Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2015 | |
Document and Entity Information | |
Entity Registrant Name | Ares Commercial Real Estate Corp |
Entity Central Index Key | 1,529,377 |
Document Type | 8-K |
Document Period End Date | Dec. 31, 2015 |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents ($8 and $47 related to consolidated VIEs, respectively) | $ 5,066,000 | $ 15,045,000 |
Restricted cash | 13,083,000 | 49,679,000 |
Loans held for investment ($483,572 and $848,224 related to consolidated VIEs, respectively) | 1,174,391,000 | 1,462,584,000 |
Other assets ($2,695 and $3,438 of interest receivable related to consolidated VIEs, respectively; $35,607 and $18,352 of other receivables related to consolidated VIEs, respectively) | 53,191,000 | 39,959,000 |
Assets of discontinued operations held for sale | 133,251,000 | 294,888,000 |
Total assets | 1,378,982,000 | 1,862,155,000 |
LIABILITIES | ||
Secured funding agreements | 522,775,000 | 552,799,000 |
Secured term loan | 69,762,000 | |
Convertible notes | 67,414,000 | |
Commercial mortgage-backed securitization debt (consolidated VIE) | 61,815,000 | 217,495,000 |
Collateralized loan obligation securitization debt (consolidated VIE) | 192,528,000 | 305,734,000 |
Due to affiliate | 2,424,000 | 2,432,000 |
Dividends payable | 7,152,000 | 7,147,000 |
Other liabilities ($299 and $498 of interest payable related to consolidated VIEs, respectively) | 14,507,000 | 10,675,000 |
Liabilities of discontinued operations held for sale | 51,531,000 | 217,573,000 |
Total liabilities | 922,494,000 | 1,381,269,000 |
Commitments and contingencies (Note 8) | ||
EQUITY | ||
Common stock, par value $0.01 per share, 450,000,000 shares authorized at December 31, 2015 and December 31, 2014, 28,609,650 and 28,586,915 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively | 284,000 | 284,000 |
Additional paid-in capital | 421,179,000 | 420,344,000 |
Accumulated deficit | (11,992,000) | (17,674,000) |
Total stockholders' equity | 409,471,000 | 402,954,000 |
Non-controlling interests in consolidated VIEs | 47,017,000 | 77,932,000 |
Total equity | 456,488,000 | 480,886,000 |
Total liabilities and equity | $ 1,378,982,000 | $ 1,862,155,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Cash and cash equivalents related to consolidated VIE | $ 8 | $ 47 |
Loans held for investment related to consolidated VIE | 483,572 | 848,224 |
Other assets, interest receivable related to consolidated VIE | 2,695 | 3,438 |
Other assets, certificates receivable related to consolidated VIE | 35,607 | 18,352 |
Other liabilities, interest payable related to consolidated VIE | $ 299 | $ 498 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 28,609,650 | 28,586,915 |
Common stock, shares outstanding | 28,609,650 | 28,586,915 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net interest margin: | |||
Interest income from loans held for investment | $ 86,337 | $ 70,495 | $ 37,600 |
Interest expense | (36,342) | (33,637) | (14,973) |
Net interest margin | 49,995 | 36,858 | 22,627 |
Gain on sale of loans | 680 | ||
Total revenue | 49,995 | 37,538 | 22,627 |
Expenses: | |||
Management fees to affiliate | 5,397 | 5,440 | 4,125 |
Professional fees | 2,018 | 2,686 | 2,447 |
Acquisition and investment pursuit costs | 20 | 4,079 | |
General and administrative expenses | 2,830 | 3,003 | 2,430 |
General and administrative expenses reimbursed to affiliate | 3,426 | 3,400 | 3,394 |
Total expenses | 13,671 | 14,549 | 16,475 |
Changes in fair value of derivatives | 1,739 | ||
Income from continuing operations before gain on acquisition and income taxes | 36,324 | 22,989 | 7,891 |
Gain on acquisition | 4,438 | ||
Income from continuing operations before income taxes | 36,324 | 22,989 | 12,329 |
Income tax expense (benefit) | (11) | 240 | |
Net income from continuing operations | 36,335 | 22,749 | 12,329 |
Net income from discontinued operations held for sale, net of income taxes | 6,985 | 1,867 | 1,437 |
Net income attributable to ACRE | 43,320 | 24,616 | 13,766 |
Less: Net income attributable to non-controlling interests | (9,035) | (220) | |
Net income attributable to common stockholders | $ 34,285 | $ 24,396 | $ 13,766 |
Basic earnings per common share: | |||
Net income from continuing operations | $ 0.96 | $ 0.79 | $ 0.65 |
Net income from discontinued operations held for sale | 0.25 | 0.07 | 0.08 |
Net income (in dollars per share) | 1.20 | 0.86 | 0.72 |
Diluted earnings per common share: | |||
Net income from continuing operations | 0.95 | 0.79 | 0.65 |
Net income from discontinued operations held for sale | 0.24 | 0.07 | 0.08 |
Net income (in dollars per share) | $ 1.20 | $ 0.85 | $ 0.72 |
Weighted average number of common shares outstanding: | |||
Basic weighted average shares of common stock outstanding | 28,501,897 | 28,459,309 | 18,989,500 |
Diluted weighted average shares of common stock outstanding | 28,597,568 | 28,585,022 | 19,038,152 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | Non-Controlling Interests |
Balance (in shares) at Dec. 31, 2012 | 9,267,162 | |||||
Balance at Dec. 31, 2012 | $ 165,438 | $ 92 | $ 169,200 | $ (3,854) | $ 165,438 | |
Increase (Decrease) in Stockholders' Equity | ||||||
Sale of common stock (in shares) | 18,601,590 | 18,601,590 | ||||
Sale of common stock | $ 250,687 | $ 186 | 250,501 | 250,687 | ||
Issuance of common stock - acquisition of ACRE Capital (in shares) | 588,235 | |||||
Issuance of common stock-acquisition of ACRE Capital | 7,512 | $ 6 | 7,506 | 7,512 | ||
Offering costs | (8,412) | (8,412) | (8,412) | |||
Stock-based compensation (in shares) | 49,990 | |||||
Stock‑based compensation | 524 | 524 | 524 | |||
Net income | 13,766 | 13,766 | 13,766 | |||
2015 Convertible Notes | 86 | 86 | 86 | |||
Dividends declared | (23,385) | (23,385) | (23,385) | |||
Balance (in shares) at Dec. 31, 2013 | 28,506,977 | |||||
Balance at Dec. 31, 2013 | $ 406,216 | $ 284 | 419,405 | (13,473) | 406,216 | |
Increase (Decrease) in Stockholders' Equity | ||||||
Sale of common stock (in shares) | 0 | |||||
Stock-based compensation (in shares) | 79,938 | |||||
Stock‑based compensation | $ 939 | 939 | 939 | |||
Net income | 24,616 | 24,396 | 24,396 | $ 220 | ||
Dividends declared | (28,597) | (28,597) | (28,597) | |||
Contributions from non-controlling interests | $ 77,712 | 77,712 | ||||
Balance (in shares) at Dec. 31, 2014 | 28,586,915 | 28,586,915 | ||||
Balance at Dec. 31, 2014 | $ 480,886 | $ 284 | 420,344 | (17,674) | 402,954 | 77,932 |
Increase (Decrease) in Stockholders' Equity | ||||||
Sale of common stock (in shares) | 0 | |||||
Stock-based compensation (in shares) | 22,735 | |||||
Stock‑based compensation | $ 835 | 835 | 835 | |||
Net income | 43,320 | 34,285 | 34,285 | 9,035 | ||
Dividends declared | (28,603) | (28,603) | (28,603) | |||
Contributions from non-controlling interests | 5,685 | 5,685 | ||||
Distributions to non-controlling interests | $ (45,635) | (45,635) | ||||
Balance (in shares) at Dec. 31, 2015 | 28,609,650 | 28,609,650 | ||||
Balance at Dec. 31, 2015 | $ 456,488 | $ 284 | $ 421,179 | $ (11,992) | $ 409,471 | $ 47,017 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities: | |||
Net income | $ 43,320 | $ 24,616 | $ 13,766 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities (inclusive of amounts related to discontinued operations held for sale): | |||
Amortization of deferred financing costs | 9,559 | 9,716 | 3,274 |
Change in mortgage banking activities | (12,596) | (7,955) | (3,110) |
Change in fair value of mortgage servicing rights | 8,798 | 7,650 | 2,697 |
Accretion of deferred loan origination fees and costs | (4,979) | (3,661) | (2,366) |
Provision for loss sharing | (1,093) | (1,364) | 6 |
Cash paid to settle loss sharing obligations | (2,264) | (2,581) | (2,040) |
Originations of mortgage loans held for sale | (681,928) | (497,258) | (84,150) |
Sale of mortgage loans held for sale to third parties | 850,816 | 302,886 | 102,363 |
Stock-based compensation | 835 | 939 | 524 |
Changes in fair value of derivatives | (1,739) | ||
Gain on acquisition | (4,438) | ||
Depreciation expense | 219 | 160 | 38 |
Deferred tax expense | 2,093 | 93 | 61 |
Changes in operating assets and liabilities: | |||
Restricted cash | 38,956 | (43,811) | 1,648 |
Other assets | 20,040 | (10,892) | (4,414) |
Due to affiliate | (77) | (61) | 1,476 |
Other liabilities | 3,820 | (1,391) | 1,848 |
Net cash provided by (used in) operating activities | 275,519 | (222,914) | 25,444 |
Investing activities: | |||
Issuance of and fundings on loans held for investment | (228,500) | (711,136) | (675,607) |
Principal repayment of loans held for investment | 411,740 | 193,867 | 66,920 |
Issuance of a mortgage loan held for sale | (84,769) | ||
Proceeds from sale of a mortgage loan held for sale | 74,625 | 80,197 | |
Receipt of origination fees | 1,078 | 7,082 | 6,058 |
Acquisition of ACRE Capital, net of cash acquired | (58,258) | ||
Purchases of other assets | (604) | (823) | (41) |
Payments for acquisition of intangible assets | (1,008) | ||
Payments for acquisition of mortgage servicing rights | (1,259) | ||
Net cash provided by (used in) investing activities | 258,339 | (433,080) | (745,697) |
Financing activities: | |||
Proceeds from secured funding agreements | 345,434 | 1,143,342 | 703,154 |
Repayments of secured funding agreements | (375,458) | (854,962) | (582,991) |
Payment of secured funding costs | (8,013) | (10,841) | (7,033) |
Proceeds from issuance of debt of consolidated VIEs | 308,703 | 395,027 | |
Repayments of debt of consolidated VIEs | (272,471) | (175,984) | |
Proceeds from issuance of common stock | 250,687 | ||
Payment of offering costs | (113) | (8,834) | |
Proceeds from warehouse lines of credit | 804,935 | 544,011 | 97,676 |
Repayments of warehouse lines of credit | (973,294) | (350,846) | (112,148) |
Proceeds from secured term loan | 75,000 | ||
Repayment of convertible debt | (69,000) | ||
Dividends paid | (28,597) | (28,577) | (18,575) |
Contributions from non-controlling interests | 5,685 | 77,712 | |
Distributions to non-controlling interests | (45,635) | ||
Net cash provided by (used in) financing activities | (541,414) | 652,445 | 716,963 |
Change in cash and cash equivalents | (7,556) | (3,549) | (3,290) |
Cash and cash equivalents, continuing operations, beginning of period | 15,045 | 14,444 | 23,390 |
Cash and cash equivalents of discontinued operations held for sale, beginning of period | 1,506 | 5,656 | 0 |
Cash and cash equivalents, end of period | 8,995 | 16,551 | 20,100 |
Cash and cash equivalents, continuing operations, end of period | 5,066 | 15,045 | 14,444 |
Cash and cash equivalents of discontinued operations held for sale, end of period | 3,929 | 1,506 | 5,656 |
Supplemental Information: | |||
Interest paid during the period | 28,731 | 23,870 | 11,317 |
Income taxes paid during the period | 83 | 430 | |
Supplemental disclosure of noncash investing and financing activities: | |||
Dividends declared, but not yet paid | 7,152 | 7,147 | 7,127 |
Deferred financing and offering costs | 174 | ||
Notes receivable related to consolidated VIEs | 35,607 | $ 16,116 | |
Issuance of common stock for acquisition of ACRE Capital | $ 0 | 7,512 | |
Fair value of assets acquired from ACRE Capital, net of cash acquired | 112,609 | ||
Fair value of liabilities assumed from ACRE Capital | $ 48,401 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Ares Commercial Real Estate Corporation (together with its consolidated subsidiaries, the “Company” or “ACRE”) is a specialty finance company that operates both as a principal lender and as a mortgage banker (with respect to loans collateralized by multifamily and senior-living properties). Through Ares Commercial Real Estate Management LLC (“ACREM” or the Company’s “Manager”), a Securities and Exchange Commission (“SEC”) registered investment adviser and a subsidiary of Ares Management L.P. (NYSE: ARES) (“Ares Management”), a publicly traded, leading global alternative asset manager, it has investment professionals strategically located across the United States and Europe who directly source new loan opportunities for the Company with owners, operators and sponsors of commercial real estate (“CRE”) properties. The Company was formed and commenced operations in late 2011. The Company is a Maryland corporation and completed its initial public offering (the “IPO”) in May 2012. The Company is externally managed by its Manager, pursuant to the terms of a management agreement (the "Management Agreement"). In the Company’s principal lending business, it is primarily focused on directly originating, managing and servicing a diversified portfolio of CRE debt-related investments for the Company’s own account. The Company’s target investments in its principal lending business include senior mortgage loans, subordinated debt, preferred equity, mezzanine loans and other CRE investments. These investments, which are referred to as the Company’s “principal lending target investments,” are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial, lodging, senior-living and other commercial real estate properties, or by ownership interests therein. The Company is also engaged in the mortgage banking business through its wholly owned subsidiary, ACRE Capital LLC (“ACRE Capital”). ACRE Capital primarily originates, sells and services multifamily and senior-living related loans under programs offered by government-sponsored enterprises ("GSEs"), such as the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation ("Freddie Mac") and by government agencies, such as the Government National Mortgage Association (“Ginnie Mae”) and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”). ACRE Capital is approved as a Fannie Mae Delegated Underwriting and Servicing (“DUS”) lender, a Freddie Mac Program Plus® Seller/Servicer, a Multifamily Accelerated Processing and Section 232 LEAN lender for HUD, and a Ginnie Mae issuer. While ACRE Capital earns little interest income from these activities as it generally only holds loans for short periods, ACRE Capital receives origination fees when it closes loans and sale premiums when it sells loans. ACRE Capital also retains the rights to service the loans, which are known as mortgage servicing rights (“MSRs”) and receives fees for such servicing during the life of the loans, which generally last 10 years or more. On June 28, 2016, the Company entered into a Purchase and Sale Agreement (as amended, the “Agreement”) with Barings Real Estate Advisers LLC (formerly known as Cornerstone Real Estate Advisers LLC), a Delaware limited liability company (the “Buyer”), to sell ACRE Capital Holdings LLC (“TRS Holdings”), the holding company that owns the Company's mortgage banking subsidiary, ACRE Capital. Upon the terms and subject to the conditions set forth in the Agreement, the Buyer purchased from the Company all of the outstanding common units of TRS Holdings (the “Acquisition”). The Acquisition closed on September 30, 2016. Under the terms of the Agreement, the Buyer paid approximately $93 million in cash, subject to certain adjustments, as consideration for the Acquisition. The purchase price is subject to certain post-closing final working capital adjustments. The Company has elected and qualified to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 2012. The Company generally will not be subject to U.S. federal income taxes on its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to the extent that it annually distributes all of its REIT taxable income to stockholders and complies with various other requirements as a REIT. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”) and include the accounts of the Company, the consolidated variable interest entities (“VIEs”) that the Company controls and of which the Company is the primary beneficiary, and the Company's wholly owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated. Discontinued Operations The operating results and the assets and liabilities of ACRE Capital, which formerly comprised the Mortgage Banking segment, are presented separately in the Company’s consolidated financial statements as discontinued operations held for sale. Net assets and net liabilities related to discontinued operations are included in the line items “Assets of discontinued operations held for sale” and “Liabilities of discontinued operations held for sale” in the consolidated balance sheets for all periods presented. The value of assets and liabilities related to discontinued operations are presented at the lower of carrying value and fair value less cost to sell. The fair value less cost to sell of ACRE Capital's assets and liabilities is greater than the carrying value; therefore, the Company did not recognize any impairment losses when the Company reclassified the assets and liabilities to discontinued operations held for sale. The results of discontinued operations are included in the line item “Net income from discontinued operations held for sale, net of income taxes” in the consolidated statements of operations for all periods presented. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Variable Interest Entities The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 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. The Company considers its variable interests, as well as any variable interests of its related parties in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and it consolidates the VIE. Where either one of these factors is not present, the Company is not the primary beneficiary and it does not consolidate the VIE. To assess whether the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Company considers all facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. To assess whether the Company has 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, the Company considers all of its economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that the Company applies 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 the Company. For VIEs of which the Company is determined to be the primary beneficiary, all of the underlying assets, liabilities, equity, revenue and expenses of the structures are consolidated into the Company’s consolidated financial statements. The Company performs an ongoing reassessment of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding its involvement with a VIE cause the Company’s consolidation conclusion regarding the VIE to change. See Note 16 included in these consolidated financial statements for further discussion of the Company’s VIEs. Segment Reporting The Company previously had two reportable business segments: Principal Lending and Mortgage Banking. As a result of the sale of TRS Holdings, the operations of the Mortgage Banking segment have been reclassified as discontinued operations held for sale in all periods presented. After giving effect to the divestiture of TRS Holdings, the Company will no longer provide segment reporting. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Amortization of convertible notes issuance costs and accretion of convertible notes have been reclassified into amortization of deferred financing costs in the consolidated statements of cash flows. As of December 31, 2015, the Company no longer presents amortization of convertible notes issuance costs and accretion of convertible notes in its consolidated statements of cash flows. The Company presents, in discontinued operations, the results of operations that have either been disposed of or are classified as held for sale and for which the disposition represents a strategic shift that has or will have a significant effect on the Company's operations and financial results. As a result of this presentation, retroactive reclassifications that change prior period numbers have been made. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Cash and Cash Equivalents Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions. Cash and short-term investments with an original maturity of three months or less when acquired are considered cash and cash equivalents for the purpose of the consolidated balance sheets and statements of cash flows. Restricted Cash Restricted cash includes escrow deposits for taxes, insurance, leasing outlays, capital expenditures, tenant security deposits and payments required under certain loan agreements. These escrow deposits are held on behalf of the respective borrowers and are offset by escrow liabilities included in other liabilities in the consolidated balance sheets. In connection with its mortgage banking business, the Company held restricted cash, which consisted of reserves that are a requirement of the Fannie Mae DUS program and borrower deposits, which represent funds that were collected for the processing of the borrowers loan applications and loan commitments. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash, loans held for investment, MSRs, loans held for sale, interest receivable and derivative financial instruments. The Company places its cash and cash equivalents with financial institutions and, at times, cash held may exceed the FDIC-insured limit. The Company has exposure to credit risk on its loans held for investment and through its subsidiary ACRE Capital, the Company has exposure on credit risk on loans held for sale and the servicing portfolio whereby ACRE Capital shares in the risk of loss (see Note 7 included in these consolidated financial statements). The Company and the Company’s Manager seek to manage credit risk by performing due diligence prior to origination or acquisition and through the use of non-recourse financing, when and where available and appropriate. Loans Held for Investment The Company originates CRE debt and related instruments generally to be held for investment. Loans that are held for investment are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company 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, the Company will record an allowance 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. Each loan classified as held for investment is evaluated for impairment on a quarterly basis. Loans are collateralized by real estate. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its investment portfolio under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral, (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, and the borrower’s exit plan, among other factors. In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of December 31, 2015, 2014 and 2013 , the Company did not recognize any impairment charges with respect to its loans held for investment. Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding the borrower's ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. Preferred equity investments, which are subordinate to any loans but senior to common equity, are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included within loans held for investment in the Company’s consolidated balance sheets. The Company accretes or amortizes any discounts or premiums over the life of the related loan held for investment utilizing the effective interest method. Loans Held for Sale Through its subsidiaries, including ACRE Capital, ACRC Lender W TRS LLC ("ACRC W TRS") and ACRC Lender U TRS LLC ("ACRC U TRS"), the Company originates mortgage loans held for sale, which are recorded at fair value and accounted for under FASB ASC Topic 860, Transfers and Servicing . The holding period for loans originated by ACRE Capital is approximately 30 days. The carrying value of the mortgage loans sold is reduced by the value allocated to the associated retained MSRs based on relative fair value at the time of the sale. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the adjusted value of the related mortgage loans sold. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Although the Company generally holds its target investments as long-term investments within its principal lending business, the Company may occasionally classify some of its investments as held for sale. Investments held for sale will be carried at fair value within loans held for sale in the Company’s consolidated balance sheets, with changes in fair value recorded through earnings. The fees received are deferred and recognized as part of the gain or loss on sale. As of December 31, 2015 and 2014 , the Company did not have any loans held for sale in its principal lending business. Mortgage Servicing Rights When a mortgage loan is sold, ACRE Capital retains the right to service the loan and recognizes the MSR at fair value. The initial fair value represents expected net cash flows from servicing, as well as interest earnings on escrows and interim cash balances, borrower prepayment penalties, delinquency rates, late charges along with ancillary fees that are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan. After initial recognition, changes in the MSR fair value are included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations for the period in which the change occurs. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Intangible Assets Intangible assets consist of ACRE Capital’s licenses permitting it to participate in programs offered by Fannie Mae, Freddie Mac and HUD (including Ginnie Mae). These licenses are intangible assets with indefinite lives. The Company evaluates identified intangibles for impairment annually or if other events or circumstances indicate that the carrying value may be impaired. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Debt Issuance Costs Debt issuance costs under the Company’s indebtedness are capitalized and amortized over the terms of the respective debt instrument. Debt issuance costs related to debt securitizations are capitalized and amortized over the term of the underlying loans using the effective interest method. When an underlying loan is prepaid in a debt securitization, the related unamortized debt issuance costs are charged to expense based on a pro-rata share of the debt issuance costs being allocated to the specific loans that were prepaid. Amortization of debt issuance costs is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance on (i) Secured Funding Agreements and Warehouse Lines of Credit (each individually defined in Note 6 included in these consolidated financial statements) are included within other assets and (ii) the Secured Term Loan and the 2015 Convertible Notes (each individually defined in Note 6 included in these consolidated financial statements) are included as a reduction to the carrying amount of the liability, in the Company’s consolidated balance sheets. The original issue discount ("OID") on amounts drawn under the Company's Secured Term Loan (defined in Note 6 included in these consolidated financial statements) represents a discount to the face amount of the drawn debt obligations. The OID is amortized over the term of the Secured Term Loan using the effective interest method and is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance is a reduction to the carrying amount of the Secured Term Loan in the Company’s consolidated balance sheets. Derivative Financial Instruments The Company does not hold or issue derivative instruments for trading purposes. The Company recognizes derivatives in its consolidated balance sheets, measures them at their estimated fair value and recognizes changes in their estimated fair value in the Company’s consolidated statements of operations for the period in which the change occurs. Through its subsidiary, ACRE Capital, the Company enters into loan commitments with borrowers on loan originations whereby the interest rate on the prospective loan is determined prior to funding. In general, ACRE Capital simultaneously enters into forward sale commitments with investors in order to hedge interest rate exposure on loan commitments. The forward sale commitment with the investor locks in an interest rate and price for the sale of the loan. The terms of the loan commitment with the borrower and the forward sale commitment with the investor are matched with the objective of hedging interest rate risk. Loan commitments and forward sale commitments are considered undesignated derivative instruments. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value, with changes in fair value recorded in earnings. On December 19, 2012, the Company issued unsecured 7.00% Convertible Senior Notes that matured in December 2015 (the “2015 Convertible Notes”). The conversion features of the 2015 Convertible Notes were deemed to be an embedded derivative under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). In accordance with ASC 815, the Company was required to bifurcate the embedded derivative related to the conversion features of the 2015 Convertible Notes. Prior to June 26, 2013, the Company recognized the embedded derivative as a liability on its balance sheet, measured at its estimated fair value and recognized changes in its estimated fair value within changes in fair value of derivatives in the Company’s consolidated statements of operations for the period in which the change occurs. See Note 9 included in these consolidated financial statements for information on the derivative liability reclassification. In December 2015, the Company repaid the entire aggregate principal amount outstanding of its 2015 Convertible Notes. See Note 6 included in these consolidated financial statements for information on the 2015 Convertible Notes redemption. Fair Value Measurements 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 financial instruments recorded at fair value on a recurring basis in the Company’s consolidated financial statements are derivative financial instruments, MSRs and loans held for sale. The Company has not elected the fair value option for certain other financial instruments, including loans held for investment, secured funding agreements and other debt instruments. Such financial instruments are carried at cost. Fair value is separately disclosed (see Note 13 included in these consolidated financial statements). Allowance for Loss Sharing When a loan is sold under the Fannie Mae DUS program, ACRE Capital undertakes an obligation to partially guarantee the performance of the loan. The date ACRE Capital commits to make a loan to a borrower, a liability for the fair value of the obligation undertaken in issuing the guarantee is recognized. Subsequent to the initial commitment date, the Company monitors the performance of each loan for events or circumstances which may signal an additional liability to be recognized if there is a probable and estimable loss. The initial fair value of the guarantee is estimated by examining historical loss share experienced in the ACRE Capital Fannie Mae DUS portfolio over the most recent ten-year period. The initial fair value of the guarantee is included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations. These historical loss shares serve as a basis to derive a loss share rate which is then applied to the current ACRE Capital DUS portfolio (net of specifically identified impaired loans that are subject to a separate loss share reserve analysis). See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Servicing Fee Payable ACRE Capital provides additional payments to certain personnel by providing them with a percentage of the servicing fee revenue that is earned by ACRE Capital, which is initially recorded as a liability when ACRE Capital commits to make a loan to a borrower (the "servicing fee payable"). The initial fair value of the liability represents the expected net cash payments over the life of the related mortgage loan that are discounted at a rate that reflects the credit and liquidity risk of the related MSR. ACRE Capital incurs an expense over the life of each loan as long as the related loan is performing. If a particular loan is not performing, the recipient will not receive the additional compensation on that loan, and if a loss sharing event is triggered, the recipient will not receive a portion of the additional compensation on other loans. The servicing fee payable is included within liabilities of discontinued operations held for sale in the consolidated balance sheets. The initial fair value of the related expense and the changes in the fair value of the servicing fee payable over the life of the related mortgage loan are included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations for the period in which the change occurs. These historical loss shares serve as a basis to derive a loss share rate which is then applied to the current ACRE Capital DUS portfolio (net of specifically identified impaired loans that are subject to a separate loss share reserve analysis). See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Revenue Recognition Interest income from loans held for investment is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans held for investment, origination fees, contractual exit fees and direct loan origination costs are also recognized in interest income from loans held for investment over the initial loan term as a yield adjustment using the effective interest method. A reconciliation of the Company's interest income from loans held for investment, excluding non-controlling interests, to the Company's interest income from loans held for investment as included within its consolidated statements of operations for the years ended December 31, 2015 and 2014 is as follows ($ in thousands): For the year ended December 31, 2015 2014 Interest income from loans held for investment, excluding non-controlling interests $ 77,278 $ 70,188 Interest income from non-controlling interest investment held by third parties 9,059 307 Interest income from loans held for investment $ 86,337 $ 70,495 Servicing fees are earned for servicing mortgage loans, including all activities related to servicing the loans, and are recognized as services are provided over the life of the related mortgage loan. Also included in servicing fees are the net fees earned on borrower prepayment penalties and interest earned on borrowers’ escrow payments and interim cash balances, along with other ancillary fees and reduced by write-offs of MSRs for loans that are prepaid, changes in the fair value of the servicing fee payable (defined above) and interest expense related to escrow accounts. Servicing fees, net are included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations. Gains from mortgage banking activities includes the initial fair value of MSRs, loan origination fees, gain on the sale of loans originated, interest income and fees earned on loans held for sale, changes to the fair value of derivative financial instruments attributable to the loan commitments and forward sale commitments and reduced by the expense related to the initial fair value of the servicing fee payable and the interest expense related to the Warehouse Lines of Credit (as defined in Note 6 included in these consolidated financial statements). The initial fair value of MSRs, loan origination fees, gain on the sale of loans originated, certain direct loan origination costs for loans held for sale and the expenses related to the initial fair value of the servicing fee payable are recognized when ACRE Capital commits to make a loan to a borrower. When the Company settles a sale agreement and transfers the mortgage loan to the buyer, the Company recognizes a MSR asset equal to the present value of the expected net cash flows associated with the servicing of loans sold. Gains from mortgage banking activities are included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Net Interest Margin and Interest Expense Net interest margin within the consolidated statements of operations is a measure that is specific to the Company’s principal lending business and serves to measure the performance of the Company's loans held for investment as compared to its use of debt leverage. The Company includes interest income from its loans held for investment and interest expense related to its Secured Funding Agreements, securitizations debt, the Secured Term Loan and the 2015 Convertible Notes (individually defined in Note 6 included in these consolidated financial statements) in net interest margin. For the years ended December 31, 2015, 2014 and 2013 , interest expense is comprised of the following ($ in thousands): For the year ended December 31, 2015 2014 2013 Secured funding agreements and securitizations debt $ 29,740 $ 27,299 $ 8,774 Secured term loan 388 — — Convertible notes 6,214 6,338 6,199 Interest expense $ 36,342 $ 33,637 $ 14,973 Stock-Based Compensation The Company recognizes the cost of stock-based compensation, which is included within net income from discontinued operations held for sale, net of income taxes, for ACRE Capital and general and administrative expenses for ACRE in the consolidated statements of operations. The fair value of the time vested restricted stock or restricted stock units granted is recorded to expense on a straight-line basis over the vesting period for the award, with an offsetting increase in stockholders’ equity. For grants to directors, officers and employees, the fair value is determined based upon the market price of the stock on the grant date. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Certain ACRE Capital employees were granted restricted stock that vest in proportion to various financial performance targets being met over a specified period of time. The fair value of the performance based restricted stock granted is recorded to expense on an accelerated basis, using the accelerated attribution method, over the performance period for the award, with an offsetting increase in stockholders’ equity. For performance based measures, compensation expense, net of estimated forfeitures, is recorded based on the Company’s estimate of the probable achievement of such measures. Underwriting Commissions and Offering Costs Underwriting commissions and offering costs incurred in connection with common stock offerings are reflected as a reduction of additional paid-in capital. Costs incurred that are not directly associated with the completion of a common stock offering are expensed when incurred. Underwriting commissions that are the responsibility of and paid by a related party, such as the Company’s Manager, are reflected as a contribution of additional paid-in capital from a sponsor in the consolidated financial statements. Income Taxes The Company has elected and qualified for taxation as a REIT commencing with its taxable year ended December 31, 2012. As a result of the Company’s REIT qualification and its distribution policy, the Company does not generally pay U.S. federal corporate level income taxes. Many of the REIT requirements, however, are highly technical and complex. To continue to qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Even though the Company currently qualifies for taxation as a REIT, the Company may be subject to certain U.S. federal, state, local and foreign taxes on the Company’s income and property and to U.S. federal income and excise taxes on the Company’s undistributed REIT taxable income. In connection with the acquisition of ACRE Capital, the Company created a wholly owned subsidiary, TRS Holdings, to hold the common units of ACRE Capital. The Company formed a wholly owned subsidiary in December 2013, ACRC W TRS and in March 2014, ACRC U TRS in order to issue and hold certain loans intended for sale. Prior to the acquisition, the Company owned 100% of the equity of TRS Holdings, ACRC W TRS and ACRC U TRS. Entity classification elections to be taxed as a corporation and taxable REIT subsidiary (“TRS”) elections were made with respect to TRS Holdings, ACRC W TRS and ACRC U TRS. A TRS is an entity taxed as a corporation other than a REIT in which a REIT directly or indirectly holds equity, and that has made a joint election with such REIT to be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS generally may engage in any business, including investing in assets and engaging in activities that could not be held or conducted directly by the Company without jeopardizing its qualification as a REIT. A TRS is subject to applicable U.S. federal, state, local and foreign income tax on its taxable income. In addition, as a REIT, the Company also may be subject to a 100% excise tax on certain transactions between it and its TRS that are not conducted on an arm’s-length basis. For financial reporting purposes, a provision for current and deferred taxes has been established for the portion of the Company’s |
LOANS HELD FOR INVESTMENT
LOANS HELD FOR INVESTMENT | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
LOANS HELD FOR INVESTMENT | LOANS HELD FOR INVESTMENT As of December 31, 2015 , the Company had originated or co-originated 38 loans held for investment, excluding 24 loans that were repaid or sold since inception. The aggregate originated commitment under these loans at closing was approximately $ 1.3 billion and outstanding principal was $ 1.1 billion, excluding non-controlling interests held by third parties, as of December 31, 2015 . During the year ended December 31, 2015 , the Company funded approximately $ 229.9 million of outstanding principal, received repayments of $ 410.6 million of outstanding principal, excluding non-controlling interests held by third parties, and sold a $74.6 million loan to a third party as described in more detail in the tables below. Such investments are referred to herein as the Company’s "investment portfolio". As of December 31, 2015 , 66.2% of the Company’s loans have LIBOR floors, with a weighted average floor of 0.24% , calculated based on loans with London Interbank Offered Rates (" LIBOR"). References to LIBOR or “L” are to 30-day LIBOR (unless otherwise specifically stated). The Company’s investments in loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of December 31, 2015 and 2014 ($ in thousands): As of December 31, 2015 Carrying Amount (1) Outstanding Principal (1) Weighted Average Interest Rate Weighted Average Unleveraged Effective Yield (2) Weighted Average Remaining Life (Years) Senior mortgage loans $ 961,395 $ 965,578 4.4 % 5.1 % 1.4 Subordinated debt and preferred equity investments 166,417 168,264 10.6 % 11.2 % 5.1 Total loans held for investment portfolio (excluding non-controlling interests held by third parties) $ 1,127,812 $ 1,133,842 5.3 % 6.0 % 1.9 As of December 31, 2014 Carrying Amount (1) Outstanding Principal (1) Weighted Average Interest Rate Weighted Average Unleveraged Effective Yield (2) Weighted Average Remaining Life (Years) Senior mortgage loans $ 1,156,476 $ 1,164,055 4.5 % 5.0 % 2.1 Subordinated debt and preferred equity investments 228,499 231,226 10.3 % 10.7 % 6.1 Total loans held for investment portfolio (excluding non-controlling interests held by third parties) $ 1,384,975 $ 1,395,281 5.5 % 6.0 % 2.8 _______________________________________________________________________________ (1) The difference between the Carrying Amount and the Outstanding Principal face amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs. The tables above exclude non-controlling interests held by third parties. A reconciliation of the Carrying Amount of loans held for investment portfolio, excluding non-controlling interests, to the Carrying Amount of loans held for investment, as included within the Company's consolidated balance sheets is presented below. (2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of December 31, 2015 and 2014 as weighted by the Outstanding Principal balance of each loan. A reconciliation of the Company's loans held for investment portfolio, excluding non-controlling interests held by third parties, to the Company's loans held for investment as included within its consolidated balance sheets is as follows ($ in thousands): As of December 31, 2015 Carrying Amount Outstanding Principal Total loans held for investment portfolio (excluding non-controlling interests held by third parties) $ 1,127,812 $ 1,133,842 Non-controlling interest investment held by third parties 46,579 46,579 Loans held for investment $ 1,174,391 $ 1,180,421 As of December 31, 2014 Carrying Amount Outstanding Principal Total loans held for investment portfolio (excluding non-controlling interests held by third parties) $ 1,384,975 $ 1,395,281 Non-controlling interest investment held by third parties 77,609 77,609 Loans held for investment $ 1,462,584 $ 1,472,890 A more detailed listing of the Company’s investment portfolio, excluding non-controlling interests, based on information available as of December 31, 2015 is as follows ($ in millions, except percentages): Loan Type Location Outstanding Principal (1) Carrying Amount (1) Interest Rate Unleveraged Effective Yield (2) Maturity Date (3) Payment Terms (4) Senior Mortgage Loans: Office TX $80.5 $80.0 L+5.00% 6.2% Jan 2017 I/O Retail IL 75.9 75.6 L+4.00% (6) 4.8% Aug 2017 I/O Mixed-use IL 53.2 52.7 L+3.60% 4.4% Oct 2018 I/O Office FL 47.3 47.3 L+5.25% 5.6% Apr 2016 I/O Multifamily TX 44.7 44.7 L+3.75% 4.7% July 2016 I/O Healthcare NY 41.6 41.4 L+5.00% 5.9% Dec 2016 I/O Industrial MO/KS 37.4 37.3 L+4.30% 5.2% Jan 2017 P/I (5) Hotel NY 36.5 36.2 L+4.75% 5.6% June 2018 I/O Hotel MI 35.2 35.1 L+4.15% 4.8% July 2017 I/O Multifamily TX 35.0 35.0 L+3.75% 4.7% July 2016 I/O Office FL 34.0 33.9 L+3.65% 4.3% Oct 2017 I/O Industrial OH 32.5 32.3 L+4.20% 5.0% May 2018 I/O (5) Retail IL 30.4 30.2 L+3.25% 4.1% Sep 2018 I/O Multifamily NY 28.3 28.2 L+3.75% 4.7% Oct 2017 I/O Multifamily TX 27.6 27.5 L+3.65% 4.6% Jan 2017 I/O Office OR 28.4 28.1 L+3.75% 4.6% Oct 2018 I/O Mixed-use NY 28.0 27.9 L+4.25% 5.0% Aug 2017 I/O Office KS 25.5 25.5 L+5.00% 5.9% Mar 2016 I/O Multifamily TX 25.0 24.9 L+3.65% 4.6% Jan 2017 I/O Multifamily TX 23.9 23.8 L+3.80% 4.4% Jan 2019 I/O Multifamily GA 23.1 23.0 L+3.85% 5.0% May 2017 I/O Multifamily AZ 22.1 22.1 L+4.25% 5.5% Sep 2016 I/O Industrial VA 19.0 19.0 L+5.25% 6.4% Jan 2016 (7) I/O Office CO 18.7 18.5 L+3.95% 4.9% Dec 2017 I/O Office CA 15.9 15.8 L+3.75% 4.6% July 2016 I/O Multifamily NC 16.0 15.9 L+4.00% 5.0% Apr 2017 I/O Office CA 14.9 14.9 L+4.50% 5.5% July 2016 I/O Multifamily NY 14.9 14.9 L+3.85% 4.7% Nov 2017 I/O Office CA 14.5 14.5 L+4.75% 5.8% Feb 2016 I/O Mixed-use NY 13.1 13.0 L+3.95% 5.0% Sep 2017 I/O Multifamily FL 12.3 12.2 L+3.75% 4.8% Apr 2017 I/O Industrial CA 10.1 10.0 L+5.25% 6.5% May 2017 I/O Subordinated Debt and Preferred Equity Investments: Multifamily GA and FL 50.8 50.3 L+11.85% (8) 12.5% June 2021 I/O Multifamily NY 33.3 33.2 L+8.07% 8.8% Jan 2019 I/O Office GA 14.3 14.3 9.50% 9.5% Aug 2017 I/O Mixed-use NY 16.5 16.4 11.50% (9) 12.1% Nov 2016 I/O Multifamily TX 4.9 4.8 L+11.00% (10) 11.8% Oct 2016 I/O Various Diversified (11) 48.5 47.4 10.95% 11.7% Dec 2024 I/O Total/Weighted Average $1,133.8 $1,127.8 6.0% _______________________________________________________________________________ (1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs. (2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of December 31, 2015 or the LIBOR floor, as applicable. The Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of December 31, 2015 as weighted by the Outstanding Principal balance of each loan. (3) Certain loans are subject to contractual extension options that vary between one and two 12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities in connection with loan modifications. (4) I/O = interest only, P/I = principal and inte rest. (5) In January 2015, amortization began on the senior Missouri/Kansas loan, which had an outstanding pr incipal balance of $ 37.4 million as of December 31, 2015 . In May 2017, amortization will begin on the senior Ohio loan, which had an outstanding principal balance of $ 32.5 million as of December 31, 2015 . The remainder of the loans in the Company’s principal lending portfolio are non-a mortizing through their primary terms. (6) In April 2015, the Company entered into a loan modification that lowered the interest rate to L+4.00% with a 4.20% interest rate floor and extended the make-whole provision to November 2016. (7) In December 2015, the Company entered into a modification agreement that extended the maturity date to January 2016. (8) The preferred return is L+11.85% with 2.00% as payment-in-kind (“PIK”), to the extent cash flow is not available. There is no capped dollar amount on accrued PIK. (9) The interest rate is 11.50% with a 9.00% current pay and up to a capped dollar amount as PIK based on the borrower’s election. In July 2015, the Company entered into an amendment to increase the loan commitment and outstanding principal by $650 thousand at an interest rate of 15.00% on the increased commitment and outstanding principal only. (10) The preferred return is L+11.00% with a L+9.00% current pay and up to a capped dollar amount as PIK. (11) The preferred equity investment is in an entity whose assets are comprised of multifamily, student housing and medical office properties. For the years ended December 31, 2015 and 2014 , the activity in the Company's loan portfolio was as follows ($ in thousands): Balance at December 31, 2013 $ 958,495 Initial funding 637,222 Receipt of origination fees, net of costs (7,026 ) Additional funding 80,215 Loan payoffs (209,983 ) Origination fee accretion 3,661 Balance at December 31, 2014 $ 1,462,584 Initial funding 159,348 Receipt of origination fees, net of costs (1,078 ) Additional funding 70,529 Amortizing payments (601 ) Loan payoffs (446,745 ) Loans sold to third parties (1) (74,625 ) Origination fee accretion 4,979 Balance at December 31, 2015 $ 1,174,391 ______________________________________________________________________________ (1) In July 2015, the Company sold a loan to a third party that was previously classified as held for investment. At the time of the sale, the loan had an unleveraged effective yield of 4.2% as compared to the 4.9% weighted average unleveraged effective yield for all senior loans held by the Company. No gain or loss was recognized on the sale. No imp airment charges have been recognized during the years ended December 31, 2015, 2014 and 2013 . |
MORTGAGE SERVICING RIGHTS
MORTGAGE SERVICING RIGHTS | 12 Months Ended |
Dec. 31, 2015 | |
Transfers and Servicing [Abstract] | |
MORTGAGE SERVICING RIGHTS | MORTGAGE SERVICING RIGHTS MSRs represent servicing rights retained by ACRE Capital for loans it originates and sells. The servicing fees are collected from the monthly payments made by the borrowers. ACRE Capital generally receives other remuneration including rights to various loan fees such as late charges, collateral re-conveyance charges, loan prepayment penalties, and other ancillary fees. In addition, ACRE Capital is also generally entitled to retain the interest earned on funds held pending remittance related to its collection of loan principal and escrow balances. As of December 31, 2015 and 2014 , the carrying value of MSRs was approximately $ 61.8 million and $58.9 million , respectively. As of December 31, 2015 and 2014, ACRE Capital had a servicing portfolio consisting of 973 and 976 loans, respectively, with an unpaid principal balance of $ 4.9 billion and $4.1 billion , respectively, which excludes ACRE’s loans held for investment portfolio (see Note 14 included in these consolidated financial statements). Activity related to MSRs as of and for the years ended December 31, 2015 and 2014 was as follows ($ in thousands): Balance at December 31, 2013 $ 59,640 MSRs acquired in asset acquisition (See Note 18) 1,259 Additions, following sale of loan 7,853 Changes in fair value (7,650 ) Prepayments and write-offs (2,213 ) Balance at December 31, 2014 (1) $ 58,889 MSRs purchased 549 Additions, following sale of loan 13,267 Changes in fair value (8,798 ) Prepayments and write-offs (2,107 ) Balance at December 31, 2015 (1) $ 61,800 (1) MSRs are included in mortgage servicing rights at fair value as of December 31, 2015 and 2014 in the reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations held for sale to assets and liabilities of discontinued operations held for sale that are presented separately in the consolidated balance sheets. See Note 17 included in these consolidated financial statements for more information. As discussed in Note 2 included in these consolidated financial statements, the Company determines the fair values of the MSRs based on discounted cash flow models that calculate the present value of estimated future net servicing income. The fair values of ACRE Capital’s MSRs are subject to changes in discount rates. For example, a 100 basis point increase or decrease in the weighted average discount rate would decrease or increase, respectively, the fair value of ACRE Capital’s MSRs outstanding as of December 31, 2015 and 2014 by approximately $ 2.0 million and $1.8 million , respectively. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | 5. INTANGIBLE ASSETS As of December 31, 2015 and 2014 , the carrying value of the Company’s intangible assets, as described in Note 2 included in these consolidated financial statements, was $ 6.0 million, which is included within assets of discontinued operations held for sale in the Company’s consolidated balance sheets. On August 5, 2014, ACRE Capital was approved and granted a license by Freddie Mac as a Program Plus® Seller/Servicer for multifamily loans under which ACRE Capital is authorized to sell and service Freddie Mac loans secured by multifamily properties located in New York and Princeton, New Jersey. ACRE Capital can also sell and service Freddie Mac loans secured by multifamily properties located outside of its approved geographic area if it obtains a waiver from Freddie Mac. As a Program Plus® Seller/Servicer, ACRE Capital is approved to originate and sell to Freddie Mac multifamily loans that satisfy Freddie Mac’s underwriting and other eligibility requirements. Under the program, ACRE Capital submits its completed loan underwriting package to Freddie Mac and obtains Freddie Mac’s commitment to purchase the loan at a specified price after closing. Ultimately, Freddie Mac performs its own underwriting of loans that ACRE Capital sells to it. Freddie Mac may choose to hold, sell, or later securitize such loans. ACRE Capital does not have any material risk-sharing arrangements on loans it sells to Freddie Mac under Program Plus®. As of December 31, 2015 , the carrying value of the Company's intangible assets of $ 6.0 million includes the Freddie Mac Program Plus® Seller/Servicer license with a carrying value of $ 1.0 million. The identified intangible assets have indefinite lives and are not subject to amortization. The Company performs an annual assessment of impairment of its intangible assets in the fourth quarter of each year or whenever events or circumstances make it more likely than not that impairment may have occurred. For the years ended December 31, 2015 and 2014 , no impairment charges have been recognized. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Financing Agreements The Company, through its subsidiary ACRE Capital, borrows funds under the ASAP Line of Credit and the BAML Line of Credit (individually defined below and together, the “Warehouse Lines of Credit”). The Company also borrows funds under the Wells Fargo Facility, the Citibank Facility, the BAML Facility, the CNB Facilities, the MetLife Facility and the UBS Facilities (individually defined below and along with the Capital One Facility, collectively, the "Secured Funding Agreements"). The Company refers to the Warehouse Lines of Credit, the Secured Funding Agreements and the Secured Term Loan (defined below) as the “Financing Agreements”. As of December 31, 2015 and 2014 , the outstanding balances and total commitments under the Financing Agreements consisted of the following ($ in thousands): As of December 31, 2015 2014 Outstanding Balance Total Outstanding Balance Total Wells Fargo Facility $ 101,473 $ 225,000 $ 120,766 $ 225,000 Citibank Facility 112,827 250,000 93,432 250,000 Capital One Facility — — (1) — 100,000 BAML Facility — 50,000 — — March 2014 CNB Facility — 50,000 42,000 50,000 July 2014 CNB Facility 66,200 75,000 75,000 75,000 MetLife Facility 109,474 180,000 144,673 180,000 April 2014 UBS Facility 75,558 140,000 19,685 140,000 December 2014 UBS Facility 57,243 57,243 57,243 57,243 ASAP Line of Credit — 80,000 (2) 58,469 80,000 (2) BAML Line of Credit 24,806 135,000 (3) 134,696 180,000 (3) Secured Term Loan 75,000 155,000 — — Total $ 622,581 $ 1,397,243 $ 745,964 $ 1,337,243 ______________________________________________________________________________ (1) The secured revolving funding facility with Capital One, National Association (as amended, the “Capital One Facility”) matured on May 18, 2015. The Capital One Facility has been repaid in full and its term was not extended. (2) The commitment amount is subject to change at any time at Fannie Mae's discretion. (3) In November 2014, the BAML Line of Credit's (defined below) commitment size temporarily increased from $80.0 million to $180.0 million for the period November 25, 2014 through January 26, 2015. In February 2015, the BAML Line of Credit's commitment size increased from $80.0 million to $135.0 million . In April 2015, the BAML Line of Credit's commitment size temporarily increased from $135.0 million to $185.0 million for the period April 15, 2015 to June 1, 2015. Some of the Company's Financing Agreements are collateralized by (i) assignments of specific loans, preferred equity or a pool of loans held for investment or loans held for sale owned by the Company, (ii) interests in the subordinated portion of the Company's securitization debt, or (iii) interests in wholly owned entity subsidiaries that hold the Company's loans held for investment. The Company is the borrower or guarantor under each of the Financing Agreements (excluding the Warehouse Lines of Credit, where ACRE Capital is the borrower). Generally, the Company partially offsets interest rate risk by matching the interest index of loans held for investment with the Secured Funding Agreements used to fund them. The Company's Financing Agreements contain various affirmative and negative covenants, including negative pledges, and provisions regarding events of default that are normal and customary for similar financing arrangements. Wells Fargo Facility The Company is party to a master repurchase funding facility arranged by Wells Fargo Bank, National Association ("Wells Fargo") (as amended and restated, the “Wells Fargo Facility”), which allows the Company to borrow up to $225.0 million . In December 2014, the Company amended and restated the Wells Fargo Facility to, among other things, extend the maturity date from December 14, 2014 to December 14, 2015 and waive the non-utilization fee from December 14, 2014 through April 14, 2015. In December 2015, the Company amended and restated the Wells Fargo Facility to, among other things, extend the maturity date from December 14, 2015 to December 14, 2016. Provided that certain conditions are met and applicable extension fees are paid, the maturity date is subject to two 12 -month extensions at the Company's option. Under the Wells Fargo Facility, the Company is permitted to sell, and later repurchase, certain qualifying senior commercial mortgage loans, A-Notes, pari passu participations in commercial mortgage loans and mezzanine loans under certain circumstances, subject to available collateral. Beginning on December 14, 2015, advances under the Wells Fargo Facility accrue interest at a per annum rate equal to the sum of (i) 30 day LIBOR plus (ii) a pricing margin range of 1.75% to 2.35% . Prior to December 14, 2015, advances under the Wells Fargo Facility continue to accrue interest at a per annum rate equal to the sum of (i) 30 day LIBOR plus (ii) a pricing margin range of 2.00% to 2.50% . Subject to the waiver set forth above, the Company incurs a non-utilization fee of 25 basis points on the daily available balance of the Wells Fargo Facility to the extent less than 75% of the Wells Fargo Facility is utilized. For the years ended December 31, 2015, 2014 and 2013 , the Company incurred a non-utilization fee of $ 195 thousand, $ 213 thousand and $218 thousand , respectively. The Wells Fargo Facility contains various affirmative and negative covenants and provisions regarding events of default that are applicable to the Company and certain of the Company’s subsidiaries, which are normal and customary for similar repurchase facilities, including the following: (a) limitations on the incurrence of additional indebtedness or liens, (b) limitations on how borrowed funds may be used, (c) limitations on certain distributions and dividend payments in excess of the minimum amount necessary to continue to qualify as a REIT and avoid the payment of income and excise taxes, (d) maintenance of adequate capital, (e) limitations on change of control, (f) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (g) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00, (h) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12 -month period ending on the last date of the applicable reporting period to be at least 1.25 to 1.00, (i) maintaining a tangible net worth of at least the sum of (1) approximately $135.5 million , plus (2) 80% of the net proceeds raised in all future equity issuances by the Company and (j) if certain specific debt yield, loan to value or other credit based tests are not met with respect to assets on the Wells Fargo Facility, the Company may be required to repay certain amounts under the Wells Fargo Facility. As of December 31, 2015 , the Company was in compliance in all material respects with the terms of the Wells Fargo Facility. Citibank Facility The Company is party to a $250.0 million master repurchase facility (the “Citibank Facility”) with Citibank, N.A. Under the Citibank Facility, the Company is permitted to sell and later repurchase certain qualifying senior commercial mortgage loans and A-Notes approved by Citibank, N.A. in its sole discretion. Advances under the Citibank Facility accrue interest at a per annum rate equal to 30 day LIBOR plus a pricing margin of 2.00% to 2.50% , subject to certain exceptions. Under the Citibank Facility, the maturity date is December 8, 2016, subject to three 12 -month extensions at the Company's option assuming no existing defaults under the Citibank Facility and applicable extension fees are paid. The Company incurs a non-utilization fee of 25 basis points on the daily available balance of the Citibank Facility. For the years ended December 31, 2015, 2014 and 2013 , the Company incurred a non-utilization fee of $ 369 thousand, $ 316 thousand and $164 thousand , respectively. The Citibank Facility contains various affirmative and negative covenants and provisions regarding events of default that are applicable to the Company and certain of the Company’s subsidiaries, which are normal and customary for similar repurchase facilities, including the following: (a) maintaining tangible net worth of at least the sum of (1) 80% of the Company’s tangible net worth as of September 30, 2013, plus (2) 80% of the total net capital raised in all future equity issuances by the Company, (b) maintaining liquidity in an amount not less than the greater of (1) $ 5.0 million or (2) 5% of the Company’s recourse indebtedness, not to exceed $10.0 million (provided that in the event the Company’s total liquidity equals or exceeds $5.0 million , the Company may satisfy the difference between the minimum total liquidity requirement and the Company’s total liquidity with available borrowing capacity), (c) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12 -month period ending on the last date of the applicable reporting period to be at least 1.25 to 1.00, (d) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (e) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00 and (f) if certain specific debt yield and loan to value tests are not met with respect to assets on the Citibank Facility, the Company may be required to repay certain amounts under the Citibank Facility. The Citibank Facility also prohibits the Company from amending the management agreement with its Manager in a material respect without the prior consent of the lender. As of December 31, 2015 , the Company was in compliance in all material respects with the terms of the Citibank Facility. BAML Facility The Company is party to a $50.0 million Bridge Loan Warehousing Credit and Security Agreement (the “BAML Facility”) with Bank of America, N.A. Under the BAML Facility, the Company may obtain advances secured by eligible commercial mortgage loans collateralized by healthcare facilities and other multifamily properties. Bank of America, N.A. may approve the loans on which advances are made under the BAML Facility in its sole discretion. The Company may request individual loans under the BAML Facility through May 26, 2016. Individual advances under the BAML Facility generally have a two -year maturity, subject to one 12 -month extension at the Company's option upon the satisfaction of certain conditions and applicable extension fees being paid. The BAML Facility is fully guaranteed by the Company and a subsidiary of the Company has pledged its equity interest in the Company’s subsidiary, ACRC Lender B LLC, to secure the obligations under the BAML Facility. The final maturity date of individual loans under the BAML Facility is May 26, 2019. Advances under the BAML Facility accrue interest at a per annum rate equal to one-month LIBOR plus a spread ranging from 2.25% to 2.75% depending upon the type of asset securing such advance. The BAML Facility contains mandatory prepayment events with respect to individual advances if certain specified coverage ratio or other credit based tests are not met with respect to the related eligible assets. The Company incurs a non-utilization fee of 12.5 basis points on the average daily available balance of the BAML Facility. For the year ended December 31, 2015 , the Company incurred a non-utilization fee of $ 37 thousand . See Note 21 included in these consolidated financial statements for a subsequent event related to the BAML Facility. The BAML Facility contains various affirmative and negative covenants and provisions regarding events of default that are applicable to the Company and certain of the Company’s subsidiaries, which are normal and customary for similar financing facilities, including the following: (a) limitations on the incurrence of additional indebtedness or liens, (b) limitations on how borrowed funds may be used, (c) limitations on certain distributions and dividend payments following a default or event of default, (d) limitations on dispositions of assets and (e) prohibitions of certain change of control events. The agreements governing the BAML Facility also impose certain covenants on the Company, including the following: (i) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (ii) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00, (iii) maintaining a tangible net worth of at least 80% of the Company’s net worth as of September 30, 2013, plus 80% of the net cash proceeds raised in equity issuances by the Company after September 30, 2013, (iv) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12 -month period ending on the last date of the applicable reporting period of at least 1.25 to 1.00, (v) limitations on mergers, consolidations, transfers of assets and similar transactions and (vi) maintaining its status as a REIT. As of December 31, 2015 , the Company was in compliance in all material respects with the terms of the BAML Facility. City National Bank Facilities March 2014 CNB Facility The Company is party to a $50.0 million secured revolving funding facility with City National Bank (the “March 2014 CNB Facility”). The Company is permitted to borrow funds under the March 2014 CNB Facility to finance investments and for other working capital and general corporate needs. Advances under the March 2014 CNB Facility accrue interest at a per annum rate equal to the sum of, at the Company’s option, either (a) LIBOR for a one, two, three, six or, if available to all lenders, 12-month interest period plus 3.00% or (b) a base rate (which is the highest of a prime rate, the federal funds rate plus 0.50% , or one month LIBOR plus 1.00% ) plus 1.25% ; provided that in no event shall the interest rate be less than 3.00% . Unless at least 75% of the March 2014 CNB Facility is used on average, unused commitments under the March 2014 CNB Facility accrue unused line fees at the rate of 0.375% per annum. For the years ended December 31, 2015 and 2014 , the Company incurred a non-utilization fee of $ 177 thousand and $ 82 thousand, respectively. The initial maturity date is March 11, 2016, subject to one 12 -month extension at the Company’s option provided that certain conditions are met and applicable extension fees are paid. See Note 21 included in these consolidated financial statements for a subsequent event related to the March 2014 CNB Facility. The March 2014 CNB Facility contains various affirmative and negative covenants and provisions regarding events of default that are applicable to the Company and certain of the Company’s subsidiaries, which are normal and customary for similar financing facilities, including the following: (a) limitations on the incurrence of additional indebtedness or liens, (b) limitations on how borrowed funds may be used, (c) limitations on certain distributions and dividend payments following a default or event of default, (d) limitations on dispositions of assets, (e) maintenance of minimum total asset value by the borrower under the March 2014 CNB Facility and its subsidiaries, and (f) prohibitions of certain change of control events. The agreements governing the March 2014 CNB Facility also impose certain covenants on the Company, including the following: (i) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (ii) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00, (iii) maintaining a tangible net worth of at least 80% of the Company’s net worth as of September 30, 2013, plus 80% of the net cash proceeds raised in equity issuances by the Company after March 12, 2014, (iv) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12 -month period ending on the last date of the applicable reporting period of at least 1.25 to 1.00, (v) limitations on mergers, consolidations, transfers of assets and similar transactions, and (vi) maintaining its status as a REIT. As of December 31, 2015 , the Company was in compliance in all material respects with the terms of the March 2014 CNB Facility. July 2014 CNB Facility The Company and certain of its subsidiaries are party to a $75.0 million revolving funding facility (the “July 2014 CNB Facility” and together with the March 2014 CNB Facility, the "CNB Facilities") with City National Bank. The Company is permitted to borrow funds under the July 2014 CNB Facility to finance investments and for other working capital and general corporate needs. Advances under the July 2014 CNB Facility accrue interest at a per annum rate equal, at the Company’s option, to either (a) LIBOR for a one, two, three, six or, if available to all lenders, 12-month interest period plus 1.50% or (b) a base rate (which is the highest of a prime rate, the federal funds rate plus 0.50% , or one month LIBOR plus 1.00% ) plus 0.25% ; provided that in no event shall the interest rate be less than 1.50% . Unless at least 75% of the July 2014 CNB Facility is used on average, unused commitments under the July 2014 CNB Facility accrue unused line fees at the rate of 0.125% per annum. For the years ended December 31, 2015 and 2014 , the Company incurred a non-utilization fee of $ 4 thousand and $ 15 thousand, respectively. In July 2015, the Company exercised a 12 -month extension option to extend the maturity date to July 31, 2016. See Note 14 included in these consolidated financial statements for more information on a credit support fee agreement with respect to the July 2014 CNB Facility. The July 2014 CNB Facility contains various affirmative and negative covenants and provisions regarding events of default that are applicable to the Company and certain of the Company’s subsidiaries, which are normal and customary for similar financing facilities, including the following: (a) limitations on the incurrence of additional indebtedness or liens, (b) limitations on how borrowed funds may be used, (c) limitations on certain distributions and dividend payments following a default or event of default, (d) limitations on dispositions of assets, (e) maintenance of minimum total asset value by the borrower under the July 2014 CNB Facility and its subsidiaries and (f) prohibitions of certain change of control events. The agreements governing the July 2014 CNB Facility also impose certain covenants on the Company, including the following: (i) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (ii) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00, (iii) maintaining a tangible net worth of at least 80% of the Company’s net worth as of September 30, 2013, plus 80% of the net cash proceeds raised in equity issuances by the Company after July 30, 2014, (iv) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12 -month period ending on the last date of the applicable reporting period of at least 1.25 to 1.00, (v) limitations on mergers, consolidations, transfers of assets and similar transactions and (vi) maintaining its status as a REIT. As of December 31, 2015 , the Company was in compliance in all material respects with the terms of the July 2014 CNB Facility. MetLife Facility The Company and certain of its subsidiaries are party to a $180.0 million revolving master repurchase facility (the “MetLife Facility”) with Metropolitan Life Insurance Company (“MetLife”), pursuant to which the Company may sell, and later repurchase, commercial mortgage loans meeting defined eligibility criteria which are approved by MetLife in its sole discretion. Advances under the MetLife Facility accrue interest at a per annum rate of 30 day LIBOR plus 2.35% . The Company will pay MetLife, if applicable, an annual make-whole fee equal to the amount by which the aggregate price differential paid over the term of the MetLife Facility is less than the defined minimum price differential, unless certain conditions are met. The initial maturity date of the MetLife Facility is August 12, 2017, subject to two 12-month extensions at the Company’s option provided that certain conditions are met and applicable extension fees are paid. The MetLife Facility contains various affirmative and negative covenants and provisions regarding events of default that are applicable to the Company and certain of the Company’s subsidiaries, which are normal and customary for similar repurchase facilities, including the following: (a) limitations on the incurrence of additional indebtedness or liens, (b) limitations on how borrowed funds may be used, (c) limitations on certain distributions and dividend payments following a default or event of default, and (d) limitations on dispositions of assets. The agreements governing the MetLife Facility also impose certain covenants on the Company, including the following: (i) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (ii) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00, (iii) maintaining a tangible net worth of at least 80% of the Company’s net worth as of September 30, 2013, plus 80% of the net cash proceeds raised in equity issuances by the Company after August 13, 2014, (iv) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12 -month period ending on the last date of the applicable reporting period of at least 1.25 to 1.00, and (v) if certain specific debt yield, loan to value or other credit based tests are not met with respect to assets on the MetLife Facility, the Company may be required to repay certain amounts under the MetLife Facility. As of December 31, 2015 , the Company was in compliance in all material respects with the terms of the MetLife Facility. UBS Facilities April 2014 UBS Facility The Company is party to a $140.0 million revolving master repurchase facility (the “April 2014 UBS Facility”) with UBS Real Estate Securities Inc. (“UBS”), pursuant to which the Company may sell, and later repurchase, commercial mortgage loans and, under certain circumstances, other assets meeting defined eligibility criteria that are approved by UBS in its sole discretion. Since October 21, 2015, the price differential (or interest rate) on the April 2014 UBS Facility is one-month LIBOR plus (a) 1.88% per annum, for assets that are subject to an advance for one year or less, (b) 2.08% per annum, for assets that are subject to an advance in excess of one year but less than two years, and (c) 2.28% per annum, for assets that are subject to an advance for greater than two years; in each case, excluding amortization of commitment and exit fees. Prior to October 21, 2015, the price differential (or interest rate) on the April 2014 UBS Facility was one-month LIBOR plus 1.88% . In October 2015, the Company entered into an amendment to extend the initial maturity date to October 21, 2018. The initial maturity date is subject to annual extensions in UBS' sole discretion. Upon termination of the April 2014 UBS Facility, the Company will pay UBS, if applicable, the amount by which the aggregate price differential paid over the term of the April 2014 UBS Facility is less than the defined minimum price differential and an exit fee, in each case, unless certain conditions are met. The April 2014 UBS Facility contains margin call provisions that provide UBS with certain rights if the applicable percentage of the aggregate asset value of the purchased assets under the April 2014 UBS Facility is less than the aggregate purchase price for such assets. The April 2014 UBS Facility is fully guaranteed by the Company and requires the Company to maintain certain financial and other covenants including the following: (a) maintaining a ratio of (i) recourse debt to tangible net worth of not more than 3.00 to 1.00 and (ii) total debt to tangible net worth of not more than 4.00 to 1.00, (b) maintaining a tangible net worth of at least 80% of the Company’s net worth as of September 30, 2013, plus 80% of net cash proceeds received from all subsequent equity issuances by the Company, and (c) maintaining a fixed charge coverage ratio (expressed as the ratio of adjusted-EBITDA (net income before net interest expense, income tax expense, depreciation and amortization) to fixed charges) for the immediately preceding 12 -month period ending on the last day of the applicable reporting period of at least 1.25 to 1.00. In addition, the April 2014 UBS Facility contains certain affirmative and negative covenants and provisions regarding events of default that are normal and customary for similar repurchase facilities. As of December 31, 2015 , the Company was in compliance in all material respects with the terms of the April 2014 UBS Facility. December 2014 UBS Facility The Company is party to a global master repurchase agreement (the “December 2014 UBS Facility,” and together with the April 2014 UBS Facility, the "UBS Facilities") with UBS AG, pursuant to which the Company will sell, and later repurchase, certain retained subordinate notes in the Company's commercial mortgage-backed securities ("CMBS") securitization (the “Purchased Securities”) for an aggregate purchase price equal to $57.2 million . In August 2015, the Company extended the scheduled repurchase date of the December 2014 UBS Facility to July 6, 2016 (the “Repurchase Date”). The transaction fee (or interest rate), which is payable monthly on the December 2014 UBS Facility, is equal to one-month LIBOR plus 2.74% per annum on the outstanding amount. The Purchased Securities may be purchased by the Company in whole, but not in part, prior to the Repurchase Date. If the outstanding amount of the Purchased Securities subject to the December 2014 UBS Facility is reduced or repaid prior to the Repurchase Date, UBS AG shall be entitled to a termination fee. The December 2014 UBS Facility also contains margin call provisions that provide UBS AG with certain rights if the applicable percentage of the aggregate asset value of the Purchased Securities is less than the aggregate purchase price for such Purchased Securities. The December 2014 UBS Facility is fully guaranteed by the Company and requires the Company to maintain certain financial and other covenants including the following: (a) maintaining a ratio of (i) recourse debt to tangible net worth of not more than 3.00 to 1.00 and (ii) total debt to tangible net worth of not more than 4.00 to 1.00, (b) maintaining a tangible net worth of at least 80% of the Company's net worth as of September 30, 2013, plus 80% of net cash proceeds received from all subsequent equity issuances by the Company, and (c) maintaining a fixed charge coverage ratio (expressed as the ratio of adjusted-EBITDA (net income before net interest expense, income tax expense, depreciation and amortization) to fixed charges) for the immediately preceding 12 -month period ending on the last day of the applicable reporting period of at least 1.25 to 1.00. In addition, the December 2014 UBS Facility contains certain affirmative and negative covenants and provisions regarding events of default that are normal and customary for similar repurchase facilities. As of December 31, 2015 , the Company was in compliance in all material respects with the terms of the December 2014 UBS Facility. Secured Term Loan In December 2015, the Company and certain of its subsidiaries entered into a $155.0 million Credit and Guaranty Agreement (the ‘‘Secured Term Loan”) with Highbridge Principal Strategies, LLC, as administrative agent, and DBD Credit Funding LLC, as collateral agent. The Company made an initial draw of $75.0 million at closing. The remaining $80.0 million of the Secured Term Loan may be borrowed during the nine month commitment period following the closing date, subject to the satisfaction of certain conditions. The Secured Term Loan carries a coupon of LIBOR plus 6.0% with a LIBOR floor of 1.0% on drawn amounts. The Secured Term Loan has a maturity date of December 9, 2018. The Company is subject to a monthly non-utilization fee equal to 1.0% per annum on the unused commitment amount during the nine month commitment period following the closing date. For the year ended December 31, 2015, the Company incurred a non-utilization fee of $ 51 thousand. The original issue discount on the initial draw was $1.1 million , which represented a discount to the debt cost to be amortized into interest expense using the effective interest method over the term of the Secured Term Loan. The estimated effective interest rate of the Secured Term Loan, which is equal to LIBOR (subject to a floor of 1.0% ) plus the stated rate of 6.0% plus the accretion of the original issue discount and associated costs, was 8.4% for the year ended December 31, 2015. The Company's obligations under the Secured Term Loan are guaranteed by certain subsidiaries of the Company. Certain subsidiaries of the Company entered into a Pledge and Security Agreement with the collateral agent under the Secured Term Loan, pursuant to which the obligations of the Company and the subsidiary guarantors under the Secured Term Loan are each secured by equity interests in certain of the Company's indirect subsidiaries and other assets. In addition, the Company and certain of its subsidiaries entered into a Negative Pledge Agreement with the collateral agent under the Secured Term Loan, which prohibits pledging or otherwise encumbering, subject to permitted encumbrances, certain of the assets which were not subject to the Pledge and Security Agreement. The Secured Term Loan contains various affirmative and negative covenants and provisions regarding events of default that are applicable to the Company and certain of the Company’s subsidiaries, which are normal and customary for similar financing agreements, including the following: (a) limitations on the incurrence of additional indebtedness or liens, (b) limitations on how borrowed funds may be used, (c) limitations on certain distributions and dividend payments following a default or event of default, (d) limitations on dispositions of assets and (e) prohibitions of certain change of control events. The agreements governing the Secured Term Loan also impose certain covenants on the Company, including the following: (i) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (ii) maintaining a tangible net worth of at least 80% of the Company’s net worth as of September 30, 2015, plus 80% of the net cash proceeds raised in subsequent equity issuances by the Company, (iii) maintaining an asset coverage ratio greater than 110% , (iv) maintaining an unencumbered asset ratio greater than 120% , (v) limitations on mergers, consolidations, transfers of assets and similar transactions, (vi) maintaining its status as a REIT and (vii) maintaining at least 65.0% of loans held for investment as senior commercial real estate loans, as measured by the average daily outstanding principal balance of all loans held for investment during a fiscal quarter and as adjusted for non-controlling interests. As of December 31, 2015, the Company was in compliance in all material respects with the terms of the Secured Term Loan. Warehouse Lines of Credit ASAP Line of Credit ACRE Capital is party to a multifamily as soon as pooled (“ASAP”) sale agreement with Fannie Mae (the “ASAP Line of Credit”) to finance installments received from Fannie Mae. To the extent the ASAP Line of Credit remains active through utilization, there is no expiration date. The commitment amount is subject to change at any time at Fannie Mae's discretion. Fannie Mae advances payment to ACRE Capital in two separate installments according to the terms as set forth in the ASAP sale agreement. The first installme |
ALLOWANCE FOR LOSS SHARING
ALLOWANCE FOR LOSS SHARING | 12 Months Ended |
Dec. 31, 2015 | |
ALLOWANCE FOR LOSS SHARING | |
ALLOWANCE FOR LOSS SHARING | 7. ALLOWANCE FOR LOSS SHARING Loans originated and sold by ACRE Capital to Fannie Mae under the Fannie Mae DUS program are subject to the terms and conditions of a Master Loss Sharing Agreement, which was amended and restated during 2012. Under the Master Loss Sharing Agreement, ACRE Capital is responsible for absorbing certain losses incurred by Fannie Mae with respect to loans originated under the DUS program, as described below in more detail. The compensation for this risk of loss is a component of servicing fees on the loan. The losses incurred with respect to individual loans are allocated between ACRE Capital and Fannie Mae based on the loss level designation (“Loss Level”) for the particular loan. Loans are designated as Loss Level I, Loss Level II or Loss Level III. All loans are designated Loss Level I unless Fannie Mae and ACRE Capital agree upon a different Loss Level for a particular loan at the time of the loan commitment, or if Fannie Mae determines that the loan was not underwritten, processed or serviced according to Fannie Mae guidelines. Losses on Loss Level I loans are shared 33.33% by ACRE Capital and 66.67% by Fannie Mae. The maximum amount of ACRE Capital’s risk-sharing obligation with respect to any Loss Level I loan is 33.33% of the original principal amount of the loan. Losses incurred in connection with Loss Level II and Loss Level III loans are allocated disproportionately to ACRE Capital until ACRE Capital has absorbed the maximum level of its risk-sharing obligation with respect to the particular loan. The maximum loss allocable to ACRE Capital for Loss Level II loans is 30% of the original principal amount of the loan, and for Loss Level III loans is 40% of the original principal amount of the loan. According to the Master Loss Sharing Agreement, Fannie Mae may unilaterally increase the amount of the risk-sharing obligation of ACRE Capital with respect to individual loans without regard to a particular Loss Level if (a) the loan does not meet specific underwriting criteria, (b) the loan is defaulted within 12 months after it is purchased by Fannie Mae, or (c) Fannie Mae determines that there was fraud, material misrepresentation or gross negligence by ACRE Capital in its underwriting, closing, delivery or servicing of the loan. Under certain limited circumstances, Fannie Mae may require ACRE Capital to absorb 100% of the losses incurred on a loan by requiring ACRE Capital to repurchase the loan. The amount of loss incurred on a particular loan is determined at the time the loss is incurred, for example, at the time a property is foreclosed by Fannie Mae (whether acquired by Fannie Mae or a third party) or at the time a loan is modified in connection with a default. Losses may be determined by reference to the price paid by a third party at a foreclosure sale or by reference to an appraisal obtained by Fannie Mae in connection with the default on the loan. In connection with the Company’s acquisition of ACRE Capital, Alliant, Inc., a Florida corporation, and The Alliant Company, LLC, a Florida limited liability company (the “Sellers”), are jointly and severally obligated to fund directly (if permitted) or to reimburse ACRE Capital for amounts due and owing after the closing date to Fannie Mae pursuant to ACRE Capital’s allowance for loss sharing with respect to settlement of certain DUS program mortgage loans originated and serviced by ACRE Capital, subject to certain limitations. In addition, the Sellers are jointly and severally obligated to indemnify ACRE Capital for, among other things, certain losses arising from Sellers’ failure to fulfill the funding or reimbursement obligations described above. As of December 31, 2015 and 2014 , the preliminary estimate of the portion of such contributions towards such losses relating to the allowance for loss sharing of ACRE Capital was $ 377 thousand and $494 thousand , respectively. Additionally, with respect to the settlement of certain non-designated DUS program mortgage loans originated and serviced by ACRE Capital, the Sellers are jointly and severally obligated to fund directly (if permitted) or to reimburse ACRE Capital in each of the three 12 month periods following the closing date for eighty percent ( 80% ) of amounts due and owing after the closing date to Fannie Mae pursuant to ACRE Capital’s allowance for loss sharing in excess of $2.0 million during such 12 month period; provided that in no event shall Sellers obligations exceed in the aggregate $3.0 million for the entire three year period. ACRE Capital uses several tools to manage its risk-sharing obligation, including maintenance of disciplined underwriting and approval processes and procedures, and periodic review and evaluation of underwriting criteria based on underlying multifamily housing market data and limitation of exposure to particular geographic markets and submarkets and to individual borrowers. In situations where payment under the guarantee is probable and estimable on a specific loan, the Company records an additional liability. The amount of the provision reflects the Company’s assessment of the likelihood of payment by the borrower, the estimated disposition value of the underlying collateral and the level of risk-sharing. Historically, among other factors, the loss recognition occurs at or before the loan becoming 60 days delinquent. A summary of the Company’s allowance for loss sharing as of and for the years ended December 31, 2015, 2014 and 2013 is as follows ($ in thousands): Balance at December 31, 2013 $ 16,480 Current period provision for loss sharing (1,364 ) Settlements/Writeoffs (2,767 ) Balance at December 31, 2014 (1) $ 12,349 Current period provision for loss sharing (1,093 ) Settlements/Writeoffs (2,287 ) Balance at December 31, 2015 (1) $ 8,969 (1) Allowance for loss sharing is included in allowance for loss sharing as of December 31, 2015 and 2014 in the reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations held for sale to assets and liabilities of discontinued operations held for sale that are presented separately in the consolidated balance sheets. See Note 17 included in these consolidated financial statements for more information. As of both December 31, 2015 and 2014 , the maximum quantifiable allowance for loss sharing associated with the Company’s guarantees under the Fannie Mae DUS agreement was $ 1.1 billion from a total recourse at risk pool of $ 3.2 billion . Additionally, as of December 31, 2015 and 2014 , the non-at risk pool was $ 855 thousand and $2.0 million , respectively. The at risk pool is subject to Fannie Mae’s Master Loss Sharing Agreement and the non-at risk pool is not subject to such agreement. The maximum quantifiable allowance for loss sharing is not representative of the actual loss the Company would incur. The Company would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES As of December 31, 2015 and 2014 , the Company had the following commitments to fund various senior mortgage loans, subordinated debt investments, as well as preferred equity investments accounted for as loans held for investment ($ in thousands): As of December 31, 2015 2014 Total commitments $ 1,232,163 $ 1,565,117 Less: funded commitments (1,133,842 ) (1,395,281 ) Total unfunded commitments $ 98,321 $ 169,836 Commitments to extend credit by ACRE Capital are generally agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Occasionally, the commitments may expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements. As of December 31, 2015 and 2014 , ACRE Capital had the following commitments to sell and fund loans ($ in thousands): As of December 31, 2015 2014 Commitments to sell loans $ 237,372 $ 249,803 Commitments to fund loans $ 207,566 $ 51,109 Lease Commitments ACRE Capital is obligated under a number of operating leases for office spaces with terms ranging from less than one year to more than five years . Rent expense for the years ended December 31, 2015, 2014 and 2013 was $ 844 thousand, $ 983 thousand and $ 230 thousand, respectively. The following table shows future minimum payments required under the Company's operating leases as of December 31, 2015 ($ in thousands): As of December 31, 2015 2016 $ 775 2017 853 2018 837 2019 772 2020 754 Thereafter 1,026 Total $ 5,017 The Company from time to time may be party to litigation relating to claims arising in the normal course of business. As of December 31, 2015 , the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations. |
DERIVATIVES
DERIVATIVES | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES | 9. DERIVATIVES Non-designated Hedges Derivatives not designated as hedges are derivatives that do not meet the criteria for hedge accounting under GAAP or for which the Company has not elected to designate as hedges. Loan commitments and forward sale commitments Through its subsidiary, ACRE Capital, the Company enters into loan commitments with borrowers on loan originations whereby the interest rate on the prospective loan is determined prior to funding. In general, ACRE Capital simultaneously enters into forward sale commitments with investors in order to hedge against the interest rate exposure on loan commitments. The forward sale commitment with the investor locks in an interest rate and price for the sale of the loan. The terms of the loan commitment with the borrower and the forward sale commitment with the investor are matched with the objective of hedging interest rate risk. Loan commitments and forward sale commitments are considered undesignated derivative instruments. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value, with changes in fair value recorded in earnings. For the year ended December 31, 2015 , the Company entered into 87 loan commitments and 87 forward sale commitments. For the year ended December 31, 2014 , the Company entered into 36 loan commitments and 36 forward sale commitments. As of December 31, 2015 , the Company had 16 loan commitments with a total notional amount of $ 207.6 million and 24 forward sale commitments with a total notional amount of $ 237.4 million, with maturities ranging from 25 days to 17 months that were not designated as hedges in qualifying hedging relationships. As of December 31, 2014 , the Company had one loan commitment with a total notional amount of $51.1 million and ten forward sale commitments with a total notional amount of $249.8 million , with maturities ranging from nine days to 23 months that were not designated as hedges in qualifying hedging relationships. MSR purchase commitments In March 2015, ACRE Capital entered into a purchase agreement with a third party to purchase the servicing rights for a HUD loan. Under the MSR purchase agreement, the purchase price for the servicing rights was $500 thousand and ACRE Capital assumed the rights to service the loan in October 2015. In July 2015, ACRE Capital entered into a second purchase agreement with a third party to purchase the servicing rights for a HUD loan (the "July 2015 HUD Loan"). Under the second purchase agreement, the purchase price for the servicing rights was $325 thousand and ACRE Capital will assume the rights to service the loan in March 2016. Embedded conversion option In connection with the issuance of the 2015 Convertible Notes, the Company could not elect to issue shares of common stock upon conversion of the 2015 Convertible Notes to the extent such election would result in the issuance of 20% or more of the common stock outstanding immediately prior to the issuance of the 2015 Convertible Notes until the Company received stockholder approval for issuances above this threshold. As a result, the embedded conversion option did not qualify for equity classification and instead was separately valued and accounted for as a derivative liability. On June 26, 2013, stockholder approval was obtained for the issuance of shares in excess of 20% of the Company’s common stock outstanding to satisfy any conversions of the 2015 Convertible Notes. As a result, the Company had the ability to fully settle in shares the conversion option and the embedded conversion option was no longer required to be separately valued and accounted for as a derivative liability on a prospective basis. As of December 31, 2015 and 2014 , there was no derivative liability. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification within the Company’s consolidated balance sheets as of December 31, 2015 and 2014 ($ in thousands): As of December 31, 2015 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives not designated as hedging instruments Loan commitments Assets of discontinued operations held for sale (1) $ 8,450 Assets of discontinued operations held for sale (1) $ 3,082 Forward sale commitments Assets of discontinued operations held for sale (1) 25 Assets of discontinued operations held for sale (1) 116 MSR purchase commitment Assets of discontinued operations held for sale (1) 330 Assets of discontinued operations held for sale (1) — Forward sale commitments Liabilities of discontinued operations held for sale (1) (1,868 ) Liabilities of discontinued operations held for sale (1) (1,528 ) Total derivatives not designated as hedging instruments $ 6,937 $ 1,670 (1) Derivative financial instruments are included in other assets or other liabilities as of December 31, 2015 and 2014 in the reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations held for sale to assets and liabilities of discontinued operations held for sale that are presented separately in the consolidated balance sheets. See Note 17 included in these consolidated financial statements for more information. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | 10. EQUITY The following table summarizes the total shares issued and proceeds received in public offerings of the Company's common stock net of offering costs for the year ended December 31, 2013 (in millions, except per share data): Shares Issued Offering Price Per Share Proceeds Net Of Offering Costs 2013 July 2013 601,590 (1) $ 13.50 $ 7.7 June 2013 18,000,000 13.50 234.6 Total for the year ended December 31, 2013 18,601,590 $ 242.3 __________________________________________________________________________ (1) The Company granted the underwriters an option to purchase up to an additional 2.7 million shares of common stock. This amount represents the partial exercise of the option to purchase additional shares by the underwriters. The net proceeds were used to invest in target investments, repay indebtedness, fund future funding commitments on existing loans and for other general corporate purposes. There were no shares issued in public or private offerings for the years ended December 31, 2015 and 2014 . See Note 18 included in these consolidated financial statements for information regarding shares of the Company's common stock issued in a private placement . Equity Incentive Plan On April 23, 2012, the Company adopted an equity incentive plan (the “2012 Equity Incentive Plan”). Pursuant to the 2012 Equity Incentive Plan, the Company may grant awards consisting of restricted shares of the Company’s common stock, restricted stock units and/or other equity-based awards to the Company’s outside directors, employees, officers, ACREM and other eligible awardees under the plan, subject to an aggregate limitation of 690,000 shares of common stock ( 7.5% of the issued and outstanding shares of the Company’s common stock immediately after giving effect to the issuance of the shares sold in the IPO). Any restricted shares of the Company’s common stock and restricted stock units will be accounted for under FASB ASC Topic 718, Compensation—Stock Compensation , resulting in share-based compensation expense equal to the grant date fair value of the underlying restricted shares of common stock or restricted stock units. Restricted stock grants generally vest ratably over a one to four year period from the vesting start date. The grantee receives additional compensation for each outstanding restricted stock grant, classified as dividends paid, equal to the per-share dividends received by common stockholders. During the year ended December 31, 2014 , an ACRE Capital employee was granted restricted stock that vests in proportion to certain financial performance targets being met over a specified period of time. The fair value of the performance based restricted stock granted is recorded to expense on an accelerated basis using the accelerated attribution method over the performance period for the award, with an offsetting increase in stockholders’ equity. The following table details the restricted stock grants awarded as of December 31, 2015 : Grant Date Vesting Start Date Shares Granted May 1, 2012 July 1, 2012 35,135 June 18, 2012 July 1, 2012 7,027 July 9, 2012 October 1, 2012 25,000 June 26, 2013 July 1, 2013 22,526 November 25, 2013 November 25, 2016 30,381 January 31, 2014 August 31, 2015 48,273 February 26, 2014 February 26, 2014 12,030 February 27, 2014 August 27, 2014 22,354 June 24, 2014 June 24, 2014 17,658 June 24, 2015 July 1, 2015 25,555 Total 245,939 The following tables summarize the non-vested shares of restricted stock and the vesting schedule of shares of restricted stock for the Company's directors and officers and employees of ACRE Capital as of December 31, 2015 . Schedule of Non-Vested Share and Share Equivalents Restricted Stock Grants—Directors Restricted Stock Grants—Officer Restricted Stock Grants—Employees Total Balance at December 31, 2014 21,324 10,936 78,654 110,914 Granted 25,555 — — 25,555 Vested (27,114 ) (6,250 ) (16,091 ) (49,455 ) Forfeited (2,820 ) — — (2,820 ) Balance at December 31, 2015 16,945 4,686 62,563 84,194 Future Anticipated Vesting Schedule Restricted Stock Grants—Directors Restricted Stock Grants—Officer Restricted Stock Grants—Employees (1) Total 2016 16,111 4,686 30,381 51,178 2017 834 — — 834 2018 — — — — 2019 — — — — 2020 — — — — Total 16,945 4,686 30,381 52,012 ______________________________________________________________________________ (1) Future anticipated vesting related to an employee of ACRE Capital that was granted restricted stock that vests in proportion to certain financial performance targets being met over a specified period of time is not included due to uncertainty in actual vesting date. The following table summarizes the restricted stock compensation expense included in general and administrative expenses for ACRE and compensation and benefits for ACRE Capital, the total fair value of shares vested and the weighted average grant date fair value of the restricted stock granted to the Company's directors and officers and employees of ACRE Capital for the years ended December 31, 2015, 2014 and 2013 ($ in thousands): For the year ended December 31, 2015 2014 2013 Restricted Stock Grants Restricted Stock Grants Restricted Stock Grants Directors Officer Employees Total Directors Officer Employees Total Directors Officer Employees Total Compensation expense(1) $ 330 $ 106 $ 399 $ 835 $ 445 $ 106 $ 388 $ 939 $ 408 $ 106 $ 10 $ 524 Total fair value of shares vested(2) 313 72 201 586 399 79 56 534 366 92 — 458 Weighted average grant date fair value 299 — — 299 385 — 944 1,329 289 — 398 687 ______________________________________________________________________________ (1) Compensation expense for ACRE Capital employees is included in compensation and benefits expense for the years ended December 31, 2015, 2014 and 2013 in the reconciliation of net income from discontinued operations held for sale, net of income taxes. See Note 17 included in these consolidated financial statements for more information. (2) Based on the closing price of the Company's common stock on the NYSE on each vesting date. As of December 31, 2015 and 2014 , the total compensation cost related to non-vested awards not yet recognized totaled $ 494 thousand and $ 1.1 million, respectively, and the weighted-average period over which the non-vested awards are expected to be recognized is 1.59 years and 2.60 years, respectively. Non-Controlling Interests The non-controlling interests held by third parties in the Company's consolidated balance sheets represent the equity interests in a limited liability company, ACRC KA Investor LLC ("ACRC KA") that are not owned by the Company. A portion of ACRC KA's consolidated equity and net income are allocated to these non-controlling interests held by third parties based on their pro-rata ownership of ACRC KA. As of December 31, 2015 , ACRC KA's total equity was $ 96.0 million, of which $ 49.0 million was owned by the Company and $ 47.0 million was allocated to non-controlling interests held by third parties. As of December 31, 2014 , ACRC KA's total equity was $ 170.7 million, of which $ 92.8 million was owned by the Company and $ 77.9 million was allocated to non-controlling interests held by third parties. See Note 16 included in these consolidated financial statements for more information on ACRC KA. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 11. EARNINGS PER SHARE The following information sets forth the computations of basic and diluted earnings per common share from continuing operations and discontinued operations held for sale for the years ended December 31, 2015, 2014 and 2013 ($ in thousands, except share and per share data): For the year ended December 31, 2015 2014 2013 Net income from continuing operations, less non-controlling interests $ 27,300 $ 22,529 $ 12,329 Net income from discontinued operations held for sale, net of income taxes $ 6,985 $ 1,867 $ 1,437 Divided by: Basic weighted average shares of common stock outstanding: 28,501,897 28,459,309 18,989,500 Non-vested restricted stock 95,671 125,713 48,652 Diluted weighted average shares of common stock outstanding: 28,597,568 28,585,022 19,038,152 Basic earnings per common share (1): Net income from continuing operations $ 0.96 $ 0.79 $ 0.65 Net income from discontinued operations held for sale $ 0.25 $ 0.07 $ 0.08 Net income $ 1.20 $ 0.86 $ 0.72 Diluted earnings per common share (1): Net income from continuing operations $ 0.95 $ 0.79 $ 0.65 Net income from discontinued operations held for sale $ 0.24 $ 0.07 $ 0.08 Net income $ 1.20 $ 0.85 $ 0.72 (1) The Company has considered the impact of the 2015 Convertible Notes and the restricted shares on diluted earnings per common share. The number of shares of common stock that the 2015 Convertible Notes are convertible into were not included in the computation of diluted net income per common share because the inclusion of those shares would have been anti-dilutive for the years ended December 31, 2014 and 2013. |
INCOME TAX
INCOME TAX | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | 12. INCOME TAX The Company established a taxable REIT subsidiary (“TRS"), TRS Holdings, in connection with the acquisition of ACRE Capital. In addition, in December 2013 and March 2014, the Company formed ACRC W TRS and ACRC U TRS, respectively, in order to issue and hold certain loans intended for sale. TRS Holdings’ income tax provision (continuing and discontinued operations) consisted of the following for the years ended December 31, 2015, 2014 and 2013 ($ in thousands): For the year ended December 31, 2015 2014 2013 Current - continuing operations $ (11 ) $ 240 $ — Current - discontinued operations held for sale (154 ) 89 115 Deferred - continuing operations — — — Deferred - discontinued operations held for sale 2,093 (1,372 ) 61 Total income tax expense (benefit) $ 1,928 $ (1,043 ) $ 176 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are presented net by tax jurisdiction and are included within assets or liabilities of discontinued operations held for sale in the consolidated balance sheets. As of December 31, 2015 and 2014 , the TRS Holdings’ U.S. tax jurisdiction was in a net deferred tax liability position. TRS Holdings is not currently subject to tax in any foreign tax jurisdictions. As of December 31, 2015 , TRS Holdings had a net operating loss carryforward of $ 7.8 million, which may be carried back to 2013 and forward 20 years . The following table presents the U.S. tax jurisdiction and the tax effects of temporary differences on the respective net deferred tax assets and liabilities of TRS Holdings ($ in thousands): As of December 31, 2015 2014 Deferred tax assets Mortgage servicing rights $ 4,083 $ 2,844 Net operating loss carryforward 2,906 1,465 Other temporary differences 1,762 1,055 Sub-total-deferred tax assets 8,751 5,364 Deferred tax liabilities Basis difference in assets from acquisition of ACRE Capital (2,709 ) (2,654 ) Components of gains from mortgage banking activities (9,344 ) (4,046 ) Amortization of intangible assets (297 ) (170 ) Sub-total-deferred tax liabilities (12,350 ) (6,870 ) Net deferred tax liability $ (3,599 ) $ (1,506 ) Based on TRS Holdings' assessment, it is more likely than not that the deferred tax assets will be realized through future taxable income. For discontinued operations held for sale, TRS Holdings recognizes interest and penalties related to unrecognized tax benefits within net income from discontinued operations held for sale, net of income taxes, in the consolidated statements of operations. For discontinued operations held for sale, accrued interest and penalties, if any, are included within liabilities of discontinued operations held for sale in the consolidated balance sheets. For continuing operations, TRS Holdings recognizes interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statements of operations. For continuing operations, accrued interest and penalties, if any, are included within other liabilities in the consolidated balance sheets. The following table is a reconciliation of TRS Holdings' statutory U.S. federal income tax rate to TRS Holdings' effective tax rate for the years ended December 31, 2015, 2014 and 2013 : For the year ended December 31, 2015 2014 2013 Federal statutory rate 35.0 % 35.0 % 35.0 % State income taxes 3.6 % 2.4 % 5.7 % Federal benefit of state tax deduction (1.3 )% (0.8 )% (2.0 )% Effective tax rate 37.3 % 36.6 % 38.7 % As of December 31, 2015 , tax years 2012 through 2015 remain subject to examination by taxing authorities. The Company does not have any unrecognized tax benefits and the Company does not expect that to change in the next 12 months. Intercompany Notes In connection with the acquisition of ACRE Capital, the Company partially capitalized TRS Holdings with a $44.0 million note. In October 2014, the Company entered into an $8.0 million revolving promissory note with TRS Holdings (collectively, the two intercompany notes described above are referred to as, the “Intercompany Notes”). As of December 31, 2015 and 2014 , the outstanding principal balance of the Intercompany Notes was $ 51.9 million and $ 50.9 million, respectively. The income statement effects of the Intercompany Notes are eliminated in consolidation for financial reporting purposes, but the interest income and expense from the Intercompany Notes will affect the taxable income of the Company and TRS Holdings. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company follows FASB ASC Topic 820-10, Fair Value Measurement (“ASC 820-10”), which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure requirements for fair value measurements. ASC 820-10 determines fair value to be the price that would be received for a financial instrument in a current sale, which assumes an orderly transaction between market participants on the measurement date. The financial instruments recorded at fair value on a recurring basis in the Company’s consolidated financial statements are derivative instruments, MSRs and loans held for sale. ASC 820-10 specifies a hierarchy of valuation techniques based on the inputs used in measuring fair value. In accordance with ASC 820-10, the inputs used to measure fair value are summarized in the three broad levels listed below: • Level I-Quoted prices in active markets for identical assets or liabilities. • Level II-Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. • Level III-Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced. Financial Instruments Reported at Fair Value The Company has certain assets and liabilities that are required to be recorded at fair value on a recurring basis in accordance with GAAP. Financial instruments reported at fair value in the Company’s consolidated financial statements include MSRs, MSR purchase commitments, loan commitments, forward sale commitments and loans held for sale. Summarized financial information for the discontinued Mortgage Banking segment is shown in Note 17 included in these consolidated financial statements, which includes the financial instruments noted above. The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of December 31, 2015 and 2014 ($ in thousands): Fair Value as of December 31, 2015 Level I Level II Level III Total Loans held for sale $ — $ 30,612 $ — $ 30,612 Mortgage servicing rights — — 61,800 61,800 Derivative assets: Loan commitments — — 8,450 8,450 Forward sale commitments — — 25 25 MSR purchase commitment — — 330 330 Derivative liabilities: Forward sale commitments — — (1,868 ) (1,868 ) Fair Value as of December 31, 2014 Level I Level II Level III Total Loans held for sale $ — $ 203,006 $ — $ 203,006 Mortgage servicing rights — — 58,889 58,889 Derivative assets: Loan commitments — — 3,082 3,082 Forward sale commitments — — 116 116 Derivative liabilities: Forward sale commitments — — (1,528 ) (1,528 ) There were no transfers between the levels as of December 31, 2015 and 2014 . Transfers between levels are recognized based on the fair value of the financial instrument at the beginning of the period. Loan commitments and forward sale commitments are valued based on a discounted cash flow model that incorporates changes in interest rates during the period. The MSRs and the MSR purchase commitment are valued based on discounted cash flow models that calculate the present value of estimated future net servicing income. The model considers contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. The loans held for sale are valued based on discounted cash flow models that incorporate quoted observable prices from market participants. The valuation of derivative instruments are determined using widely accepted valuation techniques, including market yield analyses and discounted cash flow analysis on the expected cash flows of each derivative. The following table summarizes the significant unobservable inputs the Company used to value financial instruments categorized within Level III as of December 31, 2015 ($ in thousands): Unobservable Input Fair Primary Weighted Asset Category Value Valuation Technique Input Range Average Mortgage servicing rights $ 61,800 Discounted cash flow Discount rate 8 - 14% 11.1% Loan commitments and forward sale commitments 6,607 Discounted cash flow Discount rate 8 - 12% 8.2% MSR purchase commitment 330 Discounted cash flow Discount rate 8% 8.0% The following table summarizes the significant unobservable inputs the Company used to value financial instruments categorized within Level III as of December 31, 2014 ($ in thousands): Unobservable Input Fair Primary Weighted Asset Category Value Valuation Technique Input Range Average Mortgage servicing rights $ 58,889 Discounted cash flow Discount rate 8 - 14% 11.4% Loan commitments and forward sale commitments 1,670 Discounted cash flow Discount rate 8 - 8% 8.0% The tables above are not intended to be all-inclusive, but instead are intended to capture the significant unobservable inputs relevant to the Company’s determination of fair values. Changes in market yields, discount rates or EBITDA multiples, each in isolation, may have changed the fair value of the financial instruments. Generally, an increase in market yields or discount rates or a decrease in EBITDA multiples may have resulted in a decrease in the fair value of the financial instruments. The Company’s management is responsible for the Company’s fair value valuation policies, processes and procedures related to Level III financial instruments. The Company’s management reports to the Company’s Chief Financial Officer, who has final authority over the valuation of the Company’s Level III financial instruments. The following table summarizes the change in derivative assets and liabilities classified as Level III related to mortgage banking activities as of and for the years ended December 31, 2015 and 2014 ($ in thousands): Balance at December 31, 2013 $ 3,527 Settlements (8,893 ) Realized gains (losses) recorded in net income (1) 5,366 Unrealized gains (losses) recorded in net income (1) 1,670 Balance at December 31, 2014 $ 1,670 Settlements (23,675 ) Realized gains (losses) recorded in net income (1) 22,005 Unrealized gains (losses) recorded in net income (1) 6,937 Balance at December 31, 2015 $ 6,937 ______________________________________________________________________________ (1) Realized and unrealized gains (losses) from derivatives are included within gains from mortgage banking activities for the years ended December 31, 2015, 2014 and 2013 in the reconciliation of net income from discontinued operations held for sale, net of income taxes. See Note 17 included in these consolidated financial statements for more information. See Note 4 included in these consolidated financial statements for the changes in MSRs that are classified as Level III. As of December 31, 2015 and 2014 , the carrying values and fair values of the Company’s financial assets and liabilities recorded at cost are as follows ($ in thousands): As of December 31, 2015 2014 Level in Fair Value Hierarchy Carrying Value Fair Value Carrying Value Fair Value Financial assets: Loans held for investment 3 $ 1,174,391 $ 1,180,421 $ 1,462,584 $ 1,472,891 Financial liabilities: Secured funding agreements 2 $ 522,775 $ 522,775 $ 552,799 $ 552,799 Warehouse lines of credit 2 24,806 24,806 193,165 193,165 Secured term loan 2 69,762 75,000 — — Convertible notes 2 — — 67,414 69,000 Commercial mortgage-backed securitization debt (consolidated VIE) 3 61,815 61,856 217,495 219,043 Collateralized loan obligation securitization debt (consolidated VIE) 3 192,528 193,419 305,734 308,703 The carrying values of cash and cash equivalents, restricted cash, interest receivable, due to affiliate liability and accrued expenses approximate their fair values due to their short-term nature. Loans held for investment are recorded at cost, net of unamortized loan fees and origination costs and net of an allowance for loan losses. The Company may record fair value adjustments on a nonrecurring basis when it has determined that it is necessary to record a specific reserve against a loan and the Company measures such specific reserve using the fair value of the loan’s collateral. To determine the fair value of the collateral, the Company may employ different approaches depending on the type of collateral. The Financing Agreements, convertible notes, CMBS debt and collateralized loan obligation ("CLO") debt are recorded at outstanding principal, which is the Company’s best estimate of the fair value. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Management Agreement The Company is party to a Management Agreement under which ACREM, subject to the supervision and oversight of the Company’s board of directors, is responsible for, among other duties, (a) performing all of the Company’s day-to-day functions, (b) determining the Company’s investment strategy and guidelines in conjunction with the Company’s board of directors, (c) sourcing, analyzing and executing investments, asset sales and financing, and (d) performing portfolio management duties. In addition, ACREM has an Investment Committee that oversees compliance with the Company’s investment strategy and guidelines, investment portfolio holdings and financing strategy. In exchange for its services, ACREM is entitled to receive a base management fee, an incentive fee, expense reimbursements, grants of equity-based awards pursuant to the Company’s 2012 Equity Incentive Plan and a termination fee, if applicable. The base management fee is equal to 1.5% of the Company’s stockholders’ equity per annum, which is calculated and payable quarterly in arrears in cash. For purposes of calculating the base management fee, stockholders’ equity means: (a) the sum of (i) the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (ii) the Company’s retained earnings at the end of the most recently completed fiscal quarter determined in accordance with GAAP (without taking into account any non-cash equity compensation expense incurred in current or prior periods); less (b) (x) any amount that the Company has paid to repurchase the Company’s common stock since inception, (y) any unrealized gains and losses and other non-cash items that have impacted stockholders’ equity as reported in the Company’s consolidated financial statements prepared in accordance with GAAP, and (z) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between ACREM and the Company’s independent directors and approval by a majority of the Company’s independent directors. As a result, the Company’s stockholders’ equity, for purposes of calculating the management fee, could be greater or less than the amount of stockholders’ equity shown in the Company’s consolidated financial statements. The incentive fee is an amount, not less than zero, equal to the difference between: (a) the product of (i) 20% and (ii) the difference between (A) the Company’s Core Earnings (as defined below) for the previous 12 -month period, and (B) the product of (1)the weighted average of the issue price per share of the Company’s common stock of all of the Company’s public offerings of common stock multiplied by the weighted average number of all shares of common stock outstanding including any restricted shares of the Company’s common stock, restricted stock units or any shares of the Company’s common stock not yet issued, but underlying other awards granted under the Company’s 2012 Equity Incentive Plan (see Note 10 included in these consolidated financial statements) in the previous 12 -month period, and (2) 8% ; and (b) the sum of any incentive fees earned by ACREM with respect to the first three fiscal quarters of such previous 12 -month period; provided , however , that no incentive fee is payable with respect to any fiscal quarter unless cumulative Core Earnings for the 12 most recently completed fiscal quarters is greater than zero . “Core Earnings” is a non-GAAP measure and is defined as GAAP net income (loss) computed in accordance with GAAP, excluding non-cash equity compensation expense, the incentive fee, depreciation and amortization (to the extent that any of the Company’s target investments are structured as debt and the Company forecloses on any properties underlying such debt), any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss), and one-time events pursuant to changes in GAAP and certain non-cash charges after discussions between ACREM and the Company’s independent directors and after approval by a majority of the Company’s independent directors. No incentive fees were incurred for the years ended December 31, 2015, 2014 and 2013 . The Company reimburses ACREM at cost for operating expenses that ACREM incurs on the Company’s behalf, including expenses relating to legal, financial, accounting, servicing, due diligence and other services. The Company will not reimburse ACREM for the salaries and other compensation of its personnel, except for the allocable share of the salaries and other compensation of the Company’s (a) Chief Financial Officer, based on the percentage of his time spent on the Company’s affairs and (b) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance and other non-investment professional personnel of ACREM or its affiliates who spend all or a portion of their time managing the Company’s affairs based on the percentage of their time spent on the Company’s affairs. The Company is also required to pay its pro rata portion of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of ACREM and its affiliates that are required for the Company’s operations. The term of the Management Agreement ends on May 1, 2016, with automatic one -year renewal terms thereafter. Except under limited circumstances, upon a termination of the Management Agreement, the Company will pay ACREM a termination fee equal to three times the average annual base management fee and incentive fee received by ACREM during the 24 -month period immediately preceding the most recently completed fiscal quarter prior to the date of termination, each as described above. Certain of the Company’s subsidiaries, along with the Company’s lenders under certain of the Company's Secured Funding Agreements, as well as under the CMBS and CLO have entered into various servicing agreements with ACREM’s subsidiary servicer, Ares Commercial Real Estate Servicer LLC (“ACRES”), a Standard & Poor’s-rated commercial special servicer that is included on Standard & Poor’s Select Servicer List. Effective January 1, 2015, ACREM transferred primary servicing of the Company’s loans held for investment to ACRE Capital. The Company’s Manager will specially service, as needed, certain of the Company’s investments. Effective May 1, 2012, ACRES agreed that no servicing fees pursuant to these servicing agreements would be charged to the Company or its subsidiaries by ACRES or the Manager for so long as the Management Agreement remains in effect, but that ACRES will continue to receive reimbursement for overhead related to servicing and operational activities pursuant to the terms of the Management Agreement. In September 2013, the Company and ACREM entered into an amendment to the Management Agreement whereby ACREM agreed not to seek reimbursement of restricted costs in excess of $1.0 million per quarter for the quarterly periods between September 30, 2013 through December 31, 2014. Summarized below are the related party costs incurred by the Company, related to continuing operations, for the years ended December 31, 2015, 2014 and 2013 and amounts payable to the Company's Manager as of December 31, 2015 and 2014 ($ in thousands): Incurred Payable For the year ended December 31, As of December 31, 2015 2014 2013 2015 2014 Affiliate Payments Management fees $ 5,397 $ 5,440 $ 4,125 $ 1,357 $ 1,348 General and administrative expenses 3,426 3,400 3,394 835 853 Direct costs 1,466 716 450 232 231 Total $ 10,289 $ 9,556 $ 7,969 $ 2,424 $ 2,432 Summarized below are the related party costs incurred by the Company, related to discontinued operations held for sale, for the years ended December 31, 2015, 2014 and 2013 and amounts payable to the Company's Manager as of December 31, 2015 and 2014 ($ in thousands): Incurred Payable For the year ended December 31, As of December 31, 2015 2014 2013 2015 2014 Affiliate Payments Management fees $ 551 $ 476 $ 116 $ 144 $ 123 General and administrative expenses 452 600 216 84 147 Direct costs 23 145 319 6 33 Total $ 1,026 $ 1,221 $ 651 $ 234 $ 303 Ares Investments Holdings LLC As of December 31, 2014, Ares Investments Holdings LLC, a wholly owned subsidiary of Ares Management, owned $1.2 million aggregate principal amount of the 2015 Convertible Notes. In December 2015, the 2015 Convertible Notes matured and were repaid at par. Credit Support Fee Agreement In July 2014, the Company and certain of its subsidiaries entered into a Credit Support Fee Agreement with Ares Management under which the Company agreed to pay Ares Management a credit support fee in an amount equal to 1.50% per annum times the average amount of the loans outstanding under the July 2014 CNB Facility and to reimburse Ares Management for its out-of-pocket costs and expenses in connection with the transaction. During the years ended December 31, 2015 and 2014 , the Company incurred a credit support fee of $ 1.0 million and $ 278 thousand, respectively, under the July 2014 CNB Facility which is included within interest expense in the Company's consolidated statements of operations. In connection with the Credit Support Fee Agreement, the Company entered into a Pledge Agreement pursuant to which the Company pledged to Ares Management its ownership interests in its wholly owned direct subsidiary, ACRC Holdings LLC, the holding entity for the Company’s principal lending business. On December 18, 2015, the Pledge Agreement with Ares Management was terminated. In July 2015, the Company exercised a 12 -month extension option to extend the maturity date of the July 2014 CNB Facility to July 31, 2016. See Note 6 included in these consolidated financial statements for more information on the July 2014 CNB Facility. |
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS AND DISTRIBUTIONS | 12 Months Ended |
Dec. 31, 2015 | |
DIVIDENDS AND DISTRIBUTIONS | |
DIVIDENDS AND DISTRIBUTIONS | 15. DIVIDENDS AND DISTRIBUTIONS The following table summarizes the Company’s dividends declared during the years ended December 31, 2015, 2014 and 2013 ($ in thousands, except per share data): Date declared Record date Payment date Per share amount Total amount November 5, 2015 December 31, 2015 January 19, 2016 $ 0.25 $ 7,152 July 30, 2015 September 30, 2015 October 15, 2015 0.25 7,152 May 7, 2015 June 30, 2015 July 15, 2015 0.25 7,152 March 5, 2015 March 31, 2015 April 15, 2015 0.25 7,146 Total cash dividends declared for the year ended December 31, 2015 $ 1.00 $ 28,602 November 10, 2014 December 31, 2014 January 15, 2015 $ 0.25 $ 7,147 August 6, 2014 September 30, 2014 October 15, 2014 0.25 7,151 May 7, 2014 June 30, 2014 July 16, 2014 0.25 7,151 March 17, 2014 March 31, 2014 April 16, 2014 0.25 7,147 Total cash dividends declared for the year ended December 31, 2014 $ 1.00 $ 28,596 November 13, 2013 December 31, 2013 January 22, 2014 $ 0.25 $ 7,127 August 7, 2013 September 30, 2013 October 17, 2013 0.25 7,119 May 15, 2013 June 28, 2013 July 18, 2013 0.25 6,822 March 14, 2013 April 08, 2013 April 18, 2013 0.25 2,317 Total cash dividends declared for the year ended December 31, 2013 $ 1.00 $ 23,385 |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 12 Months Ended |
Dec. 31, 2015 | |
VARIABLE INTEREST ENTITIES | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES Consolidated VIEs As discussed in Note 2 , the Company evaluates all of its investments and other interests in entities for consolidation, including its investments in: (a) the CMBS transaction and the Company’s retained interests in the subordinated classes of the certificates issued by the Trust (as defined below) it initiated and (b) the CLO transaction and the Company's retained interests in the subordinated notes and preferred equity of the Issuer (as defined below) and (c) a preferred equity investment in an LLC entity (discussed below), all of which are generally considered to be variable interests in a VIE. The Trust and Issuer together are referred herein as the Company's "Securitization VIEs." CMBS Securitization In connection with forming ACRE Commercial Mortgage Trust 2013-FL1 (the "Trust"), ACRC 2013-FL1 Depositor LLC (the "Depositor"), a wholly owned subsidiary of the Company, entered into a Pooling and Servicing Agreement dated as of November 1, 2013 (as amended on March 28, 2014, the "Pooling and Servicing Agreement") with Wells Fargo as master servicer, ACRES as servicer, U.S. Bank National Association as trustee, and Trimont Real Estate Advisors Inc. as trust advisor. The Trust is treated for U.S. federal income tax purposes as a real estate mortgage investment conduit. The Pooling and Servicing Agreement governs the issuance of approximately $493.8 million aggregate principal balance commercial mortgage pass through certificates in a CMBS effected by the Depositor. In connection with the securitization, the Depositor contributed a pool of 18 adjustable rate participation interests in commercial mortgage loans to the Trust. The commercial mortgage loans were originated by the Company or its subsidiaries and are secured by 27 commercial properties. The certificates represent, in the aggregate, the entire beneficial ownership interest in, and the obligations of, the Trust. In connection with the securitization, the Company offered and sold the following classes of certificates: Class A, Class B, Class C and Class D Certificates (collectively, the "Offered Certificates") to third parties pursuant to an offering made privately in transactions exempt from the registration requirements of the Securities Act of 1933 (the "Securities Act"). A s of December 31, 2015 and 2014, the aggregate principal balance of the Offered Certificates was approximately $61.9 million and $219.0 million , respectively. In addition, a wholly owned subsidiary of the Company retained approximately $98.8 million of the certificates. The Company, as the holder of the subordinated classes of the Trust, has the obligation to absorb losses of the Trust, since the Company has a first loss position in the capital structure of the Trust. CLO Securitization On August 15, 2014, ACRE Commercial Mortgage 2014-FL2 Ltd. (the "Issuer") and ACRE Commercial Mortgage 2014-FL2 LLC ("Co-Issuer"), both wholly owned indirect subsidiaries of the Company, entered into an indenture with Wells Fargo as advancing agent and note administrator and Wilmington Trust, National Association as trustee, which governs the issuance of approximately $346.1 million principal balance secured floating rate notes (the "Notes") and $32.7 million of preferred equity in the Issuer. For U.S. federal income tax purposes, the Issuer and Co-Issuer are disregarded entities. The Notes are collateralized by interests in a pool of 15 mortgage assets having a total principal balance of $378.8 million (the "Mortgage Assets") originated by a subsidiary of the Company. The sale of the Mortgage Assets to the Issuer is governed by a Mortgage Asset Purchase Agreement dated as of August 15, 2014, between ACRC Lender LLC and the Issuer. In connection with the securitization, the Issuer and Co-Issuer offered and sold the following classes of Notes: Class A, Class A-S, Class B, Class C and Class D Notes to third parties. A wholly owned subsidiary of the Company retained approximately $37.4 million of the most subordinate Notes and all of the preferred equity in the Issuer. The Company, as the holder of the subordinated Notes and all of the preferred equity in the Issuer, has the obligation to absorb losses of the CLO, since the Company has a first loss position in the capital structure of the CLO. As of December 31, 2015 and 2014, the aggregate principal balance of the Offered Notes was approximately $193.4 million and $308.7 million , respectively. Summary of Securitization VIEs As the directing holder of the CMBS and the CLO, the Company has the ability to direct activities that could significantly impact the Securitization VIEs’ economic performance. If an unrelated third party had the right to unilaterally remove the special servicer, then the Company would not have the power to direct activities that most significantly impact the Securitization VIEs' economic performance. In addition, there are no substantive kick-out rights of any unrelated third party to remove the special servicer without cause. The Company’s subsidiaries, as directing holders, have the ability to remove the special servicer without cause. Based on these factors, the Company is determined to be the primary beneficiary of these Securitization VIEs; thus, the Securitization VIEs are consolidated into the Company’s consolidated financial statements. ACRE Capital is designated as primary servicer and ACRES as special servicer of the CMBS and the CLO. ACRES has the power to direct activities during the loan workout process on defaulted and delinquent loans, which is the activity that most significantly impacts the Securitization VIEs' economic performance. ACRE Capital and ACRES waive the servicing and special servicing fees and the Company pays its overhead costs, as with other servicing agreements. The Securitization VIEs consolidated in accordance with FASB ASC Topic 810 are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate and note holders, as applicable. The assets and other instruments held by the Securitization VIEs are restricted and can only be used to fulfill the obligations of the Securitization VIEs. Additionally, the obligations of the Securitization VIEs do not have any recourse to the general credit of any other consolidated entities, nor to the Company as the primary beneficiary. The inclusion of the assets and liabilities of Securitization VIEs of which the Company is deemed the primary beneficiary has no economic effect on the Company. The Company’s exposure to the obligations of Securitization VIEs is generally limited to its investment in these entities. The Company is not obligated to provide, nor has it provided, any financial su pport for any of these consolidated structures. As such, the risk associated with the Company’s involvement in these Securitization VIEs is limited to the carrying value of its investment in the entity. As of December 31, 2015 and 2014 , the Company’s maximum risk of loss was $ 168.8 million, which represents the carrying value of its investment in the Securitization VIEs. For the years ended December 31, 2015 and 2014 , the Company incurred interest expense related to the Securitization VIEs of $ 7.6 million and $ 9.1 million, respectively, which is included within interest expense in the Company’s consolidated statements of operations. Investment in VIE On December 19, 2014, the Company and third party institutional investors formed a limited liability company, ACRC KA, which acquired $170.0 million of preferred equity in a REIT whose assets were comprised of a portfolio of 22 multifamily, student housing, medical office and self-storage properties managed by its sponsor. The Company’s investme nt in ACRC KA is considered to be an investment in a VIE. As of December 31, 2015 and 2014 , the Company owned a controlling financial interest of 51.0% and 54.3% , respectively, of the equity shares in the VIE and the third party institutional investors owned the remaining 49.0% and 45.7% , respectively, a minority financial interest. The preferred equity shares are entitled to a preferred monthly return over the term of the investment at a fixed rate of 10.95% pe r annum. ACREM is the non-member manager of the VIE. Based on the terms of the ACRC KA LLC agreement, ACREM has the ability to direct activities that could significantly impact the VIE’s economic performance. There are no substantive kick-out rights held by the third party institutional investors to remove ACREM as the non-member manager without cause. As ACREM serves as the manager of the Company, the Company has the right to receive benefits from the VIE that could potentially be significant. As such, the Company is deemed to be the primary beneficiary of the VIE and the party that is most closely associated with the VIE. Thus, the VIE is consolidated into the Company’s consolidated financial statements and the preferred equity interests owned by the third party institutional investors are reflected as a non-controlling interest held by third parties within the Company’s consolidated balance sheets. As of December 31, 2015 and 2014 , the carrying value of the preferred equity investment, which is net of unamortized fees and origination cost s, was $ 93.9 million and $ 168.4 million, respectively, and is included within loans held for investment in the consolidated balance sheets. The risk associated solely with respect to the Company’s investment in this VIE is limited to the outstanding principal of its investment in the entity. As of December 31, 2015 and 2014 , the Company’s maximum risk of loss solely with respect to this investment was $ 48.5 m illion and $ 92.4 million, respectively. Unconsolidated VIEs The Company also holds variable interests in VIEs structured as preferred equity investments, where the Company does not have a controlling financial interest. For these structures, the Company is not deemed to be the primary beneficiary of the VIE, and the Company does not consolidate these VIEs. These preferred equity investments are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included within loans held for investment in the Company’s consolidated balance sheets. The Company is not obligated to provide, nor has it provided, any financial support for any of the Company’s unconsolidated VIEs. As such, the risks associated with the Company’s involvement in these unconsolidated VIEs are limited to the outstanding principal of the Company’s investment in the entity. The following table presents the carrying value and the maximum exposure to loss of unconsolidated VIEs as of December 31, 2015 and 2014 ($ in thousands): As of December 31, 2015 2014 Carrying value $ 55,144 $ 38,982 Maximum exposure to loss $ 55,704 $ 39,608 |
DISCONTINUED OPERATIONS HELD FO
DISCONTINUED OPERATIONS HELD FOR SALE | 12 Months Ended |
Dec. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUE OPERATIONS HELD FOR SALE | DISCONTINUED OPERATIONS HELD FOR SALE On June 28, 2016, the Company entered into the Agreement to sell all of the outstanding common units of TRS Holdings. The Acquisition closed on September 30, 2016. As a result of the sale of the outstanding common units of TRS Holdings, certain account balances and footnotes have been revised accordingly. See Note 1 included in these consolidated financial statements for further discussion of the sale. The following information reconciles the carrying amounts of major classes of assets and liabilities of the discontinued operations held for sale to assets and liabilities of discontinued operations held for sale that are presented separately in the consolidated balance sheets: As of December 31, 2015 2014 ASSETS Cash and cash equivalents $ 3,929 $ 1,506 Restricted cash 17,297 16,442 Loans held for sale, at fair value 30,612 203,006 Mortgage servicing rights, at fair value 61,800 58,889 Other assets 19,613 15,045 Assets of discontinued operations held for sale $ 133,251 $ 294,888 LIABILITIES Warehouse lines of credit $ 24,806 $ 193,165 Allowance for loss sharing 8,969 12,349 Due to affiliate 234 303 Other liabilities 17,522 11,756 Liabilities of discontinued operations held for sale $ 51,531 $ 217,573 The following information reconciles the net income from discontinued operations held for sale, net of income taxes, that are presented separately in the consolidated statements of operations: For the year ended December 31, 2015 2014 2013 Mortgage banking revenue: Servicing fees, net $ 16,051 $ 16,399 $ 5,754 Gains from mortgage banking activities 27,067 17,492 5,019 Provision for loss sharing 1,093 1,364 (6 ) Change in fair value of mortgage servicing rights (8,798 ) (7,650 ) (2,697 ) Mortgage banking revenue 35,413 27,605 8,070 Gain on sale of loans — — 1,333 Total revenue 35,413 27,605 9,403 Expenses: Management fees to affiliate 551 476 116 Professional fees 1,073 1,047 477 Compensation and benefits 20,448 18,649 5,456 General and administrative expenses 3,965 6,249 1,525 General and administrative expenses reimbursed to affiliate 452 600 216 Total expenses 26,489 27,021 7,790 Income before income taxes 8,924 584 1,613 Income tax expense (benefit) 1,939 (1,283 ) 176 Net income from discontinued operations held for sale, net of income taxes $ 6,985 $ 1,867 $ 1,437 |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
ACQUISITIONS | Asset Acquisition On August 25, 2014, ACRE Capital entered into a MSR purchase agreement (the “Purchase Agreement”) with a third party which has been accounted for as an asset acquisition under FASB ASC Topic 805, Business Combinations (“ASC 805”). Under the Purchase Agreement, ACRE Capital agreed to purchase the rights to service a portfolio of 46 Freddie Mac multifamily mortgage loans with a total unpaid principal balance of approximately $ 370.6 million . The aggregate purchase price was approximately $ 2.2 million , which also included a premium for the Freddie Mac Program Plus® Seller/Servicer license that ACRE Capital was issued by Freddie Mac in connection with the acquisition of the Freddie Mac MSR portfolio. ACRE Capital initially recorded the acquired MSRs at fair value in the amount of $ 1.3 million and subsequently accounted for these MSRs at fair value consistent with the MSR policy in Note 2 included in these consolidated financial statements. The remaining purchase price of $ 941 thousand was allocated to the Freddie Mac Program Plus® Seller/Servicer license, an indefinite-lived intangible asset. See Note 5 included in these consolidated financial statements for additional information on this license. On September 16, 2014, ACRE Capital completed the acquisition of the servicing portfolio and legal ownership of the MSRs was transferred to ACRE Capital. See Note 17 included in these consolidated financial statements for more information on the sale of ACRE Capital. Business Combination On August 30, 2013, the Company completed its acquisition of all of the outstanding common units of ACRE Capital from the Sellers. For accounting purposes, the acquisition was deemed to be effective on the close of business September 1, 2013, or the “Accounting Effective Date.” Pursuant to the Purchase and Sale Agreement, dated as of May 14, 2013, by and among the Company and the Sellers, the Company paid approximately $53.4 million in cash, subject to adjustment, and issued 588,235 shares of its common stock in a private placement exempt from registration under Section 4(2) of the Securities Act resulting in total consideration paid of approximately $60.9 million . The transaction was accounted for as a business combination under ASC 805. The Sellers provided the Company with a minimum working capital balance prior to the Accounting Effective Date. To the extent actual working capital exceeded or fell below the minimum requirement, the Company would either pay or receive funds from the Sellers. There have been no adjustments to the gain on acquisition during the years ended December 31, 2015 and 2014. The gain on acquisition was $4.4 million , which was recognized for the year ended December 31, 2013. |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | QUARTERLY FINANCIAL DATA (UNAUDITED) The following table summarizes the Company's quarterly financial results for each quarter of the years ended December 31, 2015 and 2014 ($ in thousands, except per share data): For the three month period ended, March 31 June 30 September 30 December 31 2015: Total revenue $ 12,992 $ 12,311 $ 12,242 $ 12,450 Net income attributable to ACRE $ 9,295 $ 11,263 $ 11,710 $ 11,052 Net income attributable to common stockholders $ 7,062 $ 8,967 $ 9,379 $ 8,877 Net income per common share-Basic $ 0.25 $ 0.31 $ 0.33 $ 0.31 Net income per common share-Diluted $ 0.25 $ 0.31 $ 0.33 $ 0.31 2014: Total revenue (1) $ 9,207 $ 9,321 $ 8,352 $ 10,658 Net income attributable to ACRE $ 4,755 $ 6,638 $ 4,102 $ 9,121 Net income attributable to common stockholders $ 4,755 $ 6,638 $ 4,102 $ 8,901 Net income per common share-Basic $ 0.17 $ 0.23 $ 0.14 $ 0.31 Net income per common share-Diluted $ 0.17 $ 0.23 $ 0.14 $ 0.31 ______________________________________________________________________________ (1) As of December 31, 2014, the Company no longer presents other interest expense in its consolidated statements of operations. Total revenue has been adjusted from the previously filed Forms 10-Q as of March 31, June 30 and September 30, 2014 to reflect the reclassification of other interest expense. Other interest expense related to the 2015 Convertible Notes has been reclassified into interest expense, other interest expense related to the Warehouse Lines of Credit has been reclassified into gains from mortgage banking activities and other interest expense related to escrow accounts has been reclassified into servicing fees, net in the consolidated statements of operations. The impact of these reclasses is a decrease in total revenue by $1.7 million , $1.8 million and $1.9 million , respectively, for the three month periods ending March 31, June 30 and September 30, 2014, respectively. |
COSTS ASSOCIATED WITH RESTRUCTU
COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES | COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES During the three months ended March 31, 2014, the Company began restructuring and relocating certain ACRE Capital support services in order to centralize the ACRE Capital platform into one location, including the asset management team and leadership. For the years ended December 31, 2015 and 2014, ACRE Capital incurred restructuring costs of $44 thousand and $799 thousand , respectively. The table below presents a reconciliation of the liability attributable to restructuring costs incurred by ACRE Capital as of and for the years ending December 31, 2015 and 2014 ($ in thousands): Employee Termination Costs Balance at January 1, 2014 $ — Accruals 799 Payments (574 ) Balance at December 31, 2014 (1) $ 225 Accruals 44 Payments (269 ) Balance at December 31, 2015 $ — (1) The liability attributable to restructuring costs is included in other liabilities as of December 31, 2014 in the reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations held for sale to assets and liabilities of discontinued operations held for sale that are presented separately in the consolidated balance sheets. The restructuring costs are included in general and administrative expenses for the years ended December 31, 2015, 2014 and 2013 in the reconciliation of net income from discontinued operations held for sale, net of income taxes. See Note 17 included in these consolidated financial statements for more information. The employee termination costs above are associated with employee severance compensation, retention bonuses and guaranteed bonuses to certain key employees, insurance and outplacement. The costs incurred above are included within general and administrative expenses in the Company’s consolidated statements of operations. As of December 31, 2014, the restructuring was complete and all costs were measured; however, the Company recognized restructuring costs through the first quarter of 2015. This measurement included employee costs for employees that were required to render service (beyond a minimum retention period) in order to receive the termination benefits; the Company recognized a liability ratably over the service period. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 8-K or would be required to be recognized in the consolidated financial statements as of and for the year ended December 31, 2015 , except as disclosed below. On January 20, 2016, the Company originated a $56.0 million first mortgage loan on a hotel portfolio located in California. At closing, the outstanding principal balance was approximately $56.0 million . The loan has an interest rate of LIBOR +4.75% (plus origination and exit fees) subject to a 0.25% LIBOR floor and an initial term of three years. On February 26, 2016, the Company amended its BAML Facility to expand the eligible assets to include loans secured by general and affordable multifamily properties. On February 26, 2016, the Company amended its March 2014 CNB Facility to extend the maturity date to March 11, 2017. In addition, the Company continues to have one 12 -month extension at its option provided that certain conditions are met and applicable extension fees are paid, which, if exercised, would extend the final maturity of the March 2014 CNB Facility to March 10, 2018. On February 28, 2016, the Company’s board of directors increased the size of the existing $20.0 million stock repurchase program to $30.0 million and extended the stock repurchase program through March 31, 2017. See ‘‘Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities—Issuer Purchases of Equity Securities’’ for more information on the stock repurchase program. On March 1, 2016 , the Company declared a cash dividend of $ 0.26 per common share for the first quarter of 2016 . The first quarter 2016 dividend is payable on April 15, 2016 to common stockholders of record as of March 31, 2016 . |
SIGNIFICANT ACCOUNTING POLICI28
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”) and include the accounts of the Company, the consolidated variable interest entities (“VIEs”) that the Company controls and of which the Company is the primary beneficiary, and the Company's wholly owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated. |
Variable Interest Entities | Variable Interest Entities The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 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. The Company considers its variable interests, as well as any variable interests of its related parties in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and it consolidates the VIE. Where either one of these factors is not present, the Company is not the primary beneficiary and it does not consolidate the VIE. To assess whether the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Company considers all facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. To assess whether the Company has 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, the Company considers all of its economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that the Company applies 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 the Company. For VIEs of which the Company is determined to be the primary beneficiary, all of the underlying assets, liabilities, equity, revenue and expenses of the structures are consolidated into the Company’s consolidated financial statements. The Company performs an ongoing reassessment of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding its involvement with a VIE cause the Company’s consolidation conclusion regarding the VIE to change. See Note 16 included in these consolidated financial statements for further discussion of the Company’s VIEs. |
Segment Reporting | Segment Reporting The Company previously had two reportable business segments: Principal Lending and Mortgage Banking. As a result of the sale of TRS Holdings, the operations of the Mortgage Banking segment have been reclassified as discontinued operations held for sale in all periods presented. After giving effect to the divestiture of TRS Holdings, the Company will no longer provide segment reporting. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Amortization of convertible notes issuance costs and accretion of convertible notes have been reclassified into amortization of deferred financing costs in the consolidated statements of cash flows. As of December 31, 2015, the Company no longer presents amortization of convertible notes issuance costs and accretion of convertible notes in its consolidated statements of cash flows. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions. Cash and short-term investments with an original maturity of three months or less when acquired are considered cash and cash equivalents for the purpose of the consolidated balance sheets and statements of cash flows. |
Restricted Cash | Restricted Cash Restricted cash includes escrow deposits for taxes, insurance, leasing outlays, capital expenditures, tenant security deposits and payments required under certain loan agreements. These escrow deposits are held on behalf of the respective borrowers and are offset by escrow liabilities included in other liabilities in the consolidated balance sheets. In connection with its mortgage banking business, the Company held restricted cash, which consisted of reserves that are a requirement of the Fannie Mae DUS program and borrower deposits, which represent funds that were collected for the processing of the borrowers loan applications and loan commitments. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash, loans held for investment, MSRs, loans held for sale, interest receivable and derivative financial instruments. The Company places its cash and cash equivalents with financial institutions and, at times, cash held may exceed the FDIC-insured limit. The Company has exposure to credit risk on its loans held for investment and through its subsidiary ACRE Capital, the Company has exposure on credit risk on loans held for sale and the servicing portfolio whereby ACRE Capital shares in the risk of loss (see Note 7 included in these consolidated financial statements). The Company and the Company’s Manager seek to manage credit risk by performing due diligence prior to origination or acquisition and through the use of non-recourse financing, when and where available and appropriate. |
Loans Held for Investment | Loans Held for Investment The Company originates CRE debt and related instruments generally to be held for investment. Loans that are held for investment are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company 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, the Company will record an allowance 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. Each loan classified as held for investment is evaluated for impairment on a quarterly basis. Loans are collateralized by real estate. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its investment portfolio under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral, (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, and the borrower’s exit plan, among other factors. In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of December 31, 2015, 2014 and 2013 , the Company did not recognize any impairment charges with respect to its loans held for investment. Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding the borrower's ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. Preferred equity investments, which are subordinate to any loans but senior to common equity, are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included within loans held for investment in the Company’s consolidated balance sheets. The Company accretes or amortizes any discounts or premiums over the life of the related loan held for investment utilizing the effective interest method. |
Loans Held for Sale | Loans Held for Sale Through its subsidiaries, including ACRE Capital, ACRC Lender W TRS LLC ("ACRC W TRS") and ACRC Lender U TRS LLC ("ACRC U TRS"), the Company originates mortgage loans held for sale, which are recorded at fair value and accounted for under FASB ASC Topic 860, Transfers and Servicing . The holding period for loans originated by ACRE Capital is approximately 30 days. The carrying value of the mortgage loans sold is reduced by the value allocated to the associated retained MSRs based on relative fair value at the time of the sale. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the adjusted value of the related mortgage loans sold. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Although the Company generally holds its target investments as long-term investments within its principal lending business, the Company may occasionally classify some of its investments as held for sale. Investments held for sale will be carried at fair value within loans held for sale in the Company’s consolidated balance sheets, with changes in fair value recorded through earnings. The fees received are deferred and recognized as part of the gain or loss on sale. As of December 31, 2015 and 2014 , the Company did not have any loans held for sale in its principal lending business. |
Mortgage Servicing Rights | Mortgage Servicing Rights When a mortgage loan is sold, ACRE Capital retains the right to service the loan and recognizes the MSR at fair value. The initial fair value represents expected net cash flows from servicing, as well as interest earnings on escrows and interim cash balances, borrower prepayment penalties, delinquency rates, late charges along with ancillary fees that are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan. After initial recognition, changes in the MSR fair value are included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations for the period in which the change occurs. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. |
Intangible Assets | Intangible Assets Intangible assets consist of ACRE Capital’s licenses permitting it to participate in programs offered by Fannie Mae, Freddie Mac and HUD (including Ginnie Mae). These licenses are intangible assets with indefinite lives. The Company evaluates identified intangibles for impairment annually or if other events or circumstances indicate that the carrying value may be impaired. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs under the Company’s indebtedness are capitalized and amortized over the terms of the respective debt instrument. Debt issuance costs related to debt securitizations are capitalized and amortized over the term of the underlying loans using the effective interest method. When an underlying loan is prepaid in a debt securitization, the related unamortized debt issuance costs are charged to expense based on a pro-rata share of the debt issuance costs being allocated to the specific loans that were prepaid. Amortization of debt issuance costs is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance on (i) Secured Funding Agreements and Warehouse Lines of Credit (each individually defined in Note 6 included in these consolidated financial statements) are included within other assets and (ii) the Secured Term Loan and the 2015 Convertible Notes (each individually defined in Note 6 included in these consolidated financial statements) are included as a reduction to the carrying amount of the liability, in the Company’s consolidated balance sheets. The original issue discount ("OID") on amounts drawn under the Company's Secured Term Loan (defined in Note 6 included in these consolidated financial statements) represents a discount to the face amount of the drawn debt obligations. The OID is amortized over the term of the Secured Term Loan using the effective interest method and is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance is a reduction to the carrying amount of the Secured Term Loan in the Company’s consolidated balance sheets. |
Derivative Financial Instruments | Derivative Financial Instruments The Company does not hold or issue derivative instruments for trading purposes. The Company recognizes derivatives in its consolidated balance sheets, measures them at their estimated fair value and recognizes changes in their estimated fair value in the Company’s consolidated statements of operations for the period in which the change occurs. Through its subsidiary, ACRE Capital, the Company enters into loan commitments with borrowers on loan originations whereby the interest rate on the prospective loan is determined prior to funding. In general, ACRE Capital simultaneously enters into forward sale commitments with investors in order to hedge interest rate exposure on loan commitments. The forward sale commitment with the investor locks in an interest rate and price for the sale of the loan. The terms of the loan commitment with the borrower and the forward sale commitment with the investor are matched with the objective of hedging interest rate risk. Loan commitments and forward sale commitments are considered undesignated derivative instruments. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value, with changes in fair value recorded in earnings. On December 19, 2012, the Company issued unsecured 7.00% Convertible Senior Notes that matured in December 2015 (the “2015 Convertible Notes”). The conversion features of the 2015 Convertible Notes were deemed to be an embedded derivative under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). In accordance with ASC 815, the Company was required to bifurcate the embedded derivative related to the conversion features of the 2015 Convertible Notes. Prior to June 26, 2013, the Company recognized the embedded derivative as a liability on its balance sheet, measured at its estimated fair value and recognized changes in its estimated fair value within changes in fair value of derivatives in the Company’s consolidated statements of operations for the period in which the change occurs. See Note 9 included in these consolidated financial statements for information on the derivative liability reclassification. In December 2015, the Company repaid the entire aggregate principal amount outstanding of its 2015 Convertible Notes. See Note 6 included in these consolidated financial statements for information on the 2015 Convertible Notes redemption. |
Fair Value Measurements | Fair Value Measurements 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 financial instruments recorded at fair value on a recurring basis in the Company’s consolidated financial statements are derivative financial instruments, MSRs and loans held for sale. The Company has not elected the fair value option for certain other financial instruments, including loans held for investment, secured funding agreements and other debt instruments. Such financial instruments are carried at cost. Fair value is separately disclosed (see Note 13 included in these consolidated financial statements). |
Allowance for Loss Sharing | Allowance for Loss Sharing When a loan is sold under the Fannie Mae DUS program, ACRE Capital undertakes an obligation to partially guarantee the performance of the loan. The date ACRE Capital commits to make a loan to a borrower, a liability for the fair value of the obligation undertaken in issuing the guarantee is recognized. Subsequent to the initial commitment date, the Company monitors the performance of each loan for events or circumstances which may signal an additional liability to be recognized if there is a probable and estimable loss. The initial fair value of the guarantee is estimated by examining historical loss share experienced in the ACRE Capital Fannie Mae DUS portfolio over the most recent ten-year period. The initial fair value of the guarantee is included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations. These historical loss shares serve as a basis to derive a loss share rate which is then applied to the current ACRE Capital DUS portfolio (net of specifically identified impaired loans that are subject to a separate loss share reserve analysis). See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. |
Servicing Fee Payable | Servicing Fee Payable ACRE Capital provides additional payments to certain personnel by providing them with a percentage of the servicing fee revenue that is earned by ACRE Capital, which is initially recorded as a liability when ACRE Capital commits to make a loan to a borrower (the "servicing fee payable"). The initial fair value of the liability represents the expected net cash payments over the life of the related mortgage loan that are discounted at a rate that reflects the credit and liquidity risk of the related MSR. ACRE Capital incurs an expense over the life of each loan as long as the related loan is performing. If a particular loan is not performing, the recipient will not receive the additional compensation on that loan, and if a loss sharing event is triggered, the recipient will not receive a portion of the additional compensation on other loans. The servicing fee payable is included within liabilities of discontinued operations held for sale in the consolidated balance sheets. The initial fair value of the related expense and the changes in the fair value of the servicing fee payable over the life of the related mortgage loan are included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations for the period in which the change occurs. |
Revenue Recognition | Revenue Recognition Interest income from loans held for investment is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans held for investment, origination fees, contractual exit fees and direct loan origination costs are also recognized in interest income from loans held for investment over the initial loan term as a yield adjustment using the effective interest method. A reconciliation of the Company's interest income from loans held for investment, excluding non-controlling interests, to the Company's interest income from loans held for investment as included within its consolidated statements of operations for the years ended December 31, 2015 and 2014 is as follows ($ in thousands): For the year ended December 31, 2015 2014 Interest income from loans held for investment, excluding non-controlling interests $ 77,278 $ 70,188 Interest income from non-controlling interest investment held by third parties 9,059 307 Interest income from loans held for investment $ 86,337 $ 70,495 Servicing fees are earned for servicing mortgage loans, including all activities related to servicing the loans, and are recognized as services are provided over the life of the related mortgage loan. Also included in servicing fees are the net fees earned on borrower prepayment penalties and interest earned on borrowers’ escrow payments and interim cash balances, along with other ancillary fees and reduced by write-offs of MSRs for loans that are prepaid, changes in the fair value of the servicing fee payable (defined above) and interest expense related to escrow accounts. Servicing fees, net are included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations. Gains from mortgage banking activities includes the initial fair value of MSRs, loan origination fees, gain on the sale of loans originated, interest income and fees earned on loans held for sale, changes to the fair value of derivative financial instruments attributable to the loan commitments and forward sale commitments and reduced by the expense related to the initial fair value of the servicing fee payable and the interest expense related to the Warehouse Lines of Credit (as defined in Note 6 included in these consolidated financial statements). The initial fair value of MSRs, loan origination fees, gain on the sale of loans originated, certain direct loan origination costs for loans held for sale and the expenses related to the initial fair value of the servicing fee payable are recognized when ACRE Capital commits to make a loan to a borrower. When the Company settles a sale agreement and transfers the mortgage loan to the buyer, the Company recognizes a MSR asset equal to the present value of the expected net cash flows associated with the servicing of loans sold. Gains from mortgage banking activities are included within net income from discontinued operations held for sale, net of income taxes, in the Company’s consolidated statements of operations. |
Net Interest Margin and Interest Expense | Net Interest Margin and Interest Expense Net interest margin within the consolidated statements of operations is a measure that is specific to the Company’s principal lending business and serves to measure the performance of the Company's loans held for investment as compared to its use of debt leverage. The Company includes interest income from its loans held for investment and interest expense related to its Secured Funding Agreements, securitizations debt, the Secured Term Loan and the 2015 Convertible Notes (individually defined in Note 6 included in these consolidated financial statements) in net interest margin. For the years ended December 31, 2015, 2014 and 2013 , interest expense is comprised of the following ($ in thousands): For the year ended December 31, 2015 2014 2013 Secured funding agreements and securitizations debt $ 29,740 $ 27,299 $ 8,774 Secured term loan 388 — — Convertible notes 6,214 6,338 6,199 Interest expense $ 36,342 $ 33,637 $ 14,973 |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes the cost of stock-based compensation, which is included within net income from discontinued operations held for sale, net of income taxes, for ACRE Capital and general and administrative expenses for ACRE in the consolidated statements of operations. The fair value of the time vested restricted stock or restricted stock units granted is recorded to expense on a straight-line basis over the vesting period for the award, with an offsetting increase in stockholders’ equity. For grants to directors, officers and employees, the fair value is determined based upon the market price of the stock on the grant date. See Notes 1 and 17 included in these consolidated financial statements for further discussion of the sale of the Mortgage Banking segment. Certain ACRE Capital employees were granted restricted stock that vest in proportion to various financial performance targets being met over a specified period of time. The fair value of the performance based restricted stock granted is recorded to expense on an accelerated basis, using the accelerated attribution method, over the performance period for the award, with an offsetting increase in stockholders’ equity. For performance based measures, compensation expense, net of estimated forfeitures, is recorded based on the Company’s estimate of the probable achievement of such measures. |
Underwriting Commissions and Offering Costs | Underwriting Commissions and Offering Costs Underwriting commissions and offering costs incurred in connection with common stock offerings are reflected as a reduction of additional paid-in capital. Costs incurred that are not directly associated with the completion of a common stock offering are expensed when incurred. Underwriting commissions that are the responsibility of and paid by a related party, such as the Company’s Manager, are reflected as a contribution of additional paid-in capital from a sponsor in the consolidated financial statements. |
Income Taxes | Income Taxes The Company has elected and qualified for taxation as a REIT commencing with its taxable year ended December 31, 2012. As a result of the Company’s REIT qualification and its distribution policy, the Company does not generally pay U.S. federal corporate level income taxes. Many of the REIT requirements, however, are highly technical and complex. To continue to qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Even though the Company currently qualifies for taxation as a REIT, the Company may be subject to certain U.S. federal, state, local and foreign taxes on the Company’s income and property and to U.S. federal income and excise taxes on the Company’s undistributed REIT taxable income. In connection with the acquisition of ACRE Capital, the Company created a wholly owned subsidiary, TRS Holdings, to hold the common units of ACRE Capital. The Company formed a wholly owned subsidiary in December 2013, ACRC W TRS and in March 2014, ACRC U TRS in order to issue and hold certain loans intended for sale. Prior to the acquisition, the Company owned 100% of the equity of TRS Holdings, ACRC W TRS and ACRC U TRS. Entity classification elections to be taxed as a corporation and taxable REIT subsidiary (“TRS”) elections were made with respect to TRS Holdings, ACRC W TRS and ACRC U TRS. A TRS is an entity taxed as a corporation other than a REIT in which a REIT directly or indirectly holds equity, and that has made a joint election with such REIT to be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS generally may engage in any business, including investing in assets and engaging in activities that could not be held or conducted directly by the Company without jeopardizing its qualification as a REIT. A TRS is subject to applicable U.S. federal, state, local and foreign income tax on its taxable income. In addition, as a REIT, the Company also may be subject to a 100% excise tax on certain transactions between it and its TRS that are not conducted on an arm’s-length basis. For financial reporting purposes, a provision for current and deferred taxes has been established for the portion of the Company’s GAAP consolidated earnings recognized by TRS Holdings, ACRC W TRS and ACRC U TRS. FASB ASC Topic 740, Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. As of December 31, 2015 and 2014 , based on the Company’s evaluation, there is no reserve for any uncertain income tax positions. TRS Holdings, ACRC W TRS and ACRC U TRS recognize interest and penalties, if any, related to unrecognized tax benefits within income tax expense in the consolidated statements of operations. Accrued interest and penalties, if any, are included within other liabilities in the consolidated balance sheets. |
Comprehensive Income | Comprehensive Income For the years ended December 31, 2015, 2014 and 2013 , comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements. |
Earnings per Share | Earnings per Share The Company calculates basic earnings (loss) per share by dividing net income (loss) allocable to common stockholders for the period by the weighted-average shares of common stock outstanding for that period after consideration of the earnings (loss) allocated to the Company’s restricted stock, which are participating securities as defined in GAAP. Diluted earnings (loss) per share takes into effect any dilutive instruments, such as restricted stock and convertible debt, except when doing so would be anti-dilutive. With respect to the 2015 Convertible Notes, the Company applied the treasury stock method when determining the dilutive impact on earnings per share. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. |
Business Combinations | Business Combinations The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The Company recognizes identifiable assets acquired and liabilities (both specific and contingent) assumed at their fair values at the acquisition date. Furthermore, acquisition-related costs, such as due diligence, legal and accounting fees, are not capitalized or applied in determining the fair value of the acquired assets. The excess of the assets acquired and liabilities assumed over the purchase price is recognized as a gain on acquisition. During the measurement period, the Company records adjustments to the assets acquired and liabilities assumed with corresponding adjustments to the gain on acquisition. After the measurement period, which could be up to one year after the transaction date, subsequent adjustments are recorded through earnings. |
Asset Acquisitions | Asset Acquisitions The Company accounts for acquired assets and assumed liabilities that do not meet the definition of a business as an asset acquisition, under which the cost of the acquisition is allocated to the assets acquired and liabilities assumed on a relative fair value basis. Acquisition-related costs, such as due diligence, legal and accounting fees, are capitalized as a component of the cost of the assets acquired. |
Costs Associated with Restructuring Activities | Costs Associated with Restructuring Activities The Company began restructuring and relocating certain ACRE Capital support services during the three months ended March 31, 2014. The Company incurred costs related to these restructuring activities, including employee termination costs and office relocation costs. The employee termination costs are associated with the severance of certain employees, retention bonuses and guaranteed bonuses to certain key employees, insurance and outplacement, which were accounted for on a straight-line basis over the period from notification through each employee’s termination date. If employees were required to render services (beyond a minimum retention period) in order to receive the termination benefits, a liability for employee termination costs was measured initially at the communication date based on its fair value, as of the termination date, and recognized ratably over the future service period. Office relocation costs included costs that were incurred in the physical move of offices and incremental rent costs, which were expensed when space was vacated. The costs incurred were included within general and administrative expenses in the Company’s consolidated statements of operations. The ACRE Capital restructuring was completed as of December 31, 2014. See Note 20 included in these consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The guidance in this ASU supersedes the revenue recognition requirements in Revenue Recognition (Topic 605) . Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU No. 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. In February 2015, the FASB issued ASU No. 2015-02, Consolidation: Amendments to the Consolidation Analysis (Topic 810). The guidance in this ASU includes amendments to Consolidation (Topic 810) . The new guidance modifies the consolidation analysis for limited and general partnerships and similar type entities, as well as variable interests in a VIE, particularly those that have fee arrangements and related party relationships. Additionally, it provides a scope exception to the consolidation guidance for certain entities. The amendments in ASU No. 2015-02 are effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . The new guidance modifies the requirements for reporting debt issuance costs. Under the amendments in ASU No. 2015-03, debt issuance costs related to a recognized debt liability will no longer be recorded as a separate asset, but will be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU No. 2015-03. In addition, in August 2015, the FASB issued ASU No. 2015-15, Interest-Imputation of Interest (Subtopic 835-30) . The additional guidance reiterates that the SEC would not object to an entity deferring and presenting debt issuance costs related to a line of credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings. ASU No. 2015-03 and ASU No. 2015-15 are required to be applied retrospectively for periods beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company early adopted this guidance retrospectively during the fourth quarter of 2015. As a result of adopting this guidance, the following balance sheet line items decreased as of December 31, 2014 as presented in the following table ($ in thousands): As of December 31, 2014 Other Assets Total Assets Convertible Notes Commercial Mortgage-Backed Securitization Debt Collateralized Loan Obligation Securitization Debt Total Liabilities Total Liabilities and Equity Previously reported $ 45,457 $ 1,867,653 $ 68,395 $ 219,043 $ 308,703 $ 1,386,767 $ 1,867,653 Deferred debt issuance costs (5,498 ) (5,498 ) (981 ) (1,548 ) (2,969 ) (5,498 ) (5,498 ) Current presentation $ 39,959 $ 1,862,155 $ 67,414 $ 217,495 $ 305,734 $ 1,381,269 $ 1,862,155 In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Leases (Topic 840) . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. The amendments in ASU No. 2016-02 are effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI29
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Reconciliation of interest income from loan held for investment | A reconciliation of the Company's interest income from loans held for investment, excluding non-controlling interests, to the Company's interest income from loans held for investment as included within its consolidated statements of operations for the years ended December 31, 2015 and 2014 is as follows ($ in thousands): For the year ended December 31, 2015 2014 Interest income from loans held for investment, excluding non-controlling interests $ 77,278 $ 70,188 Interest income from non-controlling interest investment held by third parties 9,059 307 Interest income from loans held for investment $ 86,337 $ 70,495 |
Schedule of interest expense | For the years ended December 31, 2015, 2014 and 2013 , interest expense is comprised of the following ($ in thousands): For the year ended December 31, 2015 2014 2013 Secured funding agreements and securitizations debt $ 29,740 $ 27,299 $ 8,774 Secured term loan 388 — — Convertible notes 6,214 6,338 6,199 Interest expense $ 36,342 $ 33,637 $ 14,973 |
Schedule of effect of adoption of new accounting guidance | The Company early adopted this guidance retrospectively during the fourth quarter of 2015. As a result of adopting this guidance, the following balance sheet line items decreased as of December 31, 2014 as presented in the following table ($ in thousands): As of December 31, 2014 Other Assets Total Assets Convertible Notes Commercial Mortgage-Backed Securitization Debt Collateralized Loan Obligation Securitization Debt Total Liabilities Total Liabilities and Equity Previously reported $ 45,457 $ 1,867,653 $ 68,395 $ 219,043 $ 308,703 $ 1,386,767 $ 1,867,653 Deferred debt issuance costs (5,498 ) (5,498 ) (981 ) (1,548 ) (2,969 ) (5,498 ) (5,498 ) Current presentation $ 39,959 $ 1,862,155 $ 67,414 $ 217,495 $ 305,734 $ 1,381,269 $ 1,862,155 |
LOANS HELD FOR INVESTMENT (Tabl
LOANS HELD FOR INVESTMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Schedule of loans held for investments | The Company’s investments in loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of December 31, 2015 and 2014 ($ in thousands): As of December 31, 2015 Carrying Amount (1) Outstanding Principal (1) Weighted Average Interest Rate Weighted Average Unleveraged Effective Yield (2) Weighted Average Remaining Life (Years) Senior mortgage loans $ 961,395 $ 965,578 4.4 % 5.1 % 1.4 Subordinated debt and preferred equity investments 166,417 168,264 10.6 % 11.2 % 5.1 Total loans held for investment portfolio (excluding non-controlling interests held by third parties) $ 1,127,812 $ 1,133,842 5.3 % 6.0 % 1.9 As of December 31, 2014 Carrying Amount (1) Outstanding Principal (1) Weighted Average Interest Rate Weighted Average Unleveraged Effective Yield (2) Weighted Average Remaining Life (Years) Senior mortgage loans $ 1,156,476 $ 1,164,055 4.5 % 5.0 % 2.1 Subordinated debt and preferred equity investments 228,499 231,226 10.3 % 10.7 % 6.1 Total loans held for investment portfolio (excluding non-controlling interests held by third parties) $ 1,384,975 $ 1,395,281 5.5 % 6.0 % 2.8 _______________________________________________________________________________ (1) The difference between the Carrying Amount and the Outstanding Principal face amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs. The tables above exclude non-controlling interests held by third parties. A reconciliation of the Carrying Amount of loans held for investment portfolio, excluding non-controlling interests, to the Carrying Amount of loans held for investment, as included within the Company's consolidated balance sheets is presented below. (2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of December 31, 2015 and 2014 as weighted by the Outstanding Principal balance of each loan. |
Reconciliation of investment portfolio excluding non-controlling interests to loans held for investment | A reconciliation of the Company's loans held for investment portfolio, excluding non-controlling interests held by third parties, to the Company's loans held for investment as included within its consolidated balance sheets is as follows ($ in thousands): As of December 31, 2015 Carrying Amount Outstanding Principal Total loans held for investment portfolio (excluding non-controlling interests held by third parties) $ 1,127,812 $ 1,133,842 Non-controlling interest investment held by third parties 46,579 46,579 Loans held for investment $ 1,174,391 $ 1,180,421 As of December 31, 2014 Carrying Amount Outstanding Principal Total loans held for investment portfolio (excluding non-controlling interests held by third parties) $ 1,384,975 $ 1,395,281 Non-controlling interest investment held by third parties 77,609 77,609 Loans held for investment $ 1,462,584 $ 1,472,890 |
Schedule of current investment portfolio and Outstanding Principal | A more detailed listing of the Company’s investment portfolio, excluding non-controlling interests, based on information available as of December 31, 2015 is as follows ($ in millions, except percentages): Loan Type Location Outstanding Principal (1) Carrying Amount (1) Interest Rate Unleveraged Effective Yield (2) Maturity Date (3) Payment Terms (4) Senior Mortgage Loans: Office TX $80.5 $80.0 L+5.00% 6.2% Jan 2017 I/O Retail IL 75.9 75.6 L+4.00% (6) 4.8% Aug 2017 I/O Mixed-use IL 53.2 52.7 L+3.60% 4.4% Oct 2018 I/O Office FL 47.3 47.3 L+5.25% 5.6% Apr 2016 I/O Multifamily TX 44.7 44.7 L+3.75% 4.7% July 2016 I/O Healthcare NY 41.6 41.4 L+5.00% 5.9% Dec 2016 I/O Industrial MO/KS 37.4 37.3 L+4.30% 5.2% Jan 2017 P/I (5) Hotel NY 36.5 36.2 L+4.75% 5.6% June 2018 I/O Hotel MI 35.2 35.1 L+4.15% 4.8% July 2017 I/O Multifamily TX 35.0 35.0 L+3.75% 4.7% July 2016 I/O Office FL 34.0 33.9 L+3.65% 4.3% Oct 2017 I/O Industrial OH 32.5 32.3 L+4.20% 5.0% May 2018 I/O (5) Retail IL 30.4 30.2 L+3.25% 4.1% Sep 2018 I/O Multifamily NY 28.3 28.2 L+3.75% 4.7% Oct 2017 I/O Multifamily TX 27.6 27.5 L+3.65% 4.6% Jan 2017 I/O Office OR 28.4 28.1 L+3.75% 4.6% Oct 2018 I/O Mixed-use NY 28.0 27.9 L+4.25% 5.0% Aug 2017 I/O Office KS 25.5 25.5 L+5.00% 5.9% Mar 2016 I/O Multifamily TX 25.0 24.9 L+3.65% 4.6% Jan 2017 I/O Multifamily TX 23.9 23.8 L+3.80% 4.4% Jan 2019 I/O Multifamily GA 23.1 23.0 L+3.85% 5.0% May 2017 I/O Multifamily AZ 22.1 22.1 L+4.25% 5.5% Sep 2016 I/O Industrial VA 19.0 19.0 L+5.25% 6.4% Jan 2016 (7) I/O Office CO 18.7 18.5 L+3.95% 4.9% Dec 2017 I/O Office CA 15.9 15.8 L+3.75% 4.6% July 2016 I/O Multifamily NC 16.0 15.9 L+4.00% 5.0% Apr 2017 I/O Office CA 14.9 14.9 L+4.50% 5.5% July 2016 I/O Multifamily NY 14.9 14.9 L+3.85% 4.7% Nov 2017 I/O Office CA 14.5 14.5 L+4.75% 5.8% Feb 2016 I/O Mixed-use NY 13.1 13.0 L+3.95% 5.0% Sep 2017 I/O Multifamily FL 12.3 12.2 L+3.75% 4.8% Apr 2017 I/O Industrial CA 10.1 10.0 L+5.25% 6.5% May 2017 I/O Subordinated Debt and Preferred Equity Investments: Multifamily GA and FL 50.8 50.3 L+11.85% (8) 12.5% June 2021 I/O Multifamily NY 33.3 33.2 L+8.07% 8.8% Jan 2019 I/O Office GA 14.3 14.3 9.50% 9.5% Aug 2017 I/O Mixed-use NY 16.5 16.4 11.50% (9) 12.1% Nov 2016 I/O Multifamily TX 4.9 4.8 L+11.00% (10) 11.8% Oct 2016 I/O Various Diversified (11) 48.5 47.4 10.95% 11.7% Dec 2024 I/O Total/Weighted Average $1,133.8 $1,127.8 6.0% _______________________________________________________________________________ (1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs. (2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of December 31, 2015 or the LIBOR floor, as applicable. The Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of December 31, 2015 as weighted by the Outstanding Principal balance of each loan. (3) Certain loans are subject to contractual extension options that vary between one and two 12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities in connection with loan modifications. (4) I/O = interest only, P/I = principal and inte rest. (5) In January 2015, amortization began on the senior Missouri/Kansas loan, which had an outstanding pr incipal balance of $ 37.4 million as of December 31, 2015 . In May 2017, amortization will begin on the senior Ohio loan, which had an outstanding principal balance of $ 32.5 million as of December 31, 2015 . The remainder of the loans in the Company’s principal lending portfolio are non-a mortizing through their primary terms. (6) In April 2015, the Company entered into a loan modification that lowered the interest rate to L+4.00% with a 4.20% interest rate floor and extended the make-whole provision to November 2016. (7) In December 2015, the Company entered into a modification agreement that extended the maturity date to January 2016. (8) The preferred return is L+11.85% with 2.00% as payment-in-kind (“PIK”), to the extent cash flow is not available. There is no capped dollar amount on accrued PIK. (9) The interest rate is 11.50% with a 9.00% current pay and up to a capped dollar amount as PIK based on the borrower’s election. In July 2015, the Company entered into an amendment to increase the loan commitment and outstanding principal by $650 thousand at an interest rate of 15.00% on the increased commitment and outstanding principal only. (10) The preferred return is L+11.00% with a L+9.00% current pay and up to a capped dollar amount as PIK. (11) The preferred equity investment is in an entity whose assets are comprised of multifamily, student housing and medical office properties. |
Schedule of activity in loan portfolio | For the years ended December 31, 2015 and 2014 , the activity in the Company's loan portfolio was as follows ($ in thousands): Balance at December 31, 2013 $ 958,495 Initial funding 637,222 Receipt of origination fees, net of costs (7,026 ) Additional funding 80,215 Loan payoffs (209,983 ) Origination fee accretion 3,661 Balance at December 31, 2014 $ 1,462,584 Initial funding 159,348 Receipt of origination fees, net of costs (1,078 ) Additional funding 70,529 Amortizing payments (601 ) Loan payoffs (446,745 ) Loans sold to third parties (1) (74,625 ) Origination fee accretion 4,979 Balance at December 31, 2015 $ 1,174,391 ______________________________________________________________________________ (1) In July 2015, the Company sold a loan to a third party that was previously classified as held for investment. At the time of the sale, the loan had an unleveraged effective yield of 4.2% as compared to the 4.9% weighted average unleveraged effective yield for all senior loans held by the Company. No gain or loss was recognized on the sale. |
MORTGAGE SERVICING RIGHTS (Tabl
MORTGAGE SERVICING RIGHTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Transfers and Servicing [Abstract] | |
Schedule of activity related to MSRs | Activity related to MSRs as of and for the years ended December 31, 2015 and 2014 was as follows ($ in thousands): Balance at December 31, 2013 $ 59,640 MSRs acquired in asset acquisition (See Note 18) 1,259 Additions, following sale of loan 7,853 Changes in fair value (7,650 ) Prepayments and write-offs (2,213 ) Balance at December 31, 2014 (1) $ 58,889 MSRs purchased 549 Additions, following sale of loan 13,267 Changes in fair value (8,798 ) Prepayments and write-offs (2,107 ) Balance at December 31, 2015 (1) $ 61,800 (1) MSRs are included in mortgage servicing rights at fair value as of December 31, 2015 and 2014 in the reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations held for sale to assets and liabilities of discontinued operations held for sale that are presented separately in the consolidated balance sheets. See Note 17 included in these consolidated financial statements for more information. |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding balances and total commitments under the Funding Agreements | As of December 31, 2015 and 2014 , the outstanding balances and total commitments under the Financing Agreements consisted of the following ($ in thousands): As of December 31, 2015 2014 Outstanding Balance Total Outstanding Balance Total Wells Fargo Facility $ 101,473 $ 225,000 $ 120,766 $ 225,000 Citibank Facility 112,827 250,000 93,432 250,000 Capital One Facility — — (1) — 100,000 BAML Facility — 50,000 — — March 2014 CNB Facility — 50,000 42,000 50,000 July 2014 CNB Facility 66,200 75,000 75,000 75,000 MetLife Facility 109,474 180,000 144,673 180,000 April 2014 UBS Facility 75,558 140,000 19,685 140,000 December 2014 UBS Facility 57,243 57,243 57,243 57,243 ASAP Line of Credit — 80,000 (2) 58,469 80,000 (2) BAML Line of Credit 24,806 135,000 (3) 134,696 180,000 (3) Secured Term Loan 75,000 155,000 — — Total $ 622,581 $ 1,397,243 $ 745,964 $ 1,337,243 ______________________________________________________________________________ (1) The secured revolving funding facility with Capital One, National Association (as amended, the “Capital One Facility”) matured on May 18, 2015. The Capital One Facility has been repaid in full and its term was not extended. (2) The commitment amount is subject to change at any time at Fannie Mae's discretion. (3) In November 2014, the BAML Line of Credit's (defined below) commitment size temporarily increased from $80.0 million to $180.0 million for the period November 25, 2014 through January 26, 2015. In February 2015, the BAML Line of Credit's commitment size increased from $80.0 million to $135.0 million . In April 2015, the BAML Line of Credit's commitment size temporarily increased from $135.0 million to $185.0 million for the period April 15, 2015 to June 1, 2015. |
Schedule of principal maturities of the Company's secured funding agreements and the 2015 Convertible Notes | At December 31, 2015 , approximate principal maturities of the Company's Financing Agreements are as follows ($ in thousands): Wells Fargo Citibank BAML Facility March 2014 CNB Facility July 2014 CNB Facility MetLife Facility April 2014 UBS Facility December 2014 UBS Facility Secured Term Loan ASAP Line BAML Total 2016 $ 101,473 $ 112,827 $ — $ — $ 66,200 $ — $ — $ 57,243 $ — $ — $ 24,806 $ 362,549 2017 — — — — — 109,474 — — — — — 109,474 2018 — — — — — — 75,558 — 75,000 — — 150,558 2019 — — — — — — — — — — — — 2020 — — — — — — — — — — — — Thereafter — — — — — — — — — — — — $ 101,473 $ 112,827 $ — $ — $ 66,200 $ 109,474 $ 75,558 $ 57,243 $ 75,000 $ — $ 24,806 $ 622,581 |
ALLOWANCE FOR LOSS SHARING (Tab
ALLOWANCE FOR LOSS SHARING (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ALLOWANCE FOR LOSS SHARING | |
Summary of the Company's allowance for loss sharing | A summary of the Company’s allowance for loss sharing as of and for the years ended December 31, 2015, 2014 and 2013 is as follows ($ in thousands): Balance at December 31, 2013 $ 16,480 Current period provision for loss sharing (1,364 ) Settlements/Writeoffs (2,767 ) Balance at December 31, 2014 (1) $ 12,349 Current period provision for loss sharing (1,093 ) Settlements/Writeoffs (2,287 ) Balance at December 31, 2015 (1) $ 8,969 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of loan commitments | As of December 31, 2015 and 2014 , the Company had the following commitments to fund various senior mortgage loans, subordinated debt investments, as well as preferred equity investments accounted for as loans held for investment ($ in thousands): As of December 31, 2015 2014 Total commitments $ 1,232,163 $ 1,565,117 Less: funded commitments (1,133,842 ) (1,395,281 ) Total unfunded commitments $ 98,321 $ 169,836 |
Schedule of ACRE Capital's commitments to sell and fund loans | As of December 31, 2015 and 2014 , ACRE Capital had the following commitments to sell and fund loans ($ in thousands): As of December 31, 2015 2014 Commitments to sell loans $ 237,372 $ 249,803 Commitments to fund loans $ 207,566 $ 51,109 |
Schedule of future minimum payments under the Company's operating leases | The following table shows future minimum payments required under the Company's operating leases as of December 31, 2015 ($ in thousands): As of December 31, 2015 2016 $ 775 2017 853 2018 837 2019 772 2020 754 Thereafter 1,026 Total $ 5,017 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of the Company's derivative financial instruments as well as their classification on the balance sheet | The table below presents the fair value of the Company’s derivative financial instruments as well as their classification within the Company’s consolidated balance sheets as of December 31, 2015 and 2014 ($ in thousands): As of December 31, 2015 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives not designated as hedging instruments Loan commitments Assets of discontinued operations held for sale (1) $ 8,450 Assets of discontinued operations held for sale (1) $ 3,082 Forward sale commitments Assets of discontinued operations held for sale (1) 25 Assets of discontinued operations held for sale (1) 116 MSR purchase commitment Assets of discontinued operations held for sale (1) 330 Assets of discontinued operations held for sale (1) — Forward sale commitments Liabilities of discontinued operations held for sale (1) (1,868 ) Liabilities of discontinued operations held for sale (1) (1,528 ) Total derivatives not designated as hedging instruments $ 6,937 $ 1,670 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Schedule of total shares issued and proceeds received in public offerings | The following table summarizes the total shares issued and proceeds received in public offerings of the Company's common stock net of offering costs for the year ended December 31, 2013 (in millions, except per share data): Shares Issued Offering Price Per Share Proceeds Net Of Offering Costs 2013 July 2013 601,590 (1) $ 13.50 $ 7.7 June 2013 18,000,000 13.50 234.6 Total for the year ended December 31, 2013 18,601,590 $ 242.3 __________________________________________________________________________ (1) The Company granted the underwriters an option to purchase up to an additional 2.7 million shares of common stock. This amount represents the partial exercise of the option to purchase additional shares by the underwriters. |
Schedule of restricted stock grants awarded | The following table details the restricted stock grants awarded as of December 31, 2015 : Grant Date Vesting Start Date Shares Granted May 1, 2012 July 1, 2012 35,135 June 18, 2012 July 1, 2012 7,027 July 9, 2012 October 1, 2012 25,000 June 26, 2013 July 1, 2013 22,526 November 25, 2013 November 25, 2016 30,381 January 31, 2014 August 31, 2015 48,273 February 26, 2014 February 26, 2014 12,030 February 27, 2014 August 27, 2014 22,354 June 24, 2014 June 24, 2014 17,658 June 24, 2015 July 1, 2015 25,555 Total 245,939 |
Schedule of restricted stock award activity | The following tables summarize the non-vested shares of restricted stock and the vesting schedule of shares of restricted stock for the Company's directors and officers and employees of ACRE Capital as of December 31, 2015 . Schedule of Non-Vested Share and Share Equivalents Restricted Stock Grants—Directors Restricted Stock Grants—Officer Restricted Stock Grants—Employees Total Balance at December 31, 2014 21,324 10,936 78,654 110,914 Granted 25,555 — — 25,555 Vested (27,114 ) (6,250 ) (16,091 ) (49,455 ) Forfeited (2,820 ) — — (2,820 ) Balance at December 31, 2015 16,945 4,686 62,563 84,194 |
Future anticipated vesting schedule of restricted stock awards | Future Anticipated Vesting Schedule Restricted Stock Grants—Directors Restricted Stock Grants—Officer Restricted Stock Grants—Employees (1) Total 2016 16,111 4,686 30,381 51,178 2017 834 — — 834 2018 — — — — 2019 — — — — 2020 — — — — Total 16,945 4,686 30,381 52,012 ______________________________________________________________________________ (1) Future anticipated vesting related to an employee of ACRE Capital that was granted restricted stock that vests in proportion to certain financial performance targets being met over a specified period of time is not included due to uncertainty in actual vesting date. |
Summary of activity in the Company's vested and nonvested shares of restricted stock | The following table summarizes the restricted stock compensation expense included in general and administrative expenses for ACRE and compensation and benefits for ACRE Capital, the total fair value of shares vested and the weighted average grant date fair value of the restricted stock granted to the Company's directors and officers and employees of ACRE Capital for the years ended December 31, 2015, 2014 and 2013 ($ in thousands): For the year ended December 31, 2015 2014 2013 Restricted Stock Grants Restricted Stock Grants Restricted Stock Grants Directors Officer Employees Total Directors Officer Employees Total Directors Officer Employees Total Compensation expense(1) $ 330 $ 106 $ 399 $ 835 $ 445 $ 106 $ 388 $ 939 $ 408 $ 106 $ 10 $ 524 Total fair value of shares vested(2) 313 72 201 586 399 79 56 534 366 92 — 458 Weighted average grant date fair value 299 — — 299 385 — 944 1,329 289 — 398 687 ______________________________________________________________________________ (1) Compensation expense for ACRE Capital employees is included in compensation and benefits expense for the years ended December 31, 2015, 2014 and 2013 in the reconciliation of net income from discontinued operations held for sale, net of income taxes. See Note 17 included in these consolidated financial statements for more information. (2) Based on the closing price of the Company's common stock on the NYSE on each vesting date. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of computations of basic and diluted earnings per share | The following information sets forth the computations of basic and diluted earnings per common share from continuing operations and discontinued operations held for sale for the years ended December 31, 2015, 2014 and 2013 ($ in thousands, except share and per share data): For the year ended December 31, 2015 2014 2013 Net income from continuing operations, less non-controlling interests $ 27,300 $ 22,529 $ 12,329 Net income from discontinued operations held for sale, net of income taxes $ 6,985 $ 1,867 $ 1,437 Divided by: Basic weighted average shares of common stock outstanding: 28,501,897 28,459,309 18,989,500 Non-vested restricted stock 95,671 125,713 48,652 Diluted weighted average shares of common stock outstanding: 28,597,568 28,585,022 19,038,152 Basic earnings per common share (1): Net income from continuing operations $ 0.96 $ 0.79 $ 0.65 Net income from discontinued operations held for sale $ 0.25 $ 0.07 $ 0.08 Net income $ 1.20 $ 0.86 $ 0.72 Diluted earnings per common share (1): Net income from continuing operations $ 0.95 $ 0.79 $ 0.65 Net income from discontinued operations held for sale $ 0.24 $ 0.07 $ 0.08 Net income $ 1.20 $ 0.85 $ 0.72 |
INCOME TAX (Tables)
INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of the TRS's income tax provision | TRS Holdings’ income tax provision (continuing and discontinued operations) consisted of the following for the years ended December 31, 2015, 2014 and 2013 ($ in thousands): For the year ended December 31, 2015 2014 2013 Current - continuing operations $ (11 ) $ 240 $ — Current - discontinued operations held for sale (154 ) 89 115 Deferred - continuing operations — — — Deferred - discontinued operations held for sale 2,093 (1,372 ) 61 Total income tax expense (benefit) $ 1,928 $ (1,043 ) $ 176 |
Schedule of U.S. tax jurisdiction and the tax effects of temporary differences on their respective net deferred tax assets and liabilities | The following table presents the U.S. tax jurisdiction and the tax effects of temporary differences on the respective net deferred tax assets and liabilities of TRS Holdings ($ in thousands): As of December 31, 2015 2014 Deferred tax assets Mortgage servicing rights $ 4,083 $ 2,844 Net operating loss carryforward 2,906 1,465 Other temporary differences 1,762 1,055 Sub-total-deferred tax assets 8,751 5,364 Deferred tax liabilities Basis difference in assets from acquisition of ACRE Capital (2,709 ) (2,654 ) Components of gains from mortgage banking activities (9,344 ) (4,046 ) Amortization of intangible assets (297 ) (170 ) Sub-total-deferred tax liabilities (12,350 ) (6,870 ) Net deferred tax liability $ (3,599 ) $ (1,506 ) |
Schedule of reconciliation of the TRS's effective tax rate determined using the TRS's statutory U.S. federal tax rate | For the year ended December 31, 2015 2014 2013 Federal statutory rate 35.0 % 35.0 % 35.0 % State income taxes 3.6 % 2.4 % 5.7 % Federal benefit of state tax deduction (1.3 )% (0.8 )% (2.0 )% Effective tax rate 37.3 % 36.6 % 38.7 % |
FAIR VALUE OF FINANCIAL INSTR39
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Summary of the levels in the fair value hierarchy into which the Company's financial instruments were categorized | The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of December 31, 2015 and 2014 ($ in thousands): Fair Value as of December 31, 2015 Level I Level II Level III Total Loans held for sale $ — $ 30,612 $ — $ 30,612 Mortgage servicing rights — — 61,800 61,800 Derivative assets: Loan commitments — — 8,450 8,450 Forward sale commitments — — 25 25 MSR purchase commitment — — 330 330 Derivative liabilities: Forward sale commitments — — (1,868 ) (1,868 ) Fair Value as of December 31, 2014 Level I Level II Level III Total Loans held for sale $ — $ 203,006 $ — $ 203,006 Mortgage servicing rights — — 58,889 58,889 Derivative assets: Loan commitments — — 3,082 3,082 Forward sale commitments — — 116 116 Derivative liabilities: Forward sale commitments — — (1,528 ) (1,528 ) |
Schedule of significant unobservable inputs used to value the financial instruments categorized within Level 3 | The following table summarizes the significant unobservable inputs the Company used to value financial instruments categorized within Level III as of December 31, 2015 ($ in thousands): Unobservable Input Fair Primary Weighted Asset Category Value Valuation Technique Input Range Average Mortgage servicing rights $ 61,800 Discounted cash flow Discount rate 8 - 14% 11.1% Loan commitments and forward sale commitments 6,607 Discounted cash flow Discount rate 8 - 12% 8.2% MSR purchase commitment 330 Discounted cash flow Discount rate 8% 8.0% The following table summarizes the significant unobservable inputs the Company used to value financial instruments categorized within Level III as of December 31, 2014 ($ in thousands): Unobservable Input Fair Primary Weighted Asset Category Value Valuation Technique Input Range Average Mortgage servicing rights $ 58,889 Discounted cash flow Discount rate 8 - 14% 11.4% Loan commitments and forward sale commitments 1,670 Discounted cash flow Discount rate 8 - 8% 8.0% |
Summary of change in derivative assets and liabilities classified as Level III | The following table summarizes the change in derivative assets and liabilities classified as Level III related to mortgage banking activities as of and for the years ended December 31, 2015 and 2014 ($ in thousands): Balance at December 31, 2013 $ 3,527 Settlements (8,893 ) Realized gains (losses) recorded in net income (1) 5,366 Unrealized gains (losses) recorded in net income (1) 1,670 Balance at December 31, 2014 $ 1,670 Settlements (23,675 ) Realized gains (losses) recorded in net income (1) 22,005 Unrealized gains (losses) recorded in net income (1) 6,937 Balance at December 31, 2015 $ 6,937 ______________________________________________________________________________ (1) Realized and unrealized gains (losses) from derivatives are included within gains from mortgage banking activities for the years ended December 31, 2015, 2014 and 2013 in the reconciliation of net income from discontinued operations held for sale, net of income taxes. |
Schedule of carrying value and estimated fair value of the Company's financial instruments not carried at fair value on the consolidated balance sheet | As of December 31, 2015 and 2014 , the carrying values and fair values of the Company’s financial assets and liabilities recorded at cost are as follows ($ in thousands): As of December 31, 2015 2014 Level in Fair Value Hierarchy Carrying Value Fair Value Carrying Value Fair Value Financial assets: Loans held for investment 3 $ 1,174,391 $ 1,180,421 $ 1,462,584 $ 1,472,891 Financial liabilities: Secured funding agreements 2 $ 522,775 $ 522,775 $ 552,799 $ 552,799 Warehouse lines of credit 2 24,806 24,806 193,165 193,165 Secured term loan 2 69,762 75,000 — — Convertible notes 2 — — 67,414 69,000 Commercial mortgage-backed securitization debt (consolidated VIE) 3 61,815 61,856 217,495 219,043 Collateralized loan obligation securitization debt (consolidated VIE) 3 192,528 193,419 305,734 308,703 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Summary of related-party costs incurred by the Company and amounts payable to the Manager | Summarized below are the related party costs incurred by the Company, related to continuing operations, for the years ended December 31, 2015, 2014 and 2013 and amounts payable to the Company's Manager as of December 31, 2015 and 2014 ($ in thousands): Incurred Payable For the year ended December 31, As of December 31, 2015 2014 2013 2015 2014 Affiliate Payments Management fees $ 5,397 $ 5,440 $ 4,125 $ 1,357 $ 1,348 General and administrative expenses 3,426 3,400 3,394 835 853 Direct costs 1,466 716 450 232 231 Total $ 10,289 $ 9,556 $ 7,969 $ 2,424 $ 2,432 Summarized below are the related party costs incurred by the Company, related to discontinued operations held for sale, for the years ended December 31, 2015, 2014 and 2013 and amounts payable to the Company's Manager as of December 31, 2015 and 2014 ($ in thousands): Incurred Payable For the year ended December 31, As of December 31, 2015 2014 2013 2015 2014 Affiliate Payments Management fees $ 551 $ 476 $ 116 $ 144 $ 123 General and administrative expenses 452 600 216 84 147 Direct costs 23 145 319 6 33 Total $ 1,026 $ 1,221 $ 651 $ 234 $ 303 |
DIVIDENDS AND DISTRIBUTIONS (Ta
DIVIDENDS AND DISTRIBUTIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DIVIDENDS AND DISTRIBUTIONS | |
Summary of the Company's dividends declared | The following table summarizes the Company’s dividends declared during the years ended December 31, 2015, 2014 and 2013 ($ in thousands, except per share data): Date declared Record date Payment date Per share amount Total amount November 5, 2015 December 31, 2015 January 19, 2016 $ 0.25 $ 7,152 July 30, 2015 September 30, 2015 October 15, 2015 0.25 7,152 May 7, 2015 June 30, 2015 July 15, 2015 0.25 7,152 March 5, 2015 March 31, 2015 April 15, 2015 0.25 7,146 Total cash dividends declared for the year ended December 31, 2015 $ 1.00 $ 28,602 November 10, 2014 December 31, 2014 January 15, 2015 $ 0.25 $ 7,147 August 6, 2014 September 30, 2014 October 15, 2014 0.25 7,151 May 7, 2014 June 30, 2014 July 16, 2014 0.25 7,151 March 17, 2014 March 31, 2014 April 16, 2014 0.25 7,147 Total cash dividends declared for the year ended December 31, 2014 $ 1.00 $ 28,596 November 13, 2013 December 31, 2013 January 22, 2014 $ 0.25 $ 7,127 August 7, 2013 September 30, 2013 October 17, 2013 0.25 7,119 May 15, 2013 June 28, 2013 July 18, 2013 0.25 6,822 March 14, 2013 April 08, 2013 April 18, 2013 0.25 2,317 Total cash dividends declared for the year ended December 31, 2013 $ 1.00 $ 23,385 |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
VARIABLE INTEREST ENTITIES | |
Schedule of carrying value and maximum exposure of unconsolidated VIEs | The following table presents the carrying value and the maximum exposure to loss of unconsolidated VIEs as of December 31, 2015 and 2014 ($ in thousands): As of December 31, 2015 2014 Carrying value $ 55,144 $ 38,982 Maximum exposure to loss $ 55,704 $ 39,608 |
DISCONTINUED OPERATIONS HELD 43
DISCONTINUED OPERATIONS HELD FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations | The following information reconciles the carrying amounts of major classes of assets and liabilities of the discontinued operations held for sale to assets and liabilities of discontinued operations held for sale that are presented separately in the consolidated balance sheets: As of December 31, 2015 2014 ASSETS Cash and cash equivalents $ 3,929 $ 1,506 Restricted cash 17,297 16,442 Loans held for sale, at fair value 30,612 203,006 Mortgage servicing rights, at fair value 61,800 58,889 Other assets 19,613 15,045 Assets of discontinued operations held for sale $ 133,251 $ 294,888 LIABILITIES Warehouse lines of credit $ 24,806 $ 193,165 Allowance for loss sharing 8,969 12,349 Due to affiliate 234 303 Other liabilities 17,522 11,756 Liabilities of discontinued operations held for sale $ 51,531 $ 217,573 The following information reconciles the net income from discontinued operations held for sale, net of income taxes, that are presented separately in the consolidated statements of operations: For the year ended December 31, 2015 2014 2013 Mortgage banking revenue: Servicing fees, net $ 16,051 $ 16,399 $ 5,754 Gains from mortgage banking activities 27,067 17,492 5,019 Provision for loss sharing 1,093 1,364 (6 ) Change in fair value of mortgage servicing rights (8,798 ) (7,650 ) (2,697 ) Mortgage banking revenue 35,413 27,605 8,070 Gain on sale of loans — — 1,333 Total revenue 35,413 27,605 9,403 Expenses: Management fees to affiliate 551 476 116 Professional fees 1,073 1,047 477 Compensation and benefits 20,448 18,649 5,456 General and administrative expenses 3,965 6,249 1,525 General and administrative expenses reimbursed to affiliate 452 600 216 Total expenses 26,489 27,021 7,790 Income before income taxes 8,924 584 1,613 Income tax expense (benefit) 1,939 (1,283 ) 176 Net income from discontinued operations held for sale, net of income taxes $ 6,985 $ 1,867 $ 1,437 |
QUARTERLY FINANCIAL DATA (UNA44
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of the entity's quarterly financial results | The following table summarizes the Company's quarterly financial results for each quarter of the years ended December 31, 2015 and 2014 ($ in thousands, except per share data): For the three month period ended, March 31 June 30 September 30 December 31 2015: Total revenue $ 12,992 $ 12,311 $ 12,242 $ 12,450 Net income attributable to ACRE $ 9,295 $ 11,263 $ 11,710 $ 11,052 Net income attributable to common stockholders $ 7,062 $ 8,967 $ 9,379 $ 8,877 Net income per common share-Basic $ 0.25 $ 0.31 $ 0.33 $ 0.31 Net income per common share-Diluted $ 0.25 $ 0.31 $ 0.33 $ 0.31 2014: Total revenue (1) $ 9,207 $ 9,321 $ 8,352 $ 10,658 Net income attributable to ACRE $ 4,755 $ 6,638 $ 4,102 $ 9,121 Net income attributable to common stockholders $ 4,755 $ 6,638 $ 4,102 $ 8,901 Net income per common share-Basic $ 0.17 $ 0.23 $ 0.14 $ 0.31 Net income per common share-Diluted $ 0.17 $ 0.23 $ 0.14 $ 0.31 ______________________________________________________________________________ (1) As of December 31, 2014, the Company no longer presents other interest expense in its consolidated statements of operations. Total revenue has been adjusted from the previously filed Forms 10-Q as of March 31, June 30 and September 30, 2014 to reflect the reclassification of other interest expense. Other interest expense related to the 2015 Convertible Notes has been reclassified into interest expense, other interest expense related to the Warehouse Lines of Credit has been reclassified into gains from mortgage banking activities and other interest expense related to escrow accounts has been reclassified into servicing fees, net in the consolidated statements of operations. The impact of these reclasses is a decrease in total revenue by $1.7 million , $1.8 million and $1.9 million , respectively, for the three month periods ending March 31, June 30 and September 30, 2014, respectively. |
COSTS ASSOCIATED WITH RESTRUC45
COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of reconciliation of the liability attributable to restructuring costs incurred in the mortgage banking segment | The table below presents a reconciliation of the liability attributable to restructuring costs incurred by ACRE Capital as of and for the years ending December 31, 2015 and 2014 ($ in thousands): Employee Termination Costs Balance at January 1, 2014 $ — Accruals 799 Payments (574 ) Balance at December 31, 2014 (1) $ 225 Accruals 44 Payments (269 ) Balance at December 31, 2015 $ — |
ORGANIZATION (Details)
ORGANIZATION (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Maximum | |
ORGANIZATION | |
Term of debt | 10 years |
Discontinued Operations, Disposed of by Sale [Member] | TRS' | |
ORGANIZATION | |
Proceeds from sale of business | $ 93,000 |
Change of control payments | $ 1,150 |
SIGNIFICANT ACCOUNTING POLICI47
SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)item | Dec. 31, 2013USD ($) | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||
Number of reportable segments as a result of the Acquisition | item | 2 | 2 | |
Loans and Leases Receivable, Other Information [Abstract] | |||
Impairments of loan held for investment | $ | $ 0 | $ 0 | $ 0 |
SIGNIFICANT ACCOUNTING POLICI48
SIGNIFICANT ACCOUNTING POLICIES - Loans Held for Sale and Revenue Recognition (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)item | Dec. 31, 2013USD ($) | |
Loans held for sale | |||
Minimum period of past due for loans to be placed on non-accrual status | 30 days | ||
Revenue Recognition [Abstract] | |||
Interest income from loans held for investment, excluding non-controlling interests | $ 77,278 | $ 70,188 | |
Interest income from non-controlling interest investment held by third parties | 9,059 | 307 | |
Interest income from loans held for investment | $ 86,337 | $ 70,495 | $ 37,600 |
ACRE | |||
Loans held for sale | |||
Number of loans held for sale | item | 0 | 0 | |
Revenue Recognition [Abstract] | |||
Interest income from loans held for investment | $ 86,337 | $ 70,495 | $ 37,600 |
ACRE Capital | |||
Loans held for sale | |||
Holding period of mortgage loans held for sale | 30 days |
SIGNIFICANT ACCOUNTING POLICI49
SIGNIFICANT ACCOUNTING POLICIES - Net Interest Margin and Interest Expense and Business Combinations (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 19, 2012 | |
Convertible Senior Notes | ||||
Interest expense | $ 36,342 | $ 33,637 | $ 14,973 | |
Business Combinations | ||||
Maximum measurement period after the transaction date for subsequent adjustments | 1 year | |||
Fannie Mae | ||||
Convertible Senior Notes | ||||
Loss period considered for calculation of fair value of guarantee | 10 years | |||
Secured funding agreements and securitizations debt | ||||
Convertible Senior Notes | ||||
Interest expense | $ 29,740 | 27,299 | 8,774 | |
Secured term loan | ||||
Convertible Senior Notes | ||||
Interest expense | 388 | |||
2015 Convertible Notes | ||||
Convertible Senior Notes | ||||
Interest rate (as a percent) | 7.00% | |||
Interest expense | $ 6,214 | $ 6,338 | $ 6,199 |
SIGNIFICANT ACCOUNTING POLICI50
SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Period of disqualification of REIT status | 4 years |
TRS' | |
Income Taxes | |
Ownership percentage | 100.00% |
Excise tax rate (as a percent) | 100.00% |
ACRC U TRS | |
Income Taxes | |
Ownership percentage | 100.00% |
Excise tax rate (as a percent) | 100.00% |
ACRE Capital | ACRC W TRS | |
Income Taxes | |
Ownership percentage | 100.00% |
Excise tax rate (as a percent) | 100.00% |
SIGNIFICANT ACCOUNTING POLICI51
SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||
Other Assets | $ 53,191 | $ 39,959 |
Total Assets | 1,378,982 | 1,862,155 |
LIABILITIES | ||
Convertible notes | 67,414 | |
Commercial Mortgage-Backed Securitization Debt | 61,815 | 217,495 |
Collateralized Loan Obligation Securitization Debt | 192,528 | 305,734 |
Total Liabilities | 922,494 | 1,381,269 |
Total Liabilities and Equity | $ 1,378,982 | 1,862,155 |
Previously reported | ||
ASSETS | ||
Other Assets | 45,457 | |
Total Assets | 1,867,653 | |
LIABILITIES | ||
Convertible notes | 68,395 | |
Commercial Mortgage-Backed Securitization Debt | 219,043 | |
Collateralized Loan Obligation Securitization Debt | 308,703 | |
Total Liabilities | 1,386,767 | |
Total Liabilities and Equity | 1,867,653 | |
Deferred debt issuance costs | Accounting Standards Update 2015-03 and Accounting Standards Update 2015-15 | Effect of early adoption | ||
ASSETS | ||
Other Assets | (5,498) | |
Total Assets | (5,498) | |
LIABILITIES | ||
Convertible notes | (981) | |
Commercial Mortgage-Backed Securitization Debt | (1,548) | |
Collateralized Loan Obligation Securitization Debt | (2,969) | |
Total Liabilities | (5,498) | |
Total Liabilities and Equity | $ (5,498) |
LOANS HELD FOR INVESTMENT - Dis
LOANS HELD FOR INVESTMENT - Dislcosures (Details) | 12 Months Ended | ||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Receivables [Abstract] | |||
Number of loans originated or co-originated | item | 38 | ||
Number of loans repaid or sold | item | 24 | ||
Amount funded | $ 229,900,000 | ||
Amount of repayments, excluding non-controlling interests held by third parties | 410,600,000 | ||
Loans sold to third party | $ 74,625,000 | ||
Percentage of Loans Held for Investment Having LIBOR Floors | 66.20% | ||
Weighted average floor (as a percent) | 0.24% | ||
Loans held for investment | |||
Total Commitment | $ 1,300,000,000 | ||
Loans held for investment | 1,174,391,000 | $ 1,462,584,000 | $ 958,495,000 |
Carrying Amount | 1,127,812,000 | 1,384,975,000 | |
Outstanding Principal including non-controlling interest | 1,180,421,000 | 1,472,890,000 | |
Outstanding Principal | $ 1,133,842,000 | $ 1,395,281,000 | |
Interest Rate (as a percent) | 5.30% | 5.50% | |
Unleveraged effective yield (as a percent) | 6.00% | 6.00% | |
Remaining Life | 1 year 10 months 24 days | 2 years 9 months 18 days | |
Unleveraged effective yield dispositions, early prepayments or defaults | $ 0 | ||
Non-controlling interest investment | |||
Loans held for investment | |||
Loans held for investment | 46,579,000 | $ 77,609,000 | |
Outstanding Principal including non-controlling interest | 46,579,000 | 77,609,000 | |
Senior mortgage loans. | |||
Loans held for investment | |||
Carrying Amount | 961,395,000 | 1,156,476,000 | |
Outstanding Principal | $ 965,578,000 | $ 1,164,055,000 | |
Interest Rate (as a percent) | 4.40% | 4.50% | |
Unleveraged effective yield (as a percent) | 5.10% | 5.00% | |
Remaining Life | 1 year 4 months 24 days | 2 years 1 month 6 days | |
Subordinated debt and preferred equity investments | |||
Loans held for investment | |||
Carrying Amount | $ 166,417,000 | $ 228,499,000 | |
Outstanding Principal | $ 168,264,000 | $ 231,226,000 | |
Interest Rate (as a percent) | 10.60% | 10.30% | |
Unleveraged effective yield (as a percent) | 11.20% | 10.70% | |
Remaining Life | 5 years 1 month 6 days | 6 years 1 month 6 days |
LOANS HELD FOR INVESTMENT - Inv
LOANS HELD FOR INVESTMENT - Investment Portfolio (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2015USD ($) | Apr. 30, 2015 | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Loans held for investment | ||||
Mortgage Loans on Real Estate Total Commitment Amount | $ 1,300,000 | |||
Outstanding Principal | 1,133,842 | $ 1,395,281 | ||
Carrying Amount | $ 1,127,812 | $ 1,384,975 | ||
Unleveraged effective yield (as a percent) | 6.00% | 6.00% | ||
Unleveraged effective yield dispositions, early prepayments or defaults | $ 0 | |||
Fixed interest rate (as a percent) | 5.30% | 5.50% | ||
Office Building in TX | ||||
Loans held for investment | ||||
Outstanding Principal | $ 80,500 | |||
Carrying Amount | $ 80,000 | |||
Basis spread (as a percent) | 5.00% | |||
Unleveraged effective yield (as a percent) | 6.20% | |||
Base rate | 30-day LIBOR | |||
Retail Property in IL | ||||
Loans held for investment | ||||
Outstanding Principal | $ 75,900 | |||
Carrying Amount | $ 75,600 | |||
Basis spread (as a percent) | 4.00% | 4.00% | ||
Unleveraged effective yield (as a percent) | 4.80% | |||
Base rate | 30-day LIBOR | 30-day LIBOR | ||
LIBOR Floor due to modification (as a percent) | 4.20% | |||
Mixed use in IL | ||||
Loans held for investment | ||||
Outstanding Principal | $ 53,200 | |||
Carrying Amount | $ 52,700 | |||
Basis spread (as a percent) | 3.60% | |||
Unleveraged effective yield (as a percent) | 4.40% | |||
Base rate | 30-day LIBOR | |||
Office Building in FL | ||||
Loans held for investment | ||||
Outstanding Principal | $ 47,300 | |||
Carrying Amount | $ 47,300 | |||
Basis spread (as a percent) | 5.25% | |||
Unleveraged effective yield (as a percent) | 5.60% | |||
Base rate | 30-day LIBOR | |||
Multifamily in TX | ||||
Loans held for investment | ||||
Outstanding Principal | $ 44,700 | |||
Carrying Amount | $ 44,700 | |||
Basis spread (as a percent) | 3.75% | |||
Unleveraged effective yield (as a percent) | 4.70% | |||
Base rate | 30-day LIBOR | |||
Healthcare In NY | ||||
Loans held for investment | ||||
Outstanding Principal | $ 41,600 | |||
Carrying Amount | $ 41,400 | |||
Basis spread (as a percent) | 5.00% | |||
Unleveraged effective yield (as a percent) | 5.90% | |||
Base rate | 30-day LIBOR | |||
Industrial in MO and KS | ||||
Loans held for investment | ||||
Outstanding Principal | $ 37,400 | |||
Carrying Amount | $ 37,300 | |||
Basis spread (as a percent) | 4.30% | |||
Unleveraged effective yield (as a percent) | 5.20% | |||
Base rate | 30-day LIBOR | |||
Hotel in NY | ||||
Loans held for investment | ||||
Outstanding Principal | $ 36,500 | |||
Carrying Amount | $ 36,200 | |||
Basis spread (as a percent) | 4.75% | |||
Unleveraged effective yield (as a percent) | 5.60% | |||
Base rate | 30-day LIBOR | |||
Hotel in MI | ||||
Loans held for investment | ||||
Outstanding Principal | $ 35,200 | |||
Carrying Amount | $ 35,100 | |||
Basis spread (as a percent) | 4.15% | |||
Unleveraged effective yield (as a percent) | 4.80% | |||
Base rate | 30-day LIBOR | |||
Multifamily in TX | ||||
Loans held for investment | ||||
Outstanding Principal | $ 35,000 | |||
Carrying Amount | $ 35,000 | |||
Basis spread (as a percent) | 3.75% | |||
Unleveraged effective yield (as a percent) | 4.70% | |||
Base rate | 30-day LIBOR | |||
Office Building in FL | ||||
Loans held for investment | ||||
Outstanding Principal | $ 34,000 | |||
Carrying Amount | $ 33,900 | |||
Basis spread (as a percent) | 3.65% | |||
Unleveraged effective yield (as a percent) | 4.30% | |||
Base rate | 30-day LIBOR | |||
Industrial in OH | ||||
Loans held for investment | ||||
Outstanding Principal | $ 32,500 | |||
Carrying Amount | $ 32,300 | |||
Basis spread (as a percent) | 4.20% | |||
Unleveraged effective yield (as a percent) | 5.00% | |||
Base rate | 30-day LIBOR | |||
Retail Property in IL | ||||
Loans held for investment | ||||
Outstanding Principal | $ 30,400 | |||
Carrying Amount | $ 30,200 | |||
Basis spread (as a percent) | 3.25% | |||
Unleveraged effective yield (as a percent) | 4.10% | |||
Base rate | 30-day LIBOR | |||
Multifamily in NY | ||||
Loans held for investment | ||||
Outstanding Principal | $ 28,300 | |||
Carrying Amount | $ 28,200 | |||
Basis spread (as a percent) | 3.75% | |||
Unleveraged effective yield (as a percent) | 4.70% | |||
Base rate | 30-day LIBOR | |||
Multifamily in TX | ||||
Loans held for investment | ||||
Outstanding Principal | $ 27,600 | |||
Carrying Amount | $ 27,500 | |||
Basis spread (as a percent) | 3.65% | |||
Unleveraged effective yield (as a percent) | 4.60% | |||
Base rate | 30-day LIBOR | |||
Office Building in OR | ||||
Loans held for investment | ||||
Outstanding Principal | $ 28,400 | |||
Carrying Amount | $ 28,100 | |||
Basis spread (as a percent) | 3.75% | |||
Unleveraged effective yield (as a percent) | 4.60% | |||
Base rate | 30-day LIBOR | |||
Mixed use in NY | ||||
Loans held for investment | ||||
Outstanding Principal | $ 28,000 | |||
Carrying Amount | $ 27,900 | |||
Basis spread (as a percent) | 4.25% | |||
Unleveraged effective yield (as a percent) | 5.00% | |||
Base rate | 30-day LIBOR | |||
Office Building in KS | ||||
Loans held for investment | ||||
Outstanding Principal | $ 25,500 | |||
Carrying Amount | $ 25,500 | |||
Basis spread (as a percent) | 5.00% | |||
Unleveraged effective yield (as a percent) | 5.90% | |||
Base rate | 30-day LIBOR | |||
Multifamily in TX | ||||
Loans held for investment | ||||
Outstanding Principal | $ 25,000 | |||
Carrying Amount | $ 24,900 | |||
Basis spread (as a percent) | 3.65% | |||
Unleveraged effective yield (as a percent) | 4.60% | |||
Base rate | 30-day LIBOR | |||
Multifamily in TX | ||||
Loans held for investment | ||||
Outstanding Principal | $ 23,900 | |||
Carrying Amount | $ 23,800 | |||
Basis spread (as a percent) | 3.80% | |||
Unleveraged effective yield (as a percent) | 4.40% | |||
Base rate | 30-day LIBOR | |||
Multifamily in GA | ||||
Loans held for investment | ||||
Outstanding Principal | $ 23,100 | |||
Carrying Amount | $ 23,000 | |||
Basis spread (as a percent) | 3.85% | |||
Unleveraged effective yield (as a percent) | 5.00% | |||
Base rate | 30-day LIBOR | |||
Multifamily in AZ | ||||
Loans held for investment | ||||
Outstanding Principal | $ 22,100 | |||
Carrying Amount | $ 22,100 | |||
Basis spread (as a percent) | 4.25% | |||
Unleveraged effective yield (as a percent) | 5.50% | |||
Base rate | 30-day LIBOR | |||
Industrial in VA | ||||
Loans held for investment | ||||
Outstanding Principal | $ 19,000 | |||
Carrying Amount | $ 19,000 | |||
Basis spread (as a percent) | 5.25% | |||
Unleveraged effective yield (as a percent) | 6.40% | |||
Base rate | 30-day LIBOR | |||
Office Building in CO | ||||
Loans held for investment | ||||
Outstanding Principal | $ 18,700 | |||
Carrying Amount | $ 18,500 | |||
Basis spread (as a percent) | 3.95% | |||
Unleveraged effective yield (as a percent) | 4.90% | |||
Base rate | 30-day LIBOR | |||
Office Building in CA | ||||
Loans held for investment | ||||
Outstanding Principal | $ 15,900 | |||
Carrying Amount | $ 15,800 | |||
Basis spread (as a percent) | 3.75% | |||
Unleveraged effective yield (as a percent) | 4.60% | |||
Base rate | 30-day LIBOR | |||
Multifamily in NC | ||||
Loans held for investment | ||||
Outstanding Principal | $ 16,000 | |||
Carrying Amount | $ 15,900 | |||
Basis spread (as a percent) | 4.00% | |||
Unleveraged effective yield (as a percent) | 5.00% | |||
Base rate | 30-day LIBOR | |||
Office Building in CA | ||||
Loans held for investment | ||||
Outstanding Principal | $ 14,900 | |||
Carrying Amount | $ 14,900 | |||
Basis spread (as a percent) | 4.50% | |||
Unleveraged effective yield (as a percent) | 5.50% | |||
Base rate | 30-day LIBOR | |||
Multifamily in NY | ||||
Loans held for investment | ||||
Outstanding Principal | $ 14,900 | |||
Carrying Amount | $ 14,900 | |||
Basis spread (as a percent) | 3.85% | |||
Unleveraged effective yield (as a percent) | 4.70% | |||
Base rate | 30-day LIBOR | |||
Office Building in CA | ||||
Loans held for investment | ||||
Outstanding Principal | $ 14,500 | |||
Carrying Amount | $ 14,500 | |||
Basis spread (as a percent) | 4.75% | |||
Unleveraged effective yield (as a percent) | 5.80% | |||
Base rate | 30-day LIBOR | |||
Mixed use in NY | ||||
Loans held for investment | ||||
Outstanding Principal | $ 13,100 | |||
Carrying Amount | $ 13,000 | |||
Basis spread (as a percent) | 3.95% | |||
Unleveraged effective yield (as a percent) | 5.00% | |||
Base rate | 30-day LIBOR | |||
Multifamily in FL | ||||
Loans held for investment | ||||
Outstanding Principal | $ 12,300 | |||
Carrying Amount | $ 12,200 | |||
Basis spread (as a percent) | 3.75% | |||
Unleveraged effective yield (as a percent) | 4.80% | |||
Base rate | 30-day LIBOR | |||
Industrial in CA | ||||
Loans held for investment | ||||
Outstanding Principal | $ 10,100 | |||
Carrying Amount | $ 10,000 | |||
Basis spread (as a percent) | 5.25% | |||
Unleveraged effective yield (as a percent) | 6.50% | |||
Base rate | 30-day LIBOR | |||
Multifamily in GA and FL | ||||
Loans held for investment | ||||
Outstanding Principal | $ 50,800 | |||
Carrying Amount | $ 50,300 | |||
Basis spread (as a percent) | 11.85% | |||
Unleveraged effective yield (as a percent) | 12.50% | |||
Base rate | 30-day LIBOR | |||
Multifamily in NY | ||||
Loans held for investment | ||||
Outstanding Principal | $ 33,300 | |||
Carrying Amount | $ 33,200 | |||
Basis spread (as a percent) | 8.07% | |||
Unleveraged effective yield (as a percent) | 8.80% | |||
Base rate | 30-day LIBOR | |||
Office Building in GA | ||||
Loans held for investment | ||||
Outstanding Principal | $ 14,300 | |||
Carrying Amount | $ 14,300 | |||
Unleveraged effective yield (as a percent) | 9.50% | |||
Fixed interest rate (as a percent) | 9.50% | |||
Mixed use in NY | ||||
Loans held for investment | ||||
Outstanding Principal | $ 16,500 | |||
Carrying Amount | $ 16,400 | |||
Unleveraged effective yield (as a percent) | 12.10% | |||
Fixed interest rate (as a percent) | 11.50% | |||
Mixed use in NY | PIK | ||||
Loans held for investment | ||||
Basis spread (as a percent) | 9.00% | |||
Fixed interest rate (as a percent) | 15.00% | |||
Increase in total commitment and outstanding principal amount | $ 650 | |||
Multifamily in TX | ||||
Loans held for investment | ||||
Outstanding Principal | $ 4,900 | |||
Carrying Amount | $ 4,800 | |||
Basis spread (as a percent) | 11.00% | |||
Unleveraged effective yield (as a percent) | 11.80% | |||
Base rate | 30-day LIBOR | |||
Multifamily in TX | PIK | ||||
Loans held for investment | ||||
Basis spread (as a percent) | 9.00% | |||
Preferred return base rate | 30-day LIBOR | |||
Diversified Properties | ||||
Loans held for investment | ||||
Outstanding Principal | $ 48,500 | |||
Carrying Amount | $ 47,400 | |||
Unleveraged effective yield (as a percent) | 11.70% | |||
Fixed interest rate (as a percent) | 10.95% | |||
Multifamily GA And FL | ||||
Loans held for investment | ||||
Preferred return fixed interest rate (as a percent) | 11.85% | |||
Preferred return base rate | 30-day LIBOR | |||
Multifamily GA And FL | PIK | ||||
Loans held for investment | ||||
Basis spread (as a percent) | 2.00% | |||
Minimum | ||||
Loans held for investment | ||||
Number of extension options | item | 1 | |||
Maximum | ||||
Loans held for investment | ||||
Number of extension options | item | 2 |
LOANS HELD FOR INVESTMENT - Por
LOANS HELD FOR INVESTMENT - Portfolio Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Change in the activity of loan portfolio | |||
Balance at the beginning of the period | $ 1,462,584,000 | $ 958,495,000 | |
Initial funding | 159,348,000 | 637,222,000 | |
Receipt of origination fees, net of costs | (1,078,000) | (7,026,000) | |
Additional funding | 70,529,000 | 80,215,000 | |
Amortizing payments | (601,000) | ||
Loan payoffs | (446,745,000) | (209,983,000) | |
Loans sold to third parties (1) | (74,625,000) | ||
Origination fee accretion | 4,979,000 | 3,661,000 | $ 2,366,000 |
Balance at the end of the period | 1,174,391,000 | 1,462,584,000 | 958,495,000 |
Recognized gain or loss on sale | 0 | ||
Impairment charges recognized | $ 0 | $ 0 | $ 0 |
Unleveraged effective yield (as a percent) | 6.00% | 6.00% | |
Senior mortgage loans | |||
Change in the activity of loan portfolio | |||
Unleveraged effective yield (as a percent) | 4.90% | ||
Transferred senior mortgage loan | |||
Change in the activity of loan portfolio | |||
Unleveraged effective yield (as a percent) | 4.20% |
MORTGAGE SERVICING RIGHTS (Deta
MORTGAGE SERVICING RIGHTS (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)item | Dec. 31, 2013USD ($) | |
Transfers and Servicing [Abstract] | |||
Number of loans held under MSR portfolio | item | 973 | 976 | |
Unpaid principal amount on servicing assets | $ 4,900,000 | $ 4,100,000 | |
Activity related to MSRs | |||
Beginning balance | 58,889 | 59,640 | |
MSRs acquired in asset acquisition | 1,259 | ||
MSRs purchased | 549 | ||
Additions, following sale of loan | 13,267 | 7,853 | |
Change in fair value of mortgage servicing rights | (8,798) | (7,650) | $ (2,697) |
Prepayments and write-offs | (2,107) | (2,213) | |
Ending balance | $ 61,800 | 58,889 | $ 59,640 |
Discount rate (as a percent) | 1.00% | ||
Change in fair value of ACRE Capital's MSRs outstanding due to increase (decrease) in weighted average discount rate | $ 2,000 | $ 1,800 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible Assets | ||
Carrying value | $ 6 | $ 6 |
Impairment charges | 0 | $ 0 |
Freddie Mac Program Plus license | ||
Intangible Assets | ||
Carrying value | $ 1 |
DEBT - Disclsoures (Details)
DEBT - Disclsoures (Details) $ in Thousands | Dec. 14, 2015 | Dec. 13, 2015 | Oct. 20, 2015 | Dec. 31, 2015USD ($)item | Jul. 31, 2015 | Dec. 31, 2015USD ($)item | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Jun. 01, 2015USD ($) | Feb. 28, 2015USD ($) | Nov. 25, 2014USD ($) | Aug. 13, 2014USD ($) | Jul. 31, 2014USD ($) |
Funding agreements | ||||||||||||||
Total Commitment | $ 1,397,243 | $ 1,397,243 | $ 1,397,243 | $ 1,337,243 | ||||||||||
Outstanding balance | 622,581 | 622,581 | 622,581 | 745,964 | ||||||||||
Outstanding Balance | 522,775 | 522,775 | 522,775 | 552,799 | ||||||||||
Initial amount withdrawn from the maximum borrowing capacity | $ 75,000 | |||||||||||||
Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Term of debt | 10 years | |||||||||||||
March 2014 CNB Facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | 50,000 | 50,000 | $ 50,000 | 50,000 | ||||||||||
Outstanding Balance | 42,000 | |||||||||||||
July 2014 CNB Facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | 75,000 | 75,000 | 75,000 | 75,000 | ||||||||||
Outstanding Balance | 66,200 | 66,200 | 66,200 | 75,000 | ||||||||||
Secured term loan | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 155,000 | $ 155,000 | $ 155,000 | |||||||||||
Interest rate (as a percent) | 6.00% | 6.00% | 6.00% | |||||||||||
Non-utilization threshold percentage (as a percent) | 1.00% | 1.00% | 1.00% | |||||||||||
Outstanding Balance | $ 75,000 | $ 75,000 | $ 75,000 | |||||||||||
Aggregate principal amount | 155,000 | 155,000 | 155,000 | |||||||||||
Initial amount withdrawn from the maximum borrowing capacity | 75,000 | |||||||||||||
Amount of debt discount on the initial draw down amount | $ 1,100 | |||||||||||||
Debt discount on initial draw down (as a percent) | 8.40% | |||||||||||||
Remaining borrowing capacity | $ 80,000 | $ 80,000 | $ 80,000 | |||||||||||
LIBOR floor (as a percent) | 1.00% | 1.00% | 1.00% | |||||||||||
Non-utilization fee | $ 51 | |||||||||||||
Secured term loan | LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 6.00% | |||||||||||||
LIBOR floor (as a percent) | 1.00% | 1.00% | 1.00% | |||||||||||
Secured term loan | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth required to be maintained (as a percent) | 65.00% | |||||||||||||
Asset coverage ratio | 110.00% | |||||||||||||
Unencumbered asset ratio | 120.00% | |||||||||||||
Secured term loan | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Wells Fargo Facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 225,000 | $ 225,000 | $ 225,000 | 225,000 | ||||||||||
Outstanding Balance | 101,473 | 101,473 | 101,473 | 120,766 | ||||||||||
Wells Fargo Facility | Secured revolving funding facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 225,000 | $ 225,000 | $ 225,000 | |||||||||||
Variable interest basis | 30 day LIBOR | 30 day LIBOR | ||||||||||||
Non-utilization fee on average available balance (as a percent) | 0.25% | |||||||||||||
Non-utilization threshold percentage (as a percent) | 75.00% | 75.00% | 75.00% | |||||||||||
Non-utilization /Commitment fee | $ 195 | 213 | $ 218 | |||||||||||
Number of extension periods available for maturity date | item | 2 | 2 | 2 | |||||||||||
Extension period of maturity date | 12 months | |||||||||||||
Wells Fargo Facility | Secured revolving funding facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Specified amount for computing the tangible net worth to be maintained | $ 135,500 | |||||||||||||
Fixed charge coverage ratio | 1.25 | |||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Wells Fargo Facility | Secured revolving funding facility | Minimum | 30 day LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 1.75% | 2.00% | ||||||||||||
Wells Fargo Facility | Secured revolving funding facility | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Ratio of recourse debt to tangible net worth | 3 | |||||||||||||
Wells Fargo Facility | Secured revolving funding facility | Maximum | 30 day LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.35% | 2.50% | ||||||||||||
Wells Fargo Facility | Secured funding facility | ||||||||||||||
Funding agreements | ||||||||||||||
Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio | 12 months | |||||||||||||
Citibank Facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 250,000 | $ 250,000 | $ 250,000 | 250,000 | ||||||||||
Outstanding Balance | $ 112,827 | $ 112,827 | $ 112,827 | 93,432 | ||||||||||
Citibank Facility | Secured revolving funding facility | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | 30 day LIBOR | |||||||||||||
Non-utilization fee on average available balance (as a percent) | 0.25% | |||||||||||||
Non-utilization /Commitment fee | $ 369 | 316 | 164 | |||||||||||
Number of extension periods available for maturity date | item | 3 | 3 | 3 | |||||||||||
Extension period of maturity date | 12 months | |||||||||||||
Liquidity to be maintained as a percentage of recourse indebtedness | 5.00% | |||||||||||||
Citibank Facility | Secured revolving funding facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Amount of liquidity to be maintained | $ 5,000 | |||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Citibank Facility | Secured revolving funding facility | Minimum | 30 day LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.00% | |||||||||||||
Citibank Facility | Secured revolving funding facility | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Ratio of recourse debt to tangible net worth | 3 | |||||||||||||
Amount of liquidity to be maintained | $ 10,000 | |||||||||||||
Fixed charge coverage ratio | 1.25 | |||||||||||||
Citibank Facility | Secured revolving funding facility | Maximum | 30 day LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.50% | |||||||||||||
Citibank Facility | Secured funding facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio | 12 months | |||||||||||||
Capital One Facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | 100,000 | |||||||||||||
Baml Facility [Member] | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 50,000 | $ 50,000 | $ 50,000 | |||||||||||
Variable interest basis | one-month LIBOR | |||||||||||||
Non-utilization fee on average available balance (as a percent) | 1250.00% | |||||||||||||
Non-utilization /Commitment fee | $ 37 | |||||||||||||
Number of extension periods available for maturity date | item | 1 | 1 | 1 | |||||||||||
Extension period of maturity date | 12 months | |||||||||||||
Term of debt | 2 years | |||||||||||||
Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio | 12 months | |||||||||||||
Baml Facility [Member] | Secured funding facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Fixed charge coverage ratio | 1.25 | |||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Baml Facility [Member] | Secured funding facility | Minimum | One-month LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.25% | |||||||||||||
Baml Facility [Member] | Secured funding facility | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Ratio of recourse debt to tangible net worth | 3 | |||||||||||||
Baml Facility [Member] | Secured funding facility | Maximum | One-month LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.75% | |||||||||||||
Fannie Mae | ASAP Line of Credit | ACRE Capital | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 80,000 | $ 80,000 | $ 80,000 | 80,000 | ||||||||||
Outstanding Balance | 58,469 | |||||||||||||
Line of Credit Facility Number of Separate Installments Received | item | 2 | |||||||||||||
Bank of America | Secured revolving funding facility | ACRC Lender C LLC | ACRE Capital | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 135,000 | |||||||||||||
Bank of America | BAML Line of Credit | ACRC Lender C LLC | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 135,000 | $ 135,000 | $ 135,000 | 180,000 | $ 185,000 | $ 80,000 | ||||||||
Variable interest basis | LIBOR | |||||||||||||
Non-utilization fee on average available balance (as a percent) | 1250.00% | |||||||||||||
Non-utilization threshold percentage (as a percent) | 40.00% | 40.00% | 40.00% | |||||||||||
Non-utilization /Commitment fee | $ 76 | 84 | $ 26 | |||||||||||
Outstanding Balance | $ 24,806 | $ 24,806 | $ 24,806 | 134,696 | ||||||||||
Maximum advances as a percentage of principal amounts of the mortgage loans originated by acquiree | 100.00% | 100.00% | 100.00% | |||||||||||
Bank of America | BAML Line of Credit | ACRC Lender C LLC | LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 1.60% | |||||||||||||
City National Bank | March 2014 CNB Facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 50,000 | $ 50,000 | $ 50,000 | |||||||||||
Non-utilization fee on average available balance (as a percent) | 0.375% | |||||||||||||
Non-utilization /Commitment fee | $ 177 | 82 | ||||||||||||
Number of extension periods available for maturity date | item | 1 | 1 | 1 | |||||||||||
Extension period of maturity date | 12 months | |||||||||||||
Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio | 12 months | |||||||||||||
City National Bank | March 2014 CNB Facility | LIBOR for a one, two, three, six or 12-month | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | LIBOR for a one, two, three, six or12-month | |||||||||||||
Interest rate margin (as a percent) | 3.00% | |||||||||||||
City National Bank | March 2014 CNB Facility | Federal funds rate | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | federal funds rate | |||||||||||||
Interest rate margin (as a percent) | 0.50% | |||||||||||||
City National Bank | March 2014 CNB Facility | One-month LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | one month LIBOR | |||||||||||||
Interest rate margin (as a percent) | 1.00% | |||||||||||||
City National Bank | March 2014 CNB Facility | Base rate | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | base rate | |||||||||||||
Interest rate margin (as a percent) | 1.25% | |||||||||||||
City National Bank | March 2014 CNB Facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate (as a percent) | 3.00% | 3.00% | 3.00% | |||||||||||
Facility used on average (as a percent) | 75.00% | |||||||||||||
Fixed charge coverage ratio | 1.25 | |||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
City National Bank | March 2014 CNB Facility | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Ratio of recourse debt to tangible net worth | 3 | |||||||||||||
City National Bank | July 2014 CNB Facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 75,000 | |||||||||||||
Non-utilization fee on average available balance (as a percent) | 0.125% | |||||||||||||
Non-utilization /Commitment fee | $ 4 | 15 | ||||||||||||
Extension period of maturity date | 12 months | 12 months | ||||||||||||
Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio | 12 months | |||||||||||||
City National Bank | July 2014 CNB Facility | LIBOR for a one, two, three, six or 12-month | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | LIBOR for a one, two, three, six or 12-month | |||||||||||||
Interest rate margin (as a percent) | 1.50% | |||||||||||||
City National Bank | July 2014 CNB Facility | Federal funds rate | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | federal funds rate | |||||||||||||
Interest rate margin (as a percent) | 0.50% | |||||||||||||
City National Bank | July 2014 CNB Facility | One-month LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | one month LIBOR | |||||||||||||
Interest rate margin (as a percent) | 1.00% | |||||||||||||
City National Bank | July 2014 CNB Facility | Base rate | ||||||||||||||
Funding agreements | ||||||||||||||
Variable interest basis | base rate | |||||||||||||
Interest rate margin (as a percent) | 0.25% | |||||||||||||
City National Bank | July 2014 CNB Facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate (as a percent) | 1.50% | 1.50% | 1.50% | |||||||||||
Facility used on average (as a percent) | 75.00% | |||||||||||||
Fixed charge coverage ratio | 1.25 | |||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
City National Bank | July 2014 CNB Facility | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Ratio of recourse debt to tangible net worth | 3 | |||||||||||||
Met Life | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 180,000 | $ 180,000 | $ 180,000 | 180,000 | ||||||||||
Outstanding Balance | 109,474 | 109,474 | $ 109,474 | 144,673 | ||||||||||
Met Life | Revolving master repurchase facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 180,000 | |||||||||||||
Variable interest basis | 30 day LIBOR | |||||||||||||
Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio | 12 months | |||||||||||||
Met Life | Revolving master repurchase facility | 30 day LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.35% | |||||||||||||
Met Life | Revolving master repurchase facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Fixed charge coverage ratio | 1.25 | |||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Met Life | Revolving master repurchase facility | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Ratio of recourse debt to tangible net worth | 3 | |||||||||||||
April 2014 UBS facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | 140,000 | 140,000 | $ 140,000 | 140,000 | ||||||||||
Outstanding Balance | 75,558 | 75,558 | 75,558 | 19,685 | ||||||||||
April 2014 UBS facility | Revolving master repurchase facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | 140,000 | $ 140,000 | $ 140,000 | |||||||||||
Variable interest basis | one-month LIBOR | |||||||||||||
Interest rate margin (as a percent) | 1.88% | |||||||||||||
Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio | 12 months | |||||||||||||
April 2014 UBS facility | Revolving master repurchase facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Fixed charge coverage ratio | 1.25 | |||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
April 2014 UBS facility | Revolving master repurchase facility | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Ratio of recourse debt to tangible net worth | 3 | |||||||||||||
April 2014 UBS facility | Revolving master repurchase facility | Assets subject to an advance for one year or less | One-month LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 1.88% | |||||||||||||
April 2014 UBS facility | Revolving master repurchase facility | Assets subject to an advance in excess of one year but less than two years | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.08% | |||||||||||||
April 2014 UBS facility | Revolving master repurchase facility | Assets subject to an advance for greater than two years | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.28% | |||||||||||||
December 2014 UBS facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | 57,243 | $ 57,243 | $ 57,243 | 57,243 | ||||||||||
Outstanding Balance | 57,243 | 57,243 | 57,243 | $ 57,243 | ||||||||||
December 2014 UBS facility | Global master repurchase facility | ||||||||||||||
Funding agreements | ||||||||||||||
Total Commitment | $ 57,200 | $ 57,200 | $ 57,200 | |||||||||||
Variable interest basis | one-month LIBOR | |||||||||||||
Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio | 12 months | |||||||||||||
December 2014 UBS facility | Global master repurchase facility | One-month LIBOR | ||||||||||||||
Funding agreements | ||||||||||||||
Interest rate margin (as a percent) | 2.74% | |||||||||||||
December 2014 UBS facility | Global master repurchase facility | Minimum | ||||||||||||||
Funding agreements | ||||||||||||||
Fixed charge coverage ratio | 1.25 | |||||||||||||
Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained | 80.00% | |||||||||||||
December 2014 UBS facility | Global master repurchase facility | Maximum | ||||||||||||||
Funding agreements | ||||||||||||||
Ratio of total debt to tangible net worth | 4 | |||||||||||||
Ratio of recourse debt to tangible net worth | 3 |
DEBT - Maturity Schedule (Detai
DEBT - Maturity Schedule (Details) - USD ($) $ in Thousands | Jun. 26, 2013 | Dec. 31, 2012 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 19, 2012 |
Convertible Senior Notes | ||||||
Carrying value of unsecured debt | $ 67,414 | |||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,016 | $ 362,549 | |||||
2,017 | 109,474 | |||||
2,018 | 150,558 | |||||
Total | 622,581 | |||||
Wells Fargo Facility | ||||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,016 | 101,473 | |||||
Total | 101,473 | |||||
Citibank Facility | ||||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,016 | 112,827 | |||||
Total | 112,827 | |||||
Met Life | ||||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,017 | 109,474 | |||||
Total | 109,474 | |||||
April 2014 UBS facility | ||||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,018 | 75,558 | |||||
Total | 75,558 | |||||
December 2014 UBS facility | ||||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,016 | 57,243 | |||||
Total | 57,243 | |||||
July 2014 CNB Facility | ||||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,016 | 66,200 | |||||
Total | 66,200 | |||||
2015 Convertible Notes | ||||||
Convertible Senior Notes | ||||||
Aggregate principal amount | $ 69,000 | |||||
Principle amount issued to initial purchasers | 60,500 | |||||
Amount issued to initial purchasers' exercise in full of their overallotment option | 9,000 | |||||
Principle amount issued to certain directors, officers and affiliates | 8,500 | |||||
Net proceeds | 66,200 | |||||
Initial purchasers' discount | $ 1,500 | 2,100 | ||||
Aggregate estimated offering expenses | $ 2,800 | |||||
Carrying value of unsecured debt | $ 67,400 | |||||
Interest rate (as a percent) | 7.00% | |||||
Effective interest rate used to amortize the debt discount | 9.40% | |||||
Interest expense incurred | 6,200 | $ 6,300 | $ 6,200 | |||
Initial value of derivative liability | $ 1,700 | |||||
Percentage of accretion of Original issue discount and associated costs | 9.40% | |||||
Conversion option's cumulative value | $ 86 | |||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,018 | 75,000 | |||||
Total | 75,000 | |||||
2015 Convertible Notes | Minimum | ||||||
Convertible Senior Notes | ||||||
Percentage of common stock issued on conversion without shareholder's approval | 20.00% | |||||
BAML Line of Credit | ||||||
Principal maturities of secured funding agreements and unsecured debt | ||||||
2,016 | 24,806 | |||||
Total | $ 24,806 |
ALLOWANCE FOR LOSS SHARING (Det
ALLOWANCE FOR LOSS SHARING (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Summary of the Company's allowance for loss sharing | |||
Beginning balance | $ 12,349 | $ 16,480 | |
Current period provision for loss sharing | 1,093 | 1,364 | $ (6) |
Settlements/Writeoffs | (2,287) | (2,767) | |
Ending balance | 8,969 | 12,349 | $ 16,480 |
Fannie Mae DUS license | |||
Allowance for loss sharing | |||
Maximum quantifiable allowance for loss sharing | 1,100,000 | 1,100,000 | |
Maximum quantifiable recourse liability at risk pool | 3,200,000 | 3,200,000 | |
Maximum quantifiable recourse liability non-at risk pool | $ 855 | 2,000 | |
Fannie Mae master loss sharing agreement | Loss Level I | |||
Allowance for loss sharing | |||
Loss sharing on the basis of Pari Passu Loss Sharing (as a percent) | 66.67% | ||
Fannie Mae master loss sharing agreement | ACRE Capital | |||
Allowance for loss sharing | |||
Maximum period considered for increase in risk-sharing obligation if loan defaulted after purchase | 12 months | ||
Absorption of losses under certain limited circumstances (as a percent) | 100.00% | ||
Contributions for reimbursement obligation | $ 377 | $ 494 | |
Number of twelve months periods following closing date considered for reimbursement | item | 3 | ||
Period following closing date considered for reimbursement | 12 months | ||
Percentage of amounts due and owing after closing date that sellers are obligated to fund directly (if permitted) or to reimburse | 80.00% | ||
Threshold limit of allowance for loss sharing pursuant to which sellers obligation arise to fund directly (if permitted) or to reimburse | $ 2,000 | ||
Sellers obligations for the entire three (3) year period | $ 3,000 | ||
Period considered in determination of maximum sellers obligations | 3 years | ||
Delinquent period | 60 days | ||
Fannie Mae master loss sharing agreement | ACRE Capital | Loss Level I | |||
Allowance for loss sharing | |||
Loss sharing on the basis of Pari Passu Loss Sharing (as a percent) | 33.33% | ||
Maximum risk-sharing obligation as a percentage of original principal amount of the loan | 33.33% | ||
Fannie Mae master loss sharing agreement | ACRE Capital | Loss Level II | |||
Allowance for loss sharing | |||
Maximum risk-sharing obligation as a percentage of original principal amount of the loan | 30.00% | ||
Fannie Mae master loss sharing agreement | ACRE Capital | Loss Level III | |||
Allowance for loss sharing | |||
Maximum risk-sharing obligation as a percentage of original principal amount of the loan | 40.00% |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Commitments (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Commitments and Contingencies Disclosure [Abstract] | ||
Total commitments | $ 1,232,163 | $ 1,565,117 |
Less: funded commitments | (1,133,842) | (1,395,281) |
Total unfunded commitments | $ 98,321 | $ 169,836 |
COMMITMENTS AND CONTINGENCIES61
COMMITMENTS AND CONTINGENCIES - Loan Commitments (Details) - ACRE Capital - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Loan commitments | ||
Commitments and Contingencies | ||
Commitments | $ 237,372 | $ 249,803 |
Commitments to fund loans | ||
Commitments and Contingencies | ||
Commitments | $ 207,566 | $ 51,109 |
COMMITMENTS AND CONTINGENCIES62
COMMITMENTS AND CONTINGENCIES - Lease Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Lease Commitments | |||
Rent expense | $ 844 | $ 983 | $ 230 |
Future minimum payments under operating lease | |||
2,016 | 775 | ||
2,017 | 853 | ||
2,018 | 837 | ||
2,019 | 772 | ||
2,020 | 754 | ||
Thereafter | 1,026 | ||
Total | $ 5,017 | ||
ACRE Capital | Maximum | |||
Lease Commitments | |||
Lease term | 1 year | ||
ACRE Capital | Minimum | |||
Lease Commitments | |||
Lease term | 5 years |
DERIVATIVES (Details)
DERIVATIVES (Details) $ in Thousands | Aug. 30, 2013USD ($) | Jun. 26, 2013 | Jul. 31, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)itemloan |
ACRE Capital | ||||||
Derivatives | ||||||
Purchase price for servicing rights | $ 60,900 | $ 325 | $ 500 | |||
2015 Convertible Notes | ||||||
Derivatives | ||||||
Derivatives in liability position, Fair Value | $ 0 | $ 0 | ||||
2015 Convertible Notes | Minimum | ||||||
Derivatives | ||||||
Percentage of common stock issued on conversion without shareholder's approval | 20.00% | |||||
Non-designated Hedges | ||||||
Derivatives | ||||||
Derivatives assets net of liabilities | $ 6,937 | $ 1,670 | ||||
Non-designated Hedges | Loan commitments | ||||||
Derivatives | ||||||
Derivative, Number of Instruments Held | item | 87 | 36 | ||||
Number of contracts entered into by the company | 16 | 1 | ||||
Notional amount | $ 207,600 | $ 51,100 | ||||
Non-designated Hedges | Loan commitments | Other assets. | ||||||
Derivatives | ||||||
Derivatives in asset position, Fair Value | $ 8,450 | $ 3,082 | ||||
Non-designated Hedges | Forward sale commitments | ||||||
Derivatives | ||||||
Derivative, Number of Instruments Held | item | 87 | 36 | ||||
Number of contracts entered into by the company | item | 24 | 10 | ||||
Notional amount | $ 237,400 | $ 249,800 | ||||
Non-designated Hedges | Forward sale commitments | Minimum | ||||||
Derivatives | ||||||
Maturity term | 25 days | 9 days | ||||
Non-designated Hedges | Forward sale commitments | Maximum | ||||||
Derivatives | ||||||
Maturity term | 17 months | 23 months | ||||
Non-designated Hedges | Forward sale commitments | Other assets. | ||||||
Derivatives | ||||||
Derivatives in asset position, Fair Value | $ 25 | $ 116 | ||||
Non-designated Hedges | Forward sale commitments | Other liabilities. | ||||||
Derivatives | ||||||
Derivatives in liability position, Fair Value | (1,868) | $ (1,528) | ||||
Non-designated Hedges | MSR purchase commitment | Other assets. | ||||||
Derivatives | ||||||
Derivatives in asset position, Fair Value | $ 330 |
EQUITY - Public Offerings (Deta
EQUITY - Public Offerings (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |||
Jul. 31, 2013 | Jun. 30, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stockholders' Equity Note [Abstract] | |||||
Common shares issued | 601,590 | 18,000,000 | 0 | 0 | 18,601,590 |
Common stock price (in dollars per share) | $ 13.5 | $ 13.5 | |||
Proceeds from issuance of common stock | $ 7.7 | $ 234.6 | $ 242.3 | ||
Number of additional shares of common stock to be purchased under the option granted to underwriters | 2,700,000 | ||||
Common stock shares issued in public or private offerings | 0 | 0 |
EQUITY - Disclosures (Details)
EQUITY - Disclosures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 23, 2012 | |
Equity Incentive Plan | |||||
Number of shares of common stock that may granted under the plan | 690,000 | ||||
Percentage of issued and outstanding shares of common stock eligible to be granted under the plan | 7.50% | ||||
Restricted stock activity | |||||
Balance at the beginning of the period (in shares) | 110,914 | ||||
Granted (in shares) | 25,555 | ||||
Vested (in shares) | (49,455) | ||||
Forfeited (in shares) | (2,820) | ||||
Balance at the end of the period (in shares) | 84,194 | 110,914 | |||
Future Anticipated Vesting Schedule | |||||
2016 (in shares) | 51,178 | ||||
2017 (in shares) | 834 | ||||
Total (in shares) | 52,012 | ||||
Activity in the Company's vested and nonvested shares of restricted stock | |||||
Compensation expense included in compensation and benefits | $ 835 | $ 939 | $ 524 | ||
Total fair value of shares vested | 586 | 534 | 458 | ||
Weighted average grant date fair value | 299 | 1,329 | 687 | ||
Total compensation cost related to non-vested awards that have not yet been recognized | $ 494,000 | $ 1,100 | |||
Weighted-average period over which non-vested awards are expected to be recognized | 1 year 7 months 2 days | 2 years 7 months 6 days | |||
Non-controlling interest | |||||
Amount allocated to non-controlling interest | $ 47,017 | $ 77,932 | |||
ACRC KA Investor LLC | |||||
Non-controlling interest | |||||
Total equity of VIE | 96,000 | 170,700 | |||
VIE equity owned by the company | 49,000 | 92,800 | |||
Amount allocated to non-controlling interest | $ 47,000 | $ 77,900 | |||
Restricted stock | |||||
Equity Incentive Plan | |||||
Shares Granted | 245,939 | ||||
Restricted stock | Maximum | |||||
Equity Incentive Plan | |||||
Award vesting period | 4 years | ||||
Restricted stock | Minimum | |||||
Equity Incentive Plan | |||||
Award vesting period | 1 year | ||||
Restricted stock | Directors | |||||
Restricted stock activity | |||||
Balance at the beginning of the period (in shares) | 21,324 | ||||
Granted (in shares) | 25,555 | ||||
Vested (in shares) | (27,114) | ||||
Forfeited (in shares) | (2,820) | ||||
Balance at the end of the period (in shares) | 16,945 | 21,324 | |||
Future Anticipated Vesting Schedule | |||||
2016 (in shares) | 16,111 | ||||
2017 (in shares) | 834 | ||||
Total (in shares) | 16,945 | ||||
Activity in the Company's vested and nonvested shares of restricted stock | |||||
Compensation expense included in compensation and benefits | $ 330 | $ 445 | 408 | ||
Total fair value of shares vested | 313 | 399 | 366 | ||
Weighted average grant date fair value | $ 299 | $ 385 | 289 | ||
Restricted stock | Officer | |||||
Restricted stock activity | |||||
Balance at the beginning of the period (in shares) | 10,936 | ||||
Vested (in shares) | (6,250) | ||||
Balance at the end of the period (in shares) | 4,686 | 10,936 | |||
Future Anticipated Vesting Schedule | |||||
2016 (in shares) | 4,686 | ||||
Total (in shares) | 4,686 | ||||
Activity in the Company's vested and nonvested shares of restricted stock | |||||
Compensation expense included in compensation and benefits | $ 106 | $ 106 | 106 | ||
Total fair value of shares vested | $ 72 | $ 79 | 92 | ||
Restricted stock | Employees | |||||
Restricted stock activity | |||||
Balance at the beginning of the period (in shares) | 78,654 | ||||
Vested (in shares) | (16,091) | ||||
Balance at the end of the period (in shares) | 62,563 | 78,654 | |||
Future Anticipated Vesting Schedule | |||||
2016 (in shares) | 30,381 | ||||
Total (in shares) | 30,381 | ||||
Activity in the Company's vested and nonvested shares of restricted stock | |||||
Compensation expense included in compensation and benefits | $ 399 | $ 388 | 10 | ||
Total fair value of shares vested | $ 201 | 56 | |||
Weighted average grant date fair value | $ 944 | $ 398 | |||
Restricted stock | May 1, 2012 | |||||
Equity Incentive Plan | |||||
Shares Granted | 35,135 | ||||
Restricted stock | June 18, 2012 | |||||
Equity Incentive Plan | |||||
Shares Granted | 7,027 | ||||
Restricted stock | July 9, 2012 | |||||
Equity Incentive Plan | |||||
Shares Granted | 25,000 | ||||
Restricted stock | June 26, 2013 | |||||
Equity Incentive Plan | |||||
Shares Granted | 22,526 | ||||
Restricted stock | November 25, 2013 | |||||
Equity Incentive Plan | |||||
Shares Granted | 30,381 | ||||
Restricted stock | January 31, 2014 | |||||
Equity Incentive Plan | |||||
Shares Granted | 48,273 | ||||
Restricted stock | February 26, 2014 | |||||
Equity Incentive Plan | |||||
Shares Granted | 12,030 | ||||
Restricted stock | February 27, 2014 | |||||
Equity Incentive Plan | |||||
Shares Granted | 22,354 | ||||
Restricted stock | June 24, 2014 | |||||
Equity Incentive Plan | |||||
Shares Granted | 17,658 | ||||
Restricted stock | June 24, 2015 | |||||
Equity Incentive Plan | |||||
Shares Granted | 25,555 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Per Share [Abstract] | |||||||||||
Net income from continuing operations, less non-controlling interests | $ 27,300 | $ 22,529 | $ 12,329 | ||||||||
Net income from discontinued operations held for sale, net of income taxes | $ 6,985 | $ 1,867 | $ 1,437 | ||||||||
Divided by: | |||||||||||
Basic weighted average shares of common stock outstanding | 28,501,897 | 28,459,309 | 18,989,500 | ||||||||
Non-vested restricted stock | 95,671 | 125,713 | 48,652 | ||||||||
Diluted weighted average shares of common stock outstanding: | 28,597,568 | 28,585,022 | 19,038,152 | ||||||||
Basic earnings per common share: | |||||||||||
Net income from continuing operations | $ 0.96 | $ 0.79 | $ 0.65 | ||||||||
Net income from discontinued operations held for sale | 0.25 | 0.07 | 0.08 | ||||||||
Net income | $ 0.31 | $ 0.33 | $ 0.31 | $ 0.25 | $ 0.31 | $ 0.14 | $ 0.23 | $ 0.17 | 1.20 | 0.86 | 0.72 |
Diluted earnings per common share: | |||||||||||
Net income from continuing operations | 0.95 | 0.79 | 0.65 | ||||||||
Net income from discontinued operations held for sale | 0.24 | 0.07 | 0.08 | ||||||||
Net income | $ 0.31 | $ 0.33 | $ 0.31 | $ 0.25 | $ 0.31 | $ 0.14 | $ 0.23 | $ 0.17 | $ 1.20 | $ 0.85 | $ 0.72 |
INCOME TAX (Details)
INCOME TAX (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Oct. 31, 2014USD ($)item | |
Components of the company's income tax provision | ||||
Deferred | $ 2,093 | $ 93 | $ 61 | |
Total income tax expense (benefit) | (11) | 240 | ||
Deferred tax asset | ||||
Net operating loss carryforward | 7,800 | |||
Reconciliation of the Company's effective tax rate to the Company's statutory federal income tax rate | ||||
Outstanding Balance | 522,775 | 552,799 | ||
TRS' | ||||
Components of the company's income tax provision | ||||
Current | (11) | 240 | 0 | |
Current Income Tax Expense (Benefit), Discontinued Operations | (154) | 89 | 115 | |
Deferred | 0 | 0 | 0 | |
Deferred Income Tax Expense (Benefit), Discontinued Operations | 2,093 | (1,372) | 61 | |
Total income tax expense (benefit) | 1,928 | (1,043) | $ 176 | |
Deferred tax asset | ||||
Mortgage servicing rights | 4,083 | 2,844 | ||
Net operating loss carryforward | 2,906 | 1,465 | ||
Other temporary differences | 1,762 | 1,055 | ||
Sub-total-deferred tax assets | 8,751 | 5,364 | ||
Deferred tax liabilities | ||||
Basis difference in assets from acquisition of ACRE Capital | (2,709) | (2,654) | ||
Components of gains from mortgage banking activities | (9,344) | (4,046) | ||
Amortization of intangible assets | (297) | (170) | ||
Sub-total-deferred tax liabilities | (12,350) | (6,870) | ||
Net deferred tax liability | $ (3,599) | $ (1,506) | ||
Reconciliation of the Company's effective tax rate to the Company's statutory federal income tax rate | ||||
Federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | |
State income taxes (as a percent) | 3.60% | 2.40% | 5.70% | |
Federal benefit of state tax deduction (as a percent) | (1.30%) | (0.80%) | (2.00%) | |
Effective tax rate (as a percent) | 37.30% | 36.60% | 38.70% | |
Reconciliation of the Company's federal income tax determined using the Company's statutory federal tax rate to the Company's reported income tax provision | ||||
Operating loss carryforward period | 20 years | |||
TRS' | Notes Receivable and Revolving Promissory Note Receivable | ||||
Reconciliation of the Company's effective tax rate to the Company's statutory federal income tax rate | ||||
Outstanding Balance | $ 51,900 | $ 50,900 | ||
TRS' | Notes Receivable | ||||
Reconciliation of the Company's effective tax rate to the Company's statutory federal income tax rate | ||||
Capitalized amount | $ 44,000 | |||
TRS' | Revolving Promissory Note | ||||
Reconciliation of the Company's effective tax rate to the Company's statutory federal income tax rate | ||||
Capitalized amount | $ 8,000 | |||
TRS' | Notes | ||||
Reconciliation of the Company's effective tax rate to the Company's statutory federal income tax rate | ||||
Number of Notes | item | 2 |
FAIR VALUE OF FINANCIAL INSTR68
FAIR VALUE OF FINANCIAL INSTRUMENTS - Financial Instruments Reported at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Transfer of asset from level 1 to level 2 | $ 0 | $ 0 |
Transfer of asset from level 2 to level 1 | 0 | 0 |
Transfer of liabilities from level 1 to level 2 | 0 | 0 |
Transfer of liabilities from level 2 to level 1 | 0 | 0 |
Recurring basis | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Loans held for sale | 30,612 | 203,006 |
Recurring basis | Mortgage servicing rights | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Derivative assets | 61,800 | 58,889 |
Recurring basis | Loan commitments | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Derivative assets | 8,450 | 3,082 |
Recurring basis | Forward sale commitments | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Derivative assets | 25 | 116 |
Derivative liabilities | (1,868) | (1,528) |
Recurring basis | MSR purchase commitment | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Derivative assets | 330 | |
Recurring basis | Level II | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Loans held for sale | 30,612 | 203,006 |
Recurring basis | Level III | Mortgage servicing rights | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Derivative assets | 61,800 | 58,889 |
Recurring basis | Level III | Loan commitments | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Derivative assets | 8,450 | 3,082 |
Recurring basis | Level III | Forward sale commitments | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Derivative assets | 25 | 116 |
Derivative liabilities | (1,868) | $ (1,528) |
Recurring basis | Level III | MSR purchase commitment | ||
Levels in the fair value hierarchy into which the financial instruments were categorized | ||
Derivative assets | $ 330 |
FAIR VALUE OF FINANCIAL INSTR69
FAIR VALUE OF FINANCIAL INSTRUMENTS - Level III (Details) - Level III - Discounted cash flow - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Mortgage servicing rights | ||
Fair Value Measurements | ||
Derivative assets | $ 61,800 | $ 58,889 |
Mortgage servicing rights | Minimum | ||
Fair Value Measurements | ||
Discount rate (as a percent) | 8.00% | 8.00% |
Mortgage servicing rights | Maximum | ||
Fair Value Measurements | ||
Discount rate (as a percent) | 14.00% | 14.00% |
Mortgage servicing rights | Weighted Average | ||
Fair Value Measurements | ||
Discount rate (as a percent) | 11.10% | 11.40% |
Loan commitments | ||
Fair Value Measurements | ||
Derivative assets | $ 6,607 | $ 1,670 |
Loan commitments | Minimum | ||
Fair Value Measurements | ||
Discount rate (as a percent) | 8.00% | 8.00% |
Loan commitments | Maximum | ||
Fair Value Measurements | ||
Discount rate (as a percent) | 12.00% | 8.00% |
Loan commitments | Weighted Average | ||
Fair Value Measurements | ||
Discount rate (as a percent) | 8.20% | 8.00% |
MSR purchase commitment | ||
Fair Value Measurements | ||
Derivative assets | $ 330 | |
Discount rate (as a percent) | 8.00% | |
MSR purchase commitment | Weighted Average | ||
Fair Value Measurements | ||
Discount rate (as a percent) | 8.00% |
FAIR VALUE OF FINANCIAL INSTR70
FAIR VALUE OF FINANCIAL INSTRUMENTS - Change in Level III (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Change in derivative instruments classified as Level III | ||
Balance at the beginning of the period | $ 1,670 | $ 3,527 |
Settlements | (23,675) | (8,893) |
Balance at the end of the period | 6,937 | 1,670 |
Gains from mortgage banking activities | ||
Change in derivative instruments classified as Level III | ||
Realized gains (losses) recorded in net income | 22,005 | 5,366 |
Unrealized gains (losses) recorded in net income | $ 6,937 | $ 1,670 |
FAIR VALUE OF FINANCIAL INSTR71
FAIR VALUE OF FINANCIAL INSTRUMENTS - Carrying Value and Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet | ||
Loans held for investment | $ 1,127,812 | $ 1,384,975 |
Financial Liabilities: | ||
Convertible notes | 67,414 | |
Debt issued by consolidated VIE | 61,815 | 217,495 |
Carrying Value | ||
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet | ||
Loans held for investment | 1,174,391 | 1,462,584 |
Financial Liabilities: | ||
Secured financing agreements | 522,775 | 552,799 |
Warehouse line of credit | 24,806 | 193,165 |
Secured term loan | 69,762 | |
Convertible notes | 67,414 | |
Carrying Value | Offered Certificates | ||
Financial Liabilities: | ||
Debt issued by consolidated VIE | 61,815 | 217,495 |
Carrying Value | Offered Notes | ||
Financial Liabilities: | ||
Debt issued by consolidated VIE | 192,528 | 305,734 |
Total | Level II | ||
Financial Liabilities: | ||
Secured financing agreements | 522,775 | 552,799 |
Warehouse line of credit | 24,806 | 193,165 |
Secured term loan | 75,000 | |
Convertible notes | 69,000 | |
Total | Level III | ||
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet | ||
Loans held for investment | 1,180,421 | 1,472,891 |
Total | Level III | Offered Certificates | ||
Financial Liabilities: | ||
Debt issued by consolidated VIE | 61,856 | 219,043 |
Total | Level III | Offered Notes | ||
Financial Liabilities: | ||
Debt issued by consolidated VIE | $ 193,419 | $ 308,703 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | May 01, 2012 | Jul. 31, 2015 | Jul. 31, 2014 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
RELATED PARTY TRANSACTIONS | ||||||||||||
Amount owed by the entity to related party | $ 2,432,000 | $ 2,424,000 | $ 2,432,000 | |||||||||
July 2014 CNB Facility | City National Bank | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Extension period of maturity date | 12 months | 12 months | ||||||||||
Restricted Costs | Maximum | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Costs to be reimbursed per quarter | 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | ||||||
ACREM | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Base management fees as a percentage of stockholders' equity per annum | 1.50% | |||||||||||
Percentage multiplied to arrive at first value affecting calculation of incentive fees | 20.00% | |||||||||||
Previous period for which core earnings are considered to arrive at first value affecting calculation of incentive fees | 12 months | |||||||||||
Previous period for product of weighted average price per share and weighted average number of shares of common stock and other shares | 12 months | |||||||||||
Percentage multiplied to arrive at difference of first value affecting calculation of incentive fees | 8.00% | |||||||||||
Period for which cumulative core earnings must be greater than zero | 3 years | |||||||||||
Number of fiscal quarters considered to arrive at second value affecting calculation of incentive fees | 12 months | |||||||||||
Period whose fiscal quarters are considered to arrive at first value affecting calculation of incentive fees | 12 months | |||||||||||
Incentive fee payable | $ 0 | |||||||||||
Minimum cumulative core earnings | 0 | $ 0 | ||||||||||
Automatic renewal period of management agreement | 1 year | |||||||||||
Incentive fees incurred | $ 0 | 0 | $ 0 | |||||||||
Multiplier of average annual base management and incentive fee to arrive at termination fee | 3 | |||||||||||
Period preceding most recently completed fiscal quarter considered for calculation of average of annual base management and incentive fee | 24 months | |||||||||||
Incurred | $ 0 | |||||||||||
Ares Investments Holdings LLC | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Aggregate principal amount | 1,200,000 | |||||||||||
Ares Investments Holdings LLC | Secured revolving funding facility | City National Bank | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Credit support fee agreed to be paid as percentage of average outstanding balance (as a percent) | 1.50% | |||||||||||
Credit support fee incurred | $ 1,000,000 | 278,000 | ||||||||||
Continuing Operations | ACREM | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Incurred | 10,289,000 | 9,556,000 | 7,969,000 | |||||||||
Amount owed by the entity to related party | 2,432,000 | 2,424,000 | 2,432,000 | |||||||||
Continuing Operations | ACREM | Management Fees | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Incurred | 5,397,000 | 5,440,000 | 4,125,000 | |||||||||
Amount owed by the entity to related party | 1,348,000 | 1,357,000 | 1,348,000 | |||||||||
Continuing Operations | ACREM | General and administrative expenses | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Incurred | 3,426,000 | 3,400,000 | 3,394,000 | |||||||||
Amount owed by the entity to related party | 853,000 | 835,000 | 853,000 | |||||||||
Continuing Operations | ACREM | Direct costs | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Incurred | 1,466,000 | 716,000 | 450,000 | |||||||||
Amount owed by the entity to related party | 231,000 | 232,000 | 231,000 | |||||||||
Discontinued Operations | ACREM | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Incurred | 1,026,000 | 1,221,000 | 651,000 | |||||||||
Amount owed by the entity to related party | 303,000 | 234,000 | 303,000 | |||||||||
Discontinued Operations | ACREM | Management Fees | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Incurred | 551,000 | 476,000 | 116,000 | |||||||||
Amount owed by the entity to related party | 123,000 | 144,000 | 123,000 | |||||||||
Discontinued Operations | ACREM | General and administrative expenses | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Incurred | 452,000 | 600,000 | 216,000 | |||||||||
Amount owed by the entity to related party | 147,000 | 84,000 | 147,000 | |||||||||
Discontinued Operations | ACREM | Direct costs | ||||||||||||
RELATED PARTY TRANSACTIONS | ||||||||||||
Incurred | 23,000 | 145,000 | $ 319,000 | |||||||||
Amount owed by the entity to related party | $ 33,000 | $ 6,000 | $ 33,000 |
DIVIDENDS AND DISTRIBUTIONS (De
DIVIDENDS AND DISTRIBUTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 1 | $ 1 | $ 1 |
Dividends per share amount paid (in dollars per share) | $ 1 | $ 1 | $ 1 |
Total cash dividends | $ 28,603 | $ 28,597 | $ 23,385 |
November 5, 2015 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,152 | ||
July 30, 2015 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,152 | ||
May 72,015 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,152 | ||
March 5, 2015 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,146 | ||
November 10, 2014 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,147 | ||
August 6, 2014 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,151 | ||
May 07 ,2014 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,151 | ||
March 17, 2014 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,147 | ||
November 13, 2013 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,127 | ||
August 7, 2013 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 7,119 | ||
May 15, 2013 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 6,822 | ||
March 14, 2013 | |||
DIVIDENDS AND DISTRIBUTIONS | |||
Dividend per share amount declared (in dollars per share) | $ 0.25 | ||
Dividends per share amount paid (in dollars per share) | $ 0.25 | ||
Total cash dividends | $ 2,317 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) $ in Thousands | Aug. 15, 2014USD ($)item | Nov. 01, 2013USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 19, 2014USD ($)property |
Variable Interest Entities | |||||
Outstanding Principal | $ 1,133,842 | $ 1,395,281 | |||
Loans held for investment related to consolidated VIE | 483,572 | 848,224 | |||
Issuer | |||||
Variable Interest Entities | |||||
Preferred equity fully funded amount | $ 32,700 | ||||
Primary beneficiary | |||||
Carrying value and the maximum exposure of unconsolidated VIEs | |||||
Maximum exposure to loss | 168,800 | 168,800 | |||
Not primary beneficiary | |||||
Carrying value and the maximum exposure of unconsolidated VIEs | |||||
Carrying value | 55,144 | 38,982 | |||
Maximum exposure to loss | 55,704 | 39,608 | |||
Offered Certificates | |||||
Variable Interest Entities | |||||
Aggregate principal amount | 61,900 | 219,000 | |||
Principal amount of certificates retained by wholly owned subsidiary of the entity | $ 98,800 | ||||
Offered Notes | |||||
Variable Interest Entities | |||||
Interest expense | 7,600 | 9,100 | |||
Offered Notes | Issuer | |||||
Variable Interest Entities | |||||
Aggregate principal amount | $ 193,400 | $ 308,700 | |||
Principal amount of certificates retained by wholly owned subsidiary of the entity | 37,400 | ||||
Outstanding Principal | $ 346,100 | ||||
Depositor | Commercial Mortgage Pass-Through Certificates (the "Certificates") | |||||
Variable Interest Entities | |||||
Aggregate principal amount | $ 493,800 | ||||
Number of adjustable rate participation interests (the "Trust Assets") in commercial mortgage loans contributed in connection with securitization | item | 18 | ||||
Number of properties collateralized for mortgage loan | item | 27 | ||||
ACRC Lender LLC | Offered Notes | |||||
Variable Interest Entities | |||||
Number of properties collateralized for mortgage loan | item | 15 | ||||
Collateral amount | $ 378,800 | ||||
ACRC KA Investor LLC | |||||
Variable Interest Entities | |||||
Preferred equity fully funded amount | $ 170,000 | ||||
Number of properties | property | 22 | ||||
Controlling financial interest held by parent | 51.00% | 54.30% | |||
Controlling financial interest held by third party institutional investors | 49.00% | 45.70% | |||
Fixed rate of return on investment | 0.1095 | ||||
Holdco | |||||
Variable Interest Entities | |||||
Loans held for investment related to consolidated VIE | $ 93,900 | $ 168,400 | |||
Holdco | Primary beneficiary | |||||
Carrying value and the maximum exposure of unconsolidated VIEs | |||||
Maximum exposure to loss | $ 48,500 | $ 92,400 |
DISCONTINUED OPERATIONS HELD 75
DISCONTINUED OPERATIONS HELD FOR SALE - Assets and Liabilities of Discontinued Operations Held for Sale (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
ASSETS | ||||
Cash and cash equivalents | $ 3,929 | $ 1,506 | $ 5,656 | $ 0 |
Assets of discontinued operations held for sale | 133,251 | 294,888 | ||
LIABILITIES | ||||
Liabilities of discontinued operations held for sale | 51,531 | 217,573 | ||
TRS' | Held-for-sale | ||||
ASSETS | ||||
Cash and cash equivalents | 3,929 | 1,506 | ||
Restricted cash | 17,297 | 16,442 | ||
Loans held for sale, at fair value | 30,612 | 203,006 | ||
Mortgage servicing rights, at fair value | 61,800 | 58,889 | ||
Other assets | 19,613 | 15,045 | ||
Assets of discontinued operations held for sale | 133,251 | 294,888 | ||
LIABILITIES | ||||
Warehouse lines of credit | 24,806 | 193,165 | ||
Allowance for loss sharing | 8,969 | 12,349 | ||
Due to affiliate | 234 | 303 | ||
Other liabilities | 17,522 | 11,756 | ||
Liabilities of discontinued operations held for sale | $ 51,531 | $ 217,573 |
DISCONTINUED OPERATIONS HELD 76
DISCONTINUED OPERATIONS HELD FOR SALE - Net Income of Discontinued Operations Held for Sale (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net income from discontinued operations held for sale, net of income taxes | $ 6,985 | $ 1,867 | $ 1,437 |
TRS' | Held-for-sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Servicing fees, net | 16,051 | 16,399 | 5,754 |
Gains from mortgage banking activities | 27,067 | 17,492 | 5,019 |
Provision for loss sharing | 1,093 | 1,364 | (6) |
Change in fair value of mortgage servicing rights | (8,798) | (7,650) | (2,697) |
Mortgage banking revenue | 35,413 | 27,605 | 8,070 |
Gain on sale of loans | 0 | 0 | 1,333 |
Total revenue | 35,413 | 27,605 | 9,403 |
Management fees to affiliate | 551 | 476 | 116 |
Professional fees | 1,073 | 1,047 | 477 |
Compensation and benefits | 20,448 | 18,649 | 5,456 |
General and administrative expenses | 3,965 | 6,249 | 1,525 |
General and administrative expenses reimbursed to affiliate | 452 | 600 | 216 |
Total expenses | 26,489 | 27,021 | 7,790 |
Income before income taxes | 8,924 | 584 | 1,613 |
Income tax expense (benefit) | 1,939 | (1,283) | 176 |
Net income from discontinued operations held for sale, net of income taxes | $ 6,985 | $ 1,867 | $ 1,437 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) | Aug. 25, 2014USD ($)item | Aug. 30, 2013USD ($)shares | Jul. 31, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)item | Dec. 31, 2013USD ($) |
ACQUISITIONS | |||||||
Number of loans held under MSR portfolio | item | 973 | 976 | |||||
Unpaid principal amount on servicing assets | $ 4,900,000,000 | $ 4,100,000,000 | |||||
MSRs acquired in asset acquisition | 1,259,000 | ||||||
Determination of gain on acquisition | |||||||
Gain on acquisition | $ 4,438,000 | ||||||
ACRE Capital | |||||||
ACQUISITIONS | |||||||
Total consideration paid | $ 60,900,000 | $ 325,000 | $ 500,000 | ||||
Cash as consideration for the acquisition | $ 53,400,000 | ||||||
Number of shares of common stock issued as consideration for the acquisition | shares | 588,235 | ||||||
Decrease in gain on acquisition | $ 0 | $ 0 | |||||
ACRE Capital | Freddie Mac Program Plus license | |||||||
ACQUISITIONS | |||||||
Number of loans held under MSR portfolio | item | 46 | ||||||
Unpaid principal amount on servicing assets | $ 370,600,000 | ||||||
Total consideration paid | 2,200,000 | ||||||
MSRs acquired in asset acquisition | 1,300,000 | ||||||
Remaining purchase price allocated to indefinite-lived intangible asset | $ 941,000 |
QUARTERLY FINANCIAL DATA (UNA78
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Total revenue | $ (12,450) | $ (12,242) | $ (12,311) | $ (12,992) | $ (10,658) | $ (8,352) | $ (9,321) | $ (9,207) | $ (49,995) | $ (37,538) | $ (22,627) |
Net income | 11,052 | 11,710 | 11,263 | 9,295 | 9,121 | 4,102 | 6,638 | 4,755 | 43,320 | 24,616 | 13,766 |
Net income attributable to common stockholders | $ 8,877 | $ 9,379 | $ 8,967 | $ 7,062 | $ 8,901 | $ 4,102 | $ 6,638 | $ 4,755 | $ 34,285 | $ 24,396 | $ 13,766 |
Net income | $ 0.31 | $ 0.33 | $ 0.31 | $ 0.25 | $ 0.31 | $ 0.14 | $ 0.23 | $ 0.17 | $ 1.20 | $ 0.86 | $ 0.72 |
Net income | $ 0.31 | $ 0.33 | $ 0.31 | $ 0.25 | $ 0.31 | $ 0.14 | $ 0.23 | $ 0.17 | $ 1.20 | $ 0.85 | $ 0.72 |
Adjustment | |||||||||||
Total revenue | $ 1,900 | $ 1,800 | $ 1,700 |
COSTS ASSOCIATED WITH RESTRUC79
COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES (Details) - ACRE Capital - Employee termination costs - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Company's exit and disposal costs incurred | ||
Total projected costs | $ 44 | $ 799 |
Reconciliation of the liability attributable to exit and disposal costs incurred | ||
Balance at the beginning of the period | 225 | |
Accruals | 44 | 799 |
Payments | $ (269) | (574) |
Balance at the end of the period | $ 225 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Thousands | Mar. 01, 2016$ / shares | Feb. 26, 2016item | Jan. 20, 2016USD ($) | Dec. 31, 2015USD ($)item | Feb. 28, 2016USD ($) | Feb. 27, 2016USD ($) | Dec. 31, 2014USD ($) |
Subsequent Events | |||||||
Outstanding principal | $ 1,133,842 | $ 1,395,281 | |||||
March 2014 CNB Facility | City National Bank | |||||||
Subsequent Events | |||||||
Number of extension periods available for maturity date | item | 1 | ||||||
Extension period of maturity date | 12 months | ||||||
Subsequent event | |||||||
Subsequent Events | |||||||
Share repurchase authorized amount | $ 30,000 | $ 20,000 | |||||
Dividends declared per share of common stock (in dollars per share) | $ / shares | $ 0.26 | ||||||
Subsequent event | Hotel portfolio in California | |||||||
Subsequent Events | |||||||
Commitments | $ 56,000 | ||||||
Outstanding principal | $ 56,000 | ||||||
Term of mortgage loans | 3 years | ||||||
Subsequent event | Hotel portfolio in California | LIBOR | |||||||
Subsequent Events | |||||||
Base rate | LIBOR | ||||||
Basis spread (as a percent) | 4.75% | ||||||
LIBOR floor (as a percent) | 0.25% | ||||||
Subsequent event | March 2014 CNB Facility | City National Bank | |||||||
Subsequent Events | |||||||
Number of extension periods available for maturity date | item | 1 | ||||||
Extension period of maturity date | 12 months |