Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING (Tables)

v3.6.0.2
SEGMENT REPORTING (Tables)
12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
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.
Schedule of other debt segment investments and debt
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.