Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 02, 2018 | |
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 | Jun. 30, 2018 | |
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 | 267,071,096 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Cash and cash equivalents | $ 235,419 | $ 369,448 |
Restricted cash | 89,794 | 48,825 |
Loans held-for-investment, net | 6,928,176 | 6,562,495 |
Loans held-for-sale, at fair value | 1,092,769 | 745,743 |
Loans transferred as secured borrowings | 74,217 | 74,403 |
Investment securities ($301,259 and $284,735 held at fair value) | 441,935 | 718,203 |
Properties, net | 2,936,684 | 2,647,481 |
Intangible assets ($22,742 and $30,759 held at fair value) | 166,686 | 183,092 |
Investment in unconsolidated entities | 166,716 | 185,503 |
Goodwill | 140,437 | 140,437 |
Derivative assets | 50,815 | 33,898 |
Accrued interest receivable | 54,660 | 47,747 |
Other assets | 177,578 | 138,140 |
Variable interest entity (“VIE”) assets, at fair value | 48,044,873 | 51,045,874 |
Total Assets | 60,600,759 | 62,941,289 |
Liabilities: | ||
Accounts payable, accrued expenses and other liabilities | 189,673 | 185,117 |
Related-party payable | 25,324 | 42,369 |
Dividends payable | 126,857 | 125,916 |
Derivative liabilities | 36,135 | 36,200 |
Secured financing agreements, net | 6,216,617 | 5,773,056 |
Unsecured senior notes, net | 2,255,976 | 2,125,235 |
Secured borrowings on transferred loans, net | 74,058 | 74,185 |
VIE liabilities, at fair value | 46,976,428 | 50,000,010 |
Total Liabilities | 55,901,068 | 58,362,088 |
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, 267,541,825 issued and 262,361,685 outstanding as of June 30, 2018 and 265,983,309 issued and 261,376,424 outstanding as of December 31, 2017 | 2,675 | 2,660 |
Additional paid-in capital | 4,738,969 | 4,715,246 |
Treasury stock (5,180,140 shares and 4,606,885 shares) | (104,194) | (92,104) |
Accumulated other comprehensive income | 68,134 | 69,924 |
Accumulated deficit | (260,762) | (217,312) |
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,444,822 | 4,478,414 |
Non-controlling interests in consolidated subsidiaries | 254,869 | 100,787 |
Total Equity | 4,699,691 | 4,579,201 |
Total Liabilities and Equity | $ 60,600,759 | $ 62,941,289 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Condensed Consolidated Balance Sheets | ||
Investment securities held at fair value | $ 301,259 | $ 284,735 |
Intangible assets held at fair value | $ 22,742 | $ 30,759 |
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 | 267,541,825 | 265,983,309 |
Common stock, shares outstanding | 262,361,685 | 261,376,424 |
Treasury stock, shares | 5,180,140 | 4,606,885 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Interest income from loans | $ 151,704 | $ 120,612 | $ 289,324 | $ 232,495 |
Interest income from investment securities | 10,790 | 12,370 | 26,059 | 27,594 |
Servicing fees | 17,315 | 18,628 | 43,382 | 32,730 |
Rental income | 88,891 | 58,966 | 170,001 | 116,008 |
Other revenues | 856 | 993 | 1,377 | 1,462 |
Total revenues | 269,556 | 211,569 | 530,143 | 410,289 |
Costs and expenses: | ||||
Management fees | 27,494 | 24,633 | 58,136 | 49,017 |
Interest expense | 91,592 | 71,317 | 178,775 | 137,177 |
General and administrative | 35,528 | 32,520 | 67,670 | 62,949 |
Acquisition and investment pursuit costs | 1,561 | 537 | 1,938 | 1,208 |
Costs of rental operations | 32,897 | 23,024 | 62,590 | 43,902 |
Depreciation and amortization | 37,150 | 22,032 | 68,894 | 44,260 |
Loan loss allowance, net | 25,259 | (2,694) | 26,797 | (2,999) |
Other expense | 497 | 142 | 601 | 900 |
Total costs and expenses | 251,978 | 171,511 | 465,401 | 336,414 |
Income before other income (loss), income taxes and non-controlling interests | 17,578 | 40,058 | 64,742 | 73,875 |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 43,946 | 77,761 | 96,599 | 146,931 |
Change in fair value of servicing rights | (2,203) | (8,001) | (8,017) | (16,434) |
Change in fair value of investment securities, net | 7,702 | (2,493) | 7,553 | (3,664) |
Change in fair value of mortgage loans held-for-sale, net | 14,833 | 15,406 | 22,633 | 25,999 |
Earnings from unconsolidated entities | 5,470 | 29,465 | 4,008 | 32,452 |
Gain on sale of investments and other assets, net | 13,437 | 5,183 | 24,097 | 5,127 |
Gain (loss) on derivative financial instruments, net | 32,622 | (37,586) | 15,763 | (41,935) |
Foreign currency (loss) gain, net | (13,264) | 12,910 | 285 | 17,774 |
Total other-than-temporary impairment (“OTTI”) | (109) | (109) | ||
Net impairment losses recognized in earnings | (109) | (109) | ||
Loss on extinguishment of debt | (186) | (186) | (5,916) | |
Other income, net | 498 | 91 | 606 | 456 |
Total other income | 102,855 | 92,627 | 163,341 | 160,681 |
Income before income taxes | 120,433 | 132,685 | 228,083 | 234,556 |
Income tax provision | (3,343) | (9,452) | (6,199) | (8,469) |
Net income | 117,090 | 123,233 | 221,884 | 226,087 |
Net income attributable to non-controlling interests | (7,860) | (5,853) | (12,722) | (6,349) |
Net income attributable to Starwood Property Trust, Inc. | $ 109,230 | $ 117,380 | $ 209,162 | $ 219,738 |
Earnings per share data attributable to Starwood Property Trust, Inc.: | ||||
Basic (in dollars per share) | $ 0.41 | $ 0.45 | $ 0.80 | $ 0.84 |
Diluted (in dollars per share) | 0.40 | 0.44 | 0.77 | 0.83 |
Dividends declared per common share (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.96 | $ 0.96 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net income | $ 117,090 | $ 123,233 | $ 221,884 | $ 226,087 |
Other comprehensive income (net change by component): | ||||
Cash flow hedges | (23) | 2 | (18) | 78 |
Available-for-sale securities | 1,023 | 4,907 | 2,186 | 6,753 |
Foreign currency translation | (8,176) | 11,005 | (3,958) | 13,012 |
Other comprehensive income | (7,176) | 15,914 | (1,790) | 19,843 |
Comprehensive income | 109,914 | 139,147 | 220,094 | 245,930 |
Less: Comprehensive income attributable to non-controlling interests | (7,860) | (5,853) | (12,722) | (6,349) |
Comprehensive income attributable to Starwood Property Trust, Inc. | $ 102,054 | $ 133,294 | $ 207,372 | $ 239,581 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Total Starwood Property Trust, Inc. Stockholders' Equity2023 Notes | Total Starwood Property Trust, Inc. Stockholders' Equity2018 Notes | Total Starwood Property Trust, Inc. Stockholders' Equity | Common stock | Additional Paid-In Capital2023 Notes | Additional Paid-In Capital2018 Notes | Additional Paid-In Capital | Treasury Stock | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interests | 2023 Notes | 2018 Notes | Total |
Balance at Dec. 31, 2016 | $ 4,522,274 | $ 2,639 | $ 4,691,180 | $ (92,104) | $ (115,579) | $ 36,138 | $ 37,799 | $ 4,560,073 | ||||||
Balance (in shares) at Dec. 31, 2016 | 263,893,806 | 4,606,885 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||
Proceeds from DRIP Plan | 369 | 369 | 369 | |||||||||||
Proceeds from DRIP Plan (in shares) | 16,407 | |||||||||||||
Equity offering costs | (12) | (12) | $ (12) | |||||||||||
Common stock repurchased (in shares) | 0 | |||||||||||||
Equity component of Convertible Senior Notes issuance | $ 3,755 | $ 3,755 | $ 3,755 | |||||||||||
Equity component of Convertible Senior Notes repurchase | $ (18,105) | $ (18,105) | $ (18,105) | |||||||||||
Share-based compensation | 8,079 | $ 7 | 8,072 | $ 8,079 | ||||||||||
Share-based compensation (in shares) | 709,462 | |||||||||||||
Manager incentive fee paid in stock | 12,244 | $ 6 | 12,238 | 12,244 | ||||||||||
Manager incentive fee paid in stock (in shares) | 541,494 | |||||||||||||
Net income | 219,738 | 219,738 | 6,349 | 226,087 | ||||||||||
Dividends declared | (251,022) | (251,022) | (251,022) | |||||||||||
Other comprehensive income, net | 19,843 | 19,843 | 19,843 | |||||||||||
VIE non-controlling interests | 2,737 | 2,737 | ||||||||||||
Distribution to non-controlling interests | (3,599) | (3,599) | ||||||||||||
Balance at Jun. 30, 2017 | 4,517,163 | $ 2,652 | 4,697,497 | $ (92,104) | (146,863) | 55,981 | 43,286 | 4,560,449 | ||||||
Balance (in shares) at Jun. 30, 2017 | 265,161,169 | 4,606,885 | ||||||||||||
Balance at Dec. 31, 2017 | 4,478,414 | $ 2,660 | 4,715,246 | $ (92,104) | (217,312) | 69,924 | 100,787 | $ 4,579,201 | ||||||
Balance (in shares) at Dec. 31, 2017 | 265,983,309 | 4,606,885 | 265,983,309 | |||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||
Proceeds from DRIP Plan | 314 | 314 | $ 314 | |||||||||||
Proceeds from DRIP Plan (in shares) | 14,982 | |||||||||||||
Equity offering costs | (17) | (17) | (17) | |||||||||||
Common stock repurchased | (12,090) | $ (12,090) | $ (12,090) | |||||||||||
Common stock repurchased (in shares) | 573,255 | 573,255 | ||||||||||||
Share-based compensation | 10,605 | $ 8 | 10,597 | $ 10,605 | ||||||||||
Share-based compensation (in shares) | 773,822 | |||||||||||||
Manager incentive fee paid in stock | 15,798 | $ 7 | 15,791 | 15,798 | ||||||||||
Manager incentive fee paid in stock (in shares) | 769,712 | |||||||||||||
Net income | 209,162 | 209,162 | 12,722 | 221,884 | ||||||||||
Dividends declared | (252,612) | (252,612) | (252,612) | |||||||||||
Other comprehensive income, net | (1,790) | (1,790) | (1,790) | |||||||||||
VIE non-controlling interests | 976 | 976 | ||||||||||||
Contributions from non-controlling interests | 375,292 | 375,292 | ||||||||||||
Distribution to non-controlling interests | (2,962) | (2,962) | (234,589) | (237,551) | ||||||||||
Sale of controlling interest in majority owned property asset | (319) | (319) | ||||||||||||
Balance at Jun. 30, 2018 | $ 4,444,822 | $ 2,675 | $ 4,738,969 | $ (104,194) | $ (260,762) | $ 68,134 | $ 254,869 | $ 4,699,691 | ||||||
Balance (in shares) at Jun. 30, 2018 | 267,541,825 | 5,180,140 | 267,541,825 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Equity (Parenthetical) - $ / shares | May 04, 2018 | Feb. 28, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Condensed Consolidated Statements of Equity | ||||||
Dividends declared per common share (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.96 | $ 0.96 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net income | $ 221,884 | $ 226,087 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Amortization of deferred financing costs, premiums and discounts on secured financing agreements and secured borrowings on transferred loans | 11,498 | 9,324 |
Amortization of discounts and deferred financing costs on senior notes | 6,835 | 11,777 |
Accretion of net discount on investment securities | (9,583) | (8,007) |
Accretion of net deferred loan fees and discounts | (20,961) | (16,194) |
Share-based compensation | 10,605 | 8,079 |
Share-based component of incentive fees | 15,798 | 12,244 |
Change in fair value of investment securities | (7,553) | 3,664 |
Change in fair value of consolidated VIEs | (18,884) | (42,593) |
Change in fair value of servicing rights | 8,017 | 16,434 |
Change in fair value of loans held-for-sale | (22,633) | (25,999) |
Change in fair value of derivatives | (13,432) | 39,223 |
Foreign currency gain, net | (369) | (17,590) |
Gain on sale of investments and other assets | (24,097) | (5,127) |
Impairment charges on properties and related intangibles | 412 | 867 |
Loan loss allowance, net | 26,797 | (2,999) |
Depreciation and amortization | 67,857 | 42,701 |
Earnings from unconsolidated entities | (4,008) | (32,452) |
Distributions of earnings from unconsolidated entities | 4,569 | 4,284 |
Loss on extinguishment of debt | 186 | 5,916 |
Origination and purchase of loans held-for-sale, net of principal collections | (814,154) | (991,343) |
Proceeds from sale of loans held-for-sale | 481,765 | 470,478 |
Changes in operating assets and liabilities: | ||
Related-party payable, net | (17,045) | (15,040) |
Accrued and capitalized interest receivable, less purchased interest | (36,218) | (39,143) |
Other assets | (15,038) | (2,391) |
Accounts payable, accrued expenses and other liabilities | 85 | 2,763 |
Net cash used in operating activities | (147,667) | (345,037) |
Cash Flows from Investing Activities: | ||
Origination and purchase of loans held-for-investment | (2,404,133) | (1,228,952) |
Proceeds from principal collections on loans | 1,840,897 | 869,297 |
Proceeds from loans sold | 194,720 | 37,079 |
Purchase of investment securities | (20,465) | (7,433) |
Proceeds from sales of investment securities | 807 | 11,134 |
Proceeds from principal collections on investment securities | 321,687 | 86,259 |
Proceeds from sales and insurance recoveries on properties | 96,147 | 18,256 |
Purchases and additions to properties and other assets | (36,769) | (25,503) |
Investment in unconsolidated entities | (3,060) | |
Distribution of capital from unconsolidated entities | 21,287 | 3,235 |
Payments for purchase or termination of derivatives | (17,373) | (39,755) |
Proceeds from termination of derivatives | 13,807 | 22,981 |
Return of investment basis in purchased derivative asset | 121 | |
Net cash provided by (used in) investing activities | 7,552 | (253,281) |
Cash Flows from Financing Activities: | ||
Proceeds from borrowings | 3,001,735 | 2,134,245 |
Principal repayments on and repurchases of borrowings | (2,410,574) | (1,590,421) |
Payment of deferred financing costs | (20,005) | (8,211) |
Proceeds from common stock issuances | 314 | 369 |
Payment of equity offering costs | (17) | (647) |
Payment of dividends | (251,671) | (249,925) |
Contributions from non-controlling interests | 8,911 | |
Distributions to non-controlling interests | (237,551) | (3,599) |
Purchase of treasury stock | (12,090) | |
Issuance of debt of consolidated VIEs | 7,948 | 10,188 |
Repayment of debt of consolidated VIEs | (98,324) | (79,099) |
Distributions of cash from consolidated VIEs | 58,908 | 38,840 |
Net cash provided by financing activities | 47,584 | 251,740 |
Net decrease in cash, cash equivalents and restricted cash | (92,531) | (346,578) |
Cash, cash equivalents and restricted cash, beginning of period | 418,273 | 650,755 |
Effect of exchange rate changes on cash | (529) | 1,016 |
Cash, cash equivalents and restricted cash, end of period | 325,213 | 305,193 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 147,228 | 113,564 |
Income taxes paid | 6,132 | 3,362 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Dividends declared, but not yet paid | 126,555 | 125,587 |
Consolidation of VIEs (VIE asset/liability additions) | 1,815,070 | 1,127,952 |
Deconsolidation of VIEs (VIE asset/liability reductions) | 1,022,356 | 2,108,589 |
Net assets acquired from consolidated VIEs | 27,737 | 19,652 |
Contributions of Woodstar II Portfolio net assets from non-controlling interests | $ 366,381 | |
Settlement of loans transferred as secured borrowings | $ 35,000 |
Business and Organization
Business and Organization | 6 Months Ended |
Jun. 30, 2018 | |
Business and Organization | |
Business and Organization | 1. Business and Organizatio Starwood Property Trust, Inc. (“STWD” and, 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. 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 June 30, 2018: · 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, certain residential mortgage loans, and other real estate and real estate-related debt investments in both the U.S. and Europe. · Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties, that are held for investment. · Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) a servicing business in the U.S. that manages and works 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”). 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 | 6 Months Ended |
Jun. 30, 2018 | |
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 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, 2017 (the “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and six months ended June 30, 2018 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, (iii) became significant since December 31, 2017 due to a corporate action or increase in the significance of the underlying business activity or (iv) changed upon adoption of an Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). Variable Interest Entities In addition to the Investing and Servicing Segment’s VIEs, certain other entities in which we hold interests are considered VIEs as the limited partners of these entities do not collectively possess (i) the right to remove the general partner without cause or (ii) the right to participate in significant decisions made by the partnership. 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: (i) identifying the activities that most significantly impact the VIE’s economic performance; and (ii) 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. The right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has 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 without cause, 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 securitization 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: (i) 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 (ii) 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 securitization 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 securitization VIEs as individual line items on our condensed consolidated balance sheets. The liabilities of our consolidated securitization 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 securitization 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 securitization 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 securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization 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 3% of our consolidated securitization VIE assets, with the remaining 97% representing loans. However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under 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 securitization 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 securitization VIEs are presented in the aggregate. 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 securitization VIEs, loans held-for-sale originated or acquired for future securitization, purchased CMBS issued by VIEs we could consolidate in the future and certain investments in marketable equity securities which, effective January 1, 2018, are now required to be carried at fair value through earnings. 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 were made due to the short-term nature of these instruments. 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 securitization VIEs at fair value pursuant to our election of the fair value option. The securitization 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 securitization VIE, we maximize the use of observable inputs over unobservable inputs. Refer to Note 19 for further discussion regarding our fair value measurements. Loans Held-for-Investment Loans that are held for investment are carried at cost, net of unamortized acquisition premiums or discounts, loan fees, and origination costs as applicable, unless the loans are deemed impaired. We evaluate each loan classified as held-for-investment for impairment at least quarterly. In connection with this evaluation, 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. Loan Impairment We evaluate each loan classified as held-for-investment for impairment at least quarterly. Impairment occurs 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 considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. 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 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, 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. Cost Method Equity Investments On January 1, 2018, ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities , became effective prospectively for public companies with a calendar fiscal year. This ASU requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, at fair value with changes in fair value recognized within net income. This ASU does not apply to equity method investments, investments in Federal Home Loan Bank (“FHLB”) stock, investments that result in consolidation of the investee or investments in certain investment companies. For investments in equity securities without a readily determinable fair value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an identical or similar investment of the same issuer. Additionally, this ASU eliminated the requirement to assess whether an impairment of an equity investment is other than temporary. The impairment model for equity investments subject to this election is now a single-step model whereby an entity performs a qualitative assessment to identify impairment. If the qualitative assessment indicates that an impairment exists, the entity would estimate the fair value of the investment and recognize in net income an impairment loss equal to the difference between the fair value and the carrying amount of the equity investment. Our equity investments within the scope of this ASU are limited to our cost method equity investments discussed in Note 7, with the exception of our FHLB stock which is outside the scope of this ASU, and to our marketable equity security discussed in Note 5 for which we had previously elected the fair value option. Our cost method equity investments within the scope of this ASU do not have readily determinable fair values. Therefore, we have elected the practicability exception whereby we measure these investments at cost, less impairment, plus or minus observable price changes from orderly transactions of identical or similar investments of the same issuer. Refer to Note 7 for further discussion. Revenue Recognition On January 1, 2018, new accounting rules regarding revenue recognition became effective for public companies with a calendar fiscal year. None of our significant revenue sources – interest income from loans and investment securities, loan servicing fees, and rental income – are within the scope of the new revenue recognition guidance. The revenue recognition guidance also included revisions to existing accounting rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and accounting for sales of nonfinancial assets where the seller has continuing involvement. These additional revisions also did not materially impact the Company. Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections. We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms. 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, (iii) the conversion options associated with our outstanding convertible senior notes (see Notes 10 and 17), and (iv) non-controlling interests that are redeemable with our common stock (see Note 16). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. Nearly all of the Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 16). 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 six months ended June 30, 2018 and 2017, 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. Recent Accounting Developments On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a right-of-use model for lessee accounting which results in the recognition of most leased assets and lease liabilities on the balance sheet of the lessee. Lessor accounting was not significantly changed by this ASU. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018 by applying a modified retrospective approach. Early application is permitted. On July 30, 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements , which provides an optional transition method of applying the new leases standard at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. It also provides lessors with a practical expedient to not separate non-lease revenue components from the associated lease component if certain conditions are met. Our assessment of the effect of these ASUs on the Company remains ongoing; however, we currently do not expect the application of these ASUs to have a material impact as the Company primarily acts as a lessor. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments , which mandates use of an “expected loss” credit model for estimating future credit losses of certain financial instruments instead of the “incurred loss” credit model that current GAAP requires. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. This ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted though no earlier than the first interim or annual period beginning after December 15, 2018. Though we have not completed our assessment of this ASU, we expect the ASU to result in our recognition of higher levels of allowances for loan losses. Our assessment of the estimated amount of such increases remains in process. On January 26, 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment , which simplifies the method applied for measuring impairment in cases where goodwill is impaired. This ASU specifies that goodwill impairment will be measured as the excess of the reporting unit’s carrying value (inclusive of goodwill) over its fair value, eliminating the requirement that all assets and liabilities of the reporting unit be remeasured individually in connection with measurement of goodwill impairment. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019 and is applied prospectively. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On August 28, 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities , which amends and simplifies existing guidance regarding the designation and measurement of designated hedging relationships. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On June 20, 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718) –Improvements to Nonemployee Share-Based Payment Accounting , which aligns the accounting for nonemployee share-based compensation with the existing accounting model for employee share based compensation. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018. Early application is permitted. We are in the process of assessing the impact this ASU will have on the Company. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 6 Months Ended |
Jun. 30, 2018 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | 3. Acquisitions Investing and Servicing Segment Property Portfolio During the three and six months ended June 30, 2018, our Investing and Servicing Segment acquired $25.0 million and $52.7 million, respectively, in net assets of one and three commercial real estate properties, respectively, from CMBS trusts for a total gross purchase price of $25.1 million and $53.1 million, respectively. These properties, aggregated with the controlling interests in 20 remaining commercial real estate properties acquired from CMBS trusts prior to December 31, 2017 for an aggregate acquisition price of $281.7 million, comprise the Investing and Servicing Segment Property Portfolio (the “REIS Equity Portfolio”). When the properties are acquired from CMBS trusts that are consolidated as VIEs on our balance sheet, the acquisitions are reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. During the three and six months ended June 30, 2018, we sold two and five properties, respectively, within the Investing and Servicing Segment for $24.9 million and $40.0 million, respectively, recognizing a total gain on sale of $10.4 million and $16.8 million, respectively, within gain on sale of investments and other assets in our condensed consolidated statements of operations. One of these properties was acquired by a third party which already held a $0.3 million non-controlling interest in the property. During the three and six months ended June 30, 2018, $2.4 million and $3.7 million of the gain on sale, respectively, was attributable to non-controlling interests. During the three and six months ended June 30, 2017, we sold two properties within the Investing and Servicing Segment for $14.7 million, recognizing a $5.1 million gain on sale within gain on sale of investments and other assets in our condensed consolidated statements of operations. Woodstar II Portfolio Acquisition During the three months ended March 31, 2018, we acquired 18 of the 27 affordable housing communities comprising our “Woodstar II Portfolio”. The Woodstar II Portfolio is comprised of 6,109 units concentrated primarily in Central and South Florida and is 99% occupied. The 18 affordable housing communities acquired during the three months ended March 31, 2018 comprise 4,057 units and were acquired for $404.7 million, including contingent consideration of $26.7 million (the “Q1 2018 Closing”). The properties acquired in the Q1 2018 Closing were recognized initially at their purchase price of $378.0 million plus capitalized acquisition costs of $3.6 million. Contingent consideration of $26.7 million will be recognized when the contingency is resolved. Government sponsored mortgage debt of $7.3 million with weighted average fixed annual interest rates of 2.88% and remaining weighted average terms of 17.7 years was assumed at closing. We financed the Q1 2018 Closing utilizing new 10-year mortgage debt totaling $300.9 million with weighted average fixed annual interest rates of 3.82% (as set forth in Note 9). In December 2017, we acquired eight of the affordable housing communities (the “Q4 2017 Closing”), which include 1,740 units, for $156.2 million, including contingent consideration of $10.8 million. We financed the Q4 2017 Closing utilizing 10-year mortgage debt totaling $116.7 million with a fixed 3.81% interest rate. We effectuated the Woodstar II Portfolio acquisitions via a contribution of the properties by third parties (the “Contributors”) to SPT Dolphin Intermediate LLC (“SPT Dolphin”), a newly-formed, wholly-owned subsidiary of the Company. In exchange for the contribution, the Contributors received cash, Class A units of SPT Dolphin (the “Class A Units”) and rights to receive additional Class A Units if certain contingent events occur. Initially, the Class A unitholders had the right, commencing six months from issuance, to redeem their Class A Units for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company. During the three months ended June 30, 2018, redemption rights were amended to allow Class A unitholders the option to redeem only after the earlier of (i) August 16, 2018 and (ii) three business days after the acquisition of the final property in the Woodstar II Portfolio. No other terms of the redemption rights were amended. The Q1 2018 Closing resulted in the Contributors receiving cash of $223.3 million, 6,979,089 Class A Units and rights to receive an additional 1,301,414 Class A Units if certain contingent events occur. In aggregate, the Q1 2018 Closing and Q4 2017 Closing have resulted in the Contributors receiving cash of $308.1 million, 9,758,863 Class A Units and rights to receive an additional 1,800,335 Class A Units if certain contingent events occur. Since substantially all of the fair value of the properties acquired was concentrated in a group of similar identifiable assets, the Woodstar II Portfolio acquisitions were accounted for in accordance with the asset acquisition provisions of ASC 805, Business Combinations . Master Lease Portfolio During the three and six months ended June 30, 2018, we sold one and three retail properties within the Master Lease Portfolio for $18.4 million and $55.6 million, respectively, recognizing a gain on sale of $3.0 million and $6.9 million, respectively, within gain on sale of investments and other assets in our condensed consolidated statements of operations. Refer to Note 6 for further discussion of the Master Lease Portfolio. Ireland Portfolio During the three and six months ended June 30, 2017, we sold one office property within the Ireland Portfolio for $3.9 million, recognizing an immaterial gain on sale within gain on sale of investments and other assets in our condensed consolidated statements of operations. There were no properties sold within the Ireland Portfolio during the three and six months ended June 30, 2018. Refer to Note 6 for further discussion of the Ireland Portfolio. |
Loans
Loans | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 (dollars in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) June 30, 2018 Value Amount Coupon (years)(1) First mortgages (2) $ 6,389,022 $ 6,416,333 6.6 % 2.2 Subordinated mortgages (3) 157,439 157,243 11.7 % 1.7 Mezzanine loans (2) 386,545 385,772 11.0 % 1.2 Other 26,297 29,745 8.7 % 3.4 Total loans held-for-investment 6,959,303 6,989,093 Loans held-for-sale, fair value option, residential 792,664 766,878 6.2 % 6.0 Loans held-for-sale, fair value option, commercial 300,105 292,535 5.1 % 9.6 Loans transferred as secured borrowings 74,217 74,692 6.7 % 1.8 Total gross loans 8,126,289 8,123,198 Loan loss allowance (loans held-for-investment) (31,127) — Total net loans $ 8,095,162 $ 8,123,198 December 31, 2017 First mortgages (2) $ 5,818,804 $ 5,843,623 6.2 % 2.0 Subordinated mortgages (3) 177,115 177,386 10.8 % 1.9 Mezzanine loans (2) 545,299 545,355 11.0 % 1.1 Other 25,607 29,320 8.5 % 3.9 Total loans held-for-investment 6,566,825 6,595,684 Loans held-for-sale, fair value option, residential 613,287 594,105 6.2 % 5.4 Loans held-for-sale, fair value option, commercial 132,456 132,393 4.6 % 10.0 Loans transferred as secured borrowings 74,403 75,000 6.2 % 2.3 Total gross loans 7,386,971 7,397,182 Loan loss allowance (loans held-for-investment) (4,330) — Total net loans $ 7,382,641 $ 7,397,182 (1) 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 or acquisition. (2) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzanine loans with carrying values of $983.3 million and $851.1 million being classified as first mortgages as of June 30, 2018 and December 31, 2017, respectively. (3) 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. During the three months ended June 30, 2018, the Company received distributions totaling $12.3 million from a profit participation in a mortgage loan that was repaid in 2016. The loan was secured by a retail and hospitality property located in the Times Square area of New York City. The profit participation is accounted for as a loan in accordance with the acquisition, development and construction accounting guidance within ASC 310-10, which results in distributions in excess of basis being recognized within interest income in our condensed consolidated statements of operations. As of June 30, 2018, approximately $6.6 billion, or 94.6%, of our loans held-for-investment were variable rate and paid interest principally at LIBOR plus a weighted-average spread of 4.8%. 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, 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 June 30, 2018, the risk ratings for loans subject to our rating system, which excludes loans for which the fair value option has been elected, by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Transferred % of Risk Rating First Subordinated Mezzanine Loans Held- As Secured Total Category Mortgages Mortgages Loans Other For-Sale Borrowings Total Loans 1 $ 1,613 $ — $ — $ 19,870 $ — $ — $ 21,483 0.3 % 2 2,625,794 11,810 181,396 — — 74,217 2,893,217 35.6 % 3 3,506,015 133,652 205,149 984 — — 3,845,800 47.3 % 4 85,006 — — — — — 85,006 1.0 % 5 — — — — — — — — % N/A 170,594 (1) 11,977 (1) — 5,443 (1) 1,092,769 — 1,280,783 15.8 % $ 6,389,022 $ 157,439 $ 386,545 $ 26,297 $ 1,092,769 $ 74,217 $ 8,126,289 100.0 % (1) Represents loans individually evaluated for impairment in accordance with ASC 310-10. As of December 31, 2017, the risk ratings for loans subject to our rating system, which excludes loans for which the fair value option has been elected, by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Transferred % of Risk Rating First Subordinated Mezzanine Loans Held- As Secured Total Category Mortgages Mortgages Loans Other For-Sale Borrowings Total Loans 1 $ 2,003 $ — $ — $ 20,267 $ — $ — $ 22,270 0.3 % 2 2,462,268 11,927 137,803 — — — 2,611,998 35.4 % 3 3,183,592 165,188 407,496 5,340 — 74,403 3,836,019 51.9 % 4 120,479 — — — — — 120,479 1.6 % 5 50,462 — — — — — 50,462 0.7 % N/A — — — — 745,743 — 745,743 10.1 % $ 5,818,804 $ 177,115 $ 545,299 $ 25,607 $ 745,743 $ 74,403 $ 7,386,971 100.0 % In accordance with our loan impairment policy, during the three months ended June 30, 2018, we recorded impairment charges of $29.9 million related to commercial mortgage loans secured by three assets. Of this amount, $21.6 million relates to a residential conversion project located in New York City, for which our recorded investment was as follows as of June 30, 2018: (i) $119.7 million first mortgage loan ($118.5 million unpaid principal balance); (ii) $53.0 million mezzanine loan ($52.3 million unpaid principal balance); and (iii) $5.5 million unsecured promissory note ($5.4 million unpaid principal balance) which is fully guaranteed by the sponsor. We determined that the unsecured promissory note was not impaired. In making our determinations surrounding impairment, we considered the property’s liquidation value, the financial wherewithal of the sponsor, the borrower’s competency in managing and operating the project and the overall economic environment. The remaining $8.3 million of impairment charges relate to two subordinated mortgages on department stores located in the Greater Chicago area. The sole tenant filed bankruptcy earlier this year, and the bankruptcy court ordered liquidation of the retailer during the three months ended June 30, 2018. In making the determination that the loans were impaired, we considered the property’s liquidation value and the financial wherewithal of the tenant’s parent company to honor certain guarantees. Our recorded investment in these loans totaled $12.2 million ($12.0 million unpaid principal balance). Each of the impaired loans was acquired as part of a loan pool purchase in 2014. All impairment charges were recognized within loan loss allowance, net in our condensed consolidated statements of operations for the three and six months ended June 30, 2018. As of June 30, 2018, each of the above loans was 90 days or greater past due, as were $2.3 million of residential mortgage loans held-for-sale. In accordance with our interest income recognition policy, we ceased recognizing interest income on these loans when they became 90 days past due, and the loans were placed on cost recovery. No cash was received during the three months ended June 30, 2018 while the loans were on cost recovery. 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,” plus (iii) impaired loan reserves, if any. The following table presents the activity in our allowance for loan losses (amounts in thousands): For the Six Months Ended June 30, 2018 2017 Allowance for loan losses at January 1 $ 4,330 $ 9,788 Provision for (reversal of) loan losses (3,055) (2,999) Provision for impaired loans 29,852 — Charge-offs — — Recoveries — — Allowance for loan losses at June 30 $ 31,127 $ 6,789 Recorded investment in loans related to the allowance for loan loss $ 273,020 $ 316,134 The activity in our loan portfolio was as follows (amounts in thousands): For the Six Months Ended June 30, 2018 2017 Balance at January 1 $ 7,382,641 $ Acquisitions/originations/additional funding 3,315,664 Capitalized interest (1) 29,499 33,817 Basis of loans sold (2) (676,214) (507,613) Loan maturities/principal repayments (1,964,644) (948,712) Discount accretion/premium amortization 20,961 16,194 Changes in fair value 22,633 25,999 Unrealized foreign currency translation (loss) gain (8,608) 19,565 Change in loan loss allowance, net (26,797) 2,999 Transfer to/from other asset classifications 27 761 Balance at June 30 $ 8,095,162 $ (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 | 6 Months Ended |
Jun. 30, 2018 | |
Investment Securities | |
Investment Securities | 5. Investment Securities Investment securities were comprised of the following as of June 30, 2018 and December 31, 2017 (amounts in thousands): Carrying Value as of June 30, 2018 December 31, 2017 RMBS, available-for-sale $ 235,796 $ 247,021 CMBS, fair value option (1) 1,076,411 1,024,143 Held-to-maturity (“HTM”) securities 140,676 433,468 Equity security, fair value 13,037 13,523 Subtotal — Investment securities 1,465,920 1,718,155 VIE eliminations (1) (1,023,985) (999,952) Total investment securities $ 441,935 $ 718,203 (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): RMBS, CMBS, fair HTM Equity available-for-sale value option Securities Security Total Three Months Ended June 30, 2018 Purchases (1) $ — $ 20,465 $ — $ — $ 20,465 Sales 807 — — — 807 Principal collections 8,036 240 94,181 — Three Months Ended June 30, 2017 Purchases (1) $ 7,433 $ — $ — $ — $ 7,433 Sales (2) — 700 — — 700 Principal collections 8,555 1,322 332 — 10,209 RMBS, CMBS, fair HTM Equity available-for-sale value option Securities Security Total Six Months Ended June 30, 2018 Purchases (3) $ — $ 20,465 $ — $ — $ 20,465 Sales (4) 807 — — — 807 Principal collections 18,186 1,017 302,484 — 321,687 Six Months Ended June 30, 2017 Purchases (3) $ 7,433 $ — $ — $ — $ 7,433 Sales (4) — 11,134 — — 11,134 Principal collections 18,783 7,088 60,388 — 86,259 (1) During the three months ended June 30, 2018 and 2017, we purchased $61.7 million and $4.3 million of CMBS, respectively, for which we elected the fair value option. The purchases for the three months ended June 30, 2018 include $8.6 million of CMBS we acquired with a third party in connection with a newly formed partnership. The third-party interest of $4.2 million is reflected within non-controlling interests in consolidated subsidiaries in our condensed consolidated balance sheet as of June 30, 2018. Due to our consolidation of securitization VIEs, $41.2 million and $4.3 million, respectively, of this amount is eliminated and reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. (2) During the three months ended June 30, 2017, we sold $6.1 million of CMBS for which we previously elected the fair value option. Due to our consolidation of securitization VIEs, $5.4 million of this amount is eliminated and reflected as issuance of debt of consolidated VIEs in our condensed consolidated statements of cash flows. (3) During the six months ended June 30, 2018 and 2017, we purchased $91.9 million and $61.7 million of CMBS, respectively, for which we elected the fair value option. Due to our consolidation of securitization VIEs, $71.4 million and $61.7 million, respectively, of this amount is eliminated and reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. (4) During the six months ended June 30, 2018 and 2017, we sold $7.9 million and $21.3 million of CMBS, respectively, for which we had previously elected the fair value option. Due to our consolidation of securitization VIEs, $7.9 million and $10.2 million, respectively, of this amount is eliminated and reflected as issuance of debt of consolidated VIEs in our condensed consolidated statements of cash flows. RMBS, Available-for-Sale The Company classified all of its RMBS as available-for-sale as of June 30, 2018 and December 31, 2017. These RMBS 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 as of June 30, 2018 and December 31, 2017 (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 June 30, 2018 RMBS $ 185,618 $ (9,897) $ 175,721 $ — $ 60,096 $ (21) $ 60,075 $ December 31, 2017 RMBS $ $ (9,897) $ 189,132 $ (94) $ 58,011 $ (28) $ 57,889 $ Weighted Average Coupon (1) Weighted Average WAL June 30, 2018 RMBS 3.3 % CC+ 6.2 December 31, 2017 RMBS 2.8 % B 6.4 (1) Calculated using the June 30, 2018 and December 31, 2017 one-month LIBOR rate of 2.090% and 1.564%, 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 June 30, 2018, approximately $198.7 million, or 84.3%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.22%. As of December 31, 2017, approximately $207.0 million, or 83.8%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.22%. We purchased all of the RMBS at a discount, a portion of which is being 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 this accretable discount. The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS as of June 30, 2018 and December 31, 2017 (amounts in thousands): June 30, 2018 December 31, 2017 Principal balance $ 345,200 $ 366,711 Accretable yield (50,877) (55,712) Non-accretable difference (118,602) (121,867) Total discount (169,479) (177,579) Amortized cost $ 175,721 $ 189,132 The principal balance of credit deteriorated RMBS was $324.7 million and $345.5 million as of June 30, 2018 and December 31, 2017, respectively. Accretable yield related to these securities totaled $45.0 million and $49.2 million as of June 30, 2018 and December 31, 2017, respectively. The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the three and six months ended June 30, 2018 (amounts in thousands): Non-Accretable Three Months Ended June 30, 2018 Accretable Yield Difference Balance as of April 1, 2018 $ 51,794 $ 121,488 Accretion of discount (2,622) — Principal write-downs, net — (1,003) Sales (178) — Transfer to/from non-accretable difference 1,883 (1,883) Balance as of June 30, 2018 $ 50,877 $ 118,602 Six Months Ended June 30, 2018 Balance as of January 1, 2018 $ 55,712 $ 121,867 Accretion of discount (5,441) — Principal write-downs, net — (2,481) Sales (178) — Transfer to/from non-accretable difference 784 (784) Balance as of June 30, 2018 $ 50,877 $ 118,602 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 and $0.5 million for the three months ended June 30, 2018 and 2017, respectively, and $0.9 million and $0.9 million for the six months ended June 30, 2018 and 2017, 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 any available-for-sale securities that were in an unrealized loss position as of June 30, 2018 and December 31, 2017, and 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 June 30, 2018 RMBS $ 1,931 $ — $ (21) $ — As of December 31, 2017 RMBS $ 10,321 $ 643 $ (99) $ (23) As of June 30, 2018 and December 31, 2017, there were one and three securities, respectively, with unrealized losses reflected in the table above. After evaluating these securities and recording adjustments for credit-related OTTI, we concluded that the remaining unrealized losses reflected above were noncredit-related and would be recovered from the securities’ estimated future cash flows. We considered a number of factors in reaching this conclusion, including that we did not intend to sell the securities, it was not considered more likely than not that we would be forced to sell the securities 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 OTTI 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 June 30, 2018, the fair value and unpaid principal balance of CMBS where we have elected the fair value option, before consolidation of securitization VIEs, were $1.1 billion and $4.2 billion, respectively. The $1.1 billion fair value balance represents our economic interests in these assets. However, as a result of our consolidation of securitization VIEs, the vast majority of this fair value (all except $52.4 million at June 30, 2018) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option CMBS. As of June 30, 2018, none of our CMBS where we have elected the fair value option were variable rate. HTM Securities The table below summarizes unrealized gains and losses of our investments in HTM securities as of June 30, 2018 and December 31, 2017 (amounts in thousands): Net Carrying Amount Gross Unrealized Gross Unrealized (Amortized Cost) Holding Gains Holding Losses Fair Value June 30, 2018 CMBS $ 120,088 $ 3,237 $ (1,932) $ 121,393 Preferred interests 20,588 1,675 — 22,263 Total $ 140,676 $ 4,912 $ (1,932) $ 143,656 December 31, 2017 CMBS $ $ 2,002 $ (7,779) $ 407,333 Preferred interests 20,358 647 — 21,005 Total $ 433,468 $ 2,649 $ (7,779) $ 428,338 The table below summarizes the maturities of our HTM CMBS and our HTM preferred equity interests in limited liability companies that own commercial real estate as of June 30, 2018 (amounts in thousands): Preferred CMBS Interests Total Less than one year $ 25,157 $ — $ 25,157 One to three years 66,211 — 66,211 Three to five years 28,720 20,588 49,308 Thereafter — — — Total $ 120,088 $ 20,588 $ 140,676 Equity Security, Fair Value During 2012, we acquired 9,140,000 ordinary shares from a related-party 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. The fair value of the investment remeasured in USD was $13.0 million and $13.5 million as of June 30, 2018 and December 31, 2017, respectively. As of June 30, 2018, our shares represent an approximate 2% interest in SEREF. |
Properties
Properties | 6 Months Ended |
Jun. 30, 2018 | |
Properties | |
Properties | 6. Propertie Our properties are held within the following portfolios: Ireland Portfolio The Ireland Portfolio is comprised of 11 net leased fully occupied office properties and one multifamily property all located in Dublin, Ireland, which the Company acquired during the year ended December 31, 2015. The Ireland Portfolio, which collectively is comprised of approximately 600,000 square feet, includes total gross properties and lease intangibles of $529.3 million and debt of $338.5 million as of June 30, 2018. Woodstar I Portfolio The Woodstar I Portfolio is comprised of 32 affordable housing communities with 8,948 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas. During the year ended December 31, 2015, we acquired 18 of the 32 affordable housing communities of the Woodstar I Portfolio with the final 14 communities acquired during the year ended December 31, 2016. The Woodstar I Portfolio includes total gross properties and lease intangibles of $619.8 million and federal, state and county sponsored financing and other debt of $408.2 million as of June 30, 2018. Woodstar II Portfolio The Woodstar II Portfolio is comprised of 27 affordable housing communities with 6,109 units concentrated primarily in Central and South Florida. Refer to Note 3 for further discussion of the Woodstar II Portfolio. Medical Office Portfolio The Medical Office Portfolio is comprised of 34 medical office buildings acquired during the year ended December 31, 2016. These properties, which collectively comprise 1.9 million square feet, are geographically dispersed throughout the U.S. and primarily affiliated with major hospitals or located on or adjacent to major hospital campuses. The Medical Office Portfolio includes total gross properties and lease intangibles of $760.1 million and debt of $483.6 million as of June 30, 2018. Master Lease Portfolio The Master Lease Portfolio is comprised of 17 retail properties and three industrial properties geographically dispersed throughout the U.S., with more than 50% of the portfolio, by carrying value, located in Utah, Florida, Texas and Minnesota. These properties collectively comprise 5.0 million square feet and were leased back to the seller under corporate guaranteed master net lease agreements with initial terms of 24.6 years and periodic rent escalations. The Master Lease Portfolio includes total gross properties of $505.0 million and debt of $262.0 million as of June 30, 2018. Investing and Servicing Segment Property Portfolio The REIS Equity Portfolio is comprised of 23 commercial real estate properties and one equity interest in an unconsolidated commercial real estate property. The REIS Equity Portfolio includes total gross properties and lease intangibles of $372.6 million and debt of $218.9 million as of June 30, 2018. Refer to Note 3 for further discussion of the REIS Equity Portfolio. The table below summarizes our properties held as of June 30, 2018 and December 31, 2017 (dollars in thousands): Depreciable Life June 30, 2018 December 31, 2017 Property Segment Land and land improvements 0 – 15 years $ 661,101 $ 585,915 Buildings and building improvements 5 – 45 years 2,066,975 1,838,266 Furniture & fixtures 3 – 7 years 41,993 31,028 Investing and Servicing Segment Land and land improvements 0 – 15 years 91,086 86,711 Buildings and building improvements 3 – 40 years 223,322 212,094 Furniture & fixtures 2 – 5 years 1,580 1,036 Properties, cost 3,086,057 2,755,050 Less: accumulated depreciation (149,373) (107,569) Properties, net $ 2,936,684 $ 2,647,481 During the three and six months ended June 30, 2018, we sold three and eight operating properties for $43.3 million and $95.6 million, respectively, recognizing a gain on sale of $13.4 million and $23.7 million, respectively, within gain on sale of investments and other assets in our condensed consolidated statements of operations. One of these properties sold in March 2018 was acquired by a third party which already held a $0.3 million non-controlling interest in the property. During the three and six months ended June 30, 2018, $2.4 million and $3.7 million, respectively, of the gain on sale was attributable to non-controlling interests. During the three and six months ended June 30, 2017, we sold three operating properties for $18.6 million which resulted in a $5.2 million gain recognized within gain on sale of investments and other assets in our condensed consolidated statement of operations. |
Investment in Unconsolidated En
Investment in Unconsolidated Entities | 6 Months Ended |
Jun. 30, 2018 | |
Investment in Unconsolidated Entities | |
Investment in Unconsolidated Entities | 7. Investment in Unconsolidated Entities The table below summarizes our investment in unconsolidated entities as of June 30, 2018 and December 31, 2017 (dollars in thousands): Participation / Carrying value as of Ownership % (1) June 30, 2018 December 31, 2017 Equity method: Retail Fund 33% $ 110,122 $ 110,704 Investor entity which owns equity in an online real estate company 50% 9,347 9,312 Equity interests in commercial real estate 50% 6,748 (2) 23,192 Equity interest in and advances to a residential mortgage originator N/A 9,235 (3) 7,742 Various 25% - 50% 5,458 3,538 140,910 154,488 Cost method: Equity interest in a servicing and advisory business 6% 6,207 12,234 Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% 9,225 9,225 Various 0% - 3% 10,374 9,556 25,806 31,015 $ 166,716 $ 185,503 (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) In March 2018, our preferred equity investment in a portfolio of student housing properties was redeemed in full for cash proceeds of $16.7 million. (3) Includes a $2.0 million subordinated loan the Company funded during the three months ended June 30, 2018. Refer to Note 15 for further discussion. As of June 30, 2018, the carrying value of our equity investment in a residential mortgage originator exceeded the underlying equity in net assets of such investee by $1.6 million. This difference is the result of the Company recording its investment in the investee at its acquisition date fair value, which included certain non-amortizing intangible assets not recognized by the investee. Should the Company determine these intangible assets held by the investee are impaired, the Company will recognize such impairment loss through earnings from unconsolidated entities in our consolidated statement of operations, otherwise, such difference between the carrying value of our equity investment in the residential mortgage originator and the underlying equity in the net assets of the residential mortgage originator will continue to exist. Other than our equity interest in the residential mortgage originator, there were no differences between the carrying value of our equity method investments and the underlying equity in the net assets of the investees as of June 30, 2018. During the three and six months ended June 30, 2018, we did not become aware of any observable price changes in our cost method investments that are within the scope of ASU 2016-01 or any indicators of impairment. |
Goodwill and Intangibles
Goodwill and Intangibles | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangibles | |
Goodwill and Intangibles | 8. Goodwil Goodwill Goodwill at June 30, 2018 and December 31, 2017 represents the excess of consideration transferred over the fair value of net assets of LNR Property LLC (“LNR”) acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR’s existing platform, which includes a 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 servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. At June 30, 2018 and December 31, 2017 the balance of the domestic servicing intangible was net of $23.8 million and $28.2 million, respectively, which was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of June 30, 2018 and December 31, 2017, the domestic servicing intangible had a balance of $46.6 million and $59.0 million, respectively, which represents our economic interest in this asset. Lease Intangibles In connection with our acquisitions of commercial real estate, we recognized in-place lease intangible assets and favorable lease intangible assets associated with certain non-cancelable operating leases of the acquired properties. The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of June 30, 2018 and December 31, 2017 (amounts in thousands): As of June 30, 2018 As of December 31, 2017 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ 22,742 $ — $ 22,742 $ 30,759 $ — $ 30,759 In-place lease intangible assets 200,953 (86,308) 114,645 187,816 (65,351) 122,465 Favorable lease intangible assets 37,672 (8,373) 29,299 37,231 (7,363) 29,868 Total net intangible assets $ 261,367 $ (94,681) $ 166,686 $ 255,806 $ (72,714) $ 183,092 The following table summarizes the activity within intangible assets for the six months ended June 30, 2018 (amounts in thousands): Domestic In-place Lease Favorable Lease Servicing Intangible Intangible Rights Assets Assets Total Balance as of January 1, 2018 $ 30,759 $ 122,465 $ 29,868 $ 183,092 Acquisition of additional Woodstar II Portfolio properties — 10,015 — 10,015 Acquisition of additional REIS Equity Portfolio properties — 7,321 2,678 9,999 Amortization — (23,339) (2,160) (25,499) Sales — (705) (883) (1,588) Foreign exchange gain — (751) (204) (955) Impairment (1) — (361) — (361) Changes in fair value due to changes in inputs and assumptions (8,017) — — (8,017) Balance as of June 30, 2018 $ 22,742 $ 114,645 $ 29,299 $ 166,686 (1) Impairment of intangible lease assets is recognized within other expense in our condensed consolidated statements of operations. The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands): 2018 (remainder of) $ 18,005 2019 23,515 2020 17,819 2021 15,279 2022 12,432 Thereafter 56,894 Total $ 143,944 |
Secured Financing Agreements
Secured Financing Agreements | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 (dollars in thousands): Carrying Value at Current Extended Pledged Asset Maximum June 30, December 31, Maturity Maturity (a) Pricing Carrying Value Facility Size 2018 2017 Lender 1 Repo 1 (b) (b) LIBOR + 1.75% to 5.75% $ $ 2,000,000 $ 1,257,271 $ Lender 2 Repo 1 Apr 2020 Apr 2023 LIBOR + 2.00% to 2.35% 283,182 900,000 (c) 194,357 238,428 Lender 3 Repo 1 N/A N/A N/A — — — 75,291 Lender 4 Repo 2 May 2021 May 2023 LIBOR + 2.00% to 3.25% 741,093 1,000,000 (d) 333,278 215,372 Lender 6 Repo 1 Aug 2020 N/A LIBOR + 2.00% to 2.75% 653,722 600,000 497,045 494,353 Lender 6 Repo 2 Oct 2022 Oct 2023 GBP LIBOR + 2.75% 435,311 335,935 335,935 332,815 Lender 9 Repo 1 Sep 2018 N/A LIBOR + 1.65% — — — 65,762 Lender 10 Repo 1 Mar 2020 Mar 2022 LIBOR + 1.65% to 2.75% 171,000 140,000 136,800 77,800 Lender 11 Repo 1 Jun 2019 Jun 2020 LIBOR + 2.75% — 200,000 — — Lender 11 Repo 2 Sep 2018 Sep 2022 LIBOR + 2.25% to 2.75% 79,718 250,000 54,000 — Lender 12 Repo 1 Jun 2021 Jun 2024 LIBOR + 2.10% to 2.45% 57,291 250,000 43,500 — Lender 7 Secured Financing Feb 2021 Feb 2023 LIBOR + 2.25% (e) 28,219 650,000 (f) 21,169 — Lender 8 Secured Financing Aug 2019 N/A LIBOR + 4.00% — — — 15,617 Conduit Repo 2 Nov 2018 Nov 2019 LIBOR + 2.25% 120,189 200,000 89,190 40,075 Conduit Repo 3 Feb 2020 Feb 2021 LIBOR + 2.10% 108,021 150,000 78,422 26,895 MBS Repo 1 (g) (g) LIBOR + 1.90% — — — 6,510 MBS Repo 2 Dec 2019 N/A LIBOR + 1.90% to 2.45% 100,412 69,122 69,122 222,672 MBS Repo 3 (h) (h) LIBOR + 1.32% to 1.95% 239,266 163,525 163,525 224,150 MBS Repo 4 (i) N/A LIBOR + 1.70% 167,737 110,000 39,000 77,318 MBS Repo 5 Jun 2028 Dec 2028 4.13% 25,572 150,000 23,551 — Investing and Servicing Segment Property Mortgages Aug 2018 to N/A Various 245,105 218,019 196,996 177,411 Ireland Portfolio Mortgage May 2020 N/A EURIBOR + 1.69% 475,754 340,741 340,741 349,900 Woodstar I Portfolio Mortgages Nov 2025 to N/A 3.72% to 3.97% 363,962 276,748 276,748 276,748 Woodstar I Portfolio Government Financing Mar 2026 to Jun 2049 N/A 1.00% to 5.00% 303,177 132,308 132,308 133,418 Woodstar II Portfolio Mortgages Jan 2028 to Apr 2028 N/A 3.81% to 3.85% 512,125 417,669 417,669 116,745 Woodstar II Portfolio Government Financing Jun 2030 to Apr 2046 N/A 1.00% to 3.00% 133,804 7,361 7,361 — Medical Office Portfolio Mortgages Dec 2021 Dec 2023 LIBOR + 2.50% 695,869 524,499 491,197 497,613 Master Lease Portfolio Mortgages Oct 2027 N/A 4.36% to 4.38% 462,552 265,900 265,900 265,900 Term Loan A Dec 2020 Dec 2021 LIBOR + 2.25% (e) 902,809 300,000 300,000 300,000 Revolving Secured Financing Dec 2020 Dec 2021 LIBOR + 2.25% (e) — 100,000 — — FHLB Feb 2021 N/A Various 792,664 498,000 498,000 445,000 $ $ 6,263,085 Unamortized net premium 2,519 2,559 Unamortized deferred financing costs (48,987) (42,950) $ 6,216,617 $ (a) Subject to certain conditions as defined in the respective facility agreement. (b) Maturity date for borrowings collateralized by loans is September 2018 before extension options and September 2021 assuming exercise of 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 September 2025. (c) The initial maximum facility size of $600.0 million may be increased to $900.0 million, subject to certain conditions. (d) The initial maximum facility size of $600.0 million may be increased to $1.0 billion at our option, subject to certain conditions. (e) Subject to borrower’s option to choose alternative benchmark based rates pursuant to the terms of the credit agreement. (f) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions. (g) Facility carries a rolling 11-month term which may reset monthly with the lender’s consent not to exceed December 2018. This facility carries no maximum facility size. (h) Facility carries a rolling 12-month term which may reset monthly with the lender’s consent. Current maturity is June 2019. This facility carries no maximum facility size. Amounts reflect the outstanding balance as of June 30, 2018. (i) The date that is 270 days after the buyer delivers notice to seller, subject to a maximum date of May 2020. 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. During the six months ended June 30, 2018, we entered into two mortgage loans with aggregate maximum borrowings of $34.8 million to finance commercial real estate previously acquired by our Investing and Servicing Segment. As of June 30, 2018, these facilities carry a remaining weighted average term of 4.0 years with floating annual interest rates of LIBOR + 2.62%. In February 2018, we amended the Lender 7 Secured Financing facility to extend the current maturity from July 2018 to February 2021, reduce the spread from LIBOR + 2.75% to LIBOR + 2.25% and decrease available borrowings from $450.0 million to $300.0 million while maintaining the option to upsize to $650.0 million, subject to certain conditions. In February 2018, we amended the Conduit Repo 3 facility to extend the current maturity from February 2018 to February 2020. In February and March 2018, we entered into mortgage loans with total borrowings of $300.9 million to finance the Q1 2018 Closing of our Woodstar II Portfolio. The loans carry 10-year terms and weighted average fixed annual interest rates of 3.82%. Additional government sponsored mortgage loans of $7.3 million with weighted average fixed annual interest rates of 2.88% and remaining weighted average terms of 17.7 years were assumed at closing. In April 2018, we amended the Lender 2 Repo 1 facility to extend the current maturity from October 2018 to April 2020 with three one-year extension options and allow for the option to upsize to $900.0 million, subject to certain conditions. In April 2018, we amended the MBS Repo 4 facility to decrease available borrowings from $225.0 million to $110.0 million, decrease the pricing margin from LIBOR + 1.90% to LIBOR + 1.70% and extend the maximum maturity date from September 2018 to May 2020. In May 2018, we amended the Lender 4 Repo 2 facility to extend the maturity from December 2018 to May 2021 with two one-year extension options. In June 2018, we entered into a $150.0 million repurchase facility (“MBS Repo 5”) to finance vertical risk retention CMBS investments within our Investing and Servicing Segment. The facility carries a ten-year initial term with a six-month extension option. In June 2018, we entered into a $250.0 million repurchase facility (“Lender 12 Repo 1”) to finance certain loans held-for-investment. The facility carries a three-year initial term with three one-year extension options and an annual interest rate of LIBOR + 2.10% to 2.45%, subject to a 25 basis point floor. Our secured financing agreements contain certain financial tests and covenants. As of June 30, 2018, 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 2018 (remainder of) $ 235,346 $ 12,136 $ 247,482 2019 280,352 176,819 457,171 2020 888,834 354,431 1,243,265 2021 450,057 678,060 1,128,117 2022 891,061 30,648 921,709 Thereafter 569,346 1,695,995 2,265,341 Total $ 3,314,996 $ 2,948,089 $ 6,263,085 For the three and six months ended June 30, 2018, approximately $5.8 million and $10.9 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our condensed consolidated statements of operations. For the three and six months ended June 30, 2017, approximately $4.7 million and $9.4 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our condensed consolidated statements of operations. The following table sets forth our outstanding balance of repurchase agreements related to the following asset collateral classes as of June 30, 2018 and December 31, 2017 (amounts in thousands): Class of Collateral June 30, 2018 December 31, 2017 Loans held-for-investment $ 2,821,623 $ 2,637,475 Loans held-for-sale 198,175 66,970 Investment securities 295,198 530,650 $ 3,314,996 $ 3,235,095 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 31% 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 28% 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. |
Unsecured Senior Notes
Unsecured Senior Notes | 6 Months Ended |
Jun. 30, 2018 | |
Convertible Senior Notes | |
Unsecured Senior Notes | |
Unsecured Senior Notes | 10. Unsecured Senior Notes The following table is a summary of our unsecured senior notes outstanding as of June 30, 2018 and December 31, 2017 (dollars in thousands): Remaining Coupon Effective Maturity Period of Carrying Value at Rate Rate (1) Date Amortization June 30, 2018 December 31, 2017 2018 Convertible Notes N/A N/A N/A N/A — 369,981 2019 Convertible Notes 4.00 % 5.35 % 1/15/2019 years 341,363 341,363 2021 Senior Notes (February) 3.63 % 3.89 % 2/1/2021 years 500,000 — 2021 Senior Notes (December) 5.00 % 5.32 % 12/15/2021 years 700,000 700,000 2023 Convertible Notes 4.38 % 4.86 % 4/1/2023 years 250,000 250,000 2025 Senior Notes 4.75 % 5.04 % 3/15/2025 years 500,000 500,000 Total principal amount 2,291,363 2,161,344 Unamortized discount—Convertible Notes (7,556) (11,186) Unamortized discount—Senior Notes (18,483) (16,654) Unamortized deferred financing costs (9,348) (8,269) Carrying amount of debt components $ 2,255,976 $ 2,125,235 Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes $ 6,423 $ 31,638 (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our convertible senior notes, the value of which reduced the initial liability and was recorded in additional paid‑in capital. Senior Notes On January 29, 2018, we issued $500.0 million of 3.625% Senior Notes due 2021 (the “2021 February Notes”). The 2021 February Notes mature on February 1, 2021. Prior to November 1, 2020, we may redeem some or all of the 2021 February Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after November 1, 2020, we may redeem some or all of the 2021 February Notes at a price equal to 100% of the principal amount thereof. In addition, prior to February 1, 2020, we may redeem up to 40% of the 2021 February Notes at the applicable redemption price using the proceeds of certain equity offerings. The 2021 February Notes were swapped to floating rate (see Note 12). Convertible Senior Notes In March 2018, we repaid the full outstanding principal amount of the 4.55% Convertible Senior Notes due 2018 (the “2018 Notes”) in cash upon their maturity. We recognized interest expense of $7.6 million and $18.9 million during the three and six months ended June 30, 2018, respectively, from our unsecured convertible senior notes. We recognized interest expense of $19.2 million and $38.7 million during the three and six months ended June 30, 2017, respectively, from our unsecured convertible senior notes. On March 29, 2017, we issued $250.0 million of 4.375% Convertible Senior Notes due 2023 (the “2023 Notes”). The proceeds from the issuance of the 2023 Notes were used to repurchase $230.0 million of the 2018 Notes for $250.7 million. The repurchase price was allocated between the fair value of the liability component and the fair value of the equity component of the 2018 Notes at the repurchase date. The portion of the repurchase price attributable to the equity component totaled $18.1 million and was recognized as a reduction of additional paid-in capital during the six months ended June 30, 2017. The portion of the repurchase price attributable to the liability component exceeded the net carrying amount of the liability component by $5.9 million, which was recognized as a loss on extinguishment of debt in our condensed consolidated statement of operations for the six months ended June 30, 2017. The following table details the conversion attributes of our Convertible Notes outstanding as of June 30, 2018 (amounts in thousands, except rates): June 30, 2018 Conversion Spread Value - Shares (3) Conversion Conversion For the Three Months Ended June 30, For the Six Months Ended June 30, Rate (1) Price (2) 2018 2017 2018 2017 2018 Notes N/A N/A — 1,162 — 1,157 2019 Notes 51.4738 $ 19.43 1,863 1,980 1,900 1,971 2023 Notes 38.5959 $ 25.91 — — — — 1,863 3,142 1,900 3,128 (1) 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 indentures governing the Convertible Notes (including the applicable supplemental indentures). (2) As of June 30, 2018 and 2017, the market price of the Company’s common stock was $21.71 and $22.39 per share, respectively. (3) The conversion spread value represents the portion of the Convertible Notes that are “in-the-money”, representing the value that would be delivered to investors in shares upon an assumed conversion. The if-converted value of the 4.00% Convertible Senior Notes due 2019 (the “2019 Notes”) exceeded their principal amount by $40.1 million at June 30, 2018 as the closing market price of the Company’s common stock of $21.71 per share exceeded the implicit conversion price of $19.43 per share. However, the if‑converted value of the 2023 Notes was less than their principal amount by $40.5 million at June 30, 2018 as the closing market price of the Company’s common stock was less than the implicit conversion price of $25.91 per share. Due to facts and circumstances existing as of June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. The if-converted value of the principal amount of the 2019 Notes and 2023 Notes was $341.4 million and $209.5 million, respectively, as of June 30, 2018. Subsequent to June 30, 2018, we received redemptions related to our 2019 Notes with a par amount totaling $258.8 million. Based on the Company’s closing share price as of August 7, 2018, these redemptions represent $299.6 million of total value, of which $104.0 million settled in July 2018 through the issuance of 4.7 million shares. We expect to settle the remaining $195.6 million of value through share issuances totaling $168.1 million and cash payments totaling $27.5 million. |
Loan Securitization_Sale Activi
Loan Securitization/Sale Activities | 6 Months Ended |
Jun. 30, 2018 | |
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 an interest in the VIE and/or 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 six months ended June 30, 2018 and 2017 (amounts in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2018 2017 2018 2017 Fair value of loans sold $ 215,133 $ 291,182 $ 481,765 $ 470,478 Par value of loans sold 208,141 272,293 464,959 440,857 Repayment of repurchase agreements 157,538 206,461 351,382 332,979 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 June 30, 2018 $ 50,000 $ 49,447 $ — $ — 2017 — — — — For the Six Months Ended June 30, 2018 $ 196,400 $ 194,720 $ — $ — 2017 38,750 37,079 — — During the three and six months ended June 30, 2018 and 2017, gains (losses) recognized by the Lending Segment on sales of loans were not material. |
Derivatives and Hedging Activit
Derivatives and Hedging Activity | 6 Months Ended |
Jun. 30, 2018 | |
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 13 to the consolidated financial statements included in our Form 10-K for further discussion of our risk management objectives and policies. Designated Hedges The Company does not generally elect to apply the hedge accounting designation to its hedging instruments. During the three and six months ended June 30, 2018, the Company’s only designated hedges were comprised of one and two outstanding interest rate swaps, respectively, that have been designated as cash flow hedges of the interest rate risk associated with forecasted interest payments. As of June 30, 2018, the fair value of the one remaining cash flow hedge was not material. Additionally, during the three and six months ended June 30, 2018 and 2017 the impact of these cash flow hedges on our net income was not material and we did not recognize any hedge ineffectiveness in earnings associated with these cash flow hedges. Non-designated Hedges and Derivatives The Company has entered into the following types of non-designated hedges and derivatives: · Foreign exchange (“Fx”) forwards whereby we agree to buy or sell a specified amount of foreign currency for a specified amount of USD at a future date, economically fixing the USD amounts of foreign denominated cash flows we expect to receive or pay related to certain foreign denominated loan investments and properties; · Interest rate contracts which hedge a portion of our exposure to changes in interest rates; · Credit index instruments which hedge a portion of our exposure to the credit risk of our commercial loans held-for-sale; and · Forward loan purchase commitments whereby we agree to buy a specified amount of residential mortgage loans at a future date for a specified price and the counterparty is contractually obligated to deliver such mortgage loans (see Note 21). The following table summarizes our non-designated Fx forwards, interest rate contracts, credit index instruments and forward loan purchase commitments as of June 30, 2018 (notional amounts in thousands): Type of Derivative Number of Contracts Aggregate Notional Amount Notional Currency Maturity Fx contracts – Sell Euros ("EUR") 35 339,241 EUR July 2018 – March 2022 Fx contracts – Buy Pounds Sterling ("GBP") 2 5,145 GBP July 2019 Fx contracts – Sell Pounds Sterling ("GBP") 132 200,841 GBP July 2018 – December 2021 Interest rate swaps – Paying fixed rates 26 1,003,449 USD April 2019 – July 2028 Interest rate swaps – Receiving fixed rates 2 970,000 USD January 2021 – March 2025 Interest rate caps 2 294,000 EUR May 2020 Interest rate caps 10 127,054 USD November 2018 – October 2021 Credit index instruments 9 74,000 USD September 2058 – November 2059 Forward loan purchase commitments 2 65,000 USD September 2018 Total 220 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 June 30, 2018 and December 31, 2017 (amounts in thousands): Fair Value of Derivatives Fair Value of Derivatives in an Asset Position (1) as of in a Liability Position (2) as of June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Derivatives designated as hedging instruments: Interest rate swaps $ 7 $ 25 $ — $ — Total derivatives designated as hedging instruments 7 25 — — Derivatives not designated as hedging instruments: Interest rate contracts 45,835 27,234 25,078 2,781 Foreign exchange contracts 4,455 6,400 11,057 33,419 Credit index instruments 518 239 — — Total derivatives not designated as hedging instruments 50,808 33,873 36,135 36,200 Total derivatives $ 50,815 $ 33,898 $ 36,135 $ 36,200 (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 six months ended June 30, 2018 and 2017 (amounts in thousands): Gain (Loss) Gain (Loss) Reclassified Gain (Loss) Recognized from AOCI Recognized Derivatives Designated as Hedging Instruments in OCI into Income in Income Location of Gain (Loss) For the Three Months Ended June 30, (effective portion) (effective portion) (ineffective portion) Recognized in Income 2018 $ (1) $ 22 $ — Interest expense 2017 $ 1 $ (1) $ — Interest expense For the Six Months Ended June 30, 2018 $ 8 $ 26 $ — Interest expense 2017 $ 48 $ (30) $ — 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 June 30, Six Months Ended June 30, as Hedging Instruments Recognized in Income 2018 2017 2018 2017 Interest rate contracts Gain (loss) on derivative financial instruments $ (128) $ (7,822) $ 6,109 $ (6,354) Foreign exchange contracts Gain (loss) on derivative financial instruments 32,818 (29,422) 9,675 (35,164) Credit index instruments Gain (loss) on derivative financial instruments (68) (342) (21) (417) $ 32,622 $ (37,586) $ 15,763 $ |
Offsetting Assets and Liabiliti
Offsetting Assets and Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 Derivative assets $ 50,815 $ — $ 50,815 $ 4,966 $ — $ 45,849 Derivative liabilities $ 36,135 $ — $ 36,135 $ 4,966 $ 19,433 $ 11,736 Repurchase agreements 3,314,996 — 3,314,996 3,314,996 — — $ 3,351,131 $ — $ 3,351,131 $ 3,319,962 $ 19,433 $ 11,736 As of December 31, 2017 Derivative assets $ 33,898 $ — $ 33,898 $ 6,523 $ — $ 27,375 Derivative liabilities $ 36,200 $ — $ 36,200 $ 6,523 $ 15,333 $ 14,344 Repurchase agreements 3,235,095 — 3,235,095 3,235,095 — — $ 3,271,295 $ — $ 3,271,295 $ 3,241,618 $ 15,333 $ 14,344 |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2018 | |
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. Securitization 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 securitization VIEs in which we are deemed the primary beneficiary has no economic effect on us. Our exposure to the obligations of securitization 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. We also hold controlling interests in non-securitization entities that are considered VIEs, most of which were established to facilitate the acquisition of certain properties. SPT Dolphin, the entity which holds the Woodstar II Portfolio, is a VIE because the third party interest holders do not carry kick-out rights or substantive participating rights. We were deemed to be the primary beneficiary of the VIE because we possess both the power to direct the activities of the VIE that most significantly impact its economic performance and a significant economic interest in the entity. This VIE had assets of $667.0 million and liabilities of $428.8 million as of June 30, 2018. In total, our consolidated non-securitization VIEs had assets of $800.3 million and liabilities of $508.4 million as of June 30, 2018. 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 without cause. 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 June 30, 2018, two of our CDO structures were in default or imminent 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 June 30, 2018, neither of these CDO structures were consolidated. 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 June 30, 2018, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $52.4 million on a fair value basis. As of June 30, 2018, the securitization VIEs which we do not consolidate had debt obligations to beneficial interest holders with unpaid principal balances of $10.6 billion. The corresponding assets are comprised primarily of commercial mortgage loans with unpaid principal balances corresponding to the amounts of the outstanding debt obligations. We also hold passive non-controlling interests in certain unconsolidated entities that are considered VIEs. We are not the primary beneficiaries of these VIEs as we do not possess the power to direct the activities of the VIEs that most significantly impact their economic performance and therefore report our interests, which totaled $128.6 million as of June 30, 2018, within investment in unconsolidated entities on our condensed consolidated balance sheet. Our maximum risk of loss is limited to our carrying value of the investments. |
Related-Party Transactions
Related-Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related-Party Transactions | |
Related-Party Transactions | 15. Related-Party Transaction 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 16 to the consolidated financial statements included in our Form 10-K for further discussion of this agreement. In February 2018, our board of directors authorized an amendment to our Management Agreement to adjust the calculation of the base management fee and incentive fee to treat equity securities of subsidiaries issued in exchange for properties or interests therein as issued common stock, effective December 28, 2017 (the “Amendment”). Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of the Amendment. Base Management Fee. For the three months ended June 30, 2018 and 2017, approximately $18.0 million and $16.9 million, respectively, was incurred for base management fees. For the six months ended June 30, 2018 and 2017, approximately $35.5 million and $33.8 million, respectively, was incurred for base management fees. As of June 30, 2018 and December 31, 2017, there were $18.0 million and $17.1 million, respectively, of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets. Incentive Fee. For the three months ended June 30, 2018 and 2017, approximately $5.7 million and $4.3 million, respectively, was incurred for incentive fees. For the six months ended June 30, 2018 and 2017, approximately $15.3 million and $9.8 million, respectively, was incurred for incentive fees. As of June 30, 2018 and December 31, 2017, approximately $5.7 million and $22.0 million, respectively, of unpaid incentive fees were included in related-party payable in our condensed consolidated balance sheets. Expense Reimbursement. For the three months ended June 30, 2018 and 2017, approximately $1.9 million and $1.3 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our condensed consolidated statements of operations. For the six months ended June 30, 2018 and 2017, approximately $4.0 million and $2.8 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of June 30, 2018 and December 31, 2017, approximately $1.6 million and $3.3 million, respectively, of unpaid reimbursable executive compensation and other expenses were included in related-party payable in our condensed consolidated balance sheets. Equity Awards. In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. During the three months ended June 30, 2018 and 2017, there were no RSA’s granted. Expenses related to the vesting of awards to employees of affiliates of our Manager were $0.8 million during both the three months ended June 30, 2018 and 2017 and are reflected in general and administrative expenses in our condensed consolidated statements of operations. During the six months ended June 30, 2018 and 2017, we granted 189,813 and 138,264 RSAs, respectively, at grant date fair values of $4.0 million and $3.1 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $1.3 million and $1.4 million during the six months ended June 30, 2018 and 2017, respectively. These shares generally vest over a three-year period. Manager Equity Plan In May 2017, the Company’s shareholders approved the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”) which replaced the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In April 2018, we granted 775,000 RSUs to our Manager under the 2017 Manager Equity Plan. In March 2017, we granted 1,000,000 RSUs to our Manager under the Manager Equity Plan. In May 2015, we granted 675,000 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 $3.3 million and $2.9 million within management fees in our condensed consolidated statements of operations for the three months ended June 30, 2018 and 2017, respectively. For the six months ended June 30, 2018 and 2017, we recognized $6.2 million and $4.4 million, respectively, related to these awards. Refer to Note 16 for further discussion of these grants. Investments in Loans and Securities In January 2018, the Company acquired a $130.0 million first mortgage participation from an unaffiliated third party, which bears interest at LIBOR plus 4.00%. The loan is secured by four U.S. power plants that each have long-term power purchase agreements with investment grade counterparties. The borrower is an affiliate of our Manager. In February 2018, a GBP denominated first mortgage loan that we had co-originated with SEREF in November 2013, which was secured by Centre Point, an iconic tower located in Central London, England, was repaid in full. In March 2018, the Company acquired a €55.0 million newly-originated loan participation from SEREF, which is secured by a luxury resort in Estepona, Spain. During the three months ended June 30, 2018, the Company acquired $44.4 million of loans held-for-sale from a residential mortgage originator in which it holds an equity interest. Also during the three months ended June 30, 2018, the Company originated a $2.0 million subordinated loan to this residential mortgage originator which carries an 8% fixed interest rate and matures in September 2019. Refer to Note 7 for further discussion. In June 2018, a subordinate CMBS investment in a securitization issued by an affiliate of our Manager was paid off in full. We acquired the security, which was secured by five regional malls in Ohio, California and Washington, for $84.1 million in December 2013. In January 2016, we acquired an additional $9.7 million of this subordinate CMBS investment. Acquisitions from Consolidated CMBS Trusts Our Investing and Servicing Segment acquires interests in properties for its REIS Equity Portfolio 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 statements of cash flows. During the three months ended June 30, 2017, we acquired $19.7 million of net real estate assets from consolidated CMBS trusts for a gross purchase price of $19.9 million. No real estate assets were acquired from consolidated CMBS trusts during the three months ended June 30, 2018. During the six months ended June 30, 2018 and 2017, we acquired $27.7 million and $19.7 million, respectively, of net real estate assets from consolidated CMBS trusts for a gross purchase price of $28.0 million and $19.9 million, respectively. Refer to Note 3 for further discussion of these acquisitions. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements. |
Stockholders' Equity and Non-Co
Stockholders' Equity and Non-Controlling Interests | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity and Non-Controlling Interests | |
Stockholders’ Equity and Non-Controlling Interests | 16. Stockholders’ Equity During the six months ended June 30, 2018 our board of directors declared the following dividends: Declaration Date Record Date Ex-Dividend Date Payment Date Amount Frequency 5/4/18 6/29/18 6/27/18 7/13/18 $ 0.48 Quarterly 2/28/18 3/30/18 3/28/18 4/13/18 $ 0.48 Quarterly During the six months ended June 30, 2018 and 2017, there were no shares issued under our At-The-Market Equity Offering Sales Agreement. During the six months ended June 30, 2018 and 2017, shares issued under the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) were not material. In February 2017, our board of directors extended the term of our $500.0 million common stock and Convertible Note repurchase program through January 2019. Refer to Note 17 to the consolidated financial statements included in our Form 10-K for further information regarding the repurchase program. During the six months ended June 30, 2018, we repurchased 573,255 shares of common stock for $12.1 million and no Convertible Notes under our repurchase program. There were no share or Convertible Notes repurchases under the repurchase program during the six months ended June 30, 2017. The repurchase of the 2018 Notes discussed in Note 10 was not considered part of the repurchase program and therefore did not reduce our available capacity for future repurchases under the repurchase program. As of June 30, 2018, we had $250.1 million of remaining capacity to repurchase common stock and/or Convertible Notes under the repurchase program. Equity Incentive Plans In May 2017, the Company’s shareholders approved the 2017 Manager Equity Plan and the Starwood Property Trust, Inc. 2017 Equity Plan (the “2017 Equity Plan”), which allow for the issuance of up to 11,000,000 stock options, stock appreciation rights, RSAs, RSUs or other equity-based awards or any combination thereof to the Manager, directors, employees, consultants or any other party providing services to the Company. The 2017 Manager Equity Plan succeeds and replaces the Manager Equity Plan and the 2017 Equity Plan succeeds and replaces the Starwood Property Trust, Inc. Equity Plan (the “Equity Plan”) and the Starwood Property Trust, Inc. Non-Executive Director Stock Plan (the “Non-Executive Director Stock Plan”). The table below summarizes our share awards granted or vested under the Manager Equity Plan and 2017 Manager Equity Plan during the six months ended June 30, 2018 and 2017 (dollar amounts in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period April 2018 RSU 775,000 $ 16,329 3 years March 2017 RSU 1,000,000 22,240 3 years May 2015 RSU 675,000 16,511 3 years As of June 30, 2018, there were 9.5 million shares available for future grants under the 2017 Manager Equity Plan and the 2017 Equity Plan. Schedule of Non-Vested Shares and Share Equivalents 2017 Weighted Average 2017 Manager Grant Date Fair Equity Plan Equity Plan Total Value (per share) Balance as of January 1, 2018 885,138 806,251 1,691,389 $ 21.95 Granted 486,323 775,000 1,261,323 21.14 Vested (267,037) (287,499) (554,536) 21.79 Forfeited — — — — Balance as of June 30, 2018 1,104,424 1,293,752 2,398,176 21.56 Non-Controlling Interests in Consolidated Subsidiaries As discussed in Note 3, in connection with our Woodstar II Portfolio acquisitions, we issued 9.8 million Class A Units in SPT Dolphin. After the earlier of (i) August 16, 2018 and (ii) three business days after the acquisition of the final property in the Woodstar II Portfolio, Class A Units are redeemable for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company. In consolidation, the issued Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our condensed consolidated balance sheets. To the extent SPT Dolphin has sufficient cash available, the Class A Units earn a preferred return indexed to the dividend rate of the Company’s common stock. Any distributions made pursuant to this waterfall are recognized within net income attributable to non-controlling interests in our condensed consolidated statements of operations. During the three and six months ended June 30, 2018, we recognized net income attributable to non-controlling interests of $4.6 million and $7.1 million, respectively, associated with these Class A Units. In March 2018, we acquired the non-controlling interest held by a third party in one of our consolidated REIS Equity Portfolio properties, which was carried at $0.3 million, for $3.3 million. The excess of the consideration paid to acquire the non-controlling interest over the carrying value of the non-controlling interest was recorded as a reduction of stockholders’ equity in March 2018. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per Share | |
Earnings per Share | 17. Earnings per Share The following table provides a reconciliation of net income and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, 2018 2017 2018 2017 Basic Earnings Income attributable to STWD common stockholders $ 109,230 $ 117,380 $ 209,162 $ 219,738 Less: Income attributable to participating shares not already deducted as non-controlling interests (1,034) (828) (1,755) (1,728) Basic earnings $ 108,196 $ 116,552 $ 207,407 $ 218,010 Diluted Earnings Income attributable to STWD common stockholders $ 109,230 $ 117,380 $ 209,162 $ 219,738 Less: Income attributable to participating shares not already deducted as non-controlling interests (1,034) (828) (1,755) (1,728) Add: Interest expense on Convertible Notes (1) 7,593 N/A 15,159 N/A Diluted earnings $ 115,789 $ 116,552 $ 222,566 $ 218,010 Number of Shares: Basic — Average shares outstanding 260,998 259,472 260,832 259,236 Effect of dilutive securities — Convertible Notes (1) 27,134 3,142 27,044 3,128 Effect of dilutive securities — Contingently issuable shares 128 96 128 96 Effect of dilutive securities — Unvested non-participating shares 50 141 36 104 Diluted — Average shares outstanding 288,310 262,851 288,040 262,564 Earnings Per Share Attributable to STWD Common Stockholders: Basic $ 0.41 $ 0.45 $ 0.80 $ 0.84 Diluted $ 0.40 $ 0.44 $ 0.77 $ 0.83 (1) Prior to June 30, 2018, the Company had asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. Accordingly, under GAAP, the dilutive effect to EPS for the prior year periods was determined using the treasury stock method by dividing only the “conversion spread value” of the “in-the-money” Convertible Notes by the Company’s average share price and including the resulting share amount in the diluted EPS denominator. The conversion value of the principal amount of the Convertible Notes was not included. As of June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the current year periods is determined using the “if-converted” method whereby interest expense on the outstanding Convertible Notes is added back to the diluted EPS numerator and the full number of potential shares contingently issuable upon their conversion is included in the diluted EPS denominator. Refer to Note 10 for further discussion. As of June 30, 2018 and 2017, participating shares of 11.9 million and 1.7 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. Such participating shares at June 30, 2018 included 9.8 million potential shares of our common stock issuable upon redemption of the Class A Units in SPT Dolphin, as discussed in Note 16. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 Balance at April 1, 2018 $ 30 $ 59,052 $ 16,228 $ 75,310 OCI before reclassifications (1) 1,052 (8,176) (7,125) Amounts reclassified from AOCI (22) (29) — (51) Net period OCI (23) 1,023 (8,176) (7,176) Balance at June 30, 2018 $ 7 $ 60,075 $ 8,052 $ 68,134 Three Months Ended June 30, 2017 Balance at April 1, 2017 $ 50 $ 46,775 $ (6,758) $ 40,067 OCI before reclassifications 1 4,917 11,005 15,923 Amounts reclassified from AOCI 1 (10) — (9) Net period OCI 2 4,907 11,005 15,914 Balance at June 30, 2017 $ 52 $ 51,682 $ 4,247 $ 55,981 Six Months Ended June 30, 2018 Balance at January 1, 2018 $ 25 $ 57,889 $ 12,010 $ 69,924 OCI before reclassifications 8 2,261 (3,958) (1,689) Amounts reclassified from AOCI (26) (75) — (101) Net period OCI (18) 2,186 (3,958) (1,790) Balance at June 30, 2018 $ 7 $ 60,075 $ 8,052 $ 68,134 Six Months Ended June 30, 2017 Balance at January 1, 2017 $ (26) $ 44,929 $ (8,765) $ 36,138 OCI before reclassifications 48 6,848 13,012 19,908 Amounts reclassified from AOCI 30 (95) — (65) Net period OCI 78 6,753 13,012 19,843 Balance at June 30, 2017 $ 52 $ 51,682 $ 4,247 $ 55,981 The reclassifications out of AOCI impacted the condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2017 as follows (amounts in thousands): Amounts Reclassified from Amounts Reclassified from AOCI during the Three Months AOCI during the Six Months Affected Line Item Ended June 30, Ended June 30, in the Statements Details about AOCI Components 2018 2017 2018 2017 of Operations Gain (loss) on cash flow hedges: Interest rate contracts $ 22 $ (1) $ 26 $ (30) Interest expense Unrealized gains on available-for-sale securities: Interest realized upon collection — 10 46 95 Interest income from investment securities Net realized gain on sale of investment 29 — 29 — Gain on sale of investments and other assets, net Total 29 10 75 95 Total reclassifications for the period $ 51 $ 9 $ 101 $ 65 |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2018 | |
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. Fair Value Disclosures 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 June 30, 2018 and December 31, 2017 (amounts in thousands): June 30, 2018 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ 1,092,769 $ — $ 195,510 $ 897,259 RMBS 235,796 — — 235,796 CMBS 52,426 — 27,776 24,650 Equity security 13,037 13,037 — — Domestic servicing rights 22,742 — — 22,742 Derivative assets 50,815 — 50,815 — VIE assets 48,044,873 — — 48,044,873 Total $ 49,512,458 $ 13,037 $ 274,101 $ 49,225,320 Financial Liabilities: Derivative liabilities $ 36,135 $ — $ 36,135 $ — VIE liabilities 46,976,428 — 44,974,313 2,002,115 Total $ 47,012,563 $ — $ 45,010,448 $ 2,002,115 December 31, 2017 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ 745,743 $ — $ — $ 745,743 RMBS 247,021 — — 247,021 CMBS 24,191 — — 24,191 Equity security 13,523 13,523 — — Domestic servicing rights 30,759 — — 30,759 Derivative assets 33,898 — 33,898 — VIE assets 51,045,874 — — 51,045,874 Total $ 52,141,009 $ 13,523 $ 33,898 $ 52,093,588 Financial Liabilities: Derivative liabilities $ 36,200 $ — $ 36,200 $ — VIE liabilities 50,000,010 — 47,811,073 2,188,937 Total $ 50,036,210 $ — $ 47,847,273 $ 2,188,937 The changes in financial assets and liabilities classified as Level III are as follows for the three and six months ended June 30, 2018 and 2017 (amounts in thousands): Domestic Loans Servicing VIE Three Months Ended June 30, 2018 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total April 1, 2018 balance $ 723,733 $ 240,853 $ 23,969 $ 24,945 $ 49,233,307 $ (2,205,734) $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 14,833 141 (542) (2,203) (1,766,507) 297,960 (1,456,318) Net accretion — 2,622 — — — — 2,622 Included in OCI — 1,023 — — — — 1,023 Purchases / Originations 633,433 — 1,463 — — — 634,896 Sales (215,133) (807) — — — — (215,940) Cash repayments / receipts (64,097) (8,036) (240) — — (45,177) (117,550) Transfers into Level III — — — — — (160,071) (160,071) Transfers out of Level III (195,510) — — — — 109,592 (85,918) Consolidation of VIEs — — — — 725,189 — 725,189 Deconsolidation of VIEs — — — — (147,116) 1,315 (145,801) June 30, 2018 balance $ 897,259 $ 235,796 $ 24,650 $ 22,742 $ 48,044,873 $ (2,002,115) $ Amount of total gains (losses) included in earnings attributable to assets still held at June 30, 2018 $ 2,071 $ 2,623 $ (542) $ (2,203) $ (1,766,507) $ 297,960 $ (1,466,598) Domestic Loans Servicing VIE Three Months Ended June 30, 2017 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total April 1, 2017 balance $ 340,266 $ 249,419 $ 15,472 $ 46,649 $ 60,185,851 $ (2,161,295) $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 15,406 — (2,343) (8,001) (5,702,684) 213,503 (5,484,119) OTTI — (109) — — — — (109) Net accretion — 3,302 — — — — 3,302 Included in OCI — 4,907 — — — — 4,907 Purchases / Originations 557,068 7,433 — — — — 564,501 Sales (291,182) — (700) — — — (291,882) Issuances — — — — — (5,429) (5,429) Cash repayments / receipts (11,442) (8,555) (1,322) — — (5,240) (26,559) Transfers into Level III — — — — — (319,457) (319,457) Transfers out of Level III — — — — — 34,288 34,288 Consolidation of VIEs — — — — — — — Deconsolidation of VIEs — — 2,741 — (580,452) 79,037 (498,674) June 30, 2017 balance $ 610,116 $ 256,397 $ 13,848 $ 38,648 $ 53,902,715 $ (2,164,593) $ Amount of total (losses) gains included in earnings attributable to assets still held at June 30, 2017 $ (3,291) $ 3,186 $ 396 $ (8,001) $ (5,702,684) $ 213,503 $ (5,496,891) Domestic Loans Servicing VIE Six Months Ended June 30, 2018 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2018 balance $ 745,743 $ 247,021 $ 24,191 $ 30,759 $ 51,045,874 $ (2,188,937) $ 49,904,651 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 22,633 141 13 (8,017) (3,793,715) 535,050 (3,243,895) Net accretion — 5,441 — — — — 5,441 Included in OCI — 2,186 — — — — 2,186 Purchases / Originations 910,692 — 1,463 — — — 912,155 Sales (481,765) (807) — — — — (482,572) Issuances — — — — — (7,948) (7,948) Cash repayments / receipts (104,534) (18,186) (1,017) — — (57,810) (181,547) Transfers into Level III — — — — — (690,959) (690,959) Transfers out of Level III (195,510) — — — — 317,850 122,340 Consolidation of VIEs — — — — 1,815,070 — 1,815,070 Deconsolidation of VIEs — — — — (1,022,356) 90,639 (931,717) June 30, 2018 balance $ 897,259 $ 235,796 $ 24,650 $ 22,742 $ 48,044,873 $ (2,002,115) $ 47,223,205 Amount of total gains (losses) included in earnings attributable to assets still held at June 30, 2018 $ 1,482 $ 5,388 $ 13 $ (8,017) $ (3,793,715) $ 535,050 $ (3,259,799) Domestic Loans Servicing VIE Six Months Ended June 30, 2017 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2017 balance $ 63,279 $ 253,915 $ 31,546 $ 55,082 $ 67,123,261 $ (2,585,369) $ 64,941,714 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — (3,686) (16,434) (12,239,909) 598,484 (11,635,546) OTTI — (109) — — — — (109) Net accretion — 7,188 — — — — 7,188 Included in OCI — 6,753 — — — — 6,753 Purchases / Originations 1,002,955 7,433 — — — — 1,010,388 Sales (470,478) — (11,134) — — — (481,612) Issuances — — — — — (10,188) (10,188) Cash repayments / receipts (11,639) (18,783) (7,088) — — (36,036) (73,546) Transfers into Level III — — — — — (383,427) (383,427) Transfers out of Level III — — — — — 163,740 163,740 Consolidation of VIEs — — — — 1,127,952 — 1,127,952 Deconsolidation of VIEs — — 4,210 — (2,108,589) 88,203 (2,016,176) June 30, 2017 balance $ 610,116 $ 256,397 $ 13,848 $ 38,648 $ 53,902,715 $ (2,164,593) $ 52,657,131 Amount of total (losses) gains included in earnings attributable to assets still held at June 30, 2017 $ (3,291) $ 6,973 $ 228 $ (16,434) $ (12,239,909) $ 598,484 $ (11,653,949) 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 of which are classified in Level III of the fair value hierarchy, of our financial instruments not carried at fair value on the condensed consolidated balance sheets (amounts in thousands): June 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment and loans transferred as secured borrowings $ 7,002,393 $ 7,084,822 $ 6,636,898 $ 6,729,302 HTM securities 140,676 143,656 433,468 428,338 Financial liabilities not carried at fair value: Secured financing agreements and secured borrowings on transferred loans $ 6,290,675 $ 6,215,340 $ 5,847,241 $ 5,810,998 Unsecured senior notes 2,255,976 2,271,438 2,125,235 2,191,285 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 (dollars in thousands): Carrying Value at Valuation Unobservable Range as of (1) June 30, 2018 Technique Input June 30, 2018 December 31, 2017 Loans held-for-sale, fair value option $ 897,259 Discounted cash flow Yield (b) 4.8% - 6.0% 4.3% - 6.0% Duration (c) 1.8 - 12.3 years 1.8 - 12.1 years RMBS 235,796 Discounted cash flow Constant prepayment rate (a) 2.6% - 24.2% 2.5% - 21.4% Constant default rate (b) 1.0% - 5.5% 0.9% - 5.8% Loss severity (b) 15% - 81% (e) 14% - 75% (e) Delinquency rate (c) 5% - 32% 4% - 33% Servicer advances (a) 23% - 83% 20% - 83% Annual coupon deterioration (b) 0% - 0.8% 0% - 0.8% Putback amount per projected total collateral loss (d) 0% - 7% 0% - 7% CMBS 24,650 Discounted cash flow Yield (b) 0% - 852.3% 0% - 168.5% Duration (c) 0 - 9.7 years 0 - 9.7 years Domestic servicing rights 22,742 Discounted cash flow Debt yield (a) 7.50% 7.75% Discount rate (b) 15% 15% Control migration (b) 0% - 80% 0% - 80% VIE assets 48,044,873 Discounted cash flow Yield (b) 0% - 815.0% 0% - 826.6% Duration (c) 0 - 14.2 years 0 - 14.0 years VIE liabilities (2,002,115) Discounted cash flow Yield (b) 0% - 815.0% 0% - 826.6% Duration (c) 0 - 14.2 years 0 - 14.0 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 (higher or lower) 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) 72% and 81% of the portfolio falls within a range of 45%-80% as of June 30, 2018 and December 31, 2017, respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
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. As of June 30, 2018 and December 31, 2017, approximately $1.3 billion and $673.1 million, respectively, of assets, including $18.2 million and $24.1 million in cash, respectively, were owned by TRS entities. Our TRSs are not consolidated for U.S. 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. The following table is a reconciliation of our U.S. federal income tax determined using our statutory federal tax rate to our reported income tax provision for the three and six months ended June 30, 2018 and 2017 (dollars in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Federal statutory tax rate $ 25,291 21.0 % $ 46,439 35.0 % $ 47,897 21.0 % $ 82,094 35.0 % REIT and other non-taxable income (23,157) (19.2) % (37,000) (27.9) % (43,500) (19.1) % (73,425) (31.2) % State income taxes 558 0.5 % 20 — % 1,151 0.5 % (119) (0.1) % Federal benefit of state tax deduction (118) (0.1) % (7) — % (242) (0.1) % 42 — % Other 769 0.6 % — — % 893 0.4 % (123) (0.1) % Effective tax rate $ 3,343 2.8 % $ 9,452 7.1 % $ 6,199 2.7 % $ 8,469 3.6 % |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 21. Commitments and Contingencie As of June 30, 2018, we had future funding commitments on 56 loans totaling $2.0 billion, of which we expect to fund $1.8 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 June 2018, we executed an agreement to purchase up to $600.0 million of residential mortgage loans that meet our investment criteria from a third-party residential mortgage originator over the next twelve months. As of June 30, 2018, we had outstanding purchase commitments of $65.0 million under this agreement to acquire loans at an agreed-upon price within 75 days. 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 | 6 Months Ended |
Jun. 30, 2018 | |
Segment Data | |
Segment Data | 22. Segment Dat 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 securitization VIEs under ASC 810. The segment information within this note is reported on that basis. The table below presents our results of operations for the three months ended June 30, 2018 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 148,268 $ — $ 3,436 $ — $ 151,704 $ — $ 151,704 Interest income from investment securities 8,930 — 30,472 — 39,402 (28,612) 10,790 Servicing fees 50 — 24,687 — 24,737 (7,422) 17,315 Rental income — 74,401 14,490 — 88,891 — 88,891 Other revenues 224 81 516 86 907 (51) 856 Total revenues 157,472 74,482 73,601 86 305,641 (36,085) 269,556 Costs and expenses: Management fees 463 — 18 26,907 27,388 106 27,494 Interest expense 34,826 19,380 5,807 31,854 91,867 (275) 91,592 General and administrative 6,251 1,971 23,855 3,367 35,444 84 35,528 Acquisition and investment pursuit costs 1,692 (52) (79) — 1,561 — 1,561 Costs of rental operations — 25,991 6,906 — 32,897 — 32,897 Depreciation and amortization 16 31,738 5,396 — 37,150 — 37,150 Loan loss allowance, net 25,259 — — — 25,259 — 25,259 Other expense 77 — 420 — 497 — 497 Total costs and expenses 68,584 79,028 42,323 62,128 252,063 (85) 251,978 Income (loss) before other income (loss), income taxes and non-controlling interests 88,888 (4,546) 31,278 (62,042) 53,578 (36,000) 17,578 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 43,946 43,946 Change in fair value of servicing rights — — (3,255) — (3,255) 1,052 (2,203) Change in fair value of investment securities, net 482 — 15,110 — 15,592 (7,890) 7,702 Change in fair value of mortgage loans held-for-sale, net 184 — 14,649 — 14,833 — 14,833 Earnings (loss) from unconsolidated entities 1,803 2,933 1,454 — 6,190 (720) 5,470 Gain on sale of investments and other assets, net 135 2,941 10,361 — 13,437 — 13,437 Gain (loss) on derivative financial instruments, net 19,467 19,920 (398) (6,367) 32,622 — 32,622 Foreign currency (loss) gain, net (13,264) (1) 1 — (13,264) — (13,264) Loss on extinguishment of debt — — (186) — (186) — (186) Other income, net — 489 9 — 498 — 498 Total other income (loss) 8,807 26,282 37,745 (6,367) 66,467 36,388 102,855 Income (loss) before income taxes 97,695 21,736 69,023 (68,409) 120,045 388 120,433 Income tax provision (1,720) (611) (1,012) — (3,343) — (3,343) Net income (loss) 95,975 21,125 68,011 (68,409) 116,702 388 117,090 Net income attributable to non-controlling interests (361) (4,684) (2,427) — (7,472) (388) (7,860) Net income (loss) attributable to Starwood Property Trust, Inc . $ 95,614 $ 16,441 $ 65,584 $ (68,409) $ 109,230 $ — $ 109,230 The table below presents our results of operations for the three months ended June 30, 2017 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 116,993 $ — $ 3,619 $ — $ 120,612 $ — $ 120,612 Interest income from investment securities 11,611 — 38,192 — 49,803 (37,433) 12,370 Servicing fees 216 — 33,663 — 33,879 (15,251) 18,628 Rental income — 46,279 12,687 — 58,966 — 58,966 Other revenues 293 221 545 — 1,059 (66) 993 Total revenues 129,113 46,500 88,706 — 264,319 (52,750) 211,569 Costs and expenses: Management fees 469 — 18 24,096 24,583 50 24,633 Interest expense 24,486 10,899 4,856 31,351 71,592 (275) 71,317 General and administrative 5,359 1,000 22,789 3,298 32,446 74 32,520 Acquisition and investment pursuit costs 385 99 53 — 537 — 537 Costs of rental operations — 17,792 5,232 — 23,024 — 23,024 Depreciation and amortization 16 17,279 4,737 — 22,032 — 22,032 Loan loss allowance, net (2,694) — — — (2,694) — (2,694) Other expense — (34) 176 — 142 — 142 Total costs and expenses 28,021 47,035 37,861 58,745 171,662 (151) 171,511 Income (loss) before other income (loss), income taxes and non-controlling interests 101,092 (535) 50,845 (58,745) 92,657 (52,599) 40,058 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 77,761 77,761 Change in fair value of servicing rights — — (13,667) — (13,667) 5,666 (8,001) Change in fair value of investment securities, net (149) — 12,256 — 12,107 (14,600) (2,493) Change in fair value of mortgage loans held-for-sale, net (152) — 15,558 — 15,406 — 15,406 Earnings from unconsolidated entities 1,230 2,488 35,892 — 39,610 (10,145) 29,465 (Loss) gain on sale of investments and other assets, net (3) 77 5,109 — 5,183 — 5,183 Loss on derivative financial instruments, net (14,926) (20,481) (2,179) — (37,586) — (37,586) Foreign currency gain, net 12,882 17 11 — 12,910 — 12,910 OTTI (109) — — — (109) — (109) Other income, net — — 704 — 704 (613) 91 Total other income (loss) (1,227) (17,899) 53,684 — 34,558 58,069 92,627 Income (loss) before income taxes 99,865 (18,434) 104,529 (58,745) 127,215 5,470 132,685 Income tax provision (127) — (9,325) — (9,452) — (9,452) Net income (loss) 99,738 (18,434) 95,204 (58,745) 117,763 5,470 123,233 Net income attributable to non-controlling interests (353) — (30) — (383) (5,470) (5,853) Net income (loss) attributable to Starwood Property Trust, Inc . $ 99,385 $ (18,434) $ 95,174 $ (58,745) $ 117,380 $ — $ 117,380 The table below presents our results of operations for the six months ended June 30, 2018 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 283,240 $ — $ 6,084 $ — $ 289,324 $ — $ 289,324 Interest income from investment securities 23,369 — 64,871 — 88,240 (62,181) 26,059 Servicing fees 215 — 58,121 — 58,336 (14,954) 43,382 Rental income — 141,111 28,890 — 170,001 — 170,001 Other revenues 418 182 744 138 1,482 (105) 1,377 Total revenues 307,242 141,293 158,710 138 607,383 (77,240) 530,143 Costs and expenses: Management fees 943 — 36 56,958 57,937 199 58,136 Interest expense 66,847 35,914 10,902 65,657 179,320 (545) 178,775 General and administrative 12,946 3,830 44,875 5,849 67,500 170 67,670 Acquisition and investment pursuit costs 1,912 (46) 72 — 1,938 — 1,938 Costs of rental operations — 49,479 13,111 — 62,590 — 62,590 Depreciation and amortization 33 58,207 10,654 — 68,894 — 68,894 Loan loss allowance, net 26,797 — — — 26,797 — 26,797 Other expense 154 — 447 — 601 — 601 Total costs and expenses 109,632 147,384 80,097 128,464 465,577 (176) 465,401 Income (loss) before other income (loss), income taxes and non-controlling interests 197,610 (6,091) 78,613 (128,326) 141,806 (77,064) 64,742 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 96,599 96,599 Change in fair value of servicing rights — — (12,423) — (12,423) 4,406 (8,017) Change in fair value of investment securities, net (222) — 29,089 — 28,867 (21,314) 7,553 Change in fair value of mortgage loans held-for-sale, net (1,508) — 24,141 — 22,633 — 22,633 Earnings (loss) from unconsolidated entities 3,247 (582) 3,050 — 5,715 (1,707) 4,008 Gain on sale of investments and other assets, net 414 6,883 16,800 — 24,097 — 24,097 Gain (loss) on derivative financial instruments, net 8,649 21,839 4,644 (19,369) 15,763 — 15,763 Foreign currency gain (loss), net 286 1 (2) — 285 — 285 Loss on extinguishment of debt — — (186) — (186) — (186) Other income, net 43 506 57 — 606 — 606 Total other income (loss) 10,909 28,647 65,170 (19,369) 85,357 77,984 163,341 Income (loss) before income taxes 208,519 22,556 143,783 (147,695) 227,163 920 228,083 Income tax provision (2,667) (1,872) (1,660) — (6,199) — (6,199) Net income (loss) 205,852 20,684 142,123 (147,695) 220,964 920 221,884 Net income attributable to non-controlling interests (722) (7,137) (3,943) — (11,802) (920) (12,722) Net income (loss) attributable to Starwood Property Trust, Inc . $ 205,130 $ 13,547 $ 138,180 $ (147,695) $ 209,162 $ — $ 209,162 The table below presents our results of operations for the six months ended June 30, 2017 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 226,039 $ — $ 6,456 $ — $ 232,495 $ — $ 232,495 Interest income from investment securities 24,330 — 73,028 — 97,358 (69,764) 27,594 Servicing fees 426 — 63,744 — 64,170 (31,440) 32,730 Rental income — 91,132 24,876 — 116,008 — 116,008 Other revenues 372 266 1,009 — 1,647 (185) 1,462 Total revenues 251,167 91,398 169,113 — 511,678 (101,389) 410,289 Costs and expenses: Management fees 923 — 36 47,958 48,917 100 49,017 Interest expense 44,443 21,106 9,214 62,958 137,721 (544) 137,177 General and administrative 9,570 2,381 45,369 5,468 62,788 161 62,949 Acquisition and investment pursuit costs 900 271 37 — 1,208 — 1,208 Costs of rental operations — 33,183 10,719 — 43,902 — 43,902 Depreciation and amortization 33 34,436 9,791 — 44,260 — 44,260 Loan loss allowance, net (2,999) — — — (2,999) — (2,999) Other expense — (34) 934 — 900 — 900 Total costs and expenses 52,870 91,343 76,100 116,384 336,697 (283) 336,414 Income (loss) before other income (loss), income taxes and non-controlling interests 198,297 55 93,013 (116,384) 174,981 (101,106) 73,875 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 146,931 146,931 Change in fair value of servicing rights — (23,304) — (23,304) 6,870 (16,434) Change in fair value of investment securities, net 23 — 31,301 — 31,324 (34,988) (3,664) Change in fair value of mortgage loans held-for-sale, net (152) — 26,151 — 25,999 — 25,999 Earnings from unconsolidated entities 1,700 4,949 36,909 — 43,558 (11,106) 32,452 (Loss) gain on sale of investments and other assets, net (59) 77 5,109 — 5,127 — 5,127 Loss on derivative financial instruments, net (19,461) (20,992) (1,482) — (41,935) — (41,935) Foreign currency gain, net 17,745 17 12 — 17,774 — 17,774 OTTI (109) — — — (109) — (109) Loss on extinguishment of debt — — — (5,916) (5,916) — (5,916) Other income, net — — 1,069 — 1,069 (613) 456 Total other income (loss) (313) 75,765 (5,916) 53,587 107,094 160,681 Income (loss) before income taxes 197,984 168,778 228,568 5,988 234,556 Income tax provision (342) — (8,127) — (8,469) — (8,469) Net income (loss) 197,642 160,651 220,099 5,988 226,087 Net (income) loss attributable to non-controlling interests (707) — 346 — (361) (5,988) (6,349) Net income (loss) attributable to Starwood Property Trust, Inc . $ 196,935 $ (15,894) $ 160,997 $ (122,300) $ 219,738 $ — $ 219,738 The table below presents our condensed consolidated balance sheet as of June 30, 2018 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 10,303 $ 25,141 $ 68,853 $ 130,211 $ 234,508 $ 911 $ 235,419 Restricted cash 51,942 15,493 9,639 12,720 89,794 — 89,794 Loans held-for-investment, net 6,924,600 — 3,576 — 6,928,176 — 6,928,176 Loans held-for-sale 792,664 — 300,105 — 1,092,769 — 1,092,769 Loans transferred as secured borrowings 74,217 — — — 74,217 — 74,217 Investment securities 389,509 — 1,076,411 — 1,465,920 (1,023,985) 441,935 Properties, net — 294,608 — 2,936,684 — 2,936,684 Intangible assets — 104,425 86,101 — 190,526 (23,840) 166,686 Investment in unconsolidated entities 33,876 110,122 44,435 — 188,433 (21,717) 166,716 Goodwill — — 140,437 — 140,437 — 140,437 Derivative assets 10,748 39,184 883 — 50,815 — 50,815 Accrued interest receivable 40,180 244 1,042 13,194 54,660 — 54,660 Other assets 31,146 92,785 51,794 1,878 177,603 (25) 177,578 VIE assets, at fair value — — — — — 48,044,873 Total Assets $ 8,359,185 $ $ 2,077,884 $ 158,003 $ $ 46,976,217 $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 21,461 $ 70,113 $ 69,129 $ 28,875 $ 189,578 $ 95 $ 189,673 Related-party payable 65 — 39 25,220 25,324 — 25,324 Dividends payable — — — 126,857 126,857 — 126,857 Derivative liabilities 6,321 4,736 862 24,216 36,135 — 36,135 Secured financing agreements, net 3,466,334 564,226 297,389 6,240,317 (23,700) 6,216,617 Unsecured senior notes, net — — — 2,255,976 2,255,976 — 2,255,976 Secured borrowings on transferred loans, net 74,058 — — — 74,058 — 74,058 VIE liabilities, at fair value — — — — — 46,976,428 Total Liabilities 3,568,239 634,256 2,758,533 8,948,245 46,952,823 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — 2,675 2,675 — 2,675 Additional paid-in capital 1,905,265 826,782 606,583 1,400,339 4,738,969 — 4,738,969 Treasury stock — — — (104,194) (104,194) — (104,194) Accumulated other comprehensive income (loss) 60,082 8,115 (63) — 68,134 — 68,134 Retained earnings (accumulated deficit) 2,815,109 (788) 824,267 (3,899,350) (260,762) — (260,762) Total Starwood Property Trust, Inc. Stockholders’ Equity 4,780,456 834,109 1,430,787 (2,600,530) 4,444,822 — 4,444,822 Non-controlling interests in consolidated subsidiaries 10,490 208,144 12,841 — 231,475 23,394 254,869 Total Equity 4,790,946 1,443,628 (2,600,530) 4,676,297 23,394 4,699,691 Total Liabilities and Equity $ 8,359,185 $ $ 2,077,884 $ 158,003 $ $ 46,976,217 $ The table below presents our condensed consolidated balance sheet as of December 31, 2017 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 14,580 $ 10,388 $ 39,446 $ 299,308 $ 363,722 $ 5,726 $ 369,448 Restricted cash 21,555 12,491 10,289 4,490 48,825 — 48,825 Loans held-for-investment, net 6,558,699 — 3,796 — 6,562,495 — 6,562,495 Loans held-for-sale 613,287 — 132,456 — 745,743 — 745,743 Loans transferred as secured borrowings 74,403 — — — 74,403 — 74,403 Investment securities 694,012 — 1,024,143 — 1,718,155 (999,952) 718,203 Properties, net — 2,364,806 282,675 — 2,647,481 — 2,647,481 Intangible assets — 116,081 95,257 — 211,338 (28,246) 183,092 Investment in unconsolidated entities 45,028 110,704 50,759 — 206,491 (20,988) 185,503 Goodwill — — 140,437 — 140,437 — 140,437 Derivative assets 6,487 26,775 636 — 33,898 — 33,898 Accrued interest receivable 46,650 68 243 786 47,747 — 47,747 Other assets 5,648 71,929 59,676 3,755 141,008 (2,868) 138,140 VIE assets, at fair value — — — — — 51,045,874 51,045,874 Total Assets $ 8,080,349 $ 2,713,242 $ 1,839,813 $ 308,339 $ 12,941,743 $ 49,999,546 $ 62,941,289 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 23,054 $ 62,890 $ 74,426 $ 23,536 $ 183,906 $ 1,211 $ 185,117 Related-party payable 20 — 31 42,318 42,369 — 42,369 Dividends payable — — — 125,916 125,916 — 125,916 Derivative liabilities 20,386 13,063 85 2,666 36,200 — 36,200 Secured financing agreements, net 3,466,487 1,621,885 411,526 296,858 5,796,756 (23,700) 5,773,056 Unsecured senior notes, net — — — 2,125,235 2,125,235 — 2,125,235 Secured borrowings on transferred loans 74,185 — — — 74,185 — 74,185 VIE liabilities, at fair value — — — — — 50,000,010 50,000,010 Total Liabilities 3,584,132 1,697,838 486,068 2,616,529 8,384,567 49,977,521 58,362,088 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — 2,660 2,660 — 2,660 Additional paid-in capital 1,818,559 957,329 659,062 1,280,296 4,715,246 — 4,715,246 Treasury stock — — — (92,104) (92,104) — (92,104) Accumulated other comprehensive income (loss) 57,914 12,076 (66) — 69,924 — 69,924 Retained earnings (accumulated deficit) 2,609,050 (14,335) 687,015 (3,499,042) (217,312) — (217,312) Total Starwood Property Trust, Inc. Stockholders’ Equity 4,485,523 955,070 1,346,011 (2,308,190) 4,478,414 — 4,478,414 Non-controlling interests in consolidated subsidiaries 10,694 60,334 7,734 — 78,762 22,025 100,787 Total Equity 4,496,217 1,015,404 1,353,745 (2,308,190) 4,557,176 22,025 4,579,201 Total Liabilities and Equity $ 8,080,349 $ 2,713,242 $ 1,839,813 $ 308,339 $ 12,941,743 $ 49,999,546 $ 62,941,289 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events | |
Subsequent Events | 23. Subsequent Events Our significant events subsequent to June 30, 2018 were as follows: Energy Project Finance Loan Portfolio On August 7, 2018, we entered into a purchase agreement to acquire the energy project finance origination business (the “Project Finance Debt Business”), of GE Capital Global Holdings, LLC for approximately $2.2 billion. The Project Finance Debt Business consists of a $2.5 billion senior secured project finance loan portfolio, including approximately $400.0 million of unfunded commitments, and of 21 full-time employees. Completion of the acquisition is subject to the satisfaction of customary closing conditions. In connection with the pending acquisition of the Project Finance Debt Business, on August 7, 2018, we entered into a debt commitment letter for a senior secured term loan facility, a senior secured revolving credit facility, a senior secured delayed draw term loan facility and a senior secured letter of credit facility (collectively, the “Senior Secured Credit Facilities”) in an aggregate principal amount of up to $2.1 billion, with an initial advance of $1.7 billion, for purposes of funding a portion of the acquisition and the Company’s ongoing obligations under the acquired project finance loans (the “Senior Secured Credit Facilities Commitment Letter”). The Senior Secured Credit Facilities would mature three years from initial funding, subject to a one-year extension option upon the satisfaction of certain conditions precedent. In addition, on August 7, 2018, the Company entered into a debt commitment letter to provide a senior unsecured bridge facility (the “Bridge Facility”), in a principal amount of up to $600 million (the “Bridge Facility Commitment Letter”) to provide further financing for the Project Finance Debt Business. The Bridge Facility would mature 364 days after its execution. 2019 Convertible Notes Subsequent to June 30, 2018, we received redemptions related to our 2019 Notes with a par amount totaling $258.8 million. Based on the Company’s closing share price as of August 7, 2018, these redemptions represent $299.6 million of total value, of which $104.0 million settled in July 2018 through the issuance of 4.7 million shares. We expect to settle the remaining $195.6 million of value through share issuances totaling $168.1 million and cash payments totaling $27.5 million. Refer to Note 10 for further discussion. Dividend Declaration On August 8, 2018, our board of directors declared a dividend of $0.48 per share for the third quarter of 2018, which is payable on October 15, 2018 to common stockholders of record as of September 28, 2018. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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 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, 2017 (the “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and six months ended June 30, 2018 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, (iii) became significant since December 31, 2017 due to a corporate action or increase in the significance of the underlying business activity or (iv) changed upon adoption of an Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). |
Variable Interest Entities | Variable Interest Entities In addition to the Investing and Servicing Segment’s VIEs, certain other entities in which we hold interests are considered VIEs as the limited partners of these entities do not collectively possess (i) the right to remove the general partner without cause or (ii) the right to participate in significant decisions made by the partnership. 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: (i) identifying the activities that most significantly impact the VIE’s economic performance; and (ii) 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. The right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has 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 without cause, 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 securitization 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: (i) 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 (ii) 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 securitization 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 securitization VIEs as individual line items on our condensed consolidated balance sheets. The liabilities of our consolidated securitization 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 securitization 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 securitization 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 securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization 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 3% of our consolidated securitization VIE assets, with the remaining 97% representing loans. However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under 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 securitization 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 securitization VIEs are presented in the aggregate. |
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 securitization VIEs, loans held-for-sale originated or acquired for future securitization, purchased CMBS issued by VIEs we could consolidate in the future and certain investments in marketable equity securities which, effective January 1, 2018, are now required to be carried at fair value through earnings. 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 were made due to the short-term nature of these instruments. |
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 securitization VIEs at fair value pursuant to our election of the fair value option. The securitization 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 securitization VIE, we maximize the use of observable inputs over unobservable inputs. Refer to Note 19 for further discussion regarding our fair value measurements. |
Loans Held-for-Investment | Loans Held-for-Investment Loans that are held for investment are carried at cost, net of unamortized acquisition premiums or discounts, loan fees, and origination costs as applicable, unless the loans are deemed impaired. We evaluate each loan classified as held-for-investment for impairment at least quarterly. In connection with this evaluation, 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. Loan Impairment We evaluate each loan classified as held-for-investment for impairment at least quarterly. Impairment occurs 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 considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. 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 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, 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. |
Cost Method Equity Investments | Cost Method Equity Investments On January 1, 2018, ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities , became effective prospectively for public companies with a calendar fiscal year. This ASU requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, at fair value with changes in fair value recognized within net income. This ASU does not apply to equity method investments, investments in Federal Home Loan Bank (“FHLB”) stock, investments that result in consolidation of the investee or investments in certain investment companies. For investments in equity securities without a readily determinable fair value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an identical or similar investment of the same issuer. Additionally, this ASU eliminated the requirement to assess whether an impairment of an equity investment is other than temporary. The impairment model for equity investments subject to this election is now a single-step model whereby an entity performs a qualitative assessment to identify impairment. If the qualitative assessment indicates that an impairment exists, the entity would estimate the fair value of the investment and recognize in net income an impairment loss equal to the difference between the fair value and the carrying amount of the equity investment. Our equity investments within the scope of this ASU are limited to our cost method equity investments discussed in Note 7, with the exception of our FHLB stock which is outside the scope of this ASU, and to our marketable equity security discussed in Note 5 for which we had previously elected the fair value option. Our cost method equity investments within the scope of this ASU do not have readily determinable fair values. Therefore, we have elected the practicability exception whereby we measure these investments at cost, less impairment, plus or minus observable price changes from orderly transactions of identical or similar investments of the same issuer. Refer to Note 7 for further discussion. |
Revenue Recognition | Revenue Recognition On January 1, 2018, new accounting rules regarding revenue recognition became effective for public companies with a calendar fiscal year. None of our significant revenue sources – interest income from loans and investment securities, loan servicing fees, and rental income – are within the scope of the new revenue recognition guidance. The revenue recognition guidance also included revisions to existing accounting rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and accounting for sales of nonfinancial assets where the seller has continuing involvement. These additional revisions also did not materially impact the Company. Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections. We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms. |
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, (iii) the conversion options associated with our outstanding convertible senior notes (see Notes 10 and 17), and (iv) non-controlling interests that are redeemable with our common stock (see Note 16). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. Nearly all of the Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 16). 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 six months ended June 30, 2018 and 2017, 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. |
Recent Accounting Developments | Recent Accounting Developments On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a right-of-use model for lessee accounting which results in the recognition of most leased assets and lease liabilities on the balance sheet of the lessee. Lessor accounting was not significantly changed by this ASU. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018 by applying a modified retrospective approach. Early application is permitted. On July 30, 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements , which provides an optional transition method of applying the new leases standard at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. It also provides lessors with a practical expedient to not separate non-lease revenue components from the associated lease component if certain conditions are met. Our assessment of the effect of these ASUs on the Company remains ongoing; however, we currently do not expect the application of these ASUs to have a material impact as the Company primarily acts as a lessor. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments , which mandates use of an “expected loss” credit model for estimating future credit losses of certain financial instruments instead of the “incurred loss” credit model that current GAAP requires. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. This ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted though no earlier than the first interim or annual period beginning after December 15, 2018. Though we have not completed our assessment of this ASU, we expect the ASU to result in our recognition of higher levels of allowances for loan losses. Our assessment of the estimated amount of such increases remains in process. On January 26, 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment , which simplifies the method applied for measuring impairment in cases where goodwill is impaired. This ASU specifies that goodwill impairment will be measured as the excess of the reporting unit’s carrying value (inclusive of goodwill) over its fair value, eliminating the requirement that all assets and liabilities of the reporting unit be remeasured individually in connection with measurement of goodwill impairment. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019 and is applied prospectively. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On August 28, 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities , which amends and simplifies existing guidance regarding the designation and measurement of designated hedging relationships. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018. Early application is permitted. We do not expect the application of this ASU to materially impact the Company. On June 20, 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718) –Improvements to Nonemployee Share-Based Payment Accounting , which aligns the accounting for nonemployee share-based compensation with the existing accounting model for employee share based compensation. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2018. Early application is permitted. We are in the process of assessing the impact this ASU will have on the Company. |
Loans (Tables)
Loans (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 (dollars in thousands): Weighted Weighted Average Life Carrying Face Average (“WAL”) June 30, 2018 Value Amount Coupon (years)(1) First mortgages (2) $ 6,389,022 $ 6,416,333 6.6 % 2.2 Subordinated mortgages (3) 157,439 157,243 11.7 % 1.7 Mezzanine loans (2) 386,545 385,772 11.0 % 1.2 Other 26,297 29,745 8.7 % 3.4 Total loans held-for-investment 6,959,303 6,989,093 Loans held-for-sale, fair value option, residential 792,664 766,878 6.2 % 6.0 Loans held-for-sale, fair value option, commercial 300,105 292,535 5.1 % 9.6 Loans transferred as secured borrowings 74,217 74,692 6.7 % 1.8 Total gross loans 8,126,289 8,123,198 Loan loss allowance (loans held-for-investment) (31,127) — Total net loans $ 8,095,162 $ 8,123,198 December 31, 2017 First mortgages (2) $ 5,818,804 $ 5,843,623 6.2 % 2.0 Subordinated mortgages (3) 177,115 177,386 10.8 % 1.9 Mezzanine loans (2) 545,299 545,355 11.0 % 1.1 Other 25,607 29,320 8.5 % 3.9 Total loans held-for-investment 6,566,825 6,595,684 Loans held-for-sale, fair value option, residential 613,287 594,105 6.2 % 5.4 Loans held-for-sale, fair value option, commercial 132,456 132,393 4.6 % 10.0 Loans transferred as secured borrowings 74,403 75,000 6.2 % 2.3 Total gross loans 7,386,971 7,397,182 Loan loss allowance (loans held-for-investment) (4,330) — Total net loans $ 7,382,641 $ 7,397,182 (1) 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 or acquisition. (2) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzanine loans with carrying values of $983.3 million and $851.1 million being classified as first mortgages as of June 30, 2018 and December 31, 2017, respectively. (3) 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. |
Schedule of internal rating categories | 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%. |
Schedule of risk ratings by class of loan | As of June 30, 2018, the risk ratings for loans subject to our rating system, which excludes loans for which the fair value option has been elected, by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Transferred % of Risk Rating First Subordinated Mezzanine Loans Held- As Secured Total Category Mortgages Mortgages Loans Other For-Sale Borrowings Total Loans 1 $ 1,613 $ — $ — $ 19,870 $ — $ — $ 21,483 0.3 % 2 2,625,794 11,810 181,396 — — 74,217 2,893,217 35.6 % 3 3,506,015 133,652 205,149 984 — — 3,845,800 47.3 % 4 85,006 — — — — — 85,006 1.0 % 5 — — — — — — — — % N/A 170,594 (1) 11,977 (1) — 5,443 (1) 1,092,769 — 1,280,783 15.8 % $ 6,389,022 $ 157,439 $ 386,545 $ 26,297 $ 1,092,769 $ 74,217 $ 8,126,289 100.0 % (1) Represents loans individually evaluated for impairment in accordance with ASC 310-10. As of December 31, 2017, the risk ratings for loans subject to our rating system, which excludes loans for which the fair value option has been elected, by class of loan were as follows (dollars in thousands): Balance Sheet Classification Loans Held-For-Investment Loans Transferred % of Risk Rating First Subordinated Mezzanine Loans Held- As Secured Total Category Mortgages Mortgages Loans Other For-Sale Borrowings Total Loans 1 $ 2,003 $ — $ — $ 20,267 $ — $ — $ 22,270 0.3 % 2 2,462,268 11,927 137,803 — — — 2,611,998 35.4 % 3 3,183,592 165,188 407,496 5,340 — 74,403 3,836,019 51.9 % 4 120,479 — — — — — 120,479 1.6 % 5 50,462 — — — — — 50,462 0.7 % N/A — — — — 745,743 — 745,743 10.1 % $ 5,818,804 $ 177,115 $ 545,299 $ 25,607 $ 745,743 $ 74,403 $ 7,386,971 100.0 % |
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 Six Months Ended June 30, 2018 2017 Allowance for loan losses at January 1 $ 4,330 $ 9,788 Provision for (reversal of) loan losses (3,055) (2,999) Provision for impaired loans 29,852 — Charge-offs — — Recoveries — — Allowance for loan losses at June 30 $ 31,127 $ 6,789 Recorded investment in loans related to the allowance for loan loss $ 273,020 $ 316,134 |
Schedule of activity in loan portfolio | The activity in our loan portfolio was as follows (amounts in thousands): For the Six Months Ended June 30, 2018 2017 Balance at January 1 $ 7,382,641 $ Acquisitions/originations/additional funding 3,315,664 Capitalized interest (1) 29,499 33,817 Basis of loans sold (2) (676,214) (507,613) Loan maturities/principal repayments (1,964,644) (948,712) Discount accretion/premium amortization 20,961 16,194 Changes in fair value 22,633 25,999 Unrealized foreign currency translation (loss) gain (8,608) 19,565 Change in loan loss allowance, net (26,797) 2,999 Transfer to/from other asset classifications 27 761 Balance at June 30 $ 8,095,162 $ (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 (Tables)
Investment Securities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Schedule of investment securities | Investment securities were comprised of the following as of June 30, 2018 and December 31, 2017 (amounts in thousands): Carrying Value as of June 30, 2018 December 31, 2017 RMBS, available-for-sale $ 235,796 $ 247,021 CMBS, fair value option (1) 1,076,411 1,024,143 Held-to-maturity (“HTM”) securities 140,676 433,468 Equity security, fair value 13,037 13,523 Subtotal — Investment securities 1,465,920 1,718,155 VIE eliminations (1) (1,023,985) (999,952) Total investment securities $ 441,935 $ 718,203 (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): RMBS, CMBS, fair HTM Equity available-for-sale value option Securities Security Total Three Months Ended June 30, 2018 Purchases (1) $ — $ 20,465 $ — $ — $ 20,465 Sales 807 — — — 807 Principal collections 8,036 240 94,181 — Three Months Ended June 30, 2017 Purchases (1) $ 7,433 $ — $ — $ — $ 7,433 Sales (2) — 700 — — 700 Principal collections 8,555 1,322 332 — 10,209 RMBS, CMBS, fair HTM Equity available-for-sale value option Securities Security Total Six Months Ended June 30, 2018 Purchases (3) $ — $ 20,465 $ — $ — $ 20,465 Sales (4) 807 — — — 807 Principal collections 18,186 1,017 302,484 — 321,687 Six Months Ended June 30, 2017 Purchases (3) $ 7,433 $ — $ — $ — $ 7,433 Sales (4) — 11,134 — — 11,134 Principal collections 18,783 7,088 60,388 — 86,259 (1) During the three months ended June 30, 2018 and 2017, we purchased $61.7 million and $4.3 million of CMBS, respectively, for which we elected the fair value option. The purchases for the three months ended June 30, 2018 include $8.6 million of CMBS we acquired with a third party in connection with a newly formed partnership. The third-party interest of $4.2 million is reflected within non-controlling interests in consolidated subsidiaries in our condensed consolidated balance sheet as of June 30, 2018. Due to our consolidation of securitization VIEs, $41.2 million and $4.3 million, respectively, of this amount is eliminated and reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. (2) During the three months ended June 30, 2017, we sold $6.1 million of CMBS for which we previously elected the fair value option. Due to our consolidation of securitization VIEs, $5.4 million of this amount is eliminated and reflected as issuance of debt of consolidated VIEs in our condensed consolidated statements of cash flows. (3) During the six months ended June 30, 2018 and 2017, we purchased $91.9 million and $61.7 million of CMBS, respectively, for which we elected the fair value option. Due to our consolidation of securitization VIEs, $71.4 million and $61.7 million, respectively, of this amount is eliminated and reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. (4) During the six months ended June 30, 2018 and 2017, we sold $7.9 million and $21.3 million of CMBS, respectively, for which we had previously elected the fair value option. Due to our consolidation of securitization VIEs, $7.9 million and $10.2 million, respectively, of this amount is eliminated and reflected as issuance of debt of consolidated VIEs in our condensed consolidated statements of cash flows. |
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 as of June 30, 2018 and December 31, 2017 (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 June 30, 2018 RMBS $ 185,618 $ (9,897) $ 175,721 $ — $ 60,096 $ (21) $ 60,075 $ December 31, 2017 RMBS $ $ (9,897) $ 189,132 $ (94) $ 58,011 $ (28) $ 57,889 $ Weighted Average Coupon (1) Weighted Average WAL June 30, 2018 RMBS 3.3 % CC+ 6.2 December 31, 2017 RMBS 2.8 % B 6.4 (1) Calculated using the June 30, 2018 and December 31, 2017 one-month LIBOR rate of 2.090% and 1.564%, 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 as of June 30, 2018 and December 31, 2017 (amounts in thousands): June 30, 2018 December 31, 2017 Principal balance $ 345,200 $ 366,711 Accretable yield (50,877) (55,712) Non-accretable difference (118,602) (121,867) Total discount (169,479) (177,579) Amortized cost $ 175,721 $ 189,132 |
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 six months ended June 30, 2018 (amounts in thousands): Non-Accretable Three Months Ended June 30, 2018 Accretable Yield Difference Balance as of April 1, 2018 $ 51,794 $ 121,488 Accretion of discount (2,622) — Principal write-downs, net — (1,003) Sales (178) — Transfer to/from non-accretable difference 1,883 (1,883) Balance as of June 30, 2018 $ 50,877 $ 118,602 Six Months Ended June 30, 2018 Balance as of January 1, 2018 $ 55,712 $ 121,867 Accretion of discount (5,441) — Principal write-downs, net — (2,481) Sales (178) — Transfer to/from non-accretable difference 784 (784) Balance as of June 30, 2018 $ 50,877 $ 118,602 |
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 any available-for-sale securities that were in an unrealized loss position as of June 30, 2018 and December 31, 2017, and 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 June 30, 2018 RMBS $ 1,931 $ — $ (21) $ — As of December 31, 2017 RMBS $ 10,321 $ 643 $ (99) $ (23) |
Summary of maturities of preferred equity interests in limited liability companies that own commercial real estate | The table below summarizes the maturities of our HTM CMBS and our HTM preferred equity interests in limited liability companies that own commercial real estate as of June 30, 2018 (amounts in thousands): Preferred CMBS Interests Total Less than one year $ 25,157 $ — $ 25,157 One to three years 66,211 — 66,211 Three to five years 28,720 20,588 49,308 Thereafter — — — Total $ 120,088 $ 20,588 $ 140,676 |
Held-to-maturity | |
Summary of investments in HTM securities | The table below summarizes unrealized gains and losses of our investments in HTM securities as of June 30, 2018 and December 31, 2017 (amounts in thousands): Net Carrying Amount Gross Unrealized Gross Unrealized (Amortized Cost) Holding Gains Holding Losses Fair Value June 30, 2018 CMBS $ 120,088 $ 3,237 $ (1,932) $ 121,393 Preferred interests 20,588 1,675 — 22,263 Total $ 140,676 $ 4,912 $ (1,932) $ 143,656 December 31, 2017 CMBS $ $ 2,002 $ (7,779) $ 407,333 Preferred interests 20,358 647 — 21,005 Total $ 433,468 $ 2,649 $ (7,779) $ 428,338 |
Properties (Tables)
Properties (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Properties | |
Summary of properties | The table below summarizes our properties held as of June 30, 2018 and December 31, 2017 (dollars in thousands): Depreciable Life June 30, 2018 December 31, 2017 Property Segment Land and land improvements 0 – 15 years $ 661,101 $ 585,915 Buildings and building improvements 5 – 45 years 2,066,975 1,838,266 Furniture & fixtures 3 – 7 years 41,993 31,028 Investing and Servicing Segment Land and land improvements 0 – 15 years 91,086 86,711 Buildings and building improvements 3 – 40 years 223,322 212,094 Furniture & fixtures 2 – 5 years 1,580 1,036 Properties, cost 3,086,057 2,755,050 Less: accumulated depreciation (149,373) (107,569) Properties, net $ 2,936,684 $ 2,647,481 |
Investment in Unconsolidated 36
Investment in Unconsolidated Entities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investment in Unconsolidated Entities | |
Summary of investments in unconsolidated entities | The table below summarizes our investment in unconsolidated entities as of June 30, 2018 and December 31, 2017 (dollars in thousands): Participation / Carrying value as of Ownership % (1) June 30, 2018 December 31, 2017 Equity method: Retail Fund 33% $ 110,122 $ 110,704 Investor entity which owns equity in an online real estate company 50% 9,347 9,312 Equity interests in commercial real estate 50% 6,748 (2) 23,192 Equity interest in and advances to a residential mortgage originator N/A 9,235 (3) 7,742 Various 25% - 50% 5,458 3,538 140,910 154,488 Cost method: Equity interest in a servicing and advisory business 6% 6,207 12,234 Investment funds which own equity in a loan servicer and other real estate assets 4% - 6% 9,225 9,225 Various 0% - 3% 10,374 9,556 25,806 31,015 $ 166,716 $ 185,503 (1) None of these investments are publicly traded and therefore quoted market prices are not available. (2) In March 2018, our preferred equity investment in a portfolio of student housing properties was redeemed in full for cash proceeds of $16.7 million. (3) Includes a $2.0 million subordinated loan the Company funded during the three months ended June 30, 2018. Refer to Note 15 for further discussion. |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangibles | |
Summary of intangibles assets | The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of June 30, 2018 and December 31, 2017 (amounts in thousands): As of June 30, 2018 As of December 31, 2017 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Value Amortization Value Value Amortization Value Domestic servicing rights, at fair value $ 22,742 $ — $ 22,742 $ 30,759 $ — $ 30,759 In-place lease intangible assets 200,953 (86,308) 114,645 187,816 (65,351) 122,465 Favorable lease intangible assets 37,672 (8,373) 29,299 37,231 (7,363) 29,868 Total net intangible assets $ 261,367 $ (94,681) $ 166,686 $ 255,806 $ (72,714) $ 183,092 |
Summary of activity within intangible assets | The following table summarizes the activity within intangible assets for the six months ended June 30, 2018 (amounts in thousands): Domestic In-place Lease Favorable Lease Servicing Intangible Intangible Rights Assets Assets Total Balance as of January 1, 2018 $ 30,759 $ 122,465 $ 29,868 $ 183,092 Acquisition of additional Woodstar II Portfolio properties — 10,015 — 10,015 Acquisition of additional REIS Equity Portfolio properties — 7,321 2,678 9,999 Amortization — (23,339) (2,160) (25,499) Sales — (705) (883) (1,588) Foreign exchange gain — (751) (204) (955) Impairment (1) — (361) — (361) Changes in fair value due to changes in inputs and assumptions (8,017) — — (8,017) Balance as of June 30, 2018 $ 22,742 $ 114,645 $ 29,299 $ 166,686 (1) Impairment of intangible lease assets is recognized within other expense in our condensed consolidated statements of operations. |
Schedule of future amortization expense | The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands): 2018 (remainder of) $ 18,005 2019 23,515 2020 17,819 2021 15,279 2022 12,432 Thereafter 56,894 Total $ 143,944 |
Secured Financing Agreements (T
Secured Financing Agreements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Secured Financing Agreements | |
Summary of secured financing agreements | The following table is a summary of our secured financing agreements in place as of June 30, 2018 and December 31, 2017 (dollars in thousands): Carrying Value at Current Extended Pledged Asset Maximum June 30, December 31, Maturity Maturity (a) Pricing Carrying Value Facility Size 2018 2017 Lender 1 Repo 1 (b) (b) LIBOR + 1.75% to 5.75% $ $ 2,000,000 $ 1,257,271 $ Lender 2 Repo 1 Apr 2020 Apr 2023 LIBOR + 2.00% to 2.35% 283,182 900,000 (c) 194,357 238,428 Lender 3 Repo 1 N/A N/A N/A — — — 75,291 Lender 4 Repo 2 May 2021 May 2023 LIBOR + 2.00% to 3.25% 741,093 1,000,000 (d) 333,278 215,372 Lender 6 Repo 1 Aug 2020 N/A LIBOR + 2.00% to 2.75% 653,722 600,000 497,045 494,353 Lender 6 Repo 2 Oct 2022 Oct 2023 GBP LIBOR + 2.75% 435,311 335,935 335,935 332,815 Lender 9 Repo 1 Sep 2018 N/A LIBOR + 1.65% — — — 65,762 Lender 10 Repo 1 Mar 2020 Mar 2022 LIBOR + 1.65% to 2.75% 171,000 140,000 136,800 77,800 Lender 11 Repo 1 Jun 2019 Jun 2020 LIBOR + 2.75% — 200,000 — — Lender 11 Repo 2 Sep 2018 Sep 2022 LIBOR + 2.25% to 2.75% 79,718 250,000 54,000 — Lender 12 Repo 1 Jun 2021 Jun 2024 LIBOR + 2.10% to 2.45% 57,291 250,000 43,500 — Lender 7 Secured Financing Feb 2021 Feb 2023 LIBOR + 2.25% (e) 28,219 650,000 (f) 21,169 — Lender 8 Secured Financing Aug 2019 N/A LIBOR + 4.00% — — — 15,617 Conduit Repo 2 Nov 2018 Nov 2019 LIBOR + 2.25% 120,189 200,000 89,190 40,075 Conduit Repo 3 Feb 2020 Feb 2021 LIBOR + 2.10% 108,021 150,000 78,422 26,895 MBS Repo 1 (g) (g) LIBOR + 1.90% — — — 6,510 MBS Repo 2 Dec 2019 N/A LIBOR + 1.90% to 2.45% 100,412 69,122 69,122 222,672 MBS Repo 3 (h) (h) LIBOR + 1.32% to 1.95% 239,266 163,525 163,525 224,150 MBS Repo 4 (i) N/A LIBOR + 1.70% 167,737 110,000 39,000 77,318 MBS Repo 5 Jun 2028 Dec 2028 4.13% 25,572 150,000 23,551 — Investing and Servicing Segment Property Mortgages Aug 2018 to N/A Various 245,105 218,019 196,996 177,411 Ireland Portfolio Mortgage May 2020 N/A EURIBOR + 1.69% 475,754 340,741 340,741 349,900 Woodstar I Portfolio Mortgages Nov 2025 to N/A 3.72% to 3.97% 363,962 276,748 276,748 276,748 Woodstar I Portfolio Government Financing Mar 2026 to Jun 2049 N/A 1.00% to 5.00% 303,177 132,308 132,308 133,418 Woodstar II Portfolio Mortgages Jan 2028 to Apr 2028 N/A 3.81% to 3.85% 512,125 417,669 417,669 116,745 Woodstar II Portfolio Government Financing Jun 2030 to Apr 2046 N/A 1.00% to 3.00% 133,804 7,361 7,361 — Medical Office Portfolio Mortgages Dec 2021 Dec 2023 LIBOR + 2.50% 695,869 524,499 491,197 497,613 Master Lease Portfolio Mortgages Oct 2027 N/A 4.36% to 4.38% 462,552 265,900 265,900 265,900 Term Loan A Dec 2020 Dec 2021 LIBOR + 2.25% (e) 902,809 300,000 300,000 300,000 Revolving Secured Financing Dec 2020 Dec 2021 LIBOR + 2.25% (e) — 100,000 — — FHLB Feb 2021 N/A Various 792,664 498,000 498,000 445,000 $ $ 6,263,085 Unamortized net premium 2,519 2,559 Unamortized deferred financing costs (48,987) (42,950) $ 6,216,617 $ (a) Subject to certain conditions as defined in the respective facility agreement. (b) Maturity date for borrowings collateralized by loans is September 2018 before extension options and September 2021 assuming exercise of 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 September 2025. (c) The initial maximum facility size of $600.0 million may be increased to $900.0 million, subject to certain conditions. (d) The initial maximum facility size of $600.0 million may be increased to $1.0 billion at our option, subject to certain conditions. (e) Subject to borrower’s option to choose alternative benchmark based rates pursuant to the terms of the credit agreement. (f) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions. (g) Facility carries a rolling 11-month term which may reset monthly with the lender’s consent not to exceed December 2018. This facility carries no maximum facility size. (h) Facility carries a rolling 12-month term which may reset monthly with the lender’s consent. Current maturity is June 2019. This facility carries no maximum facility size. Amounts reflect the outstanding balance as of June 30, 2018. (i) The date that is 270 days after the buyer delivers notice to seller, subject to a maximum date of May 2020. |
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 2018 (remainder of) $ 235,346 $ 12,136 $ 247,482 2019 280,352 176,819 457,171 2020 888,834 354,431 1,243,265 2021 450,057 678,060 1,128,117 2022 891,061 30,648 921,709 Thereafter 569,346 1,695,995 2,265,341 Total $ 3,314,996 $ 2,948,089 $ 6,263,085 |
Schedule of outstanding balance of repurchase agreements related to the following asset collateral classes | The following table sets forth our outstanding balance of repurchase agreements related to the following asset collateral classes as of June 30, 2018 and December 31, 2017 (amounts in thousands): Class of Collateral June 30, 2018 December 31, 2017 Loans held-for-investment $ 2,821,623 $ 2,637,475 Loans held-for-sale 198,175 66,970 Investment securities 295,198 530,650 $ 3,314,996 $ 3,235,095 |
Unsecured Senior Notes (Tables)
Unsecured Senior Notes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Unsecured Senior Notes | |
Schedule of unsecured convertible senior notes outstanding | The following table is a summary of our unsecured senior notes outstanding as of June 30, 2018 and December 31, 2017 (dollars in thousands): Remaining Coupon Effective Maturity Period of Carrying Value at Rate Rate (1) Date Amortization June 30, 2018 December 31, 2017 2018 Convertible Notes N/A N/A N/A N/A — 369,981 2019 Convertible Notes 4.00 % 5.35 % 1/15/2019 years 341,363 341,363 2021 Senior Notes (February) 3.63 % 3.89 % 2/1/2021 years 500,000 — 2021 Senior Notes (December) 5.00 % 5.32 % 12/15/2021 years 700,000 700,000 2023 Convertible Notes 4.38 % 4.86 % 4/1/2023 years 250,000 250,000 2025 Senior Notes 4.75 % 5.04 % 3/15/2025 years 500,000 500,000 Total principal amount 2,291,363 2,161,344 Unamortized discount—Convertible Notes (7,556) (11,186) Unamortized discount—Senior Notes (18,483) (16,654) Unamortized deferred financing costs (9,348) (8,269) Carrying amount of debt components $ 2,255,976 $ 2,125,235 Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes $ 6,423 $ 31,638 (1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our convertible senior notes, the value of which reduced the initial liability and was recorded in additional paid‑in capital. |
Schedule of conversion attributes on Convertible Notes outstanding | The following table details the conversion attributes of our Convertible Notes outstanding as of June 30, 2018 (amounts in thousands, except rates): June 30, 2018 Conversion Spread Value - Shares (3) Conversion Conversion For the Three Months Ended June 30, For the Six Months Ended June 30, Rate (1) Price (2) 2018 2017 2018 2017 2018 Notes N/A N/A — 1,162 — 1,157 2019 Notes 51.4738 $ 19.43 1,863 1,980 1,900 1,971 2023 Notes 38.5959 $ 25.91 — — — — 1,863 3,142 1,900 3,128 (1) 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 indentures governing the Convertible Notes (including the applicable supplemental indentures). (2) As of June 30, 2018 and 2017, the market price of the Company’s common stock was $21.71 and $22.39 per share, respectively. (3) The conversion spread value represents the portion of the Convertible Notes that are “in-the-money”, representing the value that would be delivered to investors in shares upon an assumed conversion. |
Loan Securitization_Sale Acti40
Loan Securitization/Sale Activities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
LNR | |
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 six months ended June 30, 2018 and 2017 (amounts in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2018 2017 2018 2017 Fair value of loans sold $ 215,133 $ 291,182 $ 481,765 $ 470,478 Par value of loans sold 208,141 272,293 464,959 440,857 Repayment of repurchase agreements 157,538 206,461 351,382 332,979 |
Real Estate Investment Lending | |
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 June 30, 2018 $ 50,000 $ 49,447 $ — $ — 2017 — — — — For the Six Months Ended June 30, 2018 $ 196,400 $ 194,720 $ — $ — 2017 38,750 37,079 — — |
Derivatives and Hedging Activ41
Derivatives and Hedging Activity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 non-designated Fx forwards, interest rate contracts, credit index instruments and forward loan purchase commitments as of June 30, 2018 (notional amounts in thousands): Type of Derivative Number of Contracts Aggregate Notional Amount Notional Currency Maturity Fx contracts – Sell Euros ("EUR") 35 339,241 EUR July 2018 – March 2022 Fx contracts – Buy Pounds Sterling ("GBP") 2 5,145 GBP July 2019 Fx contracts – Sell Pounds Sterling ("GBP") 132 200,841 GBP July 2018 – December 2021 Interest rate swaps – Paying fixed rates 26 1,003,449 USD April 2019 – July 2028 Interest rate swaps – Receiving fixed rates 2 970,000 USD January 2021 – March 2025 Interest rate caps 2 294,000 EUR May 2020 Interest rate caps 10 127,054 USD November 2018 – October 2021 Credit index instruments 9 74,000 USD September 2058 – November 2059 Forward loan purchase commitments 2 65,000 USD September 2018 Total 220 |
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 June 30, 2018 and December 31, 2017 (amounts in thousands): Fair Value of Derivatives Fair Value of Derivatives in an Asset Position (1) as of in a Liability Position (2) as of June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Derivatives designated as hedging instruments: Interest rate swaps $ 7 $ 25 $ — $ — Total derivatives designated as hedging instruments 7 25 — — Derivatives not designated as hedging instruments: Interest rate contracts 45,835 27,234 25,078 2,781 Foreign exchange contracts 4,455 6,400 11,057 33,419 Credit index instruments 518 239 — — Total derivatives not designated as hedging instruments 50,808 33,873 36,135 36,200 Total derivatives $ 50,815 $ 33,898 $ 36,135 $ 36,200 (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 | 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 six months ended June 30, 2018 and 2017 (amounts in thousands): Gain (Loss) Gain (Loss) Reclassified Gain (Loss) Recognized from AOCI Recognized Derivatives Designated as Hedging Instruments in OCI into Income in Income Location of Gain (Loss) For the Three Months Ended June 30, (effective portion) (effective portion) (ineffective portion) Recognized in Income 2018 $ (1) $ 22 $ — Interest expense 2017 $ 1 $ (1) $ — Interest expense For the Six Months Ended June 30, 2018 $ 8 $ 26 $ — Interest expense 2017 $ 48 $ (30) $ — 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 June 30, Six Months Ended June 30, as Hedging Instruments Recognized in Income 2018 2017 2018 2017 Interest rate contracts Gain (loss) on derivative financial instruments $ (128) $ (7,822) $ 6,109 $ (6,354) Foreign exchange contracts Gain (loss) on derivative financial instruments 32,818 (29,422) 9,675 (35,164) Credit index instruments Gain (loss) on derivative financial instruments (68) (342) (21) (417) $ 32,622 $ (37,586) $ 15,763 $ |
Offsetting Assets and Liabili42
Offsetting Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 Derivative assets $ 50,815 $ — $ 50,815 $ 4,966 $ — $ 45,849 Derivative liabilities $ 36,135 $ — $ 36,135 $ 4,966 $ 19,433 $ 11,736 Repurchase agreements 3,314,996 — 3,314,996 3,314,996 — — $ 3,351,131 $ — $ 3,351,131 $ 3,319,962 $ 19,433 $ 11,736 As of December 31, 2017 Derivative assets $ 33,898 $ — $ 33,898 $ 6,523 $ — $ 27,375 Derivative liabilities $ 36,200 $ — $ 36,200 $ 6,523 $ 15,333 $ 14,344 Repurchase agreements 3,235,095 — 3,235,095 3,235,095 — — $ 3,271,295 $ — $ 3,271,295 $ 3,241,618 $ 15,333 $ 14,344 |
Stockholders' Equity and Non-43
Stockholders' Equity and Non-Controlling Interests (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity and Non-Controlling Interests | |
Schedule of dividends declared by board of directors | Declaration Date Record Date Ex-Dividend Date Payment Date Amount Frequency 5/4/18 6/29/18 6/27/18 7/13/18 $ 0.48 Quarterly 2/28/18 3/30/18 3/28/18 4/13/18 $ 0.48 Quarterly |
Summary of share awards granted under the Manager Equity Plan | The table below summarizes our share awards granted or vested under the Manager Equity Plan and 2017 Manager Equity Plan during the six months ended June 30, 2018 and 2017 (dollar amounts in thousands): Grant Date Type Amount Granted Grant Date Fair Value Vesting Period April 2018 RSU 775,000 $ 16,329 3 years March 2017 RSU 1,000,000 22,240 3 years May 2015 RSU 675,000 16,511 3 years |
Schedule of Non-Vested Shares and Share Equivalents | 2017 Weighted Average 2017 Manager Grant Date Fair Equity Plan Equity Plan Total Value (per share) Balance as of January 1, 2018 885,138 806,251 1,691,389 $ 21.95 Granted 486,323 775,000 1,261,323 21.14 Vested (267,037) (287,499) (554,536) 21.79 Forfeited — — — — Balance as of June 30, 2018 1,104,424 1,293,752 2,398,176 21.56 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, 2018 2017 2018 2017 Basic Earnings Income attributable to STWD common stockholders $ 109,230 $ 117,380 $ 209,162 $ 219,738 Less: Income attributable to participating shares not already deducted as non-controlling interests (1,034) (828) (1,755) (1,728) Basic earnings $ 108,196 $ 116,552 $ 207,407 $ 218,010 Diluted Earnings Income attributable to STWD common stockholders $ 109,230 $ 117,380 $ 209,162 $ 219,738 Less: Income attributable to participating shares not already deducted as non-controlling interests (1,034) (828) (1,755) (1,728) Add: Interest expense on Convertible Notes (1) 7,593 N/A 15,159 N/A Diluted earnings $ 115,789 $ 116,552 $ 222,566 $ 218,010 Number of Shares: Basic — Average shares outstanding 260,998 259,472 260,832 259,236 Effect of dilutive securities — Convertible Notes (1) 27,134 3,142 27,044 3,128 Effect of dilutive securities — Contingently issuable shares 128 96 128 96 Effect of dilutive securities — Unvested non-participating shares 50 141 36 104 Diluted — Average shares outstanding 288,310 262,851 288,040 262,564 Earnings Per Share Attributable to STWD Common Stockholders: Basic $ 0.41 $ 0.45 $ 0.80 $ 0.84 Diluted $ 0.40 $ 0.44 $ 0.77 $ 0.83 (1) Prior to June 30, 2018, the Company had asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. Accordingly, under GAAP, the dilutive effect to EPS for the prior year periods was determined using the treasury stock method by dividing only the “conversion spread value” of the “in-the-money” Convertible Notes by the Company’s average share price and including the resulting share amount in the diluted EPS denominator. The conversion value of the principal amount of the Convertible Notes was not included. As of June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the current year periods is determined using the “if-converted” method whereby interest expense on the outstanding Convertible Notes is added back to the diluted EPS numerator and the full number of potential shares contingently issuable upon their conversion is included in the diluted EPS denominator. Refer to Note 10 for further discussion. |
Accumulated Other Comprehensi45
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 Balance at April 1, 2018 $ 30 $ 59,052 $ 16,228 $ 75,310 OCI before reclassifications (1) 1,052 (8,176) (7,125) Amounts reclassified from AOCI (22) (29) — (51) Net period OCI (23) 1,023 (8,176) (7,176) Balance at June 30, 2018 $ 7 $ 60,075 $ 8,052 $ 68,134 Three Months Ended June 30, 2017 Balance at April 1, 2017 $ 50 $ 46,775 $ (6,758) $ 40,067 OCI before reclassifications 1 4,917 11,005 15,923 Amounts reclassified from AOCI 1 (10) — (9) Net period OCI 2 4,907 11,005 15,914 Balance at June 30, 2017 $ 52 $ 51,682 $ 4,247 $ 55,981 Six Months Ended June 30, 2018 Balance at January 1, 2018 $ 25 $ 57,889 $ 12,010 $ 69,924 OCI before reclassifications 8 2,261 (3,958) (1,689) Amounts reclassified from AOCI (26) (75) — (101) Net period OCI (18) 2,186 (3,958) (1,790) Balance at June 30, 2018 $ 7 $ 60,075 $ 8,052 $ 68,134 Six Months Ended June 30, 2017 Balance at January 1, 2017 $ (26) $ 44,929 $ (8,765) $ 36,138 OCI before reclassifications 48 6,848 13,012 19,908 Amounts reclassified from AOCI 30 (95) — (65) Net period OCI 78 6,753 13,012 19,843 Balance at June 30, 2017 $ 52 $ 51,682 $ 4,247 $ 55,981 |
Schedule of reclassifications out of AOCI that impacted the condensed consolidated statements of operations | The reclassifications out of AOCI impacted the condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2017 as follows (amounts in thousands): Amounts Reclassified from Amounts Reclassified from AOCI during the Three Months AOCI during the Six Months Affected Line Item Ended June 30, Ended June 30, in the Statements Details about AOCI Components 2018 2017 2018 2017 of Operations Gain (loss) on cash flow hedges: Interest rate contracts $ 22 $ (1) $ 26 $ (30) Interest expense Unrealized gains on available-for-sale securities: Interest realized upon collection — 10 46 95 Interest income from investment securities Net realized gain on sale of investment 29 — 29 — Gain on sale of investments and other assets, net Total 29 10 75 95 Total reclassifications for the period $ 51 $ 9 $ 101 $ 65 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 (amounts in thousands): June 30, 2018 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ 1,092,769 $ — $ 195,510 $ 897,259 RMBS 235,796 — — 235,796 CMBS 52,426 — 27,776 24,650 Equity security 13,037 13,037 — — Domestic servicing rights 22,742 — — 22,742 Derivative assets 50,815 — 50,815 — VIE assets 48,044,873 — — 48,044,873 Total $ 49,512,458 $ 13,037 $ 274,101 $ 49,225,320 Financial Liabilities: Derivative liabilities $ 36,135 $ — $ 36,135 $ — VIE liabilities 46,976,428 — 44,974,313 2,002,115 Total $ 47,012,563 $ — $ 45,010,448 $ 2,002,115 December 31, 2017 Total Level I Level II Level III Financial Assets: Loans held-for-sale, fair value option $ 745,743 $ — $ — $ 745,743 RMBS 247,021 — — 247,021 CMBS 24,191 — — 24,191 Equity security 13,523 13,523 — — Domestic servicing rights 30,759 — — 30,759 Derivative assets 33,898 — 33,898 — VIE assets 51,045,874 — — 51,045,874 Total $ 52,141,009 $ 13,523 $ 33,898 $ 52,093,588 Financial Liabilities: Derivative liabilities $ 36,200 $ — $ 36,200 $ — VIE liabilities 50,000,010 — 47,811,073 2,188,937 Total $ 50,036,210 $ — $ 47,847,273 $ 2,188,937 |
Schedule of changes in financial assets and liabilities classified as Level III | The changes in financial assets and liabilities classified as Level III are as follows for the three and six months ended June 30, 2018 and 2017 (amounts in thousands): Domestic Loans Servicing VIE Three Months Ended June 30, 2018 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total April 1, 2018 balance $ 723,733 $ 240,853 $ 23,969 $ 24,945 $ 49,233,307 $ (2,205,734) $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 14,833 141 (542) (2,203) (1,766,507) 297,960 (1,456,318) Net accretion — 2,622 — — — — 2,622 Included in OCI — 1,023 — — — — 1,023 Purchases / Originations 633,433 — 1,463 — — — 634,896 Sales (215,133) (807) — — — — (215,940) Cash repayments / receipts (64,097) (8,036) (240) — — (45,177) (117,550) Transfers into Level III — — — — — (160,071) (160,071) Transfers out of Level III (195,510) — — — — 109,592 (85,918) Consolidation of VIEs — — — — 725,189 — 725,189 Deconsolidation of VIEs — — — — (147,116) 1,315 (145,801) June 30, 2018 balance $ 897,259 $ 235,796 $ 24,650 $ 22,742 $ 48,044,873 $ (2,002,115) $ Amount of total gains (losses) included in earnings attributable to assets still held at June 30, 2018 $ 2,071 $ 2,623 $ (542) $ (2,203) $ (1,766,507) $ 297,960 $ (1,466,598) Domestic Loans Servicing VIE Three Months Ended June 30, 2017 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total April 1, 2017 balance $ 340,266 $ 249,419 $ 15,472 $ 46,649 $ 60,185,851 $ (2,161,295) $ Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 15,406 — (2,343) (8,001) (5,702,684) 213,503 (5,484,119) OTTI — (109) — — — — (109) Net accretion — 3,302 — — — — 3,302 Included in OCI — 4,907 — — — — 4,907 Purchases / Originations 557,068 7,433 — — — — 564,501 Sales (291,182) — (700) — — — (291,882) Issuances — — — — — (5,429) (5,429) Cash repayments / receipts (11,442) (8,555) (1,322) — — (5,240) (26,559) Transfers into Level III — — — — — (319,457) (319,457) Transfers out of Level III — — — — — 34,288 34,288 Consolidation of VIEs — — — — — — — Deconsolidation of VIEs — — 2,741 — (580,452) 79,037 (498,674) June 30, 2017 balance $ 610,116 $ 256,397 $ 13,848 $ 38,648 $ 53,902,715 $ (2,164,593) $ Amount of total (losses) gains included in earnings attributable to assets still held at June 30, 2017 $ (3,291) $ 3,186 $ 396 $ (8,001) $ (5,702,684) $ 213,503 $ (5,496,891) Domestic Loans Servicing VIE Six Months Ended June 30, 2018 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2018 balance $ 745,743 $ 247,021 $ 24,191 $ 30,759 $ 51,045,874 $ (2,188,937) $ 49,904,651 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale 22,633 141 13 (8,017) (3,793,715) 535,050 (3,243,895) Net accretion — 5,441 — — — — 5,441 Included in OCI — 2,186 — — — — 2,186 Purchases / Originations 910,692 — 1,463 — — — 912,155 Sales (481,765) (807) — — — — (482,572) Issuances — — — — — (7,948) (7,948) Cash repayments / receipts (104,534) (18,186) (1,017) — — (57,810) (181,547) Transfers into Level III — — — — — (690,959) (690,959) Transfers out of Level III (195,510) — — — — 317,850 122,340 Consolidation of VIEs — — — — 1,815,070 — 1,815,070 Deconsolidation of VIEs — — — — (1,022,356) 90,639 (931,717) June 30, 2018 balance $ 897,259 $ 235,796 $ 24,650 $ 22,742 $ 48,044,873 $ (2,002,115) $ 47,223,205 Amount of total gains (losses) included in earnings attributable to assets still held at June 30, 2018 $ 1,482 $ 5,388 $ 13 $ (8,017) $ (3,793,715) $ 535,050 $ (3,259,799) Domestic Loans Servicing VIE Six Months Ended June 30, 2017 Held ‑ for ‑ sale RMBS CMBS Rights VIE Assets Liabilities Total January 1, 2017 balance $ 63,279 $ 253,915 $ 31,546 $ 55,082 $ 67,123,261 $ (2,585,369) $ 64,941,714 Total realized and unrealized gains (losses): Included in earnings: Change in fair value / gain on sale — (3,686) (16,434) (12,239,909) 598,484 (11,635,546) OTTI — (109) — — — — (109) Net accretion — 7,188 — — — — 7,188 Included in OCI — 6,753 — — — — 6,753 Purchases / Originations 1,002,955 7,433 — — — — 1,010,388 Sales (470,478) — (11,134) — — — (481,612) Issuances — — — — — (10,188) (10,188) Cash repayments / receipts (11,639) (18,783) (7,088) — — (36,036) (73,546) Transfers into Level III — — — — — (383,427) (383,427) Transfers out of Level III — — — — — 163,740 163,740 Consolidation of VIEs — — — — 1,127,952 — 1,127,952 Deconsolidation of VIEs — — 4,210 — (2,108,589) 88,203 (2,016,176) June 30, 2017 balance $ 610,116 $ 256,397 $ 13,848 $ 38,648 $ 53,902,715 $ (2,164,593) $ 52,657,131 Amount of total (losses) gains included in earnings attributable to assets still held at June 30, 2017 $ (3,291) $ 6,973 $ 228 $ (16,434) $ (12,239,909) $ 598,484 $ (11,653,949) |
Schedule of fair value of financial instruments not carried at fair value | The following table presents the fair values, all of which are classified in Level III of the fair value hierarchy, of our financial instruments not carried at fair value on the condensed consolidated balance sheets (amounts in thousands): June 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Value Value Value Value Financial assets not carried at fair value: Loans held-for-investment and loans transferred as secured borrowings $ 7,002,393 $ 7,084,822 $ 6,636,898 $ 6,729,302 HTM securities 140,676 143,656 433,468 428,338 Financial liabilities not carried at fair value: Secured financing agreements and secured borrowings on transferred loans $ 6,290,675 $ 6,215,340 $ 5,847,241 $ 5,810,998 Unsecured senior notes 2,255,976 2,271,438 2,125,235 2,191,285 |
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 (dollars in thousands): Carrying Value at Valuation Unobservable Range as of (1) June 30, 2018 Technique Input June 30, 2018 December 31, 2017 Loans held-for-sale, fair value option $ 897,259 Discounted cash flow Yield (b) 4.8% - 6.0% 4.3% - 6.0% Duration (c) 1.8 - 12.3 years 1.8 - 12.1 years RMBS 235,796 Discounted cash flow Constant prepayment rate (a) 2.6% - 24.2% 2.5% - 21.4% Constant default rate (b) 1.0% - 5.5% 0.9% - 5.8% Loss severity (b) 15% - 81% (e) 14% - 75% (e) Delinquency rate (c) 5% - 32% 4% - 33% Servicer advances (a) 23% - 83% 20% - 83% Annual coupon deterioration (b) 0% - 0.8% 0% - 0.8% Putback amount per projected total collateral loss (d) 0% - 7% 0% - 7% CMBS 24,650 Discounted cash flow Yield (b) 0% - 852.3% 0% - 168.5% Duration (c) 0 - 9.7 years 0 - 9.7 years Domestic servicing rights 22,742 Discounted cash flow Debt yield (a) 7.50% 7.75% Discount rate (b) 15% 15% Control migration (b) 0% - 80% 0% - 80% VIE assets 48,044,873 Discounted cash flow Yield (b) 0% - 815.0% 0% - 826.6% Duration (c) 0 - 14.2 years 0 - 14.0 years VIE liabilities (2,002,115) Discounted cash flow Yield (b) 0% - 815.0% 0% - 826.6% Duration (c) 0 - 14.2 years 0 - 14.0 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 (higher or lower) 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) 72% and 81% of the portfolio falls within a range of 45%-80% as of June 30, 2018 and December 31, 2017, respectively. |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Income Taxes | |
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 U.S. federal income tax determined using our statutory federal tax rate to our reported income tax provision for the three and six months ended June 30, 2018 and 2017 (dollars in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Federal statutory tax rate $ 25,291 21.0 % $ 46,439 35.0 % $ 47,897 21.0 % $ 82,094 35.0 % REIT and other non-taxable income (23,157) (19.2) % (37,000) (27.9) % (43,500) (19.1) % (73,425) (31.2) % State income taxes 558 0.5 % 20 — % 1,151 0.5 % (119) (0.1) % Federal benefit of state tax deduction (118) (0.1) % (7) — % (242) (0.1) % 42 — % Other 769 0.6 % — — % 893 0.4 % (123) (0.1) % Effective tax rate $ 3,343 2.8 % $ 9,452 7.1 % $ 6,199 2.7 % $ 8,469 3.6 % |
Segment Data (Tables)
Segment Data (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Data | |
Schedule of results of operations by business segment | The table below presents our results of operations for the three months ended June 30, 2018 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 148,268 $ — $ 3,436 $ — $ 151,704 $ — $ 151,704 Interest income from investment securities 8,930 — 30,472 — 39,402 (28,612) 10,790 Servicing fees 50 — 24,687 — 24,737 (7,422) 17,315 Rental income — 74,401 14,490 — 88,891 — 88,891 Other revenues 224 81 516 86 907 (51) 856 Total revenues 157,472 74,482 73,601 86 305,641 (36,085) 269,556 Costs and expenses: Management fees 463 — 18 26,907 27,388 106 27,494 Interest expense 34,826 19,380 5,807 31,854 91,867 (275) 91,592 General and administrative 6,251 1,971 23,855 3,367 35,444 84 35,528 Acquisition and investment pursuit costs 1,692 (52) (79) — 1,561 — 1,561 Costs of rental operations — 25,991 6,906 — 32,897 — 32,897 Depreciation and amortization 16 31,738 5,396 — 37,150 — 37,150 Loan loss allowance, net 25,259 — — — 25,259 — 25,259 Other expense 77 — 420 — 497 — 497 Total costs and expenses 68,584 79,028 42,323 62,128 252,063 (85) 251,978 Income (loss) before other income (loss), income taxes and non-controlling interests 88,888 (4,546) 31,278 (62,042) 53,578 (36,000) 17,578 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 43,946 43,946 Change in fair value of servicing rights — — (3,255) — (3,255) 1,052 (2,203) Change in fair value of investment securities, net 482 — 15,110 — 15,592 (7,890) 7,702 Change in fair value of mortgage loans held-for-sale, net 184 — 14,649 — 14,833 — 14,833 Earnings (loss) from unconsolidated entities 1,803 2,933 1,454 — 6,190 (720) 5,470 Gain on sale of investments and other assets, net 135 2,941 10,361 — 13,437 — 13,437 Gain (loss) on derivative financial instruments, net 19,467 19,920 (398) (6,367) 32,622 — 32,622 Foreign currency (loss) gain, net (13,264) (1) 1 — (13,264) — (13,264) Loss on extinguishment of debt — — (186) — (186) — (186) Other income, net — 489 9 — 498 — 498 Total other income (loss) 8,807 26,282 37,745 (6,367) 66,467 36,388 102,855 Income (loss) before income taxes 97,695 21,736 69,023 (68,409) 120,045 388 120,433 Income tax provision (1,720) (611) (1,012) — (3,343) — (3,343) Net income (loss) 95,975 21,125 68,011 (68,409) 116,702 388 117,090 Net income attributable to non-controlling interests (361) (4,684) (2,427) — (7,472) (388) (7,860) Net income (loss) attributable to Starwood Property Trust, Inc . $ 95,614 $ 16,441 $ 65,584 $ (68,409) $ 109,230 $ — $ 109,230 The table below presents our results of operations for the three months ended June 30, 2017 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 116,993 $ — $ 3,619 $ — $ 120,612 $ — $ 120,612 Interest income from investment securities 11,611 — 38,192 — 49,803 (37,433) 12,370 Servicing fees 216 — 33,663 — 33,879 (15,251) 18,628 Rental income — 46,279 12,687 — 58,966 — 58,966 Other revenues 293 221 545 — 1,059 (66) 993 Total revenues 129,113 46,500 88,706 — 264,319 (52,750) 211,569 Costs and expenses: Management fees 469 — 18 24,096 24,583 50 24,633 Interest expense 24,486 10,899 4,856 31,351 71,592 (275) 71,317 General and administrative 5,359 1,000 22,789 3,298 32,446 74 32,520 Acquisition and investment pursuit costs 385 99 53 — 537 — 537 Costs of rental operations — 17,792 5,232 — 23,024 — 23,024 Depreciation and amortization 16 17,279 4,737 — 22,032 — 22,032 Loan loss allowance, net (2,694) — — — (2,694) — (2,694) Other expense — (34) 176 — 142 — 142 Total costs and expenses 28,021 47,035 37,861 58,745 171,662 (151) 171,511 Income (loss) before other income (loss), income taxes and non-controlling interests 101,092 (535) 50,845 (58,745) 92,657 (52,599) 40,058 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 77,761 77,761 Change in fair value of servicing rights — — (13,667) — (13,667) 5,666 (8,001) Change in fair value of investment securities, net (149) — 12,256 — 12,107 (14,600) (2,493) Change in fair value of mortgage loans held-for-sale, net (152) — 15,558 — 15,406 — 15,406 Earnings from unconsolidated entities 1,230 2,488 35,892 — 39,610 (10,145) 29,465 (Loss) gain on sale of investments and other assets, net (3) 77 5,109 — 5,183 — 5,183 Loss on derivative financial instruments, net (14,926) (20,481) (2,179) — (37,586) — (37,586) Foreign currency gain, net 12,882 17 11 — 12,910 — 12,910 OTTI (109) — — — (109) — (109) Other income, net — — 704 — 704 (613) 91 Total other income (loss) (1,227) (17,899) 53,684 — 34,558 58,069 92,627 Income (loss) before income taxes 99,865 (18,434) 104,529 (58,745) 127,215 5,470 132,685 Income tax provision (127) — (9,325) — (9,452) — (9,452) Net income (loss) 99,738 (18,434) 95,204 (58,745) 117,763 5,470 123,233 Net income attributable to non-controlling interests (353) — (30) — (383) (5,470) (5,853) Net income (loss) attributable to Starwood Property Trust, Inc . $ 99,385 $ (18,434) $ 95,174 $ (58,745) $ 117,380 $ — $ 117,380 The table below presents our results of operations for the six months ended June 30, 2018 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 283,240 $ — $ 6,084 $ — $ 289,324 $ — $ 289,324 Interest income from investment securities 23,369 — 64,871 — 88,240 (62,181) 26,059 Servicing fees 215 — 58,121 — 58,336 (14,954) 43,382 Rental income — 141,111 28,890 — 170,001 — 170,001 Other revenues 418 182 744 138 1,482 (105) 1,377 Total revenues 307,242 141,293 158,710 138 607,383 (77,240) 530,143 Costs and expenses: Management fees 943 — 36 56,958 57,937 199 58,136 Interest expense 66,847 35,914 10,902 65,657 179,320 (545) 178,775 General and administrative 12,946 3,830 44,875 5,849 67,500 170 67,670 Acquisition and investment pursuit costs 1,912 (46) 72 — 1,938 — 1,938 Costs of rental operations — 49,479 13,111 — 62,590 — 62,590 Depreciation and amortization 33 58,207 10,654 — 68,894 — 68,894 Loan loss allowance, net 26,797 — — — 26,797 — 26,797 Other expense 154 — 447 — 601 — 601 Total costs and expenses 109,632 147,384 80,097 128,464 465,577 (176) 465,401 Income (loss) before other income (loss), income taxes and non-controlling interests 197,610 (6,091) 78,613 (128,326) 141,806 (77,064) 64,742 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 96,599 96,599 Change in fair value of servicing rights — — (12,423) — (12,423) 4,406 (8,017) Change in fair value of investment securities, net (222) — 29,089 — 28,867 (21,314) 7,553 Change in fair value of mortgage loans held-for-sale, net (1,508) — 24,141 — 22,633 — 22,633 Earnings (loss) from unconsolidated entities 3,247 (582) 3,050 — 5,715 (1,707) 4,008 Gain on sale of investments and other assets, net 414 6,883 16,800 — 24,097 — 24,097 Gain (loss) on derivative financial instruments, net 8,649 21,839 4,644 (19,369) 15,763 — 15,763 Foreign currency gain (loss), net 286 1 (2) — 285 — 285 Loss on extinguishment of debt — — (186) — (186) — (186) Other income, net 43 506 57 — 606 — 606 Total other income (loss) 10,909 28,647 65,170 (19,369) 85,357 77,984 163,341 Income (loss) before income taxes 208,519 22,556 143,783 (147,695) 227,163 920 228,083 Income tax provision (2,667) (1,872) (1,660) — (6,199) — (6,199) Net income (loss) 205,852 20,684 142,123 (147,695) 220,964 920 221,884 Net income attributable to non-controlling interests (722) (7,137) (3,943) — (11,802) (920) (12,722) Net income (loss) attributable to Starwood Property Trust, Inc . $ 205,130 $ 13,547 $ 138,180 $ (147,695) $ 209,162 $ — $ 209,162 The table below presents our results of operations for the six months ended June 30, 2017 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 226,039 $ — $ 6,456 $ — $ 232,495 $ — $ 232,495 Interest income from investment securities 24,330 — 73,028 — 97,358 (69,764) 27,594 Servicing fees 426 — 63,744 — 64,170 (31,440) 32,730 Rental income — 91,132 24,876 — 116,008 — 116,008 Other revenues 372 266 1,009 — 1,647 (185) 1,462 Total revenues 251,167 91,398 169,113 — 511,678 (101,389) 410,289 Costs and expenses: Management fees 923 — 36 47,958 48,917 100 49,017 Interest expense 44,443 21,106 9,214 62,958 137,721 (544) 137,177 General and administrative 9,570 2,381 45,369 5,468 62,788 161 62,949 Acquisition and investment pursuit costs 900 271 37 — 1,208 — 1,208 Costs of rental operations — 33,183 10,719 — 43,902 — 43,902 Depreciation and amortization 33 34,436 9,791 — 44,260 — 44,260 Loan loss allowance, net (2,999) — — — (2,999) — (2,999) Other expense — (34) 934 — 900 — 900 Total costs and expenses 52,870 91,343 76,100 116,384 336,697 (283) 336,414 Income (loss) before other income (loss), income taxes and non-controlling interests 198,297 55 93,013 (116,384) 174,981 (101,106) 73,875 Other income (loss): Change in net assets related to consolidated VIEs — — — — — 146,931 146,931 Change in fair value of servicing rights — (23,304) — (23,304) 6,870 (16,434) Change in fair value of investment securities, net 23 — 31,301 — 31,324 (34,988) (3,664) Change in fair value of mortgage loans held-for-sale, net (152) — 26,151 — 25,999 — 25,999 Earnings from unconsolidated entities 1,700 4,949 36,909 — 43,558 (11,106) 32,452 (Loss) gain on sale of investments and other assets, net (59) 77 5,109 — 5,127 — 5,127 Loss on derivative financial instruments, net (19,461) (20,992) (1,482) — (41,935) — (41,935) Foreign currency gain, net 17,745 17 12 — 17,774 — 17,774 OTTI (109) — — — (109) — (109) Loss on extinguishment of debt — — — (5,916) (5,916) — (5,916) Other income, net — — 1,069 — 1,069 (613) 456 Total other income (loss) (313) 75,765 (5,916) 53,587 107,094 160,681 Income (loss) before income taxes 197,984 168,778 228,568 5,988 234,556 Income tax provision (342) — (8,127) — (8,469) — (8,469) Net income (loss) 197,642 160,651 220,099 5,988 226,087 Net (income) loss attributable to non-controlling interests (707) — 346 — (361) (5,988) (6,349) Net income (loss) attributable to Starwood Property Trust, Inc . $ 196,935 $ (15,894) $ 160,997 $ (122,300) $ 219,738 $ — $ 219,738 |
Schedule of condensed consolidated balance sheet by business segment | The table below presents our condensed consolidated balance sheet as of June 30, 2018 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 10,303 $ 25,141 $ 68,853 $ 130,211 $ 234,508 $ 911 $ 235,419 Restricted cash 51,942 15,493 9,639 12,720 89,794 — 89,794 Loans held-for-investment, net 6,924,600 — 3,576 — 6,928,176 — 6,928,176 Loans held-for-sale 792,664 — 300,105 — 1,092,769 — 1,092,769 Loans transferred as secured borrowings 74,217 — — — 74,217 — 74,217 Investment securities 389,509 — 1,076,411 — 1,465,920 (1,023,985) 441,935 Properties, net — 294,608 — 2,936,684 — 2,936,684 Intangible assets — 104,425 86,101 — 190,526 (23,840) 166,686 Investment in unconsolidated entities 33,876 110,122 44,435 — 188,433 (21,717) 166,716 Goodwill — — 140,437 — 140,437 — 140,437 Derivative assets 10,748 39,184 883 — 50,815 — 50,815 Accrued interest receivable 40,180 244 1,042 13,194 54,660 — 54,660 Other assets 31,146 92,785 51,794 1,878 177,603 (25) 177,578 VIE assets, at fair value — — — — — 48,044,873 Total Assets $ 8,359,185 $ $ 2,077,884 $ 158,003 $ $ 46,976,217 $ Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 21,461 $ 70,113 $ 69,129 $ 28,875 $ 189,578 $ 95 $ 189,673 Related-party payable 65 — 39 25,220 25,324 — 25,324 Dividends payable — — — 126,857 126,857 — 126,857 Derivative liabilities 6,321 4,736 862 24,216 36,135 — 36,135 Secured financing agreements, net 3,466,334 564,226 297,389 6,240,317 (23,700) 6,216,617 Unsecured senior notes, net — — — 2,255,976 2,255,976 — 2,255,976 Secured borrowings on transferred loans, net 74,058 — — — 74,058 — 74,058 VIE liabilities, at fair value — — — — — 46,976,428 Total Liabilities 3,568,239 634,256 2,758,533 8,948,245 46,952,823 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — 2,675 2,675 — 2,675 Additional paid-in capital 1,905,265 826,782 606,583 1,400,339 4,738,969 — 4,738,969 Treasury stock — — — (104,194) (104,194) — (104,194) Accumulated other comprehensive income (loss) 60,082 8,115 (63) — 68,134 — 68,134 Retained earnings (accumulated deficit) 2,815,109 (788) 824,267 (3,899,350) (260,762) — (260,762) Total Starwood Property Trust, Inc. Stockholders’ Equity 4,780,456 834,109 1,430,787 (2,600,530) 4,444,822 — 4,444,822 Non-controlling interests in consolidated subsidiaries 10,490 208,144 12,841 — 231,475 23,394 254,869 Total Equity 4,790,946 1,443,628 (2,600,530) 4,676,297 23,394 4,699,691 Total Liabilities and Equity $ 8,359,185 $ $ 2,077,884 $ 158,003 $ $ 46,976,217 $ The table below presents our condensed consolidated balance sheet as of December 31, 2017 by business segment (amounts in thousands): Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 14,580 $ 10,388 $ 39,446 $ 299,308 $ 363,722 $ 5,726 $ 369,448 Restricted cash 21,555 12,491 10,289 4,490 48,825 — 48,825 Loans held-for-investment, net 6,558,699 — 3,796 — 6,562,495 — 6,562,495 Loans held-for-sale 613,287 — 132,456 — 745,743 — 745,743 Loans transferred as secured borrowings 74,403 — — — 74,403 — 74,403 Investment securities 694,012 — 1,024,143 — 1,718,155 (999,952) 718,203 Properties, net — 2,364,806 282,675 — 2,647,481 — 2,647,481 Intangible assets — 116,081 95,257 — 211,338 (28,246) 183,092 Investment in unconsolidated entities 45,028 110,704 50,759 — 206,491 (20,988) 185,503 Goodwill — — 140,437 — 140,437 — 140,437 Derivative assets 6,487 26,775 636 — 33,898 — 33,898 Accrued interest receivable 46,650 68 243 786 47,747 — 47,747 Other assets 5,648 71,929 59,676 3,755 141,008 (2,868) 138,140 VIE assets, at fair value — — — — — 51,045,874 51,045,874 Total Assets $ 8,080,349 $ 2,713,242 $ 1,839,813 $ 308,339 $ 12,941,743 $ 49,999,546 $ 62,941,289 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 23,054 $ 62,890 $ 74,426 $ 23,536 $ 183,906 $ 1,211 $ 185,117 Related-party payable 20 — 31 42,318 42,369 — 42,369 Dividends payable — — — 125,916 125,916 — 125,916 Derivative liabilities 20,386 13,063 85 2,666 36,200 — 36,200 Secured financing agreements, net 3,466,487 1,621,885 411,526 296,858 5,796,756 (23,700) 5,773,056 Unsecured senior notes, net — — — 2,125,235 2,125,235 — 2,125,235 Secured borrowings on transferred loans 74,185 — — — 74,185 — 74,185 VIE liabilities, at fair value — — — — — 50,000,010 50,000,010 Total Liabilities 3,584,132 1,697,838 486,068 2,616,529 8,384,567 49,977,521 58,362,088 Equity: Starwood Property Trust, Inc. Stockholders’ Equity: Common stock — — — 2,660 2,660 — 2,660 Additional paid-in capital 1,818,559 957,329 659,062 1,280,296 4,715,246 — 4,715,246 Treasury stock — — — (92,104) (92,104) — (92,104) Accumulated other comprehensive income (loss) 57,914 12,076 (66) — 69,924 — 69,924 Retained earnings (accumulated deficit) 2,609,050 (14,335) 687,015 (3,499,042) (217,312) — (217,312) Total Starwood Property Trust, Inc. Stockholders’ Equity 4,485,523 955,070 1,346,011 (2,308,190) 4,478,414 — 4,478,414 Non-controlling interests in consolidated subsidiaries 10,694 60,334 7,734 — 78,762 22,025 100,787 Total Equity 4,496,217 1,015,404 1,353,745 (2,308,190) 4,557,176 22,025 4,579,201 Total Liabilities and Equity $ 8,080,349 $ 2,713,242 $ 1,839,813 $ 308,339 $ 12,941,743 $ 49,999,546 $ 62,941,289 |
Business and Organization (Deta
Business and Organization (Details) | 6 Months Ended |
Jun. 30, 2018segment | |
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 Accoun50
Summary of Significant Accounting Policies - VIE & Fair Value (Details) $ in Millions | Jun. 30, 2018USD ($) |
Variable Interest Entities | |
REO assets as a percent of consolidated VIE assets | 3.00% |
Loans as a percent of consolidated VIE assets | 97.00% |
Fair Value Measurements | |
Permitted reinvestment under static investment in VIEs | $ 0 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2017USD ($)item | Jun. 30, 2018USD ($)propertyitem | Mar. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Jun. 30, 2017USD ($)propertyitem | Jun. 30, 2018USD ($)ft²propertyitemshares | Mar. 31, 2018USD ($)shares | Jun. 30, 2017USD ($)propertyitem | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($)ft²item | |
Acquisitions and Divestitures | |||||||||||
Principal Amount | $ 2,161,344 | $ 2,291,363 | $ 2,161,344 | $ 2,291,363 | $ 2,161,344 | ||||||
Properties, net | 2,647,481 | $ 2,936,684 | 2,647,481 | 2,936,684 | 2,647,481 | ||||||
Number of business days after the closing of the final property | item | 3 | ||||||||||
Gain on sale of property | $ 13,400 | $ 5,200 | 23,700 | $ 5,200 | |||||||
Liabilities assumed: | |||||||||||
Revenues | 269,556 | 211,569 | 530,143 | 410,289 | |||||||
Net income (loss) | 117,090 | 123,233 | 221,884 | 226,087 | |||||||
Depreciation and amortization | 67,857 | 42,701 | |||||||||
Gain (loss) on derivative financial instruments, net | 32,622 | $ (37,586) | 15,763 | $ (41,935) | |||||||
Goodwill | $ 140,437 | 140,437 | 140,437 | $ 140,437 | 140,437 | ||||||
Woodstar II Portfolio | |||||||||||
Acquisitions and Divestitures | |||||||||||
Number of acquired properties closed | item | 8 | 18 | |||||||||
Number of properties in portfolio investment | item | 27 | 27 | |||||||||
Number of units in portfolio investment | item | 6,109 | 6,109 | |||||||||
Number of units acquired | item | 1,740 | 4,057 | |||||||||
Percentage of occupied portfolio | 99.00% | ||||||||||
Initial aggregate purchase price | $ 404,700 | $ 404,700 | |||||||||
Purchase price | $ 156,200 | 378,000 | |||||||||
Contingent consideration | 10,800 | 26,700 | $ 10,800 | 26,700 | 10,800 | ||||||
Principal Amount | $ 300,900 | $ 300,900 | |||||||||
Maturity period | 10 years | 10 years | |||||||||
Amount issued | $ 116,700 | $ 116,700 | $ 116,700 | ||||||||
Interest rate (as a percent) | 3.81% | 3.82% | 3.81% | 3.82% | 3.81% | ||||||
Capitalized acquisition costs | $ 3,600 | $ 3,600 | |||||||||
Woodstar II Portfolio | Class A Units | |||||||||||
Acquisitions and Divestitures | |||||||||||
Shares issued | shares | 6,979,089 | ||||||||||
Woodstar II Portfolio | SPT Dolphin | |||||||||||
Acquisitions and Divestitures | |||||||||||
Aggregate gross acquisition price | $ 223,300 | $ 308,100 | |||||||||
Woodstar II Portfolio | SPT Dolphin | Class A Units | |||||||||||
Acquisitions and Divestitures | |||||||||||
Shares issued | shares | 9,758,863 | ||||||||||
Right to receive additional shares | shares | 1,301,414 | 1,800,335 | |||||||||
Period after issuance date for redemption | 6 months | ||||||||||
Number of common stock per unit | item | 1 | ||||||||||
Number of business days after the closing of the final property | item | 3 | ||||||||||
Master Lease Portfolio | |||||||||||
Acquisitions and Divestitures | |||||||||||
Number of retail properties acquired | property | 17 | ||||||||||
Number of industrial properties acquired | property | 3 | ||||||||||
Number of square feet of properties | ft² | 5,000,000 | ||||||||||
Term of master lease agreements | 24 years 7 months 6 days | ||||||||||
Liabilities assumed: | |||||||||||
Total liabilities assumed | 262,000 | $ 262,000 | |||||||||
Ireland Portfolio | |||||||||||
Acquisitions and Divestitures | |||||||||||
Area of property | ft² | 600,000 | ||||||||||
Number of properties sold | item | 1 | 1 | |||||||||
Proceeds from sale of property | $ 3,900 | 0 | $ 3,900 | ||||||||
Liabilities assumed: | |||||||||||
Total liabilities assumed | $ 338,500 | ||||||||||
Non-Controlling Interests | |||||||||||
Acquisitions and Divestitures | |||||||||||
Gain on sale of property | $ 2,400 | 3,700 | |||||||||
Liabilities assumed: | |||||||||||
Net income (loss) | $ 12,722 | $ 6,349 | |||||||||
LNR | |||||||||||
Acquisitions and Divestitures | |||||||||||
Number of properties in portfolio investment | property | 1 | 3 | |||||||||
Number of retail properties acquired | item | 23 | ||||||||||
Purchase price | $ 281,700 | $ 281,700 | $ 281,700 | ||||||||
Number of real estate business acquired | item | 20 | 20 | 20 | ||||||||
Aggregate gross acquisition price | $ 25,100 | $ 53,100 | |||||||||
Number of properties sold | property | 2 | 2 | 5 | 2 | |||||||
Payment to acquire investment property | $ 25,000 | $ 52,700 | |||||||||
Proceeds from sale of property | 24,900 | 40,000 | $ 14,700 | ||||||||
Gain on sale of property | 10,400 | 16,800 | $ 5,100 | ||||||||
Amount of non-controlling interest already held by a purchaser of a property | 300 | 300 | |||||||||
Liabilities assumed: | |||||||||||
Total liabilities assumed | 218,900 | 218,900 | |||||||||
LNR | Non-Controlling Interests | |||||||||||
Acquisitions and Divestitures | |||||||||||
Gain on sale of property | $ 2,400 | $ 3,700 | |||||||||
Disposed of by sale | Master Lease Portfolio | |||||||||||
Acquisitions and Divestitures | |||||||||||
Number of properties sold | property | 1 | 3 | |||||||||
Proceeds from sale of property | $ 18,400 | $ 55,600 | |||||||||
Gain on sale of property | $ 3,000 | $ 6,900 | |||||||||
Additional Mortgage Facilities Acquired | Woodstar II Portfolio | |||||||||||
Acquisitions and Divestitures | |||||||||||
Amount issued | $ 7,300 | $ 7,300 | |||||||||
Interest rate (as a percent) | 2.88% | 2.88% | |||||||||
Additional Mortgage Facilities Acquired | Woodstar II Portfolio | Weighted-average | |||||||||||
Acquisitions and Divestitures | |||||||||||
Maturity period | 17 years 8 months 12 days |
Loans - Held for Investment (De
Loans - Held for Investment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investments in loans | |||||
Total gross loans | $ 8,126,289 | $ 8,126,289 | $ 7,386,971 | ||
Loan loss allowance (loans held-for-investment) | (31,127) | (31,127) | $ (6,789) | (4,330) | $ (9,788) |
Carrying Value | 8,095,162 | 8,095,162 | 7,382,641 | ||
Proceeds from borrowings | 3,001,735 | 2,134,245 | |||
Cash payment for repurchase of debt | 2,410,574 | $ 1,590,421 | |||
Face Amount | 8,123,198 | 8,123,198 | 7,397,182 | ||
Loans with variable rates of interest | $ 6,600,000 | $ 6,600,000 | |||
Loans with variable rates of interest (as a percent) | 94.60% | 94.60% | |||
Weighted average spread of loans (as a percent) | 4.80% | 4.80% | |||
Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | $ 6,959,303 | $ 6,959,303 | 6,566,825 | ||
Face Amount | 6,989,093 | 6,989,093 | 6,595,684 | ||
Loans held-for-sale | |||||
Investments in loans | |||||
Total gross loans | 1,092,769 | 1,092,769 | 745,743 | ||
Loans held-for-sale, residential | |||||
Investments in loans | |||||
Total gross loans | 792,664 | 792,664 | 613,287 | ||
Face Amount | 766,878 | $ 766,878 | $ 594,105 | ||
Weighted Average Life | 6 years | 5 years 4 months 24 days | |||
Loans held-for-sale, residential | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 6.20% | 6.20% | |||
Loans held-for-sale, commercial | |||||
Investments in loans | |||||
Total gross loans | 300,105 | $ 300,105 | $ 132,456 | ||
Face Amount | 292,535 | $ 292,535 | $ 132,393 | ||
Weighted Average Life | 9 years 7 months 6 days | 10 years | |||
Loans held-for-sale, commercial | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 5.10% | 4.60% | |||
Loans transferred as secured borrowings | |||||
Investments in loans | |||||
Total gross loans | 74,217 | $ 74,217 | $ 74,403 | ||
Face Amount | 74,692 | $ 74,692 | $ 75,000 | ||
Weighted Average Life | 1 year 9 months 18 days | 2 years 3 months 18 days | |||
Loans transferred as secured borrowings | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 6.70% | 6.20% | |||
First mortgage loan participation | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 6,389,022 | $ 6,389,022 | $ 5,818,804 | ||
Face Amount | 6,416,333 | $ 6,416,333 | $ 5,843,623 | ||
Weighted Average Life | 2 years 2 months 12 days | 2 years | |||
First mortgage loan participation | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 6.60% | 6.20% | |||
Mortgage, Residual Profit Participation | Retail and Hospitality Property | |||||
Investments in loans | |||||
Total distributions received from residual profit participation | 12,300 | ||||
Subordinated mortgages | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 157,439 | $ 157,439 | $ 177,115 | ||
Face Amount | 157,243 | $ 157,243 | $ 177,386 | ||
Weighted Average Life | 1 year 8 months 12 days | 1 year 10 months 24 days | |||
Subordinated mortgages | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 11.70% | 10.80% | |||
Mezzanine Loans | |||||
Investments in loans | |||||
Carrying Value | 983,300 | $ 983,300 | $ 851,100 | ||
Mezzanine Loans | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 386,545 | 386,545 | 545,299 | ||
Face Amount | 385,772 | $ 385,772 | $ 545,355 | ||
Weighted Average Life | 1 year 2 months 12 days | 1 year 1 month 6 days | |||
Mezzanine Loans | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 11.00% | 11.00% | |||
Other | Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 26,297 | $ 26,297 | $ 25,607 | ||
Face Amount | $ 29,745 | $ 29,745 | $ 29,320 | ||
Weighted Average Life | 3 years 4 months 24 days | 3 years 10 months 24 days | |||
Other | Total loans held-for-investment | Weighted-average | |||||
Investments in loans | |||||
Weighted Average Coupon (as a percent) | 8.70% | 8.50% |
Loans - Ratings (Details)
Loans - Ratings (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Investments in loans | |||||
Total gross loans | $ 8,126,289 | $ 8,126,289 | $ 7,386,971 | ||
Total gross loans (as a percent) | 100.00% | 100.00% | 100.00% | ||
Provision for Loan Losses Net | $ 25,259 | $ (2,694) | $ 26,797 | $ (2,999) | |
Mortgage Loans on Real Estate Capitalized, Interest | 29,499 | $ 33,817 | |||
Cash received | 0 | ||||
Rating 1 | |||||
Investments in loans | |||||
Total gross loans | $ 21,483 | $ 21,483 | $ 22,270 | ||
Total gross loans (as a percent) | 0.30% | 0.30% | 0.30% | ||
Rating 1 | Maximum | |||||
Investments in loans | |||||
LTV (as a percent) | 65.00% | 65.00% | |||
Rating 2 | |||||
Investments in loans | |||||
Total gross loans | $ 2,893,217 | $ 2,893,217 | $ 2,611,998 | ||
Total gross loans (as a percent) | 35.60% | 35.60% | 35.40% | ||
Rating 2 | Maximum | |||||
Investments in loans | |||||
LTV (as a percent) | 70.00% | 70.00% | |||
Rating 3 | |||||
Investments in loans | |||||
Total gross loans | $ 3,845,800 | $ 3,845,800 | $ 3,836,019 | ||
Total gross loans (as a percent) | 47.30% | 47.30% | 51.90% | ||
Rating 3 | Maximum | |||||
Investments in loans | |||||
LTV (as a percent) | 80.00% | 80.00% | |||
Rating 4 | |||||
Investments in loans | |||||
Total gross loans | $ 85,006 | $ 85,006 | $ 120,479 | ||
Total gross loans (as a percent) | 1.00% | 1.00% | 1.60% | ||
Allowance for loan losses as a percent of carrying amount | 1.50% | ||||
Rating 4 | Minimum | |||||
Investments in loans | |||||
LTV (as a percent) | 80.00% | 80.00% | |||
Rating 4 | Maximum | |||||
Investments in loans | |||||
LTV (as a percent) | 90.00% | 90.00% | |||
Rating 5 | |||||
Investments in loans | |||||
Total gross loans | $ 50,462 | ||||
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% | 90.00% | |||
N/A | |||||
Investments in loans | |||||
Total gross loans | $ 1,280,783 | $ 1,280,783 | $ 745,743 | ||
Total gross loans (as a percent) | 15.80% | 15.80% | 10.10% | ||
First Mortgages, excluding Cost Recovery Loans | |||||
Investments in loans | |||||
Recorded investment | $ 119,700 | $ 119,700 | |||
Unpaid principal balance | $ 118,500 | $ 118,500 | |||
Subordinated mortgages | |||||
Investments in loans | |||||
Number of impaired individual mortgage loans held-for-investment | item | 2 | 2 | |||
Amount of loan impairment charges on individual loans held-for-investment | $ 8,300 | ||||
Recorded investment | $ 12,200 | 12,200 | |||
Unpaid principal balance | 12,000 | 12,000 | |||
Mezzanine Loans | |||||
Investments in loans | |||||
Recorded investment | 53,000 | 53,000 | |||
Unpaid principal balance | 52,300 | 52,300 | |||
Unsecured promissory note | |||||
Investments in loans | |||||
Recorded investment | 5,500 | 5,500 | |||
Unpaid principal balance | 5,400 | 5,400 | |||
Total loans held-for-investment | |||||
Investments in loans | |||||
Total gross loans | 6,959,303 | 6,959,303 | $ 6,566,825 | ||
Amount of loan impairment charges on individual loans held-for-investment | $ 29,900 | ||||
Number of assets | item | 3 | ||||
Total loans held-for-investment | New York City | |||||
Investments in loans | |||||
Amount of loan impairment charges on individual loans held-for-investment | $ 21,600 | ||||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | |||||
Investments in loans | |||||
Total gross loans | 6,389,022 | 6,389,022 | 5,818,804 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 1 | |||||
Investments in loans | |||||
Total gross loans | 1,613 | 1,613 | 2,003 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 2 | |||||
Investments in loans | |||||
Total gross loans | 2,625,794 | 2,625,794 | 2,462,268 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 3,506,015 | 3,506,015 | 3,183,592 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 4 | |||||
Investments in loans | |||||
Total gross loans | 85,006 | 85,006 | 120,479 | ||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 5 | |||||
Investments in loans | |||||
Total gross loans | 50,462 | ||||
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | N/A | |||||
Investments in loans | |||||
Total gross loans | 170,594 | 170,594 | |||
Total loans held-for-investment | Subordinated mortgages | |||||
Investments in loans | |||||
Total gross loans | 157,439 | 157,439 | 177,115 | ||
Total loans held-for-investment | Subordinated mortgages | Rating 2 | |||||
Investments in loans | |||||
Total gross loans | 11,810 | 11,810 | 11,927 | ||
Total loans held-for-investment | Subordinated mortgages | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 133,652 | 133,652 | 165,188 | ||
Total loans held-for-investment | Subordinated mortgages | N/A | |||||
Investments in loans | |||||
Total gross loans | 11,977 | 11,977 | |||
Total loans held-for-investment | Mezzanine Loans | |||||
Investments in loans | |||||
Total gross loans | 386,545 | 386,545 | 545,299 | ||
Total loans held-for-investment | Mezzanine Loans | Rating 2 | |||||
Investments in loans | |||||
Total gross loans | 181,396 | 181,396 | 137,803 | ||
Total loans held-for-investment | Mezzanine Loans | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 205,149 | 205,149 | 407,496 | ||
Total loans held-for-investment | Other | |||||
Investments in loans | |||||
Total gross loans | 26,297 | 26,297 | 25,607 | ||
Total loans held-for-investment | Other | Rating 1 | |||||
Investments in loans | |||||
Total gross loans | 19,870 | 19,870 | 20,267 | ||
Total loans held-for-investment | Other | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | 984 | 984 | 5,340 | ||
Total loans held-for-investment | Other | N/A | |||||
Investments in loans | |||||
Total gross loans | 5,443 | 5,443 | |||
Loans held-for-sale | |||||
Investments in loans | |||||
Total gross loans | 1,092,769 | 1,092,769 | 745,743 | ||
Loans held-for-sale | N/A | |||||
Investments in loans | |||||
Total gross loans | 1,092,769 | 1,092,769 | 745,743 | ||
Loans held-for-sale, residential | |||||
Investments in loans | |||||
Total gross loans | 792,664 | 792,664 | 613,287 | ||
Carrying amount of loans 90 days or more past due | 2,300 | 2,300 | |||
Loans held-for-sale, commercial | |||||
Investments in loans | |||||
Total gross loans | 300,105 | 300,105 | 132,456 | ||
Loans transferred as secured borrowings | |||||
Investments in loans | |||||
Total gross loans | 74,217 | 74,217 | 74,403 | ||
Loans transferred as secured borrowings | Rating 2 | |||||
Investments in loans | |||||
Total gross loans | $ 74,217 | $ 74,217 | |||
Loans transferred as secured borrowings | Rating 3 | |||||
Investments in loans | |||||
Total gross loans | $ 74,403 |
Loans - Activity in Portfolio (
Loans - Activity in Portfolio (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Activity in allowance for loan losses | ||||
Allowance for loan losses at the beginning of the period | $ 4,330 | $ 9,788 | ||
Provision for (reversal of) loan losses | (3,055) | (2,999) | ||
Provision for impaired loans | 29,852 | |||
Allowance for loan losses at the end of the period | $ 31,127 | $ 6,789 | 31,127 | 6,789 |
Recorded investment in loans related to the allowance for loan loss | 273,020 | 316,134 | 273,020 | 316,134 |
Activity in loan portfolio | ||||
Balance at the beginning of the period | 7,382,641 | 5,946,274 | ||
Acquisitions/origination/additional funding | 3,315,664 | 2,231,907 | ||
Capitalized Interest | 29,499 | 33,817 | ||
Basis of loans sold | (676,214) | (507,613) | ||
Loan maturities/principal repayments | (1,964,644) | (948,712) | ||
Discount accretion/premium amortization | 20,961 | 16,194 | ||
Changes in fair value | 14,833 | 15,406 | 22,633 | 25,999 |
Unrealized foreign currency translation gain | (8,608) | 19,565 | ||
Change in loan loss allowance, net | (26,797) | 2,999 | ||
Transfer to/from other asset classifications | 27 | 761 | ||
Balance at the end of the period | $ 8,095,162 | $ 6,821,191 | $ 8,095,162 | $ 6,821,191 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | |
Investment Securities | |||||||
Investment securities | $ 441,935 | $ 718,203 | |||||
Purchases | $ 20,465 | $ 7,433 | $ 20,465 | $ 7,433 | |||
Sales | 807 | 700 | 807 | 11,134 | |||
Principal collections | 102,457 | 10,209 | 321,687 | 86,259 | |||
Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | $ 1,465,920 | $ 1,718,155 | |||||
Available-for-sale | One-month LIBOR | |||||||
Investment Securities | |||||||
Effective variable rate basis (as a percent) | 2.09% | 1.564% | |||||
Fair value option | VIE eliminations | |||||||
Investment Securities | |||||||
Investment securities | $ (1,023,985) | $ (999,952) | |||||
Held-to-maturity | |||||||
Investment Securities | |||||||
Principal collections | 94,181 | 332 | 302,484 | 60,388 | |||
Held-to-maturity | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | 140,676 | 433,468 | |||||
RMBS | |||||||
Investment Securities | |||||||
Portion of securities with variable rate | 198,700 | ||||||
RMBS | Available-for-sale | |||||||
Investment Securities | |||||||
Purchases | 7,433 | 7,433 | |||||
Sales | 807 | 807 | |||||
Principal collections | 8,036 | 8,555 | 18,186 | 18,783 | |||
Purchase Amortized Cost | 185,618 | 199,029 | |||||
Credit OTTI | (9,897) | (9,897) | |||||
Recorded Amortized Cost | 175,721 | 189,132 | |||||
Non-Credit OTTI | (94) | ||||||
Gross Unrealized Gains | 60,096 | 58,011 | |||||
Gross Unrealized Losses | (21) | (28) | |||||
Net Fair Value Adjustment | 60,075 | 57,889 | |||||
Fair Value | $ 235,796 | 247,021 | |||||
Portion of securities with variable rate | $ 207,000 | ||||||
Portion of securities with variable rate (as a percent) | 84.30% | 83.80% | |||||
Principal balance | $ 345,200 | $ 366,711 | |||||
Accretable yield | (51,794) | (55,712) | $ (55,712) | (50,877) | (55,712) | ||
Non-accretable difference | (118,602) | (121,867) | |||||
Total discount | (169,479) | (177,579) | |||||
Amortized cost | 175,721 | 189,132 | |||||
Credit deteriorated RMBS | 324,700 | 345,500 | |||||
Accretable yield related to credit deteriorated RMBS | $ 45,000 | $ 49,200 | |||||
Changes to accretable yield | |||||||
Balance at the beginning of the period | 51,794 | 55,712 | |||||
Accretion of discount | (2,622) | (5,441) | |||||
Sales | (178) | (178) | |||||
Transfer to/from non-accretable difference | 1,883 | 784 | |||||
Balance at the end of the period | 50,877 | 50,877 | 55,712 | ||||
Changes to non accretable difference | |||||||
Balance at the beginning of the period | 121,488 | 121,867 | |||||
Principal write-downs | (1,003) | (2,481) | |||||
Transfer to/from non-accretable difference | (1,883) | (784) | |||||
Balance at the end of the period | 118,602 | $ 118,602 | $ 121,867 | ||||
RMBS | Available-for-sale | LIBOR | |||||||
Investment Securities | |||||||
Variable rate, weighted average spread (as a percent) | 1.22% | 1.22% | |||||
RMBS | Available-for-sale | B- | |||||||
Investment Securities | |||||||
Weighted Average Coupon (as a percent) | 3.30% | 2.80% | |||||
WAL | 6 years 2 months 12 days | 6 years 4 months 24 days | |||||
RMBS | Available-for-sale | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | $ 235,796 | $ 247,021 | |||||
CMBS | Fair value option | |||||||
Investment Securities | |||||||
Purchases | 20,465 | $ 20,465 | |||||
Sales | 700 | 11,134 | |||||
Principal collections | $ 240 | $ 1,322 | $ 1,017 | $ 7,088 | |||
CMBS | Fair value option | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | 1,076,411 | 1,024,143 | |||||
Equity security | Fair value option | Before consolidation of securitization VIEs | |||||||
Investment Securities | |||||||
Investment securities | 13,037 | $ 13,523 | |||||
CMBS, fair value option | |||||||
Investment Securities | |||||||
Portion of securities with variable rate | $ 0 |
Investment Securities - AFS and
Investment Securities - AFS and Fair Value Option (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)security | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)security | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($)security | |
Unrealized Losses | |||||
Fair value of investment securities before consolidation of VIEs eliminated against VIE liabilities | $ 52,400 | $ 52,400 | |||
Third party interest | 237,551 | $ 3,599 | |||
RMBS | |||||
Unrealized Losses | |||||
Portion of securities with variable rate | 198,700 | 198,700 | |||
RMBS | Available-for-sale | |||||
Investment Securities | |||||
Cost of third party management | 400 | $ 500 | 900 | 900 | |
Estimated Fair Value | |||||
Securities with a loss less than 12 months | 1,931 | 1,931 | $ 10,321 | ||
Securities with a loss greater than 12 months | 643 | ||||
Unrealized Losses | |||||
Securities with a loss less than 12 months | $ (21) | $ (21) | (99) | ||
Securities with a loss greater than 12 months | $ (23) | ||||
Number of securities with unrealized loss position | security | 1 | 1 | 3 | ||
Portion of securities with variable rate | $ 207,000 | ||||
CMBS | |||||
Unrealized Losses | |||||
Purchases in connection with a newly formed partnership | $ 8,600 | ||||
Third party interest | 4,200 | ||||
CMBS | Fair value option | |||||
Unrealized Losses | |||||
Fair value of investment securities before consolidation of VIEs | 1,100,000 | $ 1,100,000 | |||
Unpaid principal balance of investment securities before consolidation of VIEs | 4,200,000 | 4,200,000 | |||
Purchases in which fair value option was elected | 61,700 | 4,300 | 91,900 | 61,700 | |
Purchase amount reflected as repayment of debt of consolidated VIEs | 41,200 | 4,300 | 71,400 | 61,700 | |
Sales in which fair value option was elected | 6,100 | 7,900 | 21,300 | ||
Sale amount reflected as issuance of debt of consolidated VIEs | $ 5,400 | 7,900 | $ 10,200 | ||
CMBS, fair value option | |||||
Unrealized Losses | |||||
Portion of securities with variable rate | $ 0 | $ 0 |
Investment Securities - HTM (De
Investment Securities - HTM (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | $ 140,676 | $ 433,468 |
Gross Unrealized Holdings Gains | 4,912 | 2,649 |
Gross Unrealized Holdings Losses | (1,932) | (7,779) |
Fair Value | 143,656 | 428,338 |
HTM preferred equity interests | ||
Less than one year | 25,157 | |
One to three years | 66,211 | |
Three to five years | 49,308 | |
Total | 140,676 | 433,468 |
Preferred Equity Investment | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 20,588 | 20,358 |
Gross Unrealized Holdings Gains | 1,675 | 647 |
Fair Value | 22,263 | 21,005 |
HTM preferred equity interests | ||
Three to five years | 20,588 | |
Total | 20,588 | 20,358 |
CMBS | ||
HTM Securities | ||
Net Carrying Amount (Amortized Cost) | 120,088 | 413,110 |
Gross Unrealized Holdings Gains | 3,237 | 2,002 |
Gross Unrealized Holdings Losses | (1,932) | (7,779) |
Fair Value | 121,393 | 407,333 |
HTM preferred equity interests | ||
Less than one year | 25,157 | |
One to three years | 66,211 | |
Three to five years | 28,720 | |
Total | $ 120,088 | $ 413,110 |
Investment Securities - SEREF (
Investment Securities - SEREF (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2012 | Dec. 31, 2017 | |
Residential Real Estate | |||
Equity Securities without Readily Determinable Fair Value, Amount | $ 25,806 | $ 31,015 | |
Ownership percentage | 2.00% | ||
SEREF | |||
Residential Real Estate | |||
Number of shares acquired | 9,140,000 | ||
Equity Securities without Readily Determinable Fair Value, Amount | $ 13,000 | $ 13,500 |
Properties (Details)
Properties (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 24 Months Ended | |||||
Dec. 31, 2017USD ($)item | Jun. 30, 2018USD ($)property | Mar. 31, 2018USD ($)item | Jun. 30, 2017USD ($)property | Jun. 30, 2018USD ($)ft²propertyitem | Jun. 30, 2017USD ($)property | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)ft²item | Dec. 31, 2015USD ($)ft²propertyitem | Dec. 31, 2016ft²item | |
Properties | ||||||||||
Number of properties sold | property | 3 | 3 | 8 | 3 | ||||||
Proceeds from sale of operating properties | $ 43,300 | $ 95,600 | $ 18,600 | |||||||
Gain on sale of property | 13,400 | $ 5,200 | 23,700 | 5,200 | ||||||
Summary of properties | ||||||||||
Properties, cost | $ 2,755,050 | 3,086,057 | 3,086,057 | $ 2,755,050 | ||||||
Less: accumulated depreciation | (107,569) | (149,373) | (149,373) | (107,569) | ||||||
Properties, net | 2,647,481 | 2,936,684 | 2,936,684 | 2,647,481 | ||||||
Non-Controlling Interests | ||||||||||
Properties | ||||||||||
Gain on sale of property | 2,400 | 3,700 | ||||||||
Property Segment | ||||||||||
Summary of properties | ||||||||||
Land and land improvements | 585,915 | 661,101 | 661,101 | 585,915 | ||||||
Buildings and building improvements | 1,838,266 | 2,066,975 | 2,066,975 | 1,838,266 | ||||||
Furniture & fixtures | 31,028 | $ 41,993 | $ 41,993 | 31,028 | ||||||
Property Segment | Minimum | ||||||||||
Summary of properties | ||||||||||
Land improvements, useful life | 0 years | |||||||||
Building and building improvements, useful life | 5 years | |||||||||
Furniture & fixtures, useful life | 3 years | |||||||||
Property Segment | Maximum | ||||||||||
Summary of properties | ||||||||||
Land improvements, useful life | 15 years | |||||||||
Building and building improvements, useful life | 45 years | |||||||||
Furniture & fixtures, useful life | 7 years | |||||||||
LNR | ||||||||||
Properties | ||||||||||
Number of properties in portfolio investment | property | 1 | 3 | ||||||||
Number of retail properties acquired | item | 23 | |||||||||
Number of equity interests in unconsolidated commercial real estate properties | property | 1 | |||||||||
Total gross properties and lease intangibles | $ 372,600 | $ 372,600 | ||||||||
Total liabilities assumed | 218,900 | 218,900 | ||||||||
Purchase price | 281,700 | $ 281,700 | $ 281,700 | |||||||
Gain on sale of property | 10,400 | 16,800 | $ 5,100 | |||||||
Amount of non-controlling interest already held by a purchaser of a property | 300 | 300 | ||||||||
Summary of properties | ||||||||||
Land and land improvements | 86,711 | 91,086 | 91,086 | 86,711 | ||||||
Buildings and building improvements | 212,094 | 223,322 | 223,322 | 212,094 | ||||||
Furniture & fixtures | $ 1,036 | 1,580 | $ 1,580 | $ 1,036 | ||||||
LNR | Minimum | ||||||||||
Summary of properties | ||||||||||
Land improvements, useful life | 0 years | |||||||||
Building and building improvements, useful life | 3 years | |||||||||
Furniture & fixtures, useful life | 2 years | |||||||||
LNR | Maximum | ||||||||||
Summary of properties | ||||||||||
Land improvements, useful life | 15 years | |||||||||
Building and building improvements, useful life | 40 years | |||||||||
Furniture & fixtures, useful life | 5 years | |||||||||
LNR | Non-Controlling Interests | ||||||||||
Properties | ||||||||||
Gain on sale of property | 2,400 | $ 3,700 | ||||||||
Ireland Portfolio | ||||||||||
Properties | ||||||||||
Total gross properties and lease intangibles | 529,300 | |||||||||
Total liabilities assumed | $ 338,500 | |||||||||
Area of property | ft² | 600,000 | |||||||||
Woodstar Portfolio | ||||||||||
Properties | ||||||||||
Number of units acquired | item | 8,948 | |||||||||
Number of properties in portfolio investment | item | 32 | |||||||||
Total gross properties and lease intangibles | 619,800 | $ 619,800 | ||||||||
Total liabilities assumed | 408,200 | $ 408,200 | ||||||||
Number of acquired properties closed | item | 14 | 18 | 32 | |||||||
Woodstar II Portfolio | ||||||||||
Properties | ||||||||||
Number of units acquired | item | 1,740 | 4,057 | ||||||||
Number of properties in portfolio investment | item | 27 | 27 | ||||||||
Number of units in portfolio investment | item | 6,109 | 6,109 | ||||||||
Percentage of occupied portfolio | 99.00% | |||||||||
Purchase price | $ 156,200 | $ 378,000 | ||||||||
Number of acquired properties closed | item | 8 | 18 | ||||||||
Medical Office Portfolio | ||||||||||
Properties | ||||||||||
Total gross properties and lease intangibles | 760,100 | $ 760,100 | ||||||||
Total liabilities assumed | 483,600 | $ 483,600 | ||||||||
Area of property | ft² | 1,900,000 | 1,900,000 | ||||||||
Number of acquired properties closed | item | 34 | |||||||||
Master Lease Portfolio | ||||||||||
Properties | ||||||||||
Number of retail properties acquired | property | 17 | |||||||||
Total gross properties and lease intangibles | 505,000 | $ 505,000 | ||||||||
Total liabilities assumed | 262,000 | $ 262,000 | ||||||||
Number of industrial properties acquired | property | 3 | |||||||||
Term of master lease agreements | 24 years 7 months 6 days | |||||||||
Number of square feet of properties | ft² | 5,000,000 | |||||||||
Master Lease Portfolio | Disposed of by sale | ||||||||||
Properties | ||||||||||
Gain on sale of property | $ 3,000 | $ 6,900 | ||||||||
Net Leased Office Property | Ireland Portfolio | ||||||||||
Properties | ||||||||||
Number of properties in portfolio investment | property | 11 | |||||||||
Multifamily Property | Ireland Portfolio | ||||||||||
Properties | ||||||||||
Number of properties in portfolio investment | property | 1 | |||||||||
Utah, Florida, Texas and Minnesota | Master Lease Portfolio | Minimum | ||||||||||
Properties | ||||||||||
Concentration risk (as a percent) | 50.00% |
Investment in Unconsolidated 60
Investment in Unconsolidated Entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
Investment in Unconsolidated Entities | ||||||
Equity method, Carrying value | $ 140,910 | $ 140,910 | $ 154,488 | |||
Cost method, Carrying value | 25,806 | 25,806 | 31,015 | |||
Investment in unconsolidated entities | 166,716 | 166,716 | $ 185,503 | |||
Earnings (loss) from unconsolidated entities | 5,470 | $ 29,465 | 4,008 | $ 32,452 | ||
Distributions of earnings from unconsolidated entities | 4,569 | $ 4,284 | ||||
Carrying value over (under) equity in net assets | $ 0 | $ 0 | ||||
Retail Fund | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Participation / Ownership % | 33.00% | 33.00% | 33.00% | |||
Equity method, Carrying value | $ 110,122 | $ 110,122 | $ 110,704 | |||
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 | $ 9,347 | $ 9,347 | $ 9,312 | |||
Equity interests in commercial real estate | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | 50.00% | |||
Equity method, Carrying value | $ 6,748 | $ 6,748 | $ 23,192 | |||
Cash proceeds | 16,700 | |||||
Equity interests in commercial real estate | Minimum | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Participation / Ownership % | 50.00% | 50.00% | ||||
Equity interest in a residential mortgage originator | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Carrying value | 9,235 | 9,235 | $ 7,742 | |||
Carrying value over (under) equity in net assets | 1,600 | 1,600 | ||||
Equity interest in a residential mortgage originator | Subordinated Loans | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Carrying value | 2,000 | 2,000 | ||||
Various - Equity method | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Carrying value | $ 5,458 | $ 5,458 | $ 3,538 | |||
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% | |||
Equity interest in a servicing and advisory business | ||||||
Investment in Unconsolidated Entities | ||||||
Equity method, Participation / Ownership % | 6.00% | 6.00% | 6.00% | |||
Equity method, Carrying value | $ 6,207 | $ 6,207 | $ 12,234 | |||
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 | ||||||
Investment in Unconsolidated Entities | ||||||
Cost method, Carrying value | $ 10,374 | $ 10,374 | $ 9,556 | |||
Various | Minimum | ||||||
Investment in Unconsolidated Entities | ||||||
Cost method, Ownership % | 0.00% | 0.00% | 0.00% | |||
Various | Maximum | ||||||
Investment in Unconsolidated Entities | ||||||
Cost method, Ownership % | 3.00% | 3.00% | 3.00% |
Goodwill and Intangibles (Detai
Goodwill and Intangibles (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Summary of Intangible Assets | ||
Gross carrying value | $ 261,367 | $ 255,806 |
Accumulated amortization | (94,681) | (72,714) |
Net carrying value | 166,686 | 183,092 |
In-place lease | ||
Summary of Intangible Assets | ||
Gross carrying value | 200,953 | 187,816 |
Accumulated amortization | (86,308) | (65,351) |
Net carrying value | 114,645 | 122,465 |
Favorable lease | ||
Summary of Intangible Assets | ||
Gross carrying value | 37,672 | 37,231 |
Accumulated amortization | (8,373) | (7,363) |
Net carrying value | 29,299 | 29,868 |
Domestic Servicing Rights | ||
Summary of Intangible Assets | ||
Gross carrying value | 22,742 | 30,759 |
Net carrying value | 22,742 | 30,759 |
Domestic Servicing Rights | Before consolidation of securitization VIEs | ||
Intangible Assets | ||
Servicing rights intangibles | 46,600 | 59,000 |
Domestic Servicing Rights | VIE eliminations | ||
Intangible Assets | ||
Servicing rights intangibles | $ 23,800 | $ 28,200 |
Goodwill and Intangibles - Acti
Goodwill and Intangibles - Activity (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Summary of activity within intangible assets | |
Balance as of beginning of period | $ 183,092 |
Amortization | (25,499) |
Sales | (1,588) |
Foreign exchange gain | 955 |
Impairment | (361) |
Changes in fair value due to changes in inputs and assumptions | (8,017) |
Balance as of end of period | 166,686 |
Future amortization expense for the European servicing rights, in-place lease intangible assets and favorable lease intangible assets | |
2018 (remainder of) | 18,005 |
2,019 | 23,515 |
2,020 | 17,819 |
2,021 | 15,279 |
2,022 | 12,432 |
Thereafter | 56,894 |
Total | 143,944 |
Woodstar II Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 10,015 |
REIS Equity Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 9,999 |
In-place lease | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 122,465 |
Amortization | (23,339) |
Sales | (705) |
Foreign exchange gain | 751 |
Impairment | (361) |
Balance as of end of period | 114,645 |
In-place lease | Woodstar II Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 10,015 |
In-place lease | REIS Equity Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 7,321 |
Favorable lease | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 29,868 |
Amortization | (2,160) |
Sales | (883) |
Foreign exchange gain | 204 |
Balance as of end of period | 29,299 |
Favorable lease | REIS Equity Portfolio | |
Summary of activity within intangible assets | |
Acquisition of indefinite-lived intangibles | 2,678 |
Domestic Servicing Rights | |
Summary of activity within intangible assets | |
Balance as of beginning of period | 30,759 |
Changes in fair value due to changes in inputs and assumptions | (8,017) |
Balance as of end of period | $ 22,742 |
Secured Financing Agreements (D
Secured Financing Agreements (Details) $ in Thousands | Feb. 28, 2018USD ($) | May 31, 2018item | Apr. 30, 2018USD ($)item | Feb. 28, 2018USD ($) | Jan. 31, 2018USD ($) | Jun. 30, 2018USD ($)loan | Jun. 30, 2018USD ($)loanitem | Dec. 31, 2017USD ($) |
Secured Financing Agreements | ||||||||
Principal Amount | $ 2,291,363 | $ 2,291,363 | $ 2,161,344 | |||||
Unamortized deferred financing costs | (9,348) | (9,348) | (8,269) | |||||
Carrying Value | 6,216,617 | 6,216,617 | 5,773,056 | |||||
Lender 2 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Maximum Facility Size | 600,000 | 600,000 | ||||||
Maximum facility size subject to certain conditions | $ 900,000 | 900,000 | 900,000 | |||||
Number of extension options | item | 3 | |||||||
Extended term / option | 1 year | |||||||
Lender 4 Repo 2 Facility | ||||||||
Secured Financing Agreements | ||||||||
Maximum borrowing capacity | 600,000 | 600,000 | ||||||
Maximum facility size subject to certain conditions | 1,000,000 | $ 1,000,000 | ||||||
Number of extension options | item | 2 | |||||||
Extended term / option | 1 year | |||||||
Lender 9 Repo 1 Facility | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.65% | |||||||
Lender 12 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Floor interest rate (as a percent) | 0.25% | |||||||
Maturity period | 3 years | |||||||
Number of extension options | item | 3 | |||||||
Extended term / option | 1 year | |||||||
Lender 7 Secured Financing | ||||||||
Secured Financing Agreements | ||||||||
Maximum borrowing capacity | $ 300,000 | $ 300,000 | $ 450,000 | 300,000 | $ 300,000 | |||
Maximum facility size subject to certain conditions | $ 650,000 | $ 650,000 | $ 650,000 | $ 650,000 | ||||
Lender 7 Secured Financing | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 2.25% | 2.25% | 2.75% | |||||
MBS Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Rolling maturity period | 11 months | |||||||
MBS Repo 3 Facility | ||||||||
Secured Financing Agreements | ||||||||
Rolling maturity period | 12 months | |||||||
MBS Repo 4 Facility | ||||||||
Secured Financing Agreements | ||||||||
Maximum Facility Size | $ 225,000 | |||||||
MBS Repo 4 Facility | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.70% | 1.90% | ||||||
MBS Repo 5 Facility | ||||||||
Secured Financing Agreements | ||||||||
Maturity period | 10 years | |||||||
Extended term / option | 6 months | |||||||
Master Lease Portfolio | Minimum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 4.36% | 4.36% | ||||||
Master Lease Portfolio | Maximum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 4.38% | 4.38% | ||||||
Investing and Servicing Segment Property Mortgages | Additional Mortgage Facilities Acquired | ||||||||
Secured Financing Agreements | ||||||||
Maximum borrowing capacity | $ 34,800 | $ 34,800 | ||||||
Number of mortgage facilities executed | loan | 2 | 2 | ||||||
Investing and Servicing Segment Property Mortgages | Additional Mortgage Facilities Acquired | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.62% | |||||||
Investing and Servicing Segment Property Mortgages | Additional Mortgage Facilities Acquired | Weighted-average | ||||||||
Secured Financing Agreements | ||||||||
Maturity period | 4 years | |||||||
Woodstar I Portfolio Government Financing | Additional Mortgage Facilities Acquired | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 2.88% | 2.88% | ||||||
Principal Amount | $ 7,300 | $ 7,300 | ||||||
Woodstar I Portfolio Government Financing | Additional Mortgage Facilities Acquired | Weighted-average | ||||||||
Secured Financing Agreements | ||||||||
Maturity period | 17 years 8 months 12 days | |||||||
Woodstar II Portfolio Mortgages | Additional Mortgage Facilities Acquired | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 3.82% | 3.82% | ||||||
Principal Amount | $ 300,900 | $ 300,900 | ||||||
Maturity period | 10 years | |||||||
Secured financing agreements | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | $ 9,717,466 | $ 9,717,466 | ||||||
Maximum Facility Size | 10,249,827 | 10,249,827 | ||||||
Principal Amount | 6,263,085 | 6,263,085 | 5,813,447 | |||||
Unamortized premium (discount), net | 2,519 | 2,519 | 2,559 | |||||
Unamortized deferred financing costs | (48,987) | (48,987) | (42,950) | |||||
Secured financing agreements | Lender 1 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 1,618,912 | 1,618,912 | ||||||
Maximum Facility Size | 2,000,000 | 2,000,000 | ||||||
Principal Amount | 1,257,271 | $ 1,257,271 | 1,137,654 | |||||
Secured financing agreements | Lender 1 Repo 1 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.75% | |||||||
Secured financing agreements | Lender 1 Repo 1 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 5.75% | |||||||
Secured financing agreements | Lender 2 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 283,182 | $ 283,182 | ||||||
Maximum Facility Size | 900,000 | 900,000 | ||||||
Principal Amount | 194,357 | $ 194,357 | 238,428 | |||||
Secured financing agreements | Lender 2 Repo 1 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.00% | |||||||
Secured financing agreements | Lender 2 Repo 1 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.35% | |||||||
Secured financing agreements | Lender 3 Repo I | ||||||||
Secured Financing Agreements | ||||||||
Principal Amount | 75,291 | |||||||
Secured financing agreements | Lender 4 Repo 2 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 741,093 | $ 741,093 | ||||||
Maximum Facility Size | 1,000,000 | 1,000,000 | ||||||
Principal Amount | 333,278 | $ 333,278 | 215,372 | |||||
Secured financing agreements | Lender 4 Repo 2 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.00% | |||||||
Secured financing agreements | Lender 4 Repo 2 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 3.25% | |||||||
Secured financing agreements | Lender 6 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 653,722 | $ 653,722 | ||||||
Maximum Facility Size | 600,000 | 600,000 | ||||||
Principal Amount | 497,045 | $ 497,045 | 494,353 | |||||
Secured financing agreements | Lender 6 Repo 1 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.00% | |||||||
Secured financing agreements | Lender 6 Repo 1 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.75% | |||||||
Secured financing agreements | Lender 6 Repo 2 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 435,311 | $ 435,311 | ||||||
Maximum Facility Size | 335,935 | 335,935 | ||||||
Principal Amount | 335,935 | $ 335,935 | 332,815 | |||||
Secured financing agreements | Lender 6 Repo 2 Facility | GBP LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.75% | |||||||
Secured financing agreements | Lender 9 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Principal Amount | 65,762 | |||||||
Secured financing agreements | Lender 10 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 171,000 | $ 171,000 | ||||||
Maximum Facility Size | 140,000 | 140,000 | ||||||
Principal Amount | 136,800 | $ 136,800 | 77,800 | |||||
Secured financing agreements | Lender 10 Repo 1 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.65% | |||||||
Secured financing agreements | Lender 10 Repo 1 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.75% | |||||||
Secured financing agreements | Lender 11 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Maximum Facility Size | 200,000 | $ 200,000 | ||||||
Secured financing agreements | Lender 11 Repo 1 Facility | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.75% | |||||||
Secured financing agreements | Lender 12 Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 57,291 | $ 57,291 | ||||||
Maximum Facility Size | 250,000 | 250,000 | ||||||
Principal Amount | 43,500 | $ 43,500 | ||||||
Secured financing agreements | Lender 12 Repo 1 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.10% | |||||||
Secured financing agreements | Lender 12 Repo 1 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.45% | |||||||
Secured financing agreements | Lender 11 Repo 2 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 79,718 | $ 79,718 | ||||||
Maximum Facility Size | 250,000 | 250,000 | ||||||
Principal Amount | 54,000 | $ 54,000 | ||||||
Secured financing agreements | Lender 11 Repo 2 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.25% | |||||||
Secured financing agreements | Lender 11 Repo 2 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.75% | |||||||
Secured financing agreements | Lender 7 Secured Financing | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 28,219 | $ 28,219 | ||||||
Maximum Facility Size | 650,000 | 650,000 | ||||||
Principal Amount | 21,169 | $ 21,169 | ||||||
Secured financing agreements | Lender 7 Secured Financing | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.25% | |||||||
Secured financing agreements | Lender 8 Secured Financing | ||||||||
Secured Financing Agreements | ||||||||
Principal Amount | 15,617 | |||||||
Secured financing agreements | Lender 8 Secured Financing | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 4.00% | |||||||
Secured financing agreements | Conduit Repo 2 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 120,189 | $ 120,189 | ||||||
Maximum Facility Size | 200,000 | 200,000 | ||||||
Principal Amount | 89,190 | $ 89,190 | 40,075 | |||||
Secured financing agreements | Conduit Repo 2 Facility | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.25% | |||||||
Secured financing agreements | Conduit Repo 3 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 108,021 | $ 108,021 | ||||||
Maximum Facility Size | 150,000 | 150,000 | ||||||
Principal Amount | 78,422 | $ 78,422 | 26,895 | |||||
Secured financing agreements | Conduit Repo 3 Facility | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.10% | |||||||
Secured financing agreements | MBS Repo 1 Facility | ||||||||
Secured Financing Agreements | ||||||||
Principal Amount | 6,510 | |||||||
Secured financing agreements | MBS Repo 1 Facility | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.90% | |||||||
Secured financing agreements | MBS Repo 2 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 100,412 | $ 100,412 | ||||||
Maximum Facility Size | 69,122 | 69,122 | ||||||
Principal Amount | 69,122 | $ 69,122 | 222,672 | |||||
Secured financing agreements | MBS Repo 2 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.90% | |||||||
Secured financing agreements | MBS Repo 2 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.45% | |||||||
Secured financing agreements | MBS Repo 3 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 239,266 | $ 239,266 | ||||||
Maximum Facility Size | 163,525 | 163,525 | ||||||
Principal Amount | 163,525 | $ 163,525 | 224,150 | |||||
Secured financing agreements | MBS Repo 3 Facility | Minimum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.32% | |||||||
Secured financing agreements | MBS Repo 3 Facility | Maximum | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.95% | |||||||
Secured financing agreements | MBS Repo 4 Facility | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 167,737 | $ 167,737 | ||||||
Maximum Facility Size | 110,000 | 110,000 | ||||||
Principal Amount | $ 39,000 | $ 39,000 | 77,318 | |||||
Current maturity period, relative to when the buyer delivers notice to the seller | 270 days | |||||||
Secured financing agreements | MBS Repo 4 Facility | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.70% | |||||||
Secured financing agreements | MBS Repo 5 Facility | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 4.13% | 4.13% | ||||||
Pledged Asset Carrying Value | $ 25,572 | $ 25,572 | ||||||
Maximum Facility Size | 150,000 | 150,000 | ||||||
Principal Amount | 23,551 | 23,551 | ||||||
Secured financing agreements | Master Lease Portfolio | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 462,552 | 462,552 | ||||||
Maximum Facility Size | 265,900 | 265,900 | ||||||
Principal Amount | 265,900 | 265,900 | 265,900 | |||||
Secured financing agreements | Investing and Servicing Segment Property Mortgages | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 245,105 | 245,105 | ||||||
Maximum Facility Size | 218,019 | 218,019 | ||||||
Principal Amount | 196,996 | 196,996 | 177,411 | |||||
Secured financing agreements | Ireland Portfolio Mortgage | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 475,754 | 475,754 | ||||||
Maximum Facility Size | 340,741 | 340,741 | ||||||
Principal Amount | 340,741 | $ 340,741 | 349,900 | |||||
Secured financing agreements | Ireland Portfolio Mortgage | EURIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 1.69% | |||||||
Secured financing agreements | Woodstar I Portfolio Mortgages | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 363,962 | $ 363,962 | ||||||
Maximum Facility Size | 276,748 | 276,748 | ||||||
Principal Amount | $ 276,748 | $ 276,748 | 276,748 | |||||
Secured financing agreements | Woodstar I Portfolio Mortgages | Minimum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 3.72% | 3.72% | ||||||
Secured financing agreements | Woodstar I Portfolio Mortgages | Maximum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 3.97% | 3.97% | ||||||
Secured financing agreements | Woodstar I Portfolio Government Financing | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | $ 303,177 | $ 303,177 | ||||||
Maximum Facility Size | 132,308 | 132,308 | ||||||
Principal Amount | $ 132,308 | $ 132,308 | 133,418 | |||||
Secured financing agreements | Woodstar I Portfolio Government Financing | Minimum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 1.00% | 1.00% | ||||||
Secured financing agreements | Woodstar I Portfolio Government Financing | Maximum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 5.00% | 5.00% | ||||||
Secured financing agreements | Woodstar II Portfolio Mortgages | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | $ 512,125 | $ 512,125 | ||||||
Maximum Facility Size | 417,669 | 417,669 | ||||||
Principal Amount | $ 417,669 | $ 417,669 | 116,745 | |||||
Secured financing agreements | Woodstar II Portfolio Mortgages | Minimum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 3.81% | 3.81% | ||||||
Secured financing agreements | Woodstar II Portfolio Mortgages | Maximum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 3.85% | 3.85% | ||||||
Secured financing agreements | Woodstar II Portfolio Government Financing | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | $ 133,804 | $ 133,804 | ||||||
Maximum Facility Size | 7,361 | 7,361 | ||||||
Principal Amount | $ 7,361 | $ 7,361 | ||||||
Secured financing agreements | Woodstar II Portfolio Government Financing | Minimum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 1.00% | 1.00% | ||||||
Secured financing agreements | Woodstar II Portfolio Government Financing | Maximum | ||||||||
Secured Financing Agreements | ||||||||
Interest rate (as a percent) | 3.00% | 3.00% | ||||||
Secured financing agreements | Medical Office Portfolio Mortgages | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | $ 695,869 | $ 695,869 | ||||||
Maximum Facility Size | 524,499 | 524,499 | ||||||
Principal Amount | 491,197 | $ 491,197 | 497,613 | |||||
Secured financing agreements | Medical Office Portfolio Mortgages | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.50% | |||||||
Secured financing agreements | Term Loan | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 902,809 | $ 902,809 | ||||||
Maximum Facility Size | 300,000 | 300,000 | ||||||
Principal Amount | 300,000 | $ 300,000 | 300,000 | |||||
Secured financing agreements | Term Loan | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.25% | |||||||
Secured financing agreements | Revolving Secured Financing | ||||||||
Secured Financing Agreements | ||||||||
Maximum Facility Size | 100,000 | $ 100,000 | ||||||
Secured financing agreements | Revolving Secured Financing | LIBOR | ||||||||
Secured Financing Agreements | ||||||||
Pricing margin (as a percent) | 2.25% | |||||||
Secured financing agreements | FHLB | ||||||||
Secured Financing Agreements | ||||||||
Pledged Asset Carrying Value | 792,664 | $ 792,664 | ||||||
Maximum Facility Size | 498,000 | 498,000 | ||||||
Principal Amount | $ 498,000 | $ 498,000 | $ 445,000 |
Secured Financing Agreements -
Secured Financing Agreements - Principal Repayments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Repayment of secured financings | |||||
Total | $ 2,291,363 | $ 2,291,363 | $ 2,161,344 | ||
Secured financing agreements | |||||
Repayment of secured financings | |||||
2018 (remainder of) | 247,482 | 247,482 | |||
2,019 | 457,171 | 457,171 | |||
2,020 | 1,243,265 | 1,243,265 | |||
2,021 | 1,128,117 | 1,128,117 | |||
2,022 | 921,709 | 921,709 | |||
Thereafter | 2,265,341 | 2,265,341 | |||
Total | 6,263,085 | 6,263,085 | $ 5,813,447 | ||
Amortization of deferred financing costs from secured financing agreements included in interest expense | 5,800 | $ 4,700 | 10,900 | $ 9,400 | |
Repurchase Agreements | |||||
Repayment of secured financings | |||||
2018 (remainder of) | 235,346 | 235,346 | |||
2,019 | 280,352 | 280,352 | |||
2,020 | 888,834 | 888,834 | |||
2,021 | 450,057 | 450,057 | |||
2,022 | 891,061 | 891,061 | |||
Thereafter | 569,346 | 569,346 | |||
Total | 3,314,996 | 3,314,996 | |||
Other Secured Financing | |||||
Repayment of secured financings | |||||
2018 (remainder of) | 12,136 | 12,136 | |||
2,019 | 176,819 | 176,819 | |||
2,020 | 354,431 | 354,431 | |||
2,021 | 678,060 | 678,060 | |||
2,022 | 30,648 | 30,648 | |||
Thereafter | 1,695,995 | 1,695,995 | |||
Total | $ 2,948,089 | $ 2,948,089 |
Secured Financing Agreements 65
Secured Financing Agreements - Repurchase Agreements (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Secured Financing Agreements | ||
Long-term Debt, Gross | $ 2,291,363 | $ 2,161,344 |
Secured financing agreements | ||
Secured Financing Agreements | ||
Long-term Debt, Gross | 6,263,085 | 5,813,447 |
Repurchase Agreements | ||
Secured Financing Agreements | ||
Outstanding balance | 3,314,996 | 3,235,095 |
Long-term Debt, Gross | $ 3,314,996 | |
Percentage of repurchase agreements for which margin calls are limited to collateral specific credit marks | 31.00% | |
Percentage of repurchase agreements containing margin call provisions that pertain to loans held-for-sale | 28.00% | |
Repurchase Agreements | Loans held for investment | ||
Secured Financing Agreements | ||
Outstanding balance | $ 2,821,623 | 2,637,475 |
Repurchase Agreements | Loans held-for-sale | ||
Secured Financing Agreements | ||
Outstanding balance | 198,175 | 66,970 |
Repurchase Agreements | Investment securities. | ||
Secured Financing Agreements | ||
Outstanding balance | $ 295,198 | $ 530,650 |
Unsecured Secured Notes (Detail
Unsecured Secured Notes (Details) $ / shares in Units, shares in Thousands | Aug. 07, 2018USD ($) | Jan. 29, 2018USD ($) | Mar. 29, 2017USD ($) | Jul. 31, 2018USD ($)shares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Jul. 01, 2018USD ($) | Dec. 31, 2017USD ($) |
Unsecured Senior Notes | ||||||||||
Principal Amount | $ 2,291,363,000 | $ 2,291,363,000 | $ 2,161,344,000 | |||||||
Conversion Spread Value - Shares | shares | 1,863 | 3,142 | 1,900 | 3,128 | ||||||
Unamortized deferred financing costs | $ (9,348,000) | $ (9,348,000) | (8,269,000) | |||||||
Carrying amount of debt components | 2,255,976,000 | 2,255,976,000 | 2,125,235,000 | |||||||
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes | 6,423,000 | 6,423,000 | 31,638,000 | |||||||
Principal amount of notes, basis for conversion | 1,000 | 1,000 | ||||||||
Interest expense | $ 91,592,000 | $ 71,317,000 | $ 178,775,000 | $ 137,177,000 | ||||||
Closing share price (in dollars per share) | $ / shares | $ 21.71 | $ 22.39 | $ 21.71 | $ 22.39 | ||||||
Loss on extinguishment of debt | $ 186,000 | $ 186,000 | $ 5,916,000 | |||||||
Convertible senior notes due 2017 | ||||||||||
Unsecured Senior Notes | ||||||||||
Amount by which if-converted value of the Notes are less than principal amount | 40,500,000 | |||||||||
2018 Notes | ||||||||||
Unsecured Senior Notes | ||||||||||
Principal Amount | $ 369,981,000 | |||||||||
Coupon Rate (as a percent) | 4.55% | |||||||||
Conversion Spread Value - Shares | shares | 1,162 | 1,157 | ||||||||
Amount by which if-converted value of the Notes exceed principal amount | 40,100,000 | |||||||||
2019 Notes | ||||||||||
Unsecured Senior Notes | ||||||||||
Principal Amount | $ 341,363,000 | $ 341,363,000 | $ 341,363,000 | |||||||
Coupon Rate (as a percent) | 4.00% | 4.00% | ||||||||
Effective Rate (as a percent) | 5.35% | 5.35% | ||||||||
Remaining Period of Amortization | 6 months | |||||||||
Conversion Rate | 51.4738 | |||||||||
Conversion price (in dollars per share) | $ / shares | $ 19.43 | $ 19.43 | ||||||||
Conversion Spread Value - Shares | shares | 1,863 | 1,980 | 1,900 | 1,971 | ||||||
Amount issued | $ 341,400,000 | $ 341,400,000 | ||||||||
2019 Notes | Subsequent event | ||||||||||
Unsecured Senior Notes | ||||||||||
Amount issued | $ 258,800,000 | |||||||||
Debt conversion original amount | $ 299,600,000 | |||||||||
Shares issued to settle redemption | shares | 4,700 | |||||||||
Value of shares issued to settle redemption | $ 104,000,000 | |||||||||
2019 Notes | Expected | Subsequent event | ||||||||||
Unsecured Senior Notes | ||||||||||
Amount agreed to be settled | 195,600,000 | |||||||||
Value of shares issued to settle redemption | 168,100,000 | |||||||||
Cash payments to settle redemptions | $ 27,500,000 | |||||||||
2021 Senior Notes 3.625% | ||||||||||
Unsecured Senior Notes | ||||||||||
Principal Amount | $ 500,000,000 | $ 500,000,000 | ||||||||
Coupon Rate (as a percent) | 3.625% | 3.63% | 3.63% | |||||||
Effective Rate (as a percent) | 3.89% | 3.89% | ||||||||
Remaining Period of Amortization | 2 years 7 months 6 days | |||||||||
Amount issued | $ 500,000,000 | |||||||||
2021 Senior Notes 3.625% | Debt instrument redemption period one | ||||||||||
Unsecured Senior Notes | ||||||||||
Percentage of principal amount that may be redeemed | 100.00% | |||||||||
2021 Senior Notes 3.625% | Debt instrument redemption period two | ||||||||||
Unsecured Senior Notes | ||||||||||
Percentage of principal amount that may be redeemed | 40.00% | |||||||||
2021 Senior Notes 5.00% | ||||||||||
Unsecured Senior Notes | ||||||||||
Principal Amount | $ 700,000,000 | $ 700,000,000 | 700,000,000 | |||||||
Coupon Rate (as a percent) | 5.00% | 5.00% | ||||||||
Effective Rate (as a percent) | 5.32% | 5.32% | ||||||||
Remaining Period of Amortization | 3 years 6 months | |||||||||
2023 Notes | ||||||||||
Unsecured Senior Notes | ||||||||||
Principal Amount | $ 250,000,000 | $ 250,000,000 | 250,000,000 | |||||||
Coupon Rate (as a percent) | 4.375% | 4.38% | 4.38% | |||||||
Effective Rate (as a percent) | 4.86% | 4.86% | ||||||||
Remaining Period of Amortization | 4 years 9 months 18 days | |||||||||
Conversion Rate | 38.5959 | |||||||||
Conversion price (in dollars per share) | $ / shares | $ 25.91 | $ 25.91 | ||||||||
Amount issued | $ 250,000,000 | $ 209,500,000 | $ 209,500,000 | |||||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | $ 3,755,000 | |||||||||
2025 Senior Notes | ||||||||||
Unsecured Senior Notes | ||||||||||
Principal Amount | $ 500,000,000 | $ 500,000,000 | 500,000,000 | |||||||
Coupon Rate (as a percent) | 4.75% | 4.75% | ||||||||
Effective Rate (as a percent) | 5.04% | 5.04% | ||||||||
Remaining Period of Amortization | 6 years 8 months 12 days | |||||||||
Convertible Senior Notes | ||||||||||
Unsecured Senior Notes | ||||||||||
Unamortized discount | $ (7,556,000) | $ (7,556,000) | (11,186,000) | |||||||
Interest expense | 7,593,000 | 15,159,000 | ||||||||
Debt repurchased amount | 250,700,000 | 0 | 0 | |||||||
Convertible Senior Notes | 2018 Notes | ||||||||||
Unsecured Senior Notes | ||||||||||
Interest expense | $ 19,200,000 | 38,700,000 | ||||||||
Amount of debt repurchased | 230,000,000 | |||||||||
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital | $ 18,100,000 | |||||||||
Loss on extinguishment of debt | $ 5,900,000 | |||||||||
Senior Notes | ||||||||||
Unsecured Senior Notes | ||||||||||
Unamortized discount | $ (18,483,000) | $ (18,483,000) | $ (16,654,000) |
Loan Securitization_Sale Acti67
Loan Securitization/Sale Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
LNR | ||||
Loan Transfer Activities | ||||
Fair value of loans sold | $ 215,133 | $ 291,182 | $ 481,765 | $ 470,478 |
Par value of loans sold | 208,141 | 272,293 | 464,959 | 440,857 |
Repayment of purchase agreements | 157,538 | $ 206,461 | 351,382 | 332,979 |
Real Estate Investment Lending | ||||
Loan Transfers Accounted for as Sales | ||||
Face Amount | 50,000 | 196,400 | 38,750 | |
Proceeds | $ 49,447 | $ 194,720 | $ 37,079 |
Derivatives and Hedging Activ68
Derivatives and Hedging Activity - Designated and Non-Designated Hedges (Details) € in Thousands, £ in Thousands, $ in Thousands | Jun. 30, 2018GBP (£)item | Jun. 30, 2018USD ($)item | Jun. 30, 2018EUR (€)item |
Derivatives | |||
Number of contracts | 220 | 220 | 220 |
Foreign exchange contracts | EUR | Short | |||
Derivatives | |||
Number of contracts | 35 | 35 | 35 |
Aggregate notional amount | € | € 339,241 | ||
Foreign exchange contracts | GBP | Long | |||
Derivatives | |||
Number of contracts | 2 | 2 | 2 |
Aggregate notional amount | £ | £ 5,145 | ||
Foreign exchange contracts | GBP | Short | |||
Derivatives | |||
Number of contracts | 132 | 132 | 132 |
Aggregate notional amount | £ | £ 200,841 | ||
Interest rate contracts | Derivatives designated as hedging instruments | |||
Derivatives | |||
Number of contracts | 1 | 1 | 1 |
Interest rate swaps - Paying fixed rates | USD | |||
Derivatives | |||
Number of contracts | 26 | 26 | 26 |
Aggregate notional amount | $ | $ 1,003,449 | ||
Interest rate swaps - Receiving fixed rates | USD | |||
Derivatives | |||
Number of contracts | 2 | 2 | 2 |
Aggregate notional amount | $ | $ 970,000 | ||
Interest rate caps | EUR | |||
Derivatives | |||
Number of contracts | 2 | 2 | 2 |
Aggregate notional amount | € | € 294,000 | ||
Interest rate caps | USD | |||
Derivatives | |||
Number of contracts | 10 | 10 | 10 |
Aggregate notional amount | $ | $ 127,054 | ||
Interest Rate Swaption | Derivatives designated as hedging instruments | |||
Derivatives | |||
Number of contracts | 2 | 2 | 2 |
Credit spread instrument | USD | |||
Derivatives | |||
Number of contracts | 9 | 9 | 9 |
Aggregate notional amount | $ | $ 74,000 | ||
Forward loan purchase commitments | USD | |||
Derivatives | |||
Number of contracts | 2 | 2 | 2 |
Aggregate notional amount | $ | $ 65,000 |
Derivatives and Hedging Activ69
Derivatives and Hedging Activity - Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 50,815 | $ 33,898 |
Fair Value of Derivatives in a Liability Position | 36,135 | 36,200 |
Derivatives designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 7 | 25 |
Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 50,808 | 33,873 |
Fair Value of Derivatives in a Liability Position | 36,135 | 36,200 |
Interest rate contracts | Derivatives designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 7 | 25 |
Interest rate contracts | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 45,835 | 27,234 |
Fair Value of Derivatives in a Liability Position | 25,078 | 2,781 |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | 4,455 | 6,400 |
Fair Value of Derivatives in a Liability Position | 11,057 | 33,419 |
Credit spread instrument | Derivatives not designated as hedging instruments | ||
Fair value of derivative instruments | ||
Fair Value of Derivatives in an Asset Position | $ 518 | $ 239 |
Derivatives and Hedging Activ70
Derivatives and Hedging Activity - Effect on Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | $ 32,622 | $ (37,586) | $ 15,763 | $ (41,935) |
Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 32,622 | (37,586) | 15,763 | (41,935) |
Interest rate contracts | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | (128) | (7,822) | 6,109 | (6,354) |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | 32,818 | (29,422) | 9,675 | (35,164) |
Credit spread instrument | Derivatives not designated as hedging instruments | ||||
Derivatives | ||||
Gain (loss) on derivative financial instruments, net | (68) | (342) | (21) | (417) |
Cash flow hedges | Interest rate contracts | Derivatives designated as hedging instruments | ||||
Derivatives | ||||
Gain (Loss) Recognized in OCI (effective portion) | (1) | 1 | 8 | 48 |
Gain (Loss) Reclassified from AOCI into Income (effective portion) | $ 22 | $ (1) | $ 26 | $ (30) |
Offsetting Assets and Liabili71
Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Net Amounts of Assets Presented in the Statement of Financial Position | $ 50,815 | $ 33,898 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 3,351,131 | 3,271,295 |
Net Amounts of Liabilities Presented in the Statement of Financial | 3,351,131 | 3,271,295 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 3,319,962 | 3,241,618 |
Cash Collateral Pledged | 19,433 | 15,333 |
Net Amount | 11,736 | 14,344 |
Derivatives | ||
Assets | ||
Gross Amounts of Recognized Assets | 50,815 | 33,898 |
Net Amounts of Assets Presented in the Statement of Financial Position | 50,815 | 33,898 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 4,966 | 6,523 |
Net Amount | 45,849 | 27,375 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | 36,135 | 36,200 |
Net Amounts of Liabilities Presented in the Statement of Financial | 36,135 | 36,200 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | 4,966 | 6,523 |
Cash Collateral Pledged | 19,433 | 15,333 |
Net Amount | 11,736 | 14,344 |
Repurchase agreements | ||
Liabilities | ||
Gross Amounts of Recognized Liabilities | 3,314,996 | 3,235,095 |
Net Amounts of Liabilities Presented in the Statement of Financial | 3,314,996 | 3,235,095 |
Gross Amounts Not Offset in the Statement of Financial Position | ||
Financial Instruments | $ 3,314,996 | $ 3,235,095 |
Variable Interest Entities (Det
Variable Interest Entities (Details) $ in Thousands | Jun. 30, 2018USD ($)item | Dec. 31, 2017USD ($) |
Variable interest entities | ||
VIE Assets | $ 48,044,873 | $ 51,045,874 |
VIE Liabilities | 46,976,428 | 50,000,010 |
Investment securities | 441,935 | 718,203 |
Debt obligations to beneficial interest holders, unpaid principal balances | 2,291,363 | 2,161,344 |
Interest in VIE | 166,716 | $ 185,503 |
Primary beneficiary | Accounting Standards Update 2015-02 | ||
Variable interest entities | ||
VIE Assets | 800,300 | |
VIE Liabilities | 508,400 | |
Primary beneficiary | SPT Dolphin | Accounting Standards Update 2015-02 | ||
Variable interest entities | ||
VIE assets | 667,000 | |
VIE liabilities | $ 428,800 | |
Not primary beneficiary | ||
Variable interest entities | ||
Number of CDO structures currently in default | item | 2 | |
Maximum risk of loss related to VIEs, on fair value basis | $ 52,400 | |
Not primary beneficiary | Accounting Standards Update 2015-02 | Measurement Period Adjustments | ||
Variable interest entities | ||
Interest in VIE | 128,600 | |
Not primary beneficiary | Securitization SPEs | ||
Variable interest entities | ||
Debt obligations to beneficial interest holders, unpaid principal balances | $ 10,600,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Apr. 30, 2018shares | Mar. 31, 2018USD ($) | Jan. 31, 2018USD ($)item | Mar. 31, 2017shares | Jan. 31, 2016USD ($) | May 31, 2015shares | Dec. 31, 2013USD ($)item | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($)shares | Jun. 30, 2018USD ($)itemshares | Jun. 30, 2017USD ($)shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Related-Party Transactions | ||||||||||||||
Granted (in shares) | shares | 1,261,323 | |||||||||||||
Investment in unconsolidated entities | $ 166,716 | $ 166,716 | $ 185,503 | |||||||||||
Acquisitions and originations of mortgage financing | $ 3,315,664 | $ 2,231,907 | ||||||||||||
Spread on interest rate basis (as a percent) | 4.80% | 4.80% | ||||||||||||
Retail Fund | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Equity interest acquired (as a percent) | 33.00% | 33.00% | 33.00% | |||||||||||
Starwood Property Trust, Inc. Manager Equity Plan | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Granted (in shares) | shares | 775,000 | |||||||||||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Granted (in shares) | shares | 775,000 | 1,000,000 | 675,000 | |||||||||||
Award vesting period | 3 years | 3 years | 3 years | |||||||||||
Manager | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Base management fee incurred | $ 18,000 | $ 16,900 | $ 35,500 | 33,800 | ||||||||||
Base management fee payable | 18,000 | 18,000 | $ 17,100 | |||||||||||
Incentive fee incurred | 5,700 | 4,300 | 15,300 | 9,800 | ||||||||||
Incentive fees payable | 5,700 | 5,700 | 22,000 | |||||||||||
Executive compensation and other reimbursable expenses | 1,900 | $ 1,300 | 4,000 | $ 2,800 | ||||||||||
Executive compensation and other reimbursable expense payable | 1,600 | $ 1,600 | 3,300 | |||||||||||
Manager | Restricted stock units | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Granted (in shares) | shares | 0 | 189,813 | 138,264 | |||||||||||
Grant date fair value | $ 4,000 | $ 3,100 | ||||||||||||
Award vesting period | 3 years | 3 years | ||||||||||||
Share-based compensation expense | 800 | $ 800 | $ 1,300 | $ 1,400 | ||||||||||
Manager | Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Share-based compensation expense | 3,300 | 2,900 | $ 6,200 | 4,400 | ||||||||||
Residential mortgage originator | Loans held-for-sale, residential | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Acquisitions and originations of mortgage financing | 44,400 | |||||||||||||
Residential mortgage originator | Loans held-for-sale, residential | Subordinated Loans | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Acquisitions and originations of mortgage financing | $ 2,000 | |||||||||||||
Fixed interest rate | 8.00% | |||||||||||||
LNR | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Number of retail properties acquired | item | 23 | |||||||||||||
Purchase price | $ 281,700 | $ 281,700 | $ 281,700 | |||||||||||
CMBS | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Payments to acquire security | $ 9,700 | $ 84,100 | ||||||||||||
Number of regional malls by which investment is secured | item | 5 | |||||||||||||
CMBS | LNR | REO Portfolio | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Net real estate assets acquired | 19,700 | $ 27,700 | 19,700 | |||||||||||
Purchase price | $ 19,900 | $ 28,000 | $ 19,900 | |||||||||||
First mortgage loan participation | Purchase of First Mortgage Loan Participation | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Acquisitions and originations of mortgage financing | $ 130,000 | |||||||||||||
Number of U.S power plants secured | item | 4 | |||||||||||||
Number of properties | item | 4 | |||||||||||||
First mortgage loan participation | Purchase of First Mortgage Loan Participation | LIBOR | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Spread on interest rate basis (as a percent) | 4.00% | |||||||||||||
First mortgage loan participation | Purchase of first mortgage loan participation for acquisition of luxury resort, spain from SEREF | ||||||||||||||
Related-Party Transactions | ||||||||||||||
Acquisitions and originations of mortgage financing | $ 55,000 |
Stockholders' Equity and Non-74
Stockholders' Equity and Non-Controlling Interests (Details) | May 04, 2018$ / shares | Feb. 28, 2018$ / shares | Jun. 30, 2018USD ($)item$ / shares | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2018USD ($)item$ / sharesshares | Mar. 31, 2018shares | Jun. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2017USD ($) | Mar. 29, 2017USD ($) | Feb. 28, 2017USD ($) |
Stockholders' Equity | ||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.96 | $ 0.96 | ||||
Shares issued under ATM Agreement | shares | 0 | 0 | ||||||||
Authorized amount of share repurchases | $ 500,000,000 | |||||||||
Common stock repurchased (in shares) | shares | 573,255 | 0 | ||||||||
Cost of common stock repurchased | $ 12,090,000 | |||||||||
Remaining capacity under repurchase program | $ 250,100,000 | 250,100,000 | ||||||||
Proceeds from Issuance of Common Stock | 314,000 | $ 369,000 | ||||||||
Net income attributable to non-controlling interests | 7,860,000 | $ 5,853,000 | 12,722,000 | 6,349,000 | ||||||
Payment to acquire non-controlling interest | 237,551,000 | $ 3,599,000 | ||||||||
Minority Interest | $ 254,869,000 | 254,869,000 | $ 100,787,000 | |||||||
Number of business days after the closing of the final property | item | 3 | |||||||||
Convertible Senior Notes | ||||||||||
Stockholders' Equity | ||||||||||
Common stock repurchased (in shares) | shares | 0 | |||||||||
Debt repurchased amount | $ 0 | 0 | $ 250,700,000 | |||||||
Woodstar II Portfolio | Class A Units | ||||||||||
Stockholders' Equity | ||||||||||
Net income attributable to non-controlling interests | $ 4,600,000 | $ 7,100,000 | ||||||||
Shares issued | shares | 6,979,089 | |||||||||
Woodstar II Portfolio | Class A Units | SPT Dolphin | ||||||||||
Stockholders' Equity | ||||||||||
Shares issued | shares | 9,758,863 | |||||||||
Period after issuance date for redemption | 6 months | |||||||||
Number of business days after the closing of the final property | item | 3 | |||||||||
REIS Equity Portfolio | ||||||||||
Stockholders' Equity | ||||||||||
Non-controlling interest | $ 300,000 | |||||||||
Payment to acquire non-controlling interest | $ 3,300,000 |
Stockholders' Equity and Non-75
Stockholders' Equity and Non-Controlling Interests - Equity Incentive Plans (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |||
Apr. 30, 2018 | Mar. 31, 2017 | May 31, 2015 | Jun. 30, 2018 | May 31, 2017 | |
Equity Incentive Plans | |||||
Granted (in shares) | 1,261,323 | ||||
Starwood Property Trust, Inc. Equity Plan and Manager Equity Plan | |||||
Equity Incentive Plans | |||||
Number of shares of authorized for issuance | 11,000,000 | ||||
Number of shares available for future grants | 9,500,000 | ||||
Starwood Property Trust, Inc. Equity Plan | |||||
Equity Incentive Plans | |||||
Granted (in shares) | 486,323 | ||||
Starwood Property Trust, Inc. Manager Equity Plan | |||||
Equity Incentive Plans | |||||
Granted (in shares) | 775,000 | ||||
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units | |||||
Equity Incentive Plans | |||||
Granted (in shares) | 775,000 | 1,000,000 | 675,000 | ||
Awards granted, fair value | $ 16,329,000 | $ 22,240,000 | $ 16,511,000 | ||
Award vesting period | 3 years | 3 years | 3 years |
Stockholders' Equity and Non-76
Stockholders' Equity and Non-Controlling Interests - Non-Vested Shares (Details) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 1,691,389 |
Granted (in shares) | 1,261,323 |
Vested (in shares) | (554,536) |
Balance at the end of the period (in shares) | 2,398,176 |
Weighted Average Grant Date Fair Value (per share) | |
Balance at the beginning of period (in dollars per share) | $ / shares | $ 21.95 |
Granted (in dollars per share) | $ / shares | 21.14 |
Vested (in dollars per share) | $ / shares | 21.79 |
Balance at the end of period (in dollars per share) | $ / shares | $ 21.56 |
Starwood Property Trust, Inc. Equity Plan | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 885,138 |
Granted (in shares) | 486,323 |
Vested (in shares) | (267,037) |
Balance at the end of the period (in shares) | 1,104,424 |
Starwood Property Trust, Inc. Manager Equity Plan | |
Non-Vested Shares and Share Equivalents activity | |
Balance at the beginning of the period (in shares) | 806,251 |
Granted (in shares) | 775,000 |
Vested (in shares) | (287,499) |
Balance at the end of the period (in shares) | 1,293,752 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Continuing Operations: | ||||
Basic - Income attributable to STWD common stockholders | $ 109,230 | $ 117,380 | $ 209,162 | $ 219,738 |
Less: Income attributable to participating shares not already deducted as non-controlling interests | (1,034) | (828) | (1,755) | (1,728) |
Basic earnings | 108,196 | 116,552 | 207,407 | 218,010 |
Continuing Operations: | ||||
Basic - Income attributable to STWD common stockholders | 109,230 | 117,380 | 209,162 | 219,738 |
Less: Income attributable to participating shares not already deducted as non-controlling interests | (1,034) | (828) | (1,755) | (1,728) |
Add: Interest expense on Convertible Notes | 91,592 | 71,317 | 178,775 | 137,177 |
Diluted earnings | $ 115,789 | $ 116,552 | $ 222,566 | $ 218,010 |
Number of Shares: | ||||
Basic - Average shares outstanding | 260,998 | 259,472 | 260,832 | 259,236 |
Effect of dilutive securities - Convertible Notes (in shares) | 27,134 | 3,142 | 27,044 | 3,128 |
Effect of dilutive securities - Contingently issuable shares (in shares) | 128 | 96 | 128 | 96 |
Effect of dilutive securities - Unvested non-participating shares | 50 | 141 | 36 | 104 |
Diluted - Average shares outstanding | 288,310 | 262,851 | 288,040 | 262,564 |
Basic: | ||||
Basic (in dollars per share) | $ 0.41 | $ 0.45 | $ 0.80 | $ 0.84 |
Diluted: | ||||
Diluted (in dollars per share) | $ 0.40 | $ 0.44 | $ 0.77 | $ 0.83 |
Convertible Senior Notes | ||||
Continuing Operations: | ||||
Add: Interest expense on Convertible Notes | $ 7,593 | $ 15,159 |
Earnings per Share - Dilutive a
Earnings per Share - Dilutive and Antidilutive securities (Details) shares in Thousands, item in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018shares | Jun. 30, 2017shares | Jun. 30, 2018itemshares | Jun. 30, 2017shares | |
Antidilutive securities and effect of dilutive securities | ||||
Effect of dilutive securities - Convertible Notes (in shares) | 27,134 | 3,142 | 27,044 | 3,128 |
Class A Units | ||||
Antidilutive securities and effect of dilutive securities | ||||
Potential shares of common stock contingently issuable upon conversion of the Class A units | item | 9.8 | |||
Participating securities | ||||
Antidilutive securities and effect of dilutive securities | ||||
Number of anti-dilutive common shares excluded from the calculation of diluted income per share | 11,900 | 1,700 |
Accumulated Other Comprehensi79
Accumulated Other Comprehensive Income - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Changes in AOCI by component | ||||
Beginning balance | $ 75,310 | $ 40,067 | $ 69,924 | $ 36,138 |
OCI before reclassifications | (7,125) | 15,923 | (1,689) | 19,908 |
Amounts reclassified from AOCI | (51) | (9) | (101) | (65) |
Net period OCI | (7,176) | 15,914 | (1,790) | 19,843 |
Ending balance | 68,134 | 55,981 | 68,134 | 55,981 |
Effective Portion of Cumulative Loss on Cash Flow Hedges | ||||
Changes in AOCI by component | ||||
Beginning balance | 30 | 50 | 25 | (26) |
OCI before reclassifications | (1) | 1 | 8 | 48 |
Amounts reclassified from AOCI | (22) | 1 | (26) | 30 |
Net period OCI | (23) | 2 | (18) | 78 |
Ending balance | 7 | 52 | 7 | 52 |
Cumulative Unrealized Gain on Available-for-Sale Securities | ||||
Changes in AOCI by component | ||||
Beginning balance | 59,052 | 46,775 | 57,889 | 44,929 |
OCI before reclassifications | 1,052 | 4,917 | 2,261 | 6,848 |
Amounts reclassified from AOCI | (29) | (10) | (75) | (95) |
Net period OCI | 1,023 | 4,907 | 2,186 | 6,753 |
Ending balance | 60,075 | 51,682 | 60,075 | 51,682 |
Foreign Currency Translation | ||||
Changes in AOCI by component | ||||
Beginning balance | 16,228 | (6,758) | 12,010 | (8,765) |
OCI before reclassifications | (8,176) | 11,005 | (3,958) | 13,012 |
Net period OCI | (8,176) | 11,005 | (3,958) | 13,012 |
Ending balance | $ 8,052 | $ 4,247 | $ 8,052 | $ 4,247 |
Accumulated Other Comprehensi80
Accumulated Other Comprehensive Income - Impact of Reclassifications out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accumulated Other Comprehensive Income | ||||
Interest expense | $ (91,592) | $ (71,317) | $ (178,775) | $ (137,177) |
Interest income from investment securities | 10,790 | 12,370 | 26,059 | 27,594 |
Net income | 117,090 | 123,233 | 221,884 | 226,087 |
Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Net income | 51 | 9 | 101 | 65 |
Effective Portion of Cumulative Loss on Cash Flow Hedges | Interest rate contracts | Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Interest expense | 22 | (1) | 26 | (30) |
Cumulative Unrealized Gain on Available-for-Sale Securities | ||||
Accumulated Other Comprehensive Income | ||||
Total | 29 | 10 | 75 | 95 |
Cumulative Unrealized Gain on Available-for-Sale Securities | Amounts Reclassified from AOCI | ||||
Accumulated Other Comprehensive Income | ||||
Interest income from investment securities | $ 10 | 46 | $ 95 | |
Gain on sale of investments and other assets, net | $ 29 | $ 29 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets and liabilities measured at fair value | ||
Permitted reinvestment under static investment in VIEs | $ 0 | |
Marketable securities | 441,935 | $ 718,203 |
Domestic servicing rights | 22,742 | 30,759 |
Derivative assets | 50,815 | 33,898 |
VIE Assets | 48,044,873 | 51,045,874 |
Derivative liabilities | 36,135 | 36,200 |
VIE Liabilities | 46,976,428 | 50,000,010 |
Fair value measurements on recurring basis | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 1,092,769 | 745,743 |
Derivative assets | 50,815 | 33,898 |
VIE Assets | 48,044,873 | 51,045,874 |
Total | 49,512,458 | 52,141,009 |
Derivative liabilities | 36,135 | 36,200 |
VIE Liabilities | 46,976,428 | 50,000,010 |
Total | 47,012,563 | 50,036,210 |
Fair value measurements on recurring basis | Domestic Servicing Rights | ||
Assets and liabilities measured at fair value | ||
Domestic servicing rights | 22,742 | 30,759 |
Fair value measurements on recurring basis | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 235,796 | 247,021 |
Fair value measurements on recurring basis | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 52,426 | 24,191 |
Fair value measurements on recurring basis | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 13,037 | 13,523 |
Fair value measurements on recurring basis | Level I | ||
Assets and liabilities measured at fair value | ||
Total | 13,037 | 13,523 |
Fair value measurements on recurring basis | Level I | Equity security | ||
Assets and liabilities measured at fair value | ||
Marketable securities | 13,037 | 13,523 |
Fair value measurements on recurring basis | Level II | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 195,510 | |
Derivative assets | 50,815 | 33,898 |
Total | 274,101 | 33,898 |
Derivative liabilities | 36,135 | 36,200 |
VIE Liabilities | 44,974,313 | 47,811,073 |
Total | 45,010,448 | 47,847,273 |
Fair value measurements on recurring basis | Level II | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 27,776 | |
Fair value measurements on recurring basis | Level III | ||
Assets and liabilities measured at fair value | ||
Loans held-for-sale, fair value option | 897,259 | 745,743 |
VIE Assets | 48,044,873 | 51,045,874 |
Total | 49,225,320 | 52,093,588 |
VIE Liabilities | 2,002,115 | 2,188,937 |
Total | 2,002,115 | 2,188,937 |
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | ||
Assets and liabilities measured at fair value | ||
Domestic servicing rights | 22,742 | 30,759 |
Fair value measurements on recurring basis | Level III | RMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | 235,796 | 247,021 |
Fair value measurements on recurring basis | Level III | CMBS | ||
Assets and liabilities measured at fair value | ||
Available-for-sale securities | $ 24,650 | $ 24,191 |
Fair Value - Level III (Details
Fair Value - Level III (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Total realized and unrealized gains (losses): | ||||
Included in earnings: OTTI | $ (109) | $ (109) | ||
Included in earnings: Net accretion | $ 9,583 | 8,007 | ||
Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | $ 48,041,073 | 58,676,362 | 49,904,651 | 64,941,714 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (1,456,318) | (5,484,119) | (3,243,895) | (11,635,546) |
Included in earnings: OTTI | (109) | (109) | ||
Included in earnings: Net accretion | 2,622 | 3,302 | 5,441 | 7,188 |
Included in OCI | 1,023 | 4,907 | 2,186 | 6,753 |
Purchases / Originations | 634,896 | 564,501 | 912,155 | 1,010,388 |
Sales | (215,940) | (291,882) | (482,572) | (481,612) |
Issuances | (5,429) | (7,948) | (10,188) | |
Cash repayments / receipts | (117,550) | (26,559) | (181,547) | (73,546) |
Transfers into Level III | (160,071) | (319,457) | (690,959) | (383,427) |
Transfers out of Level III | (85,918) | 34,288 | 122,340 | 163,740 |
Consolidations of VIEs | 725,189 | 1,815,070 | 1,127,952 | |
Deconsolidations of VIEs | (145,801) | (498,674) | (931,717) | (2,016,176) |
Balance at the end of the period | 47,223,205 | 52,657,131 | 47,223,205 | 52,657,131 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (1,466,598) | (5,496,891) | (3,259,799) | (11,653,949) |
VIE liabilities | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | (2,205,734) | (2,161,295) | (2,188,937) | (2,585,369) |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 297,960 | 213,503 | 535,050 | 598,484 |
Issuances | (5,429) | (7,948) | (10,188) | |
Cash repayments / receipts | (45,177) | (5,240) | (57,810) | (36,036) |
Transfers into Level III | (160,071) | (319,457) | (690,959) | (383,427) |
Transfers out of Level III | 109,592 | 34,288 | 317,850 | 163,740 |
Deconsolidations of VIEs | 1,315 | 79,037 | 90,639 | 88,203 |
Balance at the end of the period | (2,002,115) | (2,164,593) | (2,002,115) | (2,164,593) |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 297,960 | 213,503 | 535,050 | 598,484 |
Loans held-for-sale | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 723,733 | 340,266 | 745,743 | 63,279 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 14,833 | 15,406 | 22,633 | 25,999 |
Purchases / Originations | 633,433 | 557,068 | 910,692 | 1,002,955 |
Sales | (215,133) | (291,182) | (481,765) | (470,478) |
Cash repayments / receipts | (64,097) | (11,442) | (104,534) | (11,639) |
Transfers out of Level III | (195,510) | (195,510) | ||
Balance at the end of the period | 897,259 | 610,116 | 897,259 | 610,116 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 2,071 | (3,291) | 1,482 | (3,291) |
RMBS | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 240,853 | 249,419 | 247,021 | 253,915 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | 141 | 141 | ||
Included in earnings: OTTI | (109) | (109) | ||
Included in earnings: Net accretion | 2,622 | 3,302 | 5,441 | 7,188 |
Included in OCI | 1,023 | 4,907 | 2,186 | 6,753 |
Purchases / Originations | 7,433 | 7,433 | ||
Sales | (807) | (807) | ||
Cash repayments / receipts | (8,036) | (8,555) | (18,186) | (18,783) |
Balance at the end of the period | 235,796 | 256,397 | 235,796 | 256,397 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | 2,623 | 3,186 | 5,388 | 6,973 |
CMBS | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 23,969 | 15,472 | 24,191 | 31,546 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (542) | (2,343) | 13 | (3,686) |
Purchases / Originations | 1,463 | 1,463 | ||
Sales | (700) | (11,134) | ||
Cash repayments / receipts | (240) | (1,322) | (1,017) | (7,088) |
Deconsolidations of VIEs | 2,741 | 4,210 | ||
Balance at the end of the period | 24,650 | 13,848 | 24,650 | 13,848 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (542) | 396 | 13 | 228 |
Domestic Servicing Rights | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 24,945 | 46,649 | 30,759 | 55,082 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (2,203) | (8,001) | (8,017) | (16,434) |
Balance at the end of the period | 22,742 | 38,648 | 22,742 | 38,648 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | (2,203) | (8,001) | (8,017) | (16,434) |
VIE Assets | Level III | ||||
Changes in financial assets classified as Level III | ||||
Balance at the beginning of the period | 49,233,307 | 60,185,851 | 51,045,874 | 67,123,261 |
Total realized and unrealized gains (losses): | ||||
Included in earnings: Change in fair value / gain on sale | (1,766,507) | (5,702,684) | (3,793,715) | (12,239,909) |
Consolidations of VIEs | 725,189 | 1,815,070 | 1,127,952 | |
Deconsolidations of VIEs | (147,116) | (580,452) | (1,022,356) | (2,108,589) |
Balance at the end of the period | 48,044,873 | 53,902,715 | 48,044,873 | 53,902,715 |
Amount of total (losses) gains included in earnings attributable to assets still held at period end | $ (1,766,507) | $ (5,702,684) | $ (3,793,715) | $ (12,239,909) |
Fair Value - Financial Instrume
Fair Value - Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Financial assets not carried at fair value: | ||
HTM securities | $ 140,676 | $ 433,468 |
Financial liabilities not carried at fair value: | ||
Unsecured senior notes | 2,255,976 | 2,125,235 |
Carrying Value | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment and loans transferred as secured borrowings | 7,002,393 | 6,636,898 |
HTM securities | 140,676 | 433,468 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 6,290,675 | 5,847,241 |
Unsecured senior notes | 2,255,976 | 2,125,235 |
Fair Value | ||
Financial assets not carried at fair value: | ||
Loans held-for-investment and loans transferred as secured borrowings | 7,084,822 | 6,729,302 |
HTM securities | 143,656 | 428,338 |
Financial liabilities not carried at fair value: | ||
Secured financing agreements and secured borrowings on transferred loans | 6,215,340 | 5,810,998 |
Unsecured senior notes | $ 2,271,438 | $ 2,191,285 |
Fair Value - Significant unobse
Fair Value - Significant unobservable inputs (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 60,600,759 | $ 62,941,289 |
Carrying Value | 55,901,068 | $ 58,362,088 |
Fair value measurements on recurring basis | Level III | VIE liabilities | Discounted cash flow | ||
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis | ||
Carrying Value | $ 2,002,115 | |
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) | 815.00% | 826.60% |
Duration | 14 years 2 months 12 days | 14 years |
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 | $ 897,259 | |
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) | 4.80% | 4.30% |
Duration | 1 year 9 months 18 days | 1 year 9 months 18 days |
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) | 6.00% | 6.00% |
Duration | 12 years 3 months 18 days | 12 years 1 month 6 days |
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 | $ 235,796 | |
Portfolio percentage | 72.00% | 81.00% |
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% | 2.50% |
Constant default rate (as a percent) | 1.00% | 0.90% |
Loss severity (as a percent) | 15.00% | 14.00% |
Delinquency rate (as a percent) | 5.00% | 4.00% |
Servicer advances (as a percent) | 23.00% | 20.00% |
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% | |
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) | 24.20% | 21.40% |
Constant default rate (as a percent) | 5.50% | 5.80% |
Loss severity (as a percent) | 81.00% | 75.00% |
Delinquency rate (as a percent) | 32.00% | 33.00% |
Servicer advances (as a percent) | 83.00% | 83.00% |
Annual coupon deterioration (as a percent) | 0.80% | 0.80% |
Putback amount per projected total collateral loss (as a percent) | 7.00% | 7.00% |
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 | $ 24,650 | |
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) | 852.30% | 168.50% |
Duration | 9 years 8 months 12 days | 9 years 8 months 12 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 | $ 22,742 | |
Yield (as a percent) | 7.50% | 7.75% |
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 | $ 48,044,873 | |
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) | 815.00% | 826.60% |
Duration | 14 years 2 months 12 days | 14 years |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Income Taxes | ||
Assets | $ 60,600,759 | $ 62,941,289 |
Cash | 235,419 | 369,448 |
LNR | TRS entities | ||
Income Taxes | ||
Assets | 1,300,000 | 673,100 |
Cash | $ 18,200 | $ 24,100 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Reconciliation of statutory tax to effective tax | ||||
Federal statutory tax rate | $ 25,291 | $ 46,439 | $ 47,897 | $ 82,094 |
REIT and other non-taxable income | (23,157) | (37,000) | (43,500) | (73,425) |
State income taxes | 558 | 20 | 1,151 | (119) |
Federal benefit of state tax deduction | (118) | (7) | (242) | 42 |
Other | 769 | 893 | (123) | |
Total | $ 3,343 | $ 9,452 | $ 6,199 | $ 8,469 |
Reconciliation of statutory tax rate to effective tax rate | ||||
Federal statutory tax rate (as a percent) | 21.00% | 35.00% | 21.00% | 35.00% |
REIT and other non-taxable income (as a percent) | (19.20%) | (27.90%) | (19.10%) | (31.20%) |
State income taxes (as a percent) | 0.50% | 0.50% | (0.10%) | |
Federal benefit of state tax deduction (as a percent) | (0.10%) | 0.10% | ||
Other (as a percent) | 0.60% | 0.40% | (0.10%) | |
Effective tax rate (as a percent) | 2.80% | 7.10% | 2.70% | 3.60% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($)loan | |
Operating leases | |
Agreement to purchase | $ 600 |
Duration of purchase commitments to acquire residential mortgage loans from third parties (in days) | 75 days |
Commitments | |
Operating leases | |
Number of loans with future funding commitments | loan | 56 |
Value of loans with future funding commitments | $ 2,000 |
Value of loans with future funding commitments expected to fund | 1,800 |
Purchase commitments to acquire a pool of residential mortgage loans | $ 65 |
Segment Data - Results of Opera
Segment Data - Results of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Interest income from loans | $ 151,704 | $ 120,612 | $ 289,324 | $ 232,495 |
Interest income from investment securities | 10,790 | 12,370 | 26,059 | 27,594 |
Servicing fees | 17,315 | 18,628 | 43,382 | 32,730 |
Rental income | 88,891 | 58,966 | 170,001 | 116,008 |
Other revenues | 856 | 993 | 1,377 | 1,462 |
Total revenues | 269,556 | 211,569 | 530,143 | 410,289 |
Costs and expenses: | ||||
Management fees | 27,494 | 24,633 | 58,136 | 49,017 |
Interest expense | 91,592 | 71,317 | 178,775 | 137,177 |
General and administrative | 35,528 | 32,520 | 67,670 | 62,949 |
Acquisition and investment pursuit costs | 1,561 | 537 | 1,938 | 1,208 |
Costs of rental operations | 32,897 | 23,024 | 62,590 | 43,902 |
Depreciation and amortization | 37,150 | 22,032 | 68,894 | 44,260 |
Loan loss allowance, net | 25,259 | (2,694) | 26,797 | (2,999) |
Other expense | 497 | 142 | 601 | 900 |
Total costs and expenses | 251,978 | 171,511 | 465,401 | 336,414 |
Income before other income (loss), income taxes and non-controlling interests | 17,578 | 40,058 | 64,742 | 73,875 |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 43,946 | 77,761 | 96,599 | 146,931 |
Change in fair value of servicing rights | (2,203) | (8,001) | (8,017) | (16,434) |
Change in fair value of investment securities, net | 7,702 | (2,493) | 7,553 | (3,664) |
Change in fair value of mortgage loans held-for-sale, net | 14,833 | 15,406 | 22,633 | 25,999 |
Earnings (loss) from unconsolidated entities | 5,470 | 29,465 | 4,008 | 32,452 |
Gain on sale of investments and other assets, net | 13,437 | 5,183 | 24,097 | 5,127 |
Gain (loss) on derivative financial instruments, net | 32,622 | (37,586) | 15,763 | (41,935) |
Foreign currency (loss) gain, net | (13,264) | 12,910 | 285 | 17,774 |
OTTI/Impairment | (109) | (109) | ||
Loss on extinguishment of debt | (186) | (186) | (5,916) | |
Other income, net | 498 | 91 | 606 | 456 |
Total other income | 102,855 | 92,627 | 163,341 | 160,681 |
Income before income taxes | 120,433 | 132,685 | 228,083 | 234,556 |
Income tax provision | (3,343) | (9,452) | (6,199) | (8,469) |
Net income | 117,090 | 123,233 | 221,884 | 226,087 |
Net income attributable to non-controlling interests | (7,860) | (5,853) | (12,722) | (6,349) |
Net income attributable to Starwood Property Trust, Inc. | 109,230 | 117,380 | 209,162 | 219,738 |
Operating Segments and Corporate | ||||
Revenues: | ||||
Interest income from loans | 151,704 | 120,612 | 289,324 | 232,495 |
Interest income from investment securities | 39,402 | 49,803 | 88,240 | 97,358 |
Servicing fees | 24,737 | 33,879 | 58,336 | 64,170 |
Rental income | 88,891 | 58,966 | 170,001 | 116,008 |
Other revenues | 907 | 1,059 | 1,482 | 1,647 |
Total revenues | 305,641 | 264,319 | 607,383 | 511,678 |
Costs and expenses: | ||||
Management fees | 27,388 | 24,583 | 57,937 | 48,917 |
Interest expense | 91,867 | 71,592 | 179,320 | 137,721 |
General and administrative | 35,444 | 32,446 | 67,500 | 62,788 |
Acquisition and investment pursuit costs | 1,561 | 537 | 1,938 | 1,208 |
Costs of rental operations | 32,897 | 23,024 | 62,590 | 43,902 |
Depreciation and amortization | 37,150 | 22,032 | 68,894 | 44,260 |
Loan loss allowance, net | 25,259 | (2,694) | 26,797 | (2,999) |
Other expense | 497 | 142 | 601 | 900 |
Total costs and expenses | 252,063 | 171,662 | 465,577 | 336,697 |
Income before other income (loss), income taxes and non-controlling interests | 53,578 | 92,657 | 141,806 | 174,981 |
Other income (loss): | ||||
Change in fair value of servicing rights | (3,255) | (13,667) | (12,423) | (23,304) |
Change in fair value of investment securities, net | 15,592 | 12,107 | 28,867 | 31,324 |
Change in fair value of mortgage loans held-for-sale, net | 14,833 | 15,406 | 22,633 | 25,999 |
Earnings (loss) from unconsolidated entities | 6,190 | 39,610 | 5,715 | 43,558 |
Gain on sale of investments and other assets, net | 13,437 | 5,183 | 24,097 | 5,127 |
Gain (loss) on derivative financial instruments, net | 32,622 | (37,586) | 15,763 | (41,935) |
Foreign currency (loss) gain, net | (13,264) | 12,910 | 285 | 17,774 |
OTTI/Impairment | (109) | (109) | ||
Loss on extinguishment of debt | (186) | (186) | (5,916) | |
Other income, net | 498 | 704 | 606 | 1,069 |
Total other income | 66,467 | 34,558 | 85,357 | 53,587 |
Income before income taxes | 120,045 | 127,215 | 227,163 | 228,568 |
Income tax provision | (3,343) | (9,452) | (6,199) | (8,469) |
Net income | 116,702 | 117,763 | 220,964 | 220,099 |
Net income attributable to non-controlling interests | (7,472) | (383) | (11,802) | (361) |
Net income attributable to Starwood Property Trust, Inc. | 109,230 | 117,380 | 209,162 | 219,738 |
Operating segment | Real Estate Investment Lending | ||||
Revenues: | ||||
Interest income from loans | 148,268 | 116,993 | 283,240 | 226,039 |
Interest income from investment securities | 8,930 | 11,611 | 23,369 | 24,330 |
Servicing fees | 50 | 216 | 215 | 426 |
Other revenues | 224 | 293 | 418 | 372 |
Total revenues | 157,472 | 129,113 | 307,242 | 251,167 |
Costs and expenses: | ||||
Management fees | 463 | 469 | 943 | 923 |
Interest expense | 34,826 | 24,486 | 66,847 | 44,443 |
General and administrative | 6,251 | 5,359 | 12,946 | 9,570 |
Acquisition and investment pursuit costs | 1,692 | 385 | 1,912 | 900 |
Depreciation and amortization | 16 | 16 | 33 | 33 |
Loan loss allowance, net | 25,259 | (2,694) | 26,797 | (2,999) |
Other expense | 77 | 154 | ||
Total costs and expenses | 68,584 | 28,021 | 109,632 | 52,870 |
Income before other income (loss), income taxes and non-controlling interests | 88,888 | 101,092 | 197,610 | 198,297 |
Other income (loss): | ||||
Change in fair value of investment securities, net | 482 | (149) | (222) | 23 |
Change in fair value of mortgage loans held-for-sale, net | 184 | (152) | (1,508) | (152) |
Earnings (loss) from unconsolidated entities | 1,803 | 1,230 | 3,247 | 1,700 |
Gain on sale of investments and other assets, net | 135 | (3) | 414 | (59) |
Gain (loss) on derivative financial instruments, net | 19,467 | (14,926) | 8,649 | (19,461) |
Foreign currency (loss) gain, net | (13,264) | 12,882 | 286 | 17,745 |
OTTI/Impairment | (109) | (109) | ||
Other income, net | 43 | |||
Total other income | 8,807 | (1,227) | 10,909 | (313) |
Income before income taxes | 97,695 | 99,865 | 208,519 | 197,984 |
Income tax provision | (1,720) | (127) | (2,667) | (342) |
Net income | 95,975 | 99,738 | 205,852 | 197,642 |
Net income attributable to non-controlling interests | (361) | (353) | (722) | (707) |
Net income attributable to Starwood Property Trust, Inc. | 95,614 | 99,385 | 205,130 | 196,935 |
Operating segment | LNR | ||||
Revenues: | ||||
Interest income from loans | 3,436 | 3,619 | 6,084 | 6,456 |
Interest income from investment securities | 30,472 | 38,192 | 64,871 | 73,028 |
Servicing fees | 24,687 | 33,663 | 58,121 | 63,744 |
Rental income | 14,490 | 12,687 | 28,890 | 24,876 |
Other revenues | 516 | 545 | 744 | 1,009 |
Total revenues | 73,601 | 88,706 | 158,710 | 169,113 |
Costs and expenses: | ||||
Management fees | 18 | 18 | 36 | 36 |
Interest expense | 5,807 | 4,856 | 10,902 | 9,214 |
General and administrative | 23,855 | 22,789 | 44,875 | 45,369 |
Acquisition and investment pursuit costs | (79) | 53 | 72 | 37 |
Costs of rental operations | 6,906 | 5,232 | 13,111 | 10,719 |
Depreciation and amortization | 5,396 | 4,737 | 10,654 | 9,791 |
Other expense | 420 | 176 | 447 | 934 |
Total costs and expenses | 42,323 | 37,861 | 80,097 | 76,100 |
Income before other income (loss), income taxes and non-controlling interests | 31,278 | 50,845 | 78,613 | 93,013 |
Other income (loss): | ||||
Change in fair value of servicing rights | (3,255) | (13,667) | (12,423) | (23,304) |
Change in fair value of investment securities, net | 15,110 | 12,256 | 29,089 | 31,301 |
Change in fair value of mortgage loans held-for-sale, net | 14,649 | 15,558 | 24,141 | 26,151 |
Earnings (loss) from unconsolidated entities | 1,454 | 35,892 | 3,050 | 36,909 |
Gain on sale of investments and other assets, net | 10,361 | 5,109 | 16,800 | 5,109 |
Gain (loss) on derivative financial instruments, net | (398) | (2,179) | 4,644 | (1,482) |
Foreign currency (loss) gain, net | 1 | 11 | (2) | 12 |
Loss on extinguishment of debt | (186) | (186) | ||
Other income, net | 9 | 704 | 57 | 1,069 |
Total other income | 37,745 | 53,684 | 65,170 | 75,765 |
Income before income taxes | 69,023 | 104,529 | 143,783 | 168,778 |
Income tax provision | (1,012) | (9,325) | (1,660) | (8,127) |
Net income | 68,011 | 95,204 | 142,123 | 160,651 |
Net income attributable to non-controlling interests | (2,427) | (30) | (3,943) | 346 |
Net income attributable to Starwood Property Trust, Inc. | 65,584 | 95,174 | 138,180 | 160,997 |
Operating segment | Property Segment | ||||
Revenues: | ||||
Rental income | 74,401 | 46,279 | 141,111 | 91,132 |
Other revenues | 81 | 221 | 182 | 266 |
Total revenues | 74,482 | 46,500 | 141,293 | 91,398 |
Costs and expenses: | ||||
Interest expense | 19,380 | 10,899 | 35,914 | 21,106 |
General and administrative | 1,971 | 1,000 | 3,830 | 2,381 |
Acquisition and investment pursuit costs | (52) | 99 | (46) | 271 |
Costs of rental operations | 25,991 | 17,792 | 49,479 | 33,183 |
Depreciation and amortization | 31,738 | 17,279 | 58,207 | 34,436 |
Other expense | (34) | (34) | ||
Total costs and expenses | 79,028 | 47,035 | 147,384 | 91,343 |
Income before other income (loss), income taxes and non-controlling interests | (4,546) | (535) | (6,091) | 55 |
Other income (loss): | ||||
Earnings (loss) from unconsolidated entities | 2,933 | 2,488 | (582) | 4,949 |
Gain on sale of investments and other assets, net | 2,941 | 77 | 6,883 | 77 |
Gain (loss) on derivative financial instruments, net | 19,920 | (20,481) | 21,839 | (20,992) |
Foreign currency (loss) gain, net | (1) | 17 | 1 | 17 |
Other income, net | 489 | 506 | ||
Total other income | 26,282 | (17,899) | 28,647 | (15,949) |
Income before income taxes | 21,736 | (18,434) | 22,556 | (15,894) |
Income tax provision | (611) | (1,872) | ||
Net income | 21,125 | (18,434) | 20,684 | (15,894) |
Net income attributable to non-controlling interests | (4,684) | (7,137) | ||
Net income attributable to Starwood Property Trust, Inc. | 16,441 | (18,434) | 13,547 | (15,894) |
Corporate | ||||
Revenues: | ||||
Other revenues | 86 | 138 | ||
Total revenues | 86 | 138 | ||
Costs and expenses: | ||||
Management fees | 26,907 | 24,096 | 56,958 | 47,958 |
Interest expense | 31,854 | 31,351 | 65,657 | 62,958 |
General and administrative | 3,367 | 3,298 | 5,849 | 5,468 |
Total costs and expenses | 62,128 | 58,745 | 128,464 | 116,384 |
Income before other income (loss), income taxes and non-controlling interests | (62,042) | (58,745) | (128,326) | (116,384) |
Other income (loss): | ||||
Gain (loss) on derivative financial instruments, net | (6,367) | (19,369) | ||
Loss on extinguishment of debt | (5,916) | |||
Total other income | (6,367) | (19,369) | (5,916) | |
Income before income taxes | (68,409) | (58,745) | (147,695) | (122,300) |
Net income | (68,409) | (58,745) | (147,695) | (122,300) |
Net income attributable to Starwood Property Trust, Inc. | (68,409) | (58,745) | (147,695) | (122,300) |
LNR VIEs | ||||
Revenues: | ||||
Interest income from investment securities | (28,612) | (37,433) | (62,181) | (69,764) |
Servicing fees | (7,422) | (15,251) | (14,954) | (31,440) |
Other revenues | (51) | (66) | (105) | (185) |
Total revenues | (36,085) | (52,750) | (77,240) | (101,389) |
Costs and expenses: | ||||
Management fees | 106 | 50 | 199 | 100 |
Interest expense | (275) | (275) | (545) | (544) |
General and administrative | 84 | 74 | 170 | 161 |
Total costs and expenses | (85) | (151) | (176) | (283) |
Income before other income (loss), income taxes and non-controlling interests | (36,000) | (52,599) | (77,064) | (101,106) |
Other income (loss): | ||||
Change in net assets related to consolidated VIEs | 43,946 | 77,761 | 96,599 | 146,931 |
Change in fair value of servicing rights | 1,052 | 5,666 | 4,406 | 6,870 |
Change in fair value of investment securities, net | (7,890) | (14,600) | (21,314) | (34,988) |
Earnings (loss) from unconsolidated entities | (720) | (10,145) | (1,707) | (11,106) |
Other income, net | (613) | (613) | ||
Total other income | 36,388 | 58,069 | 77,984 | 107,094 |
Income before income taxes | 388 | 5,470 | 920 | 5,988 |
Net income | 388 | 5,470 | 920 | 5,988 |
Net income attributable to non-controlling interests | $ (388) | $ (5,470) | $ (920) | $ (5,988) |
Segment Data - Balance sheets (
Segment Data - Balance sheets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Assets: | ||||||
Cash and cash equivalents | $ 235,419 | $ 369,448 | ||||
Restricted cash | 89,794 | 48,825 | ||||
Loans held-for-investment, net | 6,928,176 | 6,562,495 | ||||
Loans held-for-sale | 1,092,769 | 745,743 | ||||
Loans transferred as secured borrowings | 74,217 | 74,403 | ||||
Investment securities | 441,935 | 718,203 | ||||
Properties, net | 2,936,684 | 2,647,481 | ||||
Intangible assets | 166,686 | 183,092 | ||||
Investment in unconsolidated entities | 166,716 | 185,503 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 50,815 | 33,898 | ||||
Accrued interest receivable | 54,660 | 47,747 | ||||
Other assets | 177,578 | 138,140 | ||||
VIE assets, at fair value | 48,044,873 | 51,045,874 | ||||
Total Assets | 60,600,759 | 62,941,289 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 189,673 | 185,117 | ||||
Related-party payable | 25,324 | 42,369 | ||||
Dividends payable | 126,857 | 125,916 | ||||
Derivative liabilities | 36,135 | 36,200 | ||||
Secured financing agreements, net | 6,216,617 | 5,773,056 | ||||
Unsecured senior notes, net | 2,255,976 | 2,125,235 | ||||
Secured borrowings on transferred loans, net | 74,058 | 74,185 | ||||
VIE liabilities, at fair value | 46,976,428 | 50,000,010 | ||||
Total Liabilities | 55,901,068 | 58,362,088 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,675 | 2,660 | ||||
Additional paid-in capital | 4,738,969 | 4,715,246 | ||||
Treasury stock | (104,194) | (92,104) | ||||
Accumulated other comprehensive income (loss) | 68,134 | $ 75,310 | 69,924 | $ 55,981 | $ 40,067 | $ 36,138 |
Retained earnings (accumulated deficit) | (260,762) | (217,312) | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,444,822 | 4,478,414 | ||||
Non-controlling interests in consolidated subsidiaries | 254,869 | 100,787 | ||||
Total Equity | 4,699,691 | 4,579,201 | $ 4,560,449 | $ 4,560,073 | ||
Total Liabilities and Equity | 60,600,759 | 62,941,289 | ||||
Operating Segments and Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 234,508 | 363,722 | ||||
Restricted cash | 89,794 | 48,825 | ||||
Loans held-for-investment, net | 6,928,176 | 6,562,495 | ||||
Loans held-for-sale | 1,092,769 | 745,743 | ||||
Loans transferred as secured borrowings | 74,217 | 74,403 | ||||
Investment securities | 1,465,920 | 1,718,155 | ||||
Properties, net | 2,936,684 | 2,647,481 | ||||
Intangible assets | 190,526 | 211,338 | ||||
Investment in unconsolidated entities | 188,433 | 206,491 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 50,815 | 33,898 | ||||
Accrued interest receivable | 54,660 | 47,747 | ||||
Other assets | 177,603 | 141,008 | ||||
Total Assets | 13,624,542 | 12,941,743 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 189,578 | 183,906 | ||||
Related-party payable | 25,324 | 42,369 | ||||
Dividends payable | 126,857 | 125,916 | ||||
Derivative liabilities | 36,135 | 36,200 | ||||
Secured financing agreements, net | 6,240,317 | 5,796,756 | ||||
Unsecured senior notes, net | 2,255,976 | 2,125,235 | ||||
Secured borrowings on transferred loans, net | 74,058 | 74,185 | ||||
Total Liabilities | 8,948,245 | 8,384,567 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,675 | 2,660 | ||||
Additional paid-in capital | 4,738,969 | 4,715,246 | ||||
Treasury stock | (104,194) | (92,104) | ||||
Accumulated other comprehensive income (loss) | 68,134 | 69,924 | ||||
Retained earnings (accumulated deficit) | (260,762) | (217,312) | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,444,822 | 4,478,414 | ||||
Non-controlling interests in consolidated subsidiaries | 231,475 | 78,762 | ||||
Total Equity | 4,676,297 | 4,557,176 | ||||
Total Liabilities and Equity | 13,624,542 | 12,941,743 | ||||
Operating segment | Real Estate Investment Lending | ||||||
Assets: | ||||||
Cash and cash equivalents | 10,303 | 14,580 | ||||
Restricted cash | 51,942 | 21,555 | ||||
Loans held-for-investment, net | 6,924,600 | 6,558,699 | ||||
Loans held-for-sale | 792,664 | 613,287 | ||||
Loans transferred as secured borrowings | 74,217 | 74,403 | ||||
Investment securities | 389,509 | 694,012 | ||||
Investment in unconsolidated entities | 33,876 | 45,028 | ||||
Derivative assets | 10,748 | 6,487 | ||||
Accrued interest receivable | 40,180 | 46,650 | ||||
Other assets | 31,146 | 5,648 | ||||
Total Assets | 8,359,185 | 8,080,349 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 21,461 | 23,054 | ||||
Related-party payable | 65 | 20 | ||||
Derivative liabilities | 6,321 | 20,386 | ||||
Secured financing agreements, net | 3,466,334 | 3,466,487 | ||||
Secured borrowings on transferred loans, net | 74,058 | 74,185 | ||||
Total Liabilities | 3,568,239 | 3,584,132 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 1,905,265 | 1,818,559 | ||||
Accumulated other comprehensive income (loss) | 60,082 | 57,914 | ||||
Retained earnings (accumulated deficit) | 2,815,109 | 2,609,050 | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,780,456 | 4,485,523 | ||||
Non-controlling interests in consolidated subsidiaries | 10,490 | 10,694 | ||||
Total Equity | 4,790,946 | 4,496,217 | ||||
Total Liabilities and Equity | 8,359,185 | 8,080,349 | ||||
Operating segment | LNR | ||||||
Assets: | ||||||
Cash and cash equivalents | 68,853 | 39,446 | ||||
Restricted cash | 9,639 | 10,289 | ||||
Loans held-for-investment, net | 3,576 | 3,796 | ||||
Loans held-for-sale | 300,105 | 132,456 | ||||
Investment securities | 1,076,411 | 1,024,143 | ||||
Properties, net | 294,608 | 282,675 | ||||
Intangible assets | 86,101 | 95,257 | ||||
Investment in unconsolidated entities | 44,435 | 50,759 | ||||
Goodwill | 140,437 | 140,437 | ||||
Derivative assets | 883 | 636 | ||||
Accrued interest receivable | 1,042 | 243 | ||||
Other assets | 51,794 | 59,676 | ||||
Total Assets | 2,077,884 | 1,839,813 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 69,129 | 74,426 | ||||
Related-party payable | 39 | 31 | ||||
Derivative liabilities | 862 | 85 | ||||
Secured financing agreements, net | 564,226 | 411,526 | ||||
Total Liabilities | 634,256 | 486,068 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 606,583 | 659,062 | ||||
Accumulated other comprehensive income (loss) | (63) | (66) | ||||
Retained earnings (accumulated deficit) | 824,267 | 687,015 | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 1,430,787 | 1,346,011 | ||||
Non-controlling interests in consolidated subsidiaries | 12,841 | 7,734 | ||||
Total Equity | 1,443,628 | 1,353,745 | ||||
Total Liabilities and Equity | 2,077,884 | 1,839,813 | ||||
Operating segment | Property Segment | ||||||
Assets: | ||||||
Cash and cash equivalents | 25,141 | 10,388 | ||||
Restricted cash | 15,493 | 12,491 | ||||
Properties, net | 2,642,076 | 2,364,806 | ||||
Intangible assets | 104,425 | 116,081 | ||||
Investment in unconsolidated entities | 110,122 | 110,704 | ||||
Derivative assets | 39,184 | 26,775 | ||||
Accrued interest receivable | 244 | 68 | ||||
Other assets | 92,785 | 71,929 | ||||
Total Assets | 3,029,470 | 2,713,242 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 70,113 | 62,890 | ||||
Derivative liabilities | 4,736 | 13,063 | ||||
Secured financing agreements, net | 1,912,368 | 1,621,885 | ||||
Total Liabilities | 1,987,217 | 1,697,838 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Additional paid-in capital | 826,782 | 957,329 | ||||
Accumulated other comprehensive income (loss) | 8,115 | 12,076 | ||||
Retained earnings (accumulated deficit) | (788) | (14,335) | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 834,109 | 955,070 | ||||
Non-controlling interests in consolidated subsidiaries | 208,144 | 60,334 | ||||
Total Equity | 1,042,253 | 1,015,404 | ||||
Total Liabilities and Equity | 3,029,470 | 2,713,242 | ||||
Corporate | ||||||
Assets: | ||||||
Cash and cash equivalents | 130,211 | 299,308 | ||||
Restricted cash | 12,720 | 4,490 | ||||
Accrued interest receivable | 13,194 | 786 | ||||
Other assets | 1,878 | 3,755 | ||||
Total Assets | 158,003 | 308,339 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 28,875 | 23,536 | ||||
Related-party payable | 25,220 | 42,318 | ||||
Dividends payable | 126,857 | 125,916 | ||||
Derivative liabilities | 24,216 | 2,666 | ||||
Secured financing agreements, net | 297,389 | 296,858 | ||||
Unsecured senior notes, net | 2,255,976 | 2,125,235 | ||||
Total Liabilities | 2,758,533 | 2,616,529 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Common stock | 2,675 | 2,660 | ||||
Additional paid-in capital | 1,400,339 | 1,280,296 | ||||
Treasury stock | (104,194) | (92,104) | ||||
Retained earnings (accumulated deficit) | (3,899,350) | (3,499,042) | ||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | (2,600,530) | (2,308,190) | ||||
Total Equity | (2,600,530) | (2,308,190) | ||||
Total Liabilities and Equity | 158,003 | 308,339 | ||||
LNR VIEs | ||||||
Assets: | ||||||
Cash and cash equivalents | 911 | 5,726 | ||||
Investment securities | (1,023,985) | (999,952) | ||||
Intangible assets | (23,840) | (28,246) | ||||
Investment in unconsolidated entities | (21,717) | (20,988) | ||||
Other assets | (25) | (2,868) | ||||
VIE assets, at fair value | 48,044,873 | 51,045,874 | ||||
Total Assets | 46,976,217 | 49,999,546 | ||||
Liabilities: | ||||||
Accounts payable, accrued expenses and other liabilities | 95 | 1,211 | ||||
Secured financing agreements, net | (23,700) | (23,700) | ||||
VIE liabilities, at fair value | 46,976,428 | 50,000,010 | ||||
Total Liabilities | 46,952,823 | 49,977,521 | ||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||
Non-controlling interests in consolidated subsidiaries | 23,394 | 22,025 | ||||
Total Equity | 23,394 | 22,025 | ||||
Total Liabilities and Equity | $ 46,976,217 | $ 49,999,546 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, shares in Millions, $ in Millions | Aug. 08, 2018$ / shares | Aug. 07, 2018USD ($)employee | May 04, 2018$ / shares | Feb. 28, 2018$ / shares | Jul. 31, 2018USD ($)shares | Jun. 30, 2018USD ($)$ / shares | Jun. 30, 2017$ / shares | Jun. 30, 2018USD ($)$ / shares | Jun. 30, 2017$ / shares | Jul. 01, 2018USD ($) |
Subsequent Events | ||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.96 | $ 0.96 | ||||
2019 Notes | ||||||||||
Subsequent Events | ||||||||||
Aggregate principal amount | $ 341.4 | $ 341.4 | ||||||||
Subsequent event | ||||||||||
Subsequent Events | ||||||||||
Dividend declared (in dollars per share) | $ / shares | $ 0.48 | |||||||||
Subsequent event | 2019 Notes | ||||||||||
Subsequent Events | ||||||||||
Aggregate principal amount | $ 258.8 | |||||||||
Debt conversion original amount | $ 299.6 | |||||||||
Shares issued to settle redemption | shares | 4.7 | |||||||||
Value of shares issued to settle redemption | $ 104 | |||||||||
Subsequent event | 2019 Notes | Expected | ||||||||||
Subsequent Events | ||||||||||
Amount agreed to be settled | 195.6 | |||||||||
Value of shares issued to settle redemption | 168.1 | |||||||||
Cash payments to settle redemptions | 27.5 | |||||||||
Subsequent event | Project Finance Debt Business | ||||||||||
Subsequent Events | ||||||||||
Senior secured project finance loan portfolio | 2,500 | |||||||||
Unfunded commitments | $ 400 | |||||||||
Number of employees | employee | 21 | |||||||||
Subsequent event | Project Finance Debt Business | Expected | ||||||||||
Subsequent Events | ||||||||||
Purchase price | $ 2,200 | |||||||||
Subsequent event | Project Finance Debt Business | Bridge Facility | ||||||||||
Subsequent Events | ||||||||||
Aggregate principal amount | $ 600 | |||||||||
Maturity period | 364 days | |||||||||
Subsequent event | Project Finance Debt Business | Senior Secured Credit Facility | ||||||||||
Subsequent Events | ||||||||||
Aggregate principal amount | $ 2,100 | |||||||||
Initial advance | $ 1,700 | |||||||||
Maturity period | 3 years | |||||||||
Extension option | 1 year |