Drive Shack Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2018

Schedule of carrying value and estimated fair value of assets and liabilities

The following table summarizes the carrying values and estimated fair values of the Company’s financial instruments at March 31, 2018:



	Carrying Value		Estimated Fair Value		Fair Value Method (A)
Assets
Real estate securities, available-for-sale	$	2,362	$	2,362	Pricing models - Level 3
Cash and cash equivalents	137,028		137,028
Restricted cash, current and noncurrent	3,983		3,983
Non-hedge derivative assets (B)	528		528		Counterparty quotations - Level 2

Liabilities
Credit facilities - Traditional Golf term loan	100,255		103,461		Pricing models - Level 3
Junior subordinated notes payable	51,206		29,030		Pricing models - Level 3


(A)	Pricing models are used for (i) real estate securities and loans that are not traded in an active market, and, therefore, have little or no price transparency, and for which significant unobservable inputs must be used in estimating fair value, or (ii) debt obligations which are private and untraded.


(B)	Represents an interest rate cap (Note 9).

Schedule of quantitative information regarding significant unobservable inputs

The following table provides quantitative information regarding the significant unobservable inputs used by the Company for assets and liabilities measured at fair value on a recurring basis as of March 31, 2018:



					Weighted Average Significant Input
Asset Type	Amortized Cost Basis		Fair Value		Discount Rate		Prepayment Speed		Cumulative Default Rate		Loss Severity
ABS - Non-Agency RMBS	$	959	$	2,362	12.0	%	5.4	%	4.1	%	62.8	%
Total	$	959	$	2,362

Schedule of change in fair value of Level 3 investments

Real estate securities measured at fair value on a recurring basis using Level 3 inputs changed during the three months ended March 31, 2018 as follows:



	ABS - Non-Agency RMBS
Balance at December 31, 2017	$	2,294
Total gains (losses) (A)
Included in other comprehensive income (loss)	33
Amortization included in interest income	54
Purchases, sales and repayments (A)
Proceeds	(19		)
Balance at March 31, 2018	$	2,362


(A)	None of the gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. There were no purchases or sales during the three months ended March 31, 2018. There were no transfers into or out of Level 3 during the three months ended March 31, 2018.

Liabilities for which fair value is only disclosed

The following table summarizes the level of the fair value hierarchy, valuation techniques and inputs used for estimating each class of liabilities not measured at fair value in the statement of financial position but for which fair value is disclosed:



Type of Liabilities Not Measured At Fair Value for Which Fair Value Is Disclosed	Fair Value Hierarchy		Valuation Techniques and Significant Inputs
Credit facilities	Level 3	Valuation technique is based on discounted cash flows. Significant inputs include:
		l	Amount and timing of expected future cash flows
		l	Interest rates
		l	Market yields

Junior subordinated notes payable	Level 3	Valuation technique is based on discounted cash flows. Significant inputs include:
		l	Amount and timing of expected future cash flows
		l	Interest rates
		l	Market yields and the credit spread of the Company