value option % CCC− (1) As of September 30, 2015 and December 31, 2014, excludes $35.8 million and $41.7 million, respectively, in fair value option CMBS that are not rated. (2) The WAL of each security is calculated based on the period of time over which we expect to receive principal cash flows. Expected principal cash flows are based on contractual payments net of expected losses. |
Held-to-maturity | |
Schedule of gross unrealized losses and estimated fair value of securities in an unrealized loss position, excluding CMBS where the fair value option is elected | The table below summarizes unrealized gains and losses of our investments in HTM securities as of September 30, 2015 and December 31, 2014 (amounts in thousands): Net Carrying Amount Gross Unrealized Gross Unrealized (Amortized Cost) Holding Gains Holding Losses Fair Value September 30, 2015 Preferred interests $ $ — $ $ CMBS Total $ $ $ $ December 31, 2014 Preferred interests $ $ — $ $ CMBS — — Total $ $ — $ $ |
Summary of investments in HTM securities | The table below summarizes the maturities of our HTM preferred equity interests in limited liability companies that own commercial real estate and our HTM CMBS as of September 30, 2015 (amounts in thousands): Preferred Interests CMBS Total Less than one year $ — $ — $ — One to three years — Three to five years — Thereafter — Total $ $ $ |
Properties (Tables)
Properties (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Properties | |
Summary of properties | Depreciable Life September 30, 2015 December 31, 2014 Property Segment Land — $ $ — Buildings 30 years — Investing and Servicing Segment Land — Land improvements 5 – 15 years — Buildings 20 – 40 years Building improvements 5 – 10 years — Furniture & fixtures 3 years Properties, cost Less: accumulated depreciation Properties, net $ $ |
Investment in Unconsolidated 37
Investment in Unconsolidated Entities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Investment in Unconsolidated Entities | |
Summary of investments in unconsolidated entities | The below table summarizes our investments in unconsolidated entities as of September 30, 2015 and December 31, 2014 (dollar amounts in thousands): Participation / Carrying value as of Ownership %(1) September 30, 2015 December 31, 2014 Equity method: Retail Fund 33% $ $ Investor entity which owns equity in two real estate services providers 50% Equity interests in commercial real estate (2) 16% - 43% — Bridge loan venture (3) various — Various 25% - 50% Cost method: Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% Various 0% - 3% $ $ (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) During the nine months ended September 30, 2015, we acquired $28.0 million of equity interests in limited liability companies that own ten office and student housing properties throughout the U.S. (3) During the three months ended September 30, 2015, we sold our interest in the Bridge Loan Venture at par. There were no differences between the carr ying value of our investment in unconsolidated entities and the underlying equity in the net assets of the investee s as of September 30, 2015. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets | |
Summary of intangibles assets | The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of September 30, 2015 and December 31, 2014 ( amounts in thousands): As of September 30, 2015 As of December 31, 2014 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ $ — $ $ $ — $ European servicing rights (1) In-place lease intangible assets — — — Favorable lease intangible assets — — — Total net intangible assets $ $ $ $ $ $ The fair value as of September 30, 2015 and December 31, 2014 was $7.7 million and $12.7 million, respectively. |
Summary of activity within intangible assets | The following table summarizes the activity within intangible assets for the nine months ended September 30, 2015 (amounts in thousands): Domestic European In-place Lease Favorable Lease Servicing Servicing Intangible Intangible Rights Rights Assets Assets Total Balance as of January 1, 2015 $ $ $ — $ — $ Acquisition of Ireland Portfolio — — Properties acquired from CMBS trusts — — Amortization — Foreign exchange (loss) gain — Changes in fair value due to changes in inputs and assumptions — — — Balance as of September 30, 2015 $ $ $ $ $ |
Secured Financing Agreements (T
Secured Financing Agreements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Secured Financing Agreements. | |
Summary of secured financing agreements | The following table is a summary of our secured financing agreements in place as of September 30, 2015 and December 31, 2014 (dollars in thousands): Pledged Asset Maximum Carrying Value at Current Extended Carrying Facility September 30, December 31, Maturity Maturity(a) Pricing Value Size 2015 2014 Lender 1 Repo 1 (b) (b) LIBOR + 1.85% to 5.25% $ $ $ $ Lender 1 Repo 2 (c) N/A LIBOR + 1.90% Lender 2 Repo 1 Oct 2015 Oct 2018 LIBOR + 1.75% to 2.75% Lender 3 Repo 1 May 2017 May 2019 LIBOR + 2.85% Conduit Repo 1 Sep 2016 N/A LIBOR + 1.95% to 3.35% Conduit Repo 2 Nov 2015 Nov 2016 LIBOR + 2.10% Conduit Repo 3 Feb 2018 Feb 2019 LIBOR + 2.10% — Lender 4 Repo 1 Oct 2016 Oct 2017 LIBOR + 2.00% Lender 5 Repo 1 (d) N/A N/A — — — Lender 6 Repo 1 Aug 2018 N/A LIBOR + 2.50% to 3.00% Lender 6 Mortgage May 2020 N/A EURIBOR + 1.69% — Lender 7 Repo 1 Dec 2016 N/A LIBOR + 2.35% to 2.70% Investing and Servicing Segment Property Mortgages June 2018 to Nov 2024 N/A Various Lender 9 Repo 1 (e) (e) LIBOR + 1.40% to 1.85% — Borrowing Base Jul 2018 Jul 2019 LIBOR + 2.75% (f) (g) — Term Loan Apr 2020 N/A LIBOR + 2.75% (f) (h) (h) FHLB Advances N/A N/A Various — — — $ $ $ $ (a) Subject to certain conditions as defined in the respective facility agreement. (b) Maturity date for borrowings collateralized by loans of January 2017 before extension options and January 2019 assuming initial extension options. Borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions and not to exceed January 2023. (c) The date that is 180 days after the buyer delivers notice to seller, subject to a maximum date of March 2017. (d) Facility was terminated at our option in March 2015. (e) Facility carries a rolling twelve month term which may reset monthly with the lender’s consent. Current maturity is September 2016. Facility carries no maximum facility size. Amount herein reflects the outstanding balance as of September 30, 2015. (f) Subject to borrower ’s option to choose alternative benchmark based rates pursuant to the terms of the credit agreement. The Term Loan is also subject to a 75 basis point floor. (g) Subject to certain conditions defined in the facility agreement, the maximum facility size may be increased to $650.0 million. (h) Term loan outstanding balance is net of $1.8 million and $2.1 million of unamortized discount as of September 30, 2015 and December 31, 2014 , respectively . |
Schedule of five-year principal repayments for secured financings | The amount reflected in each period includes principal repayments on our credit facilities that would be required if (i) we received the repayments that we expect to receive on the investments that have been pledged as collateral under the credit facilities, as applicable, and (ii) the credit facilities that are expected to have amounts outstanding at their current maturity dates are extended where extension options are available to us (amounts in thousands): Repurchase Other Secured Agreements Financing Total 2015 (remainder of) $ $ $ 2016 2017 2018 2019 Thereafter — (1) Total $ $ $ (1) Principal paydown of the Term Loan through 2020 excludes $1.8 million of discount amortization. |
Schedule of outstanding balance of repurchase agreements related to the following asset collateral classes | As of September 30, 2015 and December 31, 2014, the outstanding balance of our repurchase agreements related to the following asset collateral classes (amounts in thousands): Class of Collateral September 30, 2015 December 31, 2014 Loans held-for-investment $ $ Loans held-for-sale Investment securities $ $ |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Convertible Senior Notes. | |
Schedule of the unsecured convertible senior notes outstanding | The following summarizes the unsecured convertible senior notes (collectively, the “Convertible Notes”) outstanding as of September 30, 2015 (amounts in thousands, except rates): Remaining Principal Coupon Effective Conversion Maturity Period of Amount Rate Rate(1) Rate(2) Date Amortization 2017 Notes $ % % 10/15/2017 years 2018 Notes $ % % 3/1/2018 years 2019 Notes $ % % 1/15/2019 years As of As of September 30, 2015 December 31, 2014 Total principal $ $ Net unamortized discount Carrying amount of debt components $ $ Carrying amount of conversion option equity components recorded in additional paid-in capital $ $ (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option, the value of which reduced the initial liability and was recorded in additional paid-in-capital. (2) The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of Convertible Notes converted, as adjusted in accordance with the applicable indentures as a result of the spin-off of the SFR segment and cash dividend payments. The if-conver ted values of the 2017 Notes, 2018 Notes and 2019 Notes were less than their principal amounts by $61.9 million , $35.0 million, and $0.3 million at September 30, 2015, respectively, since the closing market price of the Company’s common stock of $20.52 per share was less than the implicit conversion prices of $23.96 , $21.79 , and $20.54 , respectively. The Company has asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. As a result, conversion of this principal amount, totaling 62.2 million shares, was not included in the computation of diluted earnings per share (“EPS”). No dilution related to the 2017 Notes, 2018 Notes or 2019 Notes was included in the computation of diluted EPS for the three and nine months ended September 30, 2015 as these notes were not “in-the-money”. See further discussion at Note 17 . |
Loan Securitization_Sale Acti41
Loan Securitization/Sale Activities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Investment and Servicing Segment | |
Summary of fair value and par value of loans sold and amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with the loans | The following summarizes the fair value and par value of loans sold from our conduit platform, as well as the amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with these loans for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Fair value of loans sold $ $ $ $ Par value of loans sold Repayment of repurchase agreements |
Lending Segment | |
Summary of loans sold and loans transferred as secured borrowings by the Lending segment net of expenses | The following table summarizes our loans sold and loans transferred as secured borrowings by the Lending Segment net of expenses ( amounts in thousands): Loan Transfers Loan Transfers Accounted Accounted for as Secured for as Sales Borrowings Face Amount Proceeds Face Amount Proceeds For the Three Months Ended September 30, 2015 $ $ $ — $ — 2014 — — For the Nine Months Ended September 30, 2015 $ $ $ $ 2014 — — |
Derivatives and Hedging Activ42
Derivatives and Hedging Activity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivatives and Hedging Activity | |
Summary of foreign exchange ("Fx") forwards, interest rate swaps, interest rate caps and credit index instruments | The following table summarizes our foreign exchange (“Fx”) forwards, interest rate swaps, interest rate caps and credit index instruments as of September 30, 2015 (notional amounts in thousands): Aggregate Number Notional Notional Type of Derivative of Contracts Amount Currency Maturity Fx contracts – Sell Euros ("EUR") (1) EUR October 2015 – June 2020 Fx contracts – Sell Pounds Sterling ("GBP") GBP October 2015 – March 2018 Fx contracts – Sell Swedish Krona ("SEK") SEK December 2015 Fx contracts – Buy SEK SEK December 2015 Fx contracts – Sell Norwegian Krone ("NOK") NOK December 2015 Fx contracts – Sell Danish Krone ("DKK") DKK December 2015 Interest rate swaps – Paying fixed rates USD July 2016 – October 2025 Interest rate swaps – Receiving fixed rates USD October 2015 – September 2025 Interest rate caps EUR May 2020 Interest rate caps USD June 2018 Credit index instruments USD January 2047 Total (1) Includes 59 Fx contracts executed to hedge our Euro currency exposure created by our acquisition of the Ireland Portfolio. As of September 30, 2015, these contracts have an aggregate notional of €259.7 million and varying maturities through June 2020 . |
Schedule of fair values of derivative financial instruments | The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014 (amounts in thousands): Fair Value of Derivatives in an Fair Value of Derivatives in a Asset Position(1) As of Liability Position(2) As of September 30, 2015 December 31, 2014 September 30, 2015 December 31, 2014 Derivatives designated as hedging instruments: Interest rate swaps $ $ $ $ Total derivatives designated as hedging instruments Derivatives not designated as hedging instruments: Interest rate swaps and caps Foreign exchange contracts Credit index instruments — Total derivatives not designated as hedging instruments Total derivatives $ $ $ $ (1) Classified as derivative assets in our condensed consolidated balance sheets. (2) Classified as derivative liabilities in our condensed consolidated balance sheets. |
Schedule of effect of derivative financial instruments on the consolidated statements of operations and of comprehensive income | Gain (Loss) Gain (Loss) Reclassified Gain (Loss) Derivatives Designated as Recognized from AOCI Recognized Hedging Instruments in OCI into Income in Income Location of Gain (Loss) For the Three Months Ended September 30, (effective portion) (effective portion) (ineffective portion) Recognized in Income 2015 $ $ $ — Interest expense 2014 $ $ $ — Interest expense For the Nine Months Ended September 30, 2015 $ $ $ — Interest expense 2014 $ $ $ — Interest expense |
Schedule of Gain / (Loss) recognized in Income for Derivatives Not Designated as Hedging Instruments | Amount of Gain (Loss) Amount of Gain (Loss) Recognized in Income for the Recognized in Income for the Derivatives Not Designated Location of Gain (Loss) Three Months Ended September 30, Nine Months Ended September 30, as Hedging Instruments Recognized in Income 2015 2014 2015 2014 Interest rate swaps and caps Gain on derivative financial instruments $ $ $ $ Foreign exchange contracts Gain on derivative financial instruments Credit index instruments Gain on derivative financial instruments $ $ $ $ |
Offsetting Assets and Liabili43
Offsetting Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Offsetting Assets and Liabilities | |
Schedule of offsetting assets and liabilities | The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet—Offsetting , which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands): (iv) Gross Amounts Not Offset in the Statement (ii) (iii) = (i) - (ii) of Financial Position Gross Amounts Net Amounts Cash (i) Offset in the Presented in Collateral Gross Amounts Statement of the Statement of Financial Received / (v) = (iii) - (iv) Recognized Financial Position Financial Position Instruments Pledged Net Amount As of September 30, 2015 Derivative assets $ $ — $ $ $ — $ Derivative liabilities $ $ — $ $ $ $ — Repurchase agreements — — — $ $ — $ $ $ $ — As of December 31, 2014 Derivative assets $ $ — $ $ $ — $ Derivative liabilities $ $ — $ $ $ $ — Repurchase agreements — — — $ $ — $ $ $ $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity | |
Schedule of dividends declared by board of directors | Declare Date Record Date Ex-Dividend Date Payment Date Amount Frequency 8/4/15 9/30/15 9/28/15 10/15/15 $ Quarterly 5/5/15 6/30/15 6/26/15 7/15/15 $ Quarterly 2/25/15 3/31/15 3/27/15 4/15/15 $ Quarterly |
Summary of share awards granted under the Manager Equity Plan | The table below summarizes our share awards granted under the Manager Equity Plan that were not fully vested as of September 30, 2015 (dollar amounts in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period May 2015 RSU $ 3 years January 2014 (1) RSU 3 years January 2014 RSU 3 years October 2012 RSU 3 years (1) As part of the spin-off of our SFR segment, all holders of the Company’s common stock and vested restricted common stock received one SWAY common share for every five shares of the Company’s common stock. At the time of the spin-off, the Manager held certain unvested RSUs that were not entitled to SWAY shares. Under the legal documentation governing the outstanding RSUs, the Manager was entitled to receive additional RSUs in an amount equal to the number of such outstanding RSUs times the amount received in the spin-off by a holder of a share of the Company’s common stock (i.e., the price per share of a SWAY common share divided by five) divided by the fair market value of a share of the Company’s common stock on the date of the spin-off. In order to prevent dilution of the rights of our equity plan participants resulting from this make-whole issuance, the Equity Plan and Manager Equity Plan provide for, and, on August 12, 2014, our board of directors authorized, an increase of 489,281 shares to the maximum number of shares available for issuance under the Equity Plan and Manager Equity Plan. |
Schedule of Non-Vested Shares and Share Equivalents | Weighted Average Non-Executive Grant Date Director Manager Fair Value Stock Plan Equity Plan Equity Plan Total (per share) Balance as of January 1, 2015 $ Granted — Vested Forfeited — — Balance as of September 30, 2015 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings per Share | |
Reconciliation of net income from continuing operations and the number of shares of common stock used in the computation of basic EPS and diluted EPS | The following table provides a reconciliation of net income from continuing operations and the number of shares of common stock used in the computations of basic EPS and diluted EPS ( amounts in thousands, except per share amounts): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Basic Earnings Continuing Operations: Income from continuing operations attributable to STWD common shareholders $ $ $ $ Less: Income attributable to unvested shares Basic — Income from continuing operations $ $ $ $ Discontinued Operations: Loss from discontinued operations $ — $ — $ — $ Basic — Net income attributable to STWD common shareholders after allocation to participating securities $ $ $ $ Diluted Earnings Continuing Operations: Basic — Income from continuing operations attributable to STWD common shareholders $ $ $ $ Less: Income attributable to unvested shares Add: Undistributed earnings to unvested shares Less: Undistributed earnings reallocated to unvested shares Diluted — Income from continuing operations $ $ $ $ Discontinued Operations: Basic — Loss from discontinued operations $ — $ — $ — $ Diluted — Net income attributable to STWD common shareholders after allocation to participating securities $ $ $ $ Number of Shares: Basic — Average shares outstanding Effect of dilutive securities — Convertible Notes — — Effect of dilutive securities — Contingently issuable shares Diluted — Average shares outstanding Earnings Per Share Attributable to STWD Common Stockholders: Basic: Income from continuing operations $ $ $ $ Loss from discontinued operations — — — Net income $ $ $ $ Diluted: Income from continuing operations $ $ $ $ Loss from discontinued operations — — — Net income $ $ $ $ |
Accumulated Other Comprehensi46
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income | |
Schedule of changes in AOCI by component | The changes in AOCI by component are as follows ( amounts in thousands): Cumulative Unrealized Gain Effective Portion of (Loss) on Foreign Cumulative Loss on Available-for- Currency Cash Flow Hedges Sale Securities Translation Total Three Months Ended September 30, 2015 Balance at July 1, 2015 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — Net period OCI Balance at September 30, 2015 $ $ $ $ Three Months Ended September 30, 2014 Balance at July 1, 2014 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — Net period OCI Balance at September 30, 2014 $ $ $ $ Nine Months Ended September 30, 2015 Balance at January 1, 2015 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI Net period OCI Balance at September 30, 2015 $ $ $ $ Nine Months Ended September 30, 2014 Balance at January 1, 2014 $ $ $ $ OCI before reclassifications Amounts reclassified from AOCI — Net period OCI Balance at September 30, 2014 $ $ $ $ |
Schedule of reclassifications out of AOCI that impacted the consolidated statements of operations | Amounts Reclassified from Amounts Reclassified from AOCI during the Three Months AOCI during the Nine Months Affected Line Item Ended September 30, Ended September 30, in the Statements Details about AOCI Components 2015 2014 2015 2014 of Operations Losses on cash flow hedges: Interest rate contracts $ $ $ $ Interest expense Unrealized gains (losses) on available-for-sale securities: Interest realized upon collection — — — Interest income from investment securities Net realized gain on sale of investments — — Gain on sale of investments and other assets, net OTTI — — — OTTI Total — Foreign currency translation: Foreign currency loss from CMBS redemption — — Foreign currency loss, net Total reclassifications for the period $ $ $ $ |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value | |
Schedule of financial assets and liabilities carried at fair value on a recurring basis | The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the condensed consolidated balance sheets by their level in the fair value hierarchy as of September 30, 2015 and December 31, 2014 (amounts in thousands): September 30, 2015 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ $ — $ — $ RMBS — — CMBS — — Equity security — — Domestic servicing rights — Derivative assets — — VIE assets — — Total $ $ $ $ Financial Liabilities: Derivative liabilities $ $ — $ $ — VIE liabilities — Total $ $ — $ $ December 31, 2014 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ $ — $ — $ RMBS — — CMBS — — Equity security — — Domestic servicing rights — — Derivative assets — — VIE assets — — Total $ $ $ $ Financial Liabilities: Derivative liabilities $ $ — $ $ — VIE liabilities — Total $ $ — $ $ |
Schedule of changes in financial assets and liabilities classified as Level III | The changes in financial assets and liabilities classified as Level III were as follows for the three and nine months ended September 30, 2015 and 2014 (amounts in thousands): Domestic Loans Servicing VIE Three Months Ended September 30, 2015 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2015 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — OTTI — — — — — — — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidations of VIEs — — — — Deconsolidations of VIEs — — — September 30, 2015 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2015 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Three Months Ended September 30, 2014 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total July 1, 2014 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — Transfers out of Level III — — — — — Consolidations of VIEs — — — — Deconsolidations of VIEs — — — September 30, 2014 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2014 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Nine Months Ended September 30, 2015 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2015 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — OTTI — — — — — — — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — — Transfers out of Level III — — — — — Consolidations of VIEs — — — Deconsolidations of VIEs — — — September 30, 2015 balance $ $ $ $ $ $ $ Amount of total gains (losses) included in earnings attributable to assets still held at September 30, 2015 $ $ $ $ $ $ $ Domestic Loans Servicing VIE Nine Months Ended September 30, 2014 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2014 balance $ $ $ $ $ $ $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale OTTI — — — — — Net accretion — — — — — Included in OCI — — — — Purchases / Originations — — — — Sales — — — Issuances — — — — — Cash repayments / receipts — — Transfers into Level III — — — — Transfers out of Level III — — Consolidations of VIEs — — — Deconsolidations of VIEs — — — September 30, 2014 balance $ $ $ $ $ $ $ Amount of total (losses) gains included in earnings attributable to assets still held at September 30, 2014 $ $ $ $ $ $ $ |
Schedule of fair value of financial instruments not carried at fair value | The following table presents the fair values (all Level III) of our financial instruments not carried at fair value on the consolidated balance sheets (amounts in thousands): September 30, 2015 December 31, 2014 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings $ $ $ $ Securities, held-to-maturity European servicing rights Financial liabilities not carried at fair value: Secured financing agreements and secured borrowings on transferred loans $ $ $ Convertible senior notes |
Schedule of quantitative information for Level 3 Measurements for assets and liabilities measured at fair value on recurring basis | The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollar amounts in thousands): Carrying Value at Valuation Unobservable Range as of (1) September 30, 2015 Technique Input September 30, 2015 December 31, 2014 Loans held-for-sale, fair value option $ Discounted cash flow Yield (b) 4.3% - 4.9% 4.2% - 4.9% Duration (c) 5.0 - 10.0 years 5.0 - 10.0 years RMBS Discounted cash flow Constant prepayment rate (a) 2.6% - 14.7% 1.2% - 15.9% Constant default rate (b) 0.9% - 9.1% 1.1% - 8.9% Loss severity (b) 9% - 79% (e) 15% - 80% (e) Delinquency rate (c) 2% - 29% 2% - 43% Servicer advances (a) 28% - 92% 14% - 75% Annual coupon deterioration (b) 0% - 0.5% 0% - 0.6% Putback amount per projected total collateral loss (d) 0% - 11% 0% - 11% CMBS Discounted cash flow Yield (b) 0% - 779.7% 0% - 421.4% Duration (c) 0 - 13.2 years 0 - 11.8 years Domestic servicing rights Discounted cash flow Debt yield (a) 8.25% 8.25% Discount rate (b) 15% 15% Control migration (b) 0% - 80% 0% - 80% VIE assets Discounted cash flow Yield (b) 0% - 907.4% 0% - 925.0% Duration (c) 0 - 18.6 years 0 - 21.0 years VIE liabilities Discounted cash flow Yield (b) 0% - 907.4% 0% - 925.0% Duration (c) 0 - 18.6 years 0 - 21.0 years (1) The ranges of significant unobservable inputs are represented in percentages and years. Sensitivity of the Fair Value to Changes in the Unobservable Inputs (a) Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement. (b) Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement. (c) Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (lower or higher) fair value measurement depending on the structural features of the security in question. (d) Any delay in the putback recovery date leads to a decrease in fair value, for the majority of securities in our RMBS portfolio. 75% and 85% of the portfolio falls within a range of 45% - 80% as of September 30, 2015 and December 31, 2014, respectively. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | |
Schedule of income tax provision | Our income tax provision consisted of the following for the three and nine months ended September 30, 2015 and 2014 ( amounts in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Current Federal $ $ $ $ Foreign State Total current Deferred Federal Foreign State Total deferred Total income tax provision $ $ $ $ |
Schedule of tax jurisdictions and the tax effects of temporary differences on their respective net deferred tax assets and liabilities | The following table presents each of these tax jurisdictions and the tax effects of temporary differences on their respective net deferred tax assets and liabilities ( amounts in thousands): September 30, 2015 December 31, 2014 U.S. Deferred tax asset, net Reserves and accruals $ $ Domestic intangible assets Investment securities and loans Investment in unconsolidated entities Deferred income Net operating and capital loss carryforwards Valuation allowance Other U.S. temporary differences Europe Deferred tax liability, net European servicing rights Net operating and capital loss carryforwards Valuation allowance Other European temporary differences Net deferred tax assets $ $ |
Schedule of reconciliation of federal income tax determined using statutory federal tax rate to reported income tax provision | The following table is a reconciliation of our federal income tax determined using our statutory federal tax rate to our reported income tax provision for the three and nine months ended September 30, 2015 and 2014 (dollar amounts in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 Federal statutory tax rate $ % $ % $ % $ % REIT and other non-taxable income % % % % State income taxes % % % % Federal benefit of state tax deduction % % % % Valuation allowance % % % % Other % % % % Effective tax rate $ % $ % $ % $ % |
Segment Data (Tables)
Segment Data (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Data | |
Schedule of results of operations by business segment | The table below presents our results of operations for the three months ended September 30, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Other expense — — — — Total costs and expenses Income (loss) before other income, income taxes and non-controlling interests Other income: Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — Gain (loss) on derivative financial instruments, net — — Foreign currency (loss) gain, net — — Other income, net — — — — Total other (loss) income — Income (loss) before income taxes Income tax provision — — — Net income (loss) Net income attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the three months ended September 30, 2014 by business segment (amounts in thousands): Investing Investing Lending and Servicing and Servicing Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ $ — $ Interest income from investment securities — Servicing fees — Rental income — — — Other revenues — Total revenues — Costs and expenses: Management fees Interest expense — General and administrative Acquisition and investment pursuit costs — — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — Other expense — — — Total costs and expenses Income (loss) before other income, income taxes and non-controlling interests Other income: Change in net assets related to consolidated VIEs — — — — Change in fair value of servicing rights — — Change in fair value of investment securities, net — Change in fair value of mortgage loans held-for-sale, net — — — Earnings from unconsolidated entities — Gain on sale of investments, net — — — Gain on derivative financial instruments, net — — Foreign currency loss, net — — Other income, net — — — Total other income — Income (loss) before income taxes Income tax benefit (provision) — — Net income (loss) Net income attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ — $ The table below presents our results of operations for the nine months ended September 30, 2015 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — Other revenues — — Total revenues — Costs and expenses: Management fees — Interest expense — General and administrative Acquisition and investment pursuit costs — Costs of rental operations — — — Depreciation and amortization — — — Loan loss allowance, net — — — — Other expense — — — — Total costs and expenses Income (loss) before other income, income taxes and non-controlling interests Other income: Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — Gain on sale of investments and other assets, net — — — Gain (loss) on derivative financial instruments, net — — Foreign currency (loss) gain, net — — Loss on extinguishment of debt — — — — Other income, net — — — Total other (loss) income Income (loss) before income taxes Income tax provision — — — Net income (loss) Net income attributable to non-controlling interests — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ The table below presents our results of operations for the nine months ended September 30, 2014 by business segment (amounts in thousands): Investing Single Investing Lending and Servicing Family and Servicing Segment Segment Corporate Residential Subtotal VIEs Total Revenues: Interest income from loans $ $ $ — $ — $ $ — $ Interest income from investment securities — — Servicing fees — — Rental income — — — — Other revenues — — Total revenues — — Costs and expenses: Management fees — Interest expense — — General and administrative — Acquisition and investment pursuit costs — — Costs of rental operations — — — — Depreciation and amortization — — — — Loan loss allowance, net — — — — Other expense — — — Total costs and expenses — Income (loss) before other income, income taxes and non-controlling interests — Other income: Change in net assets related to consolidated VIEs — — — — — Change in fair value of servicing rights — — — Change in fair value of investment securities, net — — Change in fair value of mortgage loans held-for-sale, net — — — — Earnings from unconsolidated entities — — Gain on sale of investments, net — — — — Gain (loss) on derivative financial instruments, net — — — Foreign currency loss, net — — — OTTI — — — Other income, net — — — Total other income — — Income (loss) from continuing operations before income taxes — Income tax provision — — — Income (loss) from continuing operations — Loss from discontinued operations, net of tax — — — — Net income (loss) Net income attributable to non-controlling interests — — — Net income (loss) attributable to Starwood Property Trust, Inc . $ $ $ $ $ $ — $ |
Schedule of condensed consolidated balance sheet by business segment | The table below presents our condensed consolidated balance sheet as of September 30, 2015 b y business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ $ $ — $ $ $ $ Restricted cash — — Loans held-for-investment, net — — — — Loans held-for-sale — — — Loans transferred as secured borrowings — — — — Investment securities — — Properties, net — — — Intangible assets — — Investment in unconsolidated entities — Goodwill — — — — Derivative assets — — Accrued interest receivable — — — Other assets VIE assets, at fair value — — — — — Total Assets $ $ $ $ $ $ $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ $ $ $ $ $ $ Related-party payable — — — Dividends payable — — — — Derivative liabilities — — Secured financing agreements, net — Convertible senior notes, net — — — — Secured borrowings on transferred loans — — — — VIE liabilities, at fair value — — — — — Total Liabilities Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — Additional paid-in capital — Treasury stock — — — — Accumulated other comprehensive income (loss) — — Retained earnings (accumulated deficit) — Total Starwood Property Trust, Inc. Stockholders’ Equity — Non-controlling interests in consolidated subsidiaries — — Total Equity Total Liabilities and Equity $ $ $ $ $ $ $ The table below presents our condensed consolidated balance sheet as of December 31, 2014 by business segment (amounts in thousands): Investing Investing Lending and Servicing Property and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ $ $ — $ $ $ $ Restricted cash — — — Loans held-for-investment, net — — — Loans held-for-sale — — — — Loans transferred as secured borrowings — — — — Investment securities — — Properties, net — — — — Intangible assets — — — Investment in unconsolidated entities — Goodwill — — — — Derivative assets — — — Accrued interest receivable — — — Other assets — VIE assets, at fair value — — — — — Total Assets $ $ $ $ $ $ $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ $ $ — $ $ $ $ Related-party payable — — — Dividends payable — — — — Derivative liabilities — — — Secured financing agreements, net — — Convertible senior notes, net — — — — Secured borrowings on transferred loans — — — — VIE liabilities, at fair value — — — — — Total Liabilities — Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — — Additional paid-in capital — Treasury stock — — — — Accumulated other comprehensive income — — — Retained earnings (accumulated deficit) — Total Starwood Property Trust, Inc. Stockholders’ Equity — Non-controlling interests in consolidated subsidiaries — — — Total Equity Total Liabilities and Equity $ $ $ $ $ $ $ |
Business and Organization (Deta
Business and Organization (Details) | 9 Months Ended |
Sep. 30, 2015segment | |
Business and Organization | |
Number of reportable business segments | 3 |
Minimum annual REIT taxable income distributable to stockholders (as a percent) | 90.00% |
Summary of Significant Accoun51
Summary of Significant Accounting Policies (Details) | Sep. 30, 2015 |
Variable Interest Entities | |
REO assets as a percent of consolidated VIE assets | 4.00% |
Loans as a percent of consolidated VIE assets | 96.00% |
Summary of Significant Accoun52
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Reclassifications to financial statements | |||||
Other assets | $ 137,296 | $ 137,296 | $ 95,652 | ||
Other revenues | 4,300 | $ 4,033 | 7,437 | $ 9,296 | |
Other expense | $ 3 | 918 | $ 378 | 6,527 | |
Reclassification Adjustment | |||||
Reclassifications to financial statements | |||||
Other assets | $ 39,900 | ||||
Other revenues | 3,400 | 6,500 | |||
Other expense | $ 1,800 | $ 3,900 |
Acquisitions and Divestitures53
Acquisitions and Divestitures (Details) $ / shares in Units, $ in Thousands | Oct. 20, 2015USD ($)property | Jul. 24, 2015USD ($) | Jun. 30, 2015USD ($) | May. 31, 2015USD ($)property | Sep. 30, 2015USD ($)$ / shares | Jul. 25, 2015USD ($)ft² | Sep. 30, 2014USD ($)$ / shares | Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2014USD ($)$ / shares | Oct. 26, 2015USD ($)item | Aug. 31, 2015USD ($)propertyitem | Dec. 31, 2014USD ($) |
Acquisition | |||||||||||||
Purchase price | $ 65,900 | ||||||||||||
Liabilities assumed: | |||||||||||||
Revenues | $ 192,145 | $ 181,368 | 549,654 | $ 524,097 | |||||||||
Net loss | 117,116 | 167,390 | 355,535 | 408,653 | |||||||||
Goodwill | 140,437 | $ 140,437 | 140,437 | $ 140,437 | |||||||||
Affordable Housing Portfolio | |||||||||||||
Acquisition | |||||||||||||
Number of properties in portfolio investment | property | 29 | ||||||||||||
Number of units | item | 7,870 | ||||||||||||
Initial aggregate purchase price to be transferred | $ 524,100 | ||||||||||||
Debt incurred to partially fund acquisition | $ 362,800 | ||||||||||||
Affordable Housing Portfolio | Subsequent event | |||||||||||||
Acquisition | |||||||||||||
Number of acquired properties closed | property | 7 | ||||||||||||
Number of acquired properties not closed | property | 22 | ||||||||||||
Purchase price | $ 143,200 | ||||||||||||
Ireland Portfolio | |||||||||||||
Acquisition | |||||||||||||
Area of property | ft² | 600,000 | ||||||||||||
Purchase price | $ 226,600 | ||||||||||||
Amount of assumed debt extinguished in connection with the acquisition | 283,000 | ||||||||||||
Assets acquired: | |||||||||||||
Restricted cash | 10,829 | 10,829 | 10,829 | ||||||||||
Properties | 445,369 | 445,369 | 445,369 | ||||||||||
Intangible assets | 59,529 | 59,529 | 59,529 | ||||||||||
Other assets | 11,128 | 11,128 | 11,128 | ||||||||||
Total assets acquired | 526,855 | 526,855 | 526,855 | ||||||||||
Liabilities assumed: | |||||||||||||
Accounts payable, accrued expenses and other liabilities | 17,273 | 17,273 | 17,273 | ||||||||||
Secured financing agreements | 283,010 | 283,010 | 283,010 | ||||||||||
Total liabilities assumed | 300,283 | 300,283 | 300,283 | ||||||||||
Net assets acquired/purchase price | 226,572 | 226,572 | 226,572 | ||||||||||
Revenues | 10,800 | ||||||||||||
Net loss | 4,100 | ||||||||||||
Acquisition related costs | $ 3,300 | $ 3,300 | 3,300 | ||||||||||
Goodwill | 0 | $ 0 | 0 | ||||||||||
Pro forma revenue and net income | |||||||||||||
Revenues | 192,722 | 190,198 | 564,574 | 550,586 | |||||||||
Net income attributable to STWD | $ 116,803 | $ 164,838 | $ 357,314 | $ 399,053 | |||||||||
Net income per share - Basic | $ / shares | $ 0.49 | $ 0.73 | $ 1.52 | $ 1.85 | |||||||||
Net income per share - Diluted | $ / shares | $ 0.49 | $ 0.73 | $ 1.52 | $ 1.85 | |||||||||
Management fee expense addition | $ 46 | $ 1,047 | $ 1,605 | $ 3,141 | |||||||||
Ireland Portfolio | Lender 6 Mortgage Facility | |||||||||||||
Acquisition | |||||||||||||
Debt incurred to partially fund acquisition | $ 328,600 | ||||||||||||
Affordable Housing Community In Tampa Florida | Subsequent event | |||||||||||||
Acquisition | |||||||||||||
Number of units | item | 450 | ||||||||||||
Initial aggregate purchase price to be transferred | $ 29,100 | ||||||||||||
Net Leased Office Property | Ireland Portfolio | |||||||||||||
Acquisition | |||||||||||||
Number of properties in portfolio investment | property | 11 | ||||||||||||
Purchase price | $ 121,900 | ||||||||||||
Net Leased Office Property | Ireland Portfolio | Lender 6 Mortgage Facility | |||||||||||||
Acquisition | |||||||||||||
Debt incurred to partially fund acquisition | $ 80,700 | ||||||||||||
Multifamily Property | Ireland Portfolio | |||||||||||||
Acquisition | |||||||||||||
Number of properties in portfolio investment | property | 1 |
Acquisitions and Divestitures54
Acquisitions and Divestitures (Details 2) $ in Thousands, shares in Millions | Jan. 31, 2014USD ($)itemshares | Jan. 24, 2014 | Sep. 30, 2014USD ($) |
Summarized consolidated results of discontinued operations for the SFR segment prior to the spin-off | |||
Net loss | $ (1,551) | ||
Single Family Residential | |||
Summarized consolidated results of discontinued operations for the SFR segment prior to the spin-off | |||
Total revenues | 3,876 | ||
Total costs and expenses | 6,369 | ||
Loss before other income and income taxes | (2,493) | ||
Total other income | 942 | ||
Loss before income taxes | (1,551) | ||
Net loss | $ (1,551) | ||
SWAY | |||
Spin-off transaction | |||
Net assets | $ 1,100,000 | ||
Number of units of single-family homes | item | 7,200 | ||
Shares issued | shares | 40.1 | ||
Spin off | Single Family Residential | |||
Spin-off transaction | |||
Share exchange ratio | 0.20 | ||
Cash contribution | $ 100,000 |
Loans (Details)
Loans (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Investments in loans | ||||
Total gross loans | $ 6,414,512 | $ 6,306,316 | ||
Loan loss allowance (loans held-for-investment) | (6,342) | (6,031) | $ (5,917) | $ (3,984) |
Carrying Value | 6,408,170 | 6,300,285 | ||
Face Amount | 6,478,156 | 6,394,245 | ||
Carrying value under fair value option | 423,630 | |||
Loans with variable rates of interest | $ 4,770,057 | 4,468,210 | ||
Loans with variable rates of interest (as a percent) | 81.90% | |||
Variable rate basis of loans | LIBOR | |||
Weighted average spread of loans (as a percent) | 6.10% | |||
Amount of loan impairment charges on individual loans held-for-investment | $ 0 | 0 | ||
1-month LIBOR | ||||
Investments in loans | ||||
Loans with variable rates of interest | $ 463,214 | $ 138,576 | ||
Effective variable rate basis (as a percent) | 0.193% | 0.1713% | ||
3 Month LIBOR | ||||
Investments in loans | ||||
Loans with variable rates of interest | $ 411,122 | $ 440,222 | ||
Effective variable rate basis (as a percent) | 0.5831% | 0.564% | ||
LIBOR floor | ||||
Investments in loans | ||||
Loans with variable rates of interest | $ 3,895,721 | $ 3,889,412 | ||
LIBOR floor | Minimum | ||||
Investments in loans | ||||
Effective variable rate basis (as a percent) | 0.15% | 0.15% | ||
LIBOR floor | Maximum | ||||
Investments in loans | ||||
Effective variable rate basis (as a percent) | 3.00% | 3.00% | ||
LIBOR floor | Weighted-average | ||||
Investments in loans | ||||
Effective variable rate basis (as a percent) | 0.31% | 0.35% | ||
Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 5,821,228 | $ 5,785,269 | ||
Face Amount | 5,887,026 | 5,874,333 | ||
Loans held-for-sale | ||||
Investments in loans | ||||
Total gross loans | 450,828 | 391,620 | ||
Face Amount | $ 447,204 | $ 390,342 | ||
Weighted Average Coupon (as a percent) | 4.80% | 4.50% | ||
Weighted Average Life | 8 years 10 months 24 days | 8 years 3 months 18 days | ||
Loans transferred as secured borrowings | ||||
Investments in loans | ||||
Total gross loans | $ 142,456 | $ 129,427 | ||
Face Amount | $ 143,926 | $ 129,570 | ||
Weighted Average Coupon (as a percent) | 6.00% | 5.40% | ||
Weighted Average Life | 2 years 2 months 12 days | 2 years 6 months | ||
First Mortgages: | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 4,533,689 | $ 4,538,961 | ||
Face Amount | $ 4,588,988 | $ 4,609,526 | ||
Weighted Average Coupon (as a percent) | 6.10% | 6.20% | ||
Weighted Average Life | 3 years | 3 years 6 months | ||
Subordinated mortgages | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | $ 399,381 | $ 345,091 | ||
Face Amount | $ 424,957 | $ 374,859 | ||
Weighted Average Coupon (as a percent) | 8.60% | 8.10% | ||
Weighted Average Life | 3 years 7 months 6 days | 3 years 10 months 24 days | ||
Mezzanine Loans | ||||
Investments in loans | ||||
Carrying Value | $ 892,300 | $ 704,200 | ||
Mezzanine Loans | Total loans held-for-investment | ||||
Investments in loans | ||||
Total gross loans | 888,158 | 901,217 | ||
Face Amount | $ 873,081 | $ 889,948 | ||
Weighted Average Coupon (as a percent) | 10.00% | 10.40% | ||
Weighted Average Life | 2 years 2 months 12 days | 2 years 7 months 6 days |
Loans (Details 2)
Loans (Details 2) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015USD ($)loan | Dec. 31, 2014USD ($) | |
Investments in loans | ||
Total gross loans | $ 6,414,512 | $ 6,306,316 |
Total gross loans (as a percent) | 100.00% | 100.00% |
Amount of loan impairment charges on individual loans held-for-investment | $ 0 | $ 0 |
Investment and Servicing Segment | ||
Investments in loans | ||
Number of held-for-sale loans 90 days past due or greater that were repaid | loan | 2 | |
Rating 1 | ||
Investments in loans | ||
Total gross loans | $ 702 | 822 |
Rating 1 | Maximum | ||
Investments in loans | ||
LTV (as a percent) | 65.00% | |
Rating 2 | ||
Investments in loans | ||
Total gross loans | $ 604,864 | $ 523,572 |
Total gross loans (as a percent) | 9.40% | 8.30% |
Rating 2 | Maximum | ||
Investments in loans | ||
LTV (as a percent) | 70.00% | |
Rating 3 | ||
Investments in loans | ||
Total gross loans | $ 4,935,317 | $ 5,092,243 |
Total gross loans (as a percent) | 76.90% | 80.70% |
Rating 3 | Maximum | ||
Investments in loans | ||
LTV (as a percent) | 80.00% | |
Rating 4 | ||
Investments in loans | ||
Total gross loans | $ 422,801 | $ 248,793 |
Total gross loans (as a percent) | 6.60% | 4.00% |
Allowance for loan losses as a percent of carrying amount | 1.50% | |
Rating 4 | Minimum | ||
Investments in loans | ||
LTV (as a percent) | 80.00% | |
Rating 4 | Maximum | ||
Investments in loans | ||
LTV (as a percent) | 90.00% | |
Rating 5 | ||
Investments in loans | ||
Total gross loans | $ 45,974 | |
Total gross loans (as a percent) | 0.70% | |
Allowance for loan losses as a percent of carrying amount | 5.00% | |
Rating 5 | Minimum | ||
Investments in loans | ||
LTV (as a percent) | 90.00% | |
N/A | ||
Investments in loans | ||
Total gross loans | $ 450,828 | $ 394,912 |
Total gross loans (as a percent) | 7.10% | 6.30% |
Mezzanine Loans | Lending Segment | ||
Investments in loans | ||
Total gross loans | $ 61,000 | |
Carrying amount of loans 90 days or more past due | 18,600 | |
Total loans held-for-investment | ||
Investments in loans | ||
Total gross loans | 5,821,228 | $ 5,785,269 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | ||
Investments in loans | ||
Total gross loans | 4,533,689 | 4,535,669 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 1 | ||
Investments in loans | ||
Total gross loans | 702 | 822 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 2 | ||
Investments in loans | ||
Total gross loans | 396,967 | 258,822 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 3 | ||
Investments in loans | ||
Total gross loans | 3,863,862 | 4,120,562 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 4 | ||
Investments in loans | ||
Total gross loans | 272,158 | 109,489 |
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 5 | ||
Investments in loans | ||
Total gross loans | 45,974 | |
Total loans held-for-investment | Subordinated mortgages | ||
Investments in loans | ||
Total gross loans | 399,381 | 345,091 |
Total loans held-for-investment | Subordinated mortgages | Rating 2 | ||
Investments in loans | ||
Total gross loans | 88,195 | 116,168 |
Total loans held-for-investment | Subordinated mortgages | Rating 3 | ||
Investments in loans | ||
Total gross loans | 278,140 | 196,476 |
Total loans held-for-investment | Subordinated mortgages | Rating 4 | ||
Investments in loans | ||
Total gross loans | 33,046 | 32,447 |
Total loans held-for-investment | Mezzanine Loans | ||
Investments in loans | ||
Total gross loans | 888,158 | 901,217 |
Total loans held-for-investment | Mezzanine Loans | Rating 2 | ||
Investments in loans | ||
Total gross loans | 119,702 | 148,582 |
Total loans held-for-investment | Mezzanine Loans | Rating 3 | ||
Investments in loans | ||
Total gross loans | 650,859 | 645,778 |
Total loans held-for-investment | Mezzanine Loans | Rating 4 | ||
Investments in loans | ||
Total gross loans | 117,597 | 106,857 |
Total loans held-for-investment | Cost Recovery Loans | ||
Investments in loans | ||
Total gross loans | 3,292 | |
Total loans held-for-investment | Cost Recovery Loans | N/A | ||
Investments in loans | ||
Total gross loans | 3,292 | |
Loans held-for-sale | ||
Investments in loans | ||
Total gross loans | $ 450,828 | 391,620 |
Number of held-for-sale loans with the fair value option elected that were 90 days past due or greater or on nonaccrual status | loan | 0 | |
Loans held-for-sale | N/A | ||
Investments in loans | ||
Total gross loans | $ 450,828 | 391,620 |
Loans transferred as secured borrowings | ||
Investments in loans | ||
Total gross loans | 142,456 | 129,427 |
Loans transferred as secured borrowings | Rating 3 | ||
Investments in loans | ||
Total gross loans | $ 142,456 | $ 129,427 |
Loans (Details 3)
Loans (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Activity in allowance for loan losses | ||||
Allowance for loan losses at the beginning of the period | $ 6,031 | $ 3,984 | ||
Provision for loan losses | 311 | 1,933 | ||
Allowance for loan losses at the end of the period | $ 6,342 | $ 5,917 | 6,342 | 5,917 |
Recorded investment in loans related to the allowance for loan loss | 422,801 | 287,231 | 422,801 | 287,231 |
Activity in loan portfolio | ||||
Balance at the beginning of the period | 6,300,285 | 4,750,804 | ||
Acquisitions/origination/additional funding | 3,114,293 | 3,283,546 | ||
Capitalized Interest | 51,416 | 31,994 | ||
Basis of loans sold | (2,040,380) | (1,505,764) | ||
Loan maturities/principal repayments | (1,055,419) | (1,009,222) | ||
Discount accretion | 26,615 | 16,756 | ||
Changes in fair value | 19,082 | 15,517 | 51,044 | 48,018 |
Unrealized foreign currency remeasurement loss | (30,529) | (21,088) | ||
Change in loan loss allowance, net | (311) | (1,933) | ||
Transfer to/from other asset classifications | (8,844) | (3,503) | ||
Balance at the end of the period | $ 6,408,170 | $ 5,589,608 | $ 6,408,170 | $ 5,589,608 |
Investment Securities (Details)
Investment Securities (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Investment Securities | |||||
Investment securities | $ 786,461 | $ 786,461 | $ 998,248 | ||
Purchases | 15,595 | $ 13,777 | 163,018 | $ 67,230 | |
Sales | 1,203 | 5,588 | 6,301 | 100,166 | |
Principal collections | 100,316 | 21,885 | $ 348,090 | 40,999 | |
Number of CMBS classified as HTM | item | 6 | ||||
Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | 1,491,416 | $ 1,491,416 | 1,518,070 | ||
Available-for-sale | |||||
Investment Securities | |||||
Purchase Amortized Cost | 153,694 | 153,694 | 257,418 | ||
Credit OTTI | (10,184) | (10,184) | (10,197) | ||
Recorded Amortized Cost | 143,510 | 143,510 | 247,221 | ||
Non-Credit OTTI | (175) | (175) | (197) | ||
Gross Unrealized Gains | 41,450 | 41,450 | 60,378 | ||
Net Fair Value Adjustment | 41,275 | 41,275 | 60,181 | ||
Fair Value | $ 184,785 | $ 184,785 | $ 307,402 | ||
Available-for-sale | One-month LIBOR | |||||
Investment Securities | |||||
Effective variable rate basis (as a percent) | 0.193% | 0.193% | 0.171% | ||
Fair value option | VIE eliminations | |||||
Investment Securities | |||||
Investment securities | $ (704,955) | $ (704,955) | $ (519,822) | ||
Held-to-maturity | |||||
Investment Securities | |||||
Purchases | 9,930 | 148,365 | |||
Principal collections | 21 | 14 | 228,956 | 38 | |
Held-to-maturity | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | 365,005 | 365,005 | 441,995 | ||
RMBS | |||||
Investment Securities | |||||
Portion of securities with variable rate | 128,400 | 128,400 | |||
RMBS | Available-for-sale | |||||
Investment Securities | |||||
Sales | 5,588 | 68,134 | |||
Principal collections | 8,500 | 21,870 | 27,114 | 40,155 | |
Purchase Amortized Cost | 153,694 | 153,694 | 163,733 | ||
Credit OTTI | (10,184) | (10,184) | (10,197) | ||
Recorded Amortized Cost | 143,510 | 143,510 | 153,536 | ||
Non-Credit OTTI | (175) | (175) | (197) | ||
Gross Unrealized Gains | 41,450 | 41,450 | 53,714 | ||
Net Fair Value Adjustment | 41,275 | 41,275 | 53,517 | ||
Fair Value | $ 184,785 | $ 184,785 | 207,053 | ||
Portion of securities with variable rate | $ 140,100 | ||||
Portion of securities with variable rate (as a percent) | 69.50% | 69.50% | 67.70% | ||
Principal balance | $ 242,219 | $ 242,219 | $ 270,783 | ||
Accretable yield | (73,361) | (73,361) | (85,495) | ||
Non-accretable difference | (25,348) | (25,348) | (31,752) | ||
Total discount | (98,709) | (98,709) | (117,247) | ||
Amortized cost | 143,510 | 143,510 | 153,536 | ||
Credit deteriorated RMBS | 205,200 | 205,200 | 222,900 | ||
Accretable yield related to credit deteriorated RMBS | 61,900 | 61,900 | 66,600 | ||
Changes to accretable yield | |||||
Balance at the beginning of the period | 74,184 | 85,495 | |||
Accretion of discount | (3,600) | (17,087) | |||
Principal write-downs | (484) | (1,451) | |||
Transfer to/from non-accretable difference | 2,777 | 4,953 | |||
Balance at the end of the period | 73,361 | 73,361 | 85,495 | ||
Changes to non accretable difference | |||||
Balance at the beginning of the period | 28,609 | 31,752 | |||
Accretion of discount | (3,600) | (17,087) | |||
Principal write-downs | (484) | (1,451) | |||
Transfer to/from non-accretable difference | (2,777) | (4,953) | |||
Balance at the end of the period | $ 25,348 | $ 25,348 | $ 31,752 | ||
RMBS | Available-for-sale | LIBOR | |||||
Investment Securities | |||||
Variable rate, weighted average spread (as a percent) | 0.43% | 0.44% | |||
RMBS | Available-for-sale | B- | |||||
Investment Securities | |||||
Weighted Average Coupon (as a percent) | 1.10% | 1.10% | 1.10% | ||
WAL | 6 years 3 months 18 days | 5 years 9 months 18 days | |||
RMBS | Available-for-sale | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | $ 184,785 | $ 184,785 | $ 207,053 | ||
CMBS | Available-for-sale | |||||
Investment Securities | |||||
Principal collections | 91,794 | 92,018 | 805 | ||
Purchase Amortized Cost | 93,685 | ||||
Recorded Amortized Cost | 93,685 | ||||
Gross Unrealized Gains | 6,664 | ||||
Net Fair Value Adjustment | 6,664 | ||||
Fair Value | 100,349 | ||||
Portion of securities with variable rate | $ 200 | ||||
Portion of securities with variable rate (as a percent) | 0.20% | ||||
Principal balance | $ 93,685 | ||||
Amortized cost | $ 93,685 | ||||
CMBS | Available-for-sale | BB+ | |||||
Investment Securities | |||||
Weighted Average Coupon (as a percent) | 11.60% | ||||
WAL | 3 years 2 months 12 days | ||||
CMBS | Available-for-sale | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | $ 100,349 | ||||
CMBS | Fair value option | |||||
Investment Securities | |||||
Purchases | 5,665 | 13,777 | 14,653 | 67,230 | |
Sales | 1,203 | 6,301 | 32,032 | ||
Principal collections | $ 1 | $ 1 | $ 2 | $ 1 | |
Weighted Average Coupon (as a percent) | 3.50% | 3.50% | 3.90% | ||
WAL | 7 years 4 months 24 days | 7 years 8 months 12 days | |||
CMBS | Fair value option | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | $ 927,315 | $ 927,315 | $ 753,553 | ||
Equity security | Fair value option | Before consolidation of securitization VIEs | |||||
Investment Securities | |||||
Investment securities | 14,311 | 14,311 | 15,120 | ||
CMBS, fair value option | |||||
Investment Securities | |||||
Amount not rated | 35,800 | 35,800 | $ 41,700 | ||
Portion of securities with variable rate | $ 0 | $ 0 |
Investment Securities (Details
Investment Securities (Details 2) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($)security | Sep. 30, 2015USD ($)security | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($)security | |
Available-for-sale | ||||
Estimated Fair Value | ||||
Securities with a loss less than 12 months | $ 12,320 | $ 12,320 | ||
Securities with a loss greater than 12 months | 678 | 678 | $ 682 | |
Unrealized Losses | ||||
Securities with a loss less than 12 months | (25) | (25) | ||
Securities with a loss greater than 12 months | (150) | (150) | (197) | |
RMBS | ||||
Unrealized Losses | ||||
Portion of securities with variable rate | 128,400 | $ 128,400 | ||
RMBS | Available-for-sale | ||||
Investment Securities | ||||
Maximum investment in available-for-sale securities with aggregate expected modified durations of less than 12 months (as a percent) | 10.00% | |||
Cost of third party management | 400 | $ 1,100 | $ 1,500 | |
Estimated Fair Value | ||||
Securities with a loss less than 12 months | 12,320 | 12,320 | ||
Securities with a loss greater than 12 months | 678 | 678 | 682 | |
Unrealized Losses | ||||
Securities with a loss less than 12 months | (25) | (25) | ||
Securities with a loss greater than 12 months | $ (150) | $ (150) | $ (197) | |
Number of securities with unrealized loss position | security | 2 | 2 | 2 | |
Portion of securities with variable rate | $ 140,100 | |||
CMBS | Available-for-sale | ||||
Unrealized Losses | ||||
Portion of securities with variable rate | $ 200 | |||
CMBS | Fair value option | ||||
Unrealized Losses | ||||
Unpaid principal balance of investment securities before consolidation of VIEs | $ 4,500,000 | $ 4,500,000 | ||
Purchases in which fair value option was elected | 115,000 | 213,200 | ||
Purchase amount reflected as repayment of debt of consolidated VIEs | 109,400 | 198,600 | ||
CMBS, fair value option | ||||
Unrealized Losses | ||||
Portion of securities with variable rate | $ 0 | $ 0 |
Investment Securities (Detail60
Investment Securities (Details 3) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | $ 365,005 | $ 441,995 |
Gross Unrealized Holdings Gains | 43 | |
Gross Unrealized Holdings Losses | (3,022) | (1,366) |
Fair Value | 362,026 | 440,629 |
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract] | ||
One to three years | 283,037 | |
Three to five years | 62,704 | |
Thereafter | 19,264 | |
Total | 365,005 | 441,995 |
Preferred Equity Investment | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 81,968 | 307,465 |
Gross Unrealized Holdings Losses | (827) | (1,366) |
Fair Value | 81,141 | 306,099 |
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract] | ||
Three to five years | 62,704 | |
Thereafter | 19,264 | |
Total | 81,968 | 307,465 |
CMBS | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 283,037 | 134,530 |
Gross Unrealized Holdings Gains | 43 | |
Gross Unrealized Holdings Losses | (2,195) | |
Fair Value | 280,885 | 134,530 |
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract] | ||
One to three years | 283,037 | |
Total | $ 283,037 | $ 134,530 |
Investment Securities (Detail61
Investment Securities (Details 4) - SEREF - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2012 | Sep. 30, 2015 | Dec. 31, 2014 | |
Residential Real Estate | |||
Number of shares acquired | 9,140,000 | ||
Ownership percentage | 4.00% | ||
Fair value of investment | $ 14.3 | $ 15.1 |
Properties (Details)
Properties (Details) $ in Thousands | Jul. 24, 2015USD ($) | Mar. 31, 2015USD ($) | Sep. 30, 2015USD ($)property | Jul. 25, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | May. 31, 2015property | Dec. 31, 2014USD ($) |
Properties | |||||||||
Purchase price | $ 65,900 | ||||||||
Gain on sale of investments and other assets, net | $ 3,348 | $ 1,332 | 20,755 | $ 12,965 | |||||
Summary of properties | |||||||||
Land improvements | 70 | 70 | |||||||
Building improvements | 240 | 240 | |||||||
Total properties, at cost | 534,768 | 534,768 | $ 40,497 | ||||||
Less: accumulated depreciation | (4,330) | (4,330) | (643) | ||||||
Properties, net | 530,438 | $ 530,438 | 39,854 | ||||||
Minimum | |||||||||
Summary of properties | |||||||||
Land improvements, useful life | 5 years | ||||||||
Building improvements, useful life | 5 years | ||||||||
Maximum | |||||||||
Summary of properties | |||||||||
Land improvements, useful life | 15 years | ||||||||
Building improvements, useful life | 10 years | ||||||||
Property Segment | |||||||||
Summary of properties | |||||||||
Land | 162,274 | $ 162,274 | |||||||
Building | 286,913 | $ 286,913 | |||||||
Building, useful life | 30 years | ||||||||
Investment and Servicing Segment | |||||||||
Properties | |||||||||
Purchase price | 32,500 | $ 65,900 | |||||||
Gain on sale of investments and other assets, net | $ 17,100 | ||||||||
Summary of properties | |||||||||
Land | 20,972 | 20,972 | 8,225 | ||||||
Building | 63,619 | 63,619 | 30,637 | ||||||
Furniture & fixtures | $ 680 | $ 680 | $ 1,635 | ||||||
Furniture & fixtures, useful life | 3 years | ||||||||
Investment and Servicing Segment | Minimum | |||||||||
Summary of properties | |||||||||
Building, useful life | 20 years | ||||||||
Investment and Servicing Segment | Maximum | |||||||||
Summary of properties | |||||||||
Building, useful life | 40 years | ||||||||
Ireland Portfolio | |||||||||
Properties | |||||||||
Purchase price | $ 226,600 | ||||||||
Ireland Portfolio | Lender 6 Mortgage Facility | |||||||||
Properties | |||||||||
Debt incurred to partially fund acquisition | $ 328,600 | ||||||||
Residential Properties | Investment and Servicing Segment | |||||||||
Properties | |||||||||
Number of properties acquired | property | 3 | ||||||||
Net Leased Office Property | Ireland Portfolio | |||||||||
Properties | |||||||||
Number of properties in portfolio investment | property | 11 | ||||||||
Purchase price | $ 121,900 | ||||||||
Net Leased Office Property | Ireland Portfolio | Lender 6 Mortgage Facility | |||||||||
Properties | |||||||||
Debt incurred to partially fund acquisition | $ 80,700 | ||||||||
Multifamily Property | Ireland Portfolio | |||||||||
Properties | |||||||||
Number of properties in portfolio investment | property | 1 |
Investment in Unconsolidated 63
Investment in Unconsolidated Entities (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($)property | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)property | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Investment in Unconsolidated Entities | |||||
Equity method, Carrying value | $ 180,384 | $ 180,384 | $ 176,359 | ||
Cost method, Carrying value | 18,787 | 18,787 | 17,624 | ||
Investment in unconsolidated entities | 199,171 | 199,171 | 193,983 | ||
Purchase price | 65,900 | ||||
Income recognized | $ 5,706 | $ 3,805 | $ 20,747 | $ 13,432 | |
Retail fund | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 33.00% | 33.00% | |||
Equity method, Carrying value | $ 121,733 | $ 121,733 | $ 129,475 | ||
Investor entity which owns equity in two real estate services providers | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | 50.00% | ||
Equity method, Carrying value | $ 23,366 | $ 23,366 | $ 21,534 | ||
Equity interests in commercial real estate | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Carrying value | $ 28,224 | $ 28,224 | |||
Equity interests in commercial real estate | Properties of unconsolidated entities | |||||
Investment in Unconsolidated Entities | |||||
Number of properties | property | 10 | 10 | |||
Equity interests in commercial real estate | Minimum | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 16.00% | 16.00% | 16.00% | ||
Equity interests in commercial real estate | Maximum | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 43.00% | 43.00% | 43.00% | ||
Bridge loan venture | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Carrying value | $ 8,417 | ||||
Various - Equity method | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Carrying value | $ 7,061 | $ 7,061 | $ 16,933 | ||
Various - Equity method | Minimum | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 25.00% | 25.00% | 25.00% | ||
Various - Equity method | Maximum | |||||
Investment in Unconsolidated Entities | |||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | 50.00% | ||
Investment funds which own equity in a loan servicer and other real estate assets | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Carrying value | $ 9,225 | $ 9,225 | $ 9,225 | ||
Investment funds which own equity in a loan servicer and other real estate assets | Minimum | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Ownership % | 4.00% | 4.00% | 4.00% | ||
Investment funds which own equity in a loan servicer and other real estate assets | Maximum | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Ownership % | 6.00% | 6.00% | 6.00% | ||
Various - Cost method | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Carrying value | $ 9,562 | $ 9,562 | $ 8,399 | ||
Various - Cost method | Minimum | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Ownership % | 0.00% | 0.00% | 0.00% | ||
Various - Cost method | Maximum | |||||
Investment in Unconsolidated Entities | |||||
Cost method, Ownership % | 3.00% | 3.00% | 3.00% |
Goodwill and Intangible Asset64
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Summary of Intangible Assets | ||
Gross carrying value | $ 223,640 | $ 165,695 |
Accumulated amortization | (32,560) | (21,543) |
Net carrying value | 191,080 | 144,152 |
European servicing rights | ||
Summary of Intangible Assets | ||
Gross carrying value | 32,429 | 33,392 |
Accumulated amortization | (28,657) | (21,543) |
Net carrying value | 3,772 | 11,849 |
Fair value intangible assets | 7,700 | 12,700 |
In-place lease | ||
Summary of Intangible Assets | ||
Gross carrying value | 54,245 | |
Accumulated amortization | (3,397) | |
Net carrying value | $ 50,848 | |
In-place lease | Weighted-average | ||
Intangible Assets | ||
Amortization period (in years) | 10 years | |
Favorable lease | ||
Summary of Intangible Assets | ||
Gross carrying value | $ 13,074 | |
Accumulated amortization | (506) | |
Net carrying value | $ 12,568 | |
Favorable lease | Weighted-average | ||
Intangible Assets | ||
Amortization period (in years) | 11 years 2 months 12 days | |
Domestic Servicing Rights | ||
Summary of Intangible Assets | ||
Gross carrying value | $ 123,892 | 132,303 |
Net carrying value | 123,892 | 132,303 |
Domestic Servicing Rights | Before consolidation of securitization VIEs | ||
Intangible Assets | ||
Servicing rights intangibles | 151,800 | 178,400 |
Domestic Servicing Rights | VIE eliminations | ||
Intangible Assets | ||
Servicing rights intangibles | $ 27,900 | $ 46,100 |
Goodwill and Intangible Asset65
Goodwill and Intangible Assets (Details 2) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Summary of activity within intangible assets | |
Balance as of beginning of period | $ 144,152 |
Amortization | (11,702) |
Foreign exchange (loss) gain | 258 |
Changes in fair value due to changes in inputs and assumptions | (8,411) |
Balance as of end of period | 191,080 |
Future amortization expense for the European servicing rights, in-place lease intangible assets and favorable lease intangible assets | |
2015 (reminder of) | 3,839 |
2,016 | 12,039 |
2,017 | 8,560 |
2,018 | 7,855 |
2,019 | 6,700 |
Thereafter | 28,195 |
Total | 67,188 |
Ireland Portfolio | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 59,529 |
CMBS Trusts | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 7,254 |
European servicing rights | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 11,849 |
Amortization | (7,814) |
Foreign exchange (loss) gain | (263) |
Balance as of end of period | 3,772 |
In-place lease | |
Summary of activity within intangible assets | |
Amortization | (3,384) |
Foreign exchange (loss) gain | 391 |
Balance as of end of period | 50,848 |
In-place lease | Ireland Portfolio | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 47,999 |
In-place lease | CMBS Trusts | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 5,842 |
Favorable lease | |
Summary of activity within intangible assets | |
Amortization | (504) |
Foreign exchange (loss) gain | 130 |
Balance as of end of period | 12,568 |
Favorable lease | Ireland Portfolio | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 11,530 |
Favorable lease | CMBS Trusts | |
Summary of activity within intangible assets | |
Acquisition of finite-lived intangibles | 1,412 |
Domestic Servicing Rights | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 132,303 |
Changes in fair value due to changes in inputs and assumptions | (8,411) |
Balance as of end of period | $ 123,892 |
Secured Financing Agreements (D
Secured Financing Agreements (Details) $ in Thousands, € in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Jul. 31, 2015USD ($) | May. 31, 2015EUR (€) | Mar. 31, 2015 | Feb. 28, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Aug. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | $ 8,312,788 | $ 8,312,788 | |||||||||
Maximum Facility Size | 6,290,873 | 6,290,873 | |||||||||
Carrying Value | 3,682,274 | 3,682,274 | $ 3,137,789 | ||||||||
Repayment of secured financings | |||||||||||
Extension option exercised period | 1 year | ||||||||||
Outstanding borrowings with the FHLB | $ 0 | $ 0 | |||||||||
Percentage of repurchase agreements for which margin calls are limited to collateral specific credit marks | 76.00% | 76.00% | |||||||||
Percentage of repurchase agreements containing margin call provisions that pertain to loans held-for-sale | 50.00% | 50.00% | |||||||||
Lender 1 Repo 1 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | $ 1,471,791 | $ 1,471,791 | |||||||||
Maximum Facility Size | $ 1,250,000 | 1,600,000 | 1,600,000 | $ 1,600,000 | |||||||
Carrying Value | 916,310 | $ 916,310 | 875,111 | ||||||||
Lender 1 Repo 1 Facility | Minimum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 1.85% | ||||||||||
Lender 1 Repo 1 Facility | Maximum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 5.25% | ||||||||||
Lender 1 Repo 2 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 184,785 | $ 184,785 | |||||||||
Maximum Facility Size | 125,000 | 125,000 | |||||||||
Carrying Value | 6,948 | $ 6,948 | 101,886 | ||||||||
Current maturity period, relative to when the buyer delivers notice to the seller | 180 days | ||||||||||
Lender 1 Repo 2 Facility | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 1.90% | ||||||||||
Lender 2 Repo 1 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 373,917 | $ 373,917 | |||||||||
Maximum Facility Size | 325,000 | 325,000 | |||||||||
Carrying Value | 272,824 | $ 272,824 | 240,188 | ||||||||
Lender 2 Repo 1 Facility | Minimum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 1.75% | ||||||||||
Lender 2 Repo 1 Facility | Maximum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.75% | ||||||||||
Lender 3 Repo I Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 229,983 | $ 229,983 | |||||||||
Maximum Facility Size | 162,917 | 162,917 | |||||||||
Carrying Value | 162,917 | $ 162,917 | 124,250 | ||||||||
Lender 3 Repo I Facility | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.85% | ||||||||||
Conduit Repo 1 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 116,084 | $ 116,084 | |||||||||
Maximum Facility Size | 150,000 | 150,000 | |||||||||
Carrying Value | 85,849 | 85,849 | 94,727 | ||||||||
Repayment of secured financings | |||||||||||
2015 (remainder of) | 287,300 | $ 287,300 | |||||||||
Conduit Repo 1 Facility | Minimum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 1.95% | ||||||||||
Conduit Repo 1 Facility | Maximum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 3.35% | ||||||||||
Conduit Repo 2 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 164,310 | $ 164,310 | |||||||||
Maximum Facility Size | 150,000 | 150,000 | |||||||||
Carrying Value | 121,556 | $ 121,556 | 113,636 | ||||||||
Conduit Repo 2 Facility | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.10% | ||||||||||
Conduit Repo 3 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 107,389 | $ 107,389 | |||||||||
Maximum Facility Size | $ 150,000 | 150,000 | 150,000 | ||||||||
Carrying Value | 79,847 | $ 79,847 | |||||||||
Maturity period | 3 years | ||||||||||
Extended term | 1 year | ||||||||||
Conduit Repo 3 Facility | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.10% | 2.10% | |||||||||
Lender 4 Repo 1 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 405,195 | $ 405,195 | |||||||||
Maximum Facility Size | 317,688 | 317,688 | |||||||||
Carrying Value | 317,688 | $ 317,688 | 327,117 | ||||||||
Repayment of secured financings | |||||||||||
Extension option exercised period | 1 year | ||||||||||
Lender 4 Repo 1 Facility | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.00% | ||||||||||
Lender 5 Repo 1 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Carrying Value | 58,079 | ||||||||||
Lender 6 Repo 1 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 733,579 | $ 733,579 | |||||||||
Maximum Facility Size | 500,000 | 500,000 | |||||||||
Carrying Value | 367,010 | $ 367,010 | 296,967 | ||||||||
Lender 6 Repo 1 Facility | Minimum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.50% | ||||||||||
Lender 6 Repo 1 Facility | Maximum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 3.00% | ||||||||||
Lender 6 Mortgage Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 502,497 | $ 502,497 | |||||||||
Maximum Facility Size | € 294 | 328,602 | 328,602 | ||||||||
Carrying Value | 328,602 | 328,602 | |||||||||
Amount drawn | € | € 73.5 | ||||||||||
Maturity period | 5 years | ||||||||||
Repayment of secured financings | |||||||||||
Deferred financing costs incurred | $ 5,700 | ||||||||||
Lender 6 Mortgage Facility | Eurodollar | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 1.69% | 1.69% | |||||||||
Lender 7 Repo 1 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 140,274 | $ 140,274 | |||||||||
Maximum Facility Size | 107,416 | 107,416 | |||||||||
Carrying Value | 107,416 | $ 107,416 | 39,024 | ||||||||
Lender 7 Repo 1 Facility | Minimum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.35% | ||||||||||
Lender 7 Repo 1 Facility | Maximum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.70% | ||||||||||
Investing and Servicing Segment Property Mortgages | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 43,688 | $ 43,688 | |||||||||
Maximum Facility Size | 38,975 | 38,975 | |||||||||
Carrying Value | 31,835 | 31,835 | 14,000 | ||||||||
Lender 9 Repo 1 Facility | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 319,853 | 319,853 | |||||||||
Maximum Facility Size | 225,313 | 225,313 | |||||||||
Carrying Value | 225,313 | $ 225,313 | |||||||||
Maturity period | 12 months | ||||||||||
Lender 9 Repo 1 Facility | Minimum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 1.40% | 1.40% | |||||||||
Lender 9 Repo 1 Facility | Maximum | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 1.85% | 1.85% | |||||||||
Borrowing Base | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 222,770 | $ 222,770 | |||||||||
Maximum Facility Size | $ 450,000 | 450,000 | $ 250,000 | 450,000 | |||||||
Carrying Value | 189,871 | ||||||||||
Maximum facility size subject to certain conditions | 650,000 | $ 650,000 | |||||||||
Repayment of secured financings | |||||||||||
Extension option exercised period | 1 year | ||||||||||
Borrowing Base | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.75% | ||||||||||
Term Loan | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 3,296,673 | $ 3,296,673 | |||||||||
Maximum Facility Size | 659,962 | 659,962 | |||||||||
Carrying Value | 658,159 | $ 658,159 | 662,933 | ||||||||
Floor interest rate (as a percent) | 0.75% | ||||||||||
Unamortized discount | 1,800 | $ 1,800 | 2,100 | ||||||||
Term Loan | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.75% | ||||||||||
FHLB Advances | |||||||||||
Secured Financing Agreements | |||||||||||
Maximum Facility Size | 1,000,000 | $ 1,000,000 | |||||||||
Secured financing agreements | |||||||||||
Secured Financing Agreements | |||||||||||
Maximum Facility Size | $ 17,800 | ||||||||||
Unamortized discount | 1,800 | 1,800 | |||||||||
Number of investment securities financed | item | 2 | ||||||||||
Repayment of secured financings | |||||||||||
2015 (remainder of) | 303,796 | 303,796 | |||||||||
2,016 | 256,698 | 256,698 | |||||||||
2,017 | 934,913 | 934,913 | |||||||||
2,018 | 646,036 | 646,036 | |||||||||
2,019 | 563,288 | 563,288 | |||||||||
Thereafter | 979,347 | 979,347 | |||||||||
Total | 3,684,078 | 3,684,078 | |||||||||
Deferred financing costs, net of amortization | 29,600 | 29,600 | 26,500 | ||||||||
Additional non-cash interest expense | 3,800 | $ 2,900 | 10,800 | $ 8,200 | |||||||
Secured financing agreements | LIBOR | |||||||||||
Secured Financing Agreements | |||||||||||
Pricing margin (as a percent) | 2.41% | ||||||||||
Secured financing agreements | Weighted-average | |||||||||||
Secured Financing Agreements | |||||||||||
Maturity period | 4 years 2 months 12 days | ||||||||||
Repurchase Agreements | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 2,663,678 | 2,663,678 | 2,270,985 | ||||||||
Repayment of secured financings | |||||||||||
2015 (remainder of) | 302,104 | 302,104 | |||||||||
2,016 | 249,929 | 249,929 | |||||||||
2,017 | 928,144 | 928,144 | |||||||||
2,018 | 626,982 | 626,982 | |||||||||
2,019 | 556,519 | 556,519 | |||||||||
Total | 2,663,678 | 2,663,678 | |||||||||
Repurchase Agreements | Loan held for investment | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 2,036,748 | 2,036,748 | 1,863,633 | ||||||||
Repurchase Agreements | Loans held-for-sale | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 287,252 | 287,252 | 208,363 | ||||||||
Repurchase Agreements | Investment securities. | |||||||||||
Secured Financing Agreements | |||||||||||
Pledged Asset Carrying Value | 339,678 | 339,678 | $ 198,989 | ||||||||
Other Secured Financing | |||||||||||
Repayment of secured financings | |||||||||||
2015 (remainder of) | 1,692 | 1,692 | |||||||||
2,016 | 6,769 | 6,769 | |||||||||
2,017 | 6,769 | 6,769 | |||||||||
2,018 | 19,054 | 19,054 | |||||||||
2,019 | 6,769 | 6,769 | |||||||||
Thereafter | 979,347 | 979,347 | |||||||||
Total | $ 1,020,400 | $ 1,020,400 |
Convertible Senior Notes (Detai
Convertible Senior Notes (Details) $ / shares in Units, shares in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2014shares | Sep. 30, 2015USD ($)item$ / sharesshares | Sep. 30, 2014shares | Dec. 31, 2014USD ($) | Oct. 08, 2014USD ($) | Jul. 03, 2013USD ($) | Feb. 15, 2013USD ($) | |
Convertible Senior Notes | |||||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | $ 17,727,000 | ||||||
Loss on extinguishment of debt | $ (5,921,000) | ||||||
Conversion spread included in computation of diluted EPS (in shares) | shares | 966 | 932 | |||||
Conversion upon satisfaction of closing market price condition | |||||||
Convertible Senior Notes | |||||||
Minimum number of conditions to be satisfied for conversion of debt | item | 1 | ||||||
Minimum trading period as a basis for debt conversion | item | 20 | ||||||
Consecutive trading period as a basis for debt conversion | 30 days | ||||||
Conversion upon satisfaction of closing market price condition | Minimum | |||||||
Convertible Senior Notes | |||||||
Percentage of per share value of distributions that exceeds the market price of the entity's common stock as a basis for debt conversion | 10.00% | ||||||
Conversion upon satisfaction of closing market price condition | Maximum | |||||||
Convertible Senior Notes | |||||||
Period of average closing market price of common stock as a basis for debt conversion | 10 days | ||||||
Conversion upon satisfaction of trading price condition | |||||||
Convertible Senior Notes | |||||||
Consecutive trading period as a basis for debt conversion | 5 days | ||||||
Conversion upon satisfaction of trading price condition | Maximum | |||||||
Convertible Senior Notes | |||||||
Percentage of conversion price and last reported sales price as a basis for debt conversion | 98.00% | ||||||
2017 Notes | |||||||
Convertible Senior Notes | |||||||
Amount issued | $ 431,300,000 | ||||||
Principal Amount | $ 431,250,000 | ||||||
Coupon Rate (as a percent) | 3.75% | ||||||
Effective Rate (as a percent) | 5.87% | ||||||
Conversion Rate | 41.7397 | ||||||
Remaining Period of Amortization | 2 years | ||||||
Amount by which if-converted value of the Notes are less than principal amount | $ 61,900,000 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 23.96 | ||||||
2017 Notes | Conversion upon satisfaction of closing market price condition | Minimum | |||||||
Convertible Senior Notes | |||||||
Percentage of conversion price as a basis for debt conversion | 110.00% | ||||||
2018 Notes | |||||||
Convertible Senior Notes | |||||||
Amount issued | $ 600,000,000 | ||||||
Principal Amount | $ 599,981,000 | ||||||
Coupon Rate (as a percent) | 4.55% | ||||||
Effective Rate (as a percent) | 6.10% | ||||||
Conversion Rate | 45.8850 | ||||||
Remaining Period of Amortization | 2 years 4 months 24 days | ||||||
Amount by which if-converted value of the Notes are less than principal amount | $ 35,000,000 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 21.79 | ||||||
Conversion spread included in computation of diluted EPS (in shares) | shares | 0 | ||||||
2019 Notes | |||||||
Convertible Senior Notes | |||||||
Amount issued | $ 460,000,000 | ||||||
Principal Amount | $ 341,363,000 | ||||||
Coupon Rate (as a percent) | 4.00% | ||||||
Effective Rate (as a percent) | 5.37% | ||||||
Conversion Rate | 48.6931 | ||||||
Remaining Period of Amortization | 3 years 3 months 18 days | ||||||
Amount by which if-converted value of the Notes are less than principal amount | $ 300,000 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 20.54 | ||||||
Amount of debt repurchased | $ 118,600,000 | ||||||
Debt repurchased amount | 136,300,000 | ||||||
Repurchase expenses | 100,000 | ||||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | 17,700,000 | ||||||
Loss on extinguishment of debt | $ 5,900,000 | ||||||
Conversion spread included in computation of diluted EPS (in shares) | shares | 0 | ||||||
2018 Notes and 2019 Notes | Conversion upon satisfaction of closing market price condition | Minimum | |||||||
Convertible Senior Notes | |||||||
Percentage of conversion price as a basis for debt conversion | 130.00% | ||||||
Convertible Senior Notes | |||||||
Convertible Senior Notes | |||||||
Principal Amount | $ 1,372,594,000 | $ 1,491,228,000 | |||||
Net unamortized discount | (52,387,000) | (73,206,000) | |||||
Carrying amount of debt components | 1,320,207,000 | 1,418,022,000 | |||||
Carrying amount of conversion option equity components recorded in additional paid-in capital | $ 46,343,000 | 64,070,000 | |||||
Principal amount of notes, basis for conversion | 1,000 | ||||||
Closing share price (in dollars per share) | $ / shares | $ 20.52 | ||||||
Conversion of principal not included in computation of diluted EPS (in shares | shares | 62,200 | ||||||
Deferred financing costs, net of amortization | $ 1,600,000 | $ 2,300,000 | |||||
Convertible Senior Notes | 2017 Notes | |||||||
Convertible Senior Notes | |||||||
Conversion spread included in computation of diluted EPS (in shares) | shares | 0 | ||||||
Convertible Senior Notes | 2019 Notes | |||||||
Convertible Senior Notes | |||||||
Amount by which if-converted value of the Notes are less than principal amount | $ 300,000 |
Loan Securitization_Sale Acti68
Loan Securitization/Sale Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Loan Transfers Accounted for as Secured Borrowings | ||||
Face Amount | $ 38,925 | |||
Proceeds | 38,925 | |||
Investment and Servicing Segment | ||||
Loan Transfer Activities | ||||
Fair value of loans sold | $ 410,227 | $ 498,789 | 1,443,871 | $ 1,165,583 |
Par value of loans sold | 398,654 | 482,129 | 1,396,674 | 1,119,537 |
Repayment of purchase agreements | 299,301 | 361,569 | 1,043,757 | 839,626 |
Lending Segment | ||||
Loan Transfers Accounted for as Secured Borrowings | ||||
Net gain on the sale of loan qualifying for sales treatment | 2,700 | 800 | 3,000 | 1,300 |
Repurchase agreements | Lending Segment | ||||
Loan Transfers Accounted for as Sales | ||||
Face Amount | 225,264 | 142,896 | 606,725 | 347,755 |
Proceeds | $ 220,928 | $ 138,958 | $ 599,504 | $ 341,472 |
Derivatives and Hedging Activ69
Derivatives and Hedging Activity (Details) - 9 months ended Sep. 30, 2015 € in Thousands, £ in Thousands, SEK in Thousands, NOK in Thousands, DKK in Thousands, $ in Thousands | SEKinstrumentitem | NOKinstrumentitem | GBP (£)instrumentitem | DKKinstrumentitem | EUR (€)instrumentitem | USD ($)instrumentitem |
Derivatives | ||||||
Number of contracts | 247 | 247 | 247 | 247 | 247 | 247 |
Foreign exchange contracts | GBP | Sell | ||||||
Derivatives | ||||||
Number of contracts | 63 | 63 | 63 | 63 | 63 | 63 |
Aggregate notional amount | £ | £ 257,203 | |||||
Foreign exchange contracts | EUR | Sell | ||||||
Derivatives | ||||||
Number of contracts | 87 | 87 | 87 | 87 | 87 | 87 |
Aggregate notional amount | € | € 352,420 | |||||
Foreign exchange contracts | EUR | Sell | Ireland Portfolio | ||||||
Derivatives | ||||||
Number of contracts | 59 | 59 | 59 | 59 | 59 | 59 |
Aggregate notional amount | € | € 259,700 | |||||
Foreign exchange contracts | SEK | Buy | ||||||
Derivatives | ||||||
Number of contracts | 1 | 1 | 1 | 1 | 1 | 1 |
Aggregate notional amount | SEK | SEK 4,083 | |||||
Foreign exchange contracts | SEK | Sell | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | SEK | SEK 19,197 | |||||
Foreign exchange contracts | NOK | Sell | ||||||
Derivatives | ||||||
Number of contracts | 1 | 1 | 1 | 1 | 1 | 1 |
Aggregate notional amount | NOK | NOK 1,218 | |||||
Foreign exchange contracts | DKK | Sell | ||||||
Derivatives | ||||||
Number of contracts | 1 | 1 | 1 | 1 | 1 | 1 |
Aggregate notional amount | DKK | DKK 3,200 | |||||
Interest rate swaps | Paying fixed rates | ||||||
Derivatives | ||||||
Number of contracts | 73 | 73 | 73 | 73 | 73 | 73 |
Aggregate notional amount | $ | $ 513,218 | |||||
Interest rate swaps | Receiving fixed rates | ||||||
Derivatives | ||||||
Number of contracts | 4 | 4 | 4 | 4 | 4 | 4 |
Aggregate notional amount | $ | $ 14,300 | |||||
Interest rate swaps | Derivatives designated as hedging instruments | ||||||
Derivatives | ||||||
Number of contracts | instrument | 8 | 8 | 8 | 8 | 8 | 8 |
Aggregate notional amount | $ | $ 87,500 | |||||
Fixed monthly coupons at fixed rate, low end of range (as a percent) | 0.56% | 0.56% | 0.56% | 0.56% | 0.56% | 0.56% |
Fixed monthly coupons at fixed rate, high end of range (as a percent) | 2.23% | 2.23% | 2.23% | 2.23% | 2.23% | 2.23% |
Amount expected to be reclassified from other comprehensive income to interest expense over the next twelve months | $ | $ 400 | |||||
Hedging period for covering exposure to the variability in future cash flows | 68 months | |||||
Interest rate caps | EUR | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | € | € 294,000 | |||||
Interest rate caps | USD | ||||||
Derivatives | ||||||
Number of contracts | 2 | 2 | 2 | 2 | 2 | 2 |
Aggregate notional amount | $ | $ 17,835 | |||||
Credit index instruments | ||||||
Derivatives | ||||||
Number of contracts | 11 | 11 | 11 | 11 | 11 | 11 |
Aggregate notional amount | $ | $ 40,000 |
Derivatives and Hedging Activ70
Derivatives and Hedging Activity (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 36,307 | $ 26,628 |
Fair Value of Derivatives in a Liability Position | 14,901 | 5,476 |
Derivatives designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 6 | 138 |
Fair Value of Derivatives in a Liability Position | 451 | 235 |
Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 36,301 | 26,490 |
Fair Value of Derivatives in a Liability Position | 14,450 | 5,241 |
Interest rate swaps | Derivatives designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 6 | 138 |
Fair Value of Derivatives in a Liability Position | 451 | 235 |
Interest rate swaps | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 2,981 | 1,128 |
Fair Value of Derivatives in a Liability Position | 13,508 | 5,216 |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 31,657 | 24,388 |
Fair Value of Derivatives in a Liability Position | 942 | 15 |
Credit index instruments | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 1,663 | 974 |
Fair Value of Derivatives in a Liability Position | $ 10 |
Derivatives and Hedging Activ71
Derivatives and Hedging Activity (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | $ 2,230 | $ 29,275 | $ 7,323 | $ 11,619 |
Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 2,230 | 29,275 | 7,323 | 11,619 |
Interest rate swaps | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | (17,242) | 1,054 | (22,206) | (5,639) |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 18,957 | 28,123 | 29,129 | 18,293 |
Credit index instruments | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 515 | 98 | 400 | (1,035) |
Cash flow hedges | Interest rate swaps | Derivatives designated as hedging instruments | ||||
Derivatives | ||||
(Loss) Gain Recognized in OCI (effective portion) | (395) | 186 | (933) | (522) |
(Loss) Reclassified from AOCI into Income (effective portion) | $ (187) | $ (344) | $ (585) | $ (1,081) |
Offsetting Assets and Liabili72
Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Net Amounts of Assets Presented in the Statement of Financial Position | $ 36,307 | $ 26,628 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 2,678,579 | 2,276,461 |
Net Amounts of Liabilities Presented in the Statement of Financial | 2,678,579 | 2,276,461 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 2,665,153 | 2,273,001 |
Cash Collateral Pledged | 13,426 | 3,460 |
Derivatives | ||
Assets | ||
Gross Amounts of Recognized Assets | 36,307 | 26,628 |
Net Amounts of Assets Presented in the Statement of Financial Position | 36,307 | 26,628 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 1,475 | 2,016 |
Net Amount | 34,832 | 24,612 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 14,901 | 5,476 |
Net Amounts of Liabilities Presented in the Statement of Financial | 14,901 | 5,476 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 1,475 | 2,016 |
Cash Collateral Pledged | 13,426 | 3,460 |
Repurchase agreements | ||
Liabilities | ||
Gross Amounts of Recognized Liabilities | 2,663,678 | 2,270,985 |
Net Amounts of Liabilities Presented in the Statement of Financial | 2,663,678 | 2,270,985 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | $ 2,663,678 | $ 2,270,985 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - Not primary beneficiary $ in Millions | 3 Months Ended | |
Mar. 31, 2014item | Sep. 30, 2015USD ($)item | |
Variable interest entities | ||
Number of CDO structures currently in default | 1 | |
Number of CDO structures currently ceased to be in default | 1 | |
Maximum risk of loss related to VIEs, on fair value basis | $ | $ 222.4 | |
Securitization SPEs | ||
Variable interest entities | ||
Debt obligations to beneficial interest holders, unpaid principal balances | $ | $ 40,500 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
May. 31, 2015 | Jan. 31, 2014 | Oct. 31, 2012 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Related-Party Transactions | ||||||||
Granted (in shares) | 1,208,267 | |||||||
Starwood Property Trust, Inc. Manager Equity Plan | ||||||||
Related-Party Transactions | ||||||||
Granted (in shares) | 675,000 | |||||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | ||||||||
Related-Party Transactions | ||||||||
Granted (in shares) | 675,000 | 2,000,000 | 875,000 | |||||
Manager | ||||||||
Related-Party Transactions | ||||||||
Base management fee incurred | $ 15.2 | $ 13.8 | $ 44 | $ 40.7 | ||||
Base management fee payable | 15.2 | 15.2 | $ 13.9 | |||||
Incentive fee incurred | 5.3 | 4.3 | 16.1 | 15.5 | ||||
Incentive fees payable | 5.4 | 5.4 | 18.9 | |||||
Executive compensation and other reimbursable expenses | 1.7 | 4.6 | 5.7 | |||||
Executive compensation and other reimbursable expense payable | 2.1 | 2.1 | $ 3.4 | |||||
Manager | Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | ||||||||
Related-Party Transactions | ||||||||
Granted (in shares) | 675,000 | 2,489,281 | ||||||
Share-based compensation expense | $ 7.1 | $ 6.3 | $ 21.4 | $ 19.8 |
Related-Party Transactions (D75
Related-Party Transactions (Details 2) $ in Thousands, £ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Mar. 31, 2015USD ($)property | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2012shares | Jan. 31, 2015GBP (£) | Dec. 31, 2014GBP (£) | Dec. 31, 2014USD ($) | |
Related-Party Transactions | |||||||||
Variable rate basis of loans | LIBOR | ||||||||
Spread on interest rate basis (as a percent) | 6.10% | 6.10% | |||||||
Originations of mortgage financing | $ 3,114,293 | $ 3,283,546 | |||||||
Purchase price of notes | 1,670,124 | 2,123,947 | |||||||
Equity method, Carrying value | $ 180,384 | 180,384 | $ 176,359 | ||||||
Earnings from unconsolidated entities | 5,706 | $ 3,805 | 20,747 | $ 13,432 | |||||
Purchase price | 65,900 | ||||||||
Co-origination of loan with SEREF | Junior Mezzanine Loan | |||||||||
Related-Party Transactions | |||||||||
Participation interest in security | £ | £ 18 | £ 30 | |||||||
Spread on interest rate basis (as a percent) | 8.81% | 11.65% | 11.65% | ||||||
SEREF | |||||||||
Related-Party Transactions | |||||||||
Number of shares acquired | shares | 9,140,000 | ||||||||
Ownership percentage | 4.00% | ||||||||
Retail fund | |||||||||
Related-Party Transactions | |||||||||
Equity method, Carrying value | $ 121,733 | $ 121,733 | $ 129,475 | ||||||
Equity interest acquired (as a percent) | 33.00% | 33.00% | |||||||
Investment and Servicing Segment | |||||||||
Related-Party Transactions | |||||||||
Purchase price | $ 32,500 | $ 65,900 | |||||||
Amount of intercompany loans originated | 10,400 | ||||||||
Fund IX | CMBS | |||||||||
Related-Party Transactions | |||||||||
Payments to acquire security | $ 58,600 | ||||||||
Number of properties by which investment is secured | property | 85 | ||||||||
Fund IX | LNR | |||||||||
Related-Party Transactions | |||||||||
Obligation funded by an affiliate | 6,200 | 6,200 | |||||||
Related party payable | $ 4,400 | ||||||||
Mammoth Mezz Holdings, LLC | Mammoth Loan Investment | |||||||||
Related-Party Transactions | |||||||||
Sale of participation interest in subordinated loan | $ 35,000 | ||||||||
Starwood Global Opportunity Fund X [Member] | |||||||||
Related-Party Transactions | |||||||||
Fee income recognized | $ 100 | $ 400 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 05, 2015 | Aug. 04, 2015 | May. 05, 2015 | Apr. 20, 2015 | Feb. 25, 2015 | Jan. 31, 2014 | Jun. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Stockholders' Equity | ||||||||||||
Dividend declared (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 | |||||
Gross proceeds from issuance of common stock | $ 326,361 | $ 583,099 | ||||||||||
Number of days for which the option is given into the underwriters | 30 days | |||||||||||
Authorized amount of share repurchases | $ 450,000 | $ 250,000 | $ 250,000 | 250,000 | ||||||||
Period for repurchase of common stock | 1 year | 1 year | ||||||||||
Common stock repurchased (in shares) | 1,393,223 | 1,793,223 | ||||||||||
Cost of common stock repurchased | $ 29,100 | $ 37,890 | 12,993 | |||||||||
Remaining capacity under repurchase program | 262,600 | $ 262,600 | ||||||||||
Shares issued under ATM Agreement | 0 | |||||||||||
Proceeds from ATM Agreement | 18,346 | |||||||||||
Underwriting and offering costs | $ 945 | $ 1,623 | ||||||||||
Subsequent event | ||||||||||||
Stockholders' Equity | ||||||||||||
Dividend declared (in dollars per share) | $ 0.48 | |||||||||||
Public offering | ||||||||||||
Stockholders' Equity | ||||||||||||
Shares issued | 12,000,000 | |||||||||||
Gross proceeds from issuance of common stock | $ 283,600 | |||||||||||
Underwriters option | ||||||||||||
Stockholders' Equity | ||||||||||||
Shares issued | 1,800,000 | |||||||||||
Gross proceeds from issuance of common stock | $ 42,500 | |||||||||||
SWAY | ||||||||||||
Stockholders' Equity | ||||||||||||
Shares issued | 40,100,000 | |||||||||||
2019 Notes | ||||||||||||
Stockholders' Equity | ||||||||||||
Face amount of debt repurchased | 118,600 | 118,600 | ||||||||||
Debt repurchased amount | $ 136,300 | $ 136,300 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) | Aug. 12, 2014shares | May. 31, 2015USD ($)shares | Jan. 31, 2014USD ($)shares | Oct. 31, 2012USD ($)shares | Sep. 30, 2015shares | Sep. 30, 2015shares |
Equity Incentive Plans | ||||||
Awards granted (in shares) | 1,208,267 | |||||
Award vesting period | 3 years | |||||
Spin off | Single Family Residential | ||||||
Equity Incentive Plans | ||||||
Share exchange ratio | 0.20 | |||||
Starwood Property Trust, Inc. Equity Plan and Manager Equity Plan | ||||||
Equity Incentive Plans | ||||||
Number of additional shares authorized | 489,281 | |||||
Number of shares available for future grants | 2,700,000 | 2,700,000 | ||||
Starwood Property Trust, Inc. Equity Plan | ||||||
Equity Incentive Plans | ||||||
Awards granted (in shares) | 30,608 | 533,267 | ||||
Starwood Property Trust, Inc. Manager Equity Plan | ||||||
Equity Incentive Plans | ||||||
Awards granted (in shares) | 675,000 | |||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | ||||||
Equity Incentive Plans | ||||||
Awards granted (in shares) | 675,000 | 2,000,000 | 875,000 | |||
Awards granted, fair value | $ | $ 16,511,000 | $ 55,420,000 | $ 19,854,000 | |||
Award vesting period | 3 years | 3 years | ||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | Spin off | ||||||
Equity Incentive Plans | ||||||
Awards granted (in shares) | 489,281 | |||||
Awards granted, fair value | $ | $ 14,776,000 | |||||
Award vesting period | 3 years |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Non-Vested Shares and Share Equivalents activity | ||
Beginning Balance (in shares) | 1,981,398 | |
Granted (in shares) | 1,208,267 | |
Vested (in shares) | (1,015,337) | |
Forfeited (in shares) | (19,722) | |
Balance at the end of period (in shares) | 2,154,606 | 2,154,606 |
Weighted Average Grant Date Fair Value (per share) | ||
Balance at the beginning of period (in dollars per share) | $ 27.30 | |
Granted (in dollars per share) | 24.36 | |
Vested (in dollars per share) | 26.47 | |
Forfeited (in dollars per share) | 23.96 | |
Balance at the end of period (in dollars per share) | $ 26.07 | $ 26.07 |
Starwood Property Trust, Inc. Equity Plan | ||
Non-Vested Shares and Share Equivalents activity | ||
Beginning Balance (in shares) | 109,708 | |
Granted (in shares) | 30,608 | 533,267 |
Vested (in shares) | (40,151) | |
Forfeited (in shares) | (19,722) | |
Balance at the end of period (in shares) | 583,102 | 583,102 |
Starwood Property Trust, Inc. Manager Equity Plan | ||
Non-Vested Shares and Share Equivalents activity | ||
Beginning Balance (in shares) | 1,854,585 | |
Granted (in shares) | 675,000 | |
Vested (in shares) | (971,334) | |
Balance at the end of period (in shares) | 1,558,251 | 1,558,251 |
Starwood Property Trust, Inc. Non-Executive Director Stock Plan | ||
Non-Vested Shares and Share Equivalents activity | ||
Beginning Balance (in shares) | 17,105 | |
Vested (in shares) | (3,852) | |
Balance at the end of period (in shares) | 13,253 | 13,253 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Continuing Operations: | ||||
Income from continuing operations attributable to STWD common stockholders | $ 116,735 | $ 165,044 | $ 354,246 | $ 405,064 |
Less: Income attributable to unvested shares | (1,052) | (1,742) | (3,239) | (4,898) |
Basic - Income from continuing operations | 115,683 | 163,302 | 351,007 | 400,166 |
Discontinued Operations: | ||||
Loss from discontinued operations | (1,551) | |||
Basic - Net income attributable to STWD common stockholders after allocation to participating securities | 115,683 | 163,302 | 351,007 | 398,615 |
Continuing Operations: | ||||
Basic - Income from continuing operations attributable to STWD common stockholders | 116,735 | 165,044 | 354,246 | 405,064 |
Less: Income attributable to unvested shares | (1,052) | (1,742) | (3,239) | (4,898) |
Add: Undistributed earnings to unvested shares | 18 | 653 | 147 | 1,187 |
Less: Undistributed earnings reallocated to unvested shares | (18) | (650) | (147) | (1,182) |
Diluted - Income from continuing operations | 115,683 | 163,305 | 351,007 | 400,171 |
Discontinued Operations: | ||||
Basic - Loss from discontinued operations | (1,551) | |||
Diluted - Net income attributable to STWD common stockholders after allocation to participating securities | $ 115,683 | $ 163,305 | $ 351,007 | $ 398,620 |
Number of Shares: | ||||
Basic - Average shares outstanding | 237,796 | 222,481 | 232,194 | 212,351 |
Effect of dilutive securities - Convertible Notes (in shares) | 966 | 932 | ||
Effect of dilutive securities - Contingently Issuable Shares (in shares) | 129 | 96 | 129 | 96 |
Weighted Average Number of Shares Outstanding, Diluted, Total | 237,925 | 223,543 | 232,323 | 213,379 |
Basic: | ||||
Income from continuing operations (in dollars per share) | $ 0.49 | $ 0.73 | $ 1.51 | $ 1.89 |
Loss from discontinued operations (in dollars per share) | (0.01) | |||
Net income (in dollars per share) | 0.49 | 0.73 | 1.51 | 1.88 |
Diluted: | ||||
Income from continuing operations (in dollars per share) | 0.49 | 0.73 | 1.51 | 1.88 |
Loss from discontinued operations (in dollars per share) | (0.01) | |||
Net income (in dollars per share) | $ 0.49 | $ 0.73 | $ 1.51 | $ 1.87 |
Earnings per Share (Details 2)
Earnings per Share (Details 2) shares in Thousands, instrument in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2014shares | Sep. 30, 2015USD ($)instrumentshares | Sep. 30, 2014shares | |
Antidilutive securities and effect of dilutive securities | |||
Effect of dilutive securities - Convertible Notes (in shares) | 966 | 932 | |
2017 Notes | |||
Antidilutive securities and effect of dilutive securities | |||
Amount by which if-converted value of the Notes are less than principal amount | $ | $ 61.9 | ||
2018 Notes | |||
Antidilutive securities and effect of dilutive securities | |||
Amount by which if-converted value of the Notes are less than principal amount | $ | $ 35 | ||
Effect of dilutive securities - Convertible Notes (in shares) | 0 | ||
2019 Notes | |||
Antidilutive securities and effect of dilutive securities | |||
Amount by which if-converted value of the Notes are less than principal amount | $ | $ 0.3 | ||
Effect of dilutive securities - Convertible Notes (in shares) | 0 | ||
Convertible Senior Notes | |||
Antidilutive securities and effect of dilutive securities | |||
Potential shares of common stock contingently issuable upon conversion of the Convertible Notes | instrument | 62.2 | ||
Shares excluded from diluted EPS calculations | 62,200 | ||
Convertible Senior Notes | 2017 Notes | |||
Antidilutive securities and effect of dilutive securities | |||
Effect of dilutive securities - Convertible Notes (in shares) | 0 | ||
Convertible Senior Notes | 2019 Notes | |||
Antidilutive securities and effect of dilutive securities | |||
Amount by which if-converted value of the Notes are less than principal amount | $ | $ 0.3 | ||
Restricted stock | |||
Antidilutive securities and effect of dilutive securities | |||
Number of anti-dilutive common shares excluded from the calculation of diluted income per share | 2,200 | 2,300 |
Accumulated Other Comprehensi81
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Changes in AOCI by component | ||||
Beginning balance | $ 45,901 | $ 74,962 | $ 55,896 | $ 75,449 |
OCI before reclassifications | (12,547) | (5,389) | (17,544) | 4,880 |
Amounts reclassified from AOCI | 6,156 | 108 | 1,158 | (10,648) |
Net period OCI | (6,391) | (5,281) | (16,386) | (5,768) |
Ending balance | 39,510 | 69,681 | 39,510 | 69,681 |
Effective Portion of Cumulative Loss on Cash Flow Hedges | ||||
Changes in AOCI by component | ||||
Beginning balance | (237) | (575) | (97) | (604) |
OCI before reclassifications | (395) | 186 | (933) | (522) |
Amounts reclassified from AOCI | 187 | 344 | 585 | 1,081 |
Net period OCI | (208) | 530 | (348) | 559 |
Ending balance | (445) | (45) | (445) | (45) |
Cumulative Unrealized Gain on Available-for-Sale Securities | ||||
Changes in AOCI by component | ||||
Beginning balance | 50,370 | 60,446 | 60,190 | 66,566 |
OCI before reclassifications | (9,095) | 4,190 | (13,519) | 9,563 |
Amounts reclassified from AOCI | (236) | (5,396) | (11,729) | |
Net period OCI | (9,095) | 3,954 | (18,915) | (2,166) |
Ending balance | 41,275 | 64,400 | 41,275 | 64,400 |
Foreign Currency Translation | ||||
Changes in AOCI by component | ||||
Beginning balance | (4,232) | 15,091 | (4,197) | 9,487 |
OCI before reclassifications | (3,057) | (9,765) | (3,092) | (4,161) |
Amounts reclassified from AOCI | 5,969 | 5,969 | ||
Net period OCI | 2,912 | (9,765) | 2,877 | (4,161) |
Ending balance | $ (1,320) | $ 5,326 | $ (1,320) | $ 5,326 |
Accumulated Other Comprehensi82
Accumulated Other Comprehensive Income (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income | ||||
Interest expense | $ (50,688) | $ (39,739) | $ (151,021) | $ (115,265) |
Interest income from investment securities | 24,674 | 28,640 | 76,228 | 85,714 |
Included in earnings: OTTI | (1,010) | |||
Net income | 117,116 | 167,390 | 355,535 | 408,653 |
Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Net income | (6,156) | (108) | (1,158) | 10,648 |
Effective Portion of Cumulative Loss on Cash Flow Hedges | Interest rate contracts | Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Interest expense | (187) | (344) | (585) | (1,081) |
Cumulative Unrealized Gain on Available-for-Sale Securities | Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Interest income from investment securities | 5,396 | |||
Foreign currency loss, net | $ (5,969) | (5,969) | ||
Gain on sale of investments, net | 236 | 11,942 | ||
Included in earnings: OTTI | (213) | |||
Net income | $ 236 | $ 5,396 | $ 11,729 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Assets and liabilities measured at fair value | ||
Marketable securities | $ 786,461 | $ 998,248 |
Intangible assets - servicing rights held at fair value | 123,892 | 132,303 |
Derivative assets | 36,307 | 26,628 |
VIE Assets | 82,937,617 | 107,816,065 |
Derivative liabilities | 14,901 | 5,476 |
VIE Liabilities | 82,181,138 | 107,232,201 |
Fair value measurements on recurring basis | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 423,630 | 391,620 |
Derivative assets | 36,307 | 26,628 |
VIE Assets | 82,937,617 | 107,816,065 |
Total | 83,942,902 | 108,922,869 |
Derivative liabilities | 14,901 | 5,476 |
VIE Liabilities | 82,181,138 | 107,232,201 |
Total | 82,196,039 | 107,237,677 |
Fair value measurements on recurring basis | Domestic Servicing Rights | ||
Assets and liabilities measured at fair value | ||
Intangible assets - servicing rights held at fair value | 123,892 | 132,303 |
Fair value measurements on recurring basis | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 184,785 | 207,053 |
Fair value measurements on recurring basis | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 222,360 | 334,080 |
Fair value measurements on recurring basis | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 14,311 | 15,120 |
Fair value measurements on recurring basis | Level I | ||
Assets and liabilities measured at fair value | ||
Total | 14,311 | 15,120 |
Fair value measurements on recurring basis | Level I | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 14,311 | 15,120 |
Fair value measurements on recurring basis | Level II | ||
Assets and liabilities measured at fair value | ||
Derivative assets | 36,307 | 26,628 |
Total | 36,307 | 26,628 |
Derivative liabilities | 14,901 | 5,476 |
VIE Liabilities | 79,177,561 | 102,339,081 |
Total | 79,192,462 | 102,344,557 |
Fair value measurements on recurring basis | Level III | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 423,630 | 391,620 |
VIE Assets | 82,937,617 | 107,816,065 |
Total | 83,892,284 | 108,881,121 |
VIE Liabilities | 3,003,577 | 4,893,120 |
Total | 3,003,577 | 4,893,120 |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | ||
Assets and liabilities measured at fair value | ||
Intangible assets - servicing rights held at fair value | 123,892 | 132,303 |
Fair value measurements on recurring basis | Level III | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 184,785 | 207,053 |
Fair value measurements on recurring basis | Level III | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | $ 222,360 | $ 334,080 |
Fair Value (Details 2)
Fair Value (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Total realized and unrealized gains (losses): | ||||
Included in earnings: OTTI | $ (1,010) | |||
Included in earnings: Net accretion | $ 20,312 | 17,174 | ||
Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | $ 91,522,844 | $ 109,711,729 | 103,988,001 | 102,414,703 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (9,767,197) | (5,013,189) | (24,060,307) | (11,884,571) |
Included in earnings: OTTI | (214) | |||
Included in earnings: Net accretion | 3,600 | 4,035 | 17,087 | 13,922 |
Included in OCI | (5,629) | (2,060) | (14,603) | (4,467) |
Purchases / Originations | 541,245 | 590,993 | 1,440,152 | 1,219,955 |
Sales | (411,430) | (504,377) | (1,450,172) | (1,150,297) |
Cash repayments / receipts | (3,556) | (1,849) | ||
Consolidations of VIEs | 2,330,083 | 3,054,405 | 7,818,195 | 25,146,277 |
Deconsolidations of VIEs | (1,778,220) | (2,451,706) | (5,258,918) | (8,457,203) |
Balance at the end of the period | 80,888,707 | 106,542,503 | 80,888,707 | 106,542,503 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (9,771,150) | (5,025,733) | (24,088,401) | (11,930,078) |
Total realized and unrealized (losses) gains: | ||||
Issuances | (1,619) | (16,655) | (9,132) | (88,412) |
Cash repayments / receipts | 52,090 | 65,090 | ||
Transfers into Level III | (1,773,898) | (769,345) | (2,589,916) | (3,271,701) |
Transfers out of Level III | 232,484 | 1,940,522 | 956,230 | 2,539,421 |
VIE liabilities | Level III | ||||
Changes in financial liabilities classified as Level III | ||||
Balance at the beginning of the period | (2,111,011) | (5,186,125) | (4,893,120) | (1,597,984) |
Total realized and unrealized (losses) gains: | ||||
Included in earnings: Change in fair value/ gain on sale | 615,263 | 237,693 | 3,566,846 | 337,529 |
Issuances | (1,619) | (16,655) | (9,132) | (88,412) |
Cash repayments / receipts | 96,896 | 20,189 | 171,884 | 106,538 |
Transfers into Level III | (1,773,898) | (770,785) | (2,589,916) | (3,325,922) |
Transfers out of Level III | 232,484 | 1,940,522 | 956,230 | 2,653,379 |
Consolidations of VIEs | (80,149) | (48,745) | (225,354) | (1,941,689) |
Deconsolidations of VIEs | 18,457 | 12,167 | 18,985 | 44,822 |
Balance at the end of the period | (3,003,577) | (3,811,739) | (3,003,577) | (3,811,739) |
Amount of total gains (losses) included in earnings attributable to assets still held at period end | 615,263 | 237,693 | 3,566,846 | 337,529 |
Loans held-for-sale | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 279,352 | 154,412 | 391,620 | 206,672 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 19,082 | 15,517 | 51,044 | 47,955 |
Purchases / Originations | 535,580 | 577,216 | 1,425,499 | 1,159,607 |
Sales | (410,227) | (498,789) | (1,443,871) | (1,052,862) |
Cash repayments / receipts | (157) | (191) | (662) | (487) |
Transfers out of Level III | (112,720) | |||
Balance at the end of the period | 423,630 | 248,165 | 423,630 | 248,165 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 5,482 | (455) | 5,126 | (455) |
RMBS | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 193,150 | 231,605 | 207,053 | 296,236 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 535 | 11,676 | ||
Included in earnings: OTTI | (214) | |||
Included in earnings: Net accretion | 3,600 | 4,035 | 17,087 | 13,922 |
Included in OCI | (3,465) | 7,602 | (12,241) | 2,988 |
Sales | (5,588) | (68,134) | ||
Cash repayments / receipts | (8,500) | (21,870) | (27,114) | (40,155) |
Balance at the end of the period | 184,785 | 216,319 | 184,785 | 216,319 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 3,600 | 3,963 | 11,594 | 11,742 |
CMBS | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 314,152 | 282,361 | 334,080 | 208,006 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (2,835) | 2,471 | (2,059) | 12,070 |
Included in OCI | (2,164) | (9,662) | (2,362) | (7,455) |
Purchases / Originations | 5,665 | 13,777 | 14,653 | 60,348 |
Sales | (1,203) | (6,301) | (29,301) | |
Cash repayments / receipts | (91,795) | 23 | (92,018) | (806) |
Transfers into Level III | 1,440 | 54,221 | ||
Transfers out of Level III | (180) | |||
Consolidations of VIEs | (24,310) | (6,715) | ||
Deconsolidations of VIEs | 540 | 635 | 677 | 857 |
Balance at the end of the period | 222,360 | 291,045 | 222,360 | 291,045 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 3,212 | 2,471 | 4,171 | 14,907 |
Domestic Servicing Rights | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 128,109 | 138,318 | 132,303 | 150,149 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (4,217) | (7,898) | (8,411) | (18,671) |
Transfers out of Level III | (1,058) | |||
Balance at the end of the period | 123,892 | 130,420 | 123,892 | 130,420 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (4,217) | (7,898) | (8,411) | (18,671) |
VIE Assets | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 92,719,092 | 114,091,158 | 107,816,065 | 103,151,624 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (10,394,490) | (5,261,507) | (27,667,727) | (12,275,130) |
Consolidations of VIEs | 2,410,232 | 3,103,150 | 8,067,859 | 27,094,681 |
Deconsolidations of VIEs | (1,797,217) | (2,464,508) | (5,278,580) | (8,502,882) |
Balance at the end of the period | 82,937,617 | 109,468,293 | 82,937,617 | 109,468,293 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | $ (10,394,490) | $ (5,261,507) | $ (27,667,727) | $ (12,275,130) |
Fair Value (Details 3)
Fair Value (Details 3) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Financial assets not carried at fair value: | ||
Securities, held-to-maturity | $ 365,005 | $ 441,995 |
Financial liabilities not carried at fair value: | ||
Convertible senior notes | 1,320,207 | 1,418,022 |
Carrying Value | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings | 5,984,540 | 5,908,665 |
Securities, held-to-maturity | 365,005 | 441,995 |
European servicing rights | 3,772 | 11,849 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 3,826,200 | 3,267,230 |
Convertible senior notes | 1,320,207 | 1,418,022 |
Fair Value. | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings | 6,083,182 | 6,034,838 |
Securities, held-to-maturity | 362,026 | 440,629 |
European servicing rights | 7,684 | 12,741 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 3,815,875 | 3,251,035 |
Convertible senior notes | $ 1,339,173 | $ 1,444,975 |
Fair Value (Details 4)
Fair Value (Details 4) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 91,819,407 | $ 116,099,297 |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 423,630 | |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 4.30% | 4.20% |
Duration | 5 years | 5 years |
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 4.90% | 4.90% |
Duration | 10 years | 10 years |
Fair value measurements on recurring basis | Level III | RMBS | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 184,785 | |
Portfolio percentage | 75.00% | 85.00% |
Fair value measurements on recurring basis | Level III | RMBS | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Constant prepayment rate (as a percent) | 2.60% | 1.20% |
Constant default rate (as a percent) | 0.90% | 1.10% |
Loss severity (as a percent) | 9.00% | 15.00% |
Delinquency rate (as a percent) | 2.00% | 2.00% |
Servicer advances (as a percent) | 28.00% | 14.00% |
Annual coupon deterioration (as a percent) | 0.00% | 0.00% |
Putback amount per projected total collateral loss (as a percent) | 0.00% | 0.00% |
Loss severity for specified percentage of portfolio (as a percent) | 45.00% | 45.00% |
Fair value measurements on recurring basis | Level III | RMBS | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Constant prepayment rate (as a percent) | 14.70% | 15.90% |
Constant default rate (as a percent) | 9.10% | 8.90% |
Loss severity (as a percent) | 79.00% | 80.00% |
Delinquency rate (as a percent) | 29.00% | 43.00% |
Servicer advances (as a percent) | 92.00% | 75.00% |
Annual coupon deterioration (as a percent) | 0.50% | 0.60% |
Putback amount per projected total collateral loss (as a percent) | 11.00% | 11.00% |
Loss severity for specified percentage of portfolio (as a percent) | 80.00% | 80.00% |
Fair value measurements on recurring basis | Level III | CMBS | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 222,360 | |
Fair value measurements on recurring basis | Level III | CMBS | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 0.00% | 0.00% |
Duration | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | CMBS | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 779.70% | 421.40% |
Duration | 13 years 2 months 12 days | 11 years 9 months 18 days |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 123,892 | |
Yield (as a percent) | 8.25% | 8.25% |
Discount rate (as a percent) | 15.00% | 15.00% |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Control migration (as a percent) | 0.00% | 0.00% |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Control migration (as a percent) | 80.00% | 80.00% |
Fair value measurements on recurring basis | Level III | VIE Assets | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 82,937,617 | |
Fair value measurements on recurring basis | Level III | VIE Assets | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 0.00% | 0.00% |
Duration | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | VIE Assets | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 907.40% | 925.00% |
Duration | 18 years 7 months 6 days | 21 years |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | Minimum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 0.00% | 0.00% |
Duration | 0 years | 0 years |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | Maximum | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Yield (as a percent) | 907.40% | 925.00% |
Duration | 18 years 7 months 6 days | 21 years |
Fair Value (Details 5)
Fair Value (Details 5) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Quantitative information for Level 3 Fair Value Measurements Liabilities | ||
Carrying Value | $ 87,618,227 | $ 112,216,385 |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements Liabilities | ||
Carrying Value | $ 3,003,577 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current | ||||||
Federal | $ 6,074 | $ 10,044 | $ 21,825 | $ 20,668 | ||
Foreign | 1,718 | 905 | 3,996 | 4,136 | ||
State | 1,009 | 2,041 | 3,634 | 3,840 | ||
Total current | 8,801 | 12,990 | 29,455 | 28,644 | ||
Deferred | ||||||
Federal | (689) | (7,390) | (74) | (10,438) | ||
Foreign | (322) | (539) | (1,945) | (2,737) | ||
State | (115) | (1,225) | (18) | (1,736) | ||
Total deferred | (1,126) | (9,154) | (2,037) | (14,911) | ||
Total income tax provision | 7,675 | 3,836 | 27,418 | 13,733 | ||
Income Taxes | ||||||
Assets owned | 91,819,407 | 91,819,407 | $ 116,099,297 | |||
Cash | 372,768 | $ 327,322 | 372,768 | $ 327,322 | 255,187 | $ 317,627 |
Deferred tax assets and liabilities | ||||||
Net deferred tax assets (liabilities) | 22,049 | 22,049 | 19,915 | |||
U.S. | ||||||
Deferred tax assets and liabilities | ||||||
Reserves and accruals | 12,790 | 12,790 | 13,818 | |||
Domestic intangible assets | 12,292 | 12,292 | 9,617 | |||
Investment securities and loans | (2,482) | (2,482) | (2,327) | |||
Investment in unconsolidated entities | (412) | (412) | 883 | |||
Deferred income | 432 | 432 | 427 | |||
Net operating and capital loss carryforwards | 5,173 | 5,173 | 2,498 | |||
Valuation allowance | (5,173) | (5,173) | (2,498) | |||
Other temporary differences (asset) | 405 | 405 | 515 | |||
Net deferred tax assets | 23,025 | 23,025 | 22,933 | |||
Europe | ||||||
Deferred tax assets and liabilities | ||||||
European servicing rights | (845) | (845) | (2,681) | |||
Net operating and capital loss carryforwards | 8,149 | 8,149 | 8,702 | |||
Valuation allowance | (8,149) | (8,149) | (8,702) | |||
Other temporary differences (liability) | (131) | (131) | (337) | |||
Net deferred tax liabilities | (976) | (976) | (3,018) | |||
Investment and Servicing Segment | TRS entities | ||||||
Income Taxes | ||||||
Assets owned | 1,100,000 | 1,100,000 | 1,000,000 | |||
Cash | $ 129,600 | $ 129,600 | $ 88,600 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of statutory tax to effective tax | ||||
Federal statutory tax rate | $ 43,677 | $ 59,929 | $ 134,034 | $ 147,836 |
REIT and other non-taxable income | (36,250) | (52,979) | (111,732) | (133,483) |
State income taxes | 937 | 930 | 3,117 | 1,953 |
Federal benefit of state tax deduction | (328) | (326) | (1,091) | (683) |
Valuation allowance | (221) | 712 | 2,652 | 1,160 |
Other | (140) | (4,430) | 438 | (3,050) |
Total income tax provision | $ 7,675 | $ 3,836 | $ 27,418 | $ 13,733 |
Reconciliation of statutory tax rate to effective tax rate | ||||
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 35.00% | 35.00% |
REIT and other non-taxable income (as a percent) | (29.00%) | (30.90%) | (29.10%) | (31.60%) |
State income taxes (as a percent) | 0.80% | 0.50% | 0.80% | 0.50% |
Federal benefit of state tax deduction (as a percent) | (0.30%) | (0.20%) | (0.30%) | (0.20%) |
Valuation allowance (as a percent) | (0.20%) | 0.40% | 0.70% | 0.30% |
Other (as a percent) | (0.10%) | (2.60%) | 0.10% | (0.70%) |
Effective tax rate (as a percent) | 6.20% | 2.20% | 7.20% | 3.30% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Commitments $ in Billions | Sep. 30, 2015USD ($)loan |
Operating leases | |
Number of loans with future funding commitments | loan | 55 |
Value of loans with future funding commitments | $ 1.7 |
Value of loans with future funding commitments expected to fund | $ 1.5 |
Segment Data (Details)
Segment Data (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Segment data | ||||||
Balance of the performing loan that was transferred from the Investing and Servicing Segment to the Lending Segment | $ 25,000 | |||||
Revenues: | ||||||
Interest income from loans | $ 120,598 | $ 110,669 | $ 357,319 | $ 321,034 | ||
Interest income from investment securities | 24,674 | 28,640 | 76,228 | 85,714 | ||
Servicing fees | 32,528 | 34,641 | 90,939 | 101,533 | ||
Rental income | 10,045 | 3,385 | 17,731 | 6,520 | ||
Other revenues | 4,300 | 4,033 | 7,437 | 9,296 | ||
Total revenues | 192,145 | 181,368 | 549,654 | 524,097 | ||
Costs and expenses: | ||||||
Management fees | 28,082 | 24,943 | 82,871 | 77,849 | ||
Interest expense | 50,688 | 39,739 | 151,021 | 115,265 | ||
General and administrative | 38,693 | 47,640 | 115,361 | 136,835 | ||
Acquisition and investment pursuit costs | 3,682 | 759 | 9,735 | 1,924 | ||
Costs of rental operations | 2,352 | 1,783 | 5,261 | 3,889 | ||
Depreciation and amortization | 7,234 | 3,017 | 17,147 | 12,807 | ||
Loan allowance, net | (2,667) | 1,575 | 311 | 1,933 | ||
Other expense | 3 | 918 | 378 | 6,527 | ||
Total costs and expenses | 128,067 | 120,374 | 382,085 | 357,029 | ||
Income before other income, income taxes and non-controlling interests | 64,078 | 60,994 | 167,569 | 167,068 | ||
Other income: | ||||||
Change in net assets related to consolidated VIEs | 49,665 | 87,778 | 153,399 | 190,810 | ||
Change in fair value of servicing rights | (4,217) | (7,897) | (8,411) | (18,671) | ||
Change in fair value of investment securities, net | 2,617 | 1,860 | 3,564 | 15,180 | ||
Change in fair value of mortgage loans held-for-sale, net | 19,082 | 15,517 | 51,044 | 48,018 | ||
Earnings from unconsolidated entities | 5,706 | 3,805 | 20,747 | 13,432 | ||
Gain on sale of investments and other assets, net | 3,348 | 1,332 | 20,755 | 12,965 | ||
Gain (loss) on derivative financial instruments, net | 2,230 | 29,275 | 7,323 | 11,619 | ||
Foreign currency loss, net | (17,782) | (21,466) | (27,235) | (16,212) | ||
Included in earnings: OTTI | (1,010) | |||||
Loss on extinguishment of debt | (5,921) | |||||
Other income, net | 64 | 28 | 119 | 738 | ||
Total other income | 60,713 | 110,232 | 215,384 | 256,869 | ||
Income from continuing operations before income taxes | 124,791 | 171,226 | 382,953 | 423,937 | ||
Income tax benefit (provision) | (7,675) | (3,836) | (27,418) | (13,733) | ||
Income from continuing operations | 117,116 | 167,390 | 355,535 | 410,204 | ||
Loss from discontinued operations, net of tax | (1,551) | |||||
Net income | 117,116 | 167,390 | 355,535 | 408,653 | ||
Net income attributable to non-controlling interests | (381) | (2,346) | (1,289) | (5,140) | ||
Net income (loss) attributable to Starwood Property Trust, Inc. | 116,735 | 165,044 | 354,246 | 403,513 | ||
Investment and Servicing Segment | ||||||
Other income: | ||||||
Gain on sale of investments and other assets, net | $ 17,100 | |||||
Operating Segments and Corporate | ||||||
Revenues: | ||||||
Interest income from loans | 120,598 | 110,669 | 357,319 | 321,034 | ||
Interest income from investment securities | 58,752 | 45,865 | 170,066 | 132,421 | ||
Servicing fees | 61,508 | 58,889 | 166,987 | 173,098 | ||
Rental income | 10,045 | 3,385 | 17,731 | 6,520 | ||
Other revenues | 4,526 | 4,349 | 8,170 | 10,235 | ||
Total revenues | 255,429 | 223,157 | 720,273 | 643,308 | ||
Costs and expenses: | ||||||
Management fees | 27,996 | 24,901 | 82,684 | 77,729 | ||
Interest expense | 50,688 | 39,739 | 151,021 | 115,265 | ||
General and administrative | 38,515 | 47,463 | 114,819 | 136,291 | ||
Acquisition and investment pursuit costs | 3,682 | 759 | 9,735 | 1,924 | ||
Costs of rental operations | 2,352 | 1,783 | 5,261 | 3,889 | ||
Depreciation and amortization | 7,234 | 3,017 | 17,147 | 12,807 | ||
Loan allowance, net | (2,667) | 1,575 | 311 | 1,933 | ||
Other expense | 3 | 918 | 378 | 6,527 | ||
Total costs and expenses | 127,803 | 120,155 | 381,356 | 356,365 | ||
Income before other income, income taxes and non-controlling interests | 127,626 | 103,002 | 338,917 | 286,943 | ||
Other income: | ||||||
Change in fair value of servicing rights | (13,331) | (18,312) | (26,587) | (43,291) | ||
Change in fair value of investment securities, net | (2,459) | 51,927 | 2,834 | 105,878 | ||
Change in fair value of mortgage loans held-for-sale, net | 19,082 | 15,517 | 51,044 | 48,018 | ||
Earnings from unconsolidated entities | 5,906 | 7,780 | 21,369 | 16,588 | ||
Gain on sale of investments and other assets, net | 3,348 | 1,332 | 20,755 | 12,965 | ||
Gain (loss) on derivative financial instruments, net | 2,230 | 29,275 | 7,323 | 11,619 | ||
Foreign currency loss, net | (17,782) | (21,466) | (27,235) | (16,212) | ||
Included in earnings: OTTI | (1,010) | |||||
Loss on extinguishment of debt | (5,921) | |||||
Other income, net | 64 | 28 | 119 | 738 | ||
Total other income | (2,942) | 66,081 | 43,701 | 135,293 | ||
Income from continuing operations before income taxes | 124,684 | 169,083 | 382,618 | 422,236 | ||
Income tax benefit (provision) | (7,675) | (3,836) | (27,418) | (13,733) | ||
Income from continuing operations | 408,503 | |||||
Loss from discontinued operations, net of tax | (1,551) | |||||
Net income | 117,009 | 165,247 | 355,200 | 406,952 | ||
Net income attributable to non-controlling interests | (274) | (203) | (954) | (3,439) | ||
Net income (loss) attributable to Starwood Property Trust, Inc. | 116,735 | 165,044 | 354,246 | 403,513 | ||
Operating segment | Lending Segment | ||||||
Revenues: | ||||||
Interest income from loans | 116,049 | 106,369 | 343,449 | 311,348 | ||
Interest income from investment securities | 18,137 | 15,729 | 57,483 | 49,196 | ||
Servicing fees | 114 | 63 | 296 | 253 | ||
Other revenues | 154 | 130 | 567 | 318 | ||
Total revenues | 134,454 | 122,291 | 401,795 | 361,115 | ||
Costs and expenses: | ||||||
Management fees | 364 | 470 | 1,119 | 1,653 | ||
Interest expense | 20,148 | 16,865 | 61,868 | 48,310 | ||
General and administrative | 5,901 | 8,362 | 16,842 | 18,974 | ||
Acquisition and investment pursuit costs | 935 | 583 | 1,932 | 1,303 | ||
Loan allowance, net | (2,667) | 1,575 | 311 | 1,933 | ||
Other expense | 52 | |||||
Total costs and expenses | 24,681 | 27,855 | 82,072 | 72,225 | ||
Income before other income, income taxes and non-controlling interests | 109,773 | 94,436 | 319,723 | 288,890 | ||
Other income: | ||||||
Change in fair value of investment securities, net | (518) | (140) | (347) | 565 | ||
Earnings from unconsolidated entities | 818 | 1,875 | 3,034 | 6,847 | ||
Gain on sale of investments and other assets, net | 2,688 | 1,332 | 2,995 | 12,965 | ||
Gain (loss) on derivative financial instruments, net | 10,693 | 26,540 | 19,602 | 16,142 | ||
Foreign currency loss, net | (18,705) | (21,019) | (26,860) | (15,376) | ||
Included in earnings: OTTI | (214) | |||||
Other income, net | 54 | |||||
Total other income | (5,024) | 8,588 | (1,576) | 20,983 | ||
Income from continuing operations before income taxes | 104,749 | 103,024 | 318,147 | 309,873 | ||
Income tax benefit (provision) | (166) | 233 | (136) | (293) | ||
Income from continuing operations | 309,580 | |||||
Net income | 104,583 | 103,257 | 318,011 | 309,580 | ||
Net income attributable to non-controlling interests | (350) | (203) | (1,030) | (3,439) | ||
Net income (loss) attributable to Starwood Property Trust, Inc. | 104,233 | 103,054 | 316,981 | 306,141 | ||
Operating segment | Investment and Servicing Segment | ||||||
Revenues: | ||||||
Interest income from loans | 4,549 | 4,300 | 13,870 | 9,686 | ||
Interest income from investment securities | 40,615 | 30,136 | 112,583 | 83,225 | ||
Servicing fees | 61,394 | 58,826 | 166,691 | 172,845 | ||
Rental income | 2,758 | 3,385 | 6,908 | 6,520 | ||
Other revenues | 4,372 | 4,219 | 7,603 | 9,917 | ||
Total revenues | 113,688 | 100,866 | 307,655 | 282,193 | ||
Costs and expenses: | ||||||
Management fees | 18 | 18 | 54 | 54 | ||
Interest expense | 2,793 | 1,602 | 7,663 | 3,529 | ||
General and administrative | 30,187 | 37,723 | 92,002 | 112,049 | ||
Acquisition and investment pursuit costs | 552 | 176 | 1,270 | 606 | ||
Costs of rental operations | 1,562 | 1,783 | 4,138 | 3,889 | ||
Depreciation and amortization | 2,492 | 3,017 | 10,790 | 12,807 | ||
Other expense | 3 | 918 | 378 | 6,475 | ||
Total costs and expenses | 37,607 | 45,237 | 116,295 | 139,409 | ||
Income before other income, income taxes and non-controlling interests | 76,081 | 55,629 | 191,360 | 142,784 | ||
Other income: | ||||||
Change in fair value of servicing rights | (13,331) | (18,312) | (26,587) | (43,291) | ||
Change in fair value of investment securities, net | (1,941) | 52,067 | 3,181 | 105,313 | ||
Change in fair value of mortgage loans held-for-sale, net | 19,082 | 15,517 | 51,044 | 48,018 | ||
Earnings from unconsolidated entities | 2,652 | 5,905 | 10,704 | 9,741 | ||
Gain on sale of investments and other assets, net | 660 | 17,760 | ||||
Gain (loss) on derivative financial instruments, net | (9,582) | 2,735 | (13,315) | (4,523) | ||
Foreign currency loss, net | 896 | (447) | (395) | (836) | ||
Included in earnings: OTTI | (796) | |||||
Other income, net | 64 | 28 | 105 | 684 | ||
Total other income | (1,500) | 57,493 | 42,497 | 114,310 | ||
Income from continuing operations before income taxes | 74,581 | 113,122 | 233,857 | 257,094 | ||
Income tax benefit (provision) | (7,509) | (4,069) | (27,282) | (13,440) | ||
Income from continuing operations | 243,654 | |||||
Net income | 67,072 | 109,053 | 206,575 | 243,654 | ||
Net income attributable to non-controlling interests | 76 | 76 | ||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 67,148 | 109,053 | 206,651 | 243,654 | ||
Operating segment | Property Segment | ||||||
Revenues: | ||||||
Rental income | 7,287 | 10,823 | ||||
Total revenues | 7,287 | 10,823 | ||||
Costs and expenses: | ||||||
Interest expense | 1,713 | 2,590 | ||||
General and administrative | 226 | 402 | ||||
Acquisition and investment pursuit costs | 2,233 | 6,495 | ||||
Costs of rental operations | 790 | 1,123 | ||||
Depreciation and amortization | 4,742 | 6,357 | ||||
Total costs and expenses | 9,704 | 16,967 | ||||
Income before other income, income taxes and non-controlling interests | (2,417) | (6,144) | ||||
Other income: | ||||||
Earnings from unconsolidated entities | 2,436 | 7,631 | ||||
Gain (loss) on derivative financial instruments, net | 1,119 | 1,036 | ||||
Foreign currency loss, net | 27 | 20 | ||||
Total other income | 3,582 | 8,687 | ||||
Income from continuing operations before income taxes | 1,165 | 2,543 | ||||
Net income | 1,165 | 2,543 | ||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 1,165 | 2,543 | ||||
Operating segment | Single Family Residential | ||||||
Other income: | ||||||
Loss from discontinued operations, net of tax | (1,551) | |||||
Net income | (1,551) | |||||
Net income (loss) attributable to Starwood Property Trust, Inc. | (1,551) | |||||
Corporate | ||||||
Costs and expenses: | ||||||
Management fees | 27,614 | 24,413 | 81,511 | 76,022 | ||
Interest expense | 26,034 | 21,272 | 78,900 | 63,426 | ||
General and administrative | 2,201 | 1,378 | 5,573 | 5,268 | ||
Acquisition and investment pursuit costs | (38) | 38 | 15 | |||
Total costs and expenses | 55,811 | 47,063 | 166,022 | 144,731 | ||
Income before other income, income taxes and non-controlling interests | (55,811) | (47,063) | (166,022) | (144,731) | ||
Other income: | ||||||
Loss on extinguishment of debt | (5,921) | |||||
Other income, net | 14 | |||||
Total other income | (5,907) | |||||
Income from continuing operations before income taxes | (55,811) | (47,063) | (171,929) | (144,731) | ||
Income from continuing operations | (144,731) | |||||
Net income | (55,811) | (47,063) | (171,929) | (144,731) | ||
Net income (loss) attributable to Starwood Property Trust, Inc. | (55,811) | (47,063) | (171,929) | (144,731) | ||
Investment and Servicing VIEs | ||||||
Revenues: | ||||||
Interest income from investment securities | (34,078) | (17,225) | (93,838) | (46,707) | ||
Servicing fees | (28,980) | (24,248) | (76,048) | (71,565) | ||
Other revenues | (226) | (316) | (733) | (939) | ||
Total revenues | (63,284) | (41,789) | (170,619) | (119,211) | ||
Costs and expenses: | ||||||
Management fees | 86 | 42 | 187 | 120 | ||
General and administrative | 178 | 177 | 542 | 544 | ||
Total costs and expenses | 264 | 219 | 729 | 664 | ||
Income before other income, income taxes and non-controlling interests | (63,548) | (42,008) | (171,348) | (119,875) | ||
Other income: | ||||||
Change in net assets related to consolidated VIEs | 49,665 | 87,778 | 153,399 | 190,810 | ||
Change in fair value of servicing rights | 9,114 | 10,415 | 18,176 | 24,620 | ||
Change in fair value of investment securities, net | 5,076 | (50,067) | 730 | (90,698) | ||
Earnings from unconsolidated entities | (200) | (3,975) | (622) | (3,156) | ||
Total other income | 63,655 | 44,151 | 171,683 | 121,576 | ||
Income from continuing operations before income taxes | 107 | 2,143 | 335 | 1,701 | ||
Income from continuing operations | 1,701 | |||||
Net income | 107 | 2,143 | 335 | 1,701 | ||
Net income attributable to non-controlling interests | $ (107) | $ (2,143) | $ (335) | $ (1,701) | ||
Retail fund | ||||||
Segment data | ||||||
Balance of the equity method investment that was transferred from the Lending Segment to the Property Segment | $ 129,500 |
Segment Data (Details 2)
Segment Data (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Assets: | ||||||
Cash and cash equivalents | $ 372,768 | $ 255,187 | $ 327,322 | $ 317,627 | ||
Restricted cash | 43,620 | 48,704 | ||||
Loans held-for-investment, net | 5,814,886 | 5,779,238 | ||||
Loans held-for-sale | 450,828 | 391,620 | ||||
Loans transferred as secured borrowings | 142,456 | 129,427 | ||||
Investment securities | 786,461 | 998,248 | ||||
Properties, net | 530,438 | 39,854 | ||||
Intangible assets | 191,080 | 144,152 | ||||
Investment in unconsolidated entities | 199,171 | 193,983 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 36,307 | 26,628 | ||||
Accrued interest receivable | 36,042 | 40,102 | ||||
Other assets | 137,296 | 95,652 | ||||
VIE assets, at fair value | 82,937,617 | 107,816,065 | ||||
Total Assets | 91,819,407 | 116,099,297 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 137,786 | 144,516 | ||||
Related-party payable | 22,804 | 40,751 | ||||
Dividends payable | 115,191 | 108,189 | 108,056 | |||
Derivative liabilities | 14,901 | 5,476 | ||||
Secured financing agreements, net | 3,682,274 | 3,137,789 | ||||
Convertible senior notes, net | 1,320,207 | 1,418,022 | ||||
Secured borrowings on transferred loans | 143,926 | 129,441 | ||||
VIE liabilities, at fair value | 82,181,138 | 107,232,201 | ||||
Total Liabilities | 87,618,227 | 112,216,385 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,407 | 2,248 | ||||
Additional paid-in capital | 4,184,538 | 3,835,725 | ||||
Treasury stock | (61,525) | (23,635) | ||||
Accumulated other comprehensive income (loss) | 39,510 | $ 45,901 | 55,896 | 69,681 | $ 74,962 | 75,449 |
Retained earnings (accumulated deficit) | 5,843 | (9,378) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,170,773 | 3,860,856 | ||||
Non-controlling interests in consolidated subsidiaries | 30,407 | 22,056 | ||||
Total Equity | 4,201,180 | 3,882,912 | $ 3,863,963 | $ 4,327,133 | ||
Total Liabilities and Equity | 91,819,407 | 116,099,297 | ||||
Operating Segments and Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 371,855 | 254,401 | ||||
Restricted cash | 43,620 | 48,704 | ||||
Loans held-for-investment, net | 5,814,886 | 5,779,238 | ||||
Loans held-for-sale | 450,828 | 391,620 | ||||
Loans transferred as secured borrowings | 142,456 | 129,427 | ||||
Investment securities | 1,491,416 | 1,518,070 | ||||
Properties, net | 530,438 | 39,854 | ||||
Intangible assets | 218,959 | 190,207 | ||||
Investment in unconsolidated entities | 206,515 | 200,705 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 36,307 | 26,628 | ||||
Accrued interest receivable | 36,042 | 40,102 | ||||
Other assets | 139,196 | 97,116 | ||||
Total Assets | 9,622,955 | 8,856,509 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 137,126 | 144,059 | ||||
Related-party payable | 22,804 | 40,751 | ||||
Dividends payable | 115,191 | 108,189 | ||||
Derivative liabilities | 14,901 | 5,476 | ||||
Secured financing agreements, net | 3,682,274 | 3,137,789 | ||||
Convertible senior notes, net | 1,320,207 | 1,418,022 | ||||
Secured borrowings on transferred loans | 143,926 | 129,441 | ||||
Total Liabilities | 5,436,429 | 4,983,727 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,407 | 2,248 | ||||
Additional paid-in capital | 4,184,538 | 3,835,725 | ||||
Treasury stock | (61,525) | (23,635) | ||||
Accumulated other comprehensive income (loss) | 39,510 | 55,896 | ||||
Retained earnings (accumulated deficit) | 5,843 | (9,378) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,170,773 | 3,860,856 | ||||
Non-controlling interests in consolidated subsidiaries | 15,753 | 11,926 | ||||
Total Equity | 4,186,526 | 3,872,782 | ||||
Total Liabilities and Equity | 9,622,955 | 8,856,509 | ||||
Operating segment | Lending Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 112,635 | 125,132 | ||||
Restricted cash | 15,352 | 34,941 | ||||
Loans held-for-investment, net | 5,814,886 | 5,771,307 | ||||
Loans held-for-sale | 27,198 | |||||
Loans transferred as secured borrowings | 142,456 | 129,427 | ||||
Investment securities | 564,101 | 764,517 | ||||
Investment in unconsolidated entities | 30,155 | 22,537 | ||||
Derivative assets | 26,102 | 23,579 | ||||
Accrued interest receivable | 35,214 | 39,188 | ||||
Other assets | 21,722 | 21,329 | ||||
Total Assets | 6,789,821 | 6,931,957 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 17,143 | 23,015 | ||||
Derivative liabilities | 8,387 | 3,662 | ||||
Secured financing agreements, net | 2,209,851 | 2,252,493 | ||||
Secured borrowings on transferred loans | 143,926 | 129,441 | ||||
Total Liabilities | 2,379,307 | 2,408,611 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 2,689,426 | 3,126,845 | ||||
Accumulated other comprehensive income (loss) | 40,830 | 55,781 | ||||
Retained earnings (accumulated deficit) | 1,668,561 | 1,328,794 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,398,817 | 4,511,420 | ||||
Non-controlling interests in consolidated subsidiaries | 11,697 | 11,926 | ||||
Total Equity | 4,410,514 | 4,523,346 | ||||
Total Liabilities and Equity | 6,789,821 | 6,931,957 | ||||
Operating segment | Investment and Servicing Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 56,454 | 85,252 | ||||
Restricted cash | 23,978 | 13,763 | ||||
Loans held-for-investment, net | 7,931 | |||||
Loans held-for-sale | 423,630 | 391,620 | ||||
Investment securities | 927,315 | 753,553 | ||||
Properties, net | 84,558 | 39,854 | ||||
Intangible assets | 162,343 | 190,207 | ||||
Investment in unconsolidated entities | 54,627 | 48,693 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 4,389 | 3,049 | ||||
Accrued interest receivable | 828 | 914 | ||||
Other assets | 64,086 | 61,048 | ||||
Total Assets | 1,942,645 | 1,736,321 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 85,208 | 97,424 | ||||
Related-party payable | 120 | 4,405 | ||||
Derivative liabilities | 6,359 | 1,814 | ||||
Secured financing agreements, net | 485,662 | 222,363 | ||||
Total Liabilities | 577,349 | 326,006 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 1,183,262 | 1,413,608 | ||||
Accumulated other comprehensive income (loss) | (2,478) | 115 | ||||
Retained earnings (accumulated deficit) | 180,456 | (3,408) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 1,361,240 | 1,410,315 | ||||
Non-controlling interests in consolidated subsidiaries | 4,056 | |||||
Total Equity | 1,365,296 | 1,410,315 | ||||
Total Liabilities and Equity | 1,942,645 | 1,736,321 | ||||
Operating segment | Property Segment | ||||||
Assets: | ||||||
Restricted cash | 4,290 | |||||
Properties, net | 445,880 | |||||
Intangible assets | 56,616 | |||||
Investment in unconsolidated entities | 121,733 | 129,475 | ||||
Derivative assets | 5,816 | |||||
Other assets | 40,604 | |||||
Total Assets | 674,939 | 129,475 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 10,344 | |||||
Derivative liabilities | 155 | |||||
Secured financing agreements, net | 328,602 | |||||
Total Liabilities | 339,101 | |||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 329,960 | 127,299 | ||||
Accumulated other comprehensive income (loss) | 1,158 | |||||
Retained earnings (accumulated deficit) | 4,720 | 2,176 | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 335,838 | 129,475 | ||||
Total Equity | 335,838 | 129,475 | ||||
Total Liabilities and Equity | 674,939 | 129,475 | ||||
Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 202,766 | 44,017 | ||||
Other assets | 12,784 | 14,739 | ||||
Total Assets | 215,550 | 58,756 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 24,431 | 23,620 | ||||
Related-party payable | 22,684 | 36,346 | ||||
Dividends payable | 115,191 | 108,189 | ||||
Secured financing agreements, net | 658,159 | 662,933 | ||||
Convertible senior notes, net | 1,320,207 | 1,418,022 | ||||
Total Liabilities | 2,140,672 | 2,249,110 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,407 | 2,248 | ||||
Additional paid-in capital | (18,110) | (832,027) | ||||
Treasury stock | (61,525) | (23,635) | ||||
Retained earnings (accumulated deficit) | (1,847,894) | (1,336,940) | ||||
Total Starwood Property Trust, Inc. Stockholders' Equity | (1,925,122) | (2,190,354) | ||||
Total Equity | (1,925,122) | (2,190,354) | ||||
Total Liabilities and Equity | 215,550 | 58,756 | ||||
Investment and Servicing VIEs | ||||||
Assets: | ||||||
Cash and cash equivalents | 913 | 786 | ||||
Investment securities | (704,955) | (519,822) | ||||
Intangible assets | (27,879) | (46,055) | ||||
Investment in unconsolidated entities | (7,344) | (6,722) | ||||
Other assets | (1,900) | (1,464) | ||||
VIE assets, at fair value | 82,937,617 | 107,816,065 | ||||
Total Assets | 82,196,452 | 107,242,788 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 660 | 457 | ||||
VIE liabilities, at fair value | 82,181,138 | 107,232,201 | ||||
Total Liabilities | 82,181,798 | 107,232,658 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Non-controlling interests in consolidated subsidiaries | 14,654 | 10,130 | ||||
Total Equity | 14,654 | 10,130 | ||||
Total Liabilities and Equity | $ 82,196,452 | $ 107,242,788 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Thousands | Nov. 05, 2015$ / shares | Oct. 20, 2015USD ($)property | Aug. 04, 2015$ / shares | May. 05, 2015$ / shares | Feb. 25, 2015$ / shares | Oct. 31, 2015USD ($) | Jul. 31, 2015 | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2014$ / shares | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2014$ / shares | Oct. 26, 2015USD ($)item | Aug. 31, 2015USD ($)propertyitem | Dec. 31, 2014USD ($) |
Subsequent Events | ||||||||||||||
Purchase price | $ 65,900 | |||||||||||||
Maximum Facility Size | $ 6,290,873 | $ 6,290,873 | ||||||||||||
Extension option exercised period | 1 year | |||||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 1.44 | $ 1.44 | |||||||
Carrying Value | $ 3,682,274 | $ 3,682,274 | $ 3,137,789 | |||||||||||
Lender 2 Repo 1 Facility | ||||||||||||||
Subsequent Events | ||||||||||||||
Maximum Facility Size | 325,000 | 325,000 | ||||||||||||
Carrying Value | 272,824 | 272,824 | 240,188 | |||||||||||
Conduit Repo 2 Facility | ||||||||||||||
Subsequent Events | ||||||||||||||
Maximum Facility Size | 150,000 | 150,000 | ||||||||||||
Carrying Value | $ 121,556 | $ 121,556 | $ 113,636 | |||||||||||
Subsequent event | ||||||||||||||
Subsequent Events | ||||||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | |||||||||||||
Subsequent event | Lender 2 Repo 1 Facility | ||||||||||||||
Subsequent Events | ||||||||||||||
Maximum Facility Size | $ 500,000 | |||||||||||||
Subsequent event | Conduit Repo 2 Facility | ||||||||||||||
Subsequent Events | ||||||||||||||
Extension option exercised period | 1 year | |||||||||||||
Affordable Housing Portfolio | ||||||||||||||
Subsequent Events | ||||||||||||||
Number of units | item | 7,870 | |||||||||||||
Number of properties in portfolio investment | property | 29 | |||||||||||||
Initial aggregate purchase price to be transferred | $ 524,100 | |||||||||||||
Affordable Housing Portfolio | Subsequent event | ||||||||||||||
Subsequent Events | ||||||||||||||
Number of acquired properties closed | property | 7 | |||||||||||||
Purchase price | $ 143,200 | |||||||||||||
Number of acquired properties not closed | property | 22 | |||||||||||||
Affordable Housing Portfolio | Subsequent event | Property Specific Debt Facilities | ||||||||||||||
Subsequent Events | ||||||||||||||
Carrying Value | $ 101,000 | |||||||||||||
Maturity period | 10 years | |||||||||||||
Interest rate (as a percent) | 3.70% | |||||||||||||
Affordable Housing Community In Tampa Florida | Subsequent event | ||||||||||||||
Subsequent Events | ||||||||||||||
Number of units | item | 450 | |||||||||||||
Initial aggregate purchase price to be transferred | $ 29,100 |