| Schedule of segment reporting |
Summary financial data on Drive Shack Inc.’s segments is given below, together with reconciliation to the same data for Drive Shack Inc. as a whole:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Traditional Golf |
|
Entertainment Golf |
|
Debt Investments (A)(B) |
|
Corporate |
|
Total |
Year Ended December 31, 2016 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
Golf course operations |
$ |
226,255 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
226,255 |
|
Sales of food and beverages |
72,625 |
|
|
— |
|
|
— |
|
|
— |
|
|
72,625 |
|
Total revenues |
298,880 |
|
|
— |
|
|
— |
|
|
— |
|
|
298,880 |
|
Operating costs |
|
|
|
|
|
|
|
|
— |
|
Operating expenses (C) |
254,353 |
|
|
— |
|
|
— |
|
|
— |
|
|
254,353 |
|
Cost of sales - food and beverages |
21,593 |
|
|
— |
|
|
— |
|
|
— |
|
|
21,593 |
|
General and administrative expense |
2,708 |
|
|
12 |
|
|
93 |
|
|
6,675 |
|
|
9,488 |
|
General and administrative expense - acquisition and transaction expenses (D) |
1,594 |
|
|
1,555 |
|
|
— |
|
|
1,205 |
|
|
4,354 |
|
Management fee to affiliate |
— |
|
|
— |
|
|
— |
|
|
10,704 |
|
|
10,704 |
|
Depreciation and amortization |
26,496 |
|
|
— |
|
|
— |
|
|
— |
|
|
26,496 |
|
Impairment (reversal) |
6,232 |
|
|
— |
|
|
4,149 |
|
|
— |
|
|
10,381 |
|
Realized/unrealized (gain) loss on investments |
(294 |
) |
|
— |
|
|
979 |
|
|
— |
|
|
685 |
|
Total operating costs |
312,682 |
|
|
1,567 |
|
|
5,221 |
|
|
18,584 |
|
|
338,054 |
|
Operating loss |
(13,802 |
) |
|
(1,567 |
) |
|
(5,221 |
) |
|
(18,584 |
) |
|
(39,174 |
) |
Other income (expenses) |
|
|
|
|
|
|
|
|
— |
|
Interest and investment income |
134 |
|
|
— |
|
|
91,107 |
|
|
50 |
|
|
91,291 |
|
Interest expense |
(12,470 |
) |
|
— |
|
|
(38,112 |
) |
|
(2,286 |
) |
|
(52,868 |
) |
Loss on extinguishment of debt |
(780 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(780 |
) |
Gain on deconsolidation |
— |
|
|
— |
|
|
82,130 |
|
|
— |
|
|
82,130 |
|
Other loss, net |
(2,379 |
) |
|
— |
|
|
(695 |
) |
|
— |
|
|
(3,074 |
) |
Total other income (expenses) |
(15,495 |
) |
|
— |
|
|
134,430 |
|
|
(2,236 |
) |
|
116,699 |
|
Income tax expense |
188 |
|
|
1 |
|
|
— |
|
|
— |
|
|
189 |
|
Income (loss) from continuing operations |
(29,485 |
) |
|
(1,568 |
) |
|
129,209 |
|
|
(20,820 |
) |
|
77,336 |
|
Income from discontinued operations, net of tax |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Net income (loss) |
(29,485 |
) |
|
(1,568 |
) |
|
129,209 |
|
|
(20,820 |
) |
|
77,336 |
|
Preferred dividends |
— |
|
|
— |
|
|
— |
|
|
(5,580 |
) |
|
(5,580 |
) |
Net income attributable to noncontrolling interest |
(257 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(257 |
) |
Income (loss) applicable to common stockholders |
$ |
(29,742 |
) |
|
$ |
(1,568 |
) |
|
$ |
129,209 |
|
|
$ |
(26,400 |
) |
|
$ |
71,499 |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
Investments |
$ |
282,064 |
|
|
$ |
659 |
|
|
$ |
704,122 |
|
|
$ |
— |
|
|
$ |
986,845 |
|
Cash and restricted cash |
24,484 |
|
|
— |
|
|
192 |
|
|
121,868 |
|
|
146,544 |
|
Other assets |
34,487 |
|
|
766 |
|
|
3,219 |
|
|
97 |
|
|
38,569 |
|
Total assets |
341,035 |
|
|
1,425 |
|
|
707,533 |
|
|
121,965 |
|
|
1,171,958 |
|
Debt, net |
115,284 |
|
|
— |
|
|
600,964 |
|
|
51,217 |
|
|
767,465 |
|
Other liabilities |
170,718 |
|
|
1,116 |
|
|
2,293 |
|
|
12,299 |
|
|
186,426 |
|
Total liabilities |
286,002 |
|
|
1,116 |
|
|
603,257 |
|
|
63,516 |
|
|
953,891 |
|
Preferred stock |
— |
|
|
— |
|
|
— |
|
|
61,583 |
|
|
61,583 |
|
Noncontrolling interest |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Equity (deficit) attributable to common stockholders |
$ |
55,033 |
|
|
$ |
309 |
|
|
$ |
104,276 |
|
|
$ |
(3,134 |
) |
|
$ |
156,484 |
|
|
|
|
|
|
|
|
|
|
|
Additions to investments in real estate during the year ended December 31, 2016 |
$ |
11,912 |
|
|
$ |
659 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
12,571 |
|
Summary segment financial data (continued).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Traditional Golf |
|
Entertainment Golf |
|
Debt Investments (A)(B) |
|
Corporate |
|
Discontinued Operations |
|
Eliminations |
|
Total |
Year Ended December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf course operations |
$ |
224,419 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
224,419 |
|
Sales of food and beverages |
71,437 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
71,437 |
|
Total revenues |
295,856 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
295,856 |
|
Operating costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (C) |
254,553 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
254,553 |
|
Cost of sales - food and beverages |
22,549 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
22,549 |
|
General and administrative expense |
2,983 |
|
|
— |
|
|
291 |
|
|
7,640 |
|
|
— |
|
|
— |
|
|
10,914 |
|
General and administrative expense - acquisition and transaction expenses (D) |
1,364 |
|
|
— |
|
|
60 |
|
|
(301 |
) |
|
— |
|
|
— |
|
|
1,123 |
|
Management fee to affiliate |
— |
|
|
— |
|
|
— |
|
|
10,692 |
|
|
— |
|
|
— |
|
|
10,692 |
|
Depreciation and amortization |
28,682 |
|
|
— |
|
|
— |
|
|
(48 |
) |
|
— |
|
|
— |
|
|
28,634 |
|
Impairment (reversal) |
— |
|
|
— |
|
|
11,896 |
|
|
— |
|
|
— |
|
|
— |
|
|
11,896 |
|
Realized/unrealized (gain) loss on investments |
9 |
|
|
— |
|
|
(22,273 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(22,264 |
) |
Total operating costs |
310,140 |
|
|
— |
|
|
(10,026 |
) |
|
17,983 |
|
|
— |
|
|
— |
|
|
318,097 |
|
Operating income (loss) |
(14,284 |
) |
|
— |
|
|
10,026 |
|
|
(17,983 |
) |
|
— |
|
|
— |
|
|
(22,241 |
) |
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and investment income |
152 |
|
|
— |
|
|
98,721 |
|
|
23 |
|
|
— |
|
|
(3,005 |
) |
|
95,891 |
|
Interest expense |
(16,520 |
) |
|
— |
|
|
(44,831 |
) |
|
(3,783 |
) |
|
— |
|
|
3,005 |
|
|
(62,129 |
) |
Gain on extinguishment of debt |
14,818 |
|
|
— |
|
|
488 |
|
|
— |
|
|
— |
|
|
— |
|
|
15,306 |
|
Other income (loss), net |
(1,629 |
) |
|
— |
|
|
(3,999 |
) |
|
54 |
|
|
— |
|
|
— |
|
|
(5,574 |
) |
Inter-segment elimination |
3,005 |
|
|
— |
|
|
(3,005 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total other income (expenses) |
(174 |
) |
|
— |
|
|
47,374 |
|
|
(3,706 |
) |
|
— |
|
|
— |
|
|
43,494 |
|
Income tax expense |
345 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
345 |
|
Income (loss) from continuing operations |
(14,803 |
) |
|
— |
|
|
57,400 |
|
|
(21,689 |
) |
|
— |
|
|
— |
|
|
20,908 |
|
Income from discontinued operations, net of tax |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
646 |
|
|
— |
|
|
646 |
|
Net income (loss) |
(14,803 |
) |
|
— |
|
|
57,400 |
|
|
(21,689 |
) |
|
646 |
|
|
— |
|
|
21,554 |
|
Preferred dividends |
— |
|
|
— |
|
|
— |
|
|
(5,580 |
) |
|
— |
|
|
— |
|
|
(5,580 |
) |
Net loss attributable to noncontrolling interest |
293 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
293 |
|
Income (loss) applicable to common stockholders |
$ |
(14,510 |
) |
|
$ |
— |
|
|
$ |
57,400 |
|
|
$ |
(27,269 |
) |
|
$ |
646 |
|
|
$ |
— |
|
|
$ |
16,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments, net |
$ |
302,379 |
|
|
$ |
— |
|
|
$ |
715,596 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,017,975 |
|
Cash and restricted cash |
19,981 |
|
|
— |
|
|
1,210 |
|
|
28,929 |
|
|
— |
|
|
— |
|
|
50,120 |
|
Other assets |
33,765 |
|
|
— |
|
|
365,713 |
|
|
409 |
|
|
— |
|
|
— |
|
|
399,887 |
|
Total assets |
356,125 |
|
|
— |
|
|
1,082,519 |
|
|
29,338 |
|
|
— |
|
|
— |
|
|
1,467,982 |
|
Debt, net |
81,091 |
|
|
— |
|
|
838,526 |
|
|
51,225 |
|
|
— |
|
|
— |
|
|
970,842 |
|
Other liabilities |
166,973 |
|
|
— |
|
|
107,154 |
|
|
12,891 |
|
|
— |
|
|
— |
|
|
287,018 |
|
Total liabilities |
248,064 |
|
|
— |
|
|
945,680 |
|
|
64,116 |
|
|
— |
|
|
— |
|
|
1,257,860 |
|
Preferred stock |
— |
|
|
— |
|
|
— |
|
|
61,583 |
|
|
— |
|
|
— |
|
|
61,583 |
|
Noncontrolling interest |
(257 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(257 |
) |
Equity (deficit) attributable to common stockholders |
$ |
108,318 |
|
|
$ |
— |
|
|
$ |
136,839 |
|
|
$ |
(96,361 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
148,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to investment in real estate for the year ended December 31, 2015 |
$ |
7,637 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
7,637 |
|
Summary segment financial data (continued).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Traditional Golf |
|
Entertainment Golf |
|
Debt Investments (A)(B) |
|
Corporate |
|
Discontinued Operations |
|
Eliminations |
|
Total |
Year Ended December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf course operations |
$ |
222,983 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
222,983 |
|
Sales of food and beverages |
68,554 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
68,554 |
|
Total revenues |
291,537 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
291,537 |
|
Operating costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (C) |
263,338 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
263,338 |
|
Cost of sales - food and beverages |
21,037 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
21,037 |
|
General and administrative expense |
1,435 |
|
|
— |
|
|
1,215 |
|
|
7,722 |
|
|
— |
|
|
— |
|
|
10,372 |
|
General and administrative expense - acquisition and transaction expenses (D) |
1,941 |
|
|
— |
|
|
2,919 |
|
|
619 |
|
|
— |
|
|
— |
|
|
5,479 |
|
Management fee to affiliate |
— |
|
|
— |
|
|
— |
|
|
21,039 |
|
|
— |
|
|
— |
|
|
21,039 |
|
Depreciation and amortization |
26,880 |
|
|
— |
|
|
— |
|
|
87 |
|
|
— |
|
|
— |
|
|
26,967 |
|
Impairment (reversal) |
— |
|
|
— |
|
|
(2,419 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(2,419 |
) |
Realized/unrealized (gain) loss on investments |
— |
|
|
— |
|
|
(69,593 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(69,593 |
) |
Total operating costs |
314,631 |
|
|
— |
|
|
(67,878 |
) |
|
29,467 |
|
|
— |
|
|
— |
|
|
276,220 |
|
Operating income (loss) |
(23,094 |
) |
|
— |
|
|
67,878 |
|
|
(29,467 |
) |
|
— |
|
|
— |
|
|
15,317 |
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and investment income |
147 |
|
|
— |
|
|
135,031 |
|
|
44 |
|
|
— |
|
|
(7,595 |
) |
|
127,627 |
|
Interest expense |
(19,783 |
) |
|
— |
|
|
(64,016 |
) |
|
(3,818 |
) |
|
— |
|
|
7,595 |
|
|
(80,022 |
) |
Loss on extinguishment of debt |
— |
|
|
— |
|
|
(3,410 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(3,410 |
) |
Other income, net |
5,863 |
|
|
— |
|
|
2,416 |
|
|
— |
|
|
— |
|
|
— |
|
|
8,279 |
|
Inter-segment elimination |
5,734 |
|
|
— |
|
|
(5,734 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total other income (expenses) |
(8,039 |
) |
|
— |
|
|
64,287 |
|
|
(3,774 |
) |
|
— |
|
|
— |
|
|
52,474 |
|
Income tax expense |
208 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
208 |
|
Income (loss) from continuing operations |
(31,341 |
) |
|
— |
|
|
132,165 |
|
|
(33,241 |
) |
|
— |
|
|
— |
|
|
67,583 |
|
Loss from discontinued operations, net of tax |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(35,189 |
) |
|
— |
|
|
(35,189 |
) |
Net income (loss) |
(31,341 |
) |
|
— |
|
|
132,165 |
|
|
(33,241 |
) |
|
(35,189 |
) |
|
— |
|
|
32,394 |
|
Preferred dividends |
— |
|
|
— |
|
|
— |
|
|
(5,580 |
) |
|
— |
|
|
— |
|
|
(5,580 |
) |
Net loss attributable to noncontrolling interest |
329 |
|
|
— |
|
|
— |
|
|
— |
|
|
523 |
|
|
— |
|
|
852 |
|
Income (loss) applicable to common stockholders |
$ |
(31,012 |
) |
|
$ |
— |
|
|
$ |
132,165 |
|
|
$ |
(38,821 |
) |
|
$ |
(34,666 |
) |
|
$ |
— |
|
|
$ |
27,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to investment in real estate during the year ended December 31, 2014 |
$ |
7,925 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
307,529 |
|
|
$ |
— |
|
|
$ |
315,454 |
|
|
|
(A) |
Assets held within non-recourse structures, are not available to satisfy obligations outside of such financings, except to the extent net cash flow distributions are received from such structures. Furthermore, creditors or beneficial interest holders of these structures generally have no recourse to the general credit of the Company. Therefore, the exposure to the economic losses from such structures generally is limited to invested equity in them and economically their book value cannot be less than zero. Therefore, impairment recorded in excess of Drive Shack Inc.’s investment, which results in negative GAAP book value for a given non-recourse financing structure, cannot economically be incurred and will eventually be reversed through amortization, sales at gains, or as gains at the deconsolidation or termination of such non-recourse financing structure. |
|
|
(B) |
The following table summarizes the investments and debt in the Debt Investments segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
December 31, 2015 |
|
Investments |
|
Debt |
|
Investments |
|
Debt |
Non-Recourse |
Outstanding
Face Amount |
|
Carrying
Value |
|
Outstanding
Face Amount |
|
Carrying
Value |
|
Outstanding
Face Amount |
|
|
Carrying
Value |
|
Outstanding
Face Amount |
|
|
Carrying
Value |
Subprime mortgage loans subject to call options |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
380,806 |
|
|
|
380,806 |
|
|
380,806 |
|
|
|
380,806 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered real estate securities |
4,000 |
|
|
1,950 |
|
|
— |
|
|
— |
|
|
107,242 |
|
(E) |
|
59,034 |
|
|
97,917 |
|
|
|
97,605 |
|
Levered real estate securities |
619,808 |
|
|
627,304 |
|
|
600,964 |
|
|
600,964 |
|
|
102,660 |
|
(F) |
|
105,963 |
|
|
348,625 |
|
(F) |
|
348,625 |
|
Real estate related and other loans (G) |
74,695 |
|
|
55,612 |
|
|
— |
|
|
— |
|
|
174,995 |
|
|
|
149,198 |
|
|
11,660 |
|
|
|
11,490 |
|
Other investments |
N/A |
|
|
19,256 |
|
|
— |
|
|
— |
|
|
N/A |
|
|
|
20,595 |
|
|
— |
|
|
|
— |
|
|
$ |
698,503 |
|
|
$ |
704,122 |
|
|
$ |
600,964 |
|
|
$ |
600,964 |
|
|
$ |
765,703 |
|
|
|
$ |
715,596 |
|
|
$ |
839,008 |
|
|
|
$ |
838,526 |
|
|
|
(C) |
Operating expenses includes rental expenses recorded under operating leases for carts and equipment in the amount of $3.8 million, $4.6 million and $5.0 million for the years ended December 31, 2016, 2015 and 2014, respectively.
|
|
|
(D) |
Acquisition and transaction expense includes costs related to completed and potential acquisitions and transactions which may include advisory, legal, accounting, valuation and other professional or consulting fees. Transaction expense also includes costs which do not qualify for capitalization associated with the development of new entertainment golf venues. |
|
|
(E) |
Excludes eight securities with zero value, which had an aggregate face amount of $116.0 million. The Company sold these securities during 2016.
|
|
|
(F) |
These investments represent purchases that were traded on December 31, 2015 but settled on January 13, 2016. The debts represent repurchase agreements collateralized by sold investments that were traded on December 31, 2015 and settled on January 13, 2016. See Note 5 for additional detail. |
|
|
(G) |
Excludes two mezzanine loans with zero value, which had an aggregate face amount of $17.8 million and two corporate loans with zero value, which had an aggregate face amount of $45.7 million.
|
|