Annual report pursuant to Section 13 and 15(d)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

v3.6.0.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Dec. 31, 2016
Accounting Policies [Abstract]  
Schedule of accumulated other comprehensive income
The following table summarizes Drive Shack Inc.’s accumulated other comprehensive income:
 
December 31,
 
2016
 
2015
Net unrealized gain on securities
$
1,168

 
$
33,277

Net unrealized gain (loss) on derivatives designated as cash flow hedges

 
20

Accumulated other comprehensive income
$
1,168

 
$
33,297

Schedule of realized/unrealized (gain) loss on investments and other income (loss), net
Realized/Unrealized (Gain) Loss on Investments and Other Income (Loss), NetThese items are comprised of the following:
 
Year Ended December 31,
 
2016
 
2015
 
2014
(Gain) on settlement of real estate securities
$
(19,129
)
 
$
(42,356
)
 
$
(23,679
)
Loss on settlement of real estate securities
16,178

 
9,850

 

Unrealized loss on securities, intent-to-sell
23,128

 

 

Realized (gain) loss on settlement of TBAs, net
(18,318
)
 
12,907

 
4,151

(Gain) loss on repayment/disposition of loans held-for-sale
48

 
(1,519
)
 
(32,500
)
Loss recognized on termination of derivative instruments

 
612

 

Unrealized (gain) on non-hedge derivative instruments
(1,222
)
 
(1,758
)
 
(17,599
)
Realized loss recognized upon de-designation of hedges

 

 
34

Realized/unrealized (gain) loss on investments
$
685

 
$
(22,264
)
 
$
(69,593
)
 
 
 
 
 
 
Gain (loss) on lease modifications and terminations
$
(62
)
 
$
471

 
$
7,219

Collateral management fee income, net
592

 
708

 
963

Equity in earnings (losses) of equity method investees, net
(1,338
)
 
(6,194
)
 
954

(Loss) on disposal of long-lived assets
(22
)
 
(1,403
)
 
(1,294
)
Other income (loss)
(2,244
)
 
844

 
437

Other income (loss), net
$
(3,074
)
 
$
(5,574
)
 
$
8,279

Schedule of reclassification from accumulated other comprehensive income into net income
The following table summarizes the amounts reclassified out of accumulated other comprehensive income into net income:
 
 
 
 
Year Ended December 31,
Accumulated Other Comprehensive
Income (“AOCI”) Components
 
Income Statement
Location
 
2016
 
2015
 
2014
Net realized (gain) loss on securities
 
 
 
 
 
 
 
 
Impairment (reversal)
 
Impairment (reversal)
 
$
54

 
$
(31
)
 
$

(Gain) on settlement of real estate securities
 
Realized/unrealized (gain) loss on investments
 
(19,129
)
 
(42,356
)
 
(23,679
)
Loss on settlement of real estate securities
 
Realized/unrealized (gain) loss on investments
 
16,178

 
9,850

 

Realized (gain) on deconsolidation of CDO VI
 
Gain on deconsolidation
 
(20,682
)
 

 

Unrealized loss on real estate securities, intent-to-sell, reclassified from AOCI into income
 
Realized/unrealized (gain) loss on investments
 
23,128

 

 

 
 
 
 
$
(451
)
 
$
(32,537
)
 
$
(23,679
)
 
 
 
 
 
 
 
 
 
Net realized (gain) loss on derivatives designated as cash flow hedges
 
 
 
 
 
 
 
 
Realized loss recognized upon de-designation of hedges
 
Realized/unrealized (gain) loss on investments
 
$

 
$

 
$
34

Loss recognized on termination of derivative instruments
 
Realized/unrealized (gain) loss on investments
 

 
612

 

Amortization of deferred hedge (gain)
 
Interest expense
 
(20
)
 
(78
)
 
(61
)
Loss reclassified from AOCI into income, related to effective portion
 
Interest expense
 

 
1,363

 
4,379

 
 
 
 
$
(20
)
 
$
1,897

 
$
4,352

 
 
 
 
 
 
 
 
 
Total reclassifications
 
 
 
$
(471
)
 
$
(30,640
)
 
$
(19,327
)
 
 
 
 
 
 
 
 
 
Schedule of useful lives of property, plant, and equipment
Depreciation is calculated using the straight-line method based on the following estimated useful lives:
Buildings and improvements
10-30 years
Capital leases - equipment
3-7 years
Furniture, fixtures, and equipment
3-7 years


Schedule of amortization period
Amortization of all intangible assets is calculated using the straight-line method based on the following estimated useful lives:
Trade name
30 years
Leasehold intangibles
1 - 26 years
Management contracts
1 - 26 years
Internally-developed software
5 years
Membership base
7 years


Schedule of consolidated VIE
The following table presents certain assets of consolidated VIEs which are included in the Consolidated Balance Sheets and there were no such assets as of December 31, 2016. The assets in the table below include only those assets that can be used to settle obligations of consolidated VIEs, and are equal to or in excess of those obligations. Additionally, the assets in the table below exclude intercompany balances that eliminate in consolidation.
 
 
December 31, 2015
Assets of consolidated VIEs that can only be used to settle obligations of consolidated VIEs
 
 
Real estate securities, available-for-sale
 
$
46,392

Subprime mortgage loans subject to call option
 
380,806

Restricted cash
 
128

Receivables and other assets
 
77

Total assets of consolidated VIEs that can only be used to settle obligations of consolidated VIEs
 
$
427,403

The following table presents certain liabilities of consolidated VIEs which are included in the Consolidated Balance Sheets and there were no such liabilities as of December 31, 2016. The liabilities in the table below include third-party liabilities of consolidated VIEs due to third parties only, and exclude intercompany balances that eliminate in consolidation. The liabilities also exclude amounts where creditors or beneficial interest holders have recourse to the general credit of Drive Shack Inc.
 
 
December 31, 2015
Liabilities of consolidated VIEs for which creditors or beneficial interest holders do not have recourse to the general credit of Drive Shack Inc.
 
 
CDO bonds payable
 
$
92,933

Other bonds and notes payable
 
4,672

Financing of subprime mortgage loans subject to call option
 
380,806

Accounts payable, accrued expenses and other liabilities
 
29

Total liabilities of consolidated VIEs for which creditors or beneficial interest holders do not have recourse to the general credit of Drive Shack Inc.
 
$
478,440

Schedule of restricted cash from continuing operations
Substantially all amounts on deposit with major financial institutions exceed insured limits. Restricted cash consisted of:
 
December 31,
 
2016
 
2015
CDO bond sinking funds
$

 
$
51

CDO trustee accounts
192

 
272

Derivative margin accounts

 
887

Restricted cash for construction-in-progress
2,267

 
2,784

Other restricted cash - traditional golf
3,945

 
475

 
$
6,404

 
$
4,469

Schedule of supplemental non-cash investing and financing activities relating to CDOs
Reduction of assets and liabilities relating to spin-offs and acquisitions that are non-cash are disclosed below (there were no such reductions for the years ended December 31, 2016 and 2015):
 
 
Year Ended December 31, 2014
Reduction of Assets and Liabilities relating to the spin-off of New Media and New Senior, non-cash portion
 
 
Investments in senior housing real estate, net
 
$
1,574,048

Property, plant and equipment, net
 
$
266,385

Goodwill and intangibles, net
 
$
379,008

Restricted cash
 
$
6,477

Receivables and other assets
 
$
197,882

Mortgage notes payable
 
$
1,260,633

Credit facilities - media
 
$
177,955

Accrued expenses and other liabilities
 
$
189,940


Supplemental non-cash investing and financing activities relating to CDOs are disclosed below:
 
Year Ended December 31,
 
2016
 
2015
 
2014
Restricted cash generated from sale of securities
$

 
$
139,257

 
$
125,850

Restricted cash generated from sale of loans
$

 
$
55,574

 
$

Restricted cash generated from pay downs on securities and loans
$
2,310

 
$
78,853

 
$
325,932

Restricted cash used for repayments of CDO and other bonds payable
$
2,748

 
$
148,966

 
$
382,177

CDO VI deconsolidation:
 
 
 
 
 
Real estate securities
$
43,889

 
$

 
$

Restricted cash
$
67

 
$

 
$

CDO and other bonds payable
$
105,423

 
$

 
$

Schedule of receivables and other assets
Receivables and other assets are comprised of the following, net of allowances for doubtful accounts of $1.1 million and $1.0 million, as of December 31, 2016 and 2015:
 
December 31,
 
2016
 
2015
Accounts receivable, net
$
8,047

 
$
9,889

Prepaid expenses
3,654

 
3,205

Interest receivable
1,697

 
1,142

Deposits
4,105

 
7,437

Inventory
4,496

 
5,057

Derivative assets
856

 
127

Residential mortgage loans, held-for-sale, net
231

 
532

Miscellaneous assets, net (A)
14,931

 
11,157

 
$
38,017

 
$
38,546

(A)
Includes one owned property in Annandale, New Jersey in the Traditional Golf segment classified as held-for-sale as of December 31, 2016. The Company recorded an impairment of $3.6 million based on our estimated selling price. We expect to close on this property within the next 12 months.
Schedule of accounts payable, accrued expenses and other liabilities
Accounts payable, accrued expenses and other liabilities are comprised of the following:
 
December 31,
 
2016
 
2015
Accounts payable and accrued expenses
$
26,249

 
$
26,966

Deferred revenue
36,107

 
33,926

Security deposits payable
6,073

 
5,975

Unfavorable leasehold interests
4,225

 
5,485

Derivative liabilities

 
684

Accrued rent
2,613

 
3,135

Due to affiliates
892

 
892

Miscellaneous liabilities
12,278

 
11,876

 
$
88,437

 
$
88,939

Schedule of accretion of discount and other amortization
Amortization of Discount and Premium and Other Amortization As reflected in the Consolidated Statements of Cash Flows, these items are comprised of the following:
 
Year Ended December 31,
 
2016
 
2015
 
2014
Accretion of net discount on securities, loans and other investments
$
(7,926
)
 
$
(5,802
)
 
$
(28,638
)
Amortization of net discount on debt obligations and deferred financing costs
1,501

 
3,325

 
14,217

Amortization of net deferred hedge gains debt
(20
)
 
(78
)
 
(61
)
Amortization of discount and premium
$
(6,445
)
 
$
(2,555
)
 
$
(14,482
)
 
 
 
 
 
 
Amortization of leasehold intangibles
$
4,451

 
$
4,942

 
$
5,000

Accretion of membership deposit liability
5,803

 
5,840

 
5,663

Other amortization
$
10,254

 
$
10,782

 
$
10,663