Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES (Tables)

v2.4.0.8
SEGMENT REPORTING AND VARIABLE INTEREST ENTITIES (Tables)
 12 Months Ended
Dec. 31, 2013
Segment Reporting And Variable Interest Entities Tables  
Schedule of segment reporting
Summary financial data on Newcastle’s segments is given below, together with reconciliation to the same data for Newcastle as a whole:
                                                         
                            Excess          
                            MSRs and          
    Senior   Debt Investments (A)               Consumer   Inter-segment      
    Housing (A)   CDOs   Other Debt (B)   Media (C)   Golf   Corporate   Loans   Elimination (D)   Total  
Year Ended December 31, 2013                                                        
Interest income   $ 3   $ 119,292   $ 98,968   $ —   $ —   $ 198   $ —   $ (4,746 ) $ 213,715  
Interest expense     10,781     24,996     54,534     1,591     —     3,817     —     (4,746 )   90,973  
Net interest income (expense)     (10,778 )   94,296     44,434     (1,591 )   —     (3,619 )   —     —     122,742  
Impairment (reversal)     —     (9,338 )   (10,431 )   —     —     —     —     —     (19,769 )
Other revenues     85,267     —     2,056     61,637     —     —     —     —     148,960  
Other income (loss)     11     23,946     11,344     1,843     —     —     —     —     37,144  
Property operating expenses     52,713     —     1,005     —     —     —     —     —     53,718  
Depreciation and amortization     26,905     —     219     3,845     —     4     —     —     30,973  
Other operating expenses     20,982     741     3,144     50,671     —     47,277     —     —     122,815  
Income tax expense     1,038     —     —     1,062     —     —     —     —     2,100  
Income (loss) from continuing operations     (27,138 )   126,839     63,897     6,311     —     (50,900 )   —     —     119,009  
Income (loss) from discontinued operations     —     —     (46 )   —     —     —     33,378     —     33,332  
Net income (loss)     (27,138 )   126,839     63,851     6,311     —     (50,900 )   33,378     —     152,341  
Preferred dividends     —     —     —     —     —     (5,580 )   —     —     (5,580 )
Net income attributable to noncontrolling interests     —     —     —     (928 )   —     —     —     —     (928 )
Income (loss) applicable to common stockholders   $ (27,138 ) $ 126,839   $ 63,851   $ 5,383   $ —   $ (56,480 ) $ 33,378   $ —   $ 145,833  
                                                         
December 31, 2013                                                        
Investments   $ 1,463,758   $ 925,690   $ 1,279,549   $ 542,275   $ 358,439   $ —   $ —   $ (87,529 ) $ 4,482,182  
Cash and restricted cash     31,263     2,377     —     38,288     22,890     23,492     —     —     118,310  
Other assets     55,430     47,285     3,442     110,183     34,898     987     —     (154 )   252,071  
Total assets     1,550,451     975,352     1,282,991     690,746     416,227     24,479     —     (87,683 )   4,852,563  
Debt     (1,076,828 )   (645,938 )   (1,149,547 )   (182,016 )   (181,910 )   (51,237 )   —     87,529     (3,199,947 )
Other liabilities     (61,886 )   (19,194 )   (2,235 )   (113,251 )   (185,552 )   (44,528 )   —     154     (426,492 )
Total liabilities     (1,138,714 )   (665,132 )   (1,151,782 )   (295,267 )   (367,462 )   (95,765 )   —     87,683     (3,626,439 )
Preferred stock     —     —     —     —     —     (61,583 )   —     —     (61,583 )
Noncontrolling interest     —     —     —     (60,913 )   (366 )   —     —     —     (61,279 )
GAAP book value   $ 411,737   $ 310,220   $ 131,209   $ 334,566   $ 48,399   $ (132,869 ) $ —   $ —   $ 1,103,262  

                                                         
                            Excess          
                            MSRs and          
    Senior   Debt Investments (A)               Consumer   Inter-segment      
    Housing (A)   CDOs   Other Debt (B)   Media (C)   Golf   Corporate   Loans   Elimination (D)   Total  
Year Ended December 31, 2012                                                        
Interest income   $ —   $ 197,007   $ 91,818   $ —   $ —   $ 170   $ —   $ (6,044 ) $ 282,951  
Interest expense     1,688     56,767     53,700     —     —     3,813     —     (6,044 )   109,924  
Net interest income (expense)     (1,688 )   140,240     38,118     —     —     (3,643 )   —     —     173,027  
Impairment (reversal)     —     (7,381 )   1,717     —     —     —     —     —     (5,664 )
Other revenues     18,026     —     2,049     —     —     —     —     —     20,075  
Other income (loss)     (82 )   260,025     2,351     —     —     —     —     —     262,294  
Property operating expenses     11,539     —     1,404     —     —     —     —     —     12,943  
Depreciation and amortization     5,784     —     1,191     —     —     —     —     —     6,975  
Other operating expenses     6,846     916     3,359     —     —     35,079     —     —     46,200  
Income (loss) from continuing operations     (7,913 )   406,730     34,847     —     —     (38,722 )   —     —     394,942  
Income (loss) from discontinued operations     —     —     (68 )   —     —     —     39,236     —     39,168  
Net income (loss)     (7,913 )   406,730     34,779     —     —     (38,722 )   39,236     —     434,110  
Preferred dividends     —     —     —     —     —     (5,580 )   —     —     (5,580 )
                                                         
Income (loss) applicable to common stockholders   $ (7,913 ) $ 406,730   $ 34,779   $ —   $ —   $ (44,302 ) $ 39,236   $ —   $ 428,530  
                                                         
December 31, 2012                                                        
Investments   $ 181,887   $ 1,417,729   $ 1,911,639   $ —   $ —   $ —   $ —   $ (62,336 ) $ 3,448,919  
Cash and restricted cash     9,720     2,064     —     —     —     222,178     —     —     233,962  
Other assets     5,111     7,429     4,777     —     —     202     —     (157 )   17,362  
Assets of discontinued operations     —     —     —     —     —     —     245,069     —     245,069  
Total assets     196,718     1,427,222     1,916,416     —     —     222,380     245,069     (62,493 )   3,945,312  
Debt     (120,525 )   (1,097,013 )   (1,575,316 )   —     —     (51,243 )   —     62,336     (2,781,761 )
Other liabilities     (5,084 )   (37,259 )   (2,856 )         —     (44,969 )         157     (90,011 )
Liabilities of discontinued operations     —     —     (74 )   —     —     —     (406 )   —     (480 )
Total liabilities     (125,609 )   (1,134,272 )   (1,578,246 )   —     —     (96,212 )   (406 )   62,493     (2,872,252 )
Preferred stock     —     —     —     —     —     (61,583 )   —     —     (61,583 )
GAAP book value   $ 71,109   $ 292,950   $ 338,170   $ —   $ —   $ 64,585   $ 244,663   $ —   $ 1,011,477  

                                                         
                            Excess          
                            MSRs and          
    Senior   Debt Investments (A)               Consumer   Inter-segment      
    Housing (A)   CDOs   Other Debt (B)   Media (C)   Golf   Corporate   Loans   Elimination (D)   Total  
Year Ended December 31, 2011                                                        
Interest income   $ —   $ 218,475   $ 78,234   $ —   $ —   $ 167   $ —   $ (5,840 ) $ 291,036  
Interest expense     —     86,110     53,950     —     —     3,815     —     (5,840 )   138,035  
Net interest income (expense)     —     132,365     24,284     —     —     (3,648 )   —     —     153,001  
Impairment (reversal)     —     (3,876 )   4,986     —     —     —     —     —     1,110  
Other revenues     —     —     1,899     —     —     —     —     —     1,899  
Other income (loss)     —     175,702     4,793     —     —     —     —     —     180,495  
Property operating expenses     —     —     1,110     —     —     —     —     —     1,110  
Depreciation and amortization     —     —     12     —     —     —     —     —     12  
Other operating expenses     —     1,058     3,622     —     —     24,525     —     —     29,205  
Income (loss) from continuing operations     —     310,885     21,246     —     —     (28,173 )   —     —     303,958  
Income (loss) from discontinued operations     —     —     (11 )   —     —     —     572     —     561  
Net income (loss)     —     310,885     21,235     —     —     (28,173 )   572     —     304,519  
Preferred dividends     —     —     —     —     —     (5,580 )   —     —     (5,580 )
                                                         
Income (loss) applicable to common stockholders   $ —   $ 310,885   $ 21,235   $ —   $ —   $ (33,753 ) $ 572   $ —   $ 298,939  
     
  (A) Assets held within non-recourse structures, including all of the assets in the senior housing and CDO segments, 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 Newcastle. 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 Newcastle’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 other debt segment:

                                                   
    December 31, 2013   December 31, 2012  
    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* 		 
Manufactured housing loan portfolio I   $ 102,681   $ 91,924   $ 74,248   $ 66,446   $ 118,746   $ 100,124   $ 90,551   $ 81,963  
Manufactured housing loan portfolio II     128,975     128,117     93,863     93,536     153,193     150,123     117,907     117,191  
Subprime mortgage loans subject to call options     406,217     406,217     406,217     406,217     406,217     405,814     406,217     405,814  
Real estate securities     56,466     50,961     39,665     36,095     63,505     53,979     44,585     40,572  
Operating real estate     N/A     6,597     6,000     6,000     N/A     6,672     6,000     6,000  
Subtotal     694,339     683,816     619,993     608,294     741,661     716,712     665,260     651,540  
Other                                                  
Real estate loans     —     —     —     —     80,298     29,831     —     —  
Unlevered real estate securities     129,563     4,296     —     —     229,299     68,863     —     —  
Levered real estate securities     514,994     551,270     516,134     516,134     1,112,796     1,049,029     923,776     923,776  
Other Investments     N/A     6,160     —     —     N/A     6,024     —     —  
Residential mortgage loans     45,323     34,007     25,119     25,119     55,997     41,180     —     —  
    $ 1,384,219   $ 1,279,549   $ 1,161,246   $ 1,149,547   $ 2,220,051   $ 1,911,639   $ 1,589,036   $ 1,575,316  
   
* As of December 31, 2013 and December 31, 2012, aggregate face amounts of $133.9 million and $71.1 million (carrying values of $87.5 million and $62.5 million), respectively, of debt represents intersegment financing, which is eliminated upon consolidation.
   
(C) In February 2014, the media segment was spun off from Newcastle and will not be reported as a segment in future filings.
   
(D) Represents the elimination of investments and financings and their related income and expenses between the CDO segment, the other debt segment and the golf segment as the corresponding inter-segment investments and financings are presented on a gross basis within each of these segments.
Schedule of other debt segment investments and debt
The following table summarizes the investments and debt in the other debt segment:

                                                   
    December 31, 2013   December 31, 2012  
    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* 		 
Manufactured housing loan portfolio I   $ 102,681   $ 91,924   $ 74,248   $ 66,446   $ 118,746   $ 100,124   $ 90,551   $ 81,963  
Manufactured housing loan portfolio II     128,975     128,117     93,863     93,536     153,193     150,123     117,907     117,191  
Subprime mortgage loans subject to call options     406,217     406,217     406,217     406,217     406,217     405,814     406,217     405,814  
Real estate securities     56,466     50,961     39,665     36,095     63,505     53,979     44,585     40,572  
Operating real estate     N/A     6,597     6,000     6,000     N/A     6,672     6,000     6,000  
Subtotal     694,339     683,816     619,993     608,294     741,661     716,712     665,260     651,540  
Other                                                  
Real estate loans     —     —     —     —     80,298     29,831     —     —  
Unlevered real estate securities     129,563     4,296     —     —     229,299     68,863     —     —  
Levered real estate securities     514,994     551,270     516,134     516,134     1,112,796     1,049,029     923,776     923,776  
Other Investments     N/A     6,160     —     —     N/A     6,024     —     —  
Residential mortgage loans     45,323     34,007     25,119     25,119     55,997     41,180     —     —  
    $ 1,384,219   $ 1,279,549   $ 1,161,246   $ 1,149,547   $ 2,220,051   $ 1,911,639   $ 1,589,036   $ 1,575,316  
   
* As of December 31, 2013 and December 31, 2012, aggregate face amounts of $133.9 million and $71.1 million (carrying values of $87.5 million and $62.5 million), respectively, of debt represents intersegment financing, which is eliminated upon consolidation.
Schedule of holdings in variable interest entities

Newcastle had variable interests in the following unconsolidated VIEs at December 31, 2013, in addition to the subprime securitizations which are described in Note 7:

                     
Entity   Gross Assets (A)   Debt (B)   Carrying Value of Newcastle’s
Investment (C)		  
Newcastle CDO V   $ 200,616   $ 226,615   $ 2,002  
                     
CDO VIII Repack (D)   $ 146,645   $ 146,645   $ 104,308  
     
  (A) Face amount.
  (B) Newcastle CDO V includes $39.8 million face amount of debt owned by Newcastle with a carrying value of $2.0 million at December 31, 2013. CDO VIII Repack includes $116.8 million face amount of debt owned by Newcastle with a carrying value of $104.3 million at December 31, 2013.
  (C) This amount represents Newcastle’s maximum exposure to loss from this entity.
  (D) See Notes 13 and 14 for information about the securitization that is collateralized by certain Newcastle CDO VIII Class I Notes.