Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 06, 2018 | |
Entity Information [Line Items] | ||
Entity Registrant Name | GRANITE POINT MORTGAGE TRUST INC. | |
Entity Central Index Key | 1,703,644 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 43,456,234 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | |
ASSETS | |||
Loans held-for-investment | $ 2,483,606 | $ 2,304,266 | |
Available-for-sale securities, at fair value | 12,798 | 12,798 | |
Held-to-maturity securities | 33,659 | 42,169 | |
Cash and cash equivalents | 92,264 | 107,765 | |
Restricted cash | 16,498 | 2,953 | |
Accrued interest receivable | 7,555 | 7,105 | |
Deferred debt issuance costs | 6,950 | 8,872 | |
Prepaid expenses | 247 | 390 | |
Other assets | 14,320 | 12,812 | |
Total Assets | [1] | 2,667,897 | 2,499,130 |
Liabilities | |||
Repurchase agreements | 1,019,009 | 1,521,608 | |
Securitized debt obligations | 652,107 | 0 | |
Convertible senior notes | 139,930 | 121,314 | |
Accrued interest payable | 3,280 | 3,119 | |
Unearned interest income | 610 | 197 | |
Dividends payable | 17,408 | 16,454 | |
Other liabilities | 8,191 | 6,817 | |
Total Liabilities | [1] | 1,840,535 | 1,669,509 |
10% cumulative redeemable preferred stock, par value $0.01 per share; 50,000,000 shares authorized and 1,000 and 1,000 shares issued and outstanding, respectively | 1,000 | 1,000 | |
Stockholders' Equity | |||
Common stock, par value $0.01 per share; 450,000,000 shares authorized and 43,456,234 and 43,235,103 shares issued and outstanding, respectively | 435 | 432 | |
Additional paid-in capital | 831,568 | 829,704 | |
Accumulated other comprehensive income | 0 | 0 | |
Cumulative earnings | 58,613 | 28,800 | |
Cumulative distributions to stockholders | 64,254 | 30,315 | |
Total Stockholders’ Equity | 826,362 | 828,621 | |
Total Liabilities and Stockholders’ Equity | $ 2,667,897 | $ 2,499,130 | |
[1] | The condensed consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of these VIEs, and liabilities of the consolidated VIEs for which creditors do not have recourse to Granite Point Mortgage Trust Inc. At June 30, 2018 and December 31, 2017, assets of the VIEs totaled $826,998 and $46,068, and liabilities of the VIEs totaled $652,724 and $0, respectively. See Note 3 - Variable Interest Entities for additional information. |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
10% cumulative redeemable preferred stock par value per share (in usd per share) | $ 0.01 | $ 0.01 |
10% cumulative redeemable preferred shares authorized (in shares) | 50,000,000 | 50,000,000 |
10% cumulative redeemable preferred shares issued (in shares) | 1,000 | 1,000 |
10% cumulative redeemable preferred shares outstanding (in shares) | 1,000 | 1,000 |
Common stock par value per share (in usd per share) | $ 0.01 | $ 0.01 |
Common shares authorized (in shares) | 450,000,000 | 450,000,000 |
Common shares issued (in shares) | 43,456,234 | 43,235,103 |
Common shares outstanding (in shares) | 43,456,234 | 43,235,103 |
Assets of consolidated Variable Interest Entities | $ 826,998 | $ 46,068 |
Liabilities of consolidated Variable Interest Entities | $ 652,724 | $ 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Interest income: | ||||
Loans held-for-investment | $ 42,359 | $ 24,920 | $ 81,152 | $ 47,558 |
Available-for-sale securities | 285 | 256 | 557 | 502 |
Held-to-maturity securities | 836 | 920 | 1,721 | 1,852 |
Cash and cash equivalents | 29 | 4 | 56 | 6 |
Total interest income | 43,509 | 26,100 | 83,486 | 49,918 |
Interest expense: | ||||
Repurchase agreements | 14,934 | 5,493 | 31,128 | 10,249 |
Securitized debt obligations | 3,875 | 0 | 3,875 | 0 |
Convertible senior notes | 2,206 | 0 | 4,385 | 0 |
Revolving credit facilities | 220 | 0 | 220 | 0 |
Note payable to affiliate | 0 | 2,280 | 0 | 3,630 |
Total interest expense | 21,235 | 7,773 | 39,608 | 13,879 |
Net interest income | 22,274 | 18,327 | 43,878 | 36,039 |
Other income: | ||||
Fee income | 564 | 0 | 1,446 | 0 |
Total other income | 564 | 0 | 1,446 | 0 |
Expenses: | ||||
Management fees | 3,114 | 1,925 | 6,323 | 3,587 |
Servicing expenses | 494 | 307 | 952 | 629 |
Other operating expenses | 4,005 | 1,900 | 8,237 | 4,173 |
Total expenses | 7,613 | 4,132 | 15,512 | 8,389 |
Income before income taxes | 15,225 | 14,195 | 29,812 | 27,650 |
Benefit from income taxes | (2) | (2) | (1) | (1) |
Net income | 15,227 | 14,197 | 29,813 | 27,651 |
Dividends on preferred stock | 25 | 0 | 50 | 0 |
Net income attributable to common stockholders | $ 15,202 | $ 14,197 | $ 29,763 | $ 27,651 |
Basic earnings per weighted average common share (in usd per share) | $ 0.35 | $ 0 | $ 0.69 | $ 0 |
Diluted earnings per weighted average common share (in usd per share) | $ 0.34 | $ 0 | $ 0.67 | $ 0 |
Weighted average basic common shares outstanding (in shares) | 43,446,963 | 43,234,205 | 43,410,796 | 43,234,205 |
Weighted average diluted common shares outstanding (in shares) | 50,634,463 | 43,234,205 | 50,598,296 | 43,234,205 |
Comprehensive income: | ||||
Net income attributable to common stockholders | $ 15,202 | $ 14,197 | $ 29,763 | $ 27,651 |
Other comprehensive (loss) income, net of tax: | ||||
Unrealized gain (loss) on available-for-sale securities | (16) | 16 | 0 | 96 |
Other comprehensive (loss) income | (16) | 16 | 0 | 96 |
Comprehensive income attributable to common stockholders | $ 15,186 | $ 14,213 | $ 29,763 | $ 27,747 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Cumulative Earnings | Cumulative Distributions to Stockholders |
Common shares outstanding at beginning of period (in shares) at Dec. 31, 2016 | 0 | 0 | ||||
Stockholders’ equity at beginning of period at Dec. 31, 2016 | $ 427,991 | $ 0 | $ 392,608 | $ (112) | $ 35,495 | $ 0 |
Capital contributions from Two Harbors Investment Corp. | 254,785 | 254,785 | ||||
Distributions to Two Harbors Investment Corp. | (60,000) | (60,000) | ||||
Net income | 27,651 | 27,651 | ||||
Other comprehensive income before reclassifications, net of tax | 96 | 96 | ||||
Amounts reclassified from accumulated other comprehensive income, net of tax | 0 | 0 | ||||
Net other comprehensive income, net of tax | $ 96 | 96 | ||||
Issuance of common stock, net of offering costs (in shares) | 43,071,000 | 43,071,000 | ||||
Issuance of common stock, net of offering costs | $ 181,875 | $ 431 | 181,444 | |||
Non-cash equity award compensation (in shares) | 163,205 | 163,205 | ||||
Non-cash equity award compensation | $ 0 | $ 1 | (1) | |||
Common shares outstanding at end of period (in shares) at Jun. 30, 2017 | 43,234,205 | 43,234,205 | ||||
Stockholders’ equity at end of period at Jun. 30, 2017 | $ 832,398 | $ 432 | 828,836 | (16) | 3,146 | 0 |
Common shares outstanding at beginning of period (in shares) at Dec. 31, 2016 | 0 | 0 | ||||
Stockholders’ equity at beginning of period at Dec. 31, 2016 | $ 427,991 | $ 0 | 392,608 | (112) | 35,495 | 0 |
Common shares outstanding at end of period (in shares) at Dec. 31, 2017 | 43,235,103 | 43,235,103 | ||||
Stockholders’ equity at end of period at Dec. 31, 2017 | $ 828,621 | $ 432 | 829,704 | 0 | 28,800 | (30,315) |
Capital contributions from Two Harbors Investment Corp. | 0 | |||||
Distributions to Two Harbors Investment Corp. | 0 | |||||
Net income | 29,813 | 29,813 | ||||
Other comprehensive income before reclassifications, net of tax | 0 | 0 | ||||
Amounts reclassified from accumulated other comprehensive income, net of tax | 0 | 0 | ||||
Net other comprehensive income, net of tax | 0 | 0 | ||||
Common dividends declared | (33,889) | (33,889) | ||||
Preferred dividends declared | $ (50) | (50) | ||||
Non-cash equity award compensation (in shares) | 221,131 | 221,131 | ||||
Non-cash equity award compensation | $ 1,867 | $ 3 | 1,864 | |||
Common shares outstanding at end of period (in shares) at Jun. 30, 2018 | 43,456,234 | 43,456,234 | ||||
Stockholders’ equity at end of period at Jun. 30, 2018 | $ 826,362 | $ 435 | $ 831,568 | $ 0 | $ 58,613 | $ (64,254) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Cash Flows From Operating Activities: | |||||
Net income | $ 15,227 | $ 14,197 | $ 29,813 | $ 27,651 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Accretion of discounts and net deferred fees on loans held-for-investment | (5,893) | (4,114) | |||
Amortization of deferred debt issuance costs | 1,102 | 0 | |||
Equity based compensation | 1,867 | 0 | |||
Depreciation of fixed assets | 3 | 0 | |||
Net change in assets and liabilities: | |||||
Increase in accrued interest receivable | (450) | (1,188) | |||
Decrease in prepaid expenses | 143 | 0 | |||
Increase in other assets | (1,511) | (2,763) | |||
Increase in accrued interest payable | 161 | 376 | |||
Increase (decrease) in unearned interest income | 413 | (29) | |||
(Decrease) increase in other payables to affiliates | 0 | (19,703) | |||
Increase in other liabilities | 1,374 | 2,726 | |||
Increase in 10% cumulative redeemable preferred stock | 0 | 1,000 | |||
Net cash provided by operating activities | 27,022 | 3,956 | |||
Cash Flows From Investing Activities: | |||||
Originations, acquisitions and additional fundings of loans held-for-investment, net of deferred fees | (594,126) | (372,338) | |||
Proceeds from repayment of loans held-for-investment | 420,679 | 1,490 | |||
Principal payments on held-to-maturity securities | 8,510 | 4,756 | |||
Increase in due from counterparties | 0 | (112) | |||
Net cash used in investing activities | (164,937) | (366,204) | |||
Cash Flows From Financing Activities: | |||||
Proceeds from repurchase agreements | 561,357 | 503,439 | |||
Principal payments on repurchase agreements | (1,063,956) | (314,482) | |||
Proceeds from issuance of securitized debt obligations | 651,374 | 0 | |||
Proceeds from convertible senior notes | 18,247 | 0 | |||
Proceeds from revolving credit facilities | 49,394 | 0 | |||
Repayment of revolving credit facilities | (49,394) | 0 | |||
Proceeds from note payable to affiliate | 0 | 110,299 | |||
Repayment of note payable to affiliate | 0 | (111,651) | |||
Decrease (increase) in deferred debt issuance costs | 1,922 | (6,821) | |||
Proceeds from issuance of common stock, net of offering costs | 0 | 181,875 | |||
Proceeds from capital contributions from Two Harbors Investment Corp. | 0 | 254,785 | |||
Payments for distributions of capital to Two Harbors Investment Corp. | 0 | (60,000) | |||
Dividends paid on preferred stock | (50) | 0 | |||
Dividends paid on common stock | (32,935) | 0 | |||
Net cash provided by financing activities | 135,959 | 557,444 | |||
Net decrease in cash, cash equivalents and restricted cash | (1,956) | 195,196 | |||
Cash, cash equivalents and restricted cash at beginning of period | 110,718 | 56,279 | $ 56,279 | ||
Cash, cash equivalents and restricted cash at end of period | 108,762 | 251,475 | 108,762 | 251,475 | 110,718 |
Supplemental Disclosure of Cash Flow Information: | |||||
Cash paid for interest | 39,447 | 13,503 | |||
Cash (received) paid for taxes | (5) | 2 | |||
Noncash Activities: | |||||
Acquisition of TH Commercial Holdings LLC from Two Harbors Investment Corp. in exchange for common and preferred shares (See Note 1) | 0 | 651,000 | |||
Dividends declared but not paid at end of period | $ 17,408 | $ 0 | $ 17,408 | $ 0 | $ 16,454 |
Organization and Operations
Organization and Operations | 6 Months Ended |
Jun. 30, 2018 | |
Organization and Operations [Abstract] | |
Organization and Operations | Organization and Operations Granite Point Mortgage Trust Inc., or the Company, is a Maryland corporation that focuses primarily on directly originating, investing in and managing senior floating-rate commercial mortgage loans and other debt and debt-like commercial real estate investments. The Company is externally managed by Pine River Capital Management L.P., or PRCM. The Company’s common stock is listed on the New York Stock Exchange, or NYSE, under the symbol “GPMT”. The Company was incorporated on April 7, 2017 and commenced operations as a publicly traded company on June 28, 2017, upon completion of an initial public offering, or the IPO. Concurrently with the closing of the IPO, the Company completed a formation transaction, or the Formation Transaction, pursuant to which the Company acquired the equity interests in TH Commercial Holdings LLC, or the Predecessor, from Two Harbors Investment Corp., or Two Harbors, a publicly traded hybrid mortgage real estate investment trust (NYSE: TWO). In exchange, the Company issued 33,071,000 shares of its common stock, representing approximately 76.5% of its outstanding common stock after the IPO, and 1,000 shares of its 10% cumulative redeemable preferred stock to Two Harbors. Upon the completion of the Formation Transaction, the Predecessor became the Company’s wholly owned indirect subsidiary. On November 1, 2017, Two Harbors distributed to its common stockholders the 33,071,000 shares of the Company’s common stock it had acquired in connection with the Formation Transaction, allowing the Company’s market capitalization to be fully floating. The Company has elected to be treated as a real estate investment trust, or REIT, as defined under the Internal Revenue Code of 1986, as amended, or the Code, for U.S. federal income tax purposes. As long as the Company continues to comply with a number of requirements under federal tax law and maintains its qualification as a REIT, the Company generally will not be subject to U.S. federal income taxes to the extent that the Company distributes its taxable income to its stockholders on an annual basis and does not engage in prohibited transactions. However, certain activities that the Company may perform may cause it to earn income which will not be qualifying income for REIT purposes. The Company has designated one of its subsidiaries as a taxable REIT subsidiary, or TRS, as defined in the Code, to engage in such activities. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Consolidation and Basis of Presentation The interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, have been condensed or omitted according to such SEC rules and regulations. However, management believes that the disclosures included in these interim condensed consolidated financial statements are adequate to make the information presented not misleading. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . In the opinion of management, all normal and recurring adjustments necessary to present fairly the financial condition of the Company at June 30, 2018 and results of operations for all periods presented have been made. The results of operations for the three and six months ended June 30, 2018 should not be construed as indicative of the results to be expected for future periods or the full year. The condensed consolidated financial statements of the Company include the accounts of all subsidiaries; inter-company accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation. All entities in which the Company holds investments that are considered VIEs for financial reporting purposes were reviewed for consolidation under the applicable consolidation guidance. Whenever the Company has both the power to direct the activities of an entity that most significantly impact the entity’s performance, and the obligation to absorb losses or the right to receive benefits of the entity that could be significant, the Company consolidates the entity. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make a number of significant estimates. These include estimates of fair value of certain assets and liabilities, amount and timing of allowances for loan losses and impairments and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that changes in these estimates ( e.g. , valuation changes to the underlying collateral of loans due to changes in capitalization rates, leasing, credit worthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders, overall economic conditions, the broader commercial real estate market, local geographic sub-markets or other factors) will occur in the near term. The Company’s estimates are inherently subjective in nature and actual results could differ from its estimates and the differences may be material. Significant Accounting Policies Included in Note 2 to the Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 is a summary of the Company’s significant accounting policies. Provided below is a summary of additional accounting policies that are significant to the Company’s consolidated financial condition and results of operations for the three and six months ended June 30, 2018 . Formation Transaction On June 28, 2017, the Company completed the Formation Transaction, through which the Company acquired the equity interests in the Predecessor from Two Harbors. In accordance with Accounting Standards Codification (ASC) 805, Business Combinations , the Predecessor is considered the acquiring or surviving entity, meaning the historical assets and liabilities of TH Commercial Holdings LLC included in the condensed consolidated balance sheets are recorded at the Predecessor’s historical carryover cost basis. As a result of the Formation Transaction, the Company is considered a continuation of the Predecessor’s business operations and its historical results of operations and cash flows are included in the Company’s condensed consolidated financial statements. In consideration for the contribution, Two Harbors received 33,071,000 shares of the Company’s common stock and 1,000 shares of cumulative redeemable preferred stock with an aggregate liquidation preference of $1,000 per share. Securitized Debt Obligations In the second quarter of 2018, the Company financed a pool of its commercial real estate loans through a collateralized loan obligation, or CLO, retaining the subordinate securities in its investment portfolio. The securitization was accounted for as a “financing” and consolidated on the Company’s condensed consolidated financial statements. The securitized debt obligations not retained by the Company, which are nonrecourse to the Company beyond the assets held in the CLO, are recorded at outstanding principal balance, net of any unamortized deferred debt issuance costs, on the Company’s condensed consolidated balance sheets. Offsetting Assets and Liabilities Certain of the Company’s repurchase agreements are governed by underlying agreements that provide for a right of setoff in the event of default of either party to the agreement. Under certain of these agreements, the Company and the counterparty may be required to post cash collateral based upon the net underlying market value of the Company’s open positions with the counterparty. Under U.S. GAAP, if the Company has a valid right of setoff, it may offset the related asset and liability and report the net amount. The Company presents repurchase agreements subject to master netting arrangements or similar agreements on a gross basis. Regardless of whether or not the Company pledges or receives any cash collateral in accordance with its repurchase agreements, the Company does not offset financial assets and liabilities with the associated cash collateral on its condensed consolidated balance sheets. The following table presents information about the Company’s repurchase agreements that are subject to master netting arrangements or similar agreements and can potentially be offset on the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Gross amounts of repurchase agreements $ 1,019,009 $ 1,521,608 Gross amounts offset in the consolidated balance sheets — — Net amounts of repurchase agreements presented in the consolidated balance sheets 1,019,009 1,521,608 Gross amounts not offset against repurchase agreements in the consolidated balance sheets (1) : Financial instruments (1,019,009 ) (1,521,608 ) Cash collateral received (pledged) — — Net amount $ — $ — ____________________ (1) Amounts presented are limited in total to the net amount of liabilities presented in the condensed consolidated balance sheets by instrument. Excess cash collateral or financial assets that are pledged to counterparties may exceed the financial liabilities subject to a master netting arrangement or similar agreement. These excess amounts are excluded from the table above, although separately reported within restricted cash or due from counterparties in the Company’s condensed consolidated balance sheets. Recently Issued and/or Adopted Accounting Standards Under the Jumpstart Our Business Startups Act, or the JOBS Act, the Company meets the definition of an “emerging growth company.” The Company has irrevocably elected to opt out of the extended transition period for complying with new or revised U.S. accounting standards pursuant to Section 107(b) of the JOBS Act. As a result, the Company will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU No. 2014-09, which is a comprehensive revenue recognition standard that supersedes virtually all existing revenue guidance under U.S. GAAP. The standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. As a result of the issuance of ASU No. 2015-14 in August 2015 deferring the effective date of ASU No. 2014-09 by one year, the ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2017, with early adoption prohibited. The Company has evaluated the new guidance and determined that interest income and gains and losses on financial instruments are outside the scope of ASC 606, Revenues from Contracts with Customers . As a result, the adoption of this ASU did not have a material impact on the Company’s financial condition, results of operations or financial statement disclosures. Lease Classification and Accounting In February 2016, the FASB issued ASU No. 2016-02, which requires lessees to recognize on their balance sheets both a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2018, with early adoption permitted. The Company has determined this ASU will not have a material impact on the Company’s financial condition, results of operations or financial statement disclosures. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU No. 2016-13, which changes the impairment model for most financial assets and certain other instruments. Allowances for credit losses on available-for-sale, or AFS, and held-to-maturity, or HTM, debt securities will be recognized, rather than direct reductions in the amortized cost of the investments. The new model also requires the estimation of lifetime expected credit losses and corresponding recognition of allowance for losses on trade and other receivables, HTM debt securities, loans, and other instruments held at amortized cost. The ASU requires certain recurring disclosures and is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2019, with early adoption permitted for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2018. The Company is evaluating the adoption of this ASU to determine the impact it may have on its condensed consolidated financial statements, which at the date of adoption, is expected to increase the allowance for credit losses with a resulting negative adjustment to retained earnings. Accounting for Share-Based Payments to Nonemployees In June 2018, the FASB issued ASU No. 2018-07 to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Under the guidance, equity-classified nonemployee awards will be measured on and fixed at the grant date, rather than measured at fair value at each reporting date until the date at which the nonemployee’s performance is complete. The ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2018, with early adoption permitted. The Company is evaluating the adoption of this ASU to determine the impact it may have on its condensed consolidated financial statements. |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2018 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | Variable Interest Entities In the second quarter of 2018, the Company financed a pool of its commercial real estate loans through a CLO, which is considered a VIE for financial reporting purposes and, thus, was reviewed for consolidation under the applicable consolidation guidance. Because the Company has both the power to direct the activities of the CLO that most significantly impact the entity’s performance, and the obligation to absorb losses or the right to receive benefits of the entity that could be significant, the Company consolidates the CLO. As of December 31, 2017, the Company was the sole certificate holder of a trust entity that holds a commercial mezzanine loan. The trust is considered a VIE for financial reporting purposes and, thus, was reviewed for consolidation under the applicable consolidation guidance. Because the Company had both the power to direct the activities of the trust that most significantly impact the entity’s performance, and the obligation to absorb losses or the right to receive benefits of the entity that could be significant, the Company consolidated the trust. The loan held by the trust was repaid during the three months ended March 31, 2018. As a result, the Company no longer consolidates the trust on its condensed consolidated financial statements. The following table presents a summary of the assets and liabilities of all variable interest entities consolidated on the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Loans held-for-investment $ 808,908 $ 45,890 Restricted cash 10,478 — Accrued interest receivable 2,404 178 Other assets 5,208 — Total Assets $ 826,998 $ 46,068 Securitized debt obligations $ 652,107 $ — Accrued interest payable 617 — Total Liabilities $ 652,724 $ — The Company is not required to consolidate VIEs for which it has concluded it does not have both the power to direct the activities of the VIEs that most significantly impact the entities’ performance, and the obligation to absorb losses or the right to receive benefits of the entities that could be significant. The Company’s investments in these unconsolidated VIEs include CMBS, which are classified within available-for-sale securities, at fair value and held-to-maturity securities on the condensed consolidated balance sheets. As of June 30, 2018 and December 31, 2017 , the carrying value, which also represents the maximum exposure to loss, of all CMBS in unconsolidated VIEs was $46.5 million and $55.0 million , respectively. |
Loans Held-for-Investment
Loans Held-for-Investment | 6 Months Ended |
Jun. 30, 2018 | |
Loans Held-for-Investment [Abstract] | |
Loans Held-for-Investment | Loans Held-for-Investment The Company originates and acquires commercial real estate debt and related instruments generally to be held as long-term investments. These assets are classified as loans held-for-investment on the condensed consolidated balance sheets. Additionally, at December 31, 2017 the Company was the sole certificate holder of a trust entity that held a commercial mezzanine loan. The underlying loan held by the trust was consolidated on the Company’s condensed consolidated balance sheet and classified as loans held-for-investment. See Note 3 - Variable Interest Entities for additional information regarding consolidation of the trust. Loans held-for-investment are reported at cost, net of any unamortized acquisition premiums or discounts, loan fees and origination costs as applicable, unless the assets are deemed impaired. The following tables summarize the Company’s loans held-for-investment by asset type, property type and geographic location as of June 30, 2018 and December 31, 2017 : June 30, (dollars in thousands) Senior Loans (1) Mezzanine Loans B-Notes Total Unpaid principal balance $ 2,458,616 $ 32,237 $ 14,749 $ 2,505,602 Unamortized (discount) premium (161 ) — — (161 ) Unamortized net deferred origination fees (21,835 ) — — (21,835 ) Carrying value $ 2,436,620 $ 32,237 $ 14,749 $ 2,483,606 Unfunded commitments $ 377,470 $ — $ — $ 377,470 Number of loans 66 3 1 70 Weighted average coupon 6.3 % 11.0 % 8.0 % 6.4 % Weighted average years to maturity (2) 2.2 1.9 8.6 2.2 December 31, (dollars in thousands) Senior Loans (1) Mezzanine Loans B-Notes Total Unpaid principal balance $ 2,220,361 $ 88,945 $ 14,845 $ 2,324,151 Unamortized (discount) premium (169 ) (9 ) — (178 ) Unamortized net deferred origination fees (19,752 ) 45 — (19,707 ) Carrying value $ 2,200,440 $ 88,981 $ 14,845 $ 2,304,266 Unfunded commitments $ 337,623 $ 1,580 $ — $ 339,203 Number of loans 53 5 1 59 Weighted average coupon 5.9 % 9.7 % 8.0 % 6.0 % Weighted average years to maturity (2) 2.3 2.0 9.1 2.4 ____________________ (1) Loans primarily secured by a first priority lien on commercial real property and related personal property and also includes, when applicable, any companion subordinate loans. (2) Based on contractual maturity date. Certain loans are subject to contractual extension options which may be subject to conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities in connection with loan modifications. (dollars in thousands) June 30, December 31, Property Type Carrying Value % of Loan Portfolio Carrying Value % of Loan Portfolio Office $ 1,293,952 52.1 % $ 1,223,642 53.1 % Multifamily 394,737 15.9 % 356,016 15.4 % Hotel 397,991 16.1 % 274,416 11.9 % Retail 179,902 7.2 % 254,786 11.1 % Industrial 217,024 8.7 % 195,406 8.5 % Total $ 2,483,606 100.0 % $ 2,304,266 100.0 % (dollars in thousands) June 30, December 31, Geographic Location Carrying Value % of Loan Portfolio Carrying Value % of Loan Portfolio Northeast $ 972,668 39.2 % $ 896,361 38.9 % West 526,145 21.2 % 509,088 22.1 % Southwest 556,092 22.4 % 454,088 19.7 % Southeast 328,834 13.2 % 346,623 15.0 % Midwest 99,867 4.0 % 98,106 4.3 % Total $ 2,483,606 100.0 % $ 2,304,266 100.0 % At June 30, 2018 and December 31, 2017 , the Company pledged loans held-for-investment with a carrying value of $2.3 billion and $2.2 billion , respectively, as collateral for repurchase agreements and securitized debt obligations. See Note 10 - Repurchase Agreements and Note 11 - Securitized Debt Obligations. The following table summarizes activity related to loans held-for-investment for the three and six months ended June 30, 2018 and 2017 . Three Months Ended Six Months Ended (in thousands) 2018 2017 2018 2017 Balance at beginning of period $ 2,364,647 $ 1,502,966 $ 2,304,266 $ 1,364,291 Originations, acquisitions and additional fundings 445,944 238,664 602,130 378,048 Repayments (324,252 ) (296 ) (420,679 ) (1,490 ) Net discount accretion (premium amortization) 4 (18 ) 18 (17 ) Increase in net deferred origination fees (5,919 ) (3,771 ) (8,004 ) (5,710 ) Amortization of net deferred origination fees 3,182 1,708 5,875 4,131 Allowance for loan losses — — — — Balance at end of period $ 2,483,606 $ 1,739,253 $ 2,483,606 $ 1,739,253 The Company evaluates each loan for impairment at least quarterly by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors. Risk factors include property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, loan structure and exit plan, loan-to-value ratio, project sponsorship, and other factors deemed necessary. Risk ratings are defined as follows: 1 – Lower Risk 2 – Average Risk 3 – Acceptable Risk 4 – Higher Risk: A loan that has exhibited material deterioration in cash flows and/or other credit factors, which, if negative trends continue, could be indicative of future loss. 5 – Impaired/Loss Likely: A loan that has a significantly increased probability of default or principal loss. The following table presents the number of loans, unpaid principal balance and carrying value (amortized cost) by risk rating for loans held-for-investment as of June 30, 2018 and December 31, 2017 : (dollars in thousands) June 30, December 31, Risk Rating Number of Loans Unpaid Principal Balance Carrying Value Number of Loans Unpaid Principal Balance Carrying Value 1 9 $ 375,207 $ 373,869 6 $ 414,695 $ 413,314 2 58 2,053,105 2,032,599 50 1,840,638 1,822,134 3 3 77,290 77,138 3 68,818 68,818 4 — — — — — — 5 — — — — — — Total 70 $ 2,505,602 $ 2,483,606 59 $ 2,324,151 $ 2,304,266 The Company has not recorded any allowances for losses as it is not deemed probable that the Company will not be able to collect all amounts due pursuant to the contractual terms of the loans. |
Available-for-Sale Securities,
Available-for-Sale Securities, at Fair Value | 6 Months Ended |
Jun. 30, 2018 | |
Debt Securities, Available-for-sale [Abstract] | |
Available-for-Sale Securities, at Fair Value | Available-for-Sale Securities, at Fair Value The following table presents the face value and carrying value (which approximates fair value) of AFS securities as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Face value $ 12,798 $ 12,798 Gross unrealized gains — — Gross unrealized losses — — Carrying value $ 12,798 $ 12,798 On June 30, 2018 , the Company’s AFS securities had contractual maturities of less than one year . At June 30, 2018 and December 31, 2017 , the Company pledged AFS securities with a carrying value of $12.8 million and $12.8 million , respectively, as collateral for repurchase agreements. See Note 10 - Repurchase Agreements . At both June 30, 2018 and December 31, 2017 , the Company’s AFS securities had a carrying value equal to their face value. Evaluating AFS Securities for Other-Than-Temporary Impairments In evaluating AFS securities for other-than-temporary impairments, or OTTI, the Company determines whether there has been a significant adverse quarterly change in the cash flow expectations for a security. The Company compares the amortized cost of each security in an unrealized loss position against the present value of expected future cash flows of the security. The Company also considers whether there has been a significant adverse change in the regulatory and/or economic environment as part of this analysis. If the amortized cost of the security is greater than the present value of expected future cash flows using the original yield as the discount rate, an other-than-temporary credit impairment has occurred. If the Company does not intend to sell and will not be more likely than not required to sell the security, the credit loss is recognized in earnings and the balance of the unrealized loss is recognized in other comprehensive (loss) income . If the Company intends to sell the security or will be more likely than not required to sell the security, the full unrealized loss is recognized in earnings. The Company did not record any other-than-temporary credit impairments during the three and six months ended June 30, 2018 and 2017 as expected cash flows were greater than amortized cost for all AFS securities held. Gross Realized Gains and Losses Gains and losses from the sale of AFS securities are recorded as realized gains (losses) in the Company’s condensed consolidated statements of comprehensive income . The Company did not sell any AFS securities during the three and six months ended June 30, 2018 and 2017 . |
Held-to-Maturity Securities
Held-to-Maturity Securities | 6 Months Ended |
Jun. 30, 2018 | |
Debt Securities, Held-to-maturity, Fair Value to Amortized Cost [Abstract] | |
Held-to-Maturity Securities | Held-to-Maturity Securities The following table presents the face value and carrying value of HTM securities by collateral type as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Face value $ 33,659 $ 42,169 Unamortized premium (discount) — — Carrying value $ 33,659 $ 42,169 On June 30, 2018 , the Company’s HTM securities had contractual maturities of less than one year . At June 30, 2018 and December 31, 2017 , the Company pledged HTM securities with a carrying value of $33.7 million and $42.2 million , respectively, as collateral for repurchase agreements. See Note 10 - Repurchase Agreements . Evaluating HTM Securities for Other-Than-Temporary Impairments In evaluating HTM securities for OTTI, the Company determines whether there has been a significant adverse quarterly change in the cash flow expectations for a security. The Company compares the amortized cost of each security against the present value of expected future cash flows of the security. The Company also considers whether there has been a significant adverse change in the regulatory and/or economic environment as part of this analysis. If the amortized cost of the security is greater than the present value of expected future cash flows using the original yield as the discount rate, an other-than-temporary credit impairment has occurred and the credit loss is recognized in earnings. The Company did not record any other-than-temporary credit impairments during the three and six months ended June 30, 2018 and 2017 , as expected cash flows were greater than amortized cost for all HTM securities held. |
Cash, Cash Equivalents and Rest
Cash, Cash Equivalents and Restricted Cash | 6 Months Ended |
Jun. 30, 2018 | |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash held in bank accounts and cash held in money market funds on an overnight basis. The Company is required to maintain certain cash balances in restricted accounts as collateral for the Company’s repurchase agreements and with counterparties to support activities related to securities. As of June 30, 2018 and December 31, 2017 , the Company had $6.0 million and $3.0 million , respectively, as collateral for repurchase agreements and by counterparties to support activities related to securities. In addition, as of June 30, 2018 , the Company held $10.5 million in restricted cash as a future funding obligation related to the CLO. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 that sum to the total of the same such amounts shown in the statements of cash flows: (in thousands) June 30, December 31, Cash and cash equivalents $ 92,264 $ 107,765 Restricted cash 16,498 2,953 Total cash, cash equivalents and restricted cash $ 108,762 $ 110,718 |
Accrued Interest Receivable
Accrued Interest Receivable | 6 Months Ended |
Jun. 30, 2018 | |
Accrued Interest Receivable [Abstract] | |
Accrued Interest Receivable | Accrued Interest Receivable The following table presents the Company’s accrued interest receivable by collateral type as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Loans held-for-investment $ 7,364 $ 6,880 Available-for-sale securities 51 51 Held-to-maturity securities 140 174 Total $ 7,555 $ 7,105 |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Fair Value Measurements ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 clarifies that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices available in active markets ( i.e. , observable inputs) and the lowest priority to data lacking transparency ( i.e. , unobservable inputs). Additionally, ASC 820 requires an entity to consider all aspects of nonperformance risk, including the entity’s own credit standing, when measuring fair value of a liability. ASC 820 establishes a three-level hierarchy to be used when measuring and disclosing fair value. An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. Following is a description of the three levels: Level 1 Inputs are quoted prices in active markets for identical assets or liabilities as of the measurement date under current market conditions. Additionally, the entity must have the ability to access the active market and the quoted prices cannot be adjusted by the entity. Level 2 Inputs include quoted prices in active markets for similar assets or liabilities; quoted prices in inactive markets for identical or similar assets or liabilities; or inputs that are observable or can be corroborated by observable market data by correlation or other means for substantially the full-term of the assets or liabilities. Level 3 Unobservable inputs are supported by little or no market activity. The unobservable inputs represent the assumptions that market participants would use to price the assets and liabilities, including risk. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation. Following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models and significant assumptions utilized. Available-for-sale securities . The Company holds AFS securities that are carried at fair value on the condensed consolidated balance sheet and are comprised of CMBS. In determining the fair value of the Company’s CMBS AFS, management judgment may be used to arrive at fair value that considers prices obtained from third-party pricing providers or broker quotes received using the bid price, which are both deemed indicative of market activity, and other applicable market data. The third-party pricing providers and brokers use pricing models that generally incorporate such factors as coupons, primary and secondary mortgage rates, rate reset period, issuer, prepayment speeds, credit enhancements and expected life of the security. If observable market prices are not available or insufficient to determine fair value due principally to illiquidity in the marketplace, then fair value is based upon internally developed models that are primarily based on observable market-based inputs but also include unobservable market data inputs (including prepayment speeds, delinquency levels, and credit losses). The Company classified its CMBS AFS as Level 2 fair value assets at June 30, 2018 and December 31, 2017 . Recurring Fair Value The following tables display the Company’s assets measured at fair value on a recurring basis. The Company does not hold any liabilities measured at fair value on its condensed consolidated balance sheets. Recurring Fair Value Measurements June 30, 2018 (in thousands) Level 1 Level 2 Level 3 Total Assets Available-for-sale securities $ — $ 12,798 $ — $ 12,798 Total assets $ — $ 12,798 $ — $ 12,798 Recurring Fair Value Measurements December 31, 2017 (in thousands) Level 1 Level 2 Level 3 Total Assets Available-for-sale securities $ — $ 12,798 $ — $ 12,798 Total assets $ — $ 12,798 $ — $ 12,798 The Company may be required to measure certain assets or liabilities at fair value from time to time. These periodic fair value measures typically result from application of certain impairment measures under U.S. GAAP. These items would constitute nonrecurring fair value measures under ASC 820. As of June 30, 2018 and December 31, 2017 , the Company did not have any assets or liabilities measured at fair value on a nonrecurring basis in the periods presented. Transfers between Levels are deemed to take place on the first day of the reporting period in which the transfer has taken place. The Company did not incur transfers between Levels for the three and six months ended June 30, 2018 and 2017 . Fair Value of Financial Instruments In accordance with ASC 820, the Company is required to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized in the condensed consolidated balance sheets, for which fair value can be estimated. The following describes the Company’s methods for estimating the fair value for financial instruments. Descriptions are not provided for those items that have zero balances as of the current balance sheet date. • Loans held-for-investment are carried at cost, net of any unamortized acquisition premiums or discounts, loan fees and origination costs as applicable, unless deemed impaired. The Company estimates the fair value of its loans held-for-investment by assessing any changes in market interest rates, shifts in credit profiles and actual operating results for mezzanine loans and senior loans, taking into consideration such factors as underlying property type, property competitive position within its market, market and submarket fundamentals, tenant mix, nature of business plan, sponsorship, extent of leverage and other loan terms. The Company categorizes the fair value measurement of these assets as Level 3. • AFS securities are recurring fair value measurements; carrying value equals fair value. See discussion of valuation methods and assumptions within the Fair Value Measurements section of this footnote. • HTM securities, which are comprised of CMBS, are carried at cost, net of any unamortized acquisition premiums or discounts, unless deemed other-than-temporarily impaired. In determining the fair value of the Company’s CMBS HTM, management judgment may be used to arrive at fair value that considers prices obtained from third-party pricing providers or broker quotes received using the bid price, which are both deemed indicative of market activity, and other applicable market data. The third-party pricing providers and brokers use pricing models that generally incorporate such factors as coupons, primary and secondary mortgage rates, rate reset period, issuer, prepayment speeds, credit enhancements and expected life of the security. The Company categorizes the fair value measurement of these assets as Level 2. • Cash and cash equivalents and restricted cash have a carrying value which approximates fair value because of the short maturities of these instruments. The Company categorizes the fair value measurement of these assets as Level 1. • The carrying value of repurchase agreements that mature in less than one year generally approximates fair value due to the short maturities. As of June 30, 2018 , the Company held $0.5 billion of repurchase agreements that are considered long-term. The Company’s long-term repurchase agreements have floating rates based on an index plus a spread and the credit spread is typically consistent with those demanded in the market. Accordingly, the interest rates on these borrowings are at market and thus carrying value approximates fair value. The Company categorizes the fair value measurement of these liabilities as Level 2. • Securitized debt obligations are recorded at outstanding principal, net of any unamortized deferred debt issuance costs. In determining the fair value of its securitized debt obligations, management judgment may be used to arrive at fair value that considers prices obtained from third-party pricing providers, broker quotes received and other applicable market data. If observable market prices are not available or insufficient to determine fair value due principally to illiquidity in the marketplace, then fair value is based upon internally developed models that are primarily based on observable market-based inputs but also include unobservable market data inputs (including prepayment speeds, delinquency levels, and credit losses). The Company categorizes the fair value measurement of these liabilities as Level 2. • Convertible senior notes are carried at their unpaid principal balance, net of any unamortized deferred issuance costs. The Company estimates the fair value of its convertible senior notes using the market transaction price nearest to June 30, 2018 . The Company categorizes the fair value measurement of these assets as Level 2. The following table presents the carrying values and estimated fair values of assets and liabilities that are required to be recorded or disclosed at fair value at June 30, 2018 and December 31, 2017 . June 30, 2018 December 31, 2017 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Assets Loans held-for-investment $ 2,483,606 $ 2,515,209 $ 2,304,266 $ 2,322,259 Available-for-sale securities $ 12,798 $ 12,798 $ 12,798 $ 12,798 Held-to-maturity securities $ 33,659 $ 34,120 $ 42,169 $ 42,797 Cash and cash equivalents $ 92,264 $ 92,264 $ 107,765 $ 107,765 Restricted cash $ 16,498 $ 16,498 $ 2,953 $ 2,953 Liabilities Repurchase agreements $ 1,019,009 $ 1,019,009 $ 1,521,608 $ 1,521,608 Securitized debt obligations $ 652,107 $ 661,254 $ — $ — Convertible senior notes $ 139,930 $ 146,869 $ 121,314 $ 125,750 |
Repurchase Agreements
Repurchase Agreements | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Repurchase Agreements [Abstract] | |
Repurchase Agreements | Repurchase Agreements As of June 30, 2018 and December 31, 2017 , the Company had outstanding $1.0 billion and $1.5 billion of repurchase agreements with a weighted average borrowing rate of 4.36% and 3.78% and weighted average remaining maturities of 1.4 and 1.8 years, respectively. At June 30, 2018 and December 31, 2017 , the repurchase agreement balances were as follows: (in thousands) June 30, December 31, Short-term $ 522,991 $ 56,546 Long-term 496,018 1,465,062 Total $ 1,019,009 $ 1,521,608 At June 30, 2018 and December 31, 2017 , the repurchase agreements had the following characteristics and remaining maturities: June 30, 2018 December 31, 2017 Collateral Type Collateral Type (dollars in thousands) Loans CMBS (1) Total Amount Outstanding Loans CMBS (1) Total Amount Outstanding Within 30 days $ — $ — $ — $ 22,032 $ — $ 22,032 30 to 59 days — 30,959 30,959 — 34,514 34,514 60 to 89 days — — — — — — 90 to 119 days — — — — — — 120 to 364 days 492,032 — 492,032 — — — One year and over 496,018 — 496,018 1,465,062 — 1,465,062 Total $ 988,050 $ 30,959 $ 1,019,009 $ 1,487,094 $ 34,514 $ 1,521,608 Weighted average borrowing rate 4.36 % 4.63 % 4.36 % 3.78 % 3.77 % 3.78 % ____________________ (1) Includes both AFS securities and HTM securities sold under agreements to repurchase. The following table summarizes assets at carrying values that are pledged or restricted as collateral for the future payment obligations of repurchase agreements: (in thousands) June 30, December 31, Loans held-for-investment $ 1,475,080 $ 2,202,049 Available-for-sale securities, at fair value 12,798 12,798 Held-to-maturity securities 33,659 42,169 Restricted cash 2,922 565 Total $ 1,524,459 $ 2,257,581 Although the transactions under repurchase agreements represent committed borrowings until maturity, the respective lender retains the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets due to credit or market events, depending on the agreement, would require the Company to fund margin calls or repurchase the underlying collateral. The following table summarizes certain characteristics of the Company’s repurchase agreements and counterparty concentration at June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 (dollars in thousands) Amount Outstanding Net Counterparty Exposure (1) Percent of Equity Weighted Average Years to Maturity Amount Outstanding Net Counterparty Exposure (1) Percent of Equity Weighted Average Years to Maturity Morgan Stanley Bank $ 368,315 $ 178,015 22 % 2.00 $ 425,539 $ 250,543 30 % 2.49 JPMorgan Chase Bank 287,511 170,104 21 % 0.90 285,457 215,068 26 % 1.32 Goldman Sachs Bank 190,902 70,502 9 % 0.84 252,734 86,091 10 % 1.33 Wells Fargo Bank 44,578 43,006 5 % 0.99 424,882 128,644 16 % 1.49 All other counterparties (2) 127,703 44,923 5 % 2.00 132,996 59,645 7 % 2.08 Total $ 1,019,009 $ 506,550 $ 1,521,608 $ 739,991 ____________________ (1) Represents the net carrying value of the loans held-for-investment, AFS securities and HTM securities sold under agreements to repurchase, including accrued interest plus any cash on deposit to secure the repurchase obligation, less the amount of the repurchase liability, including accrued interest. (2) Represents amounts outstanding with one other counterparty as of both June 30, 2018 and December 31, 2017 . The Company does not anticipate any defaults by its repurchase agreement counterparties. There can be no assurance, however, that any such default or defaults will not occur. |
Securitized Debt Obligations
Securitized Debt Obligations | 6 Months Ended |
Jun. 30, 2018 | |
Securitized Debt Obligations [Abstract] | |
Securitized Debt Obligations [Text Block] | Securitized Debt Obligations In the second quarter of 2018, the Company financed a pool of its commercial real estate loans through a collateralized loan obligation, or CLO, which is consolidated on the Company’s condensed consolidated financial statements. See Note 3 - Variable Interest Entities for additional information regarding consolidation of the CLO. The securitized debt obligations issued by the CLO are recorded at outstanding principal, net of any unamortized deferred debt issuance costs, on the Company’s condensed consolidated balance sheets. As of June 30, 2018 , the outstanding amount due on securitized debt obligations was $652.1 million , net of deferred issuance costs, with a weighted average interest rate of 3.20% and weighted average remaining maturities of 2.2 years. |
Convertible Senior Notes
Convertible Senior Notes | 6 Months Ended |
Jun. 30, 2018 | |
Convertible Debt [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes On December 12, 2017, the Company closed a private placement of $125.0 million aggregate principal amount of convertible senior notes due 2022. On January 10, 2018, an additional $18.8 million in notes were issued by the Company in connection with the exercise of the initial purchaser’s option. The net proceeds from the offering were approximately $139.5 million after deducting underwriting discounts and estimated offering expenses payable by the Company. The notes are unsecured, pay interest semiannually at a rate of 5.625% per annum and are convertible at the option of the holder into shares of the Company’s common stock. The notes will mature in December 2022 , unless earlier converted or repurchased in accordance with their terms. The Company does not have the right to redeem the notes prior to maturity, but may be required to repurchase the notes from holders under certain circumstances. As of June 30, 2018 , the notes had a conversion rate of 50.0000 shares of common stock per $1,000 principal amount of the notes . The outstanding amount due on the convertible senior notes as of June 30, 2018 and December 31, 2017 was $139.9 million and $121.3 million , respectively, net of deferred issuance costs. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The following represent the material commitments and contingencies of the Company as of June 30, 2018 : Management agreement. Upon the closing the IPO on June 28, 2017, the Company entered into a management agreement with PRCM. The Company pays PRCM a base management fee equal to 1.5% of the Company’s equity on an annualized basis, as defined in the management agreement. For purposes of calculating the management fee, equity means the sum of the net proceeds received by the Company from all issuances of its equity securities, plus its cumulative “core earnings” at the end of the most recently completed calendar quarter, less any distributions to stockholders, any amount that the Company has paid to repurchase its stock, and any incentive fees earned by PRCM, but excluding the incentive fee earned in the current quarter. As a result, equity for purposes of calculating the management fee may differ from the amount of stockholders’ equity shown in the Company’s financial statements. Beginning in the fourth quarter of 2018, incentive fees, if earned, will be payable to PRCM, as defined in the management agreement. The incentive fee will be the excess of (1) the product of (a) 20% and (b) the result of (i) the Company’s “core earnings” for the previous 12 -month period, minus (ii) the product of (A) the Company’s equity in the previous 12 -month period, and (B) 8% per annum, less (2) the sum of any incentive fees paid to PRCM with respect to the first three calendar quarters of such previous 12 -month period; provided, however, that no incentive fees are payable with respect to any calendar quarter unless “core earnings” for the 12 most recently completed calendar quarters in the aggregate is greater than zero . For purposes of calculating base management and incentive fees, “core earnings” means net income (loss) attributable to common stockholders, excluding non-cash equity compensation expense, incentive fees earned by PRCM, depreciation and amortization, any unrealized gains or losses or other similar non-cash items that are included in net income for the applicable period (regardless of whether such items are included in other comprehensive income or loss or in net income), and one-time events pursuant to changes in U.S. GAAP and certain material non-cash income or expense items, in each case after discussions between PRCM and the Company’s independent directors and approved by a majority of the Company’s independent directors. The initial term of the management agreement expires on June 28, 2020, and thereafter will automatically renew for successive one -year terms annually until terminated in accordance with the terms of the agreement. Upon termination of the management agreement by the Company without cause or by PRCM due to the Company’s material breach of the management agreement, the Company is required to pay a termination fee equal to three times the sum of the average annual base management fee and average annual incentive compensation, in each case earned by PRCM during the 24 -month period immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. Employment contracts. The Company does not directly employ any personnel. Instead, the Company relies on the resources of PRCM and its affiliates to conduct the Company’s operations. Legal and regulatory. From time to time, the Company may be subject to liability under laws and government regulations and various claims and legal actions arising in the ordinary course of business. Liabilities are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts established for those claims. Based on information currently available, management is not aware of any legal or regulatory claims that would have a material effect on the Company’s consolidated financial statements and therefore no accrual is required as of June 30, 2018 . Unfunded commitments on loans held-for-investment. Certain of the Company’s commercial real estate loan agreements contain provisions for future fundings to borrowers, generally to finance lease-related or capital expenditures. As of June 30, 2018 and December 31, 2017 , the Company had unfunded commitments of $377.5 million and $339.2 million on loans held-for-investment with expirations dates within the next three years. |
Preferred Stock
Preferred Stock | 6 Months Ended |
Jun. 30, 2018 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Preferred Stock | Preferred Stock In connection with the Formation Transaction, the Company issued 1,000 shares of its 10% cumulative redeemable preferred stock to Two Harbors, which immediately sold such preferred stock to an unaffiliated third-party investor. The preferred stock ranks senior to the rights of holders of the Company’s common stock, but junior to all other classes or series of preferred stock that may be issued. The holders of the preferred stock are entitled to receive, when, as and if authorized and declared by the Company, cumulative cash dividends at the rate of 10% per annum of the $1,000 liquidation preference per share of the preferred stock. Such dividends accrue on a daily basis and are cumulative from and including the initial issue date of the preferred stock. The Company has the option at any time after five years from the initial issue date to redeem the preferred stock at a redemption price of $1,000 per share, plus any accrued and unpaid dividends. At any time after six years from the initial issue date, the Company will, at the request of any preferred stockholder, repurchase the holder’s preferred stock at a price of $1,000 per share, plus any accrued and unpaid dividends. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock On June 28, 2017, the Company completed the IPO of 10,000,000 shares of its common stock at a price of $19.50 per share, for gross proceeds of $195.0 million . Net proceeds to the Company were approximately $181.9 million , after accounting for issuance costs of approximately $13.1 million . Concurrently with the closing of the IPO, the Company issued 33,071,000 shares of its common stock to Two Harbors in exchange for the equity interests in the Predecessor, which became the Company’s wholly owned indirect subsidiary as a result of the transaction. On November 1, 2017, Two Harbors distributed to its common stockholders the 33,071,000 shares of the Company’s common stock it had acquired in connection with the Formation Transaction, allowing the Company’s market capitalization to be fully floating. As of June 30, 2018 , the Company had 43,456,234 shares of common stock outstanding. The following table presents a reconciliation of the common shares outstanding for the six months ended June 30, 2018 and 2017 : Number of common shares Common shares outstanding, December 31, 2016 — Issuance of common stock 43,071,000 Issuance of restricted stock (1) 163,205 Common shares outstanding, June 30, 2017 43,234,205 Common shares outstanding, December 31, 2017 43,235,103 Issuance of restricted stock (1) 221,131 Common shares outstanding, June 30, 2018 43,456,234 ____________________ (1) Represents shares of restricted stock granted under the 2017 Equity Incentive Plan, of which 321,134 restricted shares remained subject to vesting requirements at June 30, 2018 . Distributions to Stockholders The following table presents cash dividends declared by the Company on its common stock since its IPO and Formation Transaction: Declaration Date Record Date Payment Date Cash Dividend Per Share June 20, 2018 July 2, 2018 July 18, 2018 $ 0.40 March 15, 2018 March 29, 2018 April 18, 2018 $ 0.38 December 18, 2017 December 29, 2017 January 18, 2018 $ 0.38 September 18, 2017 September 29, 2017 October 18, 2017 $ 0.32 Accumulated Other Comprehensive Income Accumulated other comprehensive income at June 30, 2018 and December 31, 2017 was as follows: (in thousands) June 30, December 31, Available-for-sale securities Unrealized gains $ — $ — Unrealized losses — — Accumulated other comprehensive income $ — $ — Reclassifications out of Accumulated Other Comprehensive Income The Company did not record any reclassifications out of accumulated other comprehensive income during the three and six months ended June 30, 2018 and 2017 . |
Equity Incentive Plan
Equity Incentive Plan | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity Incentive Plan | Equity Incentive Plan The Company’s 2017 Equity Incentive Plan, or the Plan, provides incentive compensation to attract and retain qualified directors, officers, advisors, consultants and other personnel, including certain personnel of PRCM and its affiliates. The Plan is administered by the compensation committee of the Company’s board of directors. The compensation committee has the full authority to administer and interpret the Plan, to authorize the granting of awards, to determine the eligibility of directors, officers, advisors, consultants and other personnel, including personnel of PRCM and its affiliates, to receive an award, to determine the number of shares of common stock to be covered by each award (subject to the individual participant limitations provided in the Plan), to determine the terms, provisions and conditions of each award (which may not be inconsistent with the terms of the Plan), to prescribe the form of instruments evidencing awards and to take any other actions and make all other determinations that it deems necessary or appropriate in connection with the Plan or the administration or interpretation thereof. In connection with this authority, the compensation committee may, among other things, establish performance goals that must be met in order for awards to be granted or to vest, or for the restrictions on any such awards to lapse. The Plan provides for grants of restricted common stock, phantom shares, dividend equivalent rights and other equity-based awards, subject to a ceiling of 3,242,306 shares available for issuance under the Plan. The Plan allows for the Company’s board of directors to expand the types of awards available under the Plan to include long-term incentive plan units in the future. If an award granted under the Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards. Unless earlier terminated by the Company’s board of directors, no new award may be granted under the Plan after the tenth anniversary of the date that such Plan was initially approved by the Company’s board of directors. No award may be granted under the Plan to any person who, assuming payment of all awards held by such person, would own or be deemed to own more than 9.8% of the outstanding shares of the Company’s common stock. During the six months ended June 30, 2018 and 2017 , the Company granted 19,175 and 13,205 shares of common stock, respectively, to its independent directors as compensation for their service on the Company’s board of directors, pursuant to the terms of the Plan. The estimated fair value of these awards was $17.86 and $19.50 per share on grant date, based on the closing price of the Company’s common stock on the NYSE on such date. The shares issued in 2017 vested immediately, and the shares issued in 2018 have a one year vesting period. Additionally, during the six months ended June 30, 2018 and 2017 , the Company granted 201,956 and 150,000 shares of restricted common stock, respectively, to key employees of PRCM and its affiliates pursuant to the terms of the Plan and the associated award agreements. The estimated fair value of these awards was $17.33 and $19.50 per share on grant date, based on the closing market price of the Company’s common stock on the NYSE on such date. However, as the cost of these awards is measured at fair value at each reporting date based on the price of the Company’s stock as of period end in accordance with ASC 505, Equity , or ASC 505, the fair value of these awards as of June 30, 2018 was $18.35 per share based on the closing market price of the Company’s common stock on the NYSE on such date. The shares underlying the grants vest in three equal annual installments commencing on the first anniversary of the grant date, as long as the grantee complies with the terms and conditions of his or her applicable restricted stock award agreement. The following table summarizes the activity related to restricted common stock for the six months ended June 30, 2018 and 2017 : Six Months Ended June 30, 2018 2017 Shares Weighted Average Grant Date Fair Market Value Shares Weighted Average Grant Date Fair Market Value Outstanding at Beginning of Period 150,000 $ 19.50 — $ — Granted 221,131 17.38 163,205 19.50 Vested (49,997 ) (19.50 ) (13,205 ) (19.50 ) Forfeited — — — — Outstanding at End of Period 321,134 $ 18.04 150,000 $ 19.50 For the three and six months ended June 30, 2018 , the Company recognized compensation related to restricted common stock of $1.2 million and $1.9 million , respectively. The Company did not record any compensation related to restricted common stock during the three and six months ended June 30, 2017 . |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The recently enacted tax law informally known as the Tax Cuts and Jobs Act, or the TCJA, significantly changes the U.S. federal income tax laws applicable to businesses and their owners, including REITs and their stockholders. These changes include, among other things, lowering the federal income tax rate applicable to corporations from 35% to 21% and repealing the corporate alternative minimum tax. The Company has completed its determination of the accounting implications of the TCJA on its tax accruals, and there is no impact recorded to the financial statements. Technical corrections or other amendments to the TCJA or administrative guidance interpreting the TCJA may be forthcoming at any time. While we do not anticipate a material effect on our operations, we continue to analyze and monitor the application of the TCJA to our businesses, our peers and the economic environment. The Company intends to elect to be taxed as a REIT under the Code for U.S. federal income tax purposes. As long as the Company qualifies as a REIT, the Company generally will not be subject to U.S. federal income taxes on its taxable income to the extent it annually distributes its net taxable income to stockholders, and does not engage in prohibited transactions. The Company intends to distribute 100% of its REIT taxable income and comply with all requirements to continue to qualify as a REIT. The majority of states also recognize the Company’s REIT status. The Company’s TRS files a separate tax return and is fully taxed as a standalone U.S. C-corporation. It is assumed that the Company will retain its REIT status and will incur no REIT level taxation as it intends to comply with the REIT regulations and annual distribution requirements. The following table summarizes the tax provision recorded at the taxable subsidiary level for the three and six months ended June 30, 2018 and 2017 : Three Months Ended Six Months Ended (in thousands) 2018 2017 2018 2017 Current tax (benefit) provision: Federal $ — $ (1 ) $ (1 ) $ (3 ) State — (1 ) 2 2 Total current tax (benefit) provision — (2 ) 1 (1 ) Deferred tax benefit (2 ) — (2 ) — Total benefit from income taxes $ (2 ) $ (2 ) $ (1 ) $ (1 ) Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed consolidated financial statements of a contingent tax liability for uncertain tax positions. Additionally, there were no amounts accrued for penalties or interest as of or during the periods presented in these condensed consolidated financial statements. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company has calculated earnings per share only for the period common stock was outstanding, referred to as the post-formation period. The Company has defined the post-formation period to be the period beginning on June 28, 2017, the date the Company commenced operations as a publicly traded company, and thereafter. Earnings per share is calculated by dividing the net income for the post-formation period by the weighted average number of shares outstanding during the post-formation period. The following table presents a reconciliation of the earnings and shares used in calculating basic and diluted earnings per share for the three and six months ended June 30, 2018 and 2017 : Three Months Ended Six Months Ended June 30, June 30, (in thousands, except share data) 2018 2017 2018 2017 Numerator: Net income attributable to common stockholders - basic $ 15,202 $ 169 $ 29,763 $ 169 Interest expense attributable to convertible notes (1) 2,198 — 4,369 — Net income attributable to common stockholders - diluted $ 17,400 $ 169 $ 34,132 $ 169 Denominator: Weighted average common shares outstanding 43,090,048 43,084,205 43,087,589 43,084,205 Weighted average restricted stock shares 356,915 150,000 323,207 150,000 Basic weighted average shares outstanding 43,446,963 43,234,205 43,410,796 43,234,205 Effect of dilutive shares issued in an assumed conversion of the convertible senior notes 7,187,500 — 7,187,500 — Diluted weighted average shares outstanding 50,634,463 43,234,205 50,598,296 43,234,205 Earnings Per Share Basic $ 0.35 $ — $ 0.69 $ — Diluted $ 0.34 $ — $ 0.67 $ — ____________________ (1) Includes a nondiscretionary adjustment for the assumed change in the management fee calculation. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The following summary provides disclosure of the material transactions with affiliates of the Company. The Company does not have any employees and is externally managed by PRCM under the terms of a management agreement entered into in connection with closing of the IPO and Formation Transaction on June 28, 2017. Under the management agreement, PRCM and its affiliates provide the Company with the personnel and resources necessary to operate the Company’s business. In exchange, the Company pays PRCM a base management fee that is equal to 1.5% of the Company’s equity on an annualized basis as well as an incentive fee, which will be payable, if earned, beginning in the fourth quarter of 2018, in accordance with the terms of the management agreement. For purposes of calculating the management fee, equity is adjusted to exclude any common stock repurchases as well as any unrealized gains, losses or other items that do not affect realized net income (loss), among other adjustments, in accordance with the management agreement. The Company incurred $3.1 million and $6.3 million as a management fee to PRCM for the three and six months ended June 30, 2018 , and $0.1 million as a management fee to PRCM for both the three and six months ended June 30, 2017 . See further discussion of the base management fee and incentive fee calculations in Note 13 - Commitments and Contingencies . Prior to the IPO and Formation Transaction, the Predecessor was allocated its proportionate share of management fees incurred by Two Harbors under the management agreement that Two Harbors has with PRCM Advisers. Under its management agreement with PRCM Advisers as in effect during the relevant period, Two Harbors paid PRCM Advisers a base management fee equal to 1.5% of its adjusted equity on an annualized basis. The Predecessor was allocated management fees incurred by Two Harbors of $1.8 million for the period from April 1, 2017 through June 27, 2017, and $3.5 million for the period from January 1, 2017 through June 27, 2017. During the three and six months ended June 30, 2018 , the Company reimbursed PRCM for certain direct and allocated costs incurred by PRCM on behalf of the Company. These direct and allocated costs totaled approximately $1.4 million and $2.8 million , respectively. In addition, during the three and six months ended June 30, 2017 , certain direct and allocated operating expenses were paid by Two Harbors to PRCM Advisers and other third-party vendors and included in the Company’s condensed consolidated statements of comprehensive income . These direct and allocated costs totaled approximately $1.9 million and $4.2 million for the three and six months ended June 30, 2017 , respectively. Expenses during the period may have been different had the Predecessor not been a subsidiary of Two Harbors during those periods. The Company has contractual relationships with the majority of its third-party vendors and pays those vendors directly. The Company will continue to have certain costs allocated to it by PRCM under the management agreement for compensation, data services, technology and certain office lease payments. The Company recognized $1.2 million and $1.9 million of compensation during the three and six months ended June 30, 2018 related to restricted common stock issued to employees of PRCM and the Company’s independent directors pursuant to the Plan. See Note 16 - Equity Incentive Plan for additional information. During the six months ended June 30, 2017 , the Company financed certain of its loans held-for-investment through a revolving note payable to TH Insurance Holdings Company LLC, or TH Insurance, a captive insurance company and indirect subsidiary of Two Harbors and a member of the Federal Home Loan Bank of Des Moines, or the FHLB. In exchange for the note with TH Insurance, the Company received an allocated portion of TH Insurance’s advances from the FHLB and pledged to the FHLB a portion of its loans held-for-investment as collateral for TH Insurance’s advances. The affiliate note payable reflected terms consistent with TH Insurance’s FHLB advances. During 2017, the note payable to TH Insurance was in effect to assist with cash management and operational processes as the investments in the Company’s portfolio pledged to the FHLB were released and transitioned to its repurchase facilities. The affiliate note payable matured on October 27, 2017 and was repaid in full. The terms of these transactions may have been different had they been transacted with an unrelated third-party. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Events subsequent to June 30, 2018 , were evaluated through the date these financial statements were issued and no additional events were identified requiring further disclosure in these condensed consolidated financial statements. |
Basis of Presentation and Sig27
Basis of Presentation and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
Consolidation and Basis of Presentation | Consolidation and Basis of Presentation The interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, have been condensed or omitted according to such SEC rules and regulations. However, management believes that the disclosures included in these interim condensed consolidated financial statements are adequate to make the information presented not misleading. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . In the opinion of management, all normal and recurring adjustments necessary to present fairly the financial condition of the Company at June 30, 2018 and results of operations for all periods presented have been made. The results of operations for the three and six months ended June 30, 2018 should not be construed as indicative of the results to be expected for future periods or the full year. The condensed consolidated financial statements of the Company include the accounts of all subsidiaries; inter-company accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation. All entities in which the Company holds investments that are considered VIEs for financial reporting purposes were reviewed for consolidation under the applicable consolidation guidance. Whenever the Company has both the power to direct the activities of an entity that most significantly impact the entity’s performance, and the obligation to absorb losses or the right to receive benefits of the entity that could be significant, the Company consolidates the entity. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make a number of significant estimates. These include estimates of fair value of certain assets and liabilities, amount and timing of allowances for loan losses and impairments and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that changes in these estimates ( e.g. , valuation changes to the underlying collateral of loans due to changes in capitalization rates, leasing, credit worthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders, overall economic conditions, the broader commercial real estate market, local geographic sub-markets or other factors) will occur in the near term. The Company’s estimates are inherently subjective in nature and actual results could differ from its estimates and the differences may be material. |
Formation Transaction | Formation Transaction On June 28, 2017, the Company completed the Formation Transaction, through which the Company acquired the equity interests in the Predecessor from Two Harbors. In accordance with Accounting Standards Codification (ASC) 805, Business Combinations , the Predecessor is considered the acquiring or surviving entity, meaning the historical assets and liabilities of TH Commercial Holdings LLC included in the condensed consolidated balance sheets are recorded at the Predecessor’s historical carryover cost basis. As a result of the Formation Transaction, the Company is considered a continuation of the Predecessor’s business operations and its historical results of operations and cash flows are included in the Company’s condensed consolidated financial statements. In consideration for the contribution, Two Harbors received 33,071,000 shares of the Company’s common stock and 1,000 shares of cumulative redeemable preferred stock with an aggregate liquidation preference of $1,000 per share. |
Securitized Debt Obligations | Securitized Debt Obligations In the second quarter of 2018, the Company financed a pool of its commercial real estate loans through a collateralized loan obligation, or CLO, retaining the subordinate securities in its investment portfolio. The securitization was accounted for as a “financing” and consolidated on the Company’s condensed consolidated financial statements. The securitized debt obligations not retained by the Company, which are nonrecourse to the Company beyond the assets held in the CLO, are recorded at outstanding principal balance, net of any unamortized deferred debt issuance costs, on the Company’s condensed consolidated balance sheets. |
Offsetting Assets and Liabilities | Offsetting Assets and Liabilities Certain of the Company’s repurchase agreements are governed by underlying agreements that provide for a right of setoff in the event of default of either party to the agreement. Under certain of these agreements, the Company and the counterparty may be required to post cash collateral based upon the net underlying market value of the Company’s open positions with the counterparty. Under U.S. GAAP, if the Company has a valid right of setoff, it may offset the related asset and liability and report the net amount. The Company presents repurchase agreements subject to master netting arrangements or similar agreements on a gross basis. Regardless of whether or not the Company pledges or receives any cash collateral in accordance with its repurchase agreements, the Company does not offset financial assets and liabilities with the associated cash collateral on its condensed consolidated balance sheets. The following table presents information about the Company’s repurchase agreements that are subject to master netting arrangements or similar agreements and can potentially be offset on the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Gross amounts of repurchase agreements $ 1,019,009 $ 1,521,608 Gross amounts offset in the consolidated balance sheets — — Net amounts of repurchase agreements presented in the consolidated balance sheets 1,019,009 1,521,608 Gross amounts not offset against repurchase agreements in the consolidated balance sheets (1) : Financial instruments (1,019,009 ) (1,521,608 ) Cash collateral received (pledged) — — Net amount $ — $ — ____________________ (1) Amounts presented are limited in total to the net amount of liabilities presented in the condensed consolidated balance sheets by instrument. Excess cash collateral or financial assets that are pledged to counterparties may exceed the financial liabilities subject to a master netting arrangement or similar agreement. These excess amounts are excluded from the table above, although separately reported within restricted cash or due from counterparties in the Company’s condensed consolidated balance sheets. |
Recently Issued and/or Adopted Accounting Standards | Recently Issued and/or Adopted Accounting Standards Under the Jumpstart Our Business Startups Act, or the JOBS Act, the Company meets the definition of an “emerging growth company.” The Company has irrevocably elected to opt out of the extended transition period for complying with new or revised U.S. accounting standards pursuant to Section 107(b) of the JOBS Act. As a result, the Company will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU No. 2014-09, which is a comprehensive revenue recognition standard that supersedes virtually all existing revenue guidance under U.S. GAAP. The standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. As a result of the issuance of ASU No. 2015-14 in August 2015 deferring the effective date of ASU No. 2014-09 by one year, the ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2017, with early adoption prohibited. The Company has evaluated the new guidance and determined that interest income and gains and losses on financial instruments are outside the scope of ASC 606, Revenues from Contracts with Customers . As a result, the adoption of this ASU did not have a material impact on the Company’s financial condition, results of operations or financial statement disclosures. Lease Classification and Accounting In February 2016, the FASB issued ASU No. 2016-02, which requires lessees to recognize on their balance sheets both a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2018, with early adoption permitted. The Company has determined this ASU will not have a material impact on the Company’s financial condition, results of operations or financial statement disclosures. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU No. 2016-13, which changes the impairment model for most financial assets and certain other instruments. Allowances for credit losses on available-for-sale, or AFS, and held-to-maturity, or HTM, debt securities will be recognized, rather than direct reductions in the amortized cost of the investments. The new model also requires the estimation of lifetime expected credit losses and corresponding recognition of allowance for losses on trade and other receivables, HTM debt securities, loans, and other instruments held at amortized cost. The ASU requires certain recurring disclosures and is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2019, with early adoption permitted for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2018. The Company is evaluating the adoption of this ASU to determine the impact it may have on its condensed consolidated financial statements, which at the date of adoption, is expected to increase the allowance for credit losses with a resulting negative adjustment to retained earnings. Accounting for Share-Based Payments to Nonemployees In June 2018, the FASB issued ASU No. 2018-07 to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Under the guidance, equity-classified nonemployee awards will be measured on and fixed at the grant date, rather than measured at fair value at each reporting date until the date at which the nonemployee’s performance is complete. The ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2018, with early adoption permitted. The Company is evaluating the adoption of this ASU to determine the impact it may have on its condensed consolidated financial statements. |
Basis of Presentation and Sig28
Basis of Presentation and Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
Offsetting Liabilities | The following table presents information about the Company’s repurchase agreements that are subject to master netting arrangements or similar agreements and can potentially be offset on the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Gross amounts of repurchase agreements $ 1,019,009 $ 1,521,608 Gross amounts offset in the consolidated balance sheets — — Net amounts of repurchase agreements presented in the consolidated balance sheets 1,019,009 1,521,608 Gross amounts not offset against repurchase agreements in the consolidated balance sheets (1) : Financial instruments (1,019,009 ) (1,521,608 ) Cash collateral received (pledged) — — Net amount $ — $ — ____________________ (1) Amounts presented are limited in total to the net amount of liabilities presented in the condensed consolidated balance sheets by instrument. Excess cash collateral or financial assets that are pledged to counterparties may exceed the financial liabilities subject to a master netting arrangement or similar agreement. These excess amounts are excluded from the table above, although separately reported within restricted cash or due from counterparties in the Company’s condensed consolidated balance sheets. |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Variable Interest Entities [Abstract] | |
Schedule of Variable Interest Entities | The following table presents a summary of the assets and liabilities of all variable interest entities consolidated on the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Loans held-for-investment $ 808,908 $ 45,890 Restricted cash 10,478 — Accrued interest receivable 2,404 178 Other assets 5,208 — Total Assets $ 826,998 $ 46,068 Securitized debt obligations $ 652,107 $ — Accrued interest payable 617 — Total Liabilities $ 652,724 $ — |
Loans Held-for-Investment (Tabl
Loans Held-for-Investment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Loans Held-for-Investment [Abstract] | |
Schedule of Loans Held-for-Investment | The following tables summarize the Company’s loans held-for-investment by asset type, property type and geographic location as of June 30, 2018 and December 31, 2017 : June 30, (dollars in thousands) Senior Loans (1) Mezzanine Loans B-Notes Total Unpaid principal balance $ 2,458,616 $ 32,237 $ 14,749 $ 2,505,602 Unamortized (discount) premium (161 ) — — (161 ) Unamortized net deferred origination fees (21,835 ) — — (21,835 ) Carrying value $ 2,436,620 $ 32,237 $ 14,749 $ 2,483,606 Unfunded commitments $ 377,470 $ — $ — $ 377,470 Number of loans 66 3 1 70 Weighted average coupon 6.3 % 11.0 % 8.0 % 6.4 % Weighted average years to maturity (2) 2.2 1.9 8.6 2.2 December 31, (dollars in thousands) Senior Loans (1) Mezzanine Loans B-Notes Total Unpaid principal balance $ 2,220,361 $ 88,945 $ 14,845 $ 2,324,151 Unamortized (discount) premium (169 ) (9 ) — (178 ) Unamortized net deferred origination fees (19,752 ) 45 — (19,707 ) Carrying value $ 2,200,440 $ 88,981 $ 14,845 $ 2,304,266 Unfunded commitments $ 337,623 $ 1,580 $ — $ 339,203 Number of loans 53 5 1 59 Weighted average coupon 5.9 % 9.7 % 8.0 % 6.0 % Weighted average years to maturity (2) 2.3 2.0 9.1 2.4 ____________________ (1) Loans primarily secured by a first priority lien on commercial real property and related personal property and also includes, when applicable, any companion subordinate loans. (2) Based on contractual maturity date. Certain loans are subject to contractual extension options which may be subject to conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities in connection with loan modifications. |
Schedule of Loans Held-for-Investment by Property Type | (dollars in thousands) June 30, December 31, Property Type Carrying Value % of Loan Portfolio Carrying Value % of Loan Portfolio Office $ 1,293,952 52.1 % $ 1,223,642 53.1 % Multifamily 394,737 15.9 % 356,016 15.4 % Hotel 397,991 16.1 % 274,416 11.9 % Retail 179,902 7.2 % 254,786 11.1 % Industrial 217,024 8.7 % 195,406 8.5 % Total $ 2,483,606 100.0 % $ 2,304,266 100.0 % |
Schedule of Loans Held-for-Investment by Geographic Location | (dollars in thousands) June 30, December 31, Geographic Location Carrying Value % of Loan Portfolio Carrying Value % of Loan Portfolio Northeast $ 972,668 39.2 % $ 896,361 38.9 % West 526,145 21.2 % 509,088 22.1 % Southwest 556,092 22.4 % 454,088 19.7 % Southeast 328,834 13.2 % 346,623 15.0 % Midwest 99,867 4.0 % 98,106 4.3 % Total $ 2,483,606 100.0 % $ 2,304,266 100.0 % |
Rollforward of Loans Held-for-Investment | The following table summarizes activity related to loans held-for-investment for the three and six months ended June 30, 2018 and 2017 . Three Months Ended Six Months Ended (in thousands) 2018 2017 2018 2017 Balance at beginning of period $ 2,364,647 $ 1,502,966 $ 2,304,266 $ 1,364,291 Originations, acquisitions and additional fundings 445,944 238,664 602,130 378,048 Repayments (324,252 ) (296 ) (420,679 ) (1,490 ) Net discount accretion (premium amortization) 4 (18 ) 18 (17 ) Increase in net deferred origination fees (5,919 ) (3,771 ) (8,004 ) (5,710 ) Amortization of net deferred origination fees 3,182 1,708 5,875 4,131 Allowance for loan losses — — — — Balance at end of period $ 2,483,606 $ 1,739,253 $ 2,483,606 $ 1,739,253 |
Schedule of Loans Held-for-Investment by Internal Risk Rating | The following table presents the number of loans, unpaid principal balance and carrying value (amortized cost) by risk rating for loans held-for-investment as of June 30, 2018 and December 31, 2017 : (dollars in thousands) June 30, December 31, Risk Rating Number of Loans Unpaid Principal Balance Carrying Value Number of Loans Unpaid Principal Balance Carrying Value 1 9 $ 375,207 $ 373,869 6 $ 414,695 $ 413,314 2 58 2,053,105 2,032,599 50 1,840,638 1,822,134 3 3 77,290 77,138 3 68,818 68,818 4 — — — — — — 5 — — — — — — Total 70 $ 2,505,602 $ 2,483,606 59 $ 2,324,151 $ 2,304,266 |
Available-for-Sale Securities31
Available-for-Sale Securities, at Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Securities, Available-for-sale [Abstract] | |
Schedule of Available-for-sale Securities Reconciliation | The following table presents the face value and carrying value (which approximates fair value) of AFS securities as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Face value $ 12,798 $ 12,798 Gross unrealized gains — — Gross unrealized losses — — Carrying value $ 12,798 $ 12,798 |
Held-to-Maturity Securities (Ta
Held-to-Maturity Securities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Securities, Held-to-maturity, Fair Value to Amortized Cost [Abstract] | |
Held-to-maturity Securities | The following table presents the face value and carrying value of HTM securities by collateral type as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Face value $ 33,659 $ 42,169 Unamortized premium (discount) — — Carrying value $ 33,659 $ 42,169 |
Cash, Cash Equivalents and Re33
Cash, Cash Equivalents and Restricted Cash (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 that sum to the total of the same such amounts shown in the statements of cash flows: (in thousands) June 30, December 31, Cash and cash equivalents $ 92,264 $ 107,765 Restricted cash 16,498 2,953 Total cash, cash equivalents and restricted cash $ 108,762 $ 110,718 |
Accrued Interest Receivable (Ta
Accrued Interest Receivable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accrued Interest Receivable [Abstract] | |
Accrued Interest Receivable | The following table presents the Company’s accrued interest receivable by collateral type as of June 30, 2018 and December 31, 2017 : (in thousands) June 30, December 31, Loans held-for-investment $ 7,364 $ 6,880 Available-for-sale securities 51 51 Held-to-maturity securities 140 174 Total $ 7,555 $ 7,105 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Measurement Inputs, Disclosure | The following tables display the Company’s assets measured at fair value on a recurring basis. The Company does not hold any liabilities measured at fair value on its condensed consolidated balance sheets. Recurring Fair Value Measurements June 30, 2018 (in thousands) Level 1 Level 2 Level 3 Total Assets Available-for-sale securities $ — $ 12,798 $ — $ 12,798 Total assets $ — $ 12,798 $ — $ 12,798 Recurring Fair Value Measurements December 31, 2017 (in thousands) Level 1 Level 2 Level 3 Total Assets Available-for-sale securities $ — $ 12,798 $ — $ 12,798 Total assets $ — $ 12,798 $ — $ 12,798 |
Fair Value, by Balance Sheet Grouping | The following table presents the carrying values and estimated fair values of assets and liabilities that are required to be recorded or disclosed at fair value at June 30, 2018 and December 31, 2017 . June 30, 2018 December 31, 2017 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Assets Loans held-for-investment $ 2,483,606 $ 2,515,209 $ 2,304,266 $ 2,322,259 Available-for-sale securities $ 12,798 $ 12,798 $ 12,798 $ 12,798 Held-to-maturity securities $ 33,659 $ 34,120 $ 42,169 $ 42,797 Cash and cash equivalents $ 92,264 $ 92,264 $ 107,765 $ 107,765 Restricted cash $ 16,498 $ 16,498 $ 2,953 $ 2,953 Liabilities Repurchase agreements $ 1,019,009 $ 1,019,009 $ 1,521,608 $ 1,521,608 Securitized debt obligations $ 652,107 $ 661,254 $ — $ — Convertible senior notes $ 139,930 $ 146,869 $ 121,314 $ 125,750 |
Repurchase Agreements (Tables)
Repurchase Agreements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Repurchase Agreements [Abstract] | |
Schedule Of Repurchase Agreements By Term, Short Or Long | At June 30, 2018 and December 31, 2017 , the repurchase agreement balances were as follows: (in thousands) June 30, December 31, Short-term $ 522,991 $ 56,546 Long-term 496,018 1,465,062 Total $ 1,019,009 $ 1,521,608 |
Schedule of Repurchase Agreements by Maturity | At June 30, 2018 and December 31, 2017 , the repurchase agreements had the following characteristics and remaining maturities: June 30, 2018 December 31, 2017 Collateral Type Collateral Type (dollars in thousands) Loans CMBS (1) Total Amount Outstanding Loans CMBS (1) Total Amount Outstanding Within 30 days $ — $ — $ — $ 22,032 $ — $ 22,032 30 to 59 days — 30,959 30,959 — 34,514 34,514 60 to 89 days — — — — — — 90 to 119 days — — — — — — 120 to 364 days 492,032 — 492,032 — — — One year and over 496,018 — 496,018 1,465,062 — 1,465,062 Total $ 988,050 $ 30,959 $ 1,019,009 $ 1,487,094 $ 34,514 $ 1,521,608 Weighted average borrowing rate 4.36 % 4.63 % 4.36 % 3.78 % 3.77 % 3.78 % ____________________ (1) Includes both AFS securities and HTM securities sold under agreements to repurchase. |
Schedule of Underlying Assets of Repurchase Agreements when Amount of Repurchase Agreements Exceeds 10 Percent of Assets | The following table summarizes assets at carrying values that are pledged or restricted as collateral for the future payment obligations of repurchase agreements: (in thousands) June 30, December 31, Loans held-for-investment $ 1,475,080 $ 2,202,049 Available-for-sale securities, at fair value 12,798 12,798 Held-to-maturity securities 33,659 42,169 Restricted cash 2,922 565 Total $ 1,524,459 $ 2,257,581 |
Schedule of Repurchase Agreement Counterparties with Whom Repurchase Agreements Exceed 10 Percent of Stockholders' Equity | The following table summarizes certain characteristics of the Company’s repurchase agreements and counterparty concentration at June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 (dollars in thousands) Amount Outstanding Net Counterparty Exposure (1) Percent of Equity Weighted Average Years to Maturity Amount Outstanding Net Counterparty Exposure (1) Percent of Equity Weighted Average Years to Maturity Morgan Stanley Bank $ 368,315 $ 178,015 22 % 2.00 $ 425,539 $ 250,543 30 % 2.49 JPMorgan Chase Bank 287,511 170,104 21 % 0.90 285,457 215,068 26 % 1.32 Goldman Sachs Bank 190,902 70,502 9 % 0.84 252,734 86,091 10 % 1.33 Wells Fargo Bank 44,578 43,006 5 % 0.99 424,882 128,644 16 % 1.49 All other counterparties (2) 127,703 44,923 5 % 2.00 132,996 59,645 7 % 2.08 Total $ 1,019,009 $ 506,550 $ 1,521,608 $ 739,991 ____________________ (1) Represents the net carrying value of the loans held-for-investment, AFS securities and HTM securities sold under agreements to repurchase, including accrued interest plus any cash on deposit to secure the repurchase obligation, less the amount of the repurchase liability, including accrued interest. (2) Represents amounts outstanding with one other counterparty as of both June 30, 2018 and December 31, 2017 . |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Rollforward of Common Stock | As of June 30, 2018 , the Company had 43,456,234 shares of common stock outstanding. The following table presents a reconciliation of the common shares outstanding for the six months ended June 30, 2018 and 2017 : Number of common shares Common shares outstanding, December 31, 2016 — Issuance of common stock 43,071,000 Issuance of restricted stock (1) 163,205 Common shares outstanding, June 30, 2017 43,234,205 Common shares outstanding, December 31, 2017 43,235,103 Issuance of restricted stock (1) 221,131 Common shares outstanding, June 30, 2018 43,456,234 ____________________ (1) Represents shares of restricted stock granted under the 2017 Equity Incentive Plan, of which 321,134 restricted shares remained subject to vesting requirements at June 30, 2018 . |
Schedule of Dividends Declared | The following table presents cash dividends declared by the Company on its common stock since its IPO and Formation Transaction: Declaration Date Record Date Payment Date Cash Dividend Per Share June 20, 2018 July 2, 2018 July 18, 2018 $ 0.40 March 15, 2018 March 29, 2018 April 18, 2018 $ 0.38 December 18, 2017 December 29, 2017 January 18, 2018 $ 0.38 September 18, 2017 September 29, 2017 October 18, 2017 $ 0.32 |
Schedule of Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income at June 30, 2018 and December 31, 2017 was as follows: (in thousands) June 30, December 31, Available-for-sale securities Unrealized gains $ — $ — Unrealized losses — — Accumulated other comprehensive income $ — $ — |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The following table summarizes the activity related to restricted common stock for the six months ended June 30, 2018 and 2017 : Six Months Ended June 30, 2018 2017 Shares Weighted Average Grant Date Fair Market Value Shares Weighted Average Grant Date Fair Market Value Outstanding at Beginning of Period 150,000 $ 19.50 — $ — Granted 221,131 17.38 163,205 19.50 Vested (49,997 ) (19.50 ) (13,205 ) (19.50 ) Forfeited — — — — Outstanding at End of Period 321,134 $ 18.04 150,000 $ 19.50 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The following table summarizes the tax provision recorded at the taxable subsidiary level for the three and six months ended June 30, 2018 and 2017 : Three Months Ended Six Months Ended (in thousands) 2018 2017 2018 2017 Current tax (benefit) provision: Federal $ — $ (1 ) $ (1 ) $ (3 ) State — (1 ) 2 2 Total current tax (benefit) provision — (2 ) 1 (1 ) Deferred tax benefit (2 ) — (2 ) — Total benefit from income taxes $ (2 ) $ (2 ) $ (1 ) $ (1 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents a reconciliation of the earnings and shares used in calculating basic and diluted earnings per share for the three and six months ended June 30, 2018 and 2017 : Three Months Ended Six Months Ended June 30, June 30, (in thousands, except share data) 2018 2017 2018 2017 Numerator: Net income attributable to common stockholders - basic $ 15,202 $ 169 $ 29,763 $ 169 Interest expense attributable to convertible notes (1) 2,198 — 4,369 — Net income attributable to common stockholders - diluted $ 17,400 $ 169 $ 34,132 $ 169 Denominator: Weighted average common shares outstanding 43,090,048 43,084,205 43,087,589 43,084,205 Weighted average restricted stock shares 356,915 150,000 323,207 150,000 Basic weighted average shares outstanding 43,446,963 43,234,205 43,410,796 43,234,205 Effect of dilutive shares issued in an assumed conversion of the convertible senior notes 7,187,500 — 7,187,500 — Diluted weighted average shares outstanding 50,634,463 43,234,205 50,598,296 43,234,205 Earnings Per Share Basic $ 0.35 $ — $ 0.69 $ — Diluted $ 0.34 $ — $ 0.67 $ — ____________________ (1) Includes a nondiscretionary adjustment for the assumed change in the management fee calculation. |
Organization and Operations (De
Organization and Operations (Details) - shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Jun. 28, 2017 | |
Class of Stock [Line Items] | |||
Ownership percentage by Two Harbors Investment Corp. | 76.50% | ||
Preferred stock dividend rate | 10.00% | ||
Common Stock [Member] | |||
Class of Stock [Line Items] | |||
Number of shares issued in exchange for acquisition of TH Commercial Holdings LLC (in shares) | 33,071,000 | ||
Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Number of shares issued in exchange for acquisition of TH Commercial Holdings LLC (in shares) | 1,000 |
Organization and Operations Two
Organization and Operations Two Harbors Investment Corp. Special Dividend (Details) | Nov. 01, 2017shares |
Organization and Operations [Abstract] | |
Number of shares of the company's common stock distributed by Two Harbors Investment Corp. to its stockholders via special dividend (in shares) | 33,071,000 |
Basis of Presentation and Sig43
Basis of Presentation and Significant Accounting Policies Formation Transaction (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Jun. 30, 2018 | |
Class of Stock [Line Items] | ||
Preferred stock liquidation preference (in usd per share) | $ 1,000 | |
Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Number of shares issued in exchange for acquisition of TH Commercial Holdings LLC (in shares) | 33,071,000 | |
Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Number of shares issued in exchange for acquisition of TH Commercial Holdings LLC (in shares) | 1,000 |
Basis of Presentation and Sig44
Basis of Presentation and Significant Accounting Policies Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Basis of Presentation and Significant Accounting Policies [Abstract] | ||
Gross amount of recognized repurchase agreements | $ 1,019,009 | $ 1,521,608 |
Gross amount of financial assets offset against repurchase agreements in the balance sheet | 0 | 0 |
Repurchase agreements | 1,019,009 | 1,521,608 |
Gross amount of financial assets not offset against repurchase agreements in the balance sheet | (1,019,009) | (1,521,608) |
Gross amount of cash collateral pledged not offset against repurchase agreements in the balance sheet | 0 | 0 |
Net amount of repurchase agreements after effects of amounts offset and not offset in the balance sheet | $ 0 | $ 0 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Variable Interest Entity [Line Items] | ||
Assets of consolidated Variable Interest Entities | $ 826,998 | $ 46,068 |
Liabilities of consolidated Variable Interest Entities | 652,724 | 0 |
Assets of nonconsolidated Variable Interest Entities | 46,457 | 54,967 |
Maximum exposure to loss of nonconsolidated Variable Interest Entities | 46,457 | 54,967 |
Loans Held-for-Investment [Member] | ||
Variable Interest Entity [Line Items] | ||
Assets of consolidated Variable Interest Entities | 808,908 | 45,890 |
Restricted Cash [Member] | ||
Variable Interest Entity [Line Items] | ||
Assets of consolidated Variable Interest Entities | 10,478 | 0 |
Accrued Interest Receivable [Member] | ||
Variable Interest Entity [Line Items] | ||
Assets of consolidated Variable Interest Entities | 2,404 | 178 |
Other Assets [Member] | ||
Variable Interest Entity [Line Items] | ||
Assets of consolidated Variable Interest Entities | 5,208 | 0 |
Assets, Total [Member] | ||
Variable Interest Entity [Line Items] | ||
Assets of consolidated Variable Interest Entities | 826,998 | 46,068 |
Securitized Debt Obligations [Member] | ||
Variable Interest Entity [Line Items] | ||
Liabilities of consolidated Variable Interest Entities | 652,107 | 0 |
Accrued Interest Payable [Member] | ||
Variable Interest Entity [Line Items] | ||
Liabilities of consolidated Variable Interest Entities | 617 | 0 |
Liabilities, Total [Member] | ||
Variable Interest Entity [Line Items] | ||
Liabilities of consolidated Variable Interest Entities | $ 652,724 | $ 0 |
Loans Held-for-Investment (Deta
Loans Held-for-Investment (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018USD ($)loan | Dec. 31, 2017USD ($)loan | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid principal balance | $ 2,505,602 | $ 2,324,151 |
Unamortized (discount) premium | (161) | (178) |
Unamortized net deferred origination fees | (21,835) | (19,707) |
Loans held-for-investment | 2,483,606 | 2,304,266 |
Unfunded commitments | $ 377,470 | $ 339,203 |
Number of loans | loan | 70 | 59 |
Weighted average coupon | 6.40% | 6.00% |
Weighted average years to maturity | 2 years 2 months 12 days | 2 years 4 months 15 days |
First Mortgage [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid principal balance | $ 2,458,616 | $ 2,220,361 |
Unamortized (discount) premium | (161) | (169) |
Unamortized net deferred origination fees | (21,835) | (19,752) |
Loans held-for-investment | 2,436,620 | 2,200,440 |
Unfunded commitments | $ 377,470 | $ 337,623 |
Number of loans | loan | 66 | 53 |
Weighted average coupon | 6.30% | 5.90% |
Weighted average years to maturity | 2 years 2 months 12 days | 2 years 4 months 4 days |
Second Mortgage [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid principal balance | $ 32,237 | $ 88,945 |
Unamortized (discount) premium | 0 | (9) |
Unamortized net deferred origination fees | 0 | 45 |
Loans held-for-investment | 32,237 | 88,981 |
Unfunded commitments | $ 0 | $ 1,580 |
Number of loans | loan | 3 | 5 |
Weighted average coupon | 11.00% | 9.70% |
Weighted average years to maturity | 1 year 10 months 24 days | 2 years 12 days |
Junior Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid principal balance | $ 14,749 | $ 14,845 |
Unamortized (discount) premium | 0 | 0 |
Unamortized net deferred origination fees | 0 | 0 |
Loans held-for-investment | 14,749 | 14,845 |
Unfunded commitments | $ 0 | $ 0 |
Number of loans | loan | 1 | 1 |
Weighted average coupon | 8.00% | 8.00% |
Weighted average years to maturity | 8 years 7 months 6 days | 9 years 1 month 4 days |
Loans Held-for-Investment by Pr
Loans Held-for-Investment by Property Type (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 2,483,606 | $ 2,304,266 |
Percentage of total loans held-for-investment | 100.00% | 100.00% |
Office Building [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 1,293,952 | $ 1,223,642 |
Percentage of total loans held-for-investment | 52.10% | 53.10% |
Multifamily [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 394,737 | $ 356,016 |
Percentage of total loans held-for-investment | 15.90% | 15.40% |
Hotel [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 397,991 | $ 274,416 |
Percentage of total loans held-for-investment | 16.10% | 11.90% |
Retail Site [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 179,902 | $ 254,786 |
Percentage of total loans held-for-investment | 7.20% | 11.10% |
Industrial Property [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 217,024 | $ 195,406 |
Percentage of total loans held-for-investment | 8.70% | 8.50% |
Loans Held-for-Investment by Ge
Loans Held-for-Investment by Geographic Location (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 2,483,606 | $ 2,304,266 |
Percentage of total loans held-for-investment | 100.00% | 100.00% |
United States, Northeastern Region [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 972,668 | $ 896,361 |
Percentage of total loans held-for-investment | 39.20% | 38.90% |
United States, Western Region [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 526,145 | $ 509,088 |
Percentage of total loans held-for-investment | 21.20% | 22.10% |
United States, Southwestern Region [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 556,092 | $ 454,088 |
Percentage of total loans held-for-investment | 22.40% | 19.70% |
United States, Southeastern Region [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 328,834 | $ 346,623 |
Percentage of total loans held-for-investment | 13.20% | 15.00% |
United States, Midwestern Region [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held-for-investment | $ 99,867 | $ 98,106 |
Percentage of total loans held-for-investment | 4.00% | 4.30% |
Rollforward of Loans Held-for-I
Rollforward of Loans Held-for-Investment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Loans Held-for-Investment [Abstract] | |||||
Loans held-for-investment pledged as collateral for borrowings | $ 2,283,987 | $ 2,283,987 | $ 2,202,049 | ||
Loans Held-for-Investment [Roll Forward] | |||||
Loans held-for-investment at beginning of period | 2,364,647 | $ 1,502,966 | 2,304,266 | $ 1,364,291 | |
Originations, acquisitions and additional fundings | 445,944 | 238,664 | 602,130 | 378,048 | |
Repayments | (324,252) | (296) | (420,679) | (1,490) | |
Net discount accretion (premium amortization) | 4 | (18) | 18 | (17) | |
Increase in net deferred origination fees | (5,919) | (3,771) | (8,004) | (5,710) | |
Accretion of discounts and net deferred fees on loans held-for-investment | 3,182 | 1,708 | 5,875 | 4,131 | |
Allowance for loan losses | 0 | 0 | 0 | 0 | |
Loans held-for-investment at end of period | $ 2,483,606 | $ 1,739,253 | $ 2,483,606 | $ 1,739,253 |
Loans Held-for-Investment by In
Loans Held-for-Investment by Internal Risk Rating (Details) $ in Thousands | Jun. 30, 2018USD ($)loan | Dec. 31, 2017USD ($)loan |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of loans | loan | 70 | 59 |
Unpaid principal balance | $ 2,505,602 | $ 2,324,151 |
Loans held-for-investment | $ 2,483,606 | $ 2,304,266 |
Risk Rating 1 [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of loans | loan | 9 | 6 |
Unpaid principal balance | $ 375,207 | $ 414,695 |
Loans held-for-investment | $ 373,869 | $ 413,314 |
Risk Rating 2 [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of loans | loan | 58 | 50 |
Unpaid principal balance | $ 2,053,105 | $ 1,840,638 |
Loans held-for-investment | $ 2,032,599 | $ 1,822,134 |
Risk Rating 3 [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of loans | loan | 3 | 3 |
Unpaid principal balance | $ 77,290 | $ 68,818 |
Loans held-for-investment | $ 77,138 | $ 68,818 |
Risk Rating 4 [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of loans | loan | 0 | 0 |
Unpaid principal balance | $ 0 | $ 0 |
Loans held-for-investment | $ 0 | $ 0 |
Risk Rating 5 [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of loans | loan | 0 | 0 |
Unpaid principal balance | $ 0 | $ 0 |
Loans held-for-investment | $ 0 | $ 0 |
Schedule of Available-for-sale
Schedule of Available-for-sale Securities Reconciliation (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Abstract] | ||
Face value | $ 12,798 | $ 12,798 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 0 | 0 |
Available-for-sale securities, at fair value | 12,798 | 12,798 |
Available-for-sale securities pledged as collateral for borrowings | $ 12,798 | $ 12,798 |
Held-to-Maturity Securities (De
Held-to-Maturity Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Held-to-maturity, Fair Value to Amortized Cost [Abstract] | ||
Held-to-Maturity Securities, Face Value | $ 33,659 | $ 42,169 |
Held-to-Maturity Securities, Unamortized Premium (Discount) | 0 | 0 |
Held-to-maturity securities | 33,659 | 42,169 |
Held-to-maturity securities pledged as collateral for borrowings | $ 33,659 | $ 42,169 |
Schedule of Total Cash, Cash Eq
Schedule of Total Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||
Cash collateral for repurchase agreements and securities activity | $ 6,000 | $ 3,000 | ||
Cash reserved for future funding obligations | 10,478 | |||
Cash and cash equivalents | 92,264 | 107,765 | ||
Restricted cash | 16,498 | 2,953 | ||
Cash, cash equivalents and restricted cash | $ 108,762 | $ 110,718 | $ 251,475 | $ 56,279 |
Accrued Interest Receivable (De
Accrued Interest Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accrued interest receivable | $ 7,555 | $ 7,105 |
Loans Held-for-Investment [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accrued interest receivable | 7,364 | 6,880 |
Available-for-sale Securities [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accrued interest receivable | 51 | 51 |
Held-to-maturity Securities [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accrued interest receivable | $ 140 | $ 174 |
Fair Value, Measurement Inputs,
Fair Value, Measurement Inputs, Disclosure (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, at fair value | $ 12,798 | $ 12,798 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, at fair value | 12,798 | 12,798 |
Total assets | 12,798 | 12,798 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, at fair value | 0 | 0 |
Total assets | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, at fair value | 12,798 | 12,798 |
Total assets | 12,798 | 12,798 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, at fair value | 0 | 0 |
Total assets | $ 0 | $ 0 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Repurchase agreements | $ 1,019,009 | $ 1,521,608 |
Maturity Over One Year [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Repurchase agreements | $ 496,018 | $ 1,465,062 |
Fair Value by Balance Sheet Gro
Fair Value by Balance Sheet Grouping (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Loans held-for-investment | $ 2,483,606 | $ 2,304,266 |
Loans held-for-investment, at fair value | 2,515,209 | 2,322,259 |
Available-for-sale securities, at fair value | 12,798 | 12,798 |
Held-to-maturity securities | 33,659 | 42,169 |
Held-to-maturity securities, at fair value | 34,120 | 42,797 |
Cash and cash equivalents | 92,264 | 107,765 |
Restricted cash | 16,498 | 2,953 |
Repurchase agreements | 1,019,009 | 1,521,608 |
Securitized debt obligations | 652,107 | 0 |
Securitized debt obligations, at fair value | 661,254 | 0 |
Convertible senior notes | 139,930 | 121,314 |
Convertible senior notes, at fair value | $ 146,869 | $ 125,750 |
Repurchase Agreements (Details)
Repurchase Agreements (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Disclosure of Repurchase Agreements [Abstract] | ||
Repurchase agreements | $ 1,019,009 | $ 1,521,608 |
Weighted average borrowing rate | 4.36% | 3.783% |
Weighted average remaining maturity | 1 year 5 months 5 days | 1 year 9 months 6 days |
Schedule of Repurchase Agreemen
Schedule of Repurchase Agreements by Term, Short or Long (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | $ 1,019,009 | $ 1,521,608 |
Maturity up to One Year [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 522,991 | 56,546 |
Maturity Over One Year [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | $ 496,018 | $ 1,465,062 |
Schedule of Repurchase Agreem60
Schedule of Repurchase Agreements by Maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | $ 1,019,009 | $ 1,521,608 |
Weighted average borrowing rate | 4.36% | 3.783% |
Loans Held-for-Investment [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | $ 988,050 | $ 1,487,094 |
Weighted average borrowing rate | 4.36% | 3.784% |
Commercial Mortgage Backed Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | $ 30,959 | $ 34,514 |
Weighted average borrowing rate | 4.63% | 3.774% |
Maturity up to 30 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | $ 0 | $ 22,032 |
Maturity up to 30 days [Member] | Loans Held-for-Investment [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 22,032 |
Maturity up to 30 days [Member] | Commercial Mortgage Backed Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity 30 to 59 Days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 30,959 | 34,514 |
Maturity 30 to 59 Days [Member] | Loans Held-for-Investment [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity 30 to 59 Days [Member] | Commercial Mortgage Backed Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 30,959 | 34,514 |
Maturity 60 to 89 Days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity 60 to 89 Days [Member] | Loans Held-for-Investment [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity 60 to 89 Days [Member] | Commercial Mortgage Backed Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity 90 to 119 Days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity 90 to 119 Days [Member] | Loans Held-for-Investment [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity 90 to 119 Days [Member] | Commercial Mortgage Backed Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity 120 to 364 days [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 492,032 | 0 |
Maturity 120 to 364 days [Member] | Loans Held-for-Investment [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 492,032 | 0 |
Maturity 120 to 364 days [Member] | Commercial Mortgage Backed Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 0 | 0 |
Maturity Over One Year [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 496,018 | 1,465,062 |
Maturity Over One Year [Member] | Loans Held-for-Investment [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | 496,018 | 1,465,062 |
Maturity Over One Year [Member] | Commercial Mortgage Backed Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreements | $ 0 | $ 0 |
Schedule of Underlying Assets o
Schedule of Underlying Assets of Repurchase Agreements when Amount of Repurchase Agreements Exceeds 10 Percent of Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets pledged or restricted as collateral for repurchase agreements | $ 1,524,459 | $ 2,257,581 |
Loans Held-for-Investment [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets pledged or restricted as collateral for repurchase agreements | 1,475,080 | 2,202,049 |
Available-for-sale Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets pledged or restricted as collateral for repurchase agreements | 12,798 | 12,798 |
Held-to-maturity Securities [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets pledged or restricted as collateral for repurchase agreements | 33,659 | 42,169 |
Restricted Cash [Member] | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Assets pledged or restricted as collateral for repurchase agreements | $ 2,922 | $ 565 |
Schedule of Repurchase Agreem62
Schedule of Repurchase Agreement Counterparties with Whom Repurchase Agreements Exceed 10 Percent of Stockholders' Equity (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Repurchase Agreement Counterparty [Line Items] | ||
Repurchase agreements | $ 1,019,009 | $ 1,521,608 |
Net counterparty exposure | $ 506,550 | $ 739,991 |
Weighted average years to maturity | 1 year 5 months 5 days | 1 year 9 months 6 days |
Repurchase Agreement Counterparty, Morgan Stanley Bank [Member] | ||
Repurchase Agreement Counterparty [Line Items] | ||
Repurchase agreements | $ 368,315 | $ 425,539 |
Net counterparty exposure | $ 178,015 | $ 250,543 |
Percent of equity | 22.00% | 30.00% |
Weighted average years to maturity | 2 years | 2 years 5 months 28 days |
Repurchase Agreement Counterparty, JPMorgan Chase Bank [Member] | ||
Repurchase Agreement Counterparty [Line Items] | ||
Repurchase agreements | $ 287,511 | $ 285,457 |
Net counterparty exposure | $ 170,104 | $ 215,068 |
Percent of equity | 21.00% | 26.00% |
Weighted average years to maturity | 10 months 24 days | 1 year 3 months 27 days |
Repurchase Agreement Counterparty, Goldman Sachs Bank [Member] | ||
Repurchase Agreement Counterparty [Line Items] | ||
Repurchase agreements | $ 190,902 | $ 252,734 |
Net counterparty exposure | $ 70,502 | $ 86,091 |
Percent of equity | 9.00% | 10.00% |
Weighted average years to maturity | 10 months 2 days | 1 year 4 months |
Repurchase Agreement Counterparty, Wells Fargo Bank [Member] | ||
Repurchase Agreement Counterparty [Line Items] | ||
Repurchase agreements | $ 44,578 | $ 424,882 |
Net counterparty exposure | $ 43,006 | $ 128,644 |
Percent of equity | 5.00% | 16.00% |
Weighted average years to maturity | 11 months 27 days | 1 year 5 months 27 days |
Repurchase Agreement Counterparty, All Other Counterparties [Member] | ||
Repurchase Agreement Counterparty [Line Items] | ||
Repurchase agreements | $ 127,703 | $ 132,996 |
Net counterparty exposure | $ 44,923 | $ 59,645 |
Percent of equity | 5.00% | 7.00% |
Weighted average years to maturity | 2 years | 2 years 1 month |
Number of repurchase agreement counterparties with whom amount at risk is less than 10 percent of equity | 1 | 1 |
Securitized Debt Obligations (D
Securitized Debt Obligations (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Securitized Debt Obligations [Abstract] | ||
Securitized debt obligations | $ 652,107 | $ 0 |
Weighted average interest rate of securitized debt obligations outstanding | 3.20% | |
Weighted average remaining maturity of securitized debt obligations outstanding | 2 years 2 months 25 days |
Convertible Senior Notes (Detai
Convertible Senior Notes (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument, Redemption [Line Items] | ||
Proceeds from convertible senior notes | $ 139,522 | |
Convertible senior notes maturity date | Dec. 1, 2022 | |
Convertible senior notes conversion ratio | 0.05 | |
Convertible senior notes | $ 139,930 | $ 121,314 |
Convertible Debt [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Convertible senior notes interest rate per annum | 5.625% | |
Convertible Debt [Member] | Private Placement [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Convertible senior notes aggregate principal amount | $ 125,000 | |
Convertible Debt [Member] | Over-Allotment Option [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Convertible senior notes aggregate principal amount | $ 18,750 |
Commitments and Contingencies M
Commitments and Contingencies Management Agreement (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Percent per annum of equity used to calculate management fees | 1.50% |
Incentive fee calculation, core earnings multiplication factor | 20.00% |
Incentive fee calculation, rolling period | 12 months |
Incentive fee calculation, equity multiplication factor | 8.00% |
Incentive fee calculation, period incentive fee paid | 9 months |
Incentive fee, rolling period for threshold | 3 years |
Incentive fee, threshold amount of core earnings | $ 0 |
Management agreement, renewal term | 1 year |
Management agreement, termination fee factor | 3 |
Management agreement, termination fee period | 24 months |
Commitments and Contingencies U
Commitments and Contingencies Unfunded Commitments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Commitments and Contingencies Disclosure [Abstract] | ||
Unfunded commitments | $ 377,470 | $ 339,203 |
Preferred Stock (Details)
Preferred Stock (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Class of Stock [Line Items] | |||
Preferred stock dividend rate | 10.00% | ||
Preferred stock liquidation preference (in usd per share) | $ 1,000 | $ 1,000 | |
Period after which the company may redeem preferred stock | 5 years | ||
Preferred stock, redemption price per share (in usd per share) | $ 1,000 | $ 1,000 | |
Period after which the holder may redeem preferred stock | 6 years | ||
Preferred dividends declared | $ 25,000 | $ 50,000 | |
Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Number of shares issued in exchange for acquisition of TH Commercial Holdings LLC (in shares) | 1,000 |
Stockholders' Equity Common Sto
Stockholders' Equity Common Stock Rollforward (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 01, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Jun. 28, 2017 | Dec. 31, 2016 |
Class of Stock [Line Items] | ||||||
Common stock issued during period (in shares) | 43,071,000 | |||||
Price per share of common stock issued during the period (in usd per share) | $ 19.50 | |||||
Gross proceeds from issuance of common stock | $ 195,000 | |||||
Proceeds from issuance of common stock, net of offering costs | $ 0 | $ 181,875 | ||||
Issuance costs incurred in common stock offering | $ 13,125 | |||||
Number of shares of the company's common stock distributed by Two Harbors Investment Corp. to its stockholders via special dividend (in shares) | 33,071,000 | |||||
Increase (Decrease) in Common Stock Outstanding [Roll Forward] | ||||||
Common shares outstanding at beginning of period (in shares) | 43,235,103 | 0 | 0 | |||
Common stock issued during period (in shares) | 43,071,000 | |||||
Restricted stock issued during period (in shares) | 221,131 | 163,205 | ||||
Common shares outstanding at end of period (in shares) | 43,456,234 | 43,234,205 | 43,235,103 | |||
Number of nonvested restricted common shares outstanding (in shares) | 321,134 | 150,000 | 150,000 | 0 | ||
Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued in exchange for acquisition of TH Commercial Holdings LLC (in shares) | 33,071,000 | |||||
Increase (Decrease) in Common Stock Outstanding [Roll Forward] | ||||||
Common shares outstanding at end of period (in shares) | 43,456,234 | |||||
IPO [Member] | ||||||
Class of Stock [Line Items] | ||||||
Proceeds from issuance of common stock, net of offering costs | $ 181,875 | |||||
IPO [Member] | Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Common stock issued during period (in shares) | 10,000,000 | |||||
Increase (Decrease) in Common Stock Outstanding [Roll Forward] | ||||||
Common stock issued during period (in shares) | 10,000,000 |
Stockholders' Equity Schedule o
Stockholders' Equity Schedule of Common Dividends Declared (Details) - $ / shares | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Class of Stock [Line Items] | |||||||
Dividends declared per common share (in usd per share) | $ 0.4 | $ 0 | $ 0.78 | $ 0 | |||
Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Declaration Date | Jun. 20, 2018 | Mar. 15, 2018 | Dec. 18, 2017 | Sep. 18, 2017 | |||
Record Date | Jul. 2, 2018 | Mar. 29, 2018 | Dec. 29, 2017 | Sep. 29, 2017 | |||
Payment Date | Jul. 18, 2018 | Apr. 18, 2018 | Jan. 18, 2018 | Oct. 18, 2017 | |||
Dividends declared per common share (in usd per share) | $ 0.4 | $ 0.38 | $ 0.38 | $ 0.32 |
Stockholders' Equity Schedule70
Stockholders' Equity Schedule of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Stockholders' Equity Attributable to Parent [Abstract] | ||
Unrealized gains | $ 0 | $ 0 |
Unrealized losses | 0 | 0 |
Accumulated other comprehensive income | $ 0 | $ 0 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of restricted common shares reserved for issuance under equity incentive plan (in shares) | 3,242,306 | |
Number of restricted common shares granted during period under equity incentive plan (in shares) | 221,131 | 163,205 |
Weighted average grant date fair value of restricted common shares granted during period under equity incentive plan (in usd per share) | $ 17.38 | $ 19.50 |
Director [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of restricted common shares granted during period under equity incentive plan (in shares) | 19,175 | 13,205 |
Weighted average grant date fair value of restricted common shares granted during period under equity incentive plan (in usd per share) | $ 17.86 | $ 19.50 |
Key Employees [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of restricted common shares granted during period under equity incentive plan (in shares) | 201,956 | 150,000 |
Weighted average grant date fair value of restricted common shares granted during period under equity incentive plan (in usd per share) | $ 17.33 | $ 19.50 |
Common stock share price (in usd per share) | $ 18.35 | |
Award vesting period of restricted common shares granted during period under equity incentive plan | 3 years |
Schedule of Share-based Compens
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Number of nonvested restricted common shares outstanding at beginning of period (in shares) | 150,000 | 0 | ||
Weighted average grant date fair value of nonvested restricted common shares outstanding at beginning of period (in usd per share) | $ 19.50 | $ 0 | ||
Number of restricted common shares granted during period under equity incentive plan (in shares) | 221,131 | 163,205 | ||
Weighted average grant date fair value of restricted common shares granted during period under equity incentive plan (in usd per share) | $ 17.38 | $ 19.50 | ||
Number of restricted common shares vested during period (in shares) | (49,997) | (13,205) | ||
Weighted average grant date fair value of restricted common shares vested during period (in usd per share) | $ (19.50) | $ (19.50) | ||
Number of restricted common shares forfeited during period (in shares) | 0 | 0 | ||
Weighted average grant date fair value of restricted common shares forfeited during period (in usd per share) | $ 0 | $ 0 | ||
Number of nonvested restricted common shares outstanding at end of period (in shares) | 321,134 | 150,000 | 321,134 | 150,000 |
Weighted average grant date fair value of nonvested restricted common shares outstanding at end of period (in usd per share) | $ 18.04 | $ 19.50 | $ 18.04 | $ 19.50 |
Equity based compensation | $ 1,202 | $ 0 | $ 1,867 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Federal income tax rate applicable to corporations | 21.00% | 35.00% | |||
Percentage of REIT taxable income the company currently intends to distribute | 100.00% | 100.00% | |||
Current federal tax benefit | $ 0 | $ (1) | $ (1) | $ (3) | |
Current state tax provision | 0 | (1) | 2 | 2 | |
Total current tax (benefit) provision | 0 | (2) | 1 | (1) | |
Deferred tax benefit | (2) | 0 | (2) | 0 | |
Benefit from income taxes | $ (2) | $ (2) | $ (1) | $ (1) |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to common stockholders - basic | $ 15,202 | $ 169 | $ 29,763 | $ 169 |
Interest expense attributable to convertible notes | 2,198 | 0 | 4,369 | 0 |
Net income attributable to common stockholders - diluted | $ 17,400 | $ 169 | $ 34,132 | $ 169 |
Weighted average common shares outstanding (in shares) | 43,090,048 | 43,084,205 | 43,087,589 | 43,084,205 |
Weighted average restricted stock shares (in shares) | 356,915 | 150,000 | 323,207 | 150,000 |
Basic weighted average shares outstanding (in shares) | 43,446,963 | 43,234,205 | 43,410,796 | 43,234,205 |
Effect of dilutive shares issued in an assumed conversion of the convertible senior notes (in shares) | 7,187,500 | 0 | 7,187,500 | 0 |
Diluted weighted average shares outstanding (in shares) | 50,634,463 | 43,234,205 | 50,598,296 | 43,234,205 |
Basic earnings per weighted average common share (in usd per share) | $ 0.35 | $ 0 | $ 0.69 | $ 0 |
Diluted earnings per weighted average common share (in usd per share) | $ 0.34 | $ 0 | $ 0.67 | $ 0 |
Schedule of Related Party Trans
Schedule of Related Party Transactions, by Related Party (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Related Party Transaction [Line Items] | ||||
Percent per annum of equity used to calculate management fees | 1.50% | |||
Management fees | $ 3,114 | $ 1,925 | $ 6,323 | $ 3,587 |
Equity based compensation | 1,202 | 0 | $ 1,867 | 0 |
Pine River Capital Management L.P. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percent per annum of equity used to calculate management fees | 1.50% | |||
Management fees | 3,114 | 104 | $ 6,323 | $ 104 |
Direct and allocated costs incurred by manager | $ 1,429 | $ 2,800 | ||
PRCM Advisers LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percent per annum of equity used to calculate management fees | 1.50% | |||
Management fees | 1,821 | $ 3,483 | ||
Direct and allocated costs incurred by manager | $ 1,900 | $ 4,173 |