stwd_Current folio_10Q

Table of Contents 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2018

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 001-34436

 


 

Starwood Property Trust, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

Maryland

 

27-0247747

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

591 West Putnam Avenue

 

 

Greenwich, Connecticut

 

06830

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:

(203) 422-7700


 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

 

 

Large accelerated filer ☒

 

Accelerated filer ☐

Non-accelerated filer ☐

 

Smaller reporting company ☐

(Do not check if a smaller reporting company)

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The number of shares of the issuer’s common stock, $0.01 par value, outstanding as of August 2, 2018 was 267,071,096.

 

 

 

 

 


 

Table of Contents 

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains certain forward-looking statements, including without limitation, statements concerning our operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words “believe,” “expect,” “anticipate” and other similar expressions. Forward-looking statements do not guarantee future performance, which may be materially different from that expressed in, or implied by, any such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates.

 

These forward-looking statements are based largely on our current beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors that may cause actual results to vary from our forward-looking statements include, but are not limited to:

 

·

factors described in our Annual Report on Form 10-K for the year ended December 31, 2017, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and this Quarterly Report on Form 10-Q, including those set forth under the captions “Risk Factors” and “Business”;

 

·

defaults by borrowers in paying debt service on outstanding indebtedness;

 

·

impairment in the value of real estate property securing our loans or in which we invest;

 

·

availability of mortgage origination and acquisition opportunities acceptable to us;

 

·

potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements;

 

·

national and local economic and business conditions;

 

·

general and local commercial and residential real estate property conditions;

 

·

changes in federal government policies;

 

·

changes in federal, state and local governmental laws and regulations;

 

·

increased competition from entities engaged in mortgage lending and securities investing activities;

 

·

changes in interest rates; and

 

·

the availability of, and costs associated with, sources of liquidity.

 

In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.

2


 

Table of Contents 

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

Part I 

Financial Information

 

Item 1. 

Financial Statements

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statements of Comprehensive Income

6

 

Condensed Consolidated Statements of Equity

7

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Condensed Consolidated Financial Statements

10

 

Note 1 Business and Organization

10

 

Note 2 Summary of Significant Accounting Policies

11

 

Note 3 Acquisitions and Divestitures

17

 

Note 4 Loans

19

 

Note 5 Investment Securities

24

 

Note 6 Properties

28

 

Note 7 Investment in Unconsolidated Entities

30

 

Note 8 Goodwill and Intangibles

31

 

Note 9 Secured Financing Agreements

33

 

Note 10 Unsecured Senior Notes

36

 

Note 11 Loan Securitization/Sale Activities

38

 

Note 12 Derivatives and Hedging Activity

39

 

Note 13 Offsetting Assets and Liabilities

41

 

Note 14 Variable Interest Entities

41

 

Note 15 Related-Party Transactions

43

 

Note 16 Stockholders’ Equity and Non-Controlling Interests

45

 

Note 17 Earnings per Share

47

 

Note 18 Accumulated Other Comprehensive Income

48

 

Note 19 Fair Value

49

 

Note 20 Income Taxes

54

 

Note 21 Commitments and Contingencies

54

 

Note 22 Segment Data

54

 

Note 23 Subsequent Events

61

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

62

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

92

Item 4. 

Controls and Procedures

95

Part II 

Other Information

 

Item 1. 

Legal Proceedings

96

Item 1A. 

Risk Factors

96

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

96

Item 3. 

Defaults Upon Senior Securities

96

Item 4. 

Mine Safety Disclosures

96

Item 5. 

Other Information

96

Item 6. 

Exhibits

97

 

 

 

3


 

Table of Contents 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

    

June 30, 2018

    

December 31, 2017

Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

235,419

 

$

369,448

Restricted cash

 

 

89,794

 

 

48,825

Loans held-for-investment, net

 

 

6,928,176

 

 

6,562,495

Loans held-for-sale, at fair value

 

 

1,092,769

 

 

745,743

Loans transferred as secured borrowings

 

 

74,217

 

 

74,403

Investment securities ($301,259 and $284,735 held at fair value)

 

 

441,935

 

 

718,203

Properties, net

 

 

2,936,684

 

 

2,647,481

Intangible assets ($22,742 and $30,759 held at fair value)

 

 

166,686

 

 

183,092

Investment in unconsolidated entities

 

 

166,716

 

 

185,503

Goodwill

 

 

140,437

 

 

140,437

Derivative assets

 

 

50,815

 

 

33,898

Accrued interest receivable

 

 

54,660

 

 

47,747

Other assets

 

 

177,578

 

 

138,140

Variable interest entity (“VIE”) assets, at fair value

 

 

48,044,873

 

 

51,045,874

Total Assets 

 

$

60,600,759

 

$

62,941,289

Liabilities and Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable, accrued expenses and other liabilities

 

$

189,673

 

$

185,117

Related-party payable

 

 

25,324

 

 

42,369

Dividends payable

 

 

126,857

 

 

125,916

Derivative liabilities

 

 

36,135

 

 

36,200

Secured financing agreements, net

 

 

6,216,617

 

 

5,773,056

Unsecured senior notes, net

 

 

2,255,976

 

 

2,125,235

Secured borrowings on transferred loans, net

 

 

74,058

 

 

74,185

VIE liabilities, at fair value

 

 

46,976,428

 

 

50,000,010

Total Liabilities 

 

 

55,901,068

 

 

58,362,088

Commitments and contingencies (Note 21)

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Starwood Property Trust, Inc. Stockholders’ Equity:

 

 

 

 

 

 

Preferred stock, $0.01 per share, 100,000,000 shares authorized, no shares issued and outstanding

 

 

 —

 

 

 —

Common stock, $0.01 per share, 500,000,000 shares authorized, 267,541,825 issued and 262,361,685 outstanding as of June 30, 2018 and 265,983,309  issued and 261,376,424 outstanding as of December 31, 2017

 

 

2,675

 

 

2,660

Additional paid-in capital

 

 

4,738,969

 

 

4,715,246

Treasury stock (5,180,140 shares and 4,606,885 shares)

 

 

(104,194)

 

 

(92,104)

Accumulated other comprehensive income

 

 

68,134

 

 

69,924

Accumulated deficit

 

 

(260,762)

 

 

(217,312)

Total Starwood Property Trust, Inc. Stockholders’ Equity

 

 

4,444,822

 

 

4,478,414

Non-controlling interests in consolidated subsidiaries

 

 

254,869

 

 

100,787

Total Equity 

 

 

4,699,691

 

 

4,579,201

Total Liabilities and Equity 

 

$

60,600,759

 

$

62,941,289

 

See notes to condensed consolidated financial statements.

4


 

Table of Contents 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Operations

(Unaudited, amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

June 30,

 

June 30,

 

    

2018

    

2017

    

2018

    

2017

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income from loans

 

$

151,704

 

$

120,612

 

$

289,324

 

$

232,495

Interest income from investment securities

 

 

10,790

 

 

12,370

 

 

26,059

 

 

27,594

Servicing fees

 

 

17,315

 

 

18,628

 

 

43,382

 

 

32,730

Rental income

 

 

88,891

 

 

58,966

 

 

170,001

 

 

116,008

Other revenues

 

 

856

 

 

993

 

 

1,377

 

 

1,462

Total revenues 

 

 

269,556

 

 

211,569

 

 

530,143

 

 

410,289

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 

27,494

 

 

24,633

 

 

58,136

 

 

49,017

Interest expense

 

 

91,592

 

 

71,317

 

 

178,775

 

 

137,177

General and administrative

 

 

35,528

 

 

32,520

 

 

67,670

 

 

62,949

Acquisition and investment pursuit costs

 

 

1,561

 

 

537

 

 

1,938

 

 

1,208

Costs of rental operations

 

 

32,897

 

 

23,024

 

 

62,590

 

 

43,902

Depreciation and amortization

 

 

37,150

 

 

22,032

 

 

68,894

 

 

44,260

Loan loss allowance, net

 

 

25,259

 

 

(2,694)

 

 

26,797

 

 

(2,999)

Other expense

 

 

497

 

 

142

 

 

601

 

 

900

Total costs and expenses 

 

 

251,978

 

 

171,511

 

 

465,401

 

 

336,414

Income before other income (loss), income taxes and non-controlling interests

 

 

17,578

 

 

40,058

 

 

64,742

 

 

73,875

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Change in net assets related to consolidated VIEs

 

 

43,946

 

 

77,761

 

 

96,599

 

 

146,931

Change in fair value of servicing rights

 

 

(2,203)

 

 

(8,001)

 

 

(8,017)

 

 

(16,434)

Change in fair value of investment securities, net

 

 

7,702

 

 

(2,493)

 

 

7,553

 

 

(3,664)

Change in fair value of mortgage loans held-for-sale, net

 

 

14,833

 

 

15,406

 

 

22,633

 

 

25,999

Earnings from unconsolidated entities

 

 

5,470

 

 

29,465

 

 

4,008

 

 

32,452

Gain on sale of investments and other assets, net

 

 

13,437

 

 

5,183

 

 

24,097

 

 

5,127

Gain (loss) on derivative financial instruments, net

 

 

32,622

 

 

(37,586)

 

 

15,763

 

 

(41,935)

Foreign currency (loss) gain, net

 

 

(13,264)

 

 

12,910

 

 

285

 

 

17,774

Total other-than-temporary impairment (“OTTI”)

 

 

 —

 

 

(109)

 

 

 —

 

 

(109)

Noncredit portion of OTTI recognized in other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Net impairment losses recognized in earnings

 

 

 —

 

 

(109)

 

 

 —

 

 

(109)

Loss on extinguishment of debt

 

 

(186)

 

 

 —

 

 

(186)

 

 

(5,916)

Other income, net

 

 

498

 

 

91

 

 

606

 

 

456

Total other income

 

 

102,855

 

 

92,627

 

 

163,341

 

 

160,681

Income before income taxes

 

 

120,433

 

 

132,685

 

 

228,083

 

 

234,556

Income tax provision

 

 

(3,343)

 

 

(9,452)

 

 

(6,199)

 

 

(8,469)

Net income 

 

 

117,090

 

 

123,233

 

 

221,884

 

 

226,087

Net income attributable to non-controlling interests

 

 

(7,860)

 

 

(5,853)

 

 

(12,722)

 

 

(6,349)

Net income attributable to Starwood Property Trust, Inc.  

 

$

109,230

 

$

117,380

 

$

209,162

 

$

219,738

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share data attributable to Starwood Property Trust, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.41

 

$

0.45

 

$

0.80

 

$

0.84

Diluted

 

$

0.40

 

$

0.44

 

$

0.77

 

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.48

 

$

0.48

 

$

0.96

 

$

0.96

 

See notes to condensed consolidated financial statements.

 

 

5


 

Table of Contents 

 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

For the Three Months Ended

    

For the Six Months Ended

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

2018

 

2017

Net income 

 

$

117,090

 

$

123,233

 

$

221,884

 

$

226,087

Other comprehensive income (net change by component):

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

 

(23)

 

 

 2

 

 

(18)

 

 

78

Available-for-sale securities

 

 

1,023

 

 

4,907

 

 

2,186

 

 

6,753

Foreign currency translation

 

 

(8,176)

 

 

11,005

 

 

(3,958)

 

 

13,012

Other comprehensive income

 

 

(7,176)

 

 

15,914

 

 

(1,790)

 

 

19,843

Comprehensive income 

 

 

109,914

 

 

139,147

 

 

220,094

 

 

245,930

Less: Comprehensive income attributable to non-controlling interests

 

 

(7,860)

 

 

(5,853)

 

 

(12,722)

 

 

(6,349)

Comprehensive income attributable to Starwood Property Trust, Inc.  

 

$

102,054

 

$

133,294

 

$

207,372

 

$

239,581

 

See notes to condensed consolidated financial statements.

 

 

6


 

Table of Contents 

 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Equity

(Unaudited, amounts in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Starwood

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

Property

 

 

 

 

 

 

 

 

 

Common stock

 

Additional

 

 

 

 

 

 

 

 

Other

 

Trust, Inc.

 

Non-

 

 

 

 

 

 

 

 

Par

 

Paid-in

 

Treasury Stock

 

Accumulated

 

Comprehensive

 

Stockholders’

 

Controlling

 

Total

 

 

    

Shares

    

Value

    

Capital

    

Shares

    

Amount

    

Deficit

    

Income

    

Equity

    

Interests

    

Equity

 

Balance, January 1, 2018

 

265,983,309

 

$

2,660

 

$

4,715,246

 

4,606,885

 

$

(92,104)

 

$

(217,312)

 

$

69,924

 

$

4,478,414

 

$

100,787

 

$

4,579,201

 

Proceeds from DRIP Plan

 

14,982

 

 

 —

 

 

314

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

314

 

 

 —

 

 

314

 

Equity offering costs

 

 —

 

 

 —

 

 

(17)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(17)

 

 

 —

 

 

(17)

 

Common stock repurchased

 

 —

 

 

 —

 

 

 —

 

573,255

 

 

(12,090)

 

 

 —

 

 

 —

 

 

(12,090)

 

 

 —

 

 

(12,090)

 

Share-based compensation

 

773,822

 

 

 8

 

 

10,597

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

10,605

 

 

 —

 

 

10,605

 

Manager incentive fee paid in stock

 

769,712

 

 

 7

 

 

15,791

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

15,798

 

 

 —

 

 

15,798

 

Net income

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

209,162

 

 

 —

 

 

209,162

 

 

12,722

 

 

221,884

 

Dividends declared, $0.96 per share

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 

 

 

(252,612)

 

 

 —

 

 

(252,612)

 

 

 —

 

 

(252,612)

 

Other comprehensive income, net

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(1,790)

 

 

(1,790)

 

 

 —

 

 

(1,790)

 

VIE non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

976

 

 

976

 

Contributions from non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

375,292

 

 

375,292

 

Distributions to non-controlling interests

 

 —

 

 

 —

 

 

(2,962)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(2,962)

 

 

(234,589)

 

 

(237,551)

 

Sale of controlling interest in majority owned property asset

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(319)

 

 

(319)

 

Balance, June 30, 2018

 

267,541,825

 

$

2,675

 

$

4,738,969

 

5,180,140

 

$

(104,194)

 

$

(260,762)

 

$

68,134

 

$

4,444,822

 

$

254,869

 

$

4,699,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2017

 

263,893,806

 

$

2,639

 

$

4,691,180

 

4,606,885

 

$

(92,104)

 

$

(115,579)

 

$

36,138

 

$

4,522,274

 

$

37,799

 

$

4,560,073

 

Proceeds from DRIP Plan

 

16,407

 

 

 —

 

 

369

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

369

 

 

 —

 

 

369

 

Equity offering costs

 

 —

 

 

 —

 

 

(12)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(12)

 

 

 —

 

 

(12)

 

Equity component of 2023 Convertible Senior Notes issuance

 

 —

 

 

 —

 

 

3,755

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

3,755

 

 

 —

 

 

3,755

 

Equity component of 2018 Convertible Senior Notes repurchase

 

 —

 

 

 —

 

 

(18,105)

 

 —

 

 

 —

 

 

 

 

 

 

 

 

(18,105)

 

 

 

 

 

(18,105)

 

Share-based compensation

 

709,462

 

 

 7

 

 

8,072

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

8,079

 

 

 —

 

 

8,079

 

Manager incentive fee paid in stock

 

541,494

 

 

 6

 

 

12,238

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

12,244

 

 

 —

 

 

12,244

 

Net income

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

219,738

 

 

 —

 

 

219,738

 

 

6,349

 

 

226,087

 

Dividends declared, $0.96 per share

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(251,022)

 

 

 —

 

 

(251,022)

 

 

 —

 

 

(251,022)

 

Other comprehensive income, net

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

19,843

 

 

19,843

 

 

 —

 

 

19,843

 

VIE non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

2,737

 

 

2,737

 

Distributions to non-controlling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(3,599)

 

 

(3,599)

 

Balance, June 30, 2017

 

265,161,169

 

$

2,652

 

$

4,697,497

 

4,606,885

 

$

(92,104)

 

$

(146,863)

 

$

55,981

 

$

4,517,163

 

$

43,286

 

$

4,560,449

 

 

See notes to condensed consolidated financial statements.

 

7


 

Table of Contents 

Starwood Property Trust, Inc. and Subsidiaries

 

Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

June 30,

 

    

2018

    

2017

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net income

 

$

221,884

 

$

226,087

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

Amortization of deferred financing costs, premiums and discounts on secured financing agreements and secured borrowings on transferred loans

 

 

11,498

 

 

9,324

Amortization of discounts and deferred financing costs on senior notes

 

 

6,835

 

 

11,777

Accretion of net discount on investment securities

 

 

(9,583)

 

 

(8,007)

Accretion of net deferred loan fees and discounts

 

 

(20,961)

 

 

(16,194)

Share-based compensation

 

 

10,605

 

 

8,079

Share-based component of incentive fees

 

 

15,798

 

 

12,244

Change in fair value of investment securities

 

 

(7,553)

 

 

3,664

Change in fair value of consolidated VIEs

 

 

(18,884)

 

 

(42,593)

Change in fair value of servicing rights

 

 

8,017

 

 

16,434

Change in fair value of loans held-for-sale

 

 

(22,633)

 

 

(25,999)

Change in fair value of derivatives

 

 

(13,432)

 

 

39,223

Foreign currency gain, net

 

 

(369)

 

 

(17,590)

Gain on sale of investments and other assets

 

 

(24,097)

 

 

(5,127)

Impairment charges on properties and related intangibles

 

 

412

 

 

867

Loan loss allowance, net

 

 

26,797

 

 

(2,999)

Depreciation and amortization

 

 

67,857

 

 

42,701

Earnings from unconsolidated entities

 

 

(4,008)

 

 

(32,452)

Distributions of earnings from unconsolidated entities

 

 

4,569

 

 

4,284

Loss on extinguishment of debt

 

 

186

 

 

5,916

Origination and purchase of loans held-for-sale, net of principal collections

 

 

(814,154)

 

 

(991,343)

Proceeds from sale of loans held-for-sale

 

 

481,765

 

 

470,478

Changes in operating assets and liabilities:

 

 

 

 

 

 

Related-party payable, net

 

 

(17,045)

 

 

(15,040)

Accrued and capitalized interest receivable, less purchased interest

 

 

(36,218)

 

 

(39,143)

Other assets

 

 

(15,038)

 

 

(2,391)

Accounts payable, accrued expenses and other liabilities

 

 

85

 

 

2,763

Net cash used in operating activities

 

 

(147,667)

 

 

(345,037)

Cash Flows from Investing Activities:

 

 

 

 

 

 

Origination and purchase of loans held-for-investment

 

 

(2,404,133)

 

 

(1,228,952)

Proceeds from principal collections on loans

 

 

1,840,897

 

 

869,297

Proceeds from loans sold

 

 

194,720

 

 

37,079

Purchase of investment securities

 

 

(20,465)

 

 

(7,433)

Proceeds from sales of investment securities

 

 

807

 

 

11,134

Proceeds from principal collections on investment securities

 

 

321,687

 

 

86,259

Proceeds from sales and insurance recoveries on properties

 

 

96,147

 

 

18,256

Purchases and additions to properties and other assets

 

 

(36,769)

 

 

(25,503)

Investment in unconsolidated entities

 

 

(3,060)

 

 

 —

Distribution of capital from unconsolidated entities

 

 

21,287

 

 

3,235

Payments for purchase or termination of derivatives

 

 

(17,373)

 

 

(39,755)

Proceeds from termination of derivatives

 

 

13,807

 

 

22,981

Return of investment basis in purchased derivative asset

 

 

 —

 

 

121

Net cash provided by (used in) investing activities

 

 

7,552

 

 

(253,281)

 

See notes to condensed consolidated financial statements.