Annual report pursuant to Section 13 and 15(d)

REAL ESTATE RELATED AND OTHER LOANS, RESIDENTIAL MORTGAGE LOANS AND SUBPRIME MORTGAGE LOANS (Tables)

v3.6.0.2
REAL ESTATE RELATED AND OTHER LOANS, RESIDENTIAL MORTGAGE LOANS AND SUBPRIME MORTGAGE LOANS (Tables)
12 Months Ended
Dec. 31, 2016
Receivables [Abstract]  
Schedule of real estate and other related loans, residential mortgage loans and subprime mortgage loans
The following is a summary of real estate related and other loans, residential mortgage loans and subprime mortgage loans. The loans contain various terms, including fixed and floating rates, self-amortizing and interest only. They are generally subject to prepayment.
 
 
December 31, 2016
 
December 31, 2015
Loan Type
 
Outstanding
Face Amount
 
Carrying
Value (A)
 
Valuation Allowance (Reversal)
 
Loan
Count
 
Wtd.
Avg
Yield
 
Wtd
Avg
Coupon
 
Wtd
Avg
Life
(Years) (B)
 
Floating Rate
Loans as a %
of Face
Amount
 
Delinquent
Face Amount
(C)
 
Carrying
Value
 
Loan Count
 
Wtd. Avg.
Yield
Mezzanine Loans
 
$
17,767

 
$

 
$

 
2

 
0.00
%
 
8.39
%
 
0.0
 
100.0
%
 
$
17,767

 
$
19,433

 
3
 
8.00
%
Corporate Loans
 
120,381

 
55,612

 
3,826

 
4

 
22.49
%
 
15.20
%
 
0.5
 
0.0
%
 
59,384

 
129,765

 
4
 
22.42
%
Total Real Estate Related and other Loans Held-for-Sale, Net (D)
 
$
138,148

 
$
55,612

 
$
3,826

 
6

 
22.49
%
 
14.32
%
 
0.5
 
12.9
%
 
$
77,151

 
$
149,198

 
7
 
20.54
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Mortgage Loans Held-for-Sale, Net (E)
 
$
771

 
$
231

 
$
213

 
3

 
3.40
%
 
3.05
%
 
1.8
 
100.0
%
 
$
628

 
$
532

 
4
 
62.02
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subprime Mortgage Loans Subject to Call Option
 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
380,806

 
 
 
 

(A)
The aggregate United States federal income tax basis for such assets at December 31, 2016 was approximately $75.5 million (unaudited). Carrying value includes negligible interest receivable for the residential housing loans.
(B)
The weighted average maturity is based on the timing of expected cash flows on the assets.
(C)
Includes loans that are 60 days or more past due (including loans that are in foreclosure and borrowers in bankruptcy) or considered real estate owned (“REO”). As of December 31, 2016 and December 31, 2015, $77.2 million and $63.5 million face amount of real estate related and other loans, respectively, was on non-accrual status.
(D)
Loans which are more than 3% of the total current carrying value (or $1.7 million) at December 31, 2016 are as follows:
 
 
December 31, 2016
Loan Type
 
Outstanding
Face Amount
 
Carrying Value
 
Prior Liens
 
Loan
Count
 
Yield (1)
 
Coupon (1)
 
Weighted Average
Life (Years)
Individual Corporate Loan (2)
 
$
60,997

 
$
55,465

 
$
554,480

 
1

 
22.50
%
 
22.50
%
 
0.5
Others (3)
 
77,151

 
147

 
327,234

 
5

 
20.00
%
 
7.85
%
 
0.5
 
 
$
138,148

 
$
55,612

 
 
 
6

 
22.49
%
 
14.32
%
 
0.5
(1)
For Others, represents weighted average yield and weighted average coupon.
(2)
Interest accrued to principal balance over life to maturity. Prior Liens reflect indebtedness and other claims on the assets of the related companies which support the Individual Corporate Loan.
(3)
Various terms of payment. This represents $59.4 million and $17.8 million of corporate loans and mezzanine loans, respectively. Each of the five loans had a carrying value of less than $1.7 million at December 31, 2016. Prior Liens reflect face amounts of third party liens that are senior to Drive Shack Inc.’s position for Others.
(E)
Loans acquired at a discount for credit quality. Residential mortgage loans held-for-sale, net is recorded in receivables and other assets on the Consolidated Balance Sheets.

Schedule of large loans
Loans which are more than 3% of the total current carrying value (or $1.7 million) at December 31, 2016 are as follows:
 
 
December 31, 2016
Loan Type
 
Outstanding
Face Amount
 
Carrying Value
 
Prior Liens
 
Loan
Count
 
Yield (1)
 
Coupon (1)
 
Weighted Average
Life (Years)
Individual Corporate Loan (2)
 
$
60,997

 
$
55,465

 
$
554,480

 
1

 
22.50
%
 
22.50
%
 
0.5
Others (3)
 
77,151

 
147

 
327,234

 
5

 
20.00
%
 
7.85
%
 
0.5
 
 
$
138,148

 
$
55,612

 
 
 
6

 
22.49
%
 
14.32
%
 
0.5
(1)
For Others, represents weighted average yield and weighted average coupon.
(2)
Interest accrued to principal balance over life to maturity. Prior Liens reflect indebtedness and other claims on the assets of the related companies which support the Individual Corporate Loan.
(3)
Various terms of payment. This represents $59.4 million and $17.8 million of corporate loans and mezzanine loans, respectively. Each of the five loans had a carrying value of less than $1.7 million at December 31, 2016. Prior Liens reflect face amounts of third party liens that are senior to Drive Shack Inc.’s position for Others.
Schedule of real estate related loans by maturity
The following is a summary of real estate related and other loans by maturity at December 31, 2016:
Year of Maturity (A)
 
Outstanding
Face Amount
 
Carrying Value
 
Number of
Loans
Delinquent (B)
 
$
77,151

 
$
147

 
5

2017
 

 

 

2018
 

 

 

2019
 
60,997

 
55,465

 
1

2020
 

 

 

2021
 

 

 

Thereafter
 

 

 

Total
 
$
138,148

 
$
55,612

 
6


(A)
Based on the final extended maturity date of each loan investment as of December 31, 2016.
(B)
Includes loans that are non-performing, in foreclosure, or under bankruptcy.

Schedule of activity in carrying value of real estate related and other loans and residential mortgage loans
Activities relating to the carrying value of real estate related and other loans and residential mortgage loans are as follows:
 
Held for Sale
 
Held for Investment
 
Real Estate
Related Loans
 
Residential
Mortgage Loans (A)
 
Residential
Mortgage Loans
Balance at December 31, 2013
$
437,530

 
$
2,185

 
$
255,450

Purchases / additional fundings

 

 

Interest accrued to principal balance
20,830

 

 

Principal pay downs
(240,937
)
 
(9,574
)
 
(9,436
)
Sales

 
(233,349
)
 

Transfer to held-for-sale

 
246,121

 
(246,121
)
Valuation (allowance) reversal on loans
3,303

 
(51
)
 
(833
)
Accretion of loan discount and other amortization
8,867

 

 
115

Other
607

 
(1,478
)
 
825

Balance at December 31, 2014
$
230,200

 
$
3,854

 
$

Purchases / additional fundings

 

 

Interest accrued to principal balance
27,717

 

 

Principal pay downs
(46,696
)
 
(134
)
 

Sales
(55,574
)
 
(2,925
)
 

Valuation allowance on loans
(9,284
)
 
(257
)
 

Accretion of loan discount and other amortization
3,203

 

 

Other
(368
)
 
(6
)
 

Balance at December 31, 2015
$
149,198

 
$
532

 
$

Purchases / additional fundings

 

 

Interest accrued to principal balance
29,025

 

 

Principal pay downs
(109,892
)
 
(40
)
 

Sales
(19,433
)
 

 

Valuation (allowance) reversal on loans
(3,826
)
 
(213
)
 

Accretion of loan discount and other amortization
10,540

 

 

Loss on settlement of loans

 
(48
)
 

Balance at December 31, 2016
$
55,612

 
$
231

 
$


(A)
Residential mortgage loans held-for-sale, net is recorded in receivables and other assets on the Consolidated Balance Sheets.
Rollforward of loss allowance for real estate related and other loans and residential mortgage loans
The following is a rollforward of the related loss allowance:
 
 
Held for Sale
 
Held for Investment
 
 
Real Estate Related and Other Loans
 
Residential Mortgage Loans (A)
 
Residential Mortgage Loans (B)
Balance at December 31, 2013
 
$
(94,037
)
 
$
(824
)
 
$
(12,247
)
Charge-offs (C)
 
14,808

 
84

 
711

Transfer to held-for-sale
 

 
(12,369
)
 
12,369

Sales
 

 
13,006

 

Valuation (allowance) reversal on loans
 
3,303

 
(51
)
 
(833
)
Balance at December 31, 2014
 
(75,926
)
 
(154
)
 

Charge-offs (C)
 
14,345

 
160

 

Sales
 

 

 

Valuation (allowance) reversal on loans
 
(9,284
)
 
(257
)
 

Balance at December 31, 2015
 
$
(70,865
)
 
$
(251
)
 
$

Charge-offs (C)
 

 

 

Sales
 

 

 

Valuation (allowance) reversal on loans
 
(3,826
)
 
(213
)
 

Balance at December 31, 2016
 
$
(74,691
)
 
$
(464
)
 
$


(A)
Residential mortgage loans held-for-sale, net is reported in receivables and other assets on the Consolidated Balance Sheets.
(B)
The allowance for credit losses was determined based on the guidance for loans acquired with deteriorated credit quality.
(C)
The charge-offs for real estate related loans represent zero, four and three loans which were written off, sold, restructured, or paid off at a discounted price during 2016, 2015 and 2014, respectively.
Schedule of geographic distribution of real estate related and other loans and residential mortgage loans
The table below summarizes the geographic distribution of real estate related and other loans and residential loans at December 31, 2016:
 
 
Real Estate Related and Other Loans
 
Residential Mortgage Loans
Geographic Location
 
Outstanding Face Amount
 
Percentage
 
Outstanding Face Amount
 
Percentage
Northeastern U.S.
 
$

 
0.0
 %
 
$
523

 
67.8
%
Southeastern U.S.
 

 
0.0
 %
 
248

 
32.2
%
Foreign
 
63,454

 
100.0
 %
 

 

 
 
$
63,454

 
100.0
 %
 
$
771

 
100.0
%
Other
 
74,694

 
(A)
 
 
 
 
 
 
$
138,148

 
 
 
 
 
 
(A)
Includes corporate loans which are not directly secured by real estate assets.