| DEBT OBLIGATIONS, NET | 7. DEBT OBLIGATIONS, NET The details of the Company’s debt obligations at June 30, 2017 and December 31, 2016 are as follows ($ in thousands): June 30, 2017 Debt Obligations Committed Financing Debt Obligations Outstanding Committed but Unfunded Interest Rate at June 30, 2017(1) Current Term Maturity Remaining Extension Options Eligible Collateral Carrying Amount of Collateral Fair Value of Collateral Committed Loan Repurchase Facility $ 600,000 $ 338,869 $ 261,131 2.91% - 3.66% 10/30/2018 (2) (3) $ 530,153 $ 534,040 Committed Loan Repurchase Facility 450,000 230,806 219,194 3.16% - 3.91% 5/24/2018 (4) (3) 397,876 399,740 Committed Loan Repurchase Facility 300,000 100,608 199,392 3.41% - 4.41% 4/10/2018 (5) (6) 210,971 210,971 Committed Loan Repurchase Facility 200,000 137,821 62,179 3.38% - 4.13% 2/29/2020 (7) (3) 175,101 207,247 (8) Committed Loan Repurchase Facility 100,000 40,458 59,542 3.66% - 3.67% 6/28/2019 — (3) 58,835 58,835 Total Committed Loan Repurchase Facilities 1,650,000 848,562 801,438 1,372,936 1,410,833 Committed Securities Repurchase Facility 400,000 107,965 292,035 1.23% - 2.31% 7/1/2018 N/A (9) 178,166 178,166 Uncommitted Securities Repurchase Facility N/A (10) 193,078 N/A (10) 1.35% - 3.05% 7/2017 - 9/2017 N/A (9) 223,524 223,524 (11) Total Repurchase Facilities 2,050,000 1,149,605 1,093,473 1,774,626 1,812,523 Revolving Credit Facility 168,520 100,000 68,520 4.55% - 6.50% 2/11/2018 (12) N/A (13) N/A (13) N/A (13) Mortgage Loan Financing 588,359 588,359 — 4.25% - 6.75% 2018 - 2026 N/A (14) 742,740 877,846 (15) Participation Financing - Mortgage Loan Receivable 3,834 3,834 — 17.00% 12/6/2017 N/A (3) 3,834 3,834 Borrowings from the FHLB 2,000,000 1,400,500 599,500 0.87% - 2.74% 2017 - 2024 N/A (16) 1,824,470 1,828,620 Senior Unsecured Notes 766,201 756,503 (17) — 5.250% - 5.875% 2017 - 2022 N/A N/A (18) N/A (18) N/A (18) Total Secured and Unsecured Debt Obligations 5,576,914 3,998,801 1,761,493 4,345,670 4,522,823 Liability for transfers not considered sales 632,130 632,130 — 4.10% - 5.88% 2017 -2027 N/A (3) (14) 723,046 717,470 Total Debt Obligations $ 6,209,044 $ 4,630,931 $ 1,761,493 $ 5,068,716 $ 5,240,293 (1) June 30, 2017 LIBOR rates are used to calculate interest rates for floating rate debt. (2) Three additional 12 -month periods at Company’s option. No new advances are permitted after the initial maturity date, or if the lender consents, October 30, 2019, the initial extended maturity date. (3) First mortgage commercial real estate loans. It does not include the real estate collateralizing such loans. (4) Three additional 12 -month periods at Company’s option. (5) Two additional 364 -day periods at Company’s option and one additional 364 -day period with Bank’s consent. (6) First mortgage and mezzanine commercial real estate loans. It does not include the real estate collateralizing such loans. (7) One additional 12 -month extension period and two additional 6 -month extension periods at Company’s option. (8) Includes $32.1 million of loans made to consolidated subsidiaries which are not reflected in these consolidated financial statements. (9) Commercial real estate securities. It does not include the real estate collateralizing such securities. (10) Represents uncommitted securities repurchase facilities for which there is no committed amount subject to future advances. (11) As more fully described in Note 3 , securities which were purchased from the LCCM LC-26 securitization trust are not reflected in these consolidated financial statements. Includes $35.5 million of such securities. (12) Three additional 12 -month extension periods at Company’s option. (13) The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by equity pledges in certain Company subsidiaries. (14) Real estate. (15) Using undepreciated carrying value of commercial real estate to approximate fair value. (16) First mortgage commercial real estate loans and investment grade commercial real estate securities. It does not include the real estate collateralizing such loans and securities. (17) Presented net of unamortized debt issuance costs of $9.7 million at June 30, 2017 . (18) The obligations under the senior unsecured notes are guaranteed by the Company and certain of its subsidiaries. December 31, 2016 Debt Obligations Committed Financing Debt Obligations Outstanding Committed but Unfunded Interest Rate at December 31, 2016(1) Current Term Maturity Remaining Extension Options Eligible Collateral Carrying Amount of Collateral Fair Value of Collateral Committed Loan Repurchase Facility $ 600,000 $ 183,604 $ 416,396 2.45% - 3.27% 10/30/2018 (2) (3) $ 292,628 $ 293,618 Committed Loan Repurchase Facility 450,000 184,158 265,842 2.95% - 3.70% 5/24/2017 (4) (3) 286,848 288,267 Committed Loan Repurchase Facility 400,000 100,979 299,021 2.95% - 3.99% 4/9/2017 (5) (6) 235,878 236,696 Committed Loan Repurchase Facility 100,000 27,132 72,868 2.90% - 3.13% 6/28/2019 — (3) 36,166 36,410 Committed Loan Repurchase Facility 100,000 71,290 28,710 2.93% - 3.68% 8/2/2019 (7) (3) 110,271 110,897 Total Committed Loan Repurchase Facilities 1,650,000 567,163 1,082,837 961,791 965,888 Committed Securities Repurchase Facility 400,000 228,317 171,683 1.00% - 2.59% 7/1/2018 N/A (8) 272,402 272,402 Uncommitted Securities Repurchase Facility N/A (9) 311,705 N/A (9) 1.00% - 2.41% 1/2017 - 3/2017 N/A (8) 368,638 368,638 Total Repurchase Facilities 2,050,000 1,107,185 1,254,520 1,602,831 1,606,928 Revolving Credit Facility 143,000 25,000 118,000 3.16% 2/11/2017 (10) N/A (11) N/A (11) N/A (11) Mortgage Loan Financing 590,106 590,106 — 4.25% - 6.75% 2018 - 2026 N/A (12) 757,468 875,160 (13) Borrowings from the FHLB 1,998,931 1,660,000 338,931 0.43% - 2.74% 2017 - 2024 N/A (14) 2,162,779 2,167,017 Senior Unsecured Notes 563,872 559,847 (15) — 5.875% - 7.375% 2017 - 2021 N/A N/A (16) N/A (16) N/A (16) Total Secured and Unsecured Debt Obligations 5,345,909 3,942,138 1,711,451 4,523,078 4,649,105 Total Debt Obligations $ 5,345,909 $ 3,942,138 $ 1,711,451 $ 4,523,078 $ 4,649,105 (1) December 31, 2016 LIBOR rates are used to calculate interest rates for floating rate debt. (2) Three additional 12 -month periods at Company’s option. No new advances are permitted after the initial maturity date, or if the lender consents, October 30, 2019, the initial extended maturity date. (3) First mortgage commercial real estate loans. It does not include the real estate collateralizing such loans. (4) Three additional 12 -month periods at Company’s option. (5) Two additional 364 -day periods at Company’s option. (6) First mortgage and mezzanine commercial real estate loans. It does not include the real estate collateralizing such loans. (7) One additional 12 -month extension period and two additional 6 -month extension periods at Company’s option. (8) Commercial real estate securities. It does not include the real estate collateralizing such securities. (9) Represents uncommitted securities repurchase facilities for which there is no committed amount subject to future advances. (10) Two additional 12 -month extension periods at Company’s option. (11) The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by equity pledges in certain Company subsidiaries. (12) Real estate. (13) Using undepreciated carrying value of commercial real estate to approximate fair value. (14) First mortgage commercial real estate loans and investment grade commercial real estate securities. It does not include the real estate collateralizing such loans and securities. (15) Presented net of unamortized debt issuance costs of $4.0 million at December 31, 2016 . (16) The obligations under the senior unsecured notes are guaranteed by the Company and certain of its subsidiaries. Committed Loan and Securities Repurchase Facilities The Company has entered into multiple committed master repurchase agreements in order to finance its lending activities. The Company has entered into five committed master repurchase agreements, as outlined in the June 30, 2017 table above, totaling $1.7 billion of credit capacity. Assets pledged as collateral under these facilities are limited to whole mortgage loans or participation interests in mortgage loans collateralized by first liens on commercial properties and mezzanine debt. The Company also has a term master repurchase agreement with a major U.S. bank to finance CMBS totaling $400.0 million . The Company’s repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum leverage ratios. The Company believes it was in compliance with all covenants as of June 30, 2017 and December 31, 2016 . The Company has the option to extend some of the current facilities subject to a number of conditions, including satisfaction of certain notice requirements, no event of default exists, and no margin deficit exists, all as defined in the repurchase facility agreements. The lenders have sole discretion with respect to the inclusion of collateral in these facilities, to determine the market value of the collateral on a daily basis, to be exercised on a good faith basis, and have the right to require additional collateral, a full and/or partial repayment of the facilities (margin call), or a reduction in unused availability under the facilities, sufficient to rebalance the facilities if the estimated market value of the included collateral declines. On April 19, 2016, the Company entered into an amendment to its committed loan repurchase facility with one of its multiple major banking institutions, adding two one -year extension options and extending the maximum term of such facility to May 24, 2020. On May 26, 2016, the Company entered into an amendment to its committed repurchase facility with a major banking institution to memorialize the replacement of the servicer under such facility. On June 27, 2016, the Company executed an amendment and extension of one of its credit facilities with a major banking institution, with an effective date of July 1, 2016, providing for, among other things, the extension of the maximum term of the facility to July 1, 2018 and increasing the maximum funding capacity to $400.0 million . On June 28, 2016, the Company entered into a committed loan repurchase facility with a major banking institution with total capacity of $100.0 million and a final maturity date of June 28, 2019. On August 3, 2016, the Company executed a committed loan repurchase facility with a major banking institution with total capacity of $100.0 million and an initial maturity date of August 2, 2019, with one twelve -month extension period, followed by two six -month extension periods. In connection with the execution of this new facility, the Company terminated its existing committed loan repurchase facility with total capacity of $35.0 million . On November 9, 2016, the Company entered into an amendment to its committed repurchase facility with a major banking institution to, among other things, extend the initial term to October 30, 2018 and add three ( 3 ) additional one year extension options to the term thereof, provided that the Company will not be permitted to obtain advances under such facility after October 30, 2018, or if the lender thereunder consents, October 30, 2019. On February 22, 2017, the Company exercised a one year extension option on one of its committed loan repurchase facilities. In connection with this extension, the Company elected to reduce the maximum capacity of the facility to $300.0 million . In addition, on March 21, 2017, the Company amended this committed loan repurchase facility to, among other things, add one additional 364 -day extension period at Company’s option and one additional 364 -day extension period permitted with lender’s consent. On March 1, 2017, the Company executed an amendment and extension of one of its credit facilities with a major banking institution, providing for, among other things, the extension of the maximum term of the facility to February 28, 2022 and increasing the maximum funding capacity to $200.0 million . On May 1, 2017, the Company executed an amendment to one of its credit facilities with a major banking institution to, among other things, extend the maximum term by an additional year to May 24, 2021. As of June 30, 2017 , we had repurchase agreements with nine counterparties, with total debt obligations outstanding of $1.1 billion . As of June 30, 2017 , three counterparties, Deutsche Bank, J.P. Morgan and Wells Fargo , held collateral that exceeded the amounts borrowed under the related repurchase agreements by more than $73.4 million , or 5% of our total equity. As of June 30, 2017 , the weighted average haircut, or the percent of collateral value in excess of the loan amount, under our repurchase agreements was 36.6% . There have been no significant fluctuations in haircuts across asset classes on our repurchase facilities. Revolving Credit Facility On February 11, 2014, the Company entered into a revolving credit facility (the “Revolving Credit Facility”), which was subsequently amended on February 26, 2016, March 1, 2017 and March 23, 2017, to add additional banks to our syndicate, add two additional one -year extension options and increase its maximum funding capacity. The Revolving Credit Facility provides for an aggregate maximum borrowing amount of $168.5 million , including a $25.0 million sublimit for the issuance of letters of credit. The Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes. The Revolving Credit Facility has a three -year maturity, which may be extended by four 12 -month periods subject to the satisfaction of customary conditions, including the absence of default. Interest on the Revolving Credit Facility is one-month LIBOR plus 3.50% per annum payable monthly in arrears. The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries. The Revolving Credit Facility is secured by a pledge of the shares of (or other ownership or equity interests in) certain subsidiaries to the extent the pledge is not restricted under existing regulations, law or contractual obligations. LCFH is subject to customary affirmative covenants and negative covenants, including limitations on the incurrence of additional debt, liens, restricted payments, sales of assets and affiliate transactions. In addition, under the Revolving Credit Facility, LCFH is required to comply with financial covenants relating to minimum net worth, maximum leverage, minimum liquidity, and minimum fixed charge coverage, consistent with our other credit facilities. The Company’s ability to borrow under the Revolving Credit Facility is dependent on, among other things, LCFH’s compliance with the financial covenants. The Revolving Credit Facility contains customary events of default, including non-payment of principal or interest, fees or other amounts, failure to perform or observe covenants, cross-default to other indebtedness, the rendering of judgments against the Company or certain of our subsidiaries to pay certain amounts of money and certain events of bankruptcy or insolvency. Debt Issuance Costs As discussed in Note 2, Significant Accounting Policies in the Annual Report, the Company considers its committed loan master repurchase facilities and Revolving Credit Facility to be revolving debt arrangements. As such, the Company continues to defer and present costs associated with these facilities as an asset, subsequently amortizing those costs ratably over the term of each revolving debt arrangement. As of June 30, 2017 and December 31, 2016 , the amount of unamortized costs relating to such facilities are $6.2 million and $4.9 million , respectively, and are included in other assets in the consolidated balance sheets. Uncommitted Securities Repurchase Facilities The Company has also entered into multiple master repurchase agreements with several counterparties collateralized by real estate securities. The borrowings under these agreements have typical advance rates between 70% and 95% of the fair value of collateral. Mortgage Loan Financing During the six months ended June 30, 2017 , the Company executed no term debt agreements to finance properties in its real estate portfolio. During the six months ended June 30, 2016 , the Company executed 4 term debt agreements to finance properties in its real estate portfolio. These non-recourse debt agreements provide for fixed rate financing at rates, ranging from 4.25% to 6.75% , maturing between 2018 - 2026 as of June 30, 2017 . These loans have carrying amounts of $588.4 million and $590.1 million , net of unamortized premiums of $5.1 million and $5.6 million at June 30, 2017 and December 31, 2016 , respectively, representing proceeds received upon financing greater than the contractual amounts due under these agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. The Company recorded $0.2 million and $0.5 million of premium amortization, which decreased interest expense, for the three and six months ended June 30, 2017 , respectively. The Company recorded $0.2 million and $0.4 million of premium amortization, which decreased interest expense, for the three and six months ended June 30, 2016 , respectively. The loans are collateralized by real estate and related lease intangibles, net, of $742.7 million and $757.5 million as of June 30, 2017 and December 31, 2016 , respectively. Participation Financing - Mortgage Loan Receivable During the six months ended June 30, 2017 , the Company sold a participating interest in a first mortgage loan receivable to a third party. The sales proceeds of $4.0 million are considered non-recourse secured borrowings and are recognized in debt obligations on the Company’s consolidated balance sheets. The Company recorded $0.2 million of interest expense for the three and six months ended June 30, 2017 . Borrowings from the Federal Home Loan Bank (“FHLB”) On July 11, 2012, Tuebor Captive Insurance Company LLC (“Tuebor”), a consolidated subsidiary of the Company, became a member of the FHLB and subsequently drew its first secured funding advances from the FHLB. On January 13, 2017, Tuebor’s advance limit was updated to the lowest of $2.0 billion , 40% of Tuebor’s total assets or 150% of the Company’s total equity. As of June 30, 2017 , Tuebor had $1.4 billion of borrowings outstanding (with an additional $599.5 million of committed term financing available from the FHLB), with terms of overnight to seven years (with a weighted average of 2.6 years ), interest rates of 0.87% to 2.74% (with a weighted average of 1.40% ), and advance rates of 56.0% to 100% of the collateral. As of June 30, 2017 , collateral for the borrowings was comprised of $1.0 billion of CMBS and U.S. Agency Securities and $770.4 million of first mortgage commercial real estate loans. As of December 31, 2016 , Tuebor had $1.7 billion of borrowings outstanding (with an additional $338.9 million of committed term financing available from the FHLB), with terms of overnight to seven years (with a weighted average of 2.4 years ), interest rates of 0.43% to 2.74% (with a weighted average of 1.12% ), and advance rates of 49.6% to 95.2% of the collateral. As of December 31, 2016 , collateral for the borrowings was comprised of $1.4 billion of CMBS and U.S. Agency Securities and $724.0 million of first mortgage commercial real estate loans. Tuebor is subject to state regulations which require that dividends (including dividends to the Company as its parent) may only be made with regulatory approval. However, there can be no assurance that we would obtain such approval if sought. Largely as a result of this restriction, approximately $331.6 million of the member’s capital was restricted from transfer to Tuebor’s parent without prior approval of state insurance regulators at June 30, 2017 . Effective February 19, 2016, the Federal Housing Finance Agency (the “FHFA’’), regulator of the FHLB, adopted a final rule amending its regulation regarding the eligibility of captive insurance companies for FHLB membership. According to the final rule, Ladder’s captive insurance company subsidiary, Tuebor may remain as a member of the FHLB through February 19, 2021 (the “Transition Period”). During the Transition Period, Tuebor is eligible to continue to draw new additional advances, extend the maturities of existing advances, and pay off outstanding advances on the same terms as non-captive insurance company FHLB members with the following two exceptions: 1. New advances (including any existing advances that are extended during the Transition Period) will have maturity dates on or before February 19, 2021; and 2. The FHLB will make new advances to Tuebor subject to a requirement that Tuebor’s total outstanding advances do not exceed 40% of Tuebor’s total assets. Tuebor has executed new advances since the effective date of the new rule in the ordinary course of business. FHLB advances amounted to 30.2% of the Company’s outstanding debt obligations as of June 30, 2017 . The Company does not anticipate that the FHFA’s final regulation will materially impact its operations as it will continue to access FHLB advances during the five-year Transition Period. There is no assurance that the FHFA or the FHLB will not take actions that could adversely impact Tuebor’s membership in the FHLB and continuing access to new or existing advances prior to February 19, 2021. Senior Unsecured Notes LCFH issued the 2022 Notes, the 2021 Notes and the 2017 Notes (each as defined below, and collectively, the “Notes”) with Ladder Capital Finance Corporation (“LCFC”), as co-issuers on a joint and several basis. LCFC is a 100% owned finance subsidiary of Series TRS of LCFH with no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the Notes. The Company and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture. The Company is the general partner of LCFH and, through LCFH and its subsidiaries, operates the Ladder Capital business. As of June 30, 2017 , the Company has a 77.7% economic and voting interest in LCFH and controls the management of LCFH as a result of its ability to appoint board members. Accordingly, the Company consolidates the financial results of LCFH and records noncontrolling interest for the economic interest in LCFH held by the Continuing LCFH Limited Partners. In addition, the Company, through certain subsidiaries which are treated as TRSs, is indirectly subject to U.S. federal, state and local income taxes. Other than the noncontrolling interest in the Operating Partnership and federal, state and local income taxes, there are no material differences between the Company’s consolidated financial statements and LCFH’s consolidated financial statements. Unamortized debt issuance costs of $9.7 million and $4.0 million are included in senior unsecured notes as of June 30, 2017 and December 31, 2016 , respectively, in accordance with GAAP. 2017 Notes On September 19, 2012, LCFH issued $325.0 million in aggregate principal amount of 7.375% senior notes due October 1, 2017 (the “2017 Notes”). The 2017 Notes required interest payments semi-annually in cash in arrears on April 1 and October 1 of each year, beginning on September 19, 2012. The 2017 Notes were unsecured and subject to incurrence-based covenants, including limitations on the incurrence of additional debt, restricted payments, liens, sales of assets, affiliate transactions and other covenants typical for financings of this type. At any time on or after April 1, 2017, the 2017 Notes were redeemable at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days’ notice, without penalty. On November 5, 2014, the board of directors authorized the Company to make up to $325.0 million in repurchases of the 2017 Notes from time to time without further approval. On December 17, 2014, the Company retired $5.4 million of principal of the 2017 Notes for a repurchase price of $5.6 million recognizing a $0.2 million loss on extinguishment of debt. During the year ended December 31, 2016, the Company retired $21.9 million of principal of the 2017 Notes for a repurchase price of $21.4 million , recognizing a $0.3 million net gain on extinguishment of debt after recognizing $(0.2) million of unamortized debt issuance costs associated with the retired debt. During the six months ended June 30, 2017, the Company retired the remaining $297.7 million of principal of the 2017 Notes for a repurchase price of $297.7 million , recognizing a $53,547 net loss on extinguishment of debt after recognizing $(22,847) of unamortized debt issuance costs associated with the retired debt. On March 1, 2017, the Company delivered a notice of conditional full redemption to holders of the 2017 Notes, pursuant to which the Company redeemed all outstanding 2017 Notes at 100% of the principal amount thereof (plus any accrued and unpaid interest to the redemption date) as of April 1, 2017. The redemption was conditional on the completion by the Company of a senior notes offering with gross proceeds of not less than $500 million . The Company’s offering of the 2022 Notes, described below, satisfied this condition. On April 3, 2017 , the Company repaid the remaining aggregate principal amount of the 2017 Notes outstanding (including accrued and unpaid interest as of that date). 2021 Notes On August 1, 2014, LCFH issued $300.0 million in aggregate principal amount of 5.875% senior notes due August 1, 2021 (the “2021 Notes”). The 2021 Notes require interest payments semi-annually in cash in arrears on February 1 and August 1 of each year, beginning on February 1, 2015. The 2021 Notes will mature on August 1, 2021. The 2021 Notes are unsecured and are subject to incurrence-based covenants, including limitations on the incurrence of additional debt, restricted payments, liens, sales of assets, affiliate transactions and other covenants typical for financings of this type. At any time on or after August 1, 2020, the 2021 Notes are redeemable at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days’ notice, without penalty. On February 24, 2016, the board of directors authorized the Company to make up to $100.0 million in repurchases of the 2021 Notes from time to time without further approval. During the year ended December 31, 2016, the Company retired $33.8 million of principal of the 2021 Notes for a repurchase price of $28.2 million , recognizing a $5.1 million net gain on extinguishment of debt after recognizing $(0.4) million of unamortized debt issuance costs associated with the retired debt. As of June 30, 2017 , the remaining $266.2 million in aggregate principal amount of the 2021 Notes is due August 1, 2021. 2022 Notes On March 16, 2017, LCFH issued $500.0 million in aggregate principal amount of 5.250% senior notes due March 15, 2022 (the “2022 Notes”). The 2022 Notes require interest payments semi-annually in cash in arrears on March 15 and September 15 of each year, beginning on September 15, 2017. The 2022 Notes will mature on March 15, 2022. The 2022 Notes are unsecured and are subject to an unencumbered assets to unsecured debt covenant. At any time on or after September 15, 2021, the 2022 Notes are redeemable at the option of the Company, in whole or in part, upon not less than 15 nor more than 60 days’ notice, without penalty. Liability for Transfers Not Considered Sales (Non-Recourse) As more fully described in Note 3 , the Company sold its interests in $625.7 million of loans to the LCCM 2017-LC26 securitization trust. The assets sold to the trust were comprised of 34 loans to third parties with a combined outstanding face amount of $549.0 million and a combined carrying value of $547.7 million as well as 23 intercompany loans secured by certain of the Company’s real estate assets with a combined principal balance of $76.7 million (which had not previously been recognized for accounting purposes because they eliminated in consolidation). In connection with this transaction, pursuant to the 5% risk retention requirement of the Dodd-Frank Act described in Part 2, Item 1A “Risk Factors,” in this Quarterly Report, (i) the Company retained a $12.9 million restricted “vertical interest” of approximately 2% in each class of securities issued by the trust, which must be held by the Company until the principal balance of the pool has been reduced to a level prescribed by the risk retention rules and (ii) sold an approximately 3% restricted “horizontal interest” in the form of 98% of the controlling classes (excluding the 2% included in the vertical interest) to a “Third Party Purchaser” (“TPP”), which must be held by the TPP for at least five years. In addition, the Company purchased $62.7 million in securities which are not restricted. The securities purchased by the Company are not reflected in these financial statements because the sale of these loans was not recognized for accounting purposes. Transfer restrictions placed on the TPP, imposed by the risk retention rules of the Dodd-Frank Act, precluded sale accounting for these loans. Accordingly, the Company continues to recognize these loans to third parties transferred in the transaction on its consolidated balance sheets. In connection with this transaction, the Company recognized a liability of $580.0 million representing the loan sale proceeds of $655.6 million (net of issue costs) less the $75.6 million of securities purchased discussed above, not reflected in these consolidated financial statements. This liability is effectively a non-recourse borrowing secured by these securitized third-party loans and the Company’s real estate collateral pledged under the previously unrecognized intercompany loans. This obligation bears effective interest of 4.30% per annum (based on contractual payments to third parties) and requires principal payments upon repayment of the underlying mortgage loans receivable, which have a weighted average term of 9.05 years with the final loan maturing in 2027 . This liability also includes $52.1 million for a non-participating loan interest previously sold to a third party, for which the controlling portion was transferred to the LCCM 2017-LC26 securitization trust on June 29, 2017, which also precluded sale accounting on the original transaction. This liability bears an effective interest rate of 5.29% per annum and matures contemporaneously with the underlying mortgage loan receivable. This transaction was considered a financing for accounting purposes. Combined Maturity of Debt Obligations The following schedule reflects the Company’s contractual payments under all borrowings by maturity ($ in thousands): Period ending December 31, Borrowings by Maturity (1) 2017 (last 6 months) $ 682,611 2018 1,221,376 2019 216,350 2020 118,377 2021 426,923 Thereafter 1,974,746 Subtotal $ 4,640,383 Debt issuance costs included in senior unsecured notes (9,698 ) Debt issuance costs included in liability for transfers not considered sales (4,872 ) Premiums included in mortgage loan financing 5,118 Total 4,630,931 (1) Includes principal payments for the liability for transfers not considered sales (see Note 3 and Note 7 ), i.e., payments required to be made on the underlying loans receivable based on their contractual maturities. The Company’s debt facilities are subject to covenants which require the Company to maintain a minimum level of total equity. Largely as a result of this restriction, approximately $899.4 million of the total equity is restricted from payment as a dividend by the Company at June 30, 2017 |
