Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Realty Finance Trust, Inc. | |
Entity Central Index Key | 1,562,528 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 31,683,529 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | |
ASSETS | |||
Cash and cash equivalents | $ 60,873 | $ 14,807 | |
Restricted cash | 5,000 | 5,366 | |
Commercial mortgage loans, held for investment, net of allowance of $1,609 and $888 | [1] | 1,119,293 | 1,124,201 |
Real estate securities, available for sale, at fair value | 57,639 | 130,754 | |
Receivable for loan repayment | 528 | 1,307 | |
Accrued interest receivable | [2] | 5,316 | 5,360 |
Prepaid expenses and other assets | 763 | 689 | |
Total assets | 1,249,412 | 1,282,484 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Collateralized loan obligations | 287,505 | 287,229 | |
Interest payable | [3] | 1,705 | 792 |
Distributions payable | 5,335 | 5,552 | |
Accounts payable and accrued expenses | 2,225 | 6,805 | |
Due to affiliate | 2,798 | 4,327 | |
Total liabilities | 614,134 | 628,155 | |
Commitments and Contingencies | |||
Preferred stock, $0.01 par value, 50,000,000 authorized, none issued and outstanding as of September 30, 2016 and December 31, 2015 | 0 | 0 | |
Convertible stock (promote shares); $0.01 par value, 1,000 shares authorized, issued and outstanding as of September 30, 2016 and December 31, 2015 | 0 | 1 | |
Common stock, $0.01 par value, 949,999,000 shares authorized, 31,605,701 and 31,385,280 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 316 | 314 | |
Additional paid-in capital | 697,684 | 691,590 | |
Accumulated other comprehensive loss | (2,219) | (2,254) | |
Accumulated deficit | (60,503) | (35,322) | |
Total stockholders' equity | 635,278 | 654,329 | |
Total liabilities and stockholders' equity | 1,249,412 | 1,282,484 | |
Commercial mortgage loans | |||
ASSETS | |||
Real estate securities, available for sale, at fair value | 57,639 | 130,754 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Repurchase agreements | 241,868 | 206,239 | |
Real estate securities | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Repurchase agreements | $ 72,698 | $ 117,211 | |
[1] | Includes $426,278 and $425,733 of loans net of allowance of $703 and $422 pledged as collateral on collateralized loan obligations ("CLO"), a variable interest entity ("VIE") as of September 30, 2016 and December 31, 2015, respectively. | ||
[2] | Includes $1,026 and $1,048 of interest receivable for loans pledged as collateral on CLO, a VIE as of September 30, 2016 and December 31, 2015, respectively. | ||
[3] | Includes $513 and $513 of interest payable for loans pledged as collateral on CLO, a VIE as of September 30, 2016 and December 31, 2015, respectively. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | |
Allowance for loan losses | $ 1,609 | $ 888 | |
Preferred stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Convertible stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Convertible stock, shares authorized (in shares) | 1,000 | 1,000 | |
Convertible stock, shares issued (in shares) | 1,000 | 1,000 | |
Convertible stock, shares outstanding (in shares) | 1,000 | 1,000 | |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized (in shares) | 949,999,000 | 949,999,000 | |
Common stock, shares issued (in shares) | 31,605,701 | 31,385,280 | |
Common stock, shares outstanding (in shares) | 31,605,701 | 31,385,280 | |
Loans pledged as collateral | $ 426,278 | $ 425,733 | |
Interest receivable | [1] | 5,316 | 5,360 |
Interest payable | [2] | 1,705 | 792 |
Variable Interest Entity, Primary Beneficiary | |||
Allowance for loan losses | 703 | 422 | |
Interest receivable | 1,026 | 1,048 | |
Interest payable | $ 513 | $ 513 | |
[1] | Includes $1,026 and $1,048 of interest receivable for loans pledged as collateral on CLO, a VIE as of September 30, 2016 and December 31, 2015, respectively. | ||
[2] | Includes $513 and $513 of interest payable for loans pledged as collateral on CLO, a VIE as of September 30, 2016 and December 31, 2015, respectively. |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Interest Income: | ||||
Interest income | $ 20,250 | $ 16,252 | $ 60,763 | $ 38,341 |
Less: Interest expense | 7,317 | 3,469 | 17,478 | 7,925 |
Net interest income | 12,933 | 12,783 | 43,285 | 30,416 |
Operating Expenses: | ||||
Asset management and subordinated performance fee | 1,066 | 2,405 | 7,091 | 3,741 |
Acquisition fees | 255 | 1,777 | 635 | 5,958 |
Administrative services expenses | 2,480 | 0 | 3,835 | 0 |
Professional fees | 2,154 | 659 | 4,226 | 3,136 |
Other expenses | 686 | 439 | 2,092 | 919 |
Total expenses | 6,641 | 5,280 | 17,879 | 13,754 |
Loan loss recovery/(provision) | 113 | (78) | (721) | (302) |
Realized loss on sale of real estate securities | (1,032) | 0 | (1,032) | 0 |
Net income | $ 5,373 | $ 7,425 | $ 23,653 | $ 16,360 |
Basic net income per share (in dollars per share) | $ 0.17 | $ 0.28 | $ 0.75 | $ 0.74 |
Diluted net income per share (in dollars per share) | $ 0.17 | $ 0.28 | $ 0.75 | $ 0.74 |
Basic weighted average shares outstanding (in shares) | 31,516,876 | 26,684,913 | 31,622,796 | 22,035,227 |
Diluted weighted average shares outstanding (in shares) | 31,523,911 | 26,690,964 | 31,629,070 | 22,040,110 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 5,373 | $ 7,425 | $ 23,653 | $ 16,360 |
Unrealized (loss)/gain on available-for-sale securities | 2,608 | (1,008) | 35 | (1,010) |
Comprehensive income attributable to Realty Finance Trust, Inc. | $ 7,981 | $ 6,417 | $ 23,688 | $ 15,350 |
Consolidated Statement of Chang
Consolidated Statement of Changes In Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Total | Convertible Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Balance, shares at Dec. 31, 2015 | 1,000 | 31,385,280 | ||||
Balance at Dec. 31, 2015 | $ 654,329 | $ 1 | $ 314 | $ 691,590 | $ (2,254) | $ (35,322) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock repurchases (in shares) | (540,125) | |||||
Common stock repurchases | (13,031) | $ (5) | (13,026) | |||
Common stock issued through distribution reinvestment plan (in shares) | 755,798 | |||||
Common stock issued through distribution reinvestment plan | 19,099 | $ 7 | 19,092 | |||
Share-based compensation (in shares) | 4,748 | |||||
Share-based compensation | 27 | 27 | ||||
Net income | 23,653 | 23,653 | ||||
Distributions declared | (48,834) | (48,834) | ||||
Conversion of convertible stocks (in shares) | (1,000) | |||||
Conversion of convertible stocks | 0 | $ (1) | 1 | |||
Other comprehensive loss | 35 | 35 | ||||
Balance, shares at Sep. 30, 2016 | 0 | 31,605,701 | ||||
Balance at Sep. 30, 2016 | $ 635,278 | $ 0 | $ 316 | $ 697,684 | $ (2,219) | $ (60,503) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 23,653 | $ 16,360 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Premium amortization and (discount accretion), net | (1,761) | (877) |
Accretion of deferred commitment fees | (1,169) | (603) |
Amortization of deferred financing costs | 2,989 | 1,872 |
Share-based compensation | 27 | 24 |
Realized loss on sale of real estate securities | 1,032 | 0 |
Loan loss provision | 721 | 302 |
Changes in assets and liabilities: | ||
Accrued interest receivable | 1,213 | (2,041) |
Prepaid expenses and other assets | 49 | (416) |
Accounts payable and accrued expenses | 1,415 | 519 |
Due to affiliates | (1,529) | 1,353 |
Interest payable | 913 | 304 |
Net cash provided by operating activities | 27,553 | 16,797 |
Cash flows from investing activities: | ||
Origination and purchase of commercial mortgage loans | (42,236) | (526,919) |
Purchase of real estate securities | 0 | (53,304) |
Proceeds from sale of real estate securities | 69,957 | 0 |
Principal repayments received on commercial mortgage loans | 48,906 | 45,542 |
Principal repayments received on real estate securities | 2,218 | 1,573 |
Net cash provided by (used in) investing activities | 78,845 | (533,108) |
Cash flows from financing activities: | ||
Proceeds from issuances of common stock | 0 | 316,614 |
Common stock repurchases | (19,026) | (2,899) |
Payments of offering costs and fees related to common stock issuances | 0 | (36,981) |
Borrowings on repurchase agreements - commercial mortgage loans | 104,626 | 244,178 |
Repayments of repurchase agreements - commercial mortgage loans | (68,997) | (18,257) |
Borrowings on repurchase agreements - real estate securities | 1,019,598 | 50,274 |
Repayments of repurchase agreements - real estate securities | (1,064,111) | (3,946) |
Increase in restricted cash related to financing activities | 366 | (1,339) |
Payments of deferred financing costs | (2,836) | 0 |
Distributions paid | (29,952) | (18,215) |
Net cash (used in) provided by financing activities | (60,332) | 529,429 |
Net change in cash and cash equivalents | 46,066 | 13,118 |
Cash and cash equivalents, beginning of period | 14,807 | 386 |
Cash and cash equivalents, end of period | 60,873 | 13,504 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 13,576 | 5,749 |
Supplemental disclosures of non-cash flow information: | ||
Common stock issued through distribution reinvestment plan | 19,099 | 13,643 |
Receivable for common stock issued | $ 0 | $ 3,065 |
Organization and Business Opera
Organization and Business Operations | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Operations | Organization and Business Operations Realty Finance Trust, Inc. (the "Company") was incorporated in Maryland on November 15, 2012 and conducts its operations to qualify as a real estate investment trust ("REIT") for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2013. Substantially all of the Company's business is conducted through Realty Finance Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. The Company is the sole general partner and directly or indirectly holds all of the units of limited partner interests in the OP. Benefit Street Partners L.L.C. serves as the Company's advisor (the "Advisor") pursuant to an advisory agreement executed on September 29, 2016 (the “Advisory Agreement”). The Advisor, an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”), is a credit-focused alternative asset management firm with over $14 billion in assets under management. The Advisor manages assets across a broad range of complementary credit strategies, including high yield, levered loans, private/opportunistic debt, liquid credit, structured credit and commercial real estate debt. The Advisor has over 115 professionals, including a 34 -person team dedicated to the Advisor's real estate platform. The Advisor is in partnership with Providence Equity Partners L.L.C., a global private equity firm with a combined $47 billion in assets under management. Prior to September 29, 2016, Realty Finance Advisor, LLC ("Former Advisor") was the Company's advisor. The Former Advisor is controlled by AR Global Investments, LLC ("AR Global"). The Advisor is an affiliate of Providence Equity Partners L.L.C. The Company is in business to originate, acquire and manage a diversified portfolio of commercial real estate debt secured by properties located both within and outside of the United States. The Company also invests in commercial real estate securities. Commercial real estate debt may include first mortgage loans, subordinated mortgage loans, mezzanine loans and participations in such loans. Real estate securities may include commercial mortgage-backed securities ("CMBS"), senior unsecured debt of publicly traded REITs, debt or equity securities of other publicly traded real estate companies and collateralized debt obligations ("CDOs"). The Company has no employees. The Company has retained the Advisor to manage the Company's affairs on a day-to-day basis. The Advisor receives compensation and fees for services related to the investment and management of the Company's assets and the operations of the Company. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Accounting The accompanying consolidated financial statements and related footnotes are unaudited and have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the consolidated financial statements may not include all of the information and notes required by GAAP for annual consolidated financial statements. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. In the opinion of management, the interim data includes all adjustments, of a normal and recurring nature, necessary for a fair statement of the results for the periods presented. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the entire year or any subsequent interim periods. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of, and for the year ended December 31, 2015 , which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 11, 2016. There have been no significant changes to the Company's significant accounting policies during the three and nine months ended September 30, 2016 , as described below. Principles of Consolidation The Company consolidates all entities that the Company controls through either majority ownership or voting rights. In addition, the Company consolidates all variable interest entities ("VIE") of which the Company is considered the primary beneficiary. VIEs are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as its primary beneficiary and is generally the entity with (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a VIE for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company's assets and liabilities are held by the OP. The accompanying consolidated financial statements include the accounts of a collateralized loan obligation ("CLO") issued and securitized by a wholly owned subsidiary of the Company. The Company has determined the CLO is a VIE of which the Company's subsidiary is the primary beneficiary. The Company has disclosed the assets and liabilities of the CLO on the face of the consolidated balance sheet in accordance with ASC 810 - Consolidation. Allowance for Loan Losses The allowance for loan losses reflects management's estimate of loan losses inherent in the loan portfolio as of the balance sheet date. The reserve is increased through the loan loss provision on the Company's consolidated statement of operations and is decreased by charge-offs when losses are confirmed through the receipt of assets, such as cash in a pre-foreclosure sale or upon ownership control of the underlying collateral in full satisfaction of the loan upon foreclosure or when significant collection efforts have ceased. The Company uses a uniform process for determining its allowance for loan losses. The allowance for loan losses includes a general, formula-based component and an asset-specific component. General reserves are recorded when (i) available information as of each balance sheet date indicates that it is probable a loss has occurred in the portfolio and (ii) the amount of the loss can be reasonably estimated. The Company currently estimates loss rates based on historical realized losses experienced in the industry, given the fact the Company has not experienced any losses, and takes into account current collateral and economic conditions affecting the probability and severity of losses when establishing the allowance for loan losses. The Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability. The Company considers, among other things, payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location as well as national and regional economic factors. This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss. Ratings range from "1" to "5" with "1" representing the lowest risk of loss and "5" representing the highest risk of loss. The asset-specific reserve component relates to reserves for losses on individual impaired loans. The Company considers a loan to be impaired when, based upon current information and events, it believes that it is probable that the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. This assessment is made on an individual loan basis each quarter based on such factors as payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographical location as well as national and regional economic factors. A reserve is established for an impaired loan when the present value of payments expected to be received, observable market prices or the estimated fair value of the collateral (for loans that are dependent on the collateral for repayment) is lower than the carrying value of that loan. For collateral dependent impaired loans, impairment is measured using the estimated fair value of collateral less the estimated cost to sell. Valuations are performed or obtained at the time a loan is determined to be impaired and designated non-performing, and they are updated if circumstances indicate that a significant change in value has occurred. The Advisor generally will use the income approach through internally developed valuation models to estimate the fair value of the collateral for such loans. In more limited cases, the Advisor will obtain external "as is" appraisals for loan collateral, generally when third party participations exist. A loan is also considered impaired if its terms are modified in a troubled debt restructuring ("TDR"). A TDR occurs when a concession is granted and the debtor is experiencing financial difficulties. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loans. The Company designates non-performing loans at such time as (i) loan payments become 90-days past due; (ii) the loan has a maturity default; or (iii) in the opinion of the Company, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan. Income recognition will be suspended when a loan is designated non-performing and resumed only when the suspended loan becomes contractually current and performance is demonstrated to have resumed. A loan will be written off when it is no longer realizable and legally discharged. Per Share Data The Company calculates basic earnings per share by dividing net income attributable to the Company for the period by the weighted-average number of shares of common stock outstanding for that period. Diluted earnings per share reflects the potential dilution that could occur from shares issuable in connection with the restricted stock plan and if convertible shares were exercised, except when doing so would be anti-dilutive. Reportable Segments The Company conducts its business through the following segments: • The real estate debt business which is focused on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinate mortgages, mezzanine loans and participations in such loans. • The real estate securities business which is focused on investing in and asset managing commercial real estate securities primarily consisting of CMBS and may include unsecured REIT debt, CDO notes and other securities. See Note 12 - Segment Reporting for further information regarding the Company's segments. Recently Issued Accounting Pronouncements In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are VIEs or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption was permitted, including adoption in an interim period. The Company elected to adopt this guidance effective January 1, 2016. The Company has evaluated the impact of the adoption of the new guidance on its consolidated financial statements and has determined the Company’s OP is considered a VIE. However, the Company meets the disclosure exemption criteria as the Company is the primary beneficiary of the VIE and the Company's partnership interest is considered a majority voting interest in a business and the assets of the OP can be used for purposes other than settling its obligation, such as paying distributions. As such, the new guidance did not have a material impact on the Company's consolidated financial statements. In March 2016, the FASB issued an update that changes the accounting for certain aspects of share-based compensation. Among other things, the revised guidance allows companies to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the provisions of this guidance beginning January 1, 2016, electing to account for forfeitures when they occur, and determined that there is no impact to the Company’s consolidated financial position, results of operations and cash flows. In March 2016, the FASB issued guidance which requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. In June 2016, the FASB issued guidance that changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance. In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. In October 2016, the FASB issued guidance where a reporting entity will need to evaluate if it should consolidate a VIE. The amendments change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. |
Commercial Mortgage Loans
Commercial Mortgage Loans | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Commercial Mortgage Loans | Commercial Mortgage Loans The following table is a summary of the Company's commercial mortgage loan carrying values by class (in thousands): September 30, 2016 December 31, 2015 Senior loans $ 905,876 $ 894,075 Mezzanine loans 205,026 221,014 Subordinated loans 10,000 10,000 Total gross carrying value of loans 1,120,902 1,125,089 Less: Allowance for loan losses 1,609 888 Total commercial mortgage loans, net $ 1,119,293 $ 1,124,201 The following table presents the activity in the Company's allowance for loan losses (in thousands): Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Beginning of period $ 888 $ 570 Provision for loan losses 721 302 Charge-offs — — Recoveries — — Ending allowance for loan losses $ 1,609 $ 872 As of September 30, 2016 and December 31, 2015 , the Company's commercial mortgage loan portfolio comprised 73 and 77 loans, respectively. September 30, 2016 December 31, 2015 Loan Type Par Value Percentage Par Value Percentage Office $ 320,195 28.4 % $ 307,876 27.2 % Multifamily 323,031 28.6 % 305,129 26.9 % Hospitality 173,526 15.4 % 171,752 15.1 % Retail 151,584 13.4 % 158,784 14.0 % Mixed Use 107,531 9.5 % 138,798 12.2 % Industrial 52,688 4.7 % 52,107 4.6 % $ 1,128,555 100.0 % $ 1,134,446 100.0 % Credit Characteristics As part of the Company's process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its loans. The loans are scored on a scale of 1 to 5 as follows: Investment Rating Summary Description 1 Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable. 2 Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. 3 Performing investments requiring closer monitoring. Trends and risk factors show some deterioration. 4 Underperforming investment with the potential of some interest loss but still expecting a positive return on investment. Trends and risk factors are negative. 5 Underperforming investment with expected loss of interest and some principal. All commercial mortgage loans are assigned an initial risk rating of 2.0 . As of September 30, 2016 and December 31, 2015 , the weighted average risk rating of loans was 2.1 and 2.0 , respectively. As of September 30, 2016 and December 31, 2015 , the Company did not have any loans that were past due on their payments, in non-accrual status or impaired. For the nine months ended September 30, 2016 and September 30, 2015 , the activity in the Company's loan portfolio was as follows (in thousands): Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Balance at Beginning of Year $ 1,124,201 $ 456,884 Acquisitions and originations 42,236 526,919 Dispositions — — Principal repayments (48,127 ) (45,542 ) Discount accretion and premium amortization* 1,704 873 Provision for loan losses (721 ) (302 ) Balance at End of Period $ 1,119,293 $ 938,832 ________________________ * Includes amortization of capitalized acquisition fees and expenses. |
Real Estate Securities
Real Estate Securities | 9 Months Ended |
Sep. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Real Estate Securities | Real Estate Securities The following is a summary of the Company's real estate securities, CMBS (in thousands): Weighted Average Number of Investments Interest Rate Maturity Par Value Fair Value September 30, 2016 7 5.27 % September 2019 $ 60,000 $ 57,639 December 31, 2015 16 4.71 % February 2019 133,183 130,754 The Company classified its CMBS as available-for-sale as of September 30, 2016 and December 31, 2015 . These investments are reported at fair value in the consolidated balance sheet with changes in fair value recorded in accumulated other comprehensive income or loss. The following table shows the amortized cost, unrealized gains/losses and fair value of the Company's CMBS investments as of September 30, 2016 and December 31, 2015 (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value September 30, 2016 $ 59,858 $ — $ (2,219 ) $ 57,639 December 31, 2015 133,008 — (2,254 ) 130,754 As of September 30, 2016 , the Company held 7 CMBS positions for an aggregate carrying value of $59.9 million , with an unrealized loss of $2.2 million , of which 6 positions had a total unrealized loss of $0.7 million for a period greater than 12 months. The Company does not believe any of the positions are other than temporarily impaired based on current market spreads. The Company does not intend to dispose the CMBS positions nor does the Company believe it is more likely than not that the Company will be required to dispose these positions before recovery of their amortized cost basis. The Company has recognized loss of approximately $1.0 million for the three and nine months ended September 30, 2016 , recorded within the realized loss on sale of real estate securities in the consolidated statement of operations. The Company did not have any realized losses during the three and nine months ended September 30, 2015 . |
Debt
Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Repurchase Agreements - Commercial Mortgage Loans As of September 30, 2016 , the Company was party to repurchase facilities with JPMorgan Chase Bank, National Association (the "JPM Repo Facility") and Barclays Bank PLC (the "Barclays Repo Facility"). The JPM Repo Facility provides up to $150.0 million in advances. The Barclays Repo Facility provides up to $150.0 million in advances. Both, the JPM Repo Facility and Barclays Repo Facility are subject to various adjustments. The initial maturity date of the JPM Repo Facility was June 18, 2016, with a one year extension at the Company’s option. The Company exercised the extension option with the JPM Repo Facility lender, extending the maturity date to June 17, 2017. The Company entered into an amendment of the Barclays Repo Facility, dated as of September 2, 2016 (the “Barclays Amendment”), upon the payment of an amendment fee, pursuant to which the maturity date of the Barclays Repo Facility was extended to October 6, 2016. Subsequent to September 30, 2016 , the JPM Repo Facility was amended to, among other things, increase the maximum advance capacity to $300 million . The proceeds from the increase in the size of the JPM Repo Facility were used to pay off the outstanding balance on the Barclays Repo Facility and the Barclays Repo Facility was terminated. Refer to Note 13-Subsequent Events. As of September 30, 2016 , the Company was in compliance with all debt covenants. As of September 30, 2016 and December 31, 2015, the Company had $130.0 million and $84.3 million outstanding under the JPM Repo Facility. Advances under the JPM Repo Facility accrue interest at per annum rates equal to the sum of (i) the applicable LIBOR index rate plus (ii) a margin between 2.25% to 4.5% , depending on the attributes of the purchased assets. As of September 30, 2016 and December 31, 2015, the weighted average interest rate on advances was 2.8% and 3.1% , respectively. The Company incurred $3.4 million and $4.2 million in interest expense on the JPM Repo Facility for the nine months ended September 30, 2016 and 2015, respectively, excluding amortization of deferred financing cost. As of September 30, 2016 and December 31, 2015, the Company had $111.9 million and $121.9 million outstanding under the Barclays Repo Facility. As of September 30, 2016 and December 31, 2015, the weighted average interest rate on advances was 3.1% and 2.4% , respectively. The Company incurred $4.7 million and $3.1 million of interest expense on the Barclays Repo Facility for the nine months ended September 30, 2016 and 2015, respectively, excluding amortization of deferred financing cost. The Barclays Repo Facility was terminated on October 5, 2016. The JPM Repo Facility and the Barclays Repo Facility generally provide that in the event of a decrease in the value of the Company's collateral, the lenders can demand additional collateral. Should the value of the Company’s collateral decrease, whether as a result of deteriorating credit quality, an increase in credit market spreads or otherwise, resulting margin calls may cause an adverse change in the Company’s liquidity position. Repurchase Agreements - Real Estate Securities The Company has entered into various Master Repurchase Agreements (the "MRAs") that allow the Company to sell real estate securities while providing a fixed repurchase price for the same real estate securities in the future. The repurchase contracts on each security under an MRA generally mature in 30 to 90 days and terms are adjusted for current market rates as necessary. Below is a summary of the Company's MRAs as of September 30, 2016 and December 31, 2015 (in thousands): Weighted Average Counterparty Amount Outstanding Accrued Interest Collateral Pledged (*) Interest Rate Days to Maturity As of September 30, 2016 J.P. Morgan Securities LLC $ 65,295 $ 65 $ 102,663 2.38 % 14 Citigroup Global Markets, Inc. 3,878 1 4,807 1.88 % 26 Wells Fargo Securities, LLC 3,525 3 4,813 1.86 % 12 Total/Weighted Average $ 72,698 $ 69 $ 112,283 2.33 % 15 As of December 31, 2015 J.P. Morgan Securities LLC $ 86,898 $ 108 $ 130,618 2.03 % 8 Citigroup Global Markets, Inc. 26,619 71 35,528 2.00 % 45 Wells Fargo Securities, LLC 3,694 3 4,925 1.67 % 13 Total/Weighted Average $ 117,211 $ 182 $ 171,071 2.01 % 17 * Includes $54,643 and $56,044 Tranche C of RFT issued CLO held by the Company, which eliminates within the real estate securities, at fair value line of the consolidated balance sheets as of September 30, 2016 and December 31, 2015, respectively. Collateralized Loan Obligation On October 19, 2015, RFT 2015-FL1 Issuer, Ltd. (the “Issuer”) and RFT 2015-FL1 Co-Issuer, LLC (the “Co-Issuer”), both wholly owned indirect subsidiaries of the Company, entered into an indenture with the OP, as advancing agent, U.S. Bank National Association as note administrator and U.S. Bank National Association as trustee, which governs the issuance of approximately $350.2 million principal balance secured floating rate notes (the “Notes”). In addition, concurrently with the issuance of the Notes, the Issuer also issued 78,188,494 Preferred Shares, par value of $0.001 per share and with an aggregate liquidation preference and notional amount equal to $1,000 per share (the “Preferred Shares”), which were not offered as part of closing the indenture. 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 28 mortgage assets having a total principal balance of $428.4 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 October 19, 2015, between the Company and the Issuer. In connection with the securitization, the Issuer and Co-Issuer offered and sold the following classes of Notes to third parties: Class A, Class B, Class C. A wholly owned subsidiary of the Company retained approximately $56.0 million of the total $76.0 million of Class C and all of the preferred equity in the Issuer. The retained Class C and its related interest income and the preferred equity are eliminated in the Company's consolidated financial statements. The Company, as the holder of preferred equity in the Issuer, will absorb the first losses of the CLO, which may have a negative impact to the Company's result of operations. The issuance of the CLO also results in an increase in interest expense within the consolidated statement of operations. The following table represents the terms of the CLO issued. Facility ($000s) Par Value Issued Par Value Outstanding (*) Interest Rate Maturity Date As of September 30, 2016 Tranche A $ 231,345 $ 231,345 1M LIBOR + 175 8/1/2030 Tranche B 42,841 42,841 1M LIBOR + 388 8/1/2030 Tranche C 76,044 20,000 1M LIBOR + 525 8/1/2030 $ 350,230 $ 294,186 As of December 31, 2015 Tranche A $ 231,345 $ 231,345 1M LIBOR + 175 8/1/2030 Tranche B 42,841 42,841 1M LIBOR + 388 8/1/2030 Tranche C 76,044 20,000 1M LIBOR + 525 8/1/2030 $ 350,230 $ 294,186 ________________________ * Excludes $56,044 and $56,044 of Tranche C of RFT issued CLO held by the Company, which eliminates within the collateralized loan obligation line of the consolidated balance sheets as of September 30, 2016 and December 31, 2015, respectively. The below table reflects the total assets and liabilities of the Company's only CLO. The CLO is considered a VIE and is consolidated into the Company's consolidated financial statements as of September 30, 2016 and December 31, 2015 as the Company is the primary beneficiary of the VIE. The Company is the primary beneficiary of the CLO because (i) the Company has the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. Assets ($000s) September 30, 2016 December 31, 2015 Cash $ 5 $ 5 Commercial mortgage loans, held for investment, net of allowance of $703 and $422 (1) 426,278 425,733 Accrued interest receivable 1,026 1,048 Total Assets $ 427,309 $ 426,786 Liabilities Notes payable (2)(3) $ 343,295 $ 342,998 Interest payable 513 513 Total Liabilities $ 343,808 $ 343,511 ________________________ (1) The balance is presented net of allowance for loan loss of $703 and $422 as of September 30, 2016 and December 31, 2015 , respectively. The commercial mortgage loans balance as of December 31, 2015 of $426,155 as disclosed in Note 5 to the consolidated financial statements included in the 2015 Form 10-K was not net of allowance for loan loss of $422 . (2) Includes $55,790 and $55,769 of Tranche C of RFT issued CLO held by the Company, which eliminates within the Collateral loan obligations line of the consolidated balance sheets as of September 30, 2016 and December 31, 2015 , respectively. (3) The balance is presented net of deferred financing cost and discount of $6,935 and $7,232 as of September 30, 2016 and December 31, 2015 , respectively. The notes payable balance as of December 31, 2015 of $348,269 as disclosed in Note 5 to the consolidated financial statements included in the 2015 Form 10-K was not net of deferred financing cost of $5,271 . |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share The following table is a summary of the basic and diluted net income per share computation for the three and nine months ended September 30, 2016 and 2015 , respectively: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income (in thousands) $ 5,373 $ 7,425 $ 23,653 $ 16,360 Basic weighted average shares outstanding 31,516,876 26,684,913 31,622,796 22,035,227 Unvested restricted shares 7,035 6,051 6,274 4,883 Diluted weighted average shares outstanding 31,523,911 26,690,964 31,629,070 22,040,110 Basic net income per share $ 0.17 $ 0.28 $ 0.75 $ 0.74 Diluted net income per share $ 0.17 $ 0.28 $ 0.75 $ 0.74 |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Common Stock | Common Stock As of September 30, 2016 and December 31, 2015 , the Company had 31,605,701 and 31,385,280 shares of common stock outstanding, respectively, including shares issued pursuant to the DRIP and unvested restricted shares. As of September 30, 2016 and December 31, 2015 , the Company had received total proceeds of $755.5 million and $755.5 million , respectively, excluding shares issued pursuant to the DRIP and share-based compensation. On December 30, 2014, the Company filed with the Maryland State Department of Assessments and Taxation articles supplementary to its charter that reclassified 1,000 authorized but unissued shares of the Company’s common stock as shares of convertible stock and set the terms of such convertible shares. The Company then issued 1,000 convertible shares to the Former Advisor for $ 1.00 per share. The convertible shares automatically convert to shares of common stock upon the first occurrence of certain triggering events (the "Triggering Event"), including the termination of the advisory agreement between the Former Advisor and the Company under certain circumstances. In general, but with certain exceptions as outlined in the articles supplementary, each convertible share will convert into a number of common shares equal to 1/1000 of the quotient of (a) the conversion product (the product of 0.15 times the amount, if any, by which (i) the sum of the enterprise value as of the date of the Triggering Event plus total distributions paid to the Company’s stockholders through the date of the Triggering Event exceeds (ii) the sum of the Company's stockholders’ invested capital plus a 6.0% return as of the date of the Triggering Event) divided by (b) the quotient of the enterprise value divided by the number of shares of the Company’s common stock outstanding (on an as-converted basis) on the date of the Triggering Event. The conversion product will be reduced by the amounts payable pursuant to the annual subordinated performance fee as realized appreciation in the Company’s assets during the time that the Former Advisor or one of its affiliates acts as the Company’s advisor. Subsequent to September 30, 2016, the Company determined that as a result of the termination of the advisory agreement between the Former Advisor and the Company a Triggering Event had occurred and, based on the Company’s determination of the enterprise value of the Company on the date of the Triggering Event, the total distributions paid to the Company’s stockholders through the date of the Triggering Event, and the sum of the Company's stockholders’ invested capital as of the date of the Triggering Event, that the convertible shares converted into a number of common shares equal to zero . As a result, the convertible shares that were issued to the Former Advisor have been extinguished and no common shares were issued in connection with the conversion. Distributions In order to maintain its election to qualify as a REIT, the Company must currently distribute, at a minimum, an amount equal to 90% of its taxable income, without regard to the deduction for distributions paid and excluding net capital gains. The Company must distribute 100% of its taxable income (including net capital gains) to avoid paying corporate federal income taxes. In May 2013, the Company's board of directors authorized, and the Company declared, a distribution payable on a monthly basis to stockholders of record on each day at a rate equal to $ 0.00565068493 per day, which is equivalent to $2.0625 per annum, per share of common stock. In March 2016 , the Company's board of directors ratified the existing distribution amount a change to the daily distribution amount equivalent to $2.0625 per annum and for calendar year 2016, affirmed a change to the daily distribution amount to $0.0056352459 per day per share of common stock, effective January 1, 2016, to accurately reflect that 2016 is a leap year. The Company's distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The Board may reduce the amount of distributions paid or suspend distribution payments at any time, and therefore, distributions payments are not assured. The Company distributed $49.1 million during the nine months ended September 30, 2016 , comprised of $30.0 million in cash and $19.1 million in shares of common stock issued under the DRIP. The Company distributed $31.8 million during the nine months ended September 30, 2015 , comprised of $18.2 million in cash and $13.6 million in shares of common stock issued under the DRIP. On November 10, 2016 the Company’s board of directors changed the DRIP offer price to $ 20.05 , which is equal to the estimated per-share NAV as of September 30, 2016 approved by the board of directors. The price change will apply to the reinvestment of distributions commencing with October 2016 distributions. Share Repurchase Program The Company's Board unanimously approved an amended and restated share repurchase program (the “SRP”), which became effective on February 28, 2016. The SRP enables stockholders to sell their shares to the Company. Subject to certain conditions, stockholders that purchased shares of the Company's common stock or received their shares from us (directly or indirectly) through one or more non-cash transactions and have held their shares for a period of at least one year may request that the Company repurchase their shares of common stock so long as the repurchase otherwise complies with the provisions of Maryland law. Repurchase requests made following the death or qualifying disability of a stockholder will not be subject to any minimum holding period. The repurchase price per share for requests other than for death or disability will be equal to the most-recent estimated net asset value per share of the Company's common stock calculated by the Company's Advisor and approved by the Company's board of directors in accordance with the Company's valuation guidelines, or estimated per-share NAV, multiplied by a percentage equal to (i) 92.5% , if the person seeking repurchase has held his or her shares for a period greater than one year and less than two years; (ii) 95% , if the person seeking repurchase has held his or her shares for a period greater than two years and less than three years; (iii) 97.5% , if the person seeking repurchase has held his or her shares for a period greater than three years and less than four years; or (iv) 100% , if the person seeking repurchase has held his or her shares for a period greater than four years. In the case of requests for death or disability, the repurchase price per share will be equal to the estimated per-share NAV at the time of repurchase. Repurchases pursuant to the SRP, when requested, generally will be made semiannually (each six-month period ending June 30 or December 31, a “fiscal semester”). Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average number of shares of common stock outstanding during the previous fiscal year. Funding for repurchases pursuant to the SRP for any given fiscal semester will be limited to proceeds received during that same fiscal semester through the issuance of common stock pursuant to any DRIP in effect from time to time, provided that the Board has the power, in its sole discretion, to determine the amount of shares repurchased during any fiscal semester as well as the amount of funds to be used for that purpose. Any repurchase requests received during such fiscal semester will be paid at a price based on the Company's estimated per share NAV applicable on the last day of such fiscal semester, as described above. Due to these limitations, the Company cannot guarantee that the Company will be able to accommodate all repurchase requests made during any fiscal semester or fiscal year. However, a stockholder may withdraw its request at any time or ask that the Company honors the request when funds are available. Pending repurchase requests will be honored on a pro rata basis. The Company will generally pay repurchase proceeds, less any applicable tax or other withholding required by law, by the 31st day following the end of the fiscal semester during which the repurchase request was made. Calculations of the Company's estimated per-share NAV will occur periodically, at the discretion of the Board, provided that such calculations will be made at least annually. Following its calculation, the Company's estimated per-share NAV will be disclosed in a periodic report. The most recent calculation of the Company's estimated per-share NAV approved by the Board occurred on November 10, 2016 based on the Company's net asset value as of September 30, 2016 and was equal to $20.05 . When a stockholder requests redemption and the redemption is approved, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation. Shares repurchased under the SRP will have the status of authorized but unissued shares. The following table reflects the number of shares repurchased under the SRP cumulatively through September 30, 2016 : Number of Requests Number of Shares Repurchased (1) Average Price per Share Cumulative as of December 31, 2015 301 381,474 $ 23.72 January 1 - March 31, 2016 — — — April 1 - June 30, 2016 668 536,240 24.08 July 1 - September 30, 2016 4 3,542 25.27 Cumulative as of September 30, 2016 973 921,256 $ 23.94 ________________________ 1 As permitted under the SRP, in July 2016, our board of directors authorized, with respect to redemption requests received during the semi-annual period from January 1, 2016 to June 30, 2016, the repurchase of shares validly submitted for repurchase in an amount limited to the proceeds reinvested through our DRIP. As a result, redemption requests in the amount of 208,470 shares were not fulfilled. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Unfunded Commitments Under Commercial Mortgage Loans As of September 30, 2016 and December 31, 2015 , the Company had the below unfunded commitments to the Company's borrowers. Funding Expiration September 30, 2016 December 31, 2015 2016 $ 238 $ 890 2017 7,957 16,072 2018 74,745 104,428 2019 10,039 16,939 2023 6,500 — Total $ 99,479 $ 138,329 Litigation and Regulatory Matters In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. Except as noted below, the Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time. On June 6, 2016, an action was filed against the Company and two of its directors in the United States District Court for the Southern District of New York and styled Rurode v. Realty Finance Trust, Inc., et. al., No. 1:16-cv-04553. The plaintiff’s individual and derivative complaint alleged that the Company made material misstatements in the proxy statement for its 2016 annual stockholder’s meeting related to an alleged planned merger transaction between the Company and an affiliate of its former advisor. The plaintiff alleged violations of Section 14(a) of the Securities Exchange Act of 1934 and sought to enjoin the Company’s 2016 annual meeting. On June 28, 2016, the parties filed, and the court subsequently entered, a stipulation and order of dismissal of the action, but provided that the court would retain jurisdiction to consider any application by plaintiff for an award of attorneys’ fees. On October 20, 2016, the plaintiff submitted a request for $0.75 million in fees and expenses. The Company intends to oppose that request. The Company did not record any accrual in the September 30, 2016 financial statements related fee and expense request as the Company does not believe it is probable there will be a judgment against the Company that would have a material effect on the Company’s financial statements. |
Related Party Transactions and
Related Party Transactions and Arrangements | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Arrangements | Related Party Transactions and Arrangements The Company entered into the Advisory Agreement with the Advisor on September 29, 2016. The Advisor receives an acquisition fee of 1.0% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and 1.0% of the anticipated net equity funded by the Company to acquire real estate securities; provided, however, that if and when the aggregate purchase price for all investments acquired after the date of the Advisory Agreement reaches $600,000,000 , the Company’s obligation to pay acquisition fees to the Advisor shall terminate. The Company reimburses the Advisor for insourced expenses incurred by the Advisor on behalf of the Company related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and up to 0.5% of the anticipated net equity funded by the Company to acquire real estate securities investments. In no event will the total of all acquisition fees and acquisition expenses exceed 4.5% of the principal amount funded with respect to the Company's total portfolio including subsequent fundings to investments in the Company's portfolio. The Company pays the Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 1.5% of stockholder’s equity as calculated pursuant to the Advisory Agreement. The Company will pay the Advisor, an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital exceeds 6.0% per annum, the Advisor will be entitled to 15.0% of the excess total return; provided that in no event will the annual subordinated performance fee payable to the Advisor exceed 10.0% of the aggregate total return for such year. The Company will reimburse the Advisor for expenses incurred related to administrative services such as accounting, legal and other services in accordance with the advisory agreement. Except as noted below, the Company did not make any payments to the Advisor for the three and nine months ended September 30, 2016 . Until September 29, 2016, the Former Advisor served as the Company’s advisor and the Company paid the Former Advisor certain fees and expense reimbursements pursuant to its advisory agreement with the Former Advisor. The Company also engaged in transactions with affiliates of the Former Advisor and AR Global. Until January 2016, the Company had been engaged in a public offering of its common shares, which was registered with the SEC (the “Offering”). Realty Capital Securities, LLC (the "Former Dealer Manager") served as the dealer manager of the Offering through December 31, 2015. American National Stock Transfer, LLC, a subsidiary of the parent company of the Former Dealer Manager ("ANST"), provided the Company with transfer agency services through February 2016. RCS Capital Corporation, the parent company of the Company's Former Dealer Manager and certain of its affiliates that provided the Company with services, filed for Chapter 11 bankruptcy protection in January 2016, prior to which they were under common control with AR Global. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc. Share Ownership As of September 30, 2016 and December 31, 2015 , entities wholly-owned by AR Global owned 52,771 and 8,888 shares of the Company’s outstanding common stock, respectively. Fees Paid to Affiliates of AR Global in Connection with the Offering Prior to the termination of the Offering, the Former Dealer Manager received fees and compensation in connection with the sale of the Company’s common stock in the Offering. The Former Dealer Manager received a selling commission of up to 7% of the per share purchase price of the Company's offering proceeds before reallowance of commissions earned by soliciting dealers. In addition, the Former Dealer Manager received up to 3% of the gross proceeds from the sale of shares, before reallowance to soliciting dealers, as a dealer manager fee. The Former Dealer Manager was permitted to reallow its dealer manager fee to such soliciting dealers. The predecessor to AR Global was a party to a services agreement with RCS Advisory Services, LLC, ("RCS Advisory") a subsidiary of the parent company of the Former Dealer Manager, pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by AR Global with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. The predecessor to AR Global instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided to the Company by RCS Advisory. The Company was also party to a transfer agency agreement with ANST, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by a third-party transfer agent. AR Global received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. Subsequently, effective February 26, 2016, the Company entered into a definitive agreement with DST Systems, Inc., a third-party and its previous provider of sub-transfer agency services, to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). The table below shows the compensation and reimbursement to the Former Advisor, its affiliates, entities under common control with the Former Advisor and the Former Dealer Manager incurred for services relating to the Offering during the three and nine months ended months ended September 30, 2016 and 2015 , respectively, and the associated payable as of September 30, 2016 and December 31, 2015 , respectively (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Payable as of 2016 2015 2016 2015 September 30, 2016 December 31, 2015 Total commissions and fees incurred from the Former Dealer Manager $ — $ 9,932 $ — $ 30,700 $ — $ — Total compensation and reimbursement for services provided by the Former Advisor, its affiliates, entities under common control with the Former Advisor and the Former Dealer Manager $ — $ 1,957 $ — $ 5,805 $ 480 $ 480 The payables as of September 30, 2016 and December 31, 2015 in the table above are included in "Due to affiliates" on the Company's consolidated balance sheets. The fees incurred are recorded within additional paid in capital line in the consolidated balance sheets. The Company is responsible for organizational and offering costs from the Offering, excluding commissions and Former Dealer Manager fees, up to a maximum of 2.0% of gross proceeds from its Offering of common stock, measured at the end of the Offering. Organizational and offering costs in excess of the 2.0% cap as of the end of the Offering are the Advisor's responsibility. As of September 30, 2016 and December 31, 2015, organizational and offering costs exceeded 2.0% of cap of gross proceeds received from the Offering by $0.8 million and $0.8 million , respectively which has been recorded in Additional Paid-In Capital of the Company's consolidated financial statements as the Former Advisor has not reimbursed the Company for these costs. Subsequent to September 30, 2016 , these amounts were reimbursed to the Company. Fees Paid to Former Advisor in Connection with the Operations of the Company The Former Advisor received an acquisition fee of 1.0% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and 1.0% of the anticipated net equity funded by the Company to acquire real estate securities. The Company reimbursed the Former Advisor for expenses incurred by the Former Advisor on behalf of the Company related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and up to 0.5% of the anticipated net equity funded by the Company to acquire real estate securities investments. During the three and nine months ended September 30, 2016 , acquisition fees of $0.3 million and $0.6 million and for three and nine months ended September 30, 2015 , acquisition fees of $1.8 million and $6.0 million , respectively, have been recognized in Acquisition fees within the consolidated statement of operations. In addition, for the three and nine months ended September 30, 2015 the Company capitalized $0.5 million and $2.2 million , of acquisition expenses in Commercial mortgage loans line within the Company's consolidated balance sheets, which will be amortized over the life of each investment using the effective interest method. The Company did not capitalize any acquisitions expenses for the three and nine months ended September 30, 2016 . The Company paid the Former Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 0.75% of the cost of the Company's assets. The asset management fee was based on the lower of the cost of the Company's assets and the fair value of the Company's assets (fair value will consist of the market value of each portfolio investment as determined by the Former Advisor in accordance with the Company's valuation guidelines). During the three and nine months ended September 30, 2016 , the Company incurred $2.3 million and $7.1 million , respectively, in asset management fees. The total asset management fees were incurred to both the Former Advisor and the Advisor, the Former Advisor receiving $2.3 million and $7.1 million , while the amount payable to the Advisor is $26.4 thousand for the three and nine months ended , respectively. During the three and nine months ended 2015 , the Company incurred $1.9 million and $2.4 million in asset management fees, respectively, all of which were attributable to the Former Advisor. These asset management fees are recorded in Asset management and subordinated performance fee within the consolidated statement of operations. Prior to June 17, 2015, the amount of the asset management fee was reduced to the extent that funds from operations as defined by the National Association of Real Estate Investment Trusts ("FFO"), as adjusted, during the six month period ending on the last day of the calendar quarter immediately preceding the date such asset management fee was payable, was less than distributions declared during the same period. For purposes of this determination, FFO, as adjusted, is FFO adjusted to (i) include acquisition fees and acquisition expenses; (ii) include non-cash restricted stock grant amortization, if any; and (iii) impairments and loan loss reserves on investments, if any (including commercial mortgage loans and other debt investments). FFO, as adjusted, is not the same as FFO. The Company paid the Former Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital exceeds 6.0% per annum, the Former Advisor was be entitled to 15.0% of the excess total return; provided that in no event will the annual subordinated performance fee payable to the Former Advisor exceed 10.0% of the aggregate total return for such year. The Company did not incur an annual subordinated performance fee during the three and nine months ended September 30, 2016 . In the June 30, 2016 Form 10-Q filed with the SEC on August 11, 2016 the Company recorded an annual subordinated performance fee of $1.3 million for the six months ended June 30, 2016. This amount has been reversed as the Company determined that as of the date the advisory agreement with the Former Advisor was terminated, the conditions necessary for payment of the annual subordinated performance fee for 2016 had not been satisfied. During the three and nine months ended September 30, 2015 , the Company incurred an annual subordinated performance fee of $0.6 million and $1.4 million , respectively. These subordinated performance fees are recorded in Asset management and subordinated performance fee within the statement of operations. Effective June 1, 2013, the Company entered into an agreement with the Former Dealer Manager to provide strategic advisory services and investment banking services required in the ordinary course of the Company's business, such as performing financial analysis, evaluating publicly traded comparable companies and assisting in developing a portfolio composition strategy, a capitalization structure to optimize future liquidity options and structuring operations. The Company prepaid the cost of a one-time $0.9 million fee associated with this agreement and amortized the cost over the estimated life of the Offering into Other expenses on the Company's consolidated statements of operations. For period ending December 31, 2015 , the Company had approximately $6,000 of unamortized cost. There was no remaining unamortized cost as of September 30, 2016 and these services are no longer being provided. The table below depicts related party fees and reimbursements in connection with the operations of the Company for the three and nine months ended September 30, 2016 and 2015 and the associated payable as of September 30, 2016 and December 31, 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Payable as of 2016 2015 2016 2015 September 30, 2016 December 31, 2015 Acquisition fees and expenses (1) $ 255 $ 572 $ 635 $ 8,441 $ 28 $ 55 Administrative services expenses 2,480 — — 3,835 — 1,500 — Advisory and investment banking fee — 14 6 42 — — Asset management and subordinated performance fee 1,066 2,405 7,091 3,741 758 3,792 Other related party expenses 6 — 56 — 32 — Total related party fees and reimbursements $ 3,807 $ 2,991 $ 11,623 $ 12,224 $ 2,318 $ 3,847 ________________________ 1 Includes amortization of capitalized acquisition fees and expenses. The payables as of September 30, 2016 and December 31, 2015 in the table above are included in "Due to affiliates" on the Company's consolidated balance sheets. In order to improve operating cash flows and the ability to pay distributions from operating cash flows, the Former Advisor could elect to waive certain fees. The Former Advisor permanently waived a portion of the acquisition fees and expenses earned on the acquisition of the Company's CMBS in the amount of $0.1 million and $0.5 million for the three and nine months ended September 30, 2015 , respectively. The Company did not purchase any CMBS positions during the three and nine months ended September 30, 2016 as such did not incur any acquisition fees and expenses for CMBS purchases. Subject to the limitations outlined below, the Company reimbursed the Former Advisor's cost of providing administrative services and personnel costs in connection with other services during the operational stage, in addition to paying an asset management fee; however, the Company did not reimburse the Former Advisor for personnel costs in connection with services for which the Former Advisor received acquisition fees or disposition fees. For the three and nine months ended September 30, 2016 , the Company incurred $2.5 million and $3.8 million of administrative costs in connection with the operations of the Company, which is included in "Administrative services expenses" in the consolidated statements of operations. The Company did not incur such expenses for the three and nine months ended September 30, 2015 . The Former Advisor was required to pay any expenses in which the Company's operating expenses as defined by North American Securities Administrators Association at the end of the four preceding fiscal quarters exceeds the greater of (i) 2.0% of average invested assets or (ii) 25.0% of net income for such expense year. For the preceding four fiscal quarters, the Company did not exceed the greater of the two aforementioned criteria as of September 30, 2016 . Fees Paid to the Former Advisor in Connection with the Listing of the Company's Common Stock or Termination of the Advisory Agreement On December 30, 2014, the Company issued 1,000 convertible shares to the Former Advisor for $ 1.00 per share. The convertible shares issued to the Advisor would convert to shares of the Company’s common stock upon the first to occur of any of the Triggering Events described in Note 7. Subsequent to September 30, 2016 , the Company determined that as a result of the termination of the advisory agreement between the Former Advisor and the Company a Triggering Event had occurred and, based on the Company’s determination of the enterprise value of the Company on the date of the Triggering Event, the total distributions paid to the Company’s stockholders through the date of the Triggering Event, and the sum of the Company's stockholders’ invested capital as of the date of the Triggering Event, that the convertible shares converted into a number of common shares equal to zero. As a result, the convertible shares that were issued to the Former Advisor have been extinguished and no common shares were issued in connection with the conversion. During the three and nine months ended September 30, 2016 and 2015 , no fees were paid in connection with the liquidation of assets, listing of the Company's common stock or termination of the advisory agreement. The Company has also established a restricted share plan for the benefit of employees, directors, employees of the Advisor and its affiliates. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair values. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below: • Level I - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level II - Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level III - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. The Company has implemented valuation control processes to validate the fair value of the Company's financial instruments measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable. CMBS are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar real estate securities and the spreads used in the prior valuation. The Company obtains current market spread information where available and uses this information in evaluating and validating the market price of all CMBS. Depending upon the significance of the fair value inputs used in determining these fair values, these real estate securities are classified in either Level II or Level III of the fair value hierarchy. As of September 30, 2016 and December 31, 2015 , the Company received broker quotes on each CMBS investment used in determining the fair value and have been classified as Level II due to the observable nature of many of the market inputs. The following table presents the Company's financial instruments carried at fair value on a recurring basis in the consolidated balance sheets by its level in the fair value hierarchy as of September 30, 2016 and December 31, 2015 (in thousands): Total Level I Level II Level III September 30, 2016 Real estate securities $ 57,639 $ — $ 57,639 $ — December 31, 2015 Real estate securities 130,754 — 130,754 — A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. The Company's policy with respect to transfers between levels of the fair value hierarchy is to recognize transfers into and out of each level as of the beginning of the reporting period. There were no transfers between levels within fair value hierarchy during the three and nine months ended September 30, 2016 and 2015 . There are no financial instruments carried at fair value on a non-recurring basis as of September 30, 2016 and December 31, 2015. The fair value of cash and cash equivalents and restricted cash are measured using observable quoted market prices, or Level I inputs and their carrying value approximates their fair value. The fair value of borrowings under repurchase agreements approximate their carrying value on the consolidated balance sheets due to their short-term nature, and are measured using Level II inputs. The fair values of the Company's commercial mortgage loans and collateralized loan obligations, which are not reported at fair value on the consolidated balance sheets are reported below as of September 30, 2016 and December 31, 2015 (in thousands): Level Carrying Amount Fair Value September 30, 2016 Commercial mortgage loans (1) Asset III $ 1,120,902 $ 1,117,636 Collateralized loan obligation Liability II 287,505 289,680 December 31, 2015 Commercial mortgage loans (1) Asset III 1,125,089 1,138,841 Collateralized loan obligation Liability II 287,229 289,733 ________________________ 1 The carrying value is gross of $1.6 million and $0.9 million of allowance for loan losses as of September 30, 2016 and December 31, 2015 , respectively. The fair value of the commercial mortgage loans is estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of investments. The Company received broker quotes for each tranche of CLO to determine the fair value of the debt. |
Offsetting Assets and Liabiliti
Offsetting Assets and Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Offsetting [Abstract] | |
Offsetting Assets and Liabilities | Offsetting Assets and Liabilities The Company's consolidated balance sheets used a gross presentation of repurchase agreements and collateral pledged. The table below provides a gross presentation, the effects of offsetting and a net presentation of the Company's repurchase agreements within the scope of ASC 210-20, Balance Sheet—Offsetting , as of September 30, 2016 and December 31, 2015 , (in thousands): Gross Amounts Not Offset on the Balance Sheet Repurchase Agreements Gross Amounts of Recognized Liabilities Gross Amounts Offset on the Balance Sheet Net Amount of Liabilities Presented on the Balance Sheet Financial Instruments as Collateral Pledged (*) Cash Collateral Pledged Net Amount September 30, 2016 Commercial mortgage loans $ 241,868 $ — $ 241,868 $ 399,544 $ 5,000 $ — Real estate securities 72,698 — 72,698 112,283 — — December 31, 2015 Commercial mortgage loans 206,239 — 206,239 355,802 5,000 — Real estate securities 117,211 — 117,211 171,071 366 — * Includes $54,643 and $56,044 Tranche C of RFT issued CLO held by the Company, which eliminates within the real estate securities, at fair value line of the consolidated balance sheets as of September 30, 2016 and December 31, 2015, respectively. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company conducts its business through the following segments: • The real estate debt business focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinate mortgages, mezzanine loans and participations in such loans. • The real estate securities business focuses on investing in and asset managing commercial real estate securities primarily consisting of CMBS and may include unsecured REIT debt, CDO notes and other securities. The following table represents the Company's operations by segment for the three months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, 2016 Total Real Estate Debt Real Estate Securities Interest income $ 20,250 $ 18,682 $ 1,568 Interest expense 7,317 6,642 675 Net income 5,373 5,265 108 Three Months Ended September 30, 2015 Interest income 16,252 15,285 967 Interest expense 3,469 3,175 294 Net income 7,425 7,105 320 The following table represents the Company's operations by segment for the nine months ended September 30, 2016 and 2015 (in thousands): Nine Months Ended September 30, 2016 Total Real Estate Debt Real Estate Securities Interest income $ 60,763 $ 55,973 $ 4,790 Interest expense 17,478 15,443 2,035 Net income 23,653 22,775 878 Nine Months Ended September 30, 2015 Interest income 38,341 36,303 2,038 Interest expense 7,925 7,323 602 Net income 16,360 15,853 507 The following table represents the Company's total assets by segment as of September 30, 2016 and December 31, 2015 (in thousands): As of September 30, 2016 Total Real Estate Debt Real Estate Securities Total Assets $ 1,249,412 $ 1,191,562 $ 57,850 As of December 31, 2015 Total Assets 1,282,484 1,150,858 131,626 For the purposes of the table above, any expenses not associated with a specific segment have been allocated to the business segments using a percentage derived by using the sum of commercial mortgage loans, net and real estate securities, at fair value as the denominator and commercial mortgage loans, net and real estate securities, at fair value as the numerators. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for the following transactions: Repurchase Agreements The Company entered into the JPM Amendment as of October 5, 2016, pursuant to which the limit on the JPM Repo Facility was increased from $150 million to $300 million with the payment of an extension fee. The proceeds were used to payoff the BarclaysRepo facility in its entirety. For additional information refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources.” Indemnification Agreement On October 27, 2016, the Company entered into an indemnification agreement (the “Indemnification Agreement”) with each of Buford Ortale, Jamie Handwerker, Richard Byrne, Jerome Baglien and Micah Goodman (each an “Indemnitee”) in connection with their respective appointment as a director and/or officer of the Company. The Indemnification Agreement provides that the Company will indemnify the Indemnitee, to the fullest extent permitted by Maryland law and the Company's charter and subject to the limitations set forth in the Indemnification Agreement, from and against all judgments, penalties, fines and amounts paid in settlement and expenses reasonably incurred by the Indemnitee that may result or arise in connection with the Indemnitee serving in his capacity as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at our request. The Indemnification Agreement further provides that, subject to the limitations set forth in the Indemnification Agreement, the Company will, without requiring a preliminary determination of the Indemnitee’s ultimate entitlement of indemnification under the Indemnification Agreement, advance all reasonable expenses to the Indemnitee incurred by or on behalf of the Indemnitee in connection with any proceeding the Indemnitee is or is threatened to be made a party to. The Indemnification Agreement provides that the Indemnitee is entitled to indemnification unless it is established that (a) the act or omission of the Indemnitee was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that his conduct was unlawful. The Indemnification Agreement further limits the Indemnitee’s entitlement to indemnification in cases where (a) the proceeding was won by or in the right of the Company and the Indemnitee was adjudged to be liable to the Company, (b) the Indemnitee was adjudged to be liable on the basis that personal benefit was improperly received in any proceeding charging improper personal benefit to the Indemnitee or (c) the proceeding was brought by the Indemnitee, except in certain circumstances. The Indemnification Agreement also provides that, except for a proceeding brought by the Indemnitee, the Company has the right to defend the Indemnitee in any proceeding which may give rise to indemnification under the Indemnification Agreement. The Indemnification Agreement grants the Indemnitee the right to separate counsel in certain proceedings involving separate defenses, counterclaims or other conflicts of interest and in proceedings in which the Company fail to assume the defense of the Indemnitee in a timely manner. The Indemnification Agreement further provides that the Company will use its reasonable best efforts to acquire directors and officers liability insurance covering the Indemnitee or any claim made against the Indemnitee by reason of his service to the Company. The description of the Indemnification Agreement in this Quarterly Report on Form 10-Q is a summary and is qualified in its entirety by the terms of the form of Indemnification Agreement attached as Exhibit 10.4 to this Quarterly Report on Form 10-Q and incorporated herein by reference. Distributions Paid On October 3, 2016 , the Company paid a distribution of $5.3 million to stockholders of record during the month of September 2016 . The Company paid $3.3 million of the distribution in cash, while $2.0 million was used to purchase 77,828 shares through the DRIP. Determination of Net Asset Value per Share On November 10, 2016, the Company’s board of directors unanimously determined an estimated NAV per share of the Company’s common stock of $20.05 as of September 30, 2016. The estimated NAV per share is based upon the estimated value of the Company’s assets less the Company’s liabilities as of September 30, 2016. Duff & Phelps, LLC, an independent third-party real estate advisory firm, performed appraisals of the Company’s investment portfolio. The Advisor calculated the estimated NAV per share based on the Duff & Phelps, LLC valuations and recommended to the board of directors the estimated NAV per share calculated by the Advisor. The valuation was performed in accordance with the provisions of Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association in April 2013. On November 10, 2016, the Company’s board of directors unanimously determined: (i) to change the purchase price for shares issued pursuant to the DRIP to equal the estimated NAV per share; and (ii) to change the repurchase price of shares under the SRP to equal, or be at a discount from, the estimated NAV per share. Accordingly, the Company (i) will offer shares pursuant to the DRIP at a purchase price of $20.05 , beginning with October 2016 distributions which are reinvested in November 2016; and (ii) will repurchase shares pursuant to the SRP at a repurchase price of $20.05 , subject to discounts in certain circumstances and subject to the terms and conditions of the SRP. Convertible Shares Subsequent to September 30, 2016, the Company determined that as a result of the termination of the advisory agreement between the Former Advisor and the Company a Triggering Event had occurred and, based on the Company’s determination of the enterprise value of the Company on the date of the Triggering Event, the total distributions paid to the Company’s stockholders through the date of the Triggering Event, and the sum of the Company's stockholders’ invested capital as of the date of the Triggering Event, that the convertible shares converted into a number of common shares equal to zero . As a result, the convertible shares that were issued to the Former Advisor have been extinguished and no common shares were issued in connection with the conversion. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying consolidated financial statements and related footnotes are unaudited and have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the consolidated financial statements may not include all of the information and notes required by GAAP for annual consolidated financial statements. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. In the opinion of management, the interim data includes all adjustments, of a normal and recurring nature, necessary for a fair statement of the results for the periods presented. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the entire year or any subsequent interim periods. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of, and for the year ended December 31, 2015 , which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 11, 2016. There have been no significant changes to the Company's significant accounting policies during the three and nine months ended September 30, 2016 , as described below. |
Principles of Consolidation | Principles of Consolidation The Company consolidates all entities that the Company controls through either majority ownership or voting rights. In addition, the Company consolidates all variable interest entities ("VIE") of which the Company is considered the primary beneficiary. VIEs are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as its primary beneficiary and is generally the entity with (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a VIE for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company's assets and liabilities are held by the OP. The accompanying consolidated financial statements include the accounts of a collateralized loan obligation ("CLO") issued and securitized by a wholly owned subsidiary of the Company. The Company has determined the CLO is a VIE of which the Company's subsidiary is the primary beneficiary. The Company has disclosed the assets and liabilities of the CLO on the face of the consolidated balance sheet in accordance with ASC 810 - Consolidation. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses reflects management's estimate of loan losses inherent in the loan portfolio as of the balance sheet date. The reserve is increased through the loan loss provision on the Company's consolidated statement of operations and is decreased by charge-offs when losses are confirmed through the receipt of assets, such as cash in a pre-foreclosure sale or upon ownership control of the underlying collateral in full satisfaction of the loan upon foreclosure or when significant collection efforts have ceased. The Company uses a uniform process for determining its allowance for loan losses. The allowance for loan losses includes a general, formula-based component and an asset-specific component. General reserves are recorded when (i) available information as of each balance sheet date indicates that it is probable a loss has occurred in the portfolio and (ii) the amount of the loss can be reasonably estimated. The Company currently estimates loss rates based on historical realized losses experienced in the industry, given the fact the Company has not experienced any losses, and takes into account current collateral and economic conditions affecting the probability and severity of losses when establishing the allowance for loan losses. The Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability. The Company considers, among other things, payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location as well as national and regional economic factors. This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss. Ratings range from "1" to "5" with "1" representing the lowest risk of loss and "5" representing the highest risk of loss. The asset-specific reserve component relates to reserves for losses on individual impaired loans. The Company considers a loan to be impaired when, based upon current information and events, it believes that it is probable that the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. This assessment is made on an individual loan basis each quarter based on such factors as payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographical location as well as national and regional economic factors. A reserve is established for an impaired loan when the present value of payments expected to be received, observable market prices or the estimated fair value of the collateral (for loans that are dependent on the collateral for repayment) is lower than the carrying value of that loan. For collateral dependent impaired loans, impairment is measured using the estimated fair value of collateral less the estimated cost to sell. Valuations are performed or obtained at the time a loan is determined to be impaired and designated non-performing, and they are updated if circumstances indicate that a significant change in value has occurred. The Advisor generally will use the income approach through internally developed valuation models to estimate the fair value of the collateral for such loans. In more limited cases, the Advisor will obtain external "as is" appraisals for loan collateral, generally when third party participations exist. A loan is also considered impaired if its terms are modified in a troubled debt restructuring ("TDR"). A TDR occurs when a concession is granted and the debtor is experiencing financial difficulties. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loans. The Company designates non-performing loans at such time as (i) loan payments become 90-days past due; (ii) the loan has a maturity default; or (iii) in the opinion of the Company, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan. Income recognition will be suspended when a loan is designated non-performing and resumed only when the suspended loan becomes contractually current and performance is demonstrated to have resumed. A loan will be written off when it is no longer realizable and legally discharged. |
Per Share Data | Per Share Data The Company calculates basic earnings per share by dividing net income attributable to the Company for the period by the weighted-average number of shares of common stock outstanding for that period. Diluted earnings per share reflects the potential dilution that could occur from shares issuable in connection with the restricted stock plan and if convertible shares were exercised, except when doing so would be anti-dilutive. |
Reportable Segments | Reportable Segments The Company conducts its business through the following segments: • The real estate debt business which is focused on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinate mortgages, mezzanine loans and participations in such loans. • The real estate securities business which is focused on investing in and asset managing commercial real estate securities primarily consisting of CMBS and may include unsecured REIT debt, CDO notes and other securities. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are VIEs or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption was permitted, including adoption in an interim period. The Company elected to adopt this guidance effective January 1, 2016. The Company has evaluated the impact of the adoption of the new guidance on its consolidated financial statements and has determined the Company’s OP is considered a VIE. However, the Company meets the disclosure exemption criteria as the Company is the primary beneficiary of the VIE and the Company's partnership interest is considered a majority voting interest in a business and the assets of the OP can be used for purposes other than settling its obligation, such as paying distributions. As such, the new guidance did not have a material impact on the Company's consolidated financial statements. In March 2016, the FASB issued an update that changes the accounting for certain aspects of share-based compensation. Among other things, the revised guidance allows companies to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the provisions of this guidance beginning January 1, 2016, electing to account for forfeitures when they occur, and determined that there is no impact to the Company’s consolidated financial position, results of operations and cash flows. In March 2016, the FASB issued guidance which requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. In June 2016, the FASB issued guidance that changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance. In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. In October 2016, the FASB issued guidance where a reporting entity will need to evaluate if it should consolidate a VIE. The amendments change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair values. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below: • Level I - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level II - Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level III - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. The Company has implemented valuation control processes to validate the fair value of the Company's financial instruments measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable. CMBS are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar real estate securities and the spreads used in the prior valuation. The Company obtains current market spread information where available and uses this information in evaluating and validating the market price of all CMBS. Depending upon the significance of the fair value inputs used in determining these fair values, these real estate securities are classified in either Level II or Level III of the fair value hierarchy. |
Commercial Mortgage Loans (Tabl
Commercial Mortgage Loans (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Summary of the company's loans receivable by class | The following table presents the activity in the Company's allowance for loan losses (in thousands): Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Beginning of period $ 888 $ 570 Provision for loan losses 721 302 Charge-offs — — Recoveries — — Ending allowance for loan losses $ 1,609 $ 872 The following table is a summary of the Company's commercial mortgage loan carrying values by class (in thousands): September 30, 2016 December 31, 2015 Senior loans $ 905,876 $ 894,075 Mezzanine loans 205,026 221,014 Subordinated loans 10,000 10,000 Total gross carrying value of loans 1,120,902 1,125,089 Less: Allowance for loan losses 1,609 888 Total commercial mortgage loans, net $ 1,119,293 $ 1,124,201 September 30, 2016 December 31, 2015 Loan Type Par Value Percentage Par Value Percentage Office $ 320,195 28.4 % $ 307,876 27.2 % Multifamily 323,031 28.6 % 305,129 26.9 % Hospitality 173,526 15.4 % 171,752 15.1 % Retail 151,584 13.4 % 158,784 14.0 % Mixed Use 107,531 9.5 % 138,798 12.2 % Industrial 52,688 4.7 % 52,107 4.6 % $ 1,128,555 100.0 % $ 1,134,446 100.0 % |
Loans and Leases Receivable, Allowance for Loan Losses Policy | As part of the Company's process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its loans. The loans are scored on a scale of 1 to 5 as follows: Investment Rating Summary Description 1 Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable. 2 Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. 3 Performing investments requiring closer monitoring. Trends and risk factors show some deterioration. 4 Underperforming investment with the potential of some interest loss but still expecting a positive return on investment. Trends and risk factors are negative. 5 Underperforming investment with expected loss of interest and some principal. |
Real Estate Notes Receivable Rollforward | For the nine months ended September 30, 2016 and September 30, 2015 , the activity in the Company's loan portfolio was as follows (in thousands): Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Balance at Beginning of Year $ 1,124,201 $ 456,884 Acquisitions and originations 42,236 526,919 Dispositions — — Principal repayments (48,127 ) (45,542 ) Discount accretion and premium amortization* 1,704 873 Provision for loan losses (721 ) (302 ) Balance at End of Period $ 1,119,293 $ 938,832 ________________________ * Includes amortization of capitalized acquisition fees and expenses. |
Real Estate Securities (Tables)
Real Estate Securities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following is a summary of the Company's real estate securities, CMBS (in thousands): Weighted Average Number of Investments Interest Rate Maturity Par Value Fair Value September 30, 2016 7 5.27 % September 2019 $ 60,000 $ 57,639 December 31, 2015 16 4.71 % February 2019 133,183 130,754 The following table presents the Company's financial instruments carried at fair value on a recurring basis in the consolidated balance sheets by its level in the fair value hierarchy as of September 30, 2016 and December 31, 2015 (in thousands): Total Level I Level II Level III September 30, 2016 Real estate securities $ 57,639 $ — $ 57,639 $ — December 31, 2015 Real estate securities 130,754 — 130,754 — |
Available-for-Sale Securities | The following table shows the amortized cost, unrealized gains/losses and fair value of the Company's CMBS investments as of September 30, 2016 and December 31, 2015 (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value September 30, 2016 $ 59,858 $ — $ (2,219 ) $ 57,639 December 31, 2015 133,008 — (2,254 ) 130,754 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Master Repurchase Agreements | Below is a summary of the Company's MRAs as of September 30, 2016 and December 31, 2015 (in thousands): Weighted Average Counterparty Amount Outstanding Accrued Interest Collateral Pledged (*) Interest Rate Days to Maturity As of September 30, 2016 J.P. Morgan Securities LLC $ 65,295 $ 65 $ 102,663 2.38 % 14 Citigroup Global Markets, Inc. 3,878 1 4,807 1.88 % 26 Wells Fargo Securities, LLC 3,525 3 4,813 1.86 % 12 Total/Weighted Average $ 72,698 $ 69 $ 112,283 2.33 % 15 As of December 31, 2015 J.P. Morgan Securities LLC $ 86,898 $ 108 $ 130,618 2.03 % 8 Citigroup Global Markets, Inc. 26,619 71 35,528 2.00 % 45 Wells Fargo Securities, LLC 3,694 3 4,925 1.67 % 13 Total/Weighted Average $ 117,211 $ 182 $ 171,071 2.01 % 17 * Includes $54,643 and $56,044 Tranche C of RFT issued CLO held by the Company, which eliminates within the real estate securities, at fair value line of the consolidated balance sheets as of September 30, 2016 and December 31, 2015, respectively. |
Schedule of Long-term Debt Instruments | The following table represents the terms of the CLO issued. Facility ($000s) Par Value Issued Par Value Outstanding (*) Interest Rate Maturity Date As of September 30, 2016 Tranche A $ 231,345 $ 231,345 1M LIBOR + 175 8/1/2030 Tranche B 42,841 42,841 1M LIBOR + 388 8/1/2030 Tranche C 76,044 20,000 1M LIBOR + 525 8/1/2030 $ 350,230 $ 294,186 As of December 31, 2015 Tranche A $ 231,345 $ 231,345 1M LIBOR + 175 8/1/2030 Tranche B 42,841 42,841 1M LIBOR + 388 8/1/2030 Tranche C 76,044 20,000 1M LIBOR + 525 8/1/2030 $ 350,230 $ 294,186 ________________________ * Excludes $56,044 and $56,044 of Tranche C of RFT issued CLO held by the Company, which eliminates within the collateralized loan obligation line of the consolidated balance sheets as of September 30, 2016 and December 31, 2015, respectively. |
Schedule of Variable Interest Entities | The below table reflects the total assets and liabilities of the Company's only CLO. The CLO is considered a VIE and is consolidated into the Company's consolidated financial statements as of September 30, 2016 and December 31, 2015 as the Company is the primary beneficiary of the VIE. The Company is the primary beneficiary of the CLO because (i) the Company has the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. Assets ($000s) September 30, 2016 December 31, 2015 Cash $ 5 $ 5 Commercial mortgage loans, held for investment, net of allowance of $703 and $422 (1) 426,278 425,733 Accrued interest receivable 1,026 1,048 Total Assets $ 427,309 $ 426,786 Liabilities Notes payable (2)(3) $ 343,295 $ 342,998 Interest payable 513 513 Total Liabilities $ 343,808 $ 343,511 ________________________ (1) The balance is presented net of allowance for loan loss of $703 and $422 as of September 30, 2016 and December 31, 2015 , respectively. The commercial mortgage loans balance as of December 31, 2015 of $426,155 as disclosed in Note 5 to the consolidated financial statements included in the 2015 Form 10-K was not net of allowance for loan loss of $422 . (2) Includes $55,790 and $55,769 of Tranche C of RFT issued CLO held by the Company, which eliminates within the Collateral loan obligations line of the consolidated balance sheets as of September 30, 2016 and December 31, 2015 , respectively. (3) The balance is presented net of deferred financing cost and discount of $6,935 and $7,232 as of September 30, 2016 and December 31, 2015 , respectively. The notes payable balance as of December 31, 2015 of $348,269 as disclosed in Note 5 to the consolidated financial statements included in the 2015 Form 10-K was not net of deferred financing cost of $5,271 . |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Summary of the Basic and Diluted Earnings Per Share | The following table is a summary of the basic and diluted net income per share computation for the three and nine months ended September 30, 2016 and 2015 , respectively: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income (in thousands) $ 5,373 $ 7,425 $ 23,653 $ 16,360 Basic weighted average shares outstanding 31,516,876 26,684,913 31,622,796 22,035,227 Unvested restricted shares 7,035 6,051 6,274 4,883 Diluted weighted average shares outstanding 31,523,911 26,690,964 31,629,070 22,040,110 Basic net income per share $ 0.17 $ 0.28 $ 0.75 $ 0.74 Diluted net income per share $ 0.17 $ 0.28 $ 0.75 $ 0.74 |
Common Stock (Tables)
Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Schedule of Share Repurchases | The following table reflects the number of shares repurchased under the SRP cumulatively through September 30, 2016 : Number of Requests Number of Shares Repurchased (1) Average Price per Share Cumulative as of December 31, 2015 301 381,474 $ 23.72 January 1 - March 31, 2016 — — — April 1 - June 30, 2016 668 536,240 24.08 July 1 - September 30, 2016 4 3,542 25.27 Cumulative as of September 30, 2016 973 921,256 $ 23.94 ________________________ 1 As permitted under the SRP, in July 2016, our board of directors authorized, with respect to redemption requests received during the semi-annual period from January 1, 2016 to June 30, 2016, the repurchase of shares validly submitted for repurchase in an amount limited to the proceeds reinvested through our DRIP. As a result, redemption requests in the amount of 208,470 shares were not fulfilled. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Unfunded Commitments Under Commercial Mortgage Loans | As of September 30, 2016 and December 31, 2015 , the Company had the below unfunded commitments to the Company's borrowers. Funding Expiration September 30, 2016 December 31, 2015 2016 $ 238 $ 890 2017 7,957 16,072 2018 74,745 104,428 2019 10,039 16,939 2023 6,500 — Total $ 99,479 $ 138,329 |
Related Party Transactions an28
Related Party Transactions and Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Selling Commissions and Dealer Manager Fees Payable to Affiliate | The table below shows the compensation and reimbursement to the Former Advisor, its affiliates, entities under common control with the Former Advisor and the Former Dealer Manager incurred for services relating to the Offering during the three and nine months ended months ended September 30, 2016 and 2015 , respectively, and the associated payable as of September 30, 2016 and December 31, 2015 , respectively (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Payable as of 2016 2015 2016 2015 September 30, 2016 December 31, 2015 Total commissions and fees incurred from the Former Dealer Manager $ — $ 9,932 $ — $ 30,700 $ — $ — Total compensation and reimbursement for services provided by the Former Advisor, its affiliates, entities under common control with the Former Advisor and the Former Dealer Manager $ — $ 1,957 $ — $ 5,805 $ 480 $ 480 |
Schedule of Amount Contractually Due and Forgiven in Connection With Operation Related Services | The table below depicts related party fees and reimbursements in connection with the operations of the Company for the three and nine months ended September 30, 2016 and 2015 and the associated payable as of September 30, 2016 and December 31, 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Payable as of 2016 2015 2016 2015 September 30, 2016 December 31, 2015 Acquisition fees and expenses (1) $ 255 $ 572 $ 635 $ 8,441 $ 28 $ 55 Administrative services expenses 2,480 — — 3,835 — 1,500 — Advisory and investment banking fee — 14 6 42 — — Asset management and subordinated performance fee 1,066 2,405 7,091 3,741 758 3,792 Other related party expenses 6 — 56 — 32 — Total related party fees and reimbursements $ 3,807 $ 2,991 $ 11,623 $ 12,224 $ 2,318 $ 3,847 ________________________ 1 Includes amortization of capitalized acquisition fees and expenses. |
Fair Value of Financial Instr29
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following is a summary of the Company's real estate securities, CMBS (in thousands): Weighted Average Number of Investments Interest Rate Maturity Par Value Fair Value September 30, 2016 7 5.27 % September 2019 $ 60,000 $ 57,639 December 31, 2015 16 4.71 % February 2019 133,183 130,754 The following table presents the Company's financial instruments carried at fair value on a recurring basis in the consolidated balance sheets by its level in the fair value hierarchy as of September 30, 2016 and December 31, 2015 (in thousands): Total Level I Level II Level III September 30, 2016 Real estate securities $ 57,639 $ — $ 57,639 $ — December 31, 2015 Real estate securities 130,754 — 130,754 — |
Fair Value by Balance Sheet Grouping | The fair values of the Company's commercial mortgage loans and collateralized loan obligations, which are not reported at fair value on the consolidated balance sheets are reported below as of September 30, 2016 and December 31, 2015 (in thousands): Level Carrying Amount Fair Value September 30, 2016 Commercial mortgage loans (1) Asset III $ 1,120,902 $ 1,117,636 Collateralized loan obligation Liability II 287,505 289,680 December 31, 2015 Commercial mortgage loans (1) Asset III 1,125,089 1,138,841 Collateralized loan obligation Liability II 287,229 289,733 ________________________ 1 The carrying value is gross of $1.6 million and $0.9 million of allowance for loan losses as of September 30, 2016 and December 31, 2015 , respectively. |
Offsetting Assets and Liabili30
Offsetting Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Offsetting [Abstract] | |
Offsetting Liabilities | The table below provides a gross presentation, the effects of offsetting and a net presentation of the Company's repurchase agreements within the scope of ASC 210-20, Balance Sheet—Offsetting , as of September 30, 2016 and December 31, 2015 , (in thousands): Gross Amounts Not Offset on the Balance Sheet Repurchase Agreements Gross Amounts of Recognized Liabilities Gross Amounts Offset on the Balance Sheet Net Amount of Liabilities Presented on the Balance Sheet Financial Instruments as Collateral Pledged (*) Cash Collateral Pledged Net Amount September 30, 2016 Commercial mortgage loans $ 241,868 $ — $ 241,868 $ 399,544 $ 5,000 $ — Real estate securities 72,698 — 72,698 112,283 — — December 31, 2015 Commercial mortgage loans 206,239 — 206,239 355,802 5,000 — Real estate securities 117,211 — 117,211 171,071 366 — * Includes $54,643 and $56,044 Tranche C of RFT issued CLO held by the Company, which eliminates within the real estate securities, at fair value line of the consolidated balance sheets as of September 30, 2016 and December 31, 2015, respectively. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table represents the Company's operations by segment for the three months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, 2016 Total Real Estate Debt Real Estate Securities Interest income $ 20,250 $ 18,682 $ 1,568 Interest expense 7,317 6,642 675 Net income 5,373 5,265 108 Three Months Ended September 30, 2015 Interest income 16,252 15,285 967 Interest expense 3,469 3,175 294 Net income 7,425 7,105 320 The following table represents the Company's operations by segment for the nine months ended September 30, 2016 and 2015 (in thousands): Nine Months Ended September 30, 2016 Total Real Estate Debt Real Estate Securities Interest income $ 60,763 $ 55,973 $ 4,790 Interest expense 17,478 15,443 2,035 Net income 23,653 22,775 878 Nine Months Ended September 30, 2015 Interest income 38,341 36,303 2,038 Interest expense 7,925 7,323 602 Net income 16,360 15,853 507 The following table represents the Company's total assets by segment as of September 30, 2016 and December 31, 2015 (in thousands): As of September 30, 2016 Total Real Estate Debt Real Estate Securities Total Assets $ 1,249,412 $ 1,191,562 $ 57,850 As of December 31, 2015 Total Assets 1,282,484 1,150,858 131,626 |
Organization and Business Ope32
Organization and Business Operations (Details) - Benefit Street Partners LLC $ in Billions | Sep. 30, 2016USD ($)professional |
Related Party Transaction [Line Items] | |
Assets under management | $ | $ 14 |
Number of professionals (professional) | professional | 115 |
Number of professionals dedicated to the real estate platform (professional) | professional | 34 |
Providence Equity Partners LLC | |
Related Party Transaction [Line Items] | |
Assets under management | $ | $ 47 |
Commercial Mortgage Loans - Loa
Commercial Mortgage Loans - Loans Receivable by Class (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Receivables [Abstract] | |||||
Senior loans | $ 905,876 | $ 894,075 | |||
Mezzanine loans | 205,026 | 221,014 | |||
Subordinated loans | 10,000 | 10,000 | |||
Total gross carrying value of loans | 1,120,902 | 1,125,089 | |||
Less: Allowance for loan losses | 1,609 | 888 | $ 872 | $ 570 | |
Total commercial mortgage loans, net | [1] | $ 1,119,293 | $ 1,124,201 | ||
[1] | Includes $426,278 and $425,733 of loans net of allowance of $703 and $422 pledged as collateral on collateralized loan obligations ("CLO"), a variable interest entity ("VIE") as of September 30, 2016 and December 31, 2015, respectively. |
Commercial Mortgage Loans - Pro
Commercial Mortgage Loans - Provision for Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Beginning balance | $ 888 | $ 570 | ||
Provision for loan losses | $ (113) | $ 78 | 721 | 302 |
Charge-offs | 0 | 0 | ||
Recoveries | 0 | 0 | ||
Ending balance | $ 1,609 | $ 872 | $ 1,609 | $ 872 |
Commercial Mortgage Loans - Nar
Commercial Mortgage Loans - Narrative (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016ratingloan | Dec. 31, 2015ratingloan | |
Receivables [Abstract] | ||
Number of mezzanine loans funded (loan) | loan | 73 | 77 |
Initial risk rating of loans | 2 | |
Weighted average risk rating of loans | 2.1 | 2 |
Commercial Mortgage Loans - L36
Commercial Mortgage Loans - Loans Receivable Portfolio (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross carrying value of loans | $ 1,120,902 | $ 1,125,089 |
First Mortgage | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross carrying value of loans | $ 1,128,555 | $ 1,134,446 |
Loan type as a percent of total loans, percent | 100.00% | 100.00% |
First Mortgage | Office | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross carrying value of loans | $ 320,195 | $ 307,876 |
Loan type as a percent of total loans, percent | 28.40% | 27.20% |
First Mortgage | Multifamily | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross carrying value of loans | $ 323,031 | $ 305,129 |
Loan type as a percent of total loans, percent | 28.60% | 26.90% |
First Mortgage | Hospitality | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross carrying value of loans | $ 173,526 | $ 171,752 |
Loan type as a percent of total loans, percent | 15.40% | 15.10% |
First Mortgage | Retail | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross carrying value of loans | $ 151,584 | $ 158,784 |
Loan type as a percent of total loans, percent | 13.40% | 14.00% |
First Mortgage | Mixed Use | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross carrying value of loans | $ 107,531 | $ 138,798 |
Loan type as a percent of total loans, percent | 9.50% | 12.20% |
First Mortgage | Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross carrying value of loans | $ 52,688 | $ 52,107 |
Loan type as a percent of total loans, percent | 4.70% | 4.60% |
Commercial Mortgage Loans - Rea
Commercial Mortgage Loans - Real Estate Notes Receivable (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Balance at Beginning of Year | $ 1,124,201 | $ 456,884 | ||
Acquisitions and originations | 42,236 | 526,919 | ||
Dispositions | 0 | 0 | ||
Principal repayments | (48,127) | (45,542) | ||
Discount accretion and premium amortization | 1,704 | 873 | ||
Provision for loan losses | $ 113 | $ (78) | (721) | (302) |
Balance at End of Period | $ 1,119,293 | $ 938,832 | $ 1,119,293 | $ 938,832 |
Real Estate Securities - Fair V
Real Estate Securities - Fair Value Measurements, Recurring and Nonrecurring (Details) - Real estate securities $ in Thousands | Sep. 30, 2016USD ($)investment | Dec. 31, 2015USD ($)investment |
Schedule of Available-for-sale Securities [Line Items] | ||
Number of Investments | investment | 7 | 16 |
Interest Rate | 5.27% | 4.71% |
Par Value | $ 60,000 | $ 133,183 |
Fair Value | $ 57,639 | $ 130,754 |
Real Estate Securities - Availa
Real Estate Securities - Available-for-sale Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | $ 57,639 | $ 130,754 |
Real estate securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 59,858 | 133,008 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (2,219) | (2,254) |
Fair Value | $ 57,639 | $ 130,754 |
Real Estate Securities - Narrat
Real Estate Securities - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)investment | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)investment | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)investment | |
Schedule of Available-for-sale Securities [Line Items] | |||||
Realized loss on sale of real estate securities | $ 1,032 | $ 0 | $ 1,032 | $ 0 | |
Real estate securities | |||||
Schedule of Available-for-sale Securities [Line Items] | |||||
Number of Investments | investment | 7 | 7 | 16 | ||
Aggregate carrying value | $ 59,858 | $ 59,858 | $ 133,008 | ||
Unrealized loss | $ 2,219 | $ 2,219 | $ 2,254 | ||
Number of investments in an unrealized loss position, 12 months or longer (investment) | investment | 6 | 6 | |||
Unrealized loss for 12 months or longer | $ 700 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)$ / sharesshares | Oct. 05, 2016USD ($) | Oct. 19, 2015USD ($)mortgage_asset$ / sharesshares | |
Line of Credit Facility [Line Items] | |||||
Preferred stock, shares issued (in shares) | shares | 0 | 0 | |||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||
U.S. Bank National Association | |||||
Line of Credit Facility [Line Items] | |||||
Preferred stock, shares issued (in shares) | shares | 78,188,494 | ||||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | ||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | ||||
U.S. Bank National Association | Secured Debt | |||||
Line of Credit Facility [Line Items] | |||||
Notes payable | $ 350,230,000 | $ 350,230,000 | $ 350,200,000 | ||
U.S. Bank National Association | Secured Debt | Class C Notes | |||||
Line of Credit Facility [Line Items] | |||||
Notes payable | $ 76,044,000 | ||||
U.S. Bank National Association | Secured Debt | Collateralized Loan Obligations | |||||
Line of Credit Facility [Line Items] | |||||
Number of mortgage assets pledged as collateral (mortgage asset) | mortgage_asset | 28 | ||||
Principal balance of collateral | $ 428,400,000 | ||||
U.S. Bank National Association | Secured Debt | Subsidiaries | Class C Notes | |||||
Line of Credit Facility [Line Items] | |||||
Notes payable | $ 56,000,000 | ||||
London Interbank Offered Rate (LIBOR) | Secured Debt | Class C Notes | |||||
Line of Credit Facility [Line Items] | |||||
Variable interest rate | 5.25% | 5.25% | |||
Minimum | |||||
Line of Credit Facility [Line Items] | |||||
MRA maturity term (days) | 30 days | ||||
Maximum | |||||
Line of Credit Facility [Line Items] | |||||
MRA maturity term (days) | 90 days | ||||
Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Revolving line of credit | $ 72,698,000 | $ 117,211,000 | |||
Revolving Credit Facility | JPM Repo Facility | |||||
Line of Credit Facility [Line Items] | |||||
Unsecured line of credit | $ 150,000,000 | ||||
Extension on initial maturity date (years) | 1 year | ||||
Revolving line of credit | $ 130,000,000 | $ 84,300,000 | |||
Weighted average interest rate | 2.80% | 3.10% | |||
Interest expense | $ 3,400,000 | $ 4,200,000 | |||
Revolving Credit Facility | JPM Repo Facility | Minimum | London Interbank Offered Rate (LIBOR) | |||||
Line of Credit Facility [Line Items] | |||||
Variable interest rate | 2.25% | ||||
Revolving Credit Facility | JPM Repo Facility | Maximum | London Interbank Offered Rate (LIBOR) | |||||
Line of Credit Facility [Line Items] | |||||
Variable interest rate | 4.50% | ||||
Revolving Credit Facility | JPM Repo Facility | Subsequent Event | |||||
Line of Credit Facility [Line Items] | |||||
Unsecured line of credit | $ 300,000,000 | ||||
Revolving Credit Facility | Barclays Repo Facility | |||||
Line of Credit Facility [Line Items] | |||||
Unsecured line of credit | $ 150,000,000 | ||||
Revolving line of credit | $ 111,900,000 | $ 121,900,000 | |||
Weighted average interest rate | 3.10% | 2.40% | |||
Interest expense | $ 4,700,000 | $ 3,100,000 |
Debt - Schedule of Master Repur
Debt - Schedule of Master Repurchase Agreements (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | ||
Assets Sold under Agreements to Repurchase [Line Items] | |||
Accrued Interest | [1] | $ 1,705 | $ 792 |
Real estate securities, available for sale, at fair value | 57,639 | 130,754 | |
Class C Notes | Secured Debt | U.S. Bank National Association | |||
Assets Sold under Agreements to Repurchase [Line Items] | |||
Real estate securities, available for sale, at fair value | 54,643 | 56,044 | |
Revolving Credit Facility | |||
Assets Sold under Agreements to Repurchase [Line Items] | |||
Amount Outstanding | 72,698 | 117,211 | |
Accrued Interest | 69 | 182 | |
Collateral Pledged | $ 112,283 | $ 171,071 | |
Interest Rate | 2.33% | 2.01% | |
Days to Maturity | 15 days | 17 days | |
Revolving Credit Facility | J.P. Morgan Securities LLC | |||
Assets Sold under Agreements to Repurchase [Line Items] | |||
Amount Outstanding | $ 65,295 | $ 86,898 | |
Accrued Interest | 65 | 108 | |
Collateral Pledged | $ 102,663 | $ 130,618 | |
Interest Rate | 2.38% | 2.03% | |
Days to Maturity | 14 days | 8 days | |
Revolving Credit Facility | Citigroup Global Markets, Inc. | |||
Assets Sold under Agreements to Repurchase [Line Items] | |||
Amount Outstanding | $ 3,878 | $ 26,619 | |
Accrued Interest | 1 | 71 | |
Collateral Pledged | $ 4,807 | $ 35,528 | |
Interest Rate | 1.88% | 2.00% | |
Days to Maturity | 26 days | 45 days | |
Revolving Credit Facility | Wells Fargo Securities, LLC | |||
Assets Sold under Agreements to Repurchase [Line Items] | |||
Amount Outstanding | $ 3,525 | $ 3,694 | |
Accrued Interest | 3 | 3 | |
Collateral Pledged | $ 4,813 | $ 4,925 | |
Interest Rate | 1.86% | 1.67% | |
Days to Maturity | 12 days | 13 days | |
[1] | Includes $513 and $513 of interest payable for loans pledged as collateral on CLO, a VIE as of September 30, 2016 and December 31, 2015, respectively. |
Debt - Schedule of CLO Issued (
Debt - Schedule of CLO Issued (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | Oct. 19, 2015 | |
Debt Instrument [Line Items] | |||
Fair Value | $ 57,639 | $ 130,754 | |
Collateralized loan obligations | $ 287,505 | $ 287,229 | |
Secured Debt | Tranche A | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 1.75% | 1.75% | |
Secured Debt | Tranche B | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 3.88% | 3.88% | |
Secured Debt | Tranche C | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 5.25% | 5.25% | |
U.S. Bank National Association | Secured Debt | |||
Debt Instrument [Line Items] | |||
Par value issued | $ 350,230 | $ 350,230 | $ 350,200 |
Par value outstanding | 294,186 | 294,186 | |
U.S. Bank National Association | Secured Debt | Tranche A | |||
Debt Instrument [Line Items] | |||
Par value issued | 231,345 | ||
Par value outstanding | 231,345 | 231,345 | |
U.S. Bank National Association | Secured Debt | Tranche B | |||
Debt Instrument [Line Items] | |||
Par value issued | 42,841 | ||
Par value outstanding | 42,841 | 42,841 | |
U.S. Bank National Association | Secured Debt | Tranche C | |||
Debt Instrument [Line Items] | |||
Par value issued | $ 76,044 | ||
Par value outstanding | 20,000 | 20,000 | |
Fair Value | 54,643 | 56,044 | |
Collateralized loan obligations | $ 56,044 | $ 56,044 |
Debt - Assets and Liabilities o
Debt - Assets and Liabilities of the Company's VIE (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Dec. 31, 2015 | Oct. 19, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | ||
Variable Interest Entity [Line Items] | ||||||
Cash | $ 60,873 | $ 14,807 | $ 13,504 | $ 386 | ||
Commercial mortgage loans, held for investment, net of allowance of $703 and $422 | [1] | 1,119,293 | 1,124,201 | |||
Accrued interest receivable | [2] | 5,316 | 5,360 | |||
Total assets | 1,249,412 | 1,282,484 | ||||
Accrued Interest | [3] | 1,705 | 792 | |||
Total liabilities | 614,134 | 628,155 | ||||
Allowance for loan losses | 1,609 | 888 | $ 872 | $ 570 | ||
Gross commercial mortgage loans | 1,120,902 | 1,125,089 | ||||
Collateralized loan obligation | 287,505 | 287,229 | ||||
U.S. Bank National Association | Secured Debt | ||||||
Variable Interest Entity [Line Items] | ||||||
Notes payable | 350,230 | 350,230 | $ 350,200 | |||
U.S. Bank National Association | Secured Debt | Class C Notes | ||||||
Variable Interest Entity [Line Items] | ||||||
Notes payable | $ 76,044 | |||||
Collateralized loan obligation | 56,044 | 56,044 | ||||
Variable Interest Entity, Primary Beneficiary | ||||||
Variable Interest Entity [Line Items] | ||||||
Cash | 5 | 5 | ||||
Commercial mortgage loans, held for investment, net of allowance of $703 and $422 | 426,278 | 425,733 | ||||
Accrued interest receivable | 1,026 | 1,048 | ||||
Total assets | 427,309 | 426,786 | ||||
Notes payable | 343,295 | 342,998 | ||||
Accrued Interest | 513 | 513 | ||||
Total liabilities | 343,808 | 343,511 | ||||
Allowance for loan losses | 703 | 422 | ||||
Gross commercial mortgage loans | 426,155 | |||||
Deferred financing cost and discount | 6,935 | 7,232 | ||||
Variable Interest Entity, Primary Beneficiary | Notes Payable | ||||||
Variable Interest Entity [Line Items] | ||||||
Notes payable gross | 348,269 | |||||
Deferred financing cost | 5,271 | |||||
Variable Interest Entity, Primary Beneficiary | U.S. Bank National Association | Secured Debt | Class C Notes | ||||||
Variable Interest Entity [Line Items] | ||||||
Collateralized loan obligation | $ 55,790 | $ 55,769 | ||||
[1] | Includes $426,278 and $425,733 of loans net of allowance of $703 and $422 pledged as collateral on collateralized loan obligations ("CLO"), a variable interest entity ("VIE") as of September 30, 2016 and December 31, 2015, respectively. | |||||
[2] | Includes $1,026 and $1,048 of interest receivable for loans pledged as collateral on CLO, a VIE as of September 30, 2016 and December 31, 2015, respectively. | |||||
[3] | Includes $513 and $513 of interest payable for loans pledged as collateral on CLO, a VIE as of September 30, 2016 and December 31, 2015, respectively. |
Net Income Per Share - Summary
Net Income Per Share - Summary of the Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 5,373 | $ 7,425 | $ 23,653 | $ 16,360 |
Basic weighted average shares outstanding (in shares) | 31,516,876 | 26,684,913 | 31,622,796 | 22,035,227 |
Unvested restricted shares (in shares) | 7,035 | 6,051 | 6,274 | 4,883 |
Diluted weighted average shares outstanding (in shares) | 31,523,911 | 26,690,964 | 31,629,070 | 22,040,110 |
Basic net income per share (in dollars per share) | $ 0.17 | $ 0.28 | $ 0.75 | $ 0.74 |
Diluted net income per share (in dollars per share) | $ 0.17 | $ 0.28 | $ 0.75 | $ 0.74 |
Common Stock - Narrative (Detai
Common Stock - Narrative (Details) $ / shares in Units, $ in Millions | Oct. 03, 2016USD ($) | Feb. 28, 2016 | Dec. 30, 2014$ / sharesshares | Nov. 14, 2016shares | Mar. 31, 2016$ / shares | May 31, 2013$ / shares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)shares |
Class of Stock [Line Items] | |||||||||
Proceeds from issuance of common stock, DRIP | $ | $ 755.5 | $ 755.5 | |||||||
Convertible common stock quotient | 0.15 | ||||||||
Cumulative capital investment return, percentage of benchmark | 6.00% | ||||||||
Minimum distribution percentage to qualify for REIT taxation status | 90.00% | ||||||||
Distribution percentage required to avoid paying federal income taxes | 100.00% | ||||||||
Common stock, dividends, per share per day, declared (in dollars per share) | $ / shares | $ 0.00565068493 | ||||||||
Common stock, dividends, per share per year, declared (in dollars per share) | $ / shares | $ 2.0625 | $ 2.0625 | |||||||
Common stock, dividends, per share per day, declared if it's a leap year (in dollars per share) | $ / shares | $ 0.0056352459 | ||||||||
Total distributions | $ | $ 49.1 | $ 31.8 | |||||||
Cash distributions | $ | 30 | 18.2 | |||||||
Common stock distributions | $ | $ 19.1 | $ 13.6 | |||||||
NAV per share (in dollars per share) | $ / shares | $ 20.05 | ||||||||
Maximum share repurchases per fiscal semester | 2.50% | ||||||||
Maximum share repurchases per fiscal year | 5.00% | ||||||||
Share Repurchase Program (SRP) | |||||||||
Class of Stock [Line Items] | |||||||||
NAV per share (in dollars per share) | $ / shares | $ 20.05 | ||||||||
Share repurchase program, NAV multiplier year one | 92.50% | ||||||||
Share repurchase program, NAV multiplier year two | 95.00% | ||||||||
Share repurchase program, NAV multiplier year three | 97.50% | ||||||||
Share repurchase program, NAV multiplier year four | 100.00% | ||||||||
Subsequent Event | |||||||||
Class of Stock [Line Items] | |||||||||
Cash distributions | $ | $ 3.3 | ||||||||
Convertible Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Shares outstanding (in shares) | shares | 0 | 1,000 | |||||||
Issuance of convertible stock (in shares) | shares | 1,000 | (1,000) | |||||||
Convertible Stock | Former Advisor | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of convertible stock (in shares) | shares | 1,000 | ||||||||
Convertible stock, per share value (in dollars per share) | $ / shares | $ 1 | ||||||||
Common Stock | Subsequent Event | |||||||||
Class of Stock [Line Items] | |||||||||
Common shares converted (shares) | shares | 0 | ||||||||
Shares issued in connection with conversion (shares) | shares | 0 | ||||||||
Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Shares outstanding (in shares) | shares | 31,605,701 | 31,385,280 |
Common Stock - Shares Repurchas
Common Stock - Shares Repurchased During the Period (Details) - Share Repurchase Program (SRP) - Common Stock | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2016repurchase_requestshare_repurchase_request$ / sharesshares | Jun. 30, 2016share_repurchase_request$ / sharesshares | Mar. 31, 2016share_repurchase_request$ / sharesshares | Jun. 30, 2016share_repurchase_request$ / sharesshares | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance, number of requests (share repurchase request) | share_repurchase_request | 301 | 301 | ||
Number of requests during the period (share repurchase request) | 4 | 668 | 0 | |
Ending balance, number of requests (share repurchase request) | share_repurchase_request | 973 | |||
Beginning balance, number of shares repurchased (shares) | 381,474 | 381,474 | ||
Number of shares repurchased (shares) | 3,542 | 536,240 | 0 | |
Ending balance, number of shares repurchased (shares) | 921,256 | |||
Beginning balance, average price per share (usd per share) | $ / shares | $ 23.72 | $ 23.72 | ||
Repurchases, average price per share (usd per share) | $ / shares | $ 25.27 | $ 24.08 | $ 0 | |
Ending balance, average price per share (usd per share) | $ / shares | $ 23.94 | |||
Unfulfilled redemption requests (shares) | 208,470 |
Commitments and Contingencies48
Commitments and Contingencies (Details) $ in Thousands | Oct. 20, 2016USD ($) | Jun. 06, 2016defendant | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) |
Loan Origination Commitments | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
2,016 | $ 238 | $ 890 | ||
2,017 | 7,957 | 16,072 | ||
2,018 | 74,745 | 104,428 | ||
2,019 | 10,039 | 16,939 | ||
2,023 | 6,500 | 0 | ||
Total unfunded commitments | $ 99,479 | $ 138,329 | ||
Pending Litigation | Rurode v. Realty Finance Trust, Inc., et. al. | Subsequent Event | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
Plaintiff requested fees and expenses | $ 750 | |||
Director | Pending Litigation | Rurode v. Realty Finance Trust, Inc., et. al. | ||||
Unrecorded Unconditional Purchase Obligation [Line Items] | ||||
Number of defendants (defendant) | defendant | 2 |
Related Party Transactions an49
Related Party Transactions and Arrangements - Narrative (Details) - USD ($) | Sep. 29, 2016 | Dec. 30, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Jun. 01, 2013 |
Related Party Transaction [Line Items] | |||||||||
Common stock, shares outstanding and owned by related party (in shares) | 31,605,701 | 31,605,701 | 31,385,280 | ||||||
Selling commission, organizational and offering costs, maximum | 2.00% | ||||||||
Organizational and offering costs, amount exceeding offering proceeds | $ 800,000 | $ 800,000 | $ 800,000 | ||||||
Asset management and subordinated performance fee | 1,066,000 | $ 2,405,000 | 7,091,000 | $ 3,741,000 | |||||
Prepaid expenses and other assets | 763,000 | 763,000 | $ 689,000 | ||||||
Acquisition related expenses and fees | 255,000 | 1,777,000 | $ 635,000 | 5,958,000 | |||||
Convertible Stock | |||||||||
Related Party Transaction [Line Items] | |||||||||
Issuance of convertible stock (in shares) | 1,000 | (1,000) | |||||||
Affiliate | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party expenses | 3,807,000 | 2,991,000 | $ 11,623,000 | 12,224,000 | |||||
Affiliate | New Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Real estate acquisition fee, percentage | 1.00% | ||||||||
Amount of purchase price to terminate Company's obligation to pay acquisition fees to the Advisor | $ 600,000,000 | ||||||||
Maximum percent of principal amount funded given as acquisition fees and expenses | 4.50% | ||||||||
Monthly asset management fee as a percent of stockholders' equity | 1.50% | ||||||||
Subordinated performance fee, total return threshold | 6.00% | ||||||||
Subordinated participation in asset sale fee | 15.00% | ||||||||
Subordinated participation in asset sale fee maximum | 10.00% | ||||||||
Affiliate | New Advisor | Fee to Acquire and Originate Real Estate Debt | |||||||||
Related Party Transaction [Line Items] | |||||||||
Transaction rate | 0.50% | ||||||||
Affiliate | New Advisor | Asset Management Fee | |||||||||
Related Party Transaction [Line Items] | |||||||||
Due to related party | $ 26,400 | $ 26,400 | |||||||
Affiliate | AR Global | |||||||||
Related Party Transaction [Line Items] | |||||||||
Common stock, shares outstanding and owned by related party (in shares) | 52,771 | 52,771 | 8,888 | ||||||
Affiliate | Former Advisor | Asset Management Fee | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party expenses | $ 2,300,000 | 1,900,000 | $ 7,100,000 | 2,400,000 | |||||
Affiliate | Former Advisor | Administrative Services and Other | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party expenses | 0 | 0 | |||||||
Dealer Manager | |||||||||
Related Party Transaction [Line Items] | |||||||||
Selling commission, percentage of offering proceeds | 7.00% | 7.00% | |||||||
Selling commission, percentage of offering proceeds, reallowance fee | 3.00% | 3.00% | |||||||
Related party expenses | $ 0 | 9,932,000 | $ 0 | 30,700,000 | |||||
Prepaid expenses and other assets | $ 0 | $ 0 | $ 6,000 | $ 900,000 | |||||
Former Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Real estate acquisition fee, percentage | 1.00% | 1.00% | |||||||
Subordinated performance fee, total return threshold | 6.00% | 6.00% | |||||||
Subordinated participation in asset sale fee | 15.00% | 15.00% | |||||||
Subordinated participation in asset sale fee maximum | 10.00% | 10.00% | |||||||
Annual asset management fee, percentage based on the lower of total costs of assets or net asset value | 0.75% | 0.75% | |||||||
Asset management and subordinated performance fee | $ 0 | 600,000 | $ 1,300,000 | $ 0 | 1,400,000 | ||||
Administrative services reimbursement, limitation, percentage of average invested assets | 2.00% | 2.00% | |||||||
Administrative services reimbursement, limitation, percentage of net income | 25.00% | 25.00% | |||||||
Former Advisor | Convertible Stock | |||||||||
Related Party Transaction [Line Items] | |||||||||
Issuance of convertible stock (in shares) | 1,000 | ||||||||
Convertible stock, per share value (in dollars per share) | $ 1 | ||||||||
Former Advisor | Waived | |||||||||
Related Party Transaction [Line Items] | |||||||||
Acquisition related expenses and fees | $ 0 | 100,000 | $ 0 | 500,000 | |||||
Former Advisor | Acquisition fees and acquisition expenses | Incurred | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party expenses | 300,000 | 1,800,000 | $ 600,000 | 6,000,000 | |||||
Former Advisor | Acquisition fees and acquisition expenses | Payable | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party expenses | 500,000 | 2,200,000 | |||||||
Former Advisor | Fee to Acquire and Originate Real Estate Debt | |||||||||
Related Party Transaction [Line Items] | |||||||||
Transaction rate | 0.50% | ||||||||
Former Advisor | Administrative Service and Personnel Cost Reimbursements | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party expenses | $ 2,500,000 | $ 0 | $ 3,800,000 | $ 0 |
Related Party Transactions an50
Related Party Transactions and Arrangements - Schedule of Selling Commissions and Dealer Manager Fees Payable to Affiliate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||||
Payable to related party | $ 2,798 | $ 2,798 | $ 4,327 | ||
Dealer Manager | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 0 | $ 9,932 | 0 | $ 30,700 | |
Payable to related party | 0 | 0 | 0 | ||
Advisor and Dealer Manager | Fees and Expense Reimbursement, Stock Offering | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 0 | $ 1,957 | 0 | $ 5,805 | |
Payable to related party | $ 480 | $ 480 | $ 480 |
Related Party Transactions an51
Related Party Transactions and Arrangements - Schedule of Amount Contractually Due and Forgiven in Connection With Operation Related Services (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||||
Payable to related party | $ 2,798 | $ 2,798 | $ 4,327 | ||
Affiliate | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 3,807 | $ 2,991 | 11,623 | $ 12,224 | |
Payable to related party | 2,318 | 2,318 | 3,847 | ||
Affiliate | Nonrecurring Fees | Acquisition fees and expenses | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 255 | 572 | 635 | 8,441 | |
Payable to related party | 28 | 28 | 55 | ||
Affiliate | Nonrecurring Fees | Administrative services expenses | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 2,480 | 0 | 3,835 | 0 | |
Payable to related party | 1,500 | 1,500 | 0 | ||
Affiliate | Nonrecurring Fees | Advisory and investment banking fee | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 0 | 14 | 6 | 42 | |
Payable to related party | 0 | 0 | 0 | ||
Affiliate | Nonrecurring Fees | Asset management and subordinated performance fee | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 1,066 | 2,405 | 7,091 | 3,741 | |
Payable to related party | 758 | 758 | 3,792 | ||
Affiliate | Nonrecurring Fees | Other related party expenses | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 6 | $ 0 | 56 | $ 0 | |
Payable to related party | $ 32 | $ 32 | $ 0 |
Fair Value of Financial Instr52
Fair Value of Financial Instruments - Fair Value Measurements, Recurring and Nonrecurring (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 57,639 | $ 130,754 |
Real estate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 57,639 | 130,754 |
Fair Value, Measurements, Recurring | Real estate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 57,639 | 130,754 |
Fair Value, Measurements, Recurring | Real estate securities | Level I | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Real estate securities | Level II | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 57,639 | 130,754 |
Fair Value, Measurements, Recurring | Real estate securities | Level III | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 0 | $ 0 |
Fair Value of Financial Instr53
Fair Value of Financial Instruments - Fair Value by Balance Sheet Grouping (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Commercial mortgage loans | [1] | $ 1,119,293 | $ 1,124,201 | ||
Collateralized loan obligation | 287,505 | 287,229 | |||
Allowance for loan losses | 1,609 | 888 | $ 872 | $ 570 | |
Carrying Amount | Level III | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Commercial mortgage loans | 1,120,902 | 1,125,089 | |||
Allowance for loan losses | 1,600 | 900 | |||
Carrying Amount | Level II | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Collateralized loan obligation | 287,505 | 287,229 | |||
Fair Value | Level III | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Commercial mortgage loans | 1,117,636 | 1,138,841 | |||
Fair Value | Level II | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Collateralized loan obligation | $ 289,680 | $ 289,733 | |||
[1] | Includes $426,278 and $425,733 of loans net of allowance of $703 and $422 pledged as collateral on collateralized loan obligations ("CLO"), a variable interest entity ("VIE") as of September 30, 2016 and December 31, 2015, respectively. |
Offsetting Assets and Liabili54
Offsetting Assets and Liabilities - Offsetting Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Offsetting Liabilities [Line Items] | ||
Real estate securities, available for sale, at fair value | $ 57,639 | $ 130,754 |
U.S. Bank National Association | Class C Notes | Secured Debt | ||
Offsetting Liabilities [Line Items] | ||
Real estate securities, available for sale, at fair value | 54,643 | 56,044 |
Commercial mortgage loans | ||
Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 241,868 | 206,239 |
Gross Amounts Offset on the Balance Sheet | 0 | 0 |
Net Amount of Liabilities Presented on the Balance Sheet | 241,868 | 206,239 |
Financial Instruments as Collateral Pledged () | 399,544 | 355,802 |
Cash Collateral Pledged | 5,000 | 5,000 |
Net Amount | 0 | 0 |
Real Estate Securities | ||
Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 72,698 | 117,211 |
Gross Amounts Offset on the Balance Sheet | 0 | 0 |
Net Amount of Liabilities Presented on the Balance Sheet | 72,698 | 117,211 |
Financial Instruments as Collateral Pledged () | 112,283 | 171,071 |
Cash Collateral Pledged | 0 | 366 |
Net Amount | 0 | 0 |
Real Estate Securities | U.S. Bank National Association | Class C Notes | Secured Debt | ||
Offsetting Liabilities [Line Items] | ||
Real estate securities, available for sale, at fair value | $ 54,643 | $ 56,044 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||
Interest income | $ 20,250 | $ 16,252 | $ 60,763 | $ 38,341 | |
Interest expense | 7,317 | 3,469 | 17,478 | 7,925 | |
Net income | 5,373 | 7,425 | 23,653 | 16,360 | |
Total assets | 1,249,412 | 1,249,412 | $ 1,282,484 | ||
Real Estate Debt | |||||
Segment Reporting Information [Line Items] | |||||
Interest income | 18,682 | 15,285 | 55,973 | 36,303 | |
Interest expense | 6,642 | 3,175 | 15,443 | 7,323 | |
Net income | 5,265 | 7,105 | 22,775 | 15,853 | |
Total assets | 1,191,562 | 1,191,562 | 1,150,858 | ||
Real Estate Securities | |||||
Segment Reporting Information [Line Items] | |||||
Interest income | 1,568 | 967 | 4,790 | 2,038 | |
Interest expense | 675 | 294 | 2,035 | 602 | |
Net income | 108 | $ 320 | 878 | $ 507 | |
Total assets | $ 57,850 | $ 57,850 | $ 131,626 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) | Oct. 03, 2016 | Nov. 14, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Oct. 05, 2016 |
Subsequent Event [Line Items] | |||||
Distributions paid | $ 29,952,000 | $ 18,215,000 | |||
Dividends in cash | 30,000,000 | $ 18,200,000 | |||
Common stock issued through distribution reinvestment plan | $ 19,099,000 | ||||
NAV per share (in dollars per share) | $ 20.05 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Distributions paid | $ 5,300,000 | ||||
Dividends in cash | 3,300,000 | ||||
Common stock issued through distribution reinvestment plan | $ 2,000,000 | ||||
Shares issued under DRIP (in shares) | 77,828 | ||||
Subsequent Event | Common Stock | |||||
Subsequent Event [Line Items] | |||||
Common shares converted (shares) | 0 | ||||
Shares issued in connection with conversion (shares) | 0 | ||||
Share Repurchase Program (SRP) | |||||
Subsequent Event [Line Items] | |||||
NAV per share (in dollars per share) | $ 20.05 | ||||
Revolving Credit Facility | JPM Repo Facility | |||||
Subsequent Event [Line Items] | |||||
Unsecured line of credit | $ 150,000,000 | ||||
Revolving Credit Facility | JPM Repo Facility | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Unsecured line of credit | $ 300,000,000 |